206Da2186 Guarantee obligations

A Agricultural Cooperatives

Attorney Shin-sung et al., Counsel for the defendant-appellant

National Agricultural Cooperative Federation

Attorney Dok-do et al.

Jeju District Court Decision 2005Na1223 Decided November 30, 2005

June 29, 2006

The judgment below is reversed, and the case is remanded to Jeju District Court Panel Division.

1. The judgment of the court below

The lower court acknowledged the facts as indicated in its reasoning in relation to the Plaintiff’s claim that held the Defendant liable for the guaranteed debt of this case, i.e., the part performed to replace the existing guaranteed debt after issuing the instant credit guarantee certificate as the Defendant’s entrusted institution according to the entrustment contract for farmers and fishermen’s credit guarantee fund with the Defendant and implementing the instant loan as security, and determined that the Defendant exempted the Defendant for the following reasons.

A. According to the provisions of this case, when performing entrusted duties, the plaintiff shall faithfully observe the provisions of the Credit Guarantee for Farmers and Fishermen Act, the Enforcement Decree of the same Act, the Enforcement Rule of the same Act, the credit guarantee contract, the provisions of the defendant's credit guarantee contract, the business process guidelines (including the procedures for performing the duties of credit guarantee) and other matters ordered by the defendant. In handling entrusted duties, when the defendant violated the above provisions, the defendant shall be exempted from all or part of the relevant guarantee liability in accordance with the criteria for exemption determined and notified to the plaintiff (Articles 3(1) and 9(2) of the entrustment contract of this case). The defendant shall be exempted from the relevant guarantee obligation in order to recover the amount of the debts already incurred to the person in arrears of the financial institution (including the repayment of the debts), and where six months have not passed since the expiration of the guarantee term, the obligation already incurred may be guaranteed without the approval of the Council within the balance of the guarantee term (Article 6(3) of the Credit Guarantee Act), but where the other debtor is in arrears before the execution of the guaranteed obligation after the issuance of the guarantee term, Article 16(2).

B. On March 30, 201, in order to substitute the existing high interest loan with low interest rate to the non-party with the existing loan guaranteed obligation, the Plaintiff conducted a simplified credit investigation with respect to the non-party on April 6, 2001, and issued the credit guarantee certificate of this case on April 6, 2001. From May 14, 2001, the issuance of the credit guarantee certificate of this case on May 13, 199, the non-party did not pay other debt amounting to three million won from the plaintiff on May 13, 199, but after the above delay date.

5. 21. 21. The Nonparty offered the instant loan to the Nonparty as security. In light of the aforementioned relevant provisions, the Plaintiff, an entrusted institution of the Defendant, did not have any other overdue loan to the Nonparty at the time of issuing the instant credit guarantee to the Nonparty.

Even if the loan of this case is executed, in other cases, if other debts are in arrears after investigating whether other debts are in arrears, and if other debts are being in arrears, the loan of this case is executed without the defendant's approval. Thus, the defendant is exempted from the whole amount of the guaranteed debt of this case and the overdue interest or delay damages after the occurrence of the above overdue debts pursuant to Article 9 (2) of the consignment contract of this case, Articles 11 (7) and 12 of the Credit Guarantee Terms and Conditions, and Article 8-A of the Credit Guarantee Exemption Standard.

2. Judgment of the Supreme Court

However, the above judgment of the court below is hard to accept.

In light of the provisions of the entrustment contract of this case as cited by the court below and the interpretation of Article 6 (3) of the Credit Guarantee Regulations as cited by the court below, the plaintiff appears to be able to independently provide credit guarantee under Article 6 (3) of the Credit Guarantee Regulations without obtaining approval from not only the deliberation committee as an entrusted institution of the defendant, but also from other institutions of the defendant, and such entrustment of credit guarantee business includes the purport of granting the right to independently provide credit guarantee under Article 6 (3) of the Credit Guarantee Regulations. Thus, if the plaintiff issued a credit guarantee certificate under Article 6 (3) of the Credit Guarantee Regulations as a credit guarantee creditor and a business entrusted institution of the Agricultural and Fishery Credit Guarantee Fund, the

Nevertheless, the court below held that in the case of the instant loan under the premise that the defendant's approval under Article 6 (1) of the Credit Guarantee Clause is required even in the above case, the defendant exempted the guaranteed debt of this case on the ground that it was implemented without the defendant's approval under Article 6 (1) of the Credit Guarantee Clause shall be deemed to have committed an unlawful act that affected the conclusion of the judgment by misapprehending the purport of Article 6 (3) of the Credit Guarantee Clause and the legal principles on the correlation between them and Article 6 (1)

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yang Sung-tae

Jeju High Court Justice Shin Shin-chul

Justices Cho Go-chul

Justices Kim Gin-tae