(a) Validity of special agreement for attracting offset notes;

(b) In the case of a claim for the amount payable under the special agreement referred to in subparagraph (a), whether the personal defense is cut;

A. The special agreement for attracting a set-off note that the bank shall, in principle, return the repurchase price claims and the obligor’s bank’s deposit and return claims to the repurchase price after the bank exercised its repurchase right for reasons such as refusal of payment, etc., if it disposes of them against the obligor. However, if the obligor is liable for the remainder of the obligation to be performed immediately and there is an obligor other than the obligor in the bill, the bank may arbitrarily collect or dispose of the bill by continuously occupying it and collect or dispose of it, it is valid as an agreement that the bank is authorized by the obligor to collect or dispose of the bill on behalf of the obligor.

(b)In the case of ‘A', a transfer endorsement made by the obligor at the time of the request for bill discount is useful by endorsement for collection delegation and the Bank is in the position of the person to whom the hidden endorsement of collection delegation is made. Therefore, the obligor of the bill can oppose the Bank as a ground for defense against the obligor (i.e. the obligor)’s personal obligation;

Articles 17 and 18 of the Bills of Exchange and Promissory Notes Act

B. Supreme Court Decision 89Meu1084 Decided April 13, 1990 (Law Firm 1990, 1062)

Korea Exchange Bank Co., Ltd., Counsel for the plaintiff-appellee and three others

Attorney Park Sung-hoon, Counsel for the defendant-appellant

Seoul Civil District Court Decision 93Na47201 delivered on April 28, 1994

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The Plaintiff’s attorney’s ground of appeal is examined.

A bank shall, in principle, return to the debtor the repurchase price claim and the obligation to return the deposit to the debtor bank when the bank has exercised its repurchase right due to reasons such as the refusal of payment, etc., and the bank shall set off the repurchase price claim and the obligation to return the deposit to the debtor bank. However, if the debtor has the remaining obligations to be immediately performed and there is any debtor other than the debtor in the bill, the bank shall continue to occupy the bill and collect or dispose of it, and if the bank has the right to collect or dispose of the bill on behalf of the debtor, the bank shall be effective as an agreement to obtain the right to collect or dispose of the bill on behalf of the debtor. In such case, the endorsement at the time of the debtor's request for a bill discount is useful by endorsement for collection delegation, and the bank shall be deemed to be in the position of the person subject to the original delegation, and the debtor shall be deemed to be able to oppose the bank as a personal defense against the endorser (i.e., the debtor) (see Supreme Court Decision 89Meu1084, Apr. 13

The court below held that, in this case where, after the plaintiff's exercise of a right of repurchase on the bill of this case for which the non-party company (the non-party company) requested a discount, it did not refund the bill of this case to the non-party company according to the special agreement for attracting discount notes (the original judgment did not affect the conclusion of the judgment) and requested the payment of the amount of promissory notes to the non-party company, the issuer of the non-party company. The bill of this case concluded an agency contract with the non-party company to purchase and sell the goods manufactured by the non-party company and issued them as a security, and since the non-party company did not supply the goods to the defendant, it did not establish the fact that the underlying claim of this case occurred due to the non-party company's lack of evidence, the judgment of the court below is just, and it did not err in the misapprehension of legal principles as to the redemption of discount notes and the burden of proof, or did not affect the conclusion of the judgment.

The theory of lawsuit argues that the non-party company has the burden of proving that the non-party company did not supply the goods and did not generate the underlying claim of the bill of this case, but it cannot be accepted as an independent opinion. There is no reason for all arguments.

Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jeong Jong-ho (Presiding Justice)