The Bankruptcy Corporation of Busan Savings Bank (Law Firm Jeong, Attorney Kim Tae-young, Counsel for defendant-appellant)

Defendant 1 and four others (Law Firm Dongba, Attorneys Ansan-do et al., Counsel for defendant-appellant)

October 22, 2014

Seoul Central District Court Decision 2013Gahap532369 Decided June 26, 2014

1. Revocation of the first instance judgment.

2. The Plaintiff:

(a) Defendant 1 shall pay 112,29,700 won and 5% per annum from August 23, 2013 to November 24, 2014; and 20% per annum from the following day to the date of full payment;

B. Defendant 2 shall pay 18,528,970 won and 5% interest per annum from July 25, 2013 to November 24, 2014; and 20% interest per annum from the following day to the date of full payment;

C. Defendant 3 shall pay 70,259,580 won and 5% interest per annum from August 22, 2013 to November 24, 2014; and 20% interest per annum from the following day to the date of full payment;

D. Defendant 4 shall pay 131,425,894 won and 5% per annum from July 26, 2013 to November 24, 2014; and 20% per annum from the following day to the date of full payment;

E. Defendant 5 shall pay KRW 45,364,872 as well as 5% interest per annum from July 25, 2013 to November 24, 2014, and 20% interest per annum from the next day to the day of full payment.

3. The total costs of the lawsuit shall be borne by the Defendants.

4. Paragraph 2 can be provisionally executed.

The judgment of the court of first instance is revoked. The judgment of the court of first instance shall be revoked. The plaintiff shall be 112,29,70 won, the defendant 1 shall be 18,528,970 won, the defendant 3 shall be 70,259,580 won, the defendant 4 shall be 131,425,89, and the defendant 5 shall be 45,364,872 won, and each of the above amounts shall be 5% per annum from the day following the day on which a copy of the complaint of this case is served until the day on which the decision of the court of first instance is rendered, and 20% per annum from the next day to the day on which the copy of the complaint of this case is served.

1. Basic facts

A. On August 16, 2012, Busan Savings Bank Co., Ltd. (hereinafter “ Busan Savings Bank”) was declared bankrupt as Busan District Court No. 2012Hahap4 on August 16, 2012, and the bankruptcy proceeding is in progress. The Plaintiff was appointed as the trustee in bankruptcy of Busan Savings Bank on the same day.

B. Nonparty 1, who was the president of the Busan Savings Bank, and Nonparty 2, the representative director, etc. established a special purpose corporation by means of lending the name of an officer or employee’s family member or partner in order to implement the business or obtain a loan necessary therefor by avoiding the restrictions under the Mutual Savings Banks Act, and then registering the name of an officer or employee in the form of stockholders or officer: (a) lending to a special purpose corporation; and (b) developing real estate, golf course, etc. through such lending; (c) An agricultural company Daesung Co., Ltd. (hereinafter “

C. Defendant 1 was registered as the representative director and in-house director from March 2008 to March 2013 (Provided, That Defendant 1 was determined as a provisional disposition suspending the performance of duties on September 26, 201). ② Defendant 2 was the director from November 2009 to November 2012; ③ Defendant 3 was the director from January 2006 to January 201; ④ Defendant 4 was the director from January 2006 to March 201; and Defendant 5 was the auditor from January 2006 to March 201, 206 to March 201, 201.

D. The Defendants were registered as the representative director, director, or auditor; ① the sum of KRW 112,29,700 from March 2008 to March 3, 201; ② the sum of KRW 18,528,970 from December 2009 to April 201; ③ the sum of KRW 70,259,580 from January 2006 to March 3, 201; ④ Defendant 4 paid the sum of KRW 131,425,894 from January 2006 to March 201; ⑤ the sum of KRW 45,364 from January 3, 201 to March 3, 201 to Defendant 5; and ④ the sum of KRW 131,425,894 from January 206 to March 3, 201 to Defendant 5 (hereinafter “each of the Defendants’ benefits”).

E. As of April 22, 2013, light bears the obligation to the Busan Savings Bank for loans equivalent to 25,170,517,180 won and damages for delay, and is currently insolvent due to the absence of any particular asset.

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 1, Eul evidence 1, 2, 10 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. Determination on this safety defense

A. In this case, Defendant 1, Defendant 2, Defendant 3, and Defendant 4 claimed restitution of unjust enrichment or damages on behalf of the Busan Savings Bank as the creditor of the Busan Savings Bank, the Plaintiff asserted that the Busan Savings Bank’s lending of money to the large amount of money owned by the Busan Savings Bank is a loan to the Busan Savings Bank itself, and therefore, there is no preserved bond against the large amount of the Busan Savings Bank.

B. So-called Dop, even if the Busan Savings Bank owns 100% of the large amount of the loan, since the large amount of the loan is a corporation established under the Commercial Act and has a legal personality separate from the Busan Savings Bank, it is difficult to view that the Busan Savings Bank's loan money to the large amount of the loan to the Busan Savings Bank constitutes the loan to it. Therefore, the above defendants' main defense is without merit.

3. Judgment on the merits

A. The parties' assertion

1) Summary of the Plaintiff’s assertion

A) The Plaintiff’s primary assertion is as follows.

The Defendants were formally registered as the representative director, director, or auditor, and actually did not perform their duties or duties as such, received each of the instant monetary amounts from the broad-scale representative director, director, or auditor as payment for the benefits of this case. Although the broad-scale director or auditor was determined by the resolution of the articles of incorporation or the general meeting of shareholders, the Defendants of the broad-scale director or auditor did not pass a resolution of the articles of incorporation or the general meeting of shareholders. Even if there was a resolution of the large-scale general meeting of shareholders regarding the remuneration for the Defendants, the Defendants did not have the right to claim specific remuneration from the large-scale representative director, director, or auditor unless the Defendants did perform their delegated duties as the representative director, director, or auditor.

B) The Plaintiff’s conjunctive assertion is as follows.

The Defendants, as seen above, committed an act of neglecting their duties under Article 750 Section 1), Article 760 Section 2 of the Civil Act, or Article 399 Section 3 of the Commercial Act, and Article 414 Section 4 of the Commercial Act, by receiving unjust benefits from the light, as a representative director, director, or auditor who has not actually performed delegated duties.

C) Therefore, the Plaintiff, as a creditor of loans against the Plaintiff, seek against the Defendants for the return of unjust enrichment or the compensation for damages by subrogation as the creditor of loans against the Plaintiff, each of the instant money and the compensation for delay.

2) Summary of the defendants' assertion

The defendants, the representative director and directors of large-scale commercial purpose corporation controlled by the Busan Savings Bank, are entrusted with the main business to the Busan Savings Bank, and as the officers of large-scale savings bank received the agreed fixed amount of remuneration each month in the course of performing incidental business within the scope of the instruction given by the Busan Savings Bank, it cannot be viewed as unjust enrichment or large-scale tort.

B. Judgment on the main claim

(i)the need for conservation claims and conservation;

According to the above-mentioned facts 1. E., the Busan Savings Bank has a loan claim equivalent to 25,170,517,180 won and damages for delay against the large amount of light, and the secured claim is recognized, and the large amount of light is currently insolvent, and the need to preserve it is also recognized.

2) Establishment of a claim for restitution of unjust enrichment

A) Article 382(2)5 of the Commercial Act provides that the provisions on delegation of the Civil Act concerning the relationship between the company and the director shall apply mutatis mutandis to the relationship between the company and the auditor. Article 382(2) of the Commercial Act provides that the delegation of authority to the other party shall take effect by one of the parties entrusting the other party with the management of affairs and the other party with the consent thereto. Article 681(8) of the Civil Act provides that the mandatary shall manage the affairs entrusted to the other party with the care of a good manager. Article 686(1) and (2)9 of the Civil Act provides that the mandatary shall manage the affairs entrusted to the other party with the care of a good manager. Article 686(1) and (9) of the Civil Act provides that the mandatary may not claim remuneration for the delegation, unless otherwise agreed upon.

In light of the purport of the above provisions, in cases where there is an agreement between the mandator and the mandatary on remuneration for the management of the entrusted affairs, such agreement on remuneration is a bilateral contract under which the mandatary agrees to manage the entrusted affairs to the mandator and the mandator agrees to pay remuneration therefor. Barring any special agreement, the mandatary’s specific right to claim remuneration arises only when performing the entrusted affairs, and in cases where the mandatary fails to perform the entrusted affairs, he/she shall not have the specific right to claim remuneration to the person related to the remuneration.

B) We examine the instant case in light of the aforementioned legal principles. Comprehensively taking account of the purport of the entire arguments in the statement Nos. 2 and 3, the Defendants are found to have leased only their names to the broad-scale representative director, director, or auditor during the period of receiving each of the instant money under the name of the representative director, director, or auditor, and did not perform their duties. As such, insofar as the Defendants did not actually perform their duties as the broad-scale representative director, director, or auditor during the period of appointment as the representative director, director, or auditor, the Defendants cannot claim payment for the said period in return for the handling of delegated duties.

C) Therefore, since the money received by the Defendants as benefits for the pertinent period from large scale was unjust enrichment without any legal ground, the Defendants are obligated to return it to large scale.

3) Scope of return of unjust enrichment

Furthermore, we examine the amount of unjust enrichment that the Defendants should return to the Busan Savings Bank. Under the foregoing facts-based clause D., barring any special circumstance, we examine the Plaintiff. ① Defendant 1 is obligated to pay the Plaintiff the sum totaling KRW 112,299,700 in the benefits received from March 2008 to March 201, ② Defendant 2 is the sum totaling KRW 18,528,970 in the benefits received from December 2009 to April 201, ③ Defendant 3 is equivalent to the sum totaling KRW 70,259,580 in the benefits received from January 2006 to March 201, ④ Defendant 4 is equivalent to the sum totaling KRW 131,425,894 in the benefits received from March 206 to March 3, 2011, ⑤ Defendant 2 is equivalent to the legal benefits received from Defendant 31,425,206 to April 31, 2016.

C. Determination as to the defendants' assertion

1) The part regarding the assertion of bad faith in payment

A) The Defendants asserted that, even if the light paid benefits to the Defendants without any legal cause, it constitutes a non-debt payment under Article 742 Section 10 of the Civil Act, and the Defendants did not have any obligation to return benefits paid to the Plaintiff.

B) On the other hand, Article 742 of the Civil Act concerning the repayment of non-performing obligations applies to a case where the person performing the obligation is aware of the absence of the obligation, and thus, is not applicable to a case where the person performing the obligation is unaware of the absence of the obligation. The burden of proving that the person performing the obligation was aware of the absence of the obligation is on the part of denying the right to claim the return (see Supreme Court Decision 2010Da68237, Nov. 15, 2012, etc.).

On the other hand, the evidence submitted by the Defendants alone is insufficient to recognize that the light is not liable at the time of the payment of wages to the Defendants (the fact that there is no obligation to pay remuneration when it is not actually performed as a director or auditor). There is no evidence to acknowledge otherwise. Accordingly, this part of the Defendants’ assertion is without merit.

2) The part regarding the claim for illegal consideration

A) The Defendants asserted that, even if the light paid benefits to the Defendants without any legal cause, it constitutes illegal consideration under Article 746 Section 11 of the Civil Act, and the Defendants did not have any obligation to return benefits paid to the Defendants to the light.

B) On the other hand, the reason for the prohibition of a claim for return of unjust enrichment under Article 746 of the Civil Act refers to the case where the act causing it violates good morals and other social order, and it is reasonable to interpret that the claim for return by the payer is not allowed even in the case where the illegality of the beneficiary is remarkably larger than that of the payer and the illegality of the payer is weak, and in such a case, the application of the main sentence of Article 746 of the Civil Act is excluded and the claim for return by the payer is allowed (see Supreme Court Decision 2010Da77477, Jan. 13, 201).

As to the instant case, it is difficult to view that the Plaintiff seeking the return of illegal consideration under Article 746 of the Civil Act to claim against the Defendants for the return of the benefits that the Plaintiff paid without any legal cause, and even if not, the degree of illegality of the Defendants, who received the payment without the handling of delegated affairs, is much larger than that of the large amount of illegality paid to the Defendants who are in the position of director or auditor. Therefore, in such a case, the application of the main sentence of Article 746 of the Civil Act is excluded, and therefore, this part of the Defendants’ assertion is without merit.

3) Part on the claim for extinctive prescription

A) The Defendants asserts that even if the Defendants were liable for return of unjust enrichment equivalent to wages, this is the right to claim the return of remuneration, which is a commercial activity in large scale, and the short-term extinctive prescription of five years as stipulated in Article 64 Section 12 of the Commercial Act is applied. Thus, the part of the benefits received five years prior to the date of the instant lawsuit was extinguished by extinctive prescription.

B) On the other hand, the right to claim for restitution of unjust enrichment of this case is not recognized as the right to claim payment from the Defendants under the delegation contract, and the Plaintiff sought the return of the amount equivalent to the wages already paid to the Defendants pursuant to the provisions of the Civil Act on the ground that the payment was made from the broad area. In light of such circumstances, in the instant claim for restitution of unjust enrichment of this case, there is no reasonable ground to deem that there is a need to be promptly resolved to the same extent as the commercial transaction relation, and therefore, Article 64 of the Commercial Act cannot be deemed as being applicable. Therefore, it is reasonable to deem the statute of limitations to be 10 years pursuant to Article 162(1)3 of the Civil Act. Accordingly,

D. Sub-committee

Therefore, the plaintiff, who is the trustee in bankruptcy of Busan Bank, can exercise his right to claim restitution of unjust enrichment against the defendants on 4.0% or more from the 20th day following the 20th day following the 1st day following the 20th day following the 4th day following the 1st day after the 20th day after the 1st day after the 2nd day after the 4th day after the 2nd day after the 1st day after the 2nd day after the 4th day after the 2nd day after the 1st day after the 2nd day of the 2nd day after the 4th day after the 2nd day after the 4th day after the 2nd day after the 2nd day of the 2nd day after the 1st day after the 4th day after the 2nd day after the 2nd day of the 1st day after the 2nd day of the 2nd day after the 2nd day after the 2nd day of the 2nd day after the 2nd day after the 3th day after the 2nd day after the 2nd day.

4. Conclusion

Therefore, the plaintiff's primary claim of this case shall be accepted on the grounds of its reasoning, and the judgment of the court of first instance shall be unfair on the grounds of its conclusion. Therefore, the court of first instance shall accept the plaintiff's appeal against the defendants and shall revoke the judgment of the court of first instance and order the defendants to pay the above amount. It is so decided as per Disposition

Judges Kim Jong-Du (Presiding Judge)

1) A person who causes damage to another person due to an intentional or negligent act under Article 750 (Definition of Unlawful Act) of the Civil Act shall be liable to compensate for such damage.

(2) Article 760 (Liability of Joint Contributors) (1) of the Civil Act (Liability of Joint Contributors) If several persons inflict damages on another person as a joint tort, the liability is jointly and severally liable for such damages. (2) The same shall apply to the case where it is impossible to find out which part of the joint acts was committed by a person.

3) Article 399 (Liability to Company) (1) of the Commercial Act (1) If a director commits, intentionally or negligently, an act in violation of Acts and subordinate statutes or the articles of incorporation or neglects his duties, he shall be jointly and severally liable to compensate for damages to the company.

(2) If an auditor has neglected his/her duties due to bad faith or gross negligence, he/she shall be jointly and severally liable for damages to a third party. (3) If an auditor is jointly and severally liable for damages to a third party.

(2) The provisions governing delegation of the Civil Act shall apply mutatis mutandis to the relationship between the company and the director.

6) The provisions of Articles 415 (Provisions 382(2), 382-4, 385, 386, 388, 400, 401 and 403 through 407 of the Commercial Act shall apply mutatis mutandis to auditors.

7) Delegation of Article 680 (Definition of Mandate) of the Civil Act becomes effective when one of the parties has entrusted the other party with the management of affairs and the other party has consented thereto.

8) Article 681 (Mandatary’s duty of care and due care) of the Civil Act provides that a mandatary shall manage the affairs entrusted to him with the care of a good manager in accordance with the tenor of the mandate.

9) Article 686 (Mandatary's Right to Demand Remuneration) (1) In the absence of any special agreement, a mandatary may not demand remuneration from the mandator. (2) If the mandatary is to receive remuneration, he may not demand it until the entrusted affairs are completed: Provided, That if the mandatary has determined remuneration during the period, he may demand it after the elapse of such period.

10) If the performance is effected with the knowledge of the non-performance of obligation under Article 742 (Non-performance of Obligation) of the Civil Act, no claim may be made.

11) If a person pays a property or provides labor on account of an illegal cause under Article 746 (Performance for Illegal Cause) of the Civil Act, he may not demand the return of that benefit: Provided, That this shall not apply if the illegal cause is limited to the beneficiary.

12) Any claim arising out of commercial activities under Article 64 of the Commercial Act shall be extinguished by prescription, if it is not exercised for five years, unless otherwise provided in this Act: Provided, That if other Acts and subordinate statutes provide for a shorter period than this Act, such provisions shall govern.

13) A claim under Article 162 (Extinctive Prescription of Claims and Property Rights) (1) of the Civil Act shall be extinguished by prescription if it is not exercised within ten years.