The case holding that the insurance liability period commences even if the insurer did not deliver the above Promissory Notes due to the insurer's circumstances, in the event that there was an agreement that the insurer would substitute for the payment of the Promissory Notes and interest on the Promissory Notes with the fire insurance premiums, and that the insurer’s delivery of the Promissory Notes was deferred from the policyholder, and that the payment of interest on the Promissory Notes was made in substitution

Articles 656 and 683 of the Commercial Act, Article 105 of the Civil Act

Korea Fire Marine Insurance Co., Ltd. (Law Firm Sejong Chang, Attorneys Kim Hyun-tae et al., Counsel for the plaintiff-appellant)

Dongyang Forest Co., Ltd. (Law Firm Song, Attorney Lee Jae-hwan, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2004Na89709, 92170 decided June 10, 2005

The appeal is dismissed. The costs of appeal are assessed against the plaintiff (Counterclaim defendant).

The grounds of appeal are examined.

1. Article 656 of the Commercial Act provides that “The liability of the insurer shall commence from the time when the first insurance premium is paid, unless otherwise agreed by the parties.” Article 3(2) of the Fire Insurance Clause applicable to the fire insurance contract of this case provides that “no damage incurred before the payment of the premium shall be compensated even after the commencement of the insurance period, unless otherwise agreed by the parties.” Thus, if there is an agreement between the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) who is a party to the fire insurance contract of this case and the Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) as a party to the fire insurance contract of this case regarding the commencement of the insurance liability period, the insurance liability period shall commence in accordance with the agreement.

According to the reasoning of the judgment below, since the Plaintiff’s insurance contract was concluded on February 20 with respect to the construction of the Defendant’s factory and building, etc. on which the instant promissory note was owned by the Defendant for a long time after the lapse of 200 to February 24, 201, and thus, the Plaintiff’s insurance contract was renewed every year with respect to the fire of the Defendant’s construction of the B, etc. on February 25, 2004, and thus, it cannot be issued with the Defendant’s insurance premium payment under the premise that the payment of interest would change from the date of the instant insurance premium to February 24, 2005. As such, the Plaintiff’s insurance premium would not change from the date of delivery of the instant promissory note to the date on which the Plaintiff’s insurance premium was issued to the Defendant for a long time due to the absence of the Defendant’s office’s payment of interest, and thus, it would be difficult to conclude that the Plaintiff’s insurance premium payment would not change its interest payment of the instant promissory note.

Although the reasoning of the court below is not appropriate, it is just in its conclusion that the plaintiff is liable to pay insurance money under the fire insurance contract of this case, and there is no error in the misapprehension of legal principles as to the commencement time of the insurance liability period, as otherwise alleged in the ground of appeal.

2. The plaintiff alleged in the ground of appeal that since the factory mortgage of the above factory building B was established in Korea, the subrogation of the bank against the insurance money under the fire insurance contract of this case cannot be a legitimate ground of appeal due to the plaintiff's argument only before the appellate court. In addition, in order for our bank to exercise a subrogation against the insurance money under the fire insurance contract of this case, the above insurance claim should be seized. There is no evidence to support that our bank seized the above insurance claim even after examining the record, the plaintiff's above assertion based on this premise is without merit.

3. Therefore, the appeal shall be dismissed, and all costs of appeal shall be borne by the plaintiff who is the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Shin Hyun-chul (Presiding Justice)