Legal nature of interest in arrears and whether the short-term extinctive prescription under Article 163 subparag. 1 of the Civil Act is applied (negative)

The interest in arrears paid after the due date is not an interest on the compensation of damages due to delay in the performance of a monetary obligation, but is not a claim for a period of less than one year under Article 163 subparagraph 1 of the Civil Code, so it is not an object of short term extinctive prescription

Article 163 of the Civil Act

Supreme Court Decision 87Meu1409 Delivered on October 28, 1987

[Judgment of the court below]

Defendant 1 and one other, Attorneys Kim Tae-Gyeong et al., Counsel for the defendant-appellant-appellee

Seoul High Court Decision 87Na709 delivered on December 9, 1987

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The grounds of appeal Nos. 1 and 2 are also examined.

According to the reasoning of the judgment below, the court below determined that the defendants 1 and 2 paid interest of KRW 20,000,000 as well as KRW 22,00,000 for each of them on March 16, 1981 (defendant 1) and KRW 22,00,000 for each of them (defendant 2) shall be determined as of June 16, 1981 and that the interest rate of KRW 4% shall be determined as of June 16, 1981 and the plaintiff shall be lent to the plaintiff, and as to the plaintiff's assertion that interest was paid until October 31, 1986 to the plaintiff, the defendants shall be deemed to have received the interest as stated in the attached Form of the judgment of the court below, and there is no evidence to acknowledge that the defendants paid the interest in full by October 31, 1986. In light of the records, the court below's fact-finding is justified and there is no violation of the rules of evidence.

In addition, if facts are as above, the plaintiff shall pay the agreed interest within the limit of the Interest Limitation Act until the above maturity period, but interest paid after the above maturity period is not interest, but interest for delay in the performance of monetary obligations, and interest for delay after the above maturity period is not a claim for a period of not more than one year as provided by Article 163 subparagraph 1 of the Civil Code, and thus, it cannot be said that the short-term extinctive prescription period is completed unless it is exercised for three years (see Supreme Court Decision 87Meu1409 delivered on October 28, 198

In addition, the judgment of the court below that the interest limit rate under the Interest Limitation Act from March 16, 1981 to December 15, 1983, which had been established the loan contract of this case, is 40 percent per annum. Thus, even if the plaintiff appropriated it as a legal appropriation under Article 479 of the Civil Act, the amount of KRW 10,550,000, which was the sum paid by the plaintiff to Defendant 1, constitutes the interest (or damages for delay) for 16 months (from July 16, 1982).

Many arguments cited as arguments are without merit, which criticizes the court below's whole right to evidence preparation and fact-finding or assumes that interest in arrears is a claim corresponding to the short-term extinctive prescription of three years.

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

Justices Ansan-man (Presiding Justice)