[1] Whether an exception to the proviso of Article 21(1) of the former Trust Act, which stipulates that a trust property may be subject to compulsory execution or auction, includes a case where a truster is a debtor (negative)

[2] The validity of a seizure disposition against a third party’s property, other than a taxpayer or a person liable for extraordinary collection, (i.e., invalidation)

[1] According to the purport of Article 1(2) of the former Trust Act (wholly amended by Act No. 10924, Jul. 25, 2011; hereinafter “Trust Act”), the trust property under the Trust Act is wholly and externally attributed to the trustee and its ownership in the internal and external relationship with the truster is not reserved to the truster, and Article 21(1) of the Trust Act provides that the legislative purpose of the Trust Act is to ensure the independence of the trust property in order to smoothly achieve the purpose of the trust. In full view of the following, the “right arising in the course of performing the trust affairs” under the proviso of Article 21(1) of the Trust Act that exceptionally provides that the trust property may be subject to compulsory execution or auction is included only in the “right arising in the course of performing the trust affairs” where the trustee is the debtor, and the truster is

[2] Article 28 of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010) which provides for the requirements for seizure as a disposition on default is limited to the property of a taxpayer or a person liable for extraordinary collection, and thus, a disposition of seizure on a third party, other than a taxpayer or a person liable for extraordinary collection, for a disposition on default, is null and void as the content of such disposition cannot be legally realized.

[1] Articles 1(2) and 21(1) of the former Trust Act (wholly amended by Act No. 10924, Jul. 25, 201) / [2] Article 28 of the former Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 2010; see Article 91 of the current Framework Act on Local Taxes)

[1] [2] Supreme Court Decision 2010Du4612 Decided April 12, 2012 (Gong2012Sang, 806) / [1] Supreme Court Decision 2011Du13903 Decided April 13, 2012

Hanol Trust Co., Ltd. (Law Firm Sepon, Attorneys Maximum Quota et al., Counsel for the defendant-appellant)

Head of the Gu of Daegu Metropolitan City (Attorney Lee Young-hwan, Counsel for the defendant-appellant)

Daegu High Court Decision 2010Nu1843 decided November 26, 2010

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

The grounds of appeal are examined.

1. Article 1(2) of the former Trust Act (wholly amended by Act No. 10924, Jul. 25, 2011; hereinafter “Trust Act”) provides that “a trust refers to a legal relation in which a truster transfers a specific property right to a trustee, or takes other measures, and has a trustee manage and dispose of such property right for the benefit of a beneficiary or for a specific purpose,” and Article 21(1) of the former Trust Act provides that “No compulsory execution or auction may be conducted against a trust property: Provided, That this shall not apply where the right arising before the trust or the right arising from the performance of the trust affairs is due to a right arising before the trust.”

According to the purport of Article 1(2) of the Trust Act, when comprehensively taking account of the following: (a) the trust property under the Trust Act is entirely and externally owned by the trustee and its ownership in the internal and external relationship with the truster is not reserved to the truster; and (b) the legislative purport of Article 21(1) of the Trust Act is to ensure the independence of the trust property in order to smoothly achieve the purpose of the trust; (c) the “right arising in the course of performing the trust affairs” prescribed by the proviso to Article 21(1) of the Trust Act that exceptionally requires compulsory execution or auction against the trust property is included in the “right arising in the course of performing the trust affairs,” and does not include the truster’s debtor (see, e.g., Supreme Court Decision 2010Du4612, Apr.

Meanwhile, Article 28 of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010) which provides for the requirements for seizure as a disposition for arrears is limited to the property of a person liable for tax payment or a person liable for extraordinary collection, and thus, a disposition of seizure on a third party, other than a person liable for tax payment or a person liable for extraordinary collection, is void as it is impossible to legally realize the content of the disposition.

2. In full view of the evidence of its employment, the court below acknowledged the following facts: (a) on July 5, 2007 and August 8, 2007, U.S. L&A Co., Ltd (hereinafter “N&A”) concluded a real estate security trust agreement with the Plaintiff on each of the instant real estate, etc. and completed the registration of transfer on the ground of trust to the Plaintiff around that time; (b) on September 22, 2009, the non-party company failed to pay acquisition tax, registration tax, and property tax; and (c) on September 22, 2009, the Defendant issued the instant disposition that seized each of the instant real estate, which is a trust property, with the non-party company as a delinquent taxpayer, on the premise that the “right to take place in the course of performing trust affairs” under the proviso of Article 21(1) of the Trust Act means the right that the trustee incurred to the trustee by performing acts related to the trust affairs; and (d) on the ground that acquisition tax, registration tax, and property tax related to the disposition of this case cannot be deemed void.

In light of the above provisions, legal principles, and records, the judgment of the court below is just and there is no error in the misapprehension of legal principles as to the proviso of Article 21 (1) of the Trust Act, as otherwise alleged in the

3. 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 on the bench.

Justices Lee In-bok (Presiding Justice)