Where real estate on which a mortgage is established is transferred to a fraudulent act, the scope of the establishment of the fraudulent act / Where the establishment registration of a mortgage is cancelled by repayment after the fraudulent act, the scope of revocation of the fraudulent act and the method of reinstatement

Article 406(1) of the Civil Act

Supreme Court Decision 2007Da4004 Decided June 11, 2009 Supreme Court Decision 2012Da107198 Decided April 11, 2013

Plaintiff (Attorney Jeon Soo-soo, Counsel for the plaintiff-appellant)

Defendant (Attorney Kim Yong-hoon, Counsel for defendant-appellant)

Jeju District Court Decision 2017Na162 decided November 8, 2017

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

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1 and 2

The lower court, citing the first instance judgment, determined that the Nonparty, who was in excess of the debt, concluded an accord and satisfaction agreement with the Defendant on each of the instant real estate with the Defendant constitutes a fraudulent act against other creditors, and that the Defendant was aware of such circumstances.

In light of the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine regarding fraudulent act, insolvency, and beneficiary’s bad faith, or by failing to exhaust all necessary deliberations, and by misapprehending the bounds of the principle of free evaluation of evidence against logical and empirical rules, thereby adversely affecting the conclusion of the judgment.

2. As to the grounds of appeal Nos. 3 and 4

In a case where a juristic act on a certain real estate constitutes a fraudulent act, in principle, the said fraudulent act shall be revoked and ordered to recover the real estate itself, such as the cancellation of the registration of transfer of ownership. Meanwhile, in a case where the real estate on which a mortgage is established is transferred by a fraudulent act, such fraudulent act is established only within the extent of the balance obtained by deducting the secured debt amount from the value of the real estate. However, in a case where the registration of creation of a mortgage is cancelled by repayment, etc. after a fraudulent act, the cancellation of a fraudulent act would order the restoration of the real estate itself to the extent that the portion which was not originally secured by the general creditors’ joint collateral, and would result in a violation of fairness. Therefore, in such a case, both the creditor and the beneficiary want to return the real estate, and even according to the return of the original property, the creditor and the beneficiary may cancel the fraudulent act within the extent of the balance obtained by deducting the secured debt amount of the mortgage from the value of the real estate, and may order compensation for the value thereof (see, e.g., Supreme Court Decision 2007Da131314.

The lower court determined that the Plaintiff’s lawsuit in this case cannot be deemed as a violation of the good faith or an abuse of rights solely on the ground that the establishment registration of a neighboring real estate established on each of the instant real estate constitutes a case where the restoration of each of the instant real estate itself is impossible or substantially difficult due to the cancellation of the said sales contract. Furthermore, the lower court, citing the first instance judgment, based on the fact that the Plaintiff and the Defendant were the general creditors of the Nonparty, and thus, the Plaintiff was repaid the full amount of the claim through compensation for value, while the Defendant was unable to receive reimbursement at all,

In light of the aforementioned legal principles and records, insofar as the Plaintiff sought compensation for value in this case, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the value compensation, violation of the good faith principle, or abuse of rights, or by misapprehending the principle of free evaluation of evidence against logical and empirical rules, or by erroneously recognizing facts beyond the bounds of the principle

3. Conclusion

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 Noh Jeong-hee (Presiding Justice)