Plaintiff 1, et al. (Law Firm Pule, Attorney Kim Jong-kon, Counsel for the plaintiff-appellant)

Defendant (Law Firm Won, Attorneys Kim Sung-tae, Counsel for defendant-appellant)

May 29, 2009

Seoul Central District Court Decision 2008Gahap52487 decided Dec. 12, 2008 (main office), 2008Gahap93525 (Counterclaim) decided Dec. 12, 2008

1. All appeals filed by the Plaintiff (Counterclaim Defendant) against the principal lawsuit and counterclaim are dismissed.

2. The costs of appeal are assessed against the Plaintiff (Counterclaim Defendant) by aggregating the principal lawsuit and counterclaim.

1. Purport of claim

A. Main suit: The Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) shall pay 82,811,775 won to the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) and 42,79 won to Plaintiff 2, and each of the above amounts, at the rate of 20% per annum from the following day of service of the written application for modification of claim and cause to the day of complete payment.

B. Counterclaim: The defendant shall pay to the defendant 59,920,562 won and 56,118,676 won from February 4, 2004 to the service date of each counterclaim; 5% per annum from April 8, 2004 to the service date of each counterclaim; and 20% per annum from the next day to the day of complete payment; and the stock company 2 shall pay to the plaintiff 31,93,587 won and the amount equivalent to 5% per annum from February 4, 2004 to the service date of the counterclaim; and 20% per annum from the next day to the day of complete payment.

2. Purport of appeal

The judgment of the first instance is revoked. The defendant's counterclaim is dismissed.

1. Basic facts

The following facts shall not be disputed between the parties, or may be acknowledged by adding up the whole purport of the pleadings to the statements in the evidence Nos. 1 and 2.

A. The composition procedure and the declaration of bankruptcy against the non-party 1 corporation (the non-party corporation of the judgment of the Supreme Court)

On November 10, 197, the bankrupt non-party 1 corporation received the commencement order of composition procedures from the Seoul District Court, and obtained the authorization of composition from the above court on December 16 of the same year. On November 14, 2000, the above court decided the cancellation of composition against the non-party 1 corporation ex officio, and appointed the defendant as the bankruptcy trustee on April 11, 2001.

B. Claims of Plaintiff 1 corporation against Nonparty 1 corporation

(1) On around 1999, Plaintiff 1 Co., Ltd., a creditor of Nonparty 1, demanded each of the auction cases of real estate owned by Nonparty 1 Co., Ltd. (Seoul District Court Decision 99Hu32104, Suwon District Court 9Hu11037, Suwon District Court 9Hu11037, Suwon District Court 9Hu4223, Suwon District Court 9Hu423, Suwon District Court 9Mo10641, 3,245,489,001 out of the successful bid price of each of the above auction, which was distributed to Nonparty 1’s employees, etc. (hereinafter “wages claim”), and it was impossible for Plaintiff 1 Co., Ltd., a senior mortgagee, who was a senior mortgagee, to receive the above amount.

(2) After that, Plaintiff 1 received dividends of KRW 1,774,946,957 in the auction case of other real estate owned by Nonparty 1 corporation, and on February 4, 2004, in the bankruptcy procedure of Nonparty 1 corporation, it received payment of KRW 56,118,676 in the first amount as the subrogated creditor of wage claim.

(3) On 200, Nonparty 2 Co., Ltd., a creditor of Nonparty 1 Co., Ltd., demanded a distribution in the auction case of the real estate owned by Nonparty 1 Co., Ltd. (Seoul District Court Decision 2000taeng78627). However, KRW 103,487,751 out of the successful bid price of the above auction, was distributed in priority to the employees of Nonparty 1 Co., Ltd., a senior mortgagee, who was a senior mortgagee, did not receive the above amount.

(4) After that, Nonparty 2 received dividends of KRW 8,440,597 from other real estate auction cases owned by Nonparty 1, and on April 8, 2004, upon being treated as estate claims as the subrogation creditor of wage claims in the bankruptcy proceedings of Nonparty 1, the company received reimbursement of KRW 3,801,886 as the primary additional repayment.

(5) Nonparty 2 was merged with Plaintiff 1 Company on April 1, 2006.

C. Claims of Plaintiff 2 Co., Ltd. against Nonparty 1 corporation

(1) The non-party 3 corporation, a creditor of the non-party 1 corporation, made a demand for distribution in the auction case of the real estate owned by the non-party 1 corporation (Jancheon District Court 9Tcheon District Court 9Mo4223, etc.), on around 199. However, 2,568,903,88 out of the successful bid price of each of the above auction was distributed in preference to the wage claim of the workers of the non-party 1 corporation, and the non-party 3 corporation was unable to receive the above amount.

(2) The non-party 3 received dividends of KRW 1,087,35,939 from the auction case of other real estate owned by the non-party 1 corporation. On February 4, 2004, the non-party 3 was paid KRW 222,70,000 at the time of selling the non-party 1 apartment, KRW 234,60,00 at the time of selling the non-party 1 apartment, KRW 230,00 at the time of selling the non-party 1 apartment, and KRW 214,20,00 at the time of selling the non-party 3 apartment at the same time, KRW 222,70,000 at the time of selling the non-party 1 corporation (=22,70,000 + KRW 234,600,000 + KRW 214,000 at the time of selling the non-party 1 corporation as the subrogated creditor, and received KRW 31,39537

(3) The non-party 3 corporation was merged with the plaintiff 2 corporation on November 1, 2001.

D. Defendant’s notification of dividend exclusion

On the other hand, on March 18, 2008, the defendant notified the plaintiffs that "the plaintiff's subrogation claim against the non-party 1 corporation is entitled to preferential payment in the auction procedure under the Civil Execution Act, but there is no express provision that it constitutes estate claims under the Bankruptcy Act, and thus excluded the plaintiffs' claims from the distribution of estate claims."

2. Demand and judgment

A. Claim of the Parties

(1) The plaintiffs' main claim

According to Article 38 subparag. 10 of the former Bankruptcy Act (amended by Act No. 611 of Jan. 12, 2000; hereinafter the above Act referred to as the "Revised Bankruptcy Act" and Article 38 subparag. 10 of the former Bankruptcy Act (amended by Act No. 38 of Jan. 12, 200), the "wages, retirement allowances, and accident compensation for the bankrupt's employees" constitutes estate claims. The amended Bankruptcy Act enters into force on Apr. 13, 200 after the date of promulgation of Jan. 12, 200, and with respect to cases for which the bankruptcy is applied before the enforcement of the above Act, the former Bankruptcy Act shall apply.

In the case of a non-party 1 corporation, the plaintiffs cannot be deemed as having been declared bankrupt ex officio without filing a petition for bankruptcy, and it is reasonable to view that the revised Bankruptcy Act applies to the non-party 1 corporation as of April 11, 2001, which was declared bankrupt. Thus, the plaintiffs asserted that the plaintiffs' wage claims subrogated against the non-party 1 corporation constitute estate claims in full, and the defendant is claiming for the payment of 82,81,775 won for the above plaintiff 1 corporation and 778,114,362 won for the above plaintiff 1 corporation by multiplying the estimated payment rate of estate claims by the estimated payment rate of estate claims.

(2) The defendant's counterclaim

In regard to this, the defendant cannot be deemed as the estate claim recognized under the amended Bankruptcy Act unless the plaintiffs are not the wage creditors of non-party 1 corporation, and the latter part of Article 368(2) of the Civil Act is not applied by analogy, and thus, the plaintiffs cannot subrogate the wage creditors, and also the Bankruptcy Act before the amendment is applied to the bankruptcy procedure of non-party 1 corporation. Therefore, the plaintiffs' claims cannot be deemed as estate claims even in this respect. As a counterclaim claim, the plaintiffs sought payment of the repayment amount and the damages for delay received in the bankruptcy procedure of non-party 1 corporation as unjust enrichment return.

B. Determination

(1) Whether a wage obligee is subrogated

We first examine whether the amended Bankruptcy Act applies to the bankruptcy procedure of this case and whether the plaintiffs can subrogate the wage creditor in the bankruptcy procedure by applying mutatis mutandis the latter part of Article 368(2) of the Civil Act.

The lien on wage claims is the so-called statutory security right that can be paid preferentially to claims secured by mortgages, taxes, etc. on the whole property of the employer. In case where some of the real estate owned by the employer was sold first and the wage creditors have been preferentially paid out of the auction proceeds with the lien, and the mortgagee of the auction real estate was at a disadvantage than the simultaneous distribution of wage claims from several real estate pursuant to Article 368(1) of the Civil Act, the latter part of Article 368(2) of the Civil Act shall apply mutatis mutandis to the mortgagee who has received the disadvantage as above by analogy of the latter part of Article 368(2) of the Civil Act, if the wage creditors have received the dividends at the same time from several real estate at the same time, the wage creditors who have received the preferential payment from other real estate shall be entitled to receive the dividends in preference to the auction procedure of other real estate (Supreme Court Decision

In full view of the above legal principles, in order to recognize the subrogation right of junior mortgagee as stipulated in the latter part of Article 368(2) of the Civil Act, it constitutes a case where several real estate mortgages are created as security of the same claim under Article 368(1) of the Civil Act, and it is legally possible to exercise a mortgage according to the same real estate auction procedure and distribute the proceeds of auction at the same time (see Supreme Court Decisions 2002Da34901, Oct. 8, 2002; 2001Da53264, Jul. 12, 2002; 2001Da53264, supra, it is difficult to view that Article 368(1) of the Civil Act applies to the compulsory execution procedure of a ship and the procedure of compulsory auction as it constitutes a separate procedure under law and thus, it is difficult to view that the latter part of Article 368(2) of the Civil Act applies by analogy).

In this case, the auction procedure and bankruptcy procedure for exercising a security right are different procedures, and they cannot be deemed as falling under “where several real estate mortgages are created on the security of the same claim” under Article 368(1) of the Civil Act. Thus, there is no room to apply Article 368(1) of the Civil Act, and the latter part of Article 368(2) of the Civil Act cannot be deemed as being applied or applied by analogy.

Therefore, even if the wage creditors of the non-party 1 corporation received dividends in preference to the plaintiffs who are the mortgagee in the auction procedure to exercise the security right, the plaintiffs cannot subrogate the wage creditors in the bankruptcy procedure.

(2) Determination on the main claim

As seen above, in the bankruptcy proceedings of the non-party 1 corporation, the plaintiffs cannot subrogate the wage creditors. Thus, regardless of whether the wage claim constitutes estate claims under the amended Bankruptcy Act, the plaintiffs' claim on the principal lawsuit is without merit.

(3) Determination on the counterclaim claim

Under the premise that the plaintiffs' claims constitute estate claims, in the bankruptcy proceedings of the non-party 1 corporation, the plaintiff 1 corporation was paid KRW 56,118,676 on February 4, 2004, KRW 3,801,886 on April 8, 2004, KRW 31,93,587 on February 4, 2004, and the non-party 3 corporation was paid KRW 31,93,587 on April 31, 2004, and the non-party 2 corporation was merged with the plaintiff 1 corporation and the non-party 3 corporation on November 1, 206, respectively, with the non-party 2 corporation on November 1, 2001. Thus, in the bankruptcy proceedings of the non-party 1 corporation, each of the above plaintiffs' repayment amounts should be returned to the defendant as unjust enrichment.

Therefore, with respect to KRW 56,118,676 out of the above amounts of KRW 59,920,562 and the above amounts of KRW 56,118,67,00 from February 4, 2004; KRW 3,801,886 from April 8, 2004 to October 6, 2008, the amount of KRW 5% per annum as prescribed by the Civil Act; and KRW 20% per annum as prescribed by the Act on Special Cases concerning Expedition, etc. of Legal Proceedings from the next day to the day of full payment; KRW 31,93,587 from February 4, 2004; and KRW 5% per annum as prescribed by the Civil Act from the next day to October 6, 2008; and KRW 20% per annum as prescribed by the Act on Special Cases concerning Promotion, etc. of Legal Proceedings, each of the counterclaim is reasonable.

3. Conclusion

Therefore, the plaintiffs' claims are dismissed as it is without merit, and the defendant's counterclaim is justified. The judgment of the court of first instance is just in conclusion, and all appeals against the plaintiff's main claim and counterclaim are dismissed as it is without merit. It is so decided as per Disposition.

Judges Signature Number (Presiding Judge)