[1] Whether the violation of the principle of good faith or abuse of rights constitutes an ex officio investigation

[2] The scope of and limitation on the guarantor's liability for a continuous guarantee agreement

[1] Since a violation of the principle of trust and good faith or an abuse of rights violates a mandatory provision, the court may determine ex officio the abuse of rights.

[2] In principle, the guarantor is liable for the entire principal obligation at the time of payment. However, in cases where the guarantor has anticipated or could have anticipated the amount of the principal obligation at the time of guarantee, the liability for the guarantee can be limited to the expected extent. However, in cases where there are circumstances contrary to the good faith principle, such as where the obligee knows that the status of the principal obligor’s assets has substantially deteriorated (in cases where the obligee was unaware of gross negligence), and where the obligee was aware of the fact that the status of the principal obligor’s assets has substantially deteriorated, the guarantor’s liability may be limited to the reasonable scope, unless there are circumstances, such as intentionally expanding the transaction size without any notification or intention.

[1] Article 124 of the Civil Procedure Act, Article 2 of the Civil Act / [2] Articles 2 and 428 of the Civil Act

[1] Supreme Court Decision 88Meu17181 decided Sep. 29, 1989 (Gong1989, 1576) / [2] Supreme Court Decision 87Meu2143 decided Apr. 27, 198 (Gong1988, 906) decided Oct. 8, 1991 (Gong1991, 2683), Supreme Court Decision 91Da26348 decided Apr. 28, 1992 (Gong192, 1692)

Seoul Gyeonggi Savings Association (Attorney Im Chang-soo, Counsel for the plaintiff-appellant)

Freeboard (Attorney Kim-sik, Counsel for the plaintiff-appellant)

Seoul High Court Decision 92Na71729 delivered on July 19, 1994

The part of the lower judgment against the Plaintiff regarding gold 50,000,000 won and damages for delay thereof is reversed, and that part of the case is remanded to the Seoul High Court. The remainder of the Plaintiff’s appeal and the Defendant’s appeal are dismissed. The costs of appeal to the Supreme Court are assessed against each appellant.

We examine the grounds of appeal.

1. As to the Defendant’s first ground of appeal

In light of the records, the decision of the court below that recognized the fact that the defendant guaranteed the solidarity between the plaintiff and the non-party company in relation to the transaction of this case and rejected the defendant's defense of evidence that the part of the defendant's guarantee was altered among the contract for the supply of the money of this case (Evidence A No. 3) is just and it is not erroneous in the misapprehension of facts against the rules of evidence

2. The plaintiff's ground of appeal No. 1

Since an abuse of rights against the principle of good faith or an abuse of rights violates a compulsory provision, a court may make an ex officio determination, even without a party’s assertion (see, e.g., Supreme Court Decision 88Meu17181, Sept. 29, 1989). Therefore, there is no ground to hold that the judgment below erred in violation of the principle of pleading

3. As to the Defendant’s ground of appeal No. 2 and Plaintiff’s ground of appeal No. 2

In principle, the guarantor shall be held liable for the entire amount of the principal obligation at the time of performance of the guarantee. However, in cases where the guarantor has anticipated or could have anticipated the amount of the principal obligation at the time of the guarantee, the liability for the guarantee may be limited to the expected extent. However, in cases where there are circumstances contrary to the good faith principle, such as where the creditor knew (or was unaware of gross negligence; hereinafter the same shall apply) that the debtor's asset status substantially deteriorated, and thus, he/she intentionally expands the transaction size without any notice or intention, the guarantor's liability may be limited to the reasonable extent (see, e.g., Supreme Court Decisions 91Da26348, Apr. 28, 1992; 91Da14147, Oct. 8, 191; 87Meu2143, Apr. 27, 198).

According to the reasoning of the judgment below, on October 13, 1990 between the plaintiff and the non-party company jointly and severally guaranteed by the defendant, on the premise that the amount of goods supplied under the contract for the supply of the goods of this case was set at KRW 100,00,000, and the plaintiff agreed to deliver the goods after receiving cash payment on the day when the above contract was concluded. However, during the period from November 8, 1990 to November 28 of the same year, the plaintiff was liable for payment of 220,247,636 won to the non-party company's credit payment from the non-party company to the non-party company on November 13 of the same year without receiving cash payment, and the non-party 1 and the non-party 2, an employee of the non-party company, who was in charge of goods transaction with the non-party company, were in violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (the non-party 1 and the non-party 1 were found to be subject to the above judgment below's error.

However, according to the reasoning of the judgment below, the supply rate of the goods in this case was set at KRW 100,00,000, which was set at KRW 100,000 for the defendant's joint and several liability and exceeded a limit for about one week after the defendant's joint and several liability. According to the records, although the non-party 1 and the non-party 2, who was an employee of the plaintiff, was convicted of violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust) around December 20, 191, there is no evidence suggesting that the non-party 1, etc. was punished in relation to the transaction in this case, but there is no other evidence suggesting that the above non-party 1, etc. was punished in relation to the transaction in this case, and there is no reason supporting that the plaintiff's assets status of the non-party company was significantly aggravated, and there is no evidence suggesting that the plaintiff would be a relation with the non-party 1 to the guarantor without any notification or opinion (the defendant does not prove this reason).

Nevertheless, recognizing the facts of the judgment of the court below and recognizing the liability for guarantee only with respect to the amount equivalent to 50 percent within the above limit of guarantee amount without any evidence, and further, misunderstanding the legal principles as to the continuous transaction liability, thereby affecting the conclusion of the judgment. Therefore, the plaintiff's appeal pointing this out is justified and the defendant's appeal is without merit.

3. Therefore, the part of the judgment of the court below against the plaintiff regarding gold 50,000,000 won and damages for delay thereof shall be reversed, and this part of the case shall be remanded to the court below for further proceedings consistent with this Opinion. The remaining appeal by the plaintiff and the defendant shall be dismissed. The costs of appeal to the Supreme Court are assessed against each appellant. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Sung-sung (Presiding Justice)