Bankrupt Bank of Busan Savings Bank (Law Firm Jeongjin, Attorneys Kim Tae-young et al., Counsel for the plaintiff-appellant)

Defendant 1 and one other (Attorney Choi Im-op, Counsel for the defendant-appellant)

January 28, 2015

Seoul Central District Court Decision 2013Gahap532406 Decided April 17, 2014

1.The judgment of the first instance, including any claims added in the trial, shall be modified as follows:

The plaintiff's claim is dismissed.

2. All costs of the lawsuit shall be borne by the Plaintiff.

The decision of the court of first instance shall be revoked. The plaintiff shall pay to the plaintiff 1 250,406,380 won, defendant 2 69,670,000 won, and each of the above amounts shall be 5% per annum from the day following the day of service of the copy of the complaint of this case until the day of the judgment of the court of first instance, and 20% per annum from the next day to the day of full payment (the plaintiff added the cause of claim to the court of first instance).

1. Basic facts

A. On August 16, 2012, Busan Savings Bank Co., Ltd. (hereinafter “ Busan Savings Bank”) was declared bankrupt as Busan District Court No. 2012Hahap4 on August 16, 2012, and the bankruptcy proceeding is in progress. The Plaintiff was appointed as a trustee in bankruptcy of Busan Savings Bank.

B. Nonparty 1, the president of the Busan Savings Bank, and Nonparty 2, the representative director, etc., established a special purpose corporation (SPC) by lending the name of an officer or employee’s family or branch, etc. in order to implement a business or to obtain a loan necessary therefor by avoiding the restrictions under the Mutual Savings Banks Act, and then registering it as a shareholder or an officer. A loan was made to a special purpose corporation and a development project of real estate or golf course, etc. was conducted through the special purpose corporation. A Mea golf&W consulting (hereinafter “Mea golf”) is one of the special purpose corporations established by this method

C. Defendant 1 was registered as an internal director of Meb golf from March 26, 2009 to May 16, 201, and Defendant 2 as an auditor of Meb golf from March 6, 2006 to July 20, 201, respectively, on the recommendation of Nonparty 3, a company in charge of accounting of the special purpose company of the Busan Savings Bank. Furthermore, the Defendants were registered as a shareholder of Meb golf from March 2006 to July 20, as the above Nonparty 3’s request.

D. The mechanical golf paid to Defendant 1 a sum of KRW 25,040,638 from April 2009 to June 201, 201, and KRW 69,670,000 in total from March 2006 to March 201, respectively, under the pretext of benefits, etc. (hereinafter collectively referred to as “each of the above amounts received by the Defendants”).

E. The main golf is loans of KRW 15,950,000,000 in total as principal from the Busan Savings Bank from December 20, 2004 to July 7, 2010 and bears a debt of KRW 20,88,525,544 as of April 19, 2013, and is currently insolvent.

[Ground of recognition] without any dispute, Gap evidence 1, Eul evidence 2-1, Gap evidence 3 (including paper numbers; hereinafter the same shall apply), Gap evidence 5, 6, 9, Eul evidence 1, 5, 6, and the purport of the whole pleadings

2. The parties' assertion

A. The plaintiff's assertion

The Plaintiff asserts that the Defendants are primarily liable for the return of unjust enrichment with respect to the mechanical golf as set forth below, and that there is a preliminary liability for damages with respect to the ancillary golf, and sought payment of each amount stated in the purport of the claim against the Defendants by subrogationing the above loans as the creditor of loans with respect to the mechanical golf as the preserved claim.

1) Claim for restitution of unjust enrichment

(1) The Defendants, as directors or auditors, have not performed their duties, shall return the money received from the main golf as wages, etc. in unjust enrichment.

② Since a machine golf’s articles of incorporation do not provide for the remuneration of executives, even though the remuneration for directors or auditors is determined by a resolution passed at a general meeting of shareholders pursuant to Articles 388 and 415 of the Commercial Act, the main golf paid remuneration to the Defendants without a resolution passed at a general meeting of shareholders. Thus, this is null and void against the compulsory provisions of the Commercial Act, and the Defendants shall return the remuneration

③ The Defendants agreed to name the Plaintiff for cooperation in the violation of the Mutual Savings Banks Act and the occupational breach of trust by Nonparty 1 and Nonparty 2, etc. of the Busan Savings Bank, and received compensation for such violation. Thus, the above agreement constitutes a juristic act with a content that violates good morals and other social order under Article 103 of the Civil Act, and thus, is null and void. The remuneration received by the Defendants is a profit received under the invalid agreement, and thus, it must be returned

2) Claim for damages arising from tort

① The Defendants are liable to compensate the Plaintiff for damages caused by the intentional act of the nominal lender as stipulated in Article 24 of the Commercial Act, pursuant to Article 756(1) of the Civil Act.

② Receiving money from the Defendants without performing their duties as a director or auditor of meral golf would cause damage to meral golf in violation of their duties as a director or auditor.

③ The fact that the operator of a machine golf pays money as salary to the Defendants in return for the nominal lending of name constitutes occupational embezzlement on a machine golf as the need or legitimacy is clearly lacking, and the said payment goes beyond a reasonable level. The Defendants engaged in joint tort by taking part in the act of occupational embezzlement of a golf operator.

B. The defendants' assertion

① Since Busan Savings Bank, which is a shareholder of the actual single-class golf, has decided to pay remuneration to the Defendants, it can be deemed that there was a resolution of a general meeting of shareholders.

② The Defendants did not agree with the actual decision-making and performance of duties as an executive officer of a mechanical golf, but did not receive any remuneration therefrom. The Defendants received an amount of KRW 1 million per month as an executive officer of a special purpose corporation, which is limited to the name name lending and the incidental business incidental thereto. Such agreement itself cannot be deemed to be contrary to good morals and other social order, and the receipt of each of the instant funds in accordance with such agreement does not constitute unjust enrichment or a tort against a mechanical golf.

③ Even if liability for tort damages is recognized against the Defendants, since the short-term extinctive prescription of three years under Article 766(1) of the Civil Act is applied, the portion of benefits paid three years prior to the filing date of the instant lawsuit was extinguished by extinctive prescription.

3. Determination

A. Determination on the claim for restitution of unjust enrichment

1) As to the assertion that unjust enrichment is established by failing to perform duties

Comprehensively taking account of the overall purport of the arguments in evidence Nos. 2 and 3, the defendants did not actually perform their duties during the period of receiving each of the instant money in the name of payment under the name of a director or auditor of a mera golf, and the defendants could recognize that they performed only the name lending and the incidental business incidental thereto as nominal officers.

In light of the above facts and the amount of each of the above amounts acquired by the Defendants, it is reasonable to view each of the above amounts received by the Defendants as compensation for the name lending, not for performing duties according to the director or auditor’s position. Thus, even if the Defendants did not perform their duties, it is difficult to view that the above consideration received pursuant to the name lending agreement is unjust because it does not have any legal ground, and there is no other evidence to acknowledge it (Article 382(2) and Article 415 of the Commercial Act). Under Articles 382(2) and 415 of the Commercial Act, the provisions on delegation of the Civil Act concerning the relationship between the company, director, and auditor apply mutatis mutandis. Article 686(2) of the Civil Act provides that “Where a mandatory receives remuneration, he shall not claim it unless he completes the delegated duties.” However, in this case, the “entrusted duties” against the Defendants does not actually perform duties according to the director or auditor’s position. Thus, the Defendants

Therefore, the plaintiff's above assertion is without merit without further review.

2) As to the assertion that unjust enrichment is established without a resolution of the general meeting of shareholders

The plaintiff must prove that there was no resolution of the general meeting of shareholders. Rather, there is room to view that the Busan Savings Bank decided to pay each of the money of this case as the actual shareholder of meral golf in full view of the facts acknowledged earlier and the purport of the entire argument in No. 8.

Therefore, the plaintiff's above assertion is without merit.

3) As to the assertion that it is a price based on an invalid name lending agreement

An act of anti-social order null and void pursuant to Article 103 of the Civil Act includes not only cases where the contents of rights and obligations, which are the object of a juristic act, violate good morals and other social order, but also cases where the content itself is legally forced, or where the contents of a juristic act are associated with social order conditions or monetary consideration, thereby constituting anti-social order, and where the motive of the juristic act indicated or known to the other party is anti-social order (see, e.g., Supreme Court Decision 2009Da12580, May 27, 2010).

However, even if there was an agreement that the executives of a corporation should rent their names only without making a substantial decision and performing their duties and pay compensation for them, the executives in their names need to prepare various documents, etc. as they are registered as executive officers under the Commercial Act, and the executive officers under the Commercial Act may be liable for damages to the company or third parties pursuant to Articles 399, 401, and 414 of the Commercial Act (see, e.g., Supreme Court Decision 2008Da94097, May 14, 2009). The capital adequacy of the company may be promoted by demanding a resolution of the general meeting of shareholders to pay remuneration decision of the executive officers; even in the real estate title trust, where the title trust agreement is imposed on the title truster, if it goes against good morals and other social order (see Supreme Court Decision 2003Da41722, Nov. 27, 2003).

In addition, it cannot be denied that there is an illegal element that the motive that the management of the Busan Savings Bank borrowed the Defendants’ name is to avoid the restrictions of the Mutual Savings Bank Act by operating a special purpose corporation under the name of the Defendants, and thereby to implement the business or to obtain a loan necessary therefor. However, there is no evidence suggesting that the Defendants, who are merely the directors or auditors, knew of the purpose of establishing the Busan Savings Bank’s special purpose corporation golf, the real estate development project through the purpose of establishing the Busan Savings Bank’s management, the process of implementing the real estate development project, the business situation, etc., and there is no other evidence suggesting that the Defendants indicated the above motive at the time of the agreement on the name lending between the Defendants and the Plaintiff, or there is no evidence suggesting that the Defendants knew of the motive.

Therefore, the plaintiff's above assertion is without merit.

B. Determination as to a claim for damages caused by a tort

1) As to the assertion of employer liability of the nominal lender

On the other hand, there is no evidence to acknowledge that the Defendants permitted the business using their names to the Busan Savings Bank Management, etc., so the Defendants cannot be deemed to be the nominal lender under Article 24 of the Commercial Act. Therefore, on a different premise, the Defendant’s above assertion on the other premise is without merit.

2) As to the assertion that the director or auditor violates his duties

According to the overall purport of the statements and arguments by Gap evidence Nos. 2 and 3, and Eul evidence Nos. 8, the defendants agreed not to exercise or perform their duties as a director or auditor with meral golf, and Meal golf also did not demand or expect the defendants to act as a director or auditor, and it can be acknowledged that Meal golf did not provide such opportunity. Thus, the defendants cannot be held liable for damages on the ground that Meal golf violated the duties as a director or auditor. Furthermore, there is no causation between the violation of duties as a director or auditor and the occurrence of damage equivalent to each of the money of this case. Therefore, the plaintiff's above assertion is without merit without any further need.

3) As to the assertion of embezzlement equivalent to benefits

The Defendants did not actually perform their duties while receiving each of the instant money under the name of the Plaintiff’s name as a director or auditor of the main golf, and the Defendants did not perform only the name lending and the incidental business incidental thereto as their nominal officers. This is as seen earlier.

However, the above facts, Gap evidence Nos. 6, Eul evidence No. 8, and the following circumstances can be acknowledged by comprehensively considering the purport of the entire pleadings. In other words, directors and auditors must be appointed as a permanent golf as a main institution. Since the Busan Savings Bank, which is the actual operator of the main golf, could not engage in real estate development business in its name under the Mutual Savings Banks Act, it is allowed to operate a special purpose corporation only if the nominal holder is the nominal holder, and the payment was made to the defendants according to these needs, and the payment was made to the defendants for the use of the nominal name. The payment made to the defendants for the use of the nominal name can be deemed as an act necessary for the operation of the main golf. In light of the above facts, the amount paid to the defendants in return for the use of the nominal name can not be concluded to have remarkably exceeded a reasonable level as KRW 1 million per month, and there is no evidence to acknowledge that the payment made to the defendants by the operator of the main golf in this case constitutes an occupational embezzlement.

Therefore, the plaintiff's above assertion is without merit.

4. Conclusion

Therefore, the plaintiff's claim is dismissed due to the lack of reason, and the judgment of the court of first instance, including the claim added in the trial, shall be modified as above, and it is so decided as per Disposition.

Judges Kim Jin-jin (Presiding Judge)

1) However, Article 409(4) of the Commercial Act was newly established to ensure that the auditor may not be appointed in the case of a company whose total amount of capital is less than one billion won after Defendant 2 was appointed as auditor.