Republic of Korea (Attorney Lee Dong-ju, Counsel for defendant-appellant)

Defendant (Attorney Han Young-sik et al., Counsel for the defendant-appellant)

September 13, 2006

Daejeon District Court Decision 2004Gahap5802 Delivered on June 2, 2005

1. Revocation of a judgment of the first instance;

2. Based on the selective claim added at the trial, the defendant shall pay to the plaintiff 1,298,060,170 won with 5% interest per annum from the day following the day this judgment became final and conclusive to the day of full payment.

3. The costs of the lawsuit shall be borne by the Defendant in both the first and second instances.

4. Paragraph 2 can be provisionally executed.

1. Purport of claim

A. The first selective claim: The defendant and the non-party 1 and the non-party 2 entered into a promise to sell and purchase the real estate listed in the separate sheet (hereinafter “the instant real estate”) as of June 24, 2002 and the sales contract as of December 29, 2002, respectively, shall be revoked. The defendant will implement the procedure for the ownership transfer registration for the instant real estate to the non-party 2 on the ground of the restoration of real name or the revocation of fraudulent act.

B. Second selective claim: The defendant and the non-party 1 and the non-party 2 shall cancel the promise to sell and purchase the pertinent real estate as of June 24, 2002 and the sales contract as of December 29, 2002 within the limit of KRW 1,298,060,170. The defendant shall pay to the plaintiff the amount of KRW 1,298,060,170 and the amount of money calculated at the rate of KRW 20% per annum from the day following the day this decision became final to the day of full payment.

C. The third selective claim: the defendant will implement the registration procedure for transfer of ownership on the instant real estate to the non-party 2 or the non-party 1 due to the restoration of real name or the return of unjust enrichment.

(d) 4 selective claims: It is marked as described in paragraph (2) of this Article;

(The plaintiff claimed in the first instance court that the procedure for the registration of transfer of ownership based on the right of subrogation of the creditor was implemented, but the above claim was modified in the first instance trial.)

2. Purport of appeal

The judgment of the first instance is revoked, and the plaintiff's claim is dismissed.

1. Basic facts

A. From December 31, 1996 to December 31, 1999, Nonparty 1 is delinquent in totaling KRW 1,298,060,170, including the principal tax, additional dues, and increased additional dues for global income tax and value-added tax for which tax liability is established.

B. Nonparty 1, with the knowledge of the fact that the principal tax as above is in arrears, had to be awarded a bid for real estate under Nonparty 2 under the name of Nonparty 2, who is the land-related trees, with the possibility of being subject to compulsory execution due to tax delinquency. Nonparty 1 received the bid price of KRW 1,411,10,000 in the auction procedure for real estate rent under the name of Nonparty 2 in Daejeon District Court 9Hu518 and completed the registration of ownership transfer in the name of Nonparty 2 on February 19, 2001.

C. On February 19, 2001, Nonparty 1 set the right to collateral security, which was the debtor, Nonparty 2 and creditor ○○ Bank, and paid part of the successful bid price with the loan. On November 29, 2001, Nonparty 1 set up a maximum debt amount of KRW 65 million with respect to the instant real estate as the debtor, Nonparty 2, and the mortgagee ○ Bank, Inc., the right to collateral security. Each of the above right to collateral security was terminated on November 30, 2002, but the cancellation registration was completed on January 30, 2004.

D. However, Nonparty 2 filed an application for provisional attachment on August 13, 2002 with the estimated amount of capital gains tax on the instant real estate in the name of Nonparty 3, a fraud, as the claim claim, in order to secure the claim, because Nonparty 1 would have been likely to bear a high amount of capital gains tax in the event that Nonparty 2 subsequently disposed of the instant real estate in another person, and the provisional attachment registration was completed on August 13, 2002.

E. Around August 2002, Nonparty 1 agreed to register the transfer of the instant real estate under the name of the Defendant, which was delegated by Nonparty 2 with all authority to dispose of the instant real estate, and completed a trade reservation as of June 24, 2002, to the effect that Nonparty 2 promised to sell or purchase the instant real estate to the Defendant (hereinafter “instant purchase reservation”), thereby completing the registration of the right to claim the transfer registration under the name of the Defendant, Daejeon District Court No. 99907, Aug. 30, 202, which was received on August 30, 2002.

F. Next, the non-party 1 filed a lawsuit against the non-party 2 in the name of the defendant against Daejeon District Court 2003Gahap6853, which filed a claim for ownership transfer registration of the instant real estate in the name of the defendant, and on December 20, 2003, the above court rendered a judgment that "the non-party 2, based on the provisional registration completed on August 30, 2002 by the above court No. 9907 with respect to the instant real estate on the ground of the provisional registration completed on December 29, 2002, "the non-party 2, upon the provisional registration completed on August 30, 2002 by the above court, shall implement the principal registration procedure for ownership transfer on the ground of the completion of the reservation for sale," and the above judgment became final and conclusive at that time. Based on the above final judgment, the ownership transfer registration was completed on the ground of the pre-sale completion of sale as of December 29, 2002.

G. On January 19, 2004, the non-party 1 prepared a written statement that "the non-party 2 and the non-party 3 should pay the transfer income tax to be imposed on the real estate of this case by proxy until February 28, 2004, and pay the non-party 2 40 million won by March 31, 2004," and the non-party 2 voluntarily withdrawn the application for provisional attachment as stated in Paragraph c above with respect to the real estate of this case.

H. Nonparty 1 does not have any particular property under its current name, and the market price of the instant real estate is KRW 4,441,135,700.

[Ground of recognition] A. 1's evidence 1's evidence 1 to 8's evidence 2, A. 11's evidence 4, A. 23's evidence 10, A. 14's evidence 1, the result of the appraisal by Nonparty 4 of the party-trial appraiser non-party 4, the purport of the whole pleadings

2. The parties' assertion

A. The plaintiff asserts that the plaintiff's selective claims are as follows.

(1) Selective Claim 1: The instant sales promise was concluded between Nonparty 1 and Nonparty 2, which is detrimental to the Plaintiff, who is the creditor of Nonparty 1, and the Defendant is presumed to be maliciously and thus ought to be revoked. However, since the mortgagee of the right to collateral security, who appears in good faith to the instant real estate after the fraudulent act, is unable to cancel provisional registration and ownership transfer registration under the name of the Defendant, the Plaintiff sought that the Defendant implement the ownership transfer registration procedure based on the restoration of the real name or revocation of the fraudulent act.

(2) Although the instant promise should be revoked as a fraudulent act, it is identical to the statement in Paragraph (1), it is sought for compensation for value in the way of restitution. In other words, since the right to collateral created on the instant real estate prior to the instant fraudulent act was revoked thereafter, the instant promise to sell and purchase the instant real estate shall be revoked within the limit of KRW 1,298,060,170, which is the Plaintiff’s claim amount, out of approximately 3 billion won remaining after deducting the secured debt amount from the market price of the instant real estate. Moreover, the Defendant seeking payment of the said money by return of value.

(3) Since the instant promise entered into between Nonparty 1 and Nonparty 2 is null and void as a false declaration of conspiracy, provisional registration and registration of ownership transfer in the name of the Defendant is also null and void. However, since the mortgagee appears to be a bona fide third party who cannot oppose the registration of ownership transfer in the name of the Defendant, the registration of ownership transfer in the name of the Defendant was impossible. Accordingly, the Plaintiff seeks that the Defendant implement the procedure for registration of ownership transfer based on the restoration of the real name regarding the instant real estate by subrogation in sequence between Nonparty 1 and Nonparty 2.

(4) The non-party 1 and the defendant respectively held the title trust of this case. Each title trust agreement and provisional registration and ownership transfer registration under the defendant's name are null and void pursuant to Article 4 of the Act on the Registration of Real Estate under Actual Titleholder's Name. Accordingly, the plaintiff, the creditor of the non-party 1, in successive subrogation of the non-party 1 and the non-party 2, or in subrogation of only the non-party 1, the defendant shall execute the procedure for the registration of ownership transfer based on the restoration of the real name or return of unjust enrichment in the non-party 2 or the non-party 1. The defendant acquired the real estate of this case equivalent to KRW 4,41,135,70 in the market price due to the invalidation of the above title trust agreement without any legal ground. The non-party 1 suffered damages of KRW 1,411,100,000, which is the successful bid price, and the plaintiff shall seek the return of unjust enrichment in subrogation of the plaintiff's claim against the non-party 1.

B. The defendant asserts as follows.

(1) Nonparty 1 does not have any right to file a provisional registration under the name of the Defendant or a claim for the registration of ownership transfer with the Defendant, since Nonparty 1 is the successful bidder, the registrant of the instant real estate, the registrant of the instant registration, and the parties to the instant sales reservation. Therefore, Nonparty 1, the creditor of Nonparty 1, cannot seek this.

(2) At least before June 25, 2004, the Plaintiff or Nonparty 1 knew that the instant reservation to sell and purchase constituted a fraudulent act. Nevertheless, the Plaintiff’s modification to the lawsuit seeking revocation of the fraudulent act around June 28, 2006, which was the limitation period, was unlawful.

(3) Since the instant real estate was disposed of to the Defendant and the sales price received by Nonparty 1 was acquired in full, it cannot be deemed that the instant promise was a fraudulent act in relation to Nonparty 1, the claimant for return of unjust enrichment by Nonparty 2. Moreover, since Nonparty 1 did not acquire the ownership of the instant real estate and the instant real estate was not the responsible property of Nonparty 1, the instant promise cannot be deemed a fraudulent act against the Plaintiff, the creditor of Nonparty 1. Furthermore, the exercise of Nonparty 1’s right of revocation contradicts the abuse of rights or the principle of good faith.

(4) Since the registration of ownership transfer was completed through a judgment between the non-party 2 and the defendant, the plaintiff's assertion that the above registration of ownership transfer is invalid by subrogation of the non-party 1 and the non-party 2 in sequence cannot be allowed against the res judicata effect.

(5) The Defendant purchased the instant real estate from Nonparty 2 in gold 1.65 billion won, and thus, the instant promise to sell and purchase was not a conspiracy, but the Defendant did not receive title trust from Nonparty 1. Nonparty 1 and Nonparty 2 are not insolvent.

3. The judgment of this Court

A. In light of the following circumstances, the aforementioned facts and evidence Nos. 6, 30, and 49 comprehensively revealed the overall purport of pleadings, namely, the fact that the instant real estate was acquired between Nonparty 1 and the Defendant, the circumstance that the Defendant acquired the instant real estate in the course of investigation into the suspected violation of the Punishment of Tax Evaders Act, the relationship between the purchase price and the receipt thereof, and the source thereof, or the false statement or false loan certificate, and the Defendant seems not capable of purchasing the instant real estate, and the point that the purchase price alleged by the Defendant seems to be significantly different from the appraisal result and the appraisal result, and the time and circumstances where the instant pre-sale was concluded, Nonparty 1 appears to have trusted the instant real estate to the Defendant again after being awarded a pre-titled by the title trust with Nonparty 2.

B. However, since the above title trust agreement between Nonparty 1 and Nonparty 2 is null and void pursuant to Article 4(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name, Nonparty 2 fully acquired the ownership of the instant real estate within and outside the country. However, Nonparty 1 is only entitled to the claim against Nonparty 2 for return of unjust enrichment equivalent to the successful bid price he paid (see Supreme Court Decision 2004Da68335, Apr. 28, 2005, etc.).

C. In addition, the title trust agreement between Nonparty 1 and the Defendant is also null and void pursuant to Article 4(1) of the above Act, and furthermore, the registration of ownership transfer under the name of the Defendant is null and void pursuant to Article 4(2) of the above Act, and as res judicata as to the above judgment between Nonparty 2 and the Defendant, no claim for cancellation of ownership transfer registration under the name of the Defendant or for ownership transfer registration based on the restoration of authentic name is allowed (in this respect, the judgment of the first instance court is unreasonable). Accordingly, the Defendant will acquire ownership of the instant real estate.

D. However, inasmuch as the Defendant acquired the ownership of the instant real estate by the invalidation of the above title trust agreement with Nonparty 1, it would be deemed that Nonparty 1 obtained benefits equivalent to the instant real estate without any legal ground. In addition, Nonparty 1 appears to have waived the right to claim return of unjust enrichment equivalent to the price of the said successful bid held by Nonparty 2, instead of Nonparty 2 making the registration of ownership transfer of the instant real estate in the name of the Defendant, which he had against Nonparty 2, and thus, Nonparty 1 would have suffered losses equivalent to the successful bid price by the invalidation of the above title trust agreement with the Defendant. Accordingly, the Defendant is obligated to return unjust enrichment equivalent to the price of the said successful bid to Nonparty 1

E. Furthermore, as to the amount of unjust enrichment to be returned by the Defendant to Nonparty 1, Nonparty 1 at the time of receiving the successful bid, Nonparty 1 set up a collateral of KRW 1.3 billion with respect to the said successful bid price, and appropriated a loan under the name of Nonparty 2. However, since the instant real estate was transferred to the Defendant on November 30, 202 (the date of termination of the collateral security), and thereafter, the amount of unjust enrichment to be returned to the Defendant would be the total amount of KRW 1,411,10,000, which is the successful bid price.

F. In addition, since Nonparty 1 is currently insolvent, the Plaintiff may claim the return of unjust enrichment against the Defendant by subrogation within the scope of KRW 1,298,060,170, which is the Plaintiff’s taxation claim amount against Nonparty 1.

4. Conclusion

Therefore, the defendant is obligated to pay to the plaintiff the amount of 1,298,060,170 won and damages for delay calculated at the rate of 5% per annum as stipulated in the Civil Act from the day following the day when this judgment became final and conclusive to the day of full payment. Thus, the plaintiff's claim for return of unjust enrichment by subrogation of the non-party 1 is justified. Since the judgment of the court of first instance is unfair with different conclusions, it shall be revoked by receiving the defendant's appeal, and the plaintiff's claim shall be accepted upon the selective claim added in the

[Attachment List omitted]

Judges Park Jong-chul (Presiding Judge)