[1] In a case where a joint collateral security is established after a joint collateral security is established on a real estate owned by an obligor and a real estate owned by a surety is sold to a third party and a part of the secured debt is repaid in return, whether a joint collateral security holder may exercise the preferential right to payment in the realization procedure of an auction, etc. on the real estate owned by a surety (negative)

[2] In a case where the property owned by the property owned by the property owned by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the property secured by the

[3] In a case where a creditor who has a joint collateral security on a real estate owned by a debtor and a real estate owned by a person who has a joint collateral security has renounced or reduced a part of the security on a real estate owned by a debtor among the joint collateral by disadvantageous means, whether a person who has a joint collateral security is exempted from liability to the extent that he/she cannot be reimbursed due to such act (affirmative)

[4] In a case where a joint mortgagee claims the full amount of his/her claim as a priority mortgagee in an auction procedure for part of the real estate which is the object of joint collateral security, whether the priority mortgagee is paid out of the auction price and the subordinate mortgagee is paid out of the balance (affirmative), and whether the same applies to the same person with the priority mortgagee and the subordinate mortgagee (affirmative)

[1] In case where a joint mortgagee receives part of the secured debt from the proceeds from the sale of part of the immovable property subject to joint security through the procedure of realization of auction, etc. conducted by another person, the joint mortgagee may not exercise the right to preferential reimbursement as a joint mortgagee again in the procedure of realization of the remaining immovable property subject to joint security, with regard to the preferential repayment amount.

This legal doctrine applies to the case where a real estate owned by a debtor and a real estate owned by a person who has pledged the property owned by a person who has pledged the property is liquidated at will after the joint collateral is established and the real estate owned by a debtor among the real estate owned by a person who has pledged the property is liquidated at will. In other words, the joint mortgagee cannot exercise the right to preferential reimbursement in the realization procedure for the real estate owned by a person who has pledged the property to secure another's property

In contrast to the above, if the joint collateral mortgagee has received a part of the secured debt from the price of the immovable property owned by the debtor through the method of voluntary repayment, but it is deemed that he can exercise preferential payment right in the realization procedure, such as auction on the real property owned by the property owned by the property owned by the property owned by the property owned by the debtor, the secured interest of the property owned by the debtor is deprived of the expectation interest of the property provided by the property as security, as well as the scope of the liability of the property pledged by the joint collateral mortgagee merely because the joint collateral mortgagee selected the method of voluntary repayment from the property secured by the property

[2] When the property owned by a person who has pledged another's property and the property owned by a person who has pledged another's property, among those owned by a person who has pledged another's property, is sold at auction, and the person who has pledged another's property, the person who has pledged another's property shall acquire the right to indemnity against the debtor, and at the same time acquire the preferential mortgage on the property owned by the person who has pledged another's property by subrogation, the person who has pledged another's property may subrogate the preferential mortgage on the property owned by the person who has pledged another

[3] If a person who has pledged his/her property to secure another's obligation has been protected by Article 485 of the Civil Code, and the creditor has forfeited or decreased the security intentionally or by negligence, the person who has pledged his/her property to secure another's obligation may, unless there are special circumstances, claim the discharge to the extent that the person who has pledged his/her property to secure another's obligation cannot be reimbursed due to the loss or decrease thereof. The creditor's waiver of the real right to secure another'

Therefore, in the event that a creditor who has created a joint collateral on a real estate owned by a debtor and a real estate owned by a person who has pledged a part of the collateral on a real estate owned by a debtor or caused a loss or reduction of the collateral by unfavorably changing the order of priority, a person who has pledged a property owned by a person who has pledged a property owned by a person who has pledged a property shall be exempted from liability to the extent that the person who has pledged a property owned by a person who has pledged a property owned by a person who has pledged a property owned by a person who has pledged a property to secure a property may not be apportioned

[4] In the auction procedure for part of the real estate which is the object of the joint collateral security, if the joint collateral mortgagee claimed the full amount of his/her claim as the priority mortgagee, the priority mortgagee shall be paid out of the proceeds of the auction pursuant to the provisions of Articles 370, 333, and 368(1) of the Civil Code, and the subordinate mortgagee shall be paid out of the balance, and this does not change from which the priority mortgagee and the subordinate mortgagee are the same person.

[1] Articles 357 and 368 of the Civil Act / [2] Articles 341, 357, 368(2), 370, 481, and 482 of the Civil Act / [3] Articles 357, 368, and 485 of the Civil Act / [4] Articles 333, 357, 368(1), and 370 of the Civil Act

[1] Supreme Court en banc Decision 2013Da1692 Decided December 21, 2017 (Gong2018Sang, 171) / [2] Supreme Court Decision 2014Da22177, 221784 decided April 26, 2017 (Gong2017Sang, 1084) / [3] Supreme Court Decision 99Da13669 decided December 12, 200 (Gong2001Sang, 274), Supreme Court Decision 2015Da65042 decided October 31, 2017 (Gong2017Ha, 2184) / [4] Supreme Court Decision 2003Da17484 decided August 20, 204

[Judgment of the court below]

Seoul High Court Decision 200Na1488 delivered on August 1, 200

Seoul High Court Decision 2017Na2022702 decided December 1, 2017

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

The grounds of appeal are examined.

1. As to the assertion regarding preferential repayment right and satisfaction right of joint collateral security

A. 1) Where a joint mortgagee receives part of the secured debt from the proceeds of realizing part of the immovable property provided as joint collateral through the realization procedure of an auction, etc. conducted by a third party, the joint mortgagee may not exercise the right to preferential reimbursement as a joint mortgagee again in the realization procedure of the remaining immovable property provided as joint collateral (see Supreme Court en banc Decision 2013Da16992, Dec. 21, 2017).

This legal doctrine applies to cases where real estate owned by a debtor among real estate owned by a debtor and real estate owned by a person who has pledged a property owned by a person who has pledged a property owned by a person who has pledged a property is liquidated at will after the joint collateral is established and the real estate owned by a person who has pledged a property owned by a person who has pledged a property is sold to a third person and the price is fully repaid, and the joint mortgagee cannot exercise the right to preferential reimbursement in the realization procedure, such as the

In contrast to the above, if the joint collateral mortgagee has received a part of the secured debt from the price of the immovable property owned by the debtor through the method of voluntary repayment, but it is deemed that he can exercise preferential payment right in the realization procedure, such as auction on the real property owned by the property owned by the property owned by the property owned by the property owned by the debtor, the secured interest of the property owned by the debtor is deprived of the expectation interest of the property provided by the property as security, as well as the scope of the liability of the property pledged by the joint collateral mortgagee merely because the joint collateral mortgagee selected the method of voluntary repayment from the property secured by the property

2) Of the real estate owned by the debtor and the real estate owned by the person who has pledged another's property owned by the person who has pledged another's property, if the person who has pledged another's property held by the person who has pledged another's property held by the person who has pledged another's property by auction is paid out from the proceeds of the sale, the person who has pledged another's property acquired the right to indemnity against the debtor and acquired the preferential mortgage on the real estate owned by the person who has pledged another's property by subrogation. In addition, the subordinate mortgagee on the real estate owned by the person who has pledged another's property can substitute the preferential mortgage on the real estate owned by the debtor (see Supreme Court Decision 2014Da22177, 221784, April

In addition, the right to expect subrogation of a person who has pledged his/her property to secure another's obligation is protected by Article 485 of the Civil Act, and when a creditor has lost or decreased the security intentionally or by negligence, the person who has pledged his/her property to secure another's obligation may claim the discharge to the extent that it is not possible to receive reimbursement due to the loss or decrease (see, e.g., Supreme Court Decision 2015Da65042, Oct. 31, 2017). It constitutes the act of waiver or reduction of security to the extent that a creditor renounces his/her real right to secure another's property as security or changes his/her order unfavorably (see, e.g., Supreme Court Decision 9Da13669, Dec. 1

Therefore, in the event that a creditor who has created a joint collateral on a real estate owned by a debtor and a real estate owned by a person who has pledged a part of the collateral on a real estate owned by a person who has pledged a real estate owned by a person who has pledged a real estate or has caused the person to lose or decrease the collateral, the person who has pledged a real estate owned by a person who has pledged a real estate shall be exempted from liability to the extent that the person who has pledged a real estate owned by a person who has pledged a real estate who has lost or decreased the collateral. In this case, the person who has pledged a property owned by

3) In the auction procedure on part of the real estate which is the object of the joint collateral security, if the joint collateral mortgagee claimed the full amount of his/her claim as a senior mortgagee, the senior mortgagee shall be paid out of the proceeds of the auction in accordance with Articles 370, 333, and 368(1) of the Civil Act, and the junior mortgagee shall be paid out of the balance, and this does not change by the same person as the senior mortgagee and the junior mortgagee (see Supreme Court Decision 2003Da1748, Aug. 20, 2004).

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) On March 9, 2009, the Defendant Busan Savings Bank (hereinafter “Defendant Busan Savings Bank”) loaned KRW 3 billion to the Yangyang Housing Co., Ltd. (hereinafter “Mayang Housing”) as collateral. On February 26, 2009, on the security deposit, it was created a joint collateral security of KRW 6.5 billion with respect to the real estate owned by the debtor Yangyang Housing and the real estate owned by the Nonparty, and thereafter, the amount of the maximum debt amount was modified to KRW 3.9 billion (hereinafter “the above loan and joint collateral security”), and thereafter, the amount of the maximum debt amount was modified to KRW 3.9 billion.

2) On May 19, 2010, Defendant Blim loaned KRW 500 million to a well-known house. Before that, on May 18, 2010, Defendant Blim created a joint collateral of KRW 650 million with the maximum debt amount on the real estate owned by the said well-known house (hereinafter the above loan and collateral security (hereinafter “mortgage 2”) and “mortgage 2”).

3) On December 23, 2010, Defendant Blim loaned KRW 400 million to a well-known house. Before that, on December 22, 2010, Defendant Blim created a joint collateral security of KRW 520,000,000 with respect to the real estate owned by the said well-known house (hereinafter the above loan and collateral security (hereinafter referred to as “third claim”) and the said collateral security (hereinafter referred to as “mortgage 3”).

4) The Defendant vice versa filed an application for the commencement of auction on the real estate owned by the said well-owned house (hereinafter referred to as “pre-auction”) with the Suwon District Court rendered an application for the commencement of auction on the real estate owned by the said well-owned house (hereinafter referred to as “pre-auction”).

A) In the prior auction procedure, part of the real estate owned by the friendly housing was sold, and the Defendant vice versa claimed the entire claim once, and distributed dividends of KRW 2,349,438,592 on November 17, 2014 and appropriated the claim once.

B) The Defendant Dayang withdrawn the application for auction of the remaining real estate among the real estate owned by the Mayang Housing. The Mayang Housing sold the said real estate and repaid KRW 2.1 billion to Defendant Dayang Housing on April 21, 2015. At the time, the Mayang Housing and the Defendant Dayang were appropriated for the repayment of KRW 817,570,996, which is the entire principal and interest of the loan No. 2 and KRW 2.17,570,876,677, which is part of the principal and interest of the loan No. 2 and KRW 2.17,570,96, which is the entire principal and interest of the loan No. 2 and KRW 2.1,282,429,04, which is the interest of the loan No. 1. The Defendant Mayang Housing received repayment as above, and renounced the said real estate and cancelled the registration thereof.

5) The Plaintiff was a subordinate mortgagee of the Nonparty’s real estate owned by the Nonparty, which was a joint collateral security of the first collateral security, and applied for the commencement of voluntary auction to the Suwon District Court (Seoul District Court Decision 2013Ma3898) with respect to the Nonparty’s real estate, and Defendant vice versa also filed an application for the commencement of voluntary auction to the said real estate with the same court on the basis of the first collateral security (hereinafter “instant auction”).

6) On October 26, 2016, at the instant auction procedure, the entire auction price of Non-Party-owned real estate is KRW 348,379,309 was distributed to the remainder of the Defendants, who were the successors of the Defendant vice-forest and the Defendant vice-forest, and the distribution schedule was formulated that the Plaintiff was not distributed to the Plaintiff, the Plaintiff raised an objection to the distribution and filed the instant lawsuit.

C.1) Examining the aforementioned factual basis in light of the legal principles as seen earlier, Defendant Down established a joint collateral of KRW 3.9 billion with respect to the real estate owned by the obligor and the real estate owned by the surety, but received dividends of KRW 2,349,438,592 with respect to the part of the immovable property owned by the obligor among the joint collateral property, and received reimbursement of KRW 817,570,996 out of the remainder of the claim through voluntary refund of the real property owned by the obligor. The dividends in the prior auction procedure were received as senior mortgagee, and thus, should be fully appropriated for the claim of KRW 1,349,438,592, and KRW 817,570,996 from the disposal price of the immovable property owned by the obligor among the joint collateral of the joint collateral property owned by the obligor, the remainder of the secured claim of KRW 1,390,000,000,000 from the initial maximum debt amount of KRW 1,392.

2) In addition, Defendant Down-mortgage’s repayment of some of the real estate owned by friendly housing at a voluntary refund price, where it did not exercise the right to preferential reimbursement of KRW 732,90,412 of the remaining maximum debt amount, by appropriating KRW 1,282,429,04 to the repayment of the claim No. 2 and 3 with the agreement or with the designation appropriation of the claim No. 1,282,429,004 to the payment of the claim No. 1, and then giving up the right to preferential reimbursement of KRW 732,90,412 of the remaining maximum debt amount, even if the appropriation due to the agreement or designation is valid due to appropriation of performance by agreement or designation, in relation to the relationship between Nonparty of the property secured by the right to expectation to subrogate the priority priority mortgage and the Plaintiff, which is the subordinate mortgagee of the said property, the prior collateral security is waived and thus, the act of losing

Therefore, the defendant vice versa has intentionally lost or decreased the collateral equivalent to KRW 732,990,412, which is the remaining maximum debt amount, and in the absence of such loss or decrease, the non-party who has pledged his property to secure another's property could have acquired and repaid the collateral up to KRW 348,379,309, which is up to the limit of the auction cost of the real property owned by the non-party, but could not be repaid due to the loss or reduction of the collateral by the defendant vice versa. Therefore, the above auction proceeds can be claimed as a discharge of liability

Therefore, in the auction procedure of this case where the property owned by the Nonparty is held by the Nonparty, the said auction proceeds, which is the limit for the Nonparty to claim immunity, cannot be preferentially distributed to the Plaintiff, who is the subordinate mortgagee of the property owned by the Nonparty.

D. Therefore, while the reasoning of the judgment below is somewhat inappropriate, the court below erred by misapprehending the distribution schedule as stated in its holding on the ground that the auction price of the non-party-owned real estate should be distributed to the plaintiff in the auction procedure of this case. Contrary to the Defendants’ grounds of appeal, the court below did not err by misapprehending the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal principles as to the waiver of joint collateral security, preferential repayment right, and satisfaction of payment, or by misapprehending the legal principles as to the waiver of joint collateral security, preferential repayment right, and satisfaction

Although the remaining defendants except the defendant vice versa have argued that the appropriation of the repayment of the defendant vice versa was erroneous, such as that the dividend should first be appropriated for the overdue interest of the claim No. 1 in the prior auction procedure, the appropriation of the repayment would not affect the conclusion of the court below, so there is no reason to determine the legitimacy of the appropriation.

2. As to the assertion regarding the scope of subrogation by junior mortgagee

The Defendants asserted as the grounds of appeal that the scope of subrogation by the Plaintiff, which is a subordinate mortgagee, is limited to the scope of subrogation by the subordinate mortgagee under Article 368(2) of the Civil Act. However, the Plaintiff does not subrogate the senior mortgagee pursuant to Article 368(2) of the Civil Act, but by subrogation for the senior mortgagee who is a subordinate mortgagee of the real estate owned by the property pledged to secure another’s property, as seen earlier. Thus, the above ground of appeal cannot be accepted.

3. Therefore, all appeals are 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 Park Jung-hwa (Presiding Justice)