Yellow School Housing Redevelopment Association (Attorney Go Young-gu, Counsel for the plaintiff-appellant)

Industrial Bank of Korea (Law Firm Spah, Attorneys Kim Jae-hwan, Counsel for plaintiff-appellant)

April 3, 2009

Seoul Central District Court Decision 2006Gahap40886 Decided April 11, 2007

Seoul High Court Decision 2007Na42268 Decided April 24, 2008

Supreme Court Decision 2008Da34668 Decided September 25, 2008

1. Of the judgment of the court of first instance, the part of the judgment against the defendant ordering the defendant to pay to the plaintiff 459,615,519 won and the amount of 5% per annum from May 24, 2006 to September 25, 2008, and 20% per annum from the next day to the day of full payment, in excess of the amount of 459,615,519 won, shall be revoked, and the plaintiff's claim corresponding to

2. The defendant's remaining appeal is dismissed.

3. Of the total litigation costs, 20% is borne by the Plaintiff, and 80% is borne by the Defendant, respectively.

1. Purport of claim

The defendant shall pay to the plaintiff 459,615,519 won and 400,000,000 won from June 20, 2003; 59,615,519 won from May 20, 2004 to the service date of a copy of the complaint of this case; 5% per annum from the next day to the day of full payment; and 20% per annum from the next day to the day of full payment.

2. Purport of appeal

The part against the defendant in the judgment of the first instance shall be revoked, and the plaintiff's claim corresponding to the revoked part shall be dismissed.

1. Quotation of judgment of the first instance;

The reasoning for this Court’s explanation concerning this case is as follows: (a) the part below the “2. Judgment” No. 5 of the judgment of the court of first instance is not more than 19,000,000,000,000,000,000,000,000,000,000 won

2. Determination:

A. Determination on the cause of the claim

According to the above facts, the plaintiff deposited land expropriation compensation in accordance with the first adjudication by the Land Tribunal of Seoul Special Metropolitan City, and the previous owner's co-defendant 1 (Defendant 2 of the judgment of the court of first instance), who was not co-defendant 2 (Defendant 1 of the judgment of the court of first instance) in the first instance (Defendant 2 of the judgment of the court of first instance), was mistakenly designated as a person subject to deposit. On the other hand, the defendant bank, a mortgagee of the first half of each real estate listed in the attached list, was entitled to exercise subrogation rights and was ordered to seize the above right to claim payment of deposit money and pay the deposit amount of KRW 459,615,519 on the ground that the above decision of first expropriation became null and void on the ground that the above deposit was erroneous.

Therefore, the defendant bank is obligated to return the deposit money to the plaintiff as unjust enrichment because it received the full order of the right to claim the return of the deposit which does not exist due to the extinction of the cause of deposit or deposit without any legal cause.

B. Determination on the assertion by the Defendant Bank

(1) Summary of the set-off defense of Defendant Bank

① Although the Plaintiff knew or could have known that the instant real estate was owned by Codefendant 2 of the first instance trial, the Defendant bank deposited the expropriation compensation with Codefendant 1 of the first instance trial co-defendant 2, the former owner. Accordingly, the Defendant bank believed that the instant first deposit was effective and used the instant real estate as a mortgagee of the instant real estate, thereby paying 400 million won out of the instant first deposit, by exercising the subrogation right. Thereafter, the Plaintiff, on the ground that the first deposit was erroneously designated and invalid, should be notified to the Defendant bank, so that the Defendant bank may exercise the subrogation right, thereby making it possible for the Defendant bank to exercise the subrogation right. However, the Plaintiff incurred loss of the opportunity for the Defendant bank to exercise the subrogation right against the instant second deposit.

② Even if the Defendant Bank was served with the second written adjudication on expropriation, the said second written adjudication on expropriation was included in only the content that the second written adjudication on expropriation was made with respect to the instant real estate, and that the compensation for losses was made for the joint Defendant 2 at the first instance court. As such, it cannot be said that the service of the said written adjudication on expropriation was not enough to have the opportunity for the Defendant Bank to exercise its right by re-consigning the second deposit, etc.

③ Therefore, the Plaintiff asserts that the Defendant bank has a duty to compensate for 400 million won, which was entitled to preferential reimbursement by exercising the subrogation right, and that the said damage claim offsets the Plaintiff’s unjust enrichment return claim within the equivalent amount.

D. Judgment on the offset against the Defendant Bank

① First of all, as to the assertion that the defendant bank did not have received the second written adjudication on the second expropriation, the local Land Tribunal of Seoul Special Metropolitan City set forth on May 21, 2005 the land compensation amounting to KRW 632,454,00, building compensation amounting to KRW 133,696,80, totaling KRW 766,150,80 on July 9, 2005, and the second written adjudication on the second expropriation was delivered to the defendant bank, who is the right to collateral security of the real estate of this case, on June 1, 2005, and there is insufficient evidence to acknowledge that the above second written adjudication on the second expropriation was delivered to the defendant bank, which is the right to collateral security of this case, and that Eul was not served solely on the statement of subparagraphs 1 through 4 of the evidence No. 6.

② Next, the defendant bank is not given an opportunity for the defendant bank to exercise its right to seize the secondary deposit by serving the above second written ruling of expropriation.

If public project operators did not consult or notify to the mortgagee of the land to be expropriated pursuant to the Land Expropriation Act, this would be illegal. However, in a case where the land is expropriated due to the failure of consultation between project operators and the landowner, and the compensation for expropriation is deposited, the mortgagee of the land may obtain preferential payment by exercising the subrogation right under Article 69 of the former Land Expropriation Act until the deposit is paid out and the land is mixed with the general property of the landowner. Thus, in a case where the mortgagee of the land to be expropriated is unable to obtain preferential payment due to failure to attach the landowner’s right to claim the payment of the compensation for expropriation under the Land Expropriation Act by exercising the subrogation right under Article 69 of the former Land Expropriation Act (see Supreme Court Decision 2005Da75385, Apr. 25, 2003), even though the mortgagee of the land was aware of the fact that the compensation for expropriation was paid by the landowner and at a sufficient time to exercise the subrogation right before the land is mixed with the general property, it cannot be deemed that the mortgagee’s failure to obtain preferential payment from the land expropriation compensation has caused consultation or notification under the Land Expropriation Act (see Supreme Court Decision 205Da.

According to the above facts, the second written ruling of expropriation on the real estate of this case is written by the owner of the real estate of this case as co-defendant 2 of the first instance court, not co-defendant 1 of the first instance court at the time of the first ruling of expropriation, and the date of commencement of expropriation is written on July 9, 2005, and the plaintiff as co-defendant 2 of the first instance court on July 8, 2005, upon the above ruling of expropriation, made the second deposit of this case by designating the deposited person as co-defendant 2 of the first instance court. According to the evidence No. 11-1 to No. 28 of the evidence No. 11, the deposited public official reported the reason on April 19, 206, when the seizure and provisional seizure were concurrent for the right to claim the second deposit payment, and on the other hand, the defendant bank made the right to claim the seizure of the second deposit after the dividend date of the second deposit of this case.

Upon examining the above facts in light of the legal principles as seen earlier, the Plaintiff’s failure to notify the Defendant bank, the mortgagee, of the second expropriation ruling, is illegal. However, the Defendant bank, upon receiving the second expropriation ruling on June 1, 2005, became aware of the progress of the new expropriation procedure on the instant real estate by being served with the second expropriation ruling on June 1, 2005, and thereafter, the Defendant bank cannot accept the Plaintiff’s assertion that the Defendant bank did not exercise its liability for subrogation on the premise that the Plaintiff did not exercise its right of subrogation on the instant real estate due to any cause attributable to the Plaintiff, since the Defendant bank did not take any measure on the ground that it did not exercise its right of subrogation until April 19, 206, the date of the report on the cause of the second disbursement order under Articles 247(1)1 and 248(4) of the Civil Execution Act.

C. Sub-committee

Therefore, the defendant bank is obligated to pay to the plaintiff 459,615,519 won and 20% interest per annum from May 24, 2006, which is the date of delivery of a copy of complaint of this case which the above defendant deemed as beneficiary of bad faith, until September 25, 2008, which is the date of delivery of a copy of complaint of this case by the above defendant, until September 25, 2008 (see Supreme Court Decision 2004Da50341, Feb. 17, 2005). The above defendant bank is obligated to pay to the plaintiff 5% interest per annum from the next day to the date of complete payment.

3. Conclusion

Thus, the plaintiff's claim of this case is reasonable within the above scope of recognition, and the remaining claims shall be dismissed due to the lack of reasonable grounds.

However, since the part against the defendant in the judgment of the court of first instance differs from this conclusion, it is unfair to accept part of the defendant's appeal and revoke it and dismiss the plaintiff's appeal corresponding to the above revoked part, and since the remaining part in the judgment of the court of first instance is legitimate, the remaining appeal of the defendant is dismissed and it

[Attachment]

Judges Park Jong-chul (Presiding Judge)