In cases where another person’s business is managed in accordance with an agreement with a third party, whether the management of affairs is established in relation to the other person (negative in principle)

A person who performs another person's business without any obligation may file a claim for reimbursement of expenses, etc. in accordance with the provisions of the Civil Act for the management of affairs with the third person. However, in cases where he/she performs another person's business in accordance with the agreement with the third person, it does not perform the other person's business.

Articles 734 and 739 of the Civil Act

Plaintiff (Law Firm Lee & Lee, Attorneys Choi Ha-soo et al., Counsel for plaintiff)

Defendant (Law Firm KEL, Attorneys Lee Jae-hwan et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2011Na40726 decided May 3, 2012

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. The reasoning of the judgment below is as follows.

A. First, the lower court acknowledged the following facts based on the adopted evidence.

(1) Nonparty 1 entered into an exchange contract with the Defendant on the instant real estate owned by the Defendant at his own end, and received the registration of ownership transfer on the instant real estate in the name of Nonparty 2 (the mother of Nonparty 3, who is a father of Nonparty 1) designated by Nonparty 1 on March 14, 2007.

(2) On March 26, 2007, Nonparty 1 borrowed KRW 120,00,000 from Nonparty 4 under the name of Nonparty 2, and became the guarantor. On the following day, Nonparty 4 completed the registration of creation of a mortgage over the instant real estate in the name of Nonparty 4, the maximum debt amount of KRW 144,00,000,00 and Nonparty 2. Nonparty 1 was unable to repay the secured debt of the right to collateral security, and Nonparty 1 started the voluntary auction procedure on the instant real estate upon Nonparty 4’s application. Nonparty 1 borrowed money from Nonparty 5, and completed the provisional registration of the right to claim ownership transfer and the registration of ownership transfer with respect to the instant real estate.

(3) On April 30, 2008, the Plaintiff agreed with Nonparty 8, etc., who was the wife of Nonparty 4, as KRW 135,000,000, the principal and interest of the secured debt of Nonparty 4 was transferred to Nonparty 8 on the same day, and Nonparty 6’s mother transferred KRW 135,00,000 to Nonparty 8 on the same day, and Nonparty 4’s registration of establishment was cancelled on the following day.

(4) On May 1, 2008, the Defendant agreed with Nonparty 5, Nonparty 3, etc. to receive KRW 100,000,000 from Nonparty 3 and to transfer the ownership of the instant real estate to the Defendant. On the following day, the ownership transfer registration for the instant real estate was completed in the Defendant’s future.

B. Based on such factual basis, the lower court rejected the allegation of the primary cause of claim that the Plaintiff subrogated to Nonparty 4’s claim on the part of the Plaintiff upon the Defendant’s request, or the allegation of the primary cause of claim that the Defendant agreed to pay the Plaintiff the money raised by the Plaintiff with the loan secured by the instant real estate, on the grounds indicated in its reasoning. As to the secondary cause of claim, the lower court determined as follows: (a) as to the secondary cause of claim, the Defendant was a person who has a legitimate interest in repaying Nonparty 4’s claim; (b) had the intent to perform the Defendant’s business at the time of repayment; and (c) was disadvantageous to, or contrary to the Defendant’s intent, that the Plaintiff’s repayment was unfavorable to, the Defendant; and thus, (d) the Plaintiff’s repayment of Nonparty 2 or Nonparty 1, the principal obligor of the secured

2. However, we cannot accept the lower court’s aforementioned determination that the Plaintiff’s repayment becomes a business management in relation to the Defendant for the following reasons.

A. A person who performs another’s business without any obligation may claim reimbursement of expenses, etc. against the other person in accordance with the provisions of the Civil Act. However, in the case of performing another’s business according to an agreement with a third party, it is not a performance of the other person’s business without any obligation. Therefore, it cannot be viewed as a management of affairs

B. According to the reasoning of the judgment below, the court below acknowledged that the defendant's non-party 6 and his mother requested the plaintiff to pay the claims of the non-party 4's collateral and the non-party 7's non-party 7 to discontinue the execution of the right to collateral security, and that the plaintiff agreed with the parties concerned about the amount of the secured debt and paid the corresponding amount. In full view of the plaintiff's repayment circumstance and the defendant's words and actions, and the amount of the plaintiff's repayment, it is reasonable to deem that the plaintiff paid the secured debt of the non-party 2 through the non-party 1 as above in accordance with the agreement with the non-party 7 as to the repayment of the claims of the non-party 4's secured debt, and in light of the above legal principles, it cannot be deemed that the plaintiff performed the defendant's business without any duty, and therefore it is difficult to deem that the plaintiff

C. Nevertheless, the court below held that the plaintiff's repayment becomes a business management in relation to the defendant, and determined that the plaintiff can claim the defendant to reimburse necessary expenses according to the business management equivalent to the amount of the repayment. In so doing, the court below erred by misapprehending the legal principles as to the requirements for establishing the office management, which affected the conclusion of the judgment. The ground of appeal pointing this out has merit.

3. Therefore, without examining the remaining grounds of appeal, the part against the defendant among the judgment below is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim So-young (Presiding Justice)