Liability for any obligation arising from the cause of the endorser, which has been endorsed as a collateral on a promissory note issued in lieu of the instrument of borrowing

If the drawer of a promissory note, while borrowing money from others, issues the bill in lieu of a borrowing instrument, and the endorser knowingly endorses the bill in the meaning of a security, the endorser is deemed to have committed an act of endorsement with the intent to assume joint and several liability for the civil loans and obligations arising out of the issuance of the bill.

Article 15 of the Bills of Exchange and Promissory Notes Act, Article 428 of the Civil Act

Supreme Court Decision 71Da2452 Delivered on March 28, 1972

[Judgment of the court below]

Eastern Inc., Ltd.

Seoul Central District Court Decision 85Na1848 delivered on March 4, 1986

The judgment of the court below is reversed, and the case is remanded to Seoul Civil Procedure District Court Panel Division.

We examine the grounds of appeal.

1. On July 25, 1984, Nonparty 1 asked Nonparty 2, a corporate bond broker, to lend money in the manner of discount of the bill. If Nonparty 2 brings about a promissory note endorsed of the Defendant Company, the court below issued a promissory note with a face value of 5,00,00 won on the same day, and on September 25, 1984, issued a promissory note with a face value of 20,000,000 won for which the date of issue, place of issue, and place of payment, and then issued a promissory note with a face value of 20,00,000 won to the obligee, who is the representative director of the Defendant Company, and agreed to do so, Nonparty 3, who is the representative director of the Defendant Company, made an endorsement under the name of the Defendant Company on the first endorsement of the said promissory note, the court below determined that the Plaintiff is liable for the debt of Nonparty 1 under the civil law to the obligee by deducting only 20,700,000 won from the obligee’s debt.

2. However, if the issuer of a promissory note borrowed money from others and issued the promissory note in lieu of a borrowed instrument, and if the endorser endorses the bill as a collateral with the knowledge of such circumstance, the endorser is deemed to have performed the act of endorsement with the intent to assume the responsibility of joint and several sureties as to the civil loan obligations which are the cause of the issuance of the promissory note (see Supreme Court Decision 71Da2452 delivered on March 28, 1972). According to the facts established by the court below and the testimony of the first and second court witness and the second court witness, according to the facts established by the court below, the representative director of the defendant company is issued by the non-party 1 in lieu of the borrowed instrument, and it is sufficiently sufficient to recognize that the defendant committed the act of endorsement as a joint and several endorse as stated in the judgment of the court below, knowing that it was required by the creditor as a collateral. Accordingly, the defendant cannot be held liable as a joint and several surety for the non-party 1's debt which is the cause of the issuance of the bill.

3. The appeal is reasonable, and this constitutes grounds for reversal under Article 12 of the Act on Special Cases Concerning Promotion, etc. of Legal Proceedings, and the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating judges.

Justices Lee B-soo (Presiding Justice)