[1] Legislative purpose of Article 37-3 (1) of the former Mutual Savings and Finance Company Act that imposes joint repayment liability on executives and oligopolistic stockholders for the obligations related to deposits in a mutual savings and finance company

[2] The scope of joint repayment liability of the officers responsible for the poor management of the credit cooperative for the debt related to the deposit in the mutual savings and finance company

[1] Article 37-3 (1) of the former Mutual Savings and Finance Company Act (amended by Act No. 6429, Mar. 28, 2001) provides that "executive officers (excluding auditors) and oligopolistic stockholders (referring to persons falling under oligopolistic stockholders as provided by Article 39 (2) of the Framework Act on National Taxes) of a mutual savings and finance company shall be jointly and severally liable with the mutual savings and finance company for the obligations related to the deposits, etc. of the mutual savings and finance company." The legislative purpose of this provision is to realize the liability management of the mutual savings and to protect creditors of the savings bank, such as deposit holders, by taking the responsibility for the obligations of the savings and finance company to the officers responsible for the management of the mutual savings and oligopolistic stockholders jointly and severally, upon the public interest request for the protection of customers and the maintenance of credit order.

[2] An officer who is responsible for poor management of a credit cooperative due to the embezzlement of assets of a mutual savings and finance company as well as direct damage to a credit cooperative, such as engaging in illegal or non-performing loans, or neglecting the fiduciary duty or fiduciary duty in managing assets of a credit cooperative, thereby causing property damage to a credit cooperative, shall be jointly and severally liable with a credit cooperative to the extent that such an act causes damage to a credit cooperative, within the scope of damage suffered by the credit cooperative.

[1] Article 37-3 (1) of the former Mutual Savings and Finance Company Act (amended by Act No. 6429 of March 28, 2001) (see current Article 37-3 of the Mutual Savings and Finance Company Act) Article 37-3 (1) of the former Mutual Savings and Finance Company Act (amended by Act No. 6429 of March 28, 2001) (see current Article 37-3 of the Mutual Savings Banks Act)

[1] Constitutional Court en banc Order 200Hun-Ga5, 6, 2001Hun-Ga26, 2000Hun-Ba34, 2002Hun-Ba3, 7, 9, 12 decided August 29, 2002 (Hun-Ga72, 710)

Seoul High Court Decision 200Na1448 delivered on August 1, 200

Defendant 1 and two others

Seoul High Court Decision 2003Na33846 delivered on November 5, 2003

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

Article 37-3 (1) of the former Mutual Savings and Finance Company Act (amended by Act No. 6429, Mar. 28, 2001; hereinafter referred to as the "Act") provides that "executive officers (excluding auditors; hereinafter referred to as oligopolistic shareholders as provided for in Article 39 (2) of the Framework Act on National Taxes) of a mutual savings and finance company and oligopolistic shareholders (referring to persons falling under oligopolistic shareholders as provided for in Article 39 (2) of the Framework Act on National Taxes) shall be jointly and severally liable with the mutual savings and finance company for the obligations related to the deposits, etc. of the mutual savings and finance company" (hereinafter referred to as the "mutual savings and finance company") shall be jointly and severally liable for the obligations of the mutual savings and finance company (hereinafter referred to as the "mutual savings and finance company") at the request of the public interest such as the protection of customers and the maintenance of credit order. The legislative purpose is to realize the responsible management and prevent poor management, and protect creditors of the mutual savings and finance company, such as deposit holders (the Constitutional Court Decision 2005Hun-Ba636, 2001364,20

Therefore, it is reasonable to view that an officer responsible for poor management of a credit cooperative is jointly and severally liable with a credit cooperative for a debt related to a deposit, etc. of a credit cooperative within the extent of a loss suffered by the credit cooperative due to such an act as above, as well as a direct damage to the credit cooperative by embezzlement of the credit cooperative's property, as well as an illegal or non-performing loan, or as a neglect of the fiduciary duty or duty in good faith in operating its assets.

The court below determined that the defendants, who are officers of the ○○ Mutual Savings and Finance Company (hereinafter referred to as “○○ Mutual Savings and Finance Company”) are liable for poor management, such as making ○○○ Savings and Finance Company suffer losses as stated in its decision due to unfair loans or budget operation, barring special circumstances, they are jointly and severally liable with the ○○○ Savings and Finance Company to pay their deposit claims to the plaintiff who has taken over the deposit claims to the extent of losses incurred by the Defendants’ own act pursuant to Article 37-3(1) of the Act. In light of the above legal principles and records, the court below's fact-finding and decision are proper, and there is no error of law such as misconception of facts due to a violation of the rules of evidence, incomplete deliberation, omission of judgment, or misunderstanding of legal principles as to the burden of proof, etc.

Therefore, the appeal is 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.

Justices Kim Young-ran (Presiding Justice)