[1] In a case where an existing company establishes a new company with the intent to evade debts, in which case the form and content of the existing company is substantially the same as those of the existing company, whether creditors of the existing company may claim for performance of obligations to both the two companies (affirmative)

[2] In a case where Gap corporation contracted the new construction of the building to Eul, subcontracted the construction work to Eul, and thereafter transferred part of Eul corporation's claim for the construction price to Byung, etc., the owner of the building was Eul at the time of entering into the contract, and the owner of the building was changed to Eul due to the final judgment of winning the contract, and the name of the owner became final and conclusive as Eul filed a lawsuit against Gap corporation seeking a change of the name of the owner, and the name of the owner was changed to non-stock corporation again, and both Gap and Eul were incorporated and operated by Eul, and Eul et al filed a claim for the payment of the construction price against non-stock corporation in accordance with the legal principles of abuse of the company system, the case holding that the judgment below erred by misapprehending the legal principles, even though the court below erred by misapprehending the legal principles, in a case where Gap corporation's assets were transferred or useful without due consideration, such as the funds borrowed by Eul during the process of transferring the status of the owner of the building to Eul

[1] Where an existing company establishes a new company substantially identical in the form and content of the existing company with the intent to evade debts, this constitutes abuse of the company system in order to achieve an unlawful purpose, such as evasion of debts of the existing company. The assertion that the above two companies have a separate legal personality against the creditors of the existing company is not allowed in light of the principle of trust and good faith. The creditors of the existing company may demand performance of debts against any of the above two existing companies. This legal doctrine applies to cases where a company uses the same type and content of the existing company with the intent to evade debts of the same company among the other companies already established. Here, whether a company has used another company’s legal personality with the intent to evade debts of the existing company should be determined by comprehensively taking into account various circumstances, such as management status or financial status of the existing company at the time of closure of its business, existence and degree of assets useful to another company, whether the existing company has assets transferred to the existing company, and whether there

In such a case, even if the assets of the existing company are not directly transferred to another company in substance identical to the type and content of the company, and a third party who has paid due consideration to the existing company were transferred to another company, if the existing company used another assets of the existing company in return for the transfer of assets from a third party and did not pay due consideration to the existing company, it is not different from the case where the existing company used the assets directly to another company or transferred assets without justifiable consideration. In such a case, if it is determined that the existing company abused the company system by comprehensively taking into account various circumstances, such as the intent or purpose to evade the obligations of the existing company, the management status of the existing company, and the asset situation, etc.

[2] In a case where Gap corporation contracted the new construction of the building to Eul, Eul corporation subcontracted the construction work to Eul, Eul corporation transferred part of Eul corporation's claim for construction price to Byung, Eul corporation was the owner of the building at the time of conclusion of the contract, and Eul corporation was the owner of the building at the time of conclusion of the contract, and the name of the owner was changed to Eul corporation after the judgment of winning the contract became final and conclusive, and both Eul corporation and non-company were established and operated by Eul corporation, and Eul et al requested construction price payment against non-company pursuant to the legal principles as to abuse of corporation system, the case holding that Gap corporation and non-company were substantially the same in its purpose of establishment, form and content, and the owner was the owner of the building at the time of the above building, and the owner of the building was transferred to Eul, and the non-company was actually operating the building owner at the time of transfer of the building owner's status from Eul corporation to Eul, and it was determined that Gap corporation's non-owned property was used for the purpose of redemption of the company's claim for payment.

[1] Article 2 of the Civil Act, Article 169 of the Commercial Act / [2] Article 2 of the Civil Act, Article 169 of the Commercial Act

[1] Supreme Court Decision 2002Da66892 Decided November 12, 2004 (Gong2004Ha, 2013) Supreme Court Decision 2006Da24438 Decided August 21, 2008 (Gong2008Ha, 1269) Supreme Court Decision 2010Da9472 Decided May 13, 201 (Gong201Sang, 1168)

Plaintiff 1 and 3 others (Law Firm LLC, Attorneys Kim Tae-tae et al., Counsel for the plaintiff-appellant)

d Epiccoa Ltd.

Seoul High Court Decision 2017Na105 decided September 13, 2017

The judgment below is reversed and the case is remanded to Seoul High Court.

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

1. Interpretation of the instant agreement (Ground of appeal No. 1)

For the following reasons, the lower court rejected the Plaintiffs’ claim seeking direct payment of the construction cost against the Defendant on the basis of the instant agreement. The Defendant agreed that “the amount payable for the existing construction cost, etc., shall be liable to the Defendant.” This is merely the purport of the Defendant, who is the contractor and the owner of the construction, is liable for the field adjustment, etc. so that the new contractor may smoothly perform the construction work, and it is difficult to view that the contract for the third party, who is the contractor or subcontractor of the former E&D development (hereinafter “ E&D”) or the E&D expenses, etc., who is the subcontractor, is an agreement accepting the obligation for the construction cost owed to the Plaintiffs.

Examining the reasoning of the lower judgment in light of the relevant legal doctrine, the lower court did not err by misapprehending the legal doctrine regarding interpretation of juristic acts or contracts for third parties and acceptance of performance.

2. Whether to recognize the abuse of corporate personality (Ground of appeal No. 2)

A. Where an existing company establishes a new company substantially identical in the form and content of the existing company with the intent to evade debts, this constitutes abuse of the company system in order to achieve an unlawful purpose, which is the evasion of debts of the existing company. The assertion that the above two existing companies have a separate legal personality is not permissible in light of the principle of trust and good faith against the creditors of the existing company. The creditors of the existing company may demand the performance of debts against either of the above two companies (see, e.g., Supreme Court Decision 2002Da66892, Nov. 12, 2004). This legal doctrine applies to cases where a company uses another company with the intent to evade debts of the existing company, the form and content of which are substantially identical in substance, among other companies already established, with the intent to evade debts of the existing company. Determination of whether the existing company has used another company’s legal personality with the intent to evade debts should be made by comprehensively taking into account various circumstances such as management status or assets situation at the time of closure of the existing company, existence and degree of assets useful in the existing company’s assets transferred to another company.

In such a case, even if the assets of the existing company are not directly transferred to another company in substance identical to the type and content of the company, and a third party who has paid due consideration to the existing company were transferred to another company, if the existing company used another assets of the existing company in return for the transfer of assets from a third party and did not pay due consideration to the existing company, it is not different from the case where the existing company used the assets directly to another company or transferred assets without justifiable consideration. In such a case, if it is determined that the existing company has abused the company system by comprehensively taking into account various circumstances, such as the intent or purpose to evade the obligations of the existing company, the management status of the existing company, and the asset situation, etc.,

B. The reasoning of the lower judgment and the evidence duly admitted reveal the following facts.

(1) On August 201, 201, E&D contracted the construction of the instant building to Plaintiff 4, who borrowed the name of B&D Co., Ltd., and Plaintiff 4 subcontracted the H&D construction to Plaintiff 1, Plaintiff Il Engineering Co., Ltd., and Plaintiff 3 respectively.

(2) Around March 2, 2012, when the construction of the instant building was being carried out by both Plaintiffs 1, 1, and 3 and other subcontractors, the construction was suspended due to the nonperformance by both Plaintiff 1, 3, and Plaintiff 4.

(3) Meanwhile, on September 27, 2006, the Nonparty established and substantially operated E&D funds, the purpose of which is real estate development business, etc., and on July 18, 201, the Nonparty established and substantially operated the Defendant with real estate development business, etc. Around July 18, 201. The Defendant did not have any details of property tax and corporate tax payment from January 1, 2012 to August 31, 2016.

(4) At the time of the conclusion of the contract between Plaintiff 4 and E&D, the owner of the instant building was an E&D cost and leb development. The owner of the instant building was changed to the name of the owner of the instant building on April 30, 2012, as the Plaintiff filed a lawsuit seeking a change of the owner’s name against E&D expenses based on a written statement prepared by E&D, and the winning judgment became final and conclusive. The name of the owner of the instant building was changed to the name of the building on November 1, 2012, and the name of the owner of the instant building was changed to the name of the Defendant and YA development, and on November 22, 2012, respectively.

(5) On February 5, 2015, Plaintiff 4 transferred KRW 42,359,000 to Plaintiff 1, and KRW 185,000 to Plaintiff 1, and KRW 65,00,000 to Plaintiff 3, respectively, among Plaintiff 4’s claim for construction payment against E&D.

C. Based on the above factual basis, the lower court rejected the Plaintiffs’ claims premised on the Defendant’s abuse of corporate personality with the intent to evade the Defendant’s debt of E&D.

In fact, the Nonparty controlled E&D costs and the Defendant, and E&D costs seem to have no particular asset except for the position of the owner of the instant building; however, there is no evidence to deem that M&D was virtually controlled by the Nonparty. On April 30, 2012, the change of the owner of the instant building from E&D to MMland was made on the basis of each written form, as it was impossible for E&D to repay the borrowed money from E&D expenses, and cannot be deemed to have transferred the owner’s position to M&D without any consideration. Therefore, solely on the ground that the owner of the instant building was changed as above, it is insufficient to recognize that the Nonparty used the Defendant for the purpose of evading obligations, and there is no other evidence to acknowledge otherwise. Accordingly, the Defendant’s assertion that the Defendant bears the obligation to pay the construction price to the Plaintiffs in accordance with the legal principles as to the abuse of the company system is without merit.

D. However, in light of the above legal principles and records, the judgment below cannot be accepted for the following reasons.

E&D cost and the Defendant are companies substantially identical to the purpose of its establishment, form, and content. The sole asset of E&D was the owner of the instant building, and according to the final judgment, the status of the owner was transferred to IMland, and was transferred to the Defendant again. However, the Defendant appears to have no particular asset at the time of acquiring the owner’s status of the instant building from GMland, and the Nonparty was actually operating as the same as E&D cost.

Even though the transfer of the position of the owner of the instant building from IMD to IMland was based on the legitimate title of IMland, if, in the course of the transfer of the position of the owner of the instant building to the Defendant again from IMland, E&D assets were transferred or used without due consideration, such as the use of funds borrowed from IMD in the course of transfer of the position of the owner of the instant building, etc., were transferred or used without due consideration, it may be deemed that E&D assets were abused the company system by using the Defendant in order to achieve the unlawful purpose of evading the obligation of E&D. Accordingly, there is room to deem that E&D expenses’ obligee

E. Nevertheless, the lower court determined that it was difficult to recognize that IMland used the Defendant for the purpose of evading obligations solely on the grounds that it was neither a company controlled by the Nonparty nor a company controlled by the Nonparty, and that E&D’s transfer of the status of the owner of the instant building to IMland without any consideration, was difficult to recognize that the Defendant used the Defendant for the purpose of evading obligations. Furthermore, the lower court rejected this part of the Plaintiffs’ claim without examining whether E&D assets were transferred or useful in the course of transferring the status of the owner of the building from MMland to the Defendant without justifiable consideration. In so doing, the lower court erred by misapprehending the legal doctrine on the abuse

3. Conclusion

The plaintiffs' appeal is with merit, and the judgment of the court below is reversed, and 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

Justices Min You-sook (Presiding Justice)