Plaintiff Co., Ltd. (Attorney Choi Ho-ho, Counsel for plaintiff-appellant)

Defendant 1 Co., Ltd. (Law Firm Rate, Attorney Yoon Yong-op, Counsel for the defendant-appellant)

Defendant 2

June 30, 2004

Seoul District Court Decision 2003Gahap1923 delivered on September 26, 2003

1. Each appeal filed by the plaintiff and defendant 1 corporation (hereinafter referred to as "the defendant corporation") shall be dismissed.

2. The costs of appeal arising between the Plaintiff and Defendant 2 are assessed against the Plaintiff, and the costs of appeal by the Plaintiff and Defendant Company are assessed against each other.

1. Purport of claim

The defendants pay to each plaintiff 466,795,58 won with 5% interest per annum from March 6, 2002 to May 31, 2003, and 20% interest per annum from the next day to the full payment date.

2. Purport of appeal

The judgment of the court of first instance is modified as follows. The defendants pay to each plaintiff 466,795,58 won with 5% per annum from March 6, 2002 to May 31, 2003, and 20% per annum from the next day to the date of full payment.

Defendant Company: The part against the Defendant Company in the judgment of the first instance is revoked, and the Plaintiff’s claim corresponding to the above revocation is dismissed.

1. Basic facts

In this part, the reasons why a member should explain are the same as the judgment of the court of first instance, and this is cited as it is.

2. Judgment on the main defense of this case

A. Defendant 2 conspired with Nonparty 1 to arbitrarily use KRW 500,00,000 for stock investment in collusion with the Plaintiff Company constitutes a tort against the Plaintiff Company. As to the Plaintiff Company’s assertion that Defendant 2 is responsible for compensating for damages arising therefrom, Defendant 2 asserts to the effect that the instant lawsuit against Defendant 2, which was filed after the Plaintiff Company had already entered into an action against the Plaintiff Company, is unlawful. As to this, Defendant 2 asserts that the subject matter of the non-party agreement entered into between the Plaintiff Company and Defendant 2, is limited to the damage arising from the sale and loss of the instant consignment account, i.e., the sale of the instant stock consignment account, and the loss arising from the embezzlement conducted before the voluntary sale, is not the subject matter of the non-party agreement.

Therefore, according to the following facts: (i) No. 1; (ii) No. 2; (iii) No. 5-2; (iv) No. 6; (iii) No. 6; and (iv) No. 1; and (iv) No. 7 and 11 were aware of the fact that Nonparty 1 embezzled total amount of KRW 516,350,00 from the accounts of the NAFFFFFFFFFFFFFFFFFFFFFFFFFFFFY 0; (iv) the Plaintiff Company did not request for the suspension of sale and purchase of the above accounts on October 1, 2001; and (v) the Plaintiff Company’s 0-FFFFFFFFFFFFFFFFFFF 0; and (v) the Plaintiff Company’s 0-FFFFFFFFFFFFFFFFF 1; and (v) the 0-FFFFFFFFFFFFFFFFFFFFFFFFF 1.

B. Even if the above part of the lawsuit agreement is accepted, Defendant 2 instigated the Plaintiff Company to embezzlement of KRW 516,350,000 in total with respect to the accounts of the NACF, even though it did not disclose it to the Plaintiff Company, which led the Plaintiff Company to the effect that the above part of the lawsuit agreement was revoked by delivering a copy of the complaint of this case, which included a declaration of revocation of the above part of the lawsuit agreement, to the effect that the above part of the lawsuit agreement was revoked by delivering the copy of the complaint of this case.

Therefore, in full view of the purport of the argument in the evidence No. 2 of this case, Defendant 2 conspired with Nonparty 1 by first proposing embezzlement of this case to the non-party 1, and the embezzlement of KRW 516,350,00 in total to the accounts of the agricultural cooperative association of the non-party 1 can be acknowledged as the facts that the above embezzlement of this case was committed by Defendant 2's teacher. First, even if Defendant 2 first proposed to commit the crime of embezzlement of this case to the non-party 1, it cannot be said that Defendant 2 and the non-party 1 did not know of the facts at the time of the above secondary agreement, so long as Defendant 2 knew of the above embezzlement of the plaintiff company, it cannot be said that the above additional agreement was made based on the plaintiff 2's deception of this case, and since the above additional agreement was not known to the non-party 5, it cannot be said that the above embezzlement of this case was made by the non-party 1's embezzlement of this case's total amount of damages to the plaintiff 20.

3. Claim against the defendant company

(a) Occurrence of liability for damages;

According to the above facts, in collusion with the non-party 1, the defendant 2 converted the bond deposit account under the name of the plaintiff company into a stock consignment account capable of a stock transaction, and traded shares with the money deposited in the above account. Although the defendant 2's act was conducted for the purpose of his own interest by abusing his position, it constitutes a case of causing damage to the plaintiff company with respect to the execution of his business. Thus, the defendant company is obligated to compensate for the amount of KRW 466,795,588 (the bond deposit account under the repurchase agreement 500,000,000 - the balance amount of the stock consignment account 33,204,412) claimed by the plaintiff company as losses, barring any special circumstance as the defendant 2's employer.

B. Determination as to the defense of the defendant company

(1) The Defendant Company has first exercised due care in the appointment and supervision of Defendant 2, and even if not, in the instant case, the Defendant Company ought to be exempted from the Defendant Company’s employer liability because it falls under a case where the Defendant Company suffered damage even if due care was paid to the Defendant Company. However, there is no evidence to acknowledge that the Defendant Company fulfilled due care in the appointment and supervision of the Defendant Company. As long as Defendant 2, an employee of the Defendant Company, in collusion with Nonparty 1, who is an employee of the Plaintiff Company, illegally uses the Plaintiff Company’s funds, the Defendant Company could have prevented the occurrence of damage if the Defendant Company fulfilled due care in the appointment and supervision.

(2) Next, Defendant 2 argues to the effect that Defendant 2 should be exempted from Defendant 2’s employer liability on the ground that Defendant 2 knew, or was grossly negligent, that Defendant 2’s act was not aware of the fact that Defendant 2’s act did not constitute an execution of duties, since Nonparty 2’s act was aware of, or was not aware of, the fact that Defendant 2’s act was not an execution of duties.

On the other hand, the meaning of "in relation to the execution of an employee's business", which is an element for the employer's liability under Article 756 of the Civil Act, is objectively deemed to be an act of an employee's unlawful act in appearance, or an act of performing an employee's business or affairs, or an act related thereto without considering the offender's subjective circumstances. As such, the reason why the employee excludes the subjective circumstances of the employee from the criteria for determining the relevance to the performance of business and only considering the circumstances of the employer who made the appearance of the act, is to protect the victim's trust who has entered into a transactional relationship with the employee's belief that the employee's act is an act of the employee's business or affairs execution. Thus, if the victim knew or did not know that the employee's act does not fall under the execution of business, the victim's subjective circumstance cannot be held liable from the perspective of fairness because it falls under the case where there is no trust in the victim's act, such as the tort occurred in the employer's transactional relationship with the employee.

First of all, as to whether Defendant 2’s act was conducted with respect to the execution of the business affairs of the Defendant Company, the act of attracting a bond deposit account with resale agreement from the Plaintiff Company, changing it into a bond consignment account, and making stock consignment transaction with the funds of the Plaintiff Company is all within the scope of the Defendant Company’s business affairs. In addition, the act of attracting and managing the bond deposit account with resale agreement and the act of managing the stock consignment account constitutes the duties of Defendant 2 themselves or duties related thereto. Thus, the above embezzlement by Defendant 2 was conducted with respect to the execution of the business affairs of the Defendant Company.

Next, in this case, we examine whether Defendant 2’s act, who is an employee of the Plaintiff Company, was aware of the fact that it does not constitute the Defendant Company’s business, or did not know of gross negligence, and thus, Defendant 2’s employer liability is exempted. According to the above facts, Nonparty 1, who conspired with Defendant 2 for the embezzlement of this case, knew of the fact that the act does not constitute legitimate business execution. Furthermore, Nonparty 1, in collusion with Defendant 2, with the intent of embezzlement, deposited KRW 500,000,00 of the Plaintiff Company’s funds in the deposit account with the intent of embezzlement, was done by lawful delegation of the Plaintiff Company, and the act deposited as above was also deemed lawful business affairs, and thus, it cannot be said that the Defendant Company started the embezzlement of the Plaintiff Company as a whole, even if it did not come to fall under the business relations of the Defendant Company, and the Defendant Company started to engage in the embezzlement of the Plaintiff Company after changing the above account to a stock consignment account. Accordingly, it cannot be said that the Defendant Company started to engage in the act of embezzlement of the Plaintiff Company’s after its comprehensive trust account.

Therefore, the above defense of the defendant company is without merit.

C. Scope of damages

(1) Fruits offsetting

As seen earlier, Defendant 2’s employee’s loss incurred to the Plaintiff Company shall be equal to KRW 466,795,58. However, according to the evidence No. 9, Eul evidence No. 11-1, 2, 3, and 4 and the result of Defendant 2’s personal examination, Defendant Company notified the Plaintiff Company of monthly transaction during the period of voluntary stock purchase and sale. In preparing half-yearly report around July 2002, Plaintiff Company did not grasp the exact financial status by the method of obtaining a certificate of balance through the Defendant Company, without considering the following factors: (a) the Plaintiff Company’s loss incurred to the Plaintiff Company’s employee was equal to KRW 50,00,00 in cash and deposit. However, in light of such circumstances, it is reasonable to view that the Plaintiff Company’s loss should be calculated by taking into account the amount of damages incurred to the Plaintiff Company’s employee’s negligence in calculating the amount of damages due to Nonparty 1’s total loss due to Nonparty 1’s tort, 2, who was jointly related to the Plaintiff Company’s tort.

The Defendant Company asserts that the scope of the Defendant Company’s damages should be calculated by taking account of the overall decline of the share price at the time. However, the Plaintiff Company’s damages arising from Defendant 2’s embezzlement, who is an employee of the Defendant Company, without connection with the share price decline. Therefore, the Defendant Company’s assertion is without merit.

(2) Loss offsetting

Defendant Company’s assertion that Defendant 2, one of the torts himself, paid part of the amount of damages to the Plaintiff Company, and therefore, according to the statement of No. 5-10, Defendant 2, as the criminal agreement amount, can be acknowledged that Defendant 2 paid KRW 20,000,000 to the Plaintiff Company as the criminal agreement amount, and the amount paid at the time of the criminal agreement, as a matter of principle, should be deemed to have been paid as part of the compensation amount. Thus, it is reasonable to deduct only KRW 10,000,000 ( KRW 20,000,000) corresponding to the ratio of negligence of the Defendant Company from the amount of damages to be paid by the Defendant Company (see, e.g., Supreme Court Decision 93Da53696, Feb. 22, 1994). The above claim for the deduction by the Defendant Company is justified within the above scope.

D. Sub-committee

Therefore, the defendant company is obligated to pay 23,397,794 won from 233,397,794 won which is equivalent to 50% of the damages of the plaintiff company and 223,397,794 won which is calculated by deducting 10,000,000 won from 50% of the damages of the plaintiff company, and to pay damages for delay at the rate of 5% per annum as stipulated in the Civil Act from March 7, 2002, which is the date of the commencement of the tort by the defendant 2, to September 26, 2003, which is deemed reasonable for the defendant company to dispute the existence and scope of its duty of performance, until September 26, 2003, and until the date of full payment.

4. Conclusion

Therefore, the plaintiff company's lawsuit against the defendant 2 is dismissed as it is unlawful, and the claim against the defendant company against the plaintiff company is accepted within the above scope of recognition, and the remaining claim is dismissed as it is without merit. The judgment of the court of first instance is just as it is concluded, and the appeal against the plaintiff company and the defendant company is dismissed, respectively.

Judges Yuwon rules (Presiding Judge)