In cases where a security right has been established on an object transferred by a debtor and the amount of such secured claim exceeds the price of the object, and the object is transferred according to the conditional intent of termination of security based on the repayment amount below the price of the object, whether a fraudulent act is established (negative)

Article 406(1) of the Civil Act

Supreme Court Decision 97Da10864 Delivered on September 9, 1997 (Gong1997Ha, 3051) Supreme Court Decision 2000Da42618 Delivered on October 9, 2001 (Gong2001Ha, 2424)

Korea Technology Credit Guarantee Fund (Law Firm Jeong, Attorneys Park Jae-chul et al., Counsel for the defendant-appellant)

Defendant (Law Firm Dong, Attorneys Nacheon-he et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2006Na15634 Decided March 20, 2007

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

We examine the grounds of appeal.

If a security right has been established on an object transferred by a debtor, only the remaining part of the object which remains after the amount of the secured debt has been deducted. If the amount of the secured debt exceeds the price of the object, the transfer of the object cannot be deemed a fraudulent act (see, e.g., Supreme Court Decisions 97Da10864, Sept. 9, 1997; 2000Da42618, Oct. 9, 2001).

In addition, since the creditor's damage caused by the renunciation of joint security in a fraudulent act is insufficient and practical to cause such damage merely, it is necessary to conclude that the creditor's damage caused by the renunciation of joint security is not sufficient and realistic. Thus, on the basis of the recovery honor value that the mortgagee calculated by himself/herself prior to the debtor's transfer act, the transferee expressed his/her intention to terminate the right to collateral security if the transferee pays the amount of the secured debt equivalent to the recovery honor value of the real estate to the debtor, and even if the agreed amount falls short of the price of the object at the time of the transfer act, the conditional declaration of intent by the mortgagee cannot be deemed as a fraudulent act against the general creditor.

According to the reasoning of the judgment below, the court below determined that the defendant and the non-party visited the sub-party branch office of the National Bank of Korea prior to the conclusion of the sales contract of this case and consulted with the loan manager of the above branch office prior to the conclusion of the sales contract of this case, and that the defendant cancelled the registration of establishment of each sub-bank in the name of the above bank as to the real estate of this case by paying part of the purchase price to the above bank and replacing the security after the completion of the registration of ownership transfer. The agreement between the national bank and the non-party merely expressed conditional intent to cancel the mortgage on the condition that part of the secured claim is repaid to the non-party, and it cannot be deemed that the national bank reduced part of the secured claim or renounced the security right to some of the secured claim of this case. Since the secured claim amount limited to the maximum debt amount of each sub-mortgage of the real estate of this case established at the time of the conclusion of the sales contract of this case exceeds the market price of the real estate of this case, the general creditor including the plaintiff cannot be seen as the non-party's responsible property at the point of time.

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 Ahn Dai-hee (Presiding Justice)