[1] In a case where a security trust contract for an essential sports facility was concluded and the facility is disposed of by a negotiated contract or by a private contract for the sale of the facility, whether the underwriter succeeds to the rights and obligations upon the registration or report of the sports facility business including the matters agreed upon between the sports facility business entity and its members (affirmative)

[2] In a case where a sports facility business entity’s act of offering a security trust for an essential sports facility, etc. constitutes a fraudulent act, whether not only the security right already established on the subject matter, but also the portion of the amount of the obligation to refund security deposits to its members, as well as the amount of the obligation to pay security deposits to its members, should be deducted from the property held by the sports facility business entity’s joint security interest (affirmative), and whether the act of offering a security trust constitutes a fraudulent act in cases where the amount of

[3] Whether the right to benefit under a security trust agreement held by the truster with respect to the secured trust property constitutes a truster's responsible property (affirmative), and whether the truster's act of conducting a security trust for the purpose of securing a truster's obligation for the secured trust property again constitutes a fraudulent act (negative)

[1] Article 27 of the Installation and Utilization of Sports Facilities Act / [2] Article 406 of the Civil Act, Article 27 of the Installation and Utilization of Sports Facilities Act / [3] Article 406 of the Civil Act

[1] Supreme Court en banc Decision 2016Da220143 Decided October 18, 2018 (Gong2018Ha, 2183) / [2] Supreme Court Decision 2012Da31963 Decided November 28, 2013 (Gong2014Sang, 43) / [3] Supreme Court Decision 2016Da20732 Decided November 25, 2016 (Gong2017Sang, 18)

Samil Construction Enterprise Co., Ltd. (formerly: Sampung Enterprise Co., Ltd.) and four others (Law Firm LLC, Attorneys Park Jong-ju et al., Counsel for the plaintiff-appellant)

rink real estate trust Co., Ltd. (Law Firm Dup, Attorneys Choi Ho-chul et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2015Na2062102 decided June 22, 2016

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. As to the establishment of fraudulent act

A. Article 27(1) of the Installation and Utilization of Sports Facilities Act (hereinafter “sports facilities Act”) provides that “When a sports facility business entity dies or transfers his/her business, or when a corporate sports facility business entity is merged with another sports facility business entity, the heir, the transferee of the business, the corporation surviving the merger, or the corporation established following the merger shall succeed to the rights and obligations following the registration or report of the sports facility business (where members are recruited pursuant to Article 17, including the matters agreed upon between the sports facility business entity and its members),” and Article 27(2) of the same Act provides that “Article 17(1) shall apply mutatis mutandis to a person who acquires the essential facilities in accordance with the facility standards for the sports facility business prescribed by Ordinance of the Ministry of Culture, Sports and Tourism in accordance with any of the following procedures, the sale of the seized property under the Debtor Rehabilitation and Bankruptcy Act” under subparagraph 1, subparagraph 2 and subparagraph 3 of the same Article provide for “other procedures corresponding to subparagraphs 4 through 3”:

As can be seen, Article 27(1) of the Sports Facilities Act provides that the rights and obligations arising from the registration or reporting of a sports facility business shall be succeeded to in addition to inheritance and merger. Paragraph (2) of the same Article also applies mutatis mutandis to a person who acquires an essential facility (hereinafter “essential sports facility”) in compliance with the standards for the facilities of a sports facility business through an auction and other similar procedures. In such a way, where a sports facility business entity’s business or an essential sports facility is transferred to another person, a transferee or a transferee of an essential sports facility succeeds not only to the rights and obligations under the public law established in relation to the sports facility business, but also to the rights and obligations under the private law

In cases where a sports facility business entity is disposed of by means of an open competitive bid method (hereinafter referred to as "public sale") or disposed of by a private contract under the conditions of public sale determined in the public sale procedure due to the occurrence of a reason for disposal of the trust property prescribed in a security trust agreement, such as nonperformance, in which the sports facility business entity, who is a truster, was a priority beneficiary, and the sports facility business entity as a truster, was entrusted with a security trust under the Trust Act in order to secure a pecuniary obligation, the transferee of the essential sports facility shall be deemed to succeed to the rights and obligations arising from the registration or report of the relevant sports facility business, including the matters agreed between the sports facility business entity and its members (see Supreme Court en banc Decision 2016Da220

Therefore, even in a case where the business of a sports facility operator is transferred, or where a public sale of a mortgaged trust property is conducted after an essential sports facility under his/her ownership is entrusted with a security trust, the acquisition or purchase price shall be determined by taking into account the obligations to refund membership fees to the members recruited under Article 17 of the Sports Facilities Act, which will be succeeded by the acquisition of the business of a sports facility operator or the essential sports facility by acquiring the sports facility through such procedures.

In light of such circumstances, in determining whether an act of a sports facility business operator as a security trust of the property owned by him/her, including an essential sports facility, constitutes a fraudulent act, the amount corresponding to the security trust should be deducted, considering that not only the secured debt of the security right already established on the property but also the obligation to refund membership fees to members is not included in the secured property provided by the joint security of the general creditors. If the amount deducted within the scope of a responsible property exceeds the value of the property, the act of security trust, etc. cannot be deemed as a fraudulent act (see Supreme Court Decision 2012Da31963, Nov. 28, 2013).

B. Meanwhile, the right to benefit under the security trust agreement held by the truster on the secured trust property constitutes a truster’s property provided for joint security by the general creditors (see Supreme Court Decision 2016Da20732, Nov. 25, 2016). Therefore, the truster’s act of security trust does not constitute a fraudulent act, since it is merely a change in the form of the beneficiary’s value from the remaining value of the secured trust property where the secured trust property is deducted from the amount of the secured trust property where the secured trust property is deducted from the amount of the secured trust property’s liabilities, etc., and as such, it does not constitute a fraudulent act.

C. According to the reasoning of the first instance judgment cited by the lower court and the evidence duly admitted by the lower court, the following facts are revealed.

1) On May 15, 2013, the Korea Sports Facility Corporation (hereinafter “Larido”) concluded a security trust agreement between the Defendant, a trustee, with respect to each real estate listed in the separate list of the lower judgment, including essential sports facilities of the golf course (hereinafter “instant trust real estate”), with respect to which the Nonghyup Bank Co., Ltd. was the first beneficiary, and the beneficiary of Laridododog’s trust (hereinafter “instant trust agreement”), and completed the registration of ownership transfer on May 16, 2013 with respect to the instant trust real estate in the name of the Defendant.

2) The instant trusted real estate had already been established as collateral (the first mortgagee was the National Agricultural Cooperative Federation, but the National Agricultural Cooperative Federation divided the banking business and mutual aid business among the assets owned on March 2, 2012 and divided and established the Nonghyup Bank, Nonghyup Damage Insurance Co., Ltd., and Nonghyup Life Insurance Co., Ltd., and the rights and obligations regarding banking business were comprehensively succeeded to the Nonghyup Bank Co., Ltd.).

3) At the time of the instant trust agreement, there were: (a) the instant trust real estate, equivalent to KRW 93,319,726,550, and the instant trust real estate, other than the instant trust real estate, equivalent to KRW 210,635,00, and machinery and appliances, etc. equivalent to KRW 296,00,00, and (b) the secured debt of KRW 13,733,30,000, as a small property, and KRW 86,040,39,000, as a security-backed debt of KRW 13,733,30,000, and the security-backed debt of KRW 86,040

D. Examining these facts in light of the aforementioned legal principles, first of all, the amount equivalent to not only the secured debt of the right to collateral security established on the instant trusted property, but also the obligation to refund membership fees to members shall be deducted from the property held by Lari-ri-ri-ri-ri-ri-ri-ri-ri-ri-ri-ri’s joint security offered by ordinary creditors. The sum exceeds KRW 99,773,727,00, the value of the instant trusted property, including building and machinery, equipment, etc. on the ground, etc., exceeds KRW 93,826,361,550, and thus, even if Lari-ri-ri-ri-ri-ri-ri-ri-ri-ri-ri-

In addition, in light of the fact that the trust contract of this case was only a secured debt of the right to collateral, which was already established on the trust property of this case, as well as a security debt of the right to collateral in addition to a security repayment obligation for the members with the small property of Darari's small property, the trust contract of this case is aimed at securing the secured debt of the above right to collateral, and thus, the trust contract of this case is only changed from the remaining value of the trust property of this case in which Dorari's secured debt was deducted from the above secured debt of the right to collateral, to the value of the right to benefit under the trust contract of this case, and there was no change in the ability of Dorari. Therefore, the trust contract

The judgment below to the same purport is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the establishment of fraudulent act.

2. As to the existence of the obligation to return the membership fee

The lower court rejected the Plaintiffs’ assertion that the Defendant, the trustee of the instant trust agreement, succeeded to the obligation to return membership fees to the Plaintiffs of Darae, in accordance with Article 27 of the Sports Facilities Act, on the grounds that the instant trust agreement is a collateral trust for the purpose of managing the ownership of the instant trust real estate and realizing and settling the said real estate, and that the Defendant’s receipt of the instant trust real estate as a collateral trust does not constitute a transfer of business under Article 27(1) of the Sports Facilities Act, and that it does not constitute a transfer of business under any of the subparagraphs of Article 27(2) of the said Act.

In light of the records, the above determination by the court below is just, and it did not err by misapprehending the legal principles on Article 27 of the Sports Facilities Act, contrary to what is alleged in the grounds of appeal.

3. As to the assertion of inconsistency in the reasoning between judgments regarding selective claims

The lower court determined that the instant trust agreement did not constitute a fraudulent act, and determined that the Defendant did not succeed to the obligation to return the membership fee to the Plaintiffs pursuant to Article 27 of the Sports Facilities Act, and did not err by failing to exhaust all such errors as alleged in the grounds of appeal, contrary to what is alleged in the grounds of appeal.

4. Conclusion

Therefore, all appeals are 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 on the bench.

Justices Noh Jeong-hee (Presiding Justice)