The validity of a farmland sales contract concluded by a company which is not entitled to acquire farmland (Invalidity)

Article 19 (2) (see current Article 8 of the Farmland Act) of the former Farmland Reform Act (repealed by Article 2 of the Addenda to the Farmland Act, Act No. 4817, Dec. 22, 1994); Article 19 of the former Farmland Lease Management Act (repealed by Article 2 of the Addenda to the Farmland Act, Act No. 4817, Dec. 22, 1994) (see current Article 8 of the Farmland Act)

Supreme Court Decision 87Meu128 Decided February 14, 1989 (Gong1989, 405) Supreme Court Decision 94Da18232 Decided October 25, 1994 (Gong1994Ha, 308) Decided December 21, 1961

Plaintiff 1 and one other

Korea Bank (Law Firm Pok, Attorneys Jeong-chul et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2006Na103296 decided August 31, 2007

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

The grounds of appeal are examined.

A person eligible to purchase farmland under the former Farmland Reform Act (amended by Act No. 4817, Dec. 22, 1994; hereinafter the same) is required to be a person with self-defluence or self-fluence of farmland at the time of sale or purchase, even if the person is not a rural farmer at the time of sale or purchase, or a farmer again becomes a rural farmer, and a farmer referred to in the same Act is defined as a natural person. Thus, even if a corporation, such as a stock company, entered into a contract for the purchase and sale of farmland, barring special circumstances such as Article 51(1) proviso of the former Enforcement Rule of the Farmland Reform Act, such corporation cannot obtain ownership of farmland because it is impossible to obtain certification of purchase and sale of farmland under the former Farmland Reform Act or the former Farmland Lease Management Act (amended by Act No. 4817, Dec. 22, 1994; see, e.g., Supreme Court Decision 2001Do1984, Apr. 19, 20196).

According to the records, the defendant is a corporation that concurrently engages in all business related to the banking business prescribed by the Banking Act and is also a corporation that concurrently engages in trust business, and the contract for the sale and purchase of this case was concluded prior to the repeal of the former Farmland Reform Act. Thus, the contract for the sale and purchase of this case is null and void for the purpose of providing benefits, which is an original impossibility, in accordance with the above legal principles, barring any special circumstances. This does not change on the ground that the defendant is likely to obtain farmland with the permission for diversion of farmland and the acquisition certificate for acquisition of farmland based thereon under the provisions of the Farmland Act.

Nevertheless, the court below did not consider whether the defendant or the contract of this case constitutes the provisions of the proviso of Article 51 (1) of the former Enforcement Rule of the Farmland Reform Act without examining whether there are special circumstances, such as the defendant or the contract of this case, and concluded that the provisional registration of this case, which was made pursuant to the provisions of the current Farmland Act, is valid only for the reason that the defendant is likely to obtain farmland with the permission to divert farmland and the qualification certificate for acquisition of farmland based thereon, etc.

Therefore, without examining the remaining grounds of appeal, 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 on the bench.

Justices Park Si-hwan (Presiding Justice)