Whether a mortgagee of a right to collateral security prior to the commencement of auction does not separately demand a distribution, is excluded from the distribution of dividends (negative)

In an auction procedure to exercise the security right to immovables, even if the mortgagee prior to the commencement of the auction does not demand a distribution under Article 605 of the Civil Procedure Act which is applied mutatis mutandis by Article 728 of the same Act, it is naturally treated as having demanded a distribution. Therefore, even if such mortgagee did not demand a distribution, he/she shall not be excluded from the distribution of dividends.

Articles 605 and 728 of the Civil Procedure Act, Article 356 of the Civil Act

Private Mutual Savings and Finance Company (Attorney Kim Si-hwan, Counsel for defendant-appellee)

The same occupation Co., Ltd. (Attorney Jeong-chul et al., Counsel for defendant-appellee)

Seoul High Court Decision 95Na4270 delivered on June 29, 1995

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

In an auction procedure to exercise a security right to real estate, even if the mortgagee prior to the commencement of the auction did not demand a distribution under Article 605 of the Civil Procedure Act, which is applied mutatis mutandis by Article 728 of the same Act, the mortgagee shall naturally be treated as having demanded a distribution. Thus, even if such mortgagee did not demand a distribution, he/she shall not be excluded from the distribution of dividends.

According to the reasoning of the judgment below, the court below held that the distribution of this case, which was distributed to the non-party mutual savings and finance company and the defendant, which are subordinate collateral security holders, should have been illegal even though the plaintiff, who had been established the two collateral security in this case, filed an application for auction on the basis of one of them and did not request auction or demand distribution on the remaining one collateral, was preferentially distributed to the non-party mutual savings and finance company and the defendant, which are subordinate collateral security holders, even though they did not request auction on the basis of one of them, and there is no error of law by misunderstanding

Therefore, the appeal is dismissed and all 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 Lee Jae-soo (Presiding Justice)