Whether, while a lawsuit for performance filed by an obligor against a garnishee is pending in the court, an execution creditor’s filing a lawsuit for collection against a garnishee constitutes an overlapping lawsuit prohibited by Article 259 of the Civil Procedure Act (negative)

[Majority Opinion] (A) While an action for performance filed by an obligor against a third-party obligor is pending before the court, an execution creditor examines and determines the merits of a lawsuit for collection filed by an execution creditor against a third-party obligor, it shall not be deemed that the third-party obligor imposes unreasonable double response, overlaps with the deliberation of the merits, thereby going against the economy of the lawsuit between the parties and the court, or is highly likely to cause inconsistency and promotion of the judgment.

(B) Although an execution creditor may participate in a performance suit filed by the debtor against a third party debtor pursuant to Articles 81 and 79 of the Civil Procedure Act, where a debtor’s performance suit is pending in the final appeal, a successor’s participation in the lawsuit is not allowed, and an execution creditor’s participation in the lawsuit is not always allowed, and the execution creditor does not have a duty to participate in the performance suit filed by the debtor.

(C) Even where a performance suit filed by a debtor against a third party debtor is pending in the court, the execution creditor may file a lawsuit claiming the performance of a seized claim against the third party debtor, and it is reasonable to view that the performance suit filed by the execution creditor against the third party debtor does not constitute a overlapping lawsuit prohibited by Article 259 of the Civil Procedure Act in relation to the performance suit filed by the debtor.

[Dissenting Opinion by Justice Shin Young-chul, Justice Min Il-young, and Justice Lee In-bok] (A) The prohibition of an overlapping lawsuit under Article 259 of the Civil Procedure Act is naturally the effect of an action resulting from the continuation of the lawsuit. Therefore, even if a prior suit pending in a court is an illegal lawsuit that does not meet the requirements of lawsuit, the lawsuit pending in the lawsuit cannot be dismissed as an unlawful lawsuit that conflict with the prohibition of an overlapping lawsuit, unless the lawsuit is extinguished by withdrawal, rejection, etc.

(B) Although a performance suit first filed by the debtor against the third debtor and a collection suit subsequently filed by the creditor against the third debtor, the parties to the lawsuit are substantially identical and the subsequent suit constitutes a double suit.

(C) The execution creditor is entitled to participate in a performance suit filed by the debtor against the third debtor pursuant to Articles 81 and 79 of the Civil Procedure Act. As such, even if the prohibition principle of overlapping lawsuit, which is the basic legal principle stipulated in the Civil Procedure Act, is broken down, it is not permissible to file a lawsuit for collection separate from the lawsuit for performance filed by the debtor against the execution creditor. However, as pointed out in the Majority Opinion, if the execution suit filed by the debtor against the third debtor is issued a seizure and collection order for the claim pending in the final appeal, it is impossible for the execution creditor to participate in the lawsuit as a successor in the final appeal. However, even in this case, the court of final appeal should ex officio investigate the situation where the debtor lost its standing due to the seizure and collection order, and reverse the part of the lawsuit for which the seizure and collection order is issued, so the execution creditor shall participate in the lawsuit as a successor in the appeal

Articles 79, 81, and 259 of the Civil Procedure Act; Articles 238 and 249(1) of the Civil Execution Act

Korea Housing Finance Corporation (Law Firm Roon, Attorneys Seo Young-gu et al., Counsel for the plaintiff-appellant)

Korea Housing Guarantee Co., Ltd. (Law Firm Chuncheon, Attorney Yoon Tae-tae, Counsel for the defendant-appellant)

Seoul High Court Decision 2012Na83409 decided January 31, 2013

The judgment of the court of first instance is reversed, and the case is remanded to the Panel Division of the Seoul Central District Court.

We examine the grounds of appeal.

1. The purport of prohibiting a double suit under Article 259 of the Civil Procedure Act is to avoid such unreasonable and prevent inconsistency and promotion of judgment, as it is against the litigation economy by imposing double response burden on the other party when allowing a new suit for a case which is already pending in the court as abuse of the litigation system.

However, when there exists a seizure and collection order against a third party debtor, only the execution creditor who has received the seizure and collection order under Articles 238 and 249(1) of the Civil Execution Act (hereinafter referred to as " execution creditor") may file a lawsuit claiming the performance of the claim attached against the third party debtor. The debtor loses the standing to file a lawsuit claiming performance against the third party debtor regarding the claim against which the seizure and collection order have been issued. Thus, the lawsuit for performance filed by the debtor against the claim against which the seizure and collection order have been issued shall be dismissed without any need to deliberate and determine on the merits (see, e.g., Supreme Court Decisions 9Da2388, Apr. 11, 200; 2007Da60417, Sept. 25, 2008). Such circumstance is an ex officio examination and determination by the court without any allegations by the parties (see, e.g., Supreme Court Decisions 200Da5175, Mar. 25, 2004>

Therefore, while an action for performance filed by a debtor against a third party debtor is pending in the court, it is deemed that an execution creditor examines and determines the merits of the lawsuit for collection filed by the third party debtor against the third party debtor. Thus, it cannot be deemed that the third party debtor unreasonably imposes an excessive burden on the third party debtor, overlaps with the deliberation on the merits, thereby going against the economy of litigation between the parties and the court, or is highly likely to cause contradiction

Rather, the dismissal of an execution creditor’s lawsuit for collection against a third party obligor on the ground that it constitutes a overlapping lawsuit for collection, and the dismissal of a debtor’s lawsuit for performance, which is not qualified to be the party, is in conflict with the economy of the lawsuit to allow the execution creditor to file a lawsuit for collection again by seeking to dismiss the lawsuit for collection. Moreover, it is unreasonable to deem that the exercise of the right to file a lawsuit for collection against the execution creditor, which is guaranteed by the Supreme Court precedents as seen earlier, and the substantive judgment thereof is unreasonable on the grounds of the refusal of a debtor’s lawsuit for performance prohibited by the seizure and collection order.

Meanwhile, an execution creditor may participate in a performance suit filed by the debtor against a third party debtor pursuant to Articles 81 and 79 of the Civil Procedure Act. However, where a debtor's performance suit is pending in the final appeal, a successor's participation in the lawsuit is not allowed, so an execution creditor's participation in the lawsuit is always allowed, and the execution creditor is not obligated to participate in the performance suit filed by the debtor.

Therefore, even where a lawsuit for performance filed by a debtor against a third party debtor is pending in the court, an execution creditor may file a lawsuit for collection against a third party debtor claiming the performance of a seized claim, and it is reasonable to view that a lawsuit for collection filed by an execution creditor against a third party debtor does not constitute a overlapping lawsuit prohibited by Article 259 of the Civil Procedure Act in relation to a lawsuit for performance filed by the debtor.

2. A. According to the reasoning of the first instance judgment as cited by the lower court, the Nonparty filed a lawsuit claiming reimbursement against the Defendant on November 10, 2010, stating that (i) on November 10, 2010, the Seoul Southern District Court 2010Kahap23129, and (ii) he paid KRW 247.6 million as down payment and intermediate payment to Alanna Construction; (iii) on the ground that the said new apartment construction is suspended, the Plaintiff was liable to pay the above KRW 247.6 million as deposit for refund performance under the Housing Sale Guarantee Contract concluded with Alanna Construction; and (iv) on the ground that the first instance judgment citing the Nonparty’s claim for reimbursement on May 24, 2011, which was issued by the Seoul Southern District Court 20,300,000 won and delayed payment thereof, based on the Nonparty’s appeal, the Nonparty’s claim for reimbursement against the Defendant’s claim for reimbursement of KRW 136.36,016.

B. Based on the aforementioned factual basis, the lower court upheld the first instance judgment which dismissed the instant lawsuit to the same purport, on the grounds that, inasmuch as the Nonparty lost its standing as a party to the instant collection order regarding the part of the lawsuit claiming the payment of the refund, which was brought by the Nonparty against the Defendant, and thus, deemed unlawful, insofar as the lawsuit claiming the payment of the refund was pending in the court, as long as the lawsuit claiming the payment of the refund was pending in the court, the instant lawsuit, which was the subsequent suit filed by the Plaintiff,

C. However, according to the legal principles as seen earlier, the instant lawsuit filed by the Plaintiff, an execution creditor, does not constitute a overlapping lawsuit prohibited under Article 259 of the Civil Procedure Act, and the judgment below otherwise determined by misapprehending the legal principles as to the prohibition of overlapping lawsuit with the collection lawsuit, thereby adversely affecting the conclusion of the judgment.

3. Therefore, the judgment of the court below is reversed, but this case is sufficient for the court to render a direct judgment, and therefore, it is decided to revoke the judgment of the court of first instance and remand the case to the court of first instance for a new trial and determination pursuant to the main sentence of Article 418 of the Civil Procedure Act. It is so decided as per Disposition by the assent of all participating Justices except for a dissenting opinion by Justice Shin Young-chul, Justice Min Il-young and Justice Lee In

4. Dissenting Opinion by Justice Shin Young-chul, Justice Min Il-young, and Justice Lee In-bok

The majority opinion states that a collection lawsuit filed by an execution creditor against a third party obligor does not constitute a double lawsuit prohibited under Article 259 of the Civil Procedure Act in the event that the debtor filed a performance lawsuit against the third party obligor and the case is pending in the court. However, we cannot agree with the majority opinion for the following reasons.

A. The prohibition of double lawsuit under Article 259 of the Civil Procedure Act is naturally the effect of an action that occurs due to the continuation of the lawsuit. Therefore, even if a lawsuit which is pending before the court is an illegal lawsuit that does not meet the requirements of lawsuit, the lawsuit which is pending in the court cannot be dismissed as an illegal lawsuit that conflicts with the prohibition of double lawsuit (see Supreme Court Decision 97Da45532 delivered on February 27, 1998) unless the continuation of the lawsuit is extinguished by withdrawal, rejection, etc.

The principle of prohibition of double lawsuit applies to cases where the whole lawsuit and the subsequent suit are the same as those of the previous lawsuit. However, when a seizure and collection order is issued for a claim, an execution creditor may file a lawsuit claiming performance of the claim attached against the third debtor, and the debtor loses the standing to file a lawsuit against the third debtor for performance against the third debtor. However, the seizure and collection order only grants the execution creditor the right to collect the claim against the third debtor, and it does not mean that the claim against the third debtor is either transferred or reverted to the execution creditor (see Supreme Court Decision 2010Da56067, Dec. 23, 2010). Therefore, even if the parties to the lawsuit brought a subsequent collection against the third debtor and the execution creditor brought a subsequent lawsuit against the third debtor, the subsequent lawsuit constitutes the same case and the subsequent lawsuit is the same.

Meanwhile, in a case where a creditor files a lawsuit against a third-party debtor on behalf of a debtor in accordance with Article 404(1) of the Civil Act in the court where the debtor files a lawsuit against the third-party debtor on the same subject matter of lawsuit, or on the contrary, the debtor is pending in the court where the creditor files a lawsuit against the third-party debtor on the same subject matter of lawsuit, and where the creditor files a creditor subrogation lawsuit against the same third-party debtor on the same subject matter of lawsuit while the creditor subrogation lawsuit is pending in the court, all of the lawsuit pending in the court last time is illegal as a lawsuit instituted against the prohibition principle of overlapping the lawsuit under Article 259 of the Civil Procedure Act (see Supreme Court Decisions 73Da351, Jan. 29, 197; 80Da2751, Jul. 7, 1981; 87Meu1618, Sept. 27, 198; 2005).

Thus, an execution creditor's lawsuit for collection against a third debtor and an obligee's lawsuit for performance against a third debtor by subrogation of a debtor pursuant to Article 404(1) of the Civil Act cannot be different in that the obligee exercises the obligor's right against a third debtor. Thus, there is no reason that the legal principles of the above precedents do not apply where an execution creditor files a performance suit against a third debtor and an execution creditor files a performance suit against a third debtor while the debtor is pending in the court.

B. The Majority Opinion, on the ground that an execution creditor’s lawsuit for collection filed against a third party debtor is in conflict with the prohibition of double lawsuit filed by the debtor in relation to the lawsuit for performance against the third party debtor, and that it is against the economy of the lawsuit to allow the execution creditor to file a lawsuit for collection again by rejecting the lawsuit for performance of the debtor who is not qualified to be the party.

However, since an execution creditor may participate in a performance suit filed by the debtor against a third party debtor pursuant to Articles 81 and 79 of the Civil Procedure Act, it is not allowed to file a lawsuit for collection separate from the performance suit filed by the debtor to the execution creditor even when the prohibition principle of overlapping lawsuit, which is the basic legal principle stipulated in the Civil Procedure Act, is violated. However, as pointed out in the majority opinion, where the execution suit filed by the debtor against the third party debtor is issued a seizure and collection order for the claim pending in the final appeal, it is impossible for the execution creditor to participate in the lawsuit as a successor in the final appeal. However, even in this case, even in the final appeal, the court of final appeal should ex officio investigate the situation where the debtor lost the standing as the party due to the seizure and collection order, and reverse the part where the seizure and collection order is issued (see, e.g., Supreme Court Decision 2001Da51510, Mar. 26, 2004). The execution creditor shall participate in the lawsuit as a successor in the judgment for reversal

Furthermore, even in the case of this case, as seen earlier, it is difficult to view that allowing a creditor, who has been subject to seizure and collection order, to file a separate lawsuit for collection without participating in the above lawsuit, would result in imposing double burden on the third debtor.

C. According to the reasoning of the lower judgment, the lower court rejected the Plaintiff’s assertion on the following grounds: (a) the Plaintiff’s following assertion, i.e., when a seizure and collection order for the claim was issued, only an execution creditor may file a lawsuit against the garnishee; and (b) the obligor loses the standing to file a lawsuit for performance against the Defendant, who is the garnishee, insofar as the instant collection order was served on the Defendant; (c) so long as the Nonparty, who is the obligor, was an unlawful lawsuit filed by the non-party against the Defendant, who is the garnishee; and (d) even if the lawsuit for performance of the above repayment amount was filed earlier than the instant lawsuit, the instant lawsuit filed by the Plaintiff, the execution creditor, who is the execution creditor, does not constitute an overlapping lawsuit; and (e) even if the lawsuit for performance of the above repayment amount is illegal as filed by the non-party without standing to sue

In light of the above legal principles, the above determination by the court below is just, and there is no error in the misapprehension of legal principles as to the standing to file a lawsuit for collection or the prohibition of overlapping lawsuits.

In addition, all of the remaining arguments in the grounds of appeal are premised on the legitimacy of the instant lawsuit. Thus, the instant lawsuit cannot be accepted without the need to further examine, as long as it falls under a double lawsuit.

Therefore, it is reasonable to dismiss the appeal of this case.

D. For the foregoing reasons, we express our dissent from the Majority Opinion.

Justices Yang Chang-soo (Presiding Justice)