[1] In a case where the proceeds from the sale of the pre-sale procedure for a part of a taxpayer's ownership from the pre-sale procedure were preferentially allocated to the mortgagee rather than the mortgagee, but the result of absorbing the other taxation claims as soon as the date of seizure was earlier, and the amount actually did not have been distributed, whether it may be asserted that the pre-sale did not have been made to the mortgagee in the pre-sale procedure for another real estate owned by the taxpayer,

[2] Requirements for a mortgagee who subrogated to a senior taxation right holder pursuant to the latter part of Article 368(2) of the Civil Code to meet the requirements for receiving a distribution in the subsequent auction procedure, etc.

[1] Since the seizure priority principle applied to determining the priority among the tax claims, the right of subrogation of the mortgagee against the mortgagee cannot be infringed due to the prior auction procedure for the sale of the proceeds from the sale of the prior auction procedure for the property owned by the taxpayer, so long as the procedures for the allocation of the proceeds from the sale of the prior auction procedure for the property owned by the mortgagee have been proceeded with in preference to the mortgagee, even though even if the amount allocated to the taxation right holders resulted in a failure to obtain the allocation of the amount actually due to the absorption of another taxation claim which is earlier than the date of seizure according to the seizure priority principle, the distribution by the prior taxation right holder shall be deemed as having been made, and it shall not be asserted that the prior taxation right

[2] A mortgagee who subrogated to a tax claim holder who is the first priority pursuant to the latter part of Article 368(2) of the Civil Act may receive a distribution if he lawfully makes a demand by the deadline for demanding a distribution pursuant to Articles 88(1) and 84(1) of the Civil Execution Act, which apply mutatis mutandis to the auction procedure to exercise the security right pursuant to Article 268(2) of the Civil Execution Act, and only where the first priority mortgagee has seized the real estate sold through the last auction or public auction procedure, or requested the delivery or distribution by participating in the auction or public auction procedure for the said real estate and then has requested the delivery or distribution, the subordinate mortgagee shall not be entitled to subrogate

[1] Article 368 of the Civil Act, Articles 35(1)3 and 36 of the Framework Act on National Taxes, Article 99(1)3 and Article 101 of the Framework Act on Local Taxes / [2] Article 368 of the Civil Act, Articles 35(1)3 and 36 of the Framework Act on National Taxes, Articles 9(1)3 and 101 of the Framework Act on Local Taxes, Articles 84(1), 88(1), and 268 of the Civil Execution Act

[2] Supreme Court Decision 2005Da34391 Decided September 29, 2005

SB Savings Bank (Law Firm Rate, Attorneys So-young et al., Counsel for the plaintiff-appellant)

Korea

Seoul High Court Decision 2010Na96654 decided May 13, 2011

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

The grounds of appeal are examined.

1. A. The right of preferential payment has the nature of so-called legal security right in that it is recognized that a right of preferential payment is given to the whole property of a tax obligor within a certain scope. Therefore, inasmuch as a number of real estate owned by a tax obligor is in a position similar to a joint mortgagee for the whole real estate, Article 368 of the Civil Act on Joint Mortgage should be applied by analogy in cases where a right of preferential payment is exercised to a number of real estate owned by a tax obligor (see Supreme Court Decision 2003Da18401, May 26, 2006, etc.).

Therefore, in cases where part of the real estate owned by a taxpayer was sold at the first auction and the tax authority received taxes preferentially by the preferential right to payment of taxes and where the mortgagee of the auction real estate was disadvantaged than the simultaneous distribution of tax claims from the above several real estate pursuant to Article 368(1) of the Civil Act, the latter part of Article 368(2) of the Civil Act shall be applied by analogically applying the latter part of Article 368(2) of the Civil Act. If the tax authority received dividends from other real estate at the same time, the mortgagee is entitled to receive dividends from other real estate by subrogation within the extent of the amount that he could have received reimbursement from other real estate proceeds (see Supreme Court Decision 9Da22311 delivered on Nov. 27, 2001, etc.). In this context, the right of the mortgagee subrogated is not a senior mortgagee but a right to preferential payment, as in subrogation of the senior mortgage as stipulated in the latter part of Article 368(2) of the Civil Act (see Supreme Court Decision 5309Da53274 delivered on Nov. 12, 2009).

B. Meanwhile, in a case where the proceeds from the sale of a taxation claim and a taxation claim, etc. that completed the seizure due to the arrival of the statutory due date prior to the creation date of a mortgage and the statutory due date prior to the creation date of a mortgage, but which completed the seizure due to the arrival of the statutory due to the expiration date after the establishment date of a tax claim and a mortgage, the priority order between the taxation claim and the mortgage except the pertinent tax shall be determined after the statutory due date and the date of the creation of a mortgage, and the proceeds from sale shall be distributed in the same order. However, the priority order between the taxation claims shall be determined according to the priority order according to the priority order, regardless of the date of the establishment of a mortgage (see Supreme Court Decision 2005Du9088, Nov. 24, 200

However, inasmuch as the right of subrogation of a mortgagee is not infringed due to the prior auction procedure for the sale of the proceeds from the sale of the prior auction procedure for a part of a taxpayer’s ownership, as long as the amount allocated to the mortgagee has been subjected to prior auction procedure for the sale of the proceeds from the sale of the proceeds from the sale of a part of the real estate owned by the mortgagee, even if the amount actually distributed to the mortgagee was absorptioned into another tax claim which is earlier than the date of seizure according to the prior auction procedure, it shall be deemed that the right of preferential reimbursement was actually distributed by the mortgagee’s exercise of the right of preferential reimbursement. Thus, it cannot be asserted that the prior auction procedure for another real estate owned by the taxpayer did not have been

C. As can be seen, a mortgagee who subrogated to a tax claim holder who is the first priority pursuant to the latter part of Article 368(2) of the Civil Act may receive a distribution in case where he lawfully makes a demand for distribution by the deadline for demanding distribution pursuant to Articles 88(1) and 84(1) of the Civil Execution Act, which apply mutatis mutandis to the auction procedure to exercise the security right pursuant to Article 268 of the Civil Execution Act (see Supreme Court Decision 2005Da34391, Sept. 29, 2005). In this case, only where the first priority mortgagee later made a seizure of real estate sold through the auction or public auction procedure or requests the delivery or distribution by participating in the auction or public auction procedure of such real estate, the second priority mortgagee cannot subrogate the first priority tax claim holder.

2. Review of the reasoning of the first instance judgment as cited by the lower court and the record reveals the following facts.

A. ○○ Construction Co., Ltd. (hereinafter “○○ Comprehensive Construction”) owned the instant real estate Nos. 1 through 12. However, on May 25, 2007, the Plaintiff set the right to collateral security of KRW 450,000,000 with respect to the instant real estate No. 1, and on April 20, 2007, set the right to collateral security of KRW 910,000,000 with respect to the instant real estate No. 2.

B. Sungnam Tax Office under the Defendant’s control (hereinafter “Defendant”) filed a request for the delivery of the instant real estate under the public sale procedure (hereinafter “instant prior distribution procedure”). On May 29, 2008, the amount of KRW 851,225,680 to be distributed to the Defendant on May 25, 2007, which was earlier than the date of establishment of the Plaintiff’s right to collateral security, was KRW 4,485,581,730 (= KRW 1,659,73,7360 + KRW 2,825,848,370) with the amount of delinquent taxes imposed on the Daejeon Metropolitan City and the Defendant at KRW 1,65,728,692, KRW 520, KRW 520, KRW 520,5315,370, KRW 297, KRW 470,000, KRW 2700, KRW 974,007.

C. In addition, the amount of KRW 2,203,390,050, which is to distribute the second real estate of this case, was 4,062,459,00 won prior to April 20, 207, the date of establishing the Plaintiff’s right to collateral security (i.e., 626,820,190 won + KRW 1,641,649,69,6900 + Defendant 1,794,589,120 won + KRW 334,066,122, and KRW 874,603,458 won in Daejeon Metropolitan City; KRW 956,432,860 in arrears with the Defendant’s right to collateral security; KRW 205,740 in Daejeon Metropolitan City; KRW 297,406,70 in addition, the amount was allotted to the Defendant; KRW 3605,705,7400 in Daejeon Metropolitan City; KRW 29475,275,27060.7.7

D. The Defendant received the distribution or distribution (hereinafter “distribution”) of KRW 1,929,748,061 in all as shown in the distribution status table in the judgment of the court of first instance, as in the public auction procedure and the auction procedure for the real estate Nos. 3 through 12 owned by ○○ General Construction, which were sold in succession thereafter (hereinafter “instant distribution procedure”).

However, in the subsequent distribution procedure of the instant case, the Plaintiff filed a report on the right and a request for distribution with the purport that “if the proceeds from sale of each of the instant real estate was distributed at the same time, the senior tax authority shall be subrogated to the amount that could have been distributed as a mortgagee of the instant real estate No. 1 and 2,” but failed to receive

3. Examining the above facts in light of the legal principles as seen earlier and the evidence duly admitted by the court below, (1) if the Government-si (tax claim amounting to KRW 626,820,190) and Daejeon Metropolitan City (tax claim amounting to KRW 1,641,049,69,690) and the defendant (tax claim amounting to KRW 1,794,589,120) received dividends from the real estate Nos. 1 through 12 of this case at the same time, the sum of the amount to be apportioned reaches KRW 8,057,759,711, and the amount to be apportioned exceeds the aggregate amount of the above tax claim even if the amount to be apportioned was excluded from delinquent portion and the corresponding tax amount, as alleged by the plaintiff in relation to the amount to be apportioned to the real estate No. 2 of this case, there is a possibility that the plaintiff would have received disadvantages prior to the distribution of the real estate, as alleged by the plaintiff.

Therefore, if the plaintiff, who had lawfully completed a demand for distribution in the subsequent distribution procedure of this case, received dividends from the Speaker-si, Daejeon Metropolitan City, and the defendant at the same time from the real estate Nos. 1 through 12, the plaintiff may claim the right to preferential payment, rather than the plaintiff's mortgage, in subrogation of the plaintiff's government, Daejeon Metropolitan City, and the defendant, within the limit of the amount that could have been repaid by the right to preferential payment from the proceeds from the sale of the real estate Nos. 3 through 12 of this case, and may receive dividends in the subsequent distribution procedure of this case. As such, the defendant cannot deny the plaintiff's right to preferential payment, subrogated to the defendant, etc. in the subsequent distribution procedure of this case, on the ground that the Government-si, Daejeon Metropolitan City, and the

4. Nevertheless, the lower court determined otherwise that even if the Plaintiff was unable to receive the distribution due to the tax claims of the Defendant, etc. taking precedence over the Plaintiff in the instant prior distribution procedure, the lower court could not assert the right to preferential payment in the instant subsequent distribution procedure by subrogation of the Defendant, who was distributed one-lane based on the right to preferential payment in the instant prior distribution procedure, but failed to receive the actual distribution due to the prior distribution principle

Therefore, this judgment of the court below is erroneous in the misapprehension of legal principles as to the preferential tax payment right, the application by analogy of joint mortgage under Article 368 of the Civil Code, and the subrogation of preferential tax payment right, which affected the conclusion of the judgment

5. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim So-young (Presiding Justice)