[1] In a case where an obligor delivers a bill to the obligee with respect to the performance of an existing obligation, and the principal obligor under the bill is not identical to the obligor in the underlying relationship, whether the bill is presumed to have been issued “for payment” for the existing obligation (affirmative in principle)

[2] The case reversing the judgment of the court below which held that the payment of the sale price liability was not extinguished on the ground that the sale price was made for the sale price, although there is a lot of room to view that the delivery of a promissory note issued by a third party to the seller was made in lieu of payment in the sale price in the sale contract for the food manufacturing factory

[1] When a debtor delivers a bill to a creditor with respect to the performance of an existing obligation, the intention of the party concerned is divided into "in lieu of payment" of the existing cause obligation, namely, "a case where the existing cause obligation is extinguished and the existing obligation is to continue to exist, "for payment" is delivered for the purpose of the security for payment of the existing obligation, and the so-called "for security" is delivered for the purpose of the security for payment of the existing obligation. If the principal debtor in the bill is not the same as the debtor in the cause relationship, it is presumed that the payment is scheduled by the third party in the bill, and it is presumed that the payment is made by the principal debtor in the bill, but such presumption is broken if there are special circumstances to deem that the payment is given in lieu

[2] The case reversing the judgment of the court below that the payment of the purchase price liability was not extinguished on the ground that the sale price was made for the sale price, although there is a lot of room to view that the delivery of a promissory note issued by a third party to the seller was made in lieu of payment in the sale price in the sale contract for the food manufacturing factory

[1] Article 460 of the Civil Code, Articles 14, 28, and 78(1) of the Bills of Exchange and Promissory Notes Act / [2] Article 460 of the Civil Code, Articles 14, 28(1), and 78(1) of the Bills of Exchange and Promissory Notes Act

[1] Supreme Court Decision 93Da12213 delivered on October 13, 1995 (Gong1995Ha, 3746), Supreme Court Decision 95Da25060 delivered on November 8, 1996 (Gong1997Sang, 713), Supreme Court Decision 97Da126, 133 delivered on March 28, 1997 (Gong197Sang, 1221), Supreme Court Decision 2005Da38249, 38256 delivered on November 10, 205

Viendi Co., Ltd. (LLC LLC, Attorneys Park Sung-ho et al., Counsel for the defendant-appellant)

NANPPPP Co., Ltd. (Law Firm Lee & Lee, et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2009Na74290 decided May 20, 2010

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined.

1. The intent of a party at the time of delivering a bill to a creditor with respect to the performance of an existing obligation is divided into cases where a debtor terminates an existing cause obligation and intends to continue to exist only a new cause obligation, and the so-called “for payment” is delivered for the purpose of securing the payment of an existing obligation by continuing to exist an existing cause obligation, and the so-called “for security” is delivered for the purpose of securing the payment of an existing obligation. If the principal debtor in a bill is not identical with the debtor in a cause-related relationship, it is presumed that the payment is scheduled by the third party, and it is presumed that the delivery is made by the principal debtor in the bill as a third party, but such presumption is broken, if there are special circumstances to deem that the payment is given in lieu

2. According to the reasoning of the judgment below, the court below rejected the defendant's assertion that the liability for down payment and late payment was extinguished by delivering to the plaintiff a promissory note amounting to KRW 4.5 billion at par value to the plaintiff in lieu of the payment of down payment and late payment, on November 11, 2004, in relation to the part where the plaintiff's claim for the payment of the purchase price of the site, buildings, appurtenant facilities, and all machinery and equipment (hereinafter referred to as "lapared factory") of the manufacturing plant of the health functional food located in the Chungcheong-gun, Chungcheongnam-gun, the plaintiff sold to the defendant on November 11, 2004 (hereinafter referred to as the "lapar number omitted"), on the part of the plaintiff's claim for the payment of the down payment and late payment, barring any special circumstances.

3. However, we cannot accept the above judgment of the court below.

According to the facts and records acknowledged by the court below, the plaintiff's initial representative director: (1) transferred the plaintiff's shares and management rights to the non-party 2 on September 30, 2004; (2) the non-party 1 paid 12.3 billion won to the non-party 1; and (3) the non-party 1 paid the non-party 4.5 billion won to the non-party 2 at the time of concluding the sales contract for the non-party 1; and (4) the non-party 1 paid the non-party 5 billion won to the non-party 2 at the non-party 1's delivery of the non-party 4.7 billion won to the non-party 1, the non-party 2; and (4) the non-party 2 delivered the non-party 1's non-party 2's non-party 1's non-party 1's non-party 1's non-party 1's non-party 1's non-party 2's non-party 1's non-party 2's non-party 2's.

The facts are as follows: ① the Plaintiff issued a certificate of deposit equivalent to down payment and intermediate payment to the Plaintiff immediately after the receipt of the said promissory note; ② the Plaintiff’s obligation to transfer ownership to perform the obligation to receive the intermediate payment of the purchase price of the original factory was immediately fulfilled on Nov. 17, 2004, immediately after the issuance of the said promissory note from the Defendant; ③ the Plaintiff transferred the said promissory note to the Daegu Fisheries Co., Ltd. which is the issuer; ④ at the time of the agreement on Aug. 1, 2005, the Plaintiff jointly and severally guaranteed the non-party 2’s obligation to pay the unpaid payment to the non-party 1 as security at the time of the agreement on Aug. 1, 2005, did not include the down payment and intermediate payment of the sales price of the original factory to the Plaintiff who provided the non-party 1 as security, and at the time of the agreement between the Plaintiff and the non-party 2 to deliver the said promissory note to the Plaintiff in lieu of the above purchase price of the said KRW 4.500 million.

Nevertheless, the lower court concluded that the Defendant’s obligation for the down payment and the intermediate payment was not extinguished for the reasons indicated in its holding without further examining whether there are circumstances to deem the delivery of the said promissory note as a substitute for the payment of down payment and the intermediate payment. In so doing, the lower court erred by failing to exhaust all necessary deliberations or by misapprehending the legal doctrine in cases where a bill is issued as to the performance of the existing obligation.

4. Conclusion

Therefore, without examining the remaining grounds of appeal, the part against the defendant among the judgment below is reversed, and that part of 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 Lee Hong-hoon (Presiding Justice)