In a case where a creditor and a debtor have concluded a security contract, but a creditor has not completed a provisional registration or a registration of transfer of ownership with respect to real estate for security, and the creditor has agreed to collect claims by disposing of real estate for security to another party without undergoing the procedures for settlement of attribution, whether such agreement is null and void in violation of the Act on Provisional

Articles 3 and 4 of the Provisional Registration Security Act (hereinafter “Provisional Registration Security Act”) provide for the procedure for settling accounts for attribution by a creditor as a means of executing a “security right” under a security contract under Article 2 subparag. 1 of the Provisional Registration Security Act. Thus, in order to be subject to Articles 3 and 4 of the Provisional Registration Security Act, a creditor is required to acquire a “security right” by completing provisional registration or ownership transfer registration with respect to secured real estate. On the contrary, even though a creditor entered into a security contract with a debtor, if a provisional registration or ownership transfer registration is not completed with respect to secured real estate, the “security right” cannot be deemed to have been acquired. In such a case, Articles 3 and 4 of the Provisional Registration Security Act cannot be applied as a matter of principle. Accordingly, even if a creditor and a debtor entered into a security contract on secured real estate, even if the creditor agreed to dispose of secured real estate without following the provisional registration or ownership transfer registration procedure, such agreement constitutes an evasion of the law of provisional registration under the Provisional Registration Security Act, barring special circumstances.

Article 2 subparag. 1, Article 3, and Article 4 of the Provisional Registration Security Act

Supreme Court Decision 96Da31116 delivered on November 15, 1996 (Gong1997Sang, 9) Supreme Court Decision 98Da51220 delivered on February 9, 199 (Gong199Sang, 478)

Plaintiff (Law Firm LLC, Attorneys Oh Jeong-hin et al., Counsel for the plaintiff-appellant)

Ansan Mutual Savings Bank (Law Firm LLC, Attorneys Kang Jong-chul et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2010Na108496 decided November 3, 2011

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

The grounds of appeal are examined.

1. As to the ground of appeal on the primary claim

A. The ground of appeal pointing out the ground of appeal pointing out the decision of the court below rejecting the plaintiff's request for an examination by the plaintiff is not legitimate ground of appeal, since it is a fact-finding court's exclusive right to select evidence. The ground of appeal pointing out in this part is not acceptable.

B. The court below, citing the reasoning of the judgment of the court of first instance, acknowledged the facts as stated in its holding, and rejected the plaintiff's primary claim against the defendant for damages on the premise that there was such deception, based on the fact that there is no evidence to support the plaintiff's assertion that the non-party 1, the manager of the defendant, was willing to transfer the building of this case and corporeal movables, even though it is not possible to transfer the ownership of the building of this case to the plaintiff, and that there is no evidence to support the plaintiff's assertion that it was unnecessary

In light of the records, the above judgment of the court below is just, and there is no error in the misapprehension of the principle of free evaluation of evidence against logical and empirical rules.

2. As to the ground of appeal on the conjunctive claim

A. Articles 3 and 4 of the Provisional Registration Security Act (hereinafter “Provisional Registration Security Act”) provide for the procedure for settling accounts for attribution by a creditor as a means of executing a “security right” under a security contract under Article 2 subparag. 1 of the Provisional Registration Security Act. Thus, in order to be subject to Articles 3 and 4 of the Provisional Registration Security Act, a creditor is required to acquire a “security right” by completing provisional registration or ownership transfer registration with respect to secured real estate. On the contrary, even if a creditor entered into a security contract with a debtor, the creditor cannot be deemed to have acquired a “security right” in the event a provisional registration or ownership transfer registration is not completed with respect to secured real estate, and in such a case, Articles 3 and 4 of the Provisional Registration Security Act cannot be applied as a matter of principle (see Supreme Court Decisions 96Da3116, Nov. 15, 196; 98Da5120, Feb. 9, 199).

B. (1) According to the reasoning of the judgment of the court of first instance as cited by the court below, the non-party 2, who is the owner of the land of this case, has constructed the building of this case on June 1997 without permission from the competent authority, and owned it unregistered. ② On December 3, 2002, the non-party 2 completed the registration of creation of mortgage over the land of this case, 585,000 won, and the non-party 2, which is the National Bank of Korea Co., Ltd., (hereinafter referred to as the non-party 2) on December 22, 2003, the additional registration for the transfer of 00 to the defendant was completed on December 62, 203, 300, the non-party 2 transferred the ownership of the building of this case to the defendant for the purpose of securing the debt for the loan to the defendant, and the ownership of the property of this case and other property transferred to the defendant for sale without delay under the agreement between the plaintiff and the non-party 2.

(2) We examine the above facts in light of the legal principles as seen earlier.

Although Nonparty 2 entered into the instant transfer security agreement on the instant building, which is a building unregistered without permission for the purpose of securing loan debt with the Defendant, the Defendant did not acquire the right to collateral security on the instant building because the ownership transfer registration under the name of the Defendant was not completed. In such a case, in principle, the procedure for settling accounts for attribution under Articles 3 and 4 of the Provisional Registration Security Act cannot be applied.

In addition, Nonparty 2 and the Defendant, when entering into the instant transfer security agreement, grant the right to dispose of the instant building to the Defendant so that the instant building can be disposed of and collected its claims, and in particular, the special agreement is made by presenting the case where the successful bidder becomes the assignee of the instant building. The price of the instant land may decline due to the possibility of establishing statutory superficies on the instant building if only the instant land falls under the ownership of another person, and it is difficult for the successful bidder to individually dispose of only the instant building, which is an unregistered building without permission, to receive an appropriate price. As such, the purport is to prevent the decline in the price of the instant land and to ensure that the instant building can be disposed of at a reasonable price by allowing the successful bidder of the instant land to acquire the instant building together, thereby preventing the decline in the price of the instant land and to ensure that the instant building can be disposed of smoothly at a reasonable price. Considering these circumstances, it is difficult for the Defendant to recover claims through the procedure of settlement of accounts devolving on the instant building, which is an unregistered building, at the time of the instant transfer security agreement.

Therefore, it cannot be deemed null and void on the ground that the above agreement to grant the right to dispose of the building included in the instant transfer agreement violates the Provisional Registration Security Act because it did not follow the procedure for settlement of attribution under Articles 3 and 4 of the Provisional Registration Security Act. Since the Plaintiff was transferred the building of this case from the Defendant who has the right to dispose of the building of this case under the instant transfer security agreement, Nonparty 2 shall be deemed to bear the obligation to directly transfer the ownership of the building of this case to the Plaintiff according to the instant transfer security agreement.

(3) Although the court below’s explanation of its reasoning is somewhat insufficient, since the above agreement to grant disposal authority included in the instant transfer security agreement is null and void in violation of the Provisional Registration Security Act, it is just to reject the Plaintiff’s assertion that the Defendant is liable to compensate the Plaintiff for damages that the Plaintiff would not have the ownership of the instant building by disposing of the instant building without disposal authority, and there is no error in the misapprehension of legal principles as to the interpretation and application of Articles 3 and 4 of the Provisional Registration Security Act, the responsibility for nonperformance, or the validity of the transfer security right.

3. Conclusion

Therefore, the appeal is dismissed, and the 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 Park Poe-young (Presiding Justice)