In a case where the registration of a mortgage on the first auction real estate is cancelled by a senior mortgagee who did not make a registration of joint mortgages on other real estate, among the immovable property which is the object of joint mortgages, whether the junior mortgagee may claim subrogation under Article 368(2) of the Civil Act against the third party who acquired a new interest, such as ownership or mortgage, with respect to the said real estate (negative)

Article 482(2)1 and 5 of the Civil Act provides that a third party purchaser shall not be subrogated to the creditor unless the third party purchaser who has acquired the real estate which is believed to have been extinguished due to the repayment of the mortgage, etc. and who has acquired the real estate in advance, in order to protect the third party from the non-defensive damage. Accordingly, if the third party purchaser who has provided the property as security of another party has acquired the said real estate while the third party is not required to make an additional registration with regard to the registration of creation of a collateral on the real estate owned by another person who has pledged his/her property as security, he/she shall not be subrogated to the third party purchaser. However, in relation to the mortgage which is naturally transferred, the necessity of protecting the third party purchaser who has acquired the right thereafter exists as well as in subrogation of the junior mortgagee.

In addition, in the case of subrogation of subordinated mortgagee, the registration of joint mortgage subrogation as stipulated in Article 80 of the Registration of Real Estate Act can be made public to a third party acquisitor. Thus, even if the subrogation registration is required in certain cases, as in the case of subrogation of mortgagee, it is not significantly unfavorable to the subordinated mortgagee. Furthermore, considering the fact that in the case of subrogation of mortgagee, the claim is not transferred in the case of subrogation of subordinated mortgagee as well as the mortgage is transferred, it is difficult to view that there is a need to protect the subordinated mortgagee more always than the mortgagee.

Meanwhile, in case where the mortgage on other real estate held by the senior mortgagee by subrogation of the junior mortgagee is not yet cancelled, and is still in existence in the real estate registration register, even if the mortgage is not registered as joint mortgagee, the third acquisitor is aware that the mortgage exists, or at least the mortgage is publicly announced as joint mortgage, and thus, it is necessary to protect the third acquisitor in relation to the transfer of the mortgage.

In full view of these circumstances, the registration of mortgage on the real estate by the senior mortgagee is cancelled between the subordinate mortgagee of the real estate at first auction and the registration of joint mortgage on the other real estate is not made by the senior mortgagee, and such registration of mortgage is cancelled and it is impossible to verify the existence of mortgage on the register, the junior mortgagee cannot claim subrogation under Article 368(2) of the Civil Act.

Articles 368(2) and 482(2)1 and 5 of the Civil Act, Article 80 of the Registration of Real Estate Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant)

Dae National Construction Industry Co., Ltd. (Law Firm New Daily, Attorney Lee Han-hun, Counsel for the plaintiff-appellant)

The term "folite Community" (Attorney Kim Young-chul, Counsel for plaintiff-appellant)

Daejeon High Court Decision 2012Na1847 decided September 28, 2012

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

The grounds of appeal are examined.

1. A. Article 368(2) of the Civil Act provides that where the proceeds of the auction sale of part of the immovable property which is the object of a joint mortgage are to be distributed first, the joint mortgagee may be paid out of the proceeds of the auction, and in this case the subordinate mortgagee may exercise the mortgage by subrogation of the senior mortgagee with respect to the other immovable property to the extent of the amount which would have been able to be paid out of the proceeds of the auction sale of the other immovable property if he/she would have paid out the proceeds of the auction at the same time. Such subordinate mortgagee’s subrogation is naturally transferring the mortgage on other immovable property owned by the senior mortgagee to the subordinate mortgagee within a certain limit under the law, and thus becomes effective without registration as it constitutes a change in real rights under the provisions of law as stipulated in Article 1

B. However, Articles 482(2)1 and 482(2)5 provide that, in cases where a third-party purchaser who acquired an immovable property by subrogation of a person who has pledged his/her own property as a security transfers to a person who has performed the obligation as a matter of course a matter of course, a third-party purchaser shall not be subrogated to the creditor of the third party unless the third-party purchaser who acquired an immovable property by subrogation of the mortgage, etc. is registered in advance in order to protect the third-party purchaser from any damage caused by the nonperformance. Accordingly, if the third-party purchaser who has pledged his/her property as a security has acquired the said real property while there are several persons who have pledged his/her property as a security of another and did not make an additional registration of another person with regard to the registration of the establishment of the collateral on the real property owned by another person, the mortgagee who has subrogated the said property cannot subrogate the creditor of the third party (see Supreme Court Decision 90Meu10305, Nov. 9, 190).

In addition, in the case of subrogation of subordinated mortgagee, the registration of joint mortgage subrogation as stipulated in Article 80 of the Registration of Real Estate Act can be made public to a third party acquisitor. Thus, even if the subrogation registration is required in certain cases, as in the case of subrogation of mortgagee, it is not significantly unfavorable to the subordinated mortgagee. Furthermore, in the case of subrogation of mortgagee, as in the case of subrogation of mortgagee, the claim is not transferred, compared with the transfer of mortgage as well as the transfer of mortgage, it is difficult to view that there is a need to protect the subordinated mortgagee more always than

Meanwhile, in case where the mortgage on other real estate held by the senior mortgagee by subrogation of the junior mortgagee is not yet cancelled, and is still in existence in the real estate registration register, the third acquisitor is not required to protect the third acquisitor in relation to the transfer of the mortgage, because even if the joint mortgagee did not make a registration of subrogation of the joint mortgage, the third acquisitor knows that the mortgage exists effectively or at least he acquired the relevant real estate with the knowledge of the mortgage being publicly announced as a joint mortgage.

In full view of these circumstances, it is reasonable to view that the subordinated mortgagee cannot claim subrogation under Article 368(2) of the Civil Act against a person who newly acquires an ownership right, mortgage, etc. on the real estate in a situation where the registration of mortgage is cancelled and the existence of mortgage on the register is not verifiable due to the cancellation of the registration of mortgage.

2. According to the reasoning of the judgment below, the court below, based on the adopted evidence, found the following facts: (a) of this case as the object of joint mortgage: (c) of the real estate and the real estate owned by the non-party company owned by the non-party 1, (b) of this case as the object of joint mortgage; (c) of the real estate, the real estate and the real estate owned by the non-party company owned by the non-party 1, and (c) of this case; (b) as the joint mortgagee, the defendant, as the joint mortgagee, received dividends of KRW 680,919,572 out of the reported amount of claims on August 14, 2008; and (c) on August 29, 2008, the defendant was paid the total amount of the debt of the defendant by subrogation of KRW 42,504,105, which is the actual unpaid amount from the non-party 1 to the time of the shortage of dividends; and (d) after the registration of the establishment of the real estate under the non-party 24.

Based on these factual basis, the lower court determined that, in accordance with the latter part of Article 368(2) of the Civil Act, the Plaintiff, a subordinate mortgagee of the instant real estate, could exercise the Defendant’s right to collateral security regarding the instant real estate, by subrogation, to the extent of the amount that the Defendant, a senior mortgagee, could have received reimbursement from the auction proceeds of the instant real estate, to the extent of the amount that, if he had distributed the auction proceeds at the same time, he could have received reimbursement from the auction proceeds of the instant real estate.

The court below held that since the defendant and the non-party 1 had no authority to cancel the registration of the establishment of the establishment of the establishment of the creation of the creation of the creation of the creation of the creation of the existing building of this case between the plaintiff and the non-party 1 who was not entitled to cancel it at will, this constitutes a tort against the plaintiff, and thereafter, the plaintiff did not complete the registration of cancellation of the registration of the establishment of the neighboring building of this case, and the non-party 2 et al. acquired the ownership of the real estate of this case (the non-party 3 et al. acquired the ownership of this case) and the non-party 2 et al. could not oppose the non-party 2 et al. as the plaintiff did not bear an obligation under the substantive law to accept the registration of cancellation of the registration of the establishment of the existing building of this case in relation to the plaintiff

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s determination appears to be based on the legal doctrine as seen earlier, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding the subrogation of subordinated mortgagee under Article 368(2) of the

3. 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 Kim So-young (Presiding Justice)