[1] The standard for determining a title trust relationship which generates a “trust relationship” that constitutes the status of a person who keeps another’s property in the crime of embezzlement

[2] Legal nature of the corporate restructuring association under the Industrial Development Act (=a combination under the Civil Act), and whether the authority of the general partner can be restricted by the rules of association or the resolution of the general meeting of association members

[3] The case holding that a crime of embezzlement is established in case where an executive member of a corporate restructuring association under the Industrial Development Act sold at will stocks kept in custody in the name of the association, notwithstanding the rules of association stipulated by the resolution of the general meeting of association

[1] The crime of embezzlement is an offense involving a person who keeps another’s property to embezzled or refuse to return such property. The subject of embezzlement is the person who keeps another’s property. Here, the subject of embezzlement refers to the possession of property through a consignment relationship. As such, for the crime of embezzlement to be established, there is a legal or de facto consignment relationship between the custodian of the property and the owner of the property (or any other person). The title trust relationship creating such trust relationship is not necessarily established by an express contract between the truster and the trustee, but can also be established by implied agreement. Whether there was an implied agreement on the title trust should be determined reasonably in light of social norms by taking into account all the circumstances such as the relationship between the truster and the trustee, the motive and background leading up to the trustee’s custody, the transaction details and mode between the truster and the trustee.

[2] Since the legal nature of a corporate restructuring association under the Industrial Development Act is a partnership under the Civil Act, the provisions on associations under the Civil Act shall apply to the extent that it does not contravene the Industrial Development Act and the Enforcement Decree thereof. Therefore, even though it is not possible to deprive the corporate restructuring company, which is a general partner of the corporate restructuring association, of the right to manage and operate its union property, in light of the purport of the Industrial Development Act’s provision, the restriction may be placed on the general partner’s disposal

[3] The case holding that the crime of embezzlement is established in case where an executive member of a corporate restructuring association under the Industrial Development Act has sold at will stocks kept in custody in the name of the association, notwithstanding the rules of association stipulated by the resolution of the general meeting of association

[1] Article 35 (1) of the Criminal Code / [2] Articles 15 (4) and 15-3 (1) of the Industrial Development Act / [3] Articles 355 (1) and 356 of the Criminal Code, Articles 15 (4) and 15-3 (1) of the Industrial Development Act

[1] Supreme Court Decision 2005Do2413 decided Jun. 24, 2005 (Gong2005Ha, 1293), Supreme Court Decision 2007Do1082 decided May 31, 2007 (Gong2007Ha, 1012)

Defendant

Prosecutor

Law Firm Law 25, Attorneys Kim Young-won et al.

Seoul High Court Decision 2007No179 decided July 12, 2007

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

We examine the grounds of appeal.

1. Regarding ground of appeal No. 1

The crime of embezzlement is an offense involving embezzlement or refusal by a person who keeps another’s property. The principal agent of embezzlement is a person who keeps another’s property in custody, and the custody here refers to possessing another’s property through a consignment relationship. Thus, for the crime of embezzlement to be established, there exists a legal or de facto consignment relationship between the custodian of the property and the truster (or any other principal authority). (See Supreme Court Decisions 2005Do2413, Jun. 24, 2005; 2007Do1082, May 31, 2007; 2007Do1082, May 31, 2007). The title trust relationship generating such trust relationship is not necessarily established only through an express contract between the truster and the trustee, but also can be established through an implied agreement between the truster and the truster, in light of social norms (see Supreme Court Decision 200Da49091, Jan. 5, 201).

According to the reasoning of the judgment of the court below, the court below reversed the judgment of the court of first instance which found the defendant guilty on the charges that the defendant refused the above victims' request for return of the social stocks held in trust under the name of the defendant for the above victim and embezzled them by refusing to return 786,000 shares of the social stocks held in trust under the name of the defendant for the above victim, and received 1,877,358 shares of the signal control corporation (hereinafter referred to as "signal control corporation") from the victim non-indicted 1, and received 4 billion won shares of the signal control corporation (hereinafter referred to as "signal control corporation") from the victim's domestic logistics, and embezzled them under the name of the victim's social trust held in the name of the representative director, while the defendant received 7,358 shares from the victim's non-indicted 1 (hereinafter referred to as "mail control corporation"), the defendant was not guilty on the grounds that the above explicit or implied agreement between the defendant and the non-indicted 1 and the non-indicted 1 were not concluded.

However, this decision of the court below is not acceptable.

According to the records, it is difficult for the Defendant to take over and manage non-indicted 1’s new shares in the name of non-indicted 1’s new shares, which were hard to obtain from the non-indicted 2’s representative director, with the Defendant’s assistance of the non-indicted 1’s new shares, and that it was difficult for the Defendant to take over the non-indicted 1’s new shares in the name of the non-indicted 3’s new shares and the non-indicted 1’s new shares that were hard to obtain from the non-indicted 5’s new shares, and that the non-indicted 2’s new shares that were purchased from the non-indicted 3 to the non-indicted 1’s new shares that were hard to obtain from the non-indicted 3’s new shares, and that the non-indicted 1’s new shares that were purchased from the non-indicted 1’s new shares that were the non-indicted 1’s new shares that were 1’s new shares that were purchased from the non-indicted 3’s new shares.

In light of the above legal principles and these circumstances, Non-Indicted 1 and Non-Indicted 2 have the defendant accept and operate a signal control system by acquiring the signal control system by proxy. Accordingly, the defendant paid the acquisition fund to the defendant, and the defendant acquired the shares of the signal control system by using the above funds. Thus, it can be sufficiently recognized that there was an implied agreement between the defendant, Non-Indicted 1 and Non-Indicted 2 to trust the shares of the signal control system in the name of the defendant, and therefore, the defendant's refusal to demand the return of the above shares held in custody as the representative director of the social group that is directly the trustee or the trustee, constitutes embezzlement.

Nevertheless, the decision of the court below that judged otherwise is erroneous in the misunderstanding of legal principles as to implied title trust relation or in violation of the rules of evidence, and such illegality has influenced the conclusion of the judgment. The ground of appeal pointing this out has merit.

2. Regarding ground of appeal No. 2

Under the Industrial Development Act, a corporate restructuring association is organized for the purpose of investing in, acquiring, etc. an enterprise subject to restructuring (Article 15(1) of the Industrial Development Act), and a corporate restructuring association shall have an executive member and a supervisory member and become an executive member (Article 15(4) of the same Act). Since an executive member provides that the fund invested in a corporate restructuring association shall be managed for the interest of investors with the care of a good manager (Article 15-3(1) of the same Act), the corporate restructuring association shall be operated with the authority and responsibility of a specialized restructuring company with expertise in corporate restructuring affairs (Article 15-3(1) of the same Act). However, matters necessary for the organization and operation of the corporate restructuring association shall be prescribed by the Presidential Decree (Article 15(7) of the same Act). The legal nature of the corporate restructuring association shall be governed by the provisions of the Civil Act concerning associations under the Industrial Development Act and the Enforcement Decree thereof, even if it is impossible to deprive a specialized restructuring company that is an executive member of its management member of the corporate restructuring association, in accordance with the provisions of the Industrial Development Act.

According to the reasoning of the judgment below, the court below found the defendant guilty on the ground that the defendant violated his occupational duties and embezzled 2,739,010 shares out of the shares in the signal control region by selling 2,739,010 shares among the shares in the signal control region, while the defendant was in the occupational custody of 3,262,05 shares of the signal control region in the name of the Agol Union. The defendant's sale of the signal control shares violates the duties of the Agol Union's general meeting of partners on October 7, 2005, although he clearly expressed his opposition to the sale of the signal control region shares, the court below reversed the first instance judgment on the ground that there was no proof of the crime.

However, the record reveals the following facts: (a) with the consent of 32 members (85% of the total number of shares of investment that serve as the basis for voting rights) present at the temporary general meeting of partners on October 7, 2005, if it is necessary for the implementation of the matters stipulated as the authority of the general meeting by the general meeting of partners due to partial restriction on the executive member’s executive authority and power of representation, the executive member may designate a person to execute the resolution of the general meeting among supervisory members, and in this case, the executive member’s power of representation shall be extinguished and the executive member may execute the resolution on behalf of the association members under the name of the association (proviso to Article 25(1) of the newly established bylaws).

In light of the above legal principles in light of these facts, where it is necessary for the enforcement of the matters stipulated as the authority of the general meeting of the association members, the provisions that allow the executive member to exclude the power of the general meeting shall be null and void in light of the purport of Article 15 (4) of the Industrial Development Act. However, the resolution of the general meeting of the association members which made the disposal of investment assets as the resolution of the general meeting of the association members is merely a restriction on the method of exercising the power of the executive member, and thus cannot be deemed null and void. Thus, if the defendant disposed of the shares of the above signal messages, which were kept in custody as the representative director of the social group formed by Sympha, even though he knows that they would go against the above regulations of the association and the will of the association members, such defendant's act may constitute embezzlement, and in light of

Nevertheless, the judgment of the court below is erroneous in the misapprehension of legal principles as to the corporate restructuring association under the Industrial Development Act, the establishment of embezzlement, and the criminal intent thereof, and it cannot be said that this affected the conclusion of the judgment. The ground of appeal pointing this out has merit.

3. Conclusion

Therefore, the judgment of the court below is reversed and 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 Kim Young-ran (Presiding Justice)