Whether a fraudulent act is established in case where other monetary claims are transferred in lieu of satisfaction of the existing monetary obligation (negative with qualification)

A creditor’s right to demand repayment of an obligation, as a natural exercise of his/her right, does not interfere with it on the ground that there exists another creditor, and the debtor also bears the obligation to perform his/her obligation according to the principal place of obligation, and does not refuse to refuse the performance of obligation on the ground that there is another creditor. As such, even in cases where the debtor’s joint security of other creditors is reduced by paying the obligation to a specific creditor in excess of his/her obligation, such performance does not constitute a fraudulent act in principle unless the debtor, in collusion with some creditors and with some other creditors, has an intent to prejudice other creditors. The same applies to cases where another monetary claim is transferred in lieu of the repayment of the existing monetary obligation.

Article 406(1) of the Civil Act

Supreme Court Decision 80Da2613 delivered on July 7, 1981 (Gong1981, 14158), Supreme Court Decision 94Da2961, 2978 delivered on June 14, 1994 (Gong1994Ha, 1956), Supreme Court Decision 2000Da66034 Delivered on April 10, 2001 (Gong2001Sang, 1113)

Teachers or Employees of Korea Mutual Savings Bank (former Mutual Savings Bank: Teachers or Employees of Korea Mutual Savings Bank (Law Firm Jeong, Attorneys Lee Hong-son et al., Counsel for the defendant-appellant)

Cho Jong-ok (Attorneys Lee Im-soo et al., Counsel for the plaintiff-appellant)

Seoul District Court Decision 2002Na9003 delivered on November 28, 2002

The judgment of the court below is reversed, and the case is remanded to the Seoul District Court Panel Division.

1. Comprehensively taking account of the selected evidence, the court below concluded a bill transaction agreement with the non-party 1 corporation (hereinafter "debtor") on May 15, 1995, and determined on April 13, 1998 that the plaintiff had been in collusion with the non-party 1 corporation on the part of the defendant's company's total face value of 1 billion won, promissory notes on May 13, 1998, and promissory notes on May 4 of the same year were extended at a discount of KRW 500 million for the debtor's issuance of the company, KRW 40 million, and the above promissory notes were extended at a discount of KRW 90 million for each of the above payment dates. The above promissory notes were transferred to the non-party 1 corporation's representative director on May 15, 1998, and the defendant had been in collusion with the defendant's assets on the part of the non-party 2 corporation's representative director 9 billion won and notified the debtor of the contents of the bonds by mail on the same day.

2. However, it is difficult to accept such fact-finding and determination by the court below in light of the following points.

A. A. Since a creditor’s right to seek repayment of a debt is a natural exercise of his/her right, it shall not be interfered with on the ground that there exists another creditor, and the debtor does not refuse to perform his/her obligation on the ground that there is another creditor as he/she bears the obligation to perform his/her obligation according to the principal place of the debt. Thus, even in cases where the debtor’s repayment according to the principal place of the obligation exceeds his/her obligation and the joint security of other creditors is reduced, the repayment does not constitute a fraudulent act as a matter of principle unless the debtor, in collusion with some creditors, has an intent to harm other creditors (see, e.g., Supreme Court Decision 200Da66034, Apr. 10, 201). Thus, the same shall apply to cases where another monetary claim is transferred in lieu of the repayment of the existing monetary obligation.

B. According to the records, the defendant, upon the non-party 1's request, remitted KRW 50 million to the debtor company on September 1, 1997 and the non-party 11.27 of the same year (the defendant asserts that the above remitted money was loaned to the non-party 1), and even if the debtor company borrowed KRW 1 billion from the non-party 1 to the non-party 1, it provided the building site and building owned by the non-party 1 as security to the non-party 1's representative director, and it was difficult for the defendant to view that the above bonds were transferred to the non-party 1's company's company's principal and interest during the pertinent period to the non-party 1's debt transfer to the non-party 2's company on behalf of the debtor company, and it was difficult for the defendant to view that the non-party 1 had been transferred to the non-party 1's representative director at the time of the above transfer of real estate and the real estate price of the non-party 2.

C. Nevertheless, the court below's determination that the debtor company in collusion with the defendant, such as the plaintiff, in transferring the claim of this case to the defendant in lieu of the repayment of the existing debt, was erroneous in failing to exhaust all necessary deliberations as to whether the beneficiary and the debtor, which are the elements for establishing a fraudulent act by payment in kind, are in collusion with the defendant. Therefore, the ground of appeal pointing this out has merit.

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Yong-woo (Presiding Justice)