The method of notification where the appraised value of the secured real estate is less than the secured claim amount in the execution of the transfer security right by settlement of attribution;

Unless otherwise agreed, a security right to property transferred for the purpose of security of a claim may be exercised by the method chosen by the creditor among the settlement of disposal or the settlement of attribution, unless otherwise agreed by the creditor. In order for a security right to such property to be exercised by the method of settlement of attribution to be transferred finally to the creditor, it is sufficient for the creditor to inform the debtor that the security right will be reverted to the creditor by the execution of the security right for the reason that the security right is not secured at an appropriate price after evaluating it at an appropriate price and returning the balance, or when the appraised amount falls short of the secured amount, he/she shall complete the settlement procedure by notifying the debtor of such contents. The method of notification of settlement of attribution is possible orally or orally because there is no restriction, and if the appraised amount of the secured property is short of the secured amount of the secured claim, it is sufficient to inform the debtor of the

[Transfer for Security] Article 372 of the Civil Act

Plaintiff 1 and one other (Attorney Choi Jong-soo et al., Counsel for the plaintiff-appellant)

[Judgment of the court below] The Minister of Justice Lee Jong-sung and 1 other

Seoul High Court Decision 99Na20805 delivered on February 23, 2000

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 (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. On the first ground for appeal

A. According to the reasoning of the lower judgment, the lower court acknowledged the following facts based on the employed evidence.

(1) On May 31, 1983, the deceased non-party deceased 2, who borrowed 300 million won from the defendant on June 31, 1983 with the interest rate of 1.6% per annum, and with the due date fixed on June 10, 1988, the annual interest rate of 48 million won (=30 million won x 16%) paid in installments from June 10, 1983 to the above due date (48 million won ±12 months).

(2) The above non-party and the plaintiff 1 (the non-party had already consulted with the non-party on March 29, 197) decided to transfer the real estate of this case to the defendant on May 31, 1983, in order to secure the above loan obligation against the non-party's defendant, the Seoul Jongno-gu Seoul Metropolitan Government real estate 257 large 132.2 square meters and the non-party's 2nd 105.65 square meters and 2nd 102.02 square meters and 26.51 square meters and 26.51 square meters and 26.51 square meters and 30 million won and 200 million won and 30 million won and 70 million won and 200 million won and 198.3 billion won and 198.

(3) Meanwhile, with respect to the relation to the use of the instant real estate, the Nonparty et al. decided to possess and use the instant real estate by the due date for repayment of the said loan, and Plaintiff 1, in form, decided on May 31, 1983 from the Defendant on May 31, 1983, without setting the deposit money, set the lease agreement (No. 3, No. 120 pages, No. 3, No. 120) stating that the lease period for the instant real estate was set at KRW 4 million from June 10, 1983, and that the said lease cannot be rescinded until the due date shall be set at KRW 4 million, and the said lease agreement was paid to the Defendant on the basis of the monthly

(4) Accordingly, the Nonparty, etc. received from the Defendant the loan amount of KRW 100 million on May 31, 1983, and the remaining amount of KRW 200 million on June 9, 1983, and issued and delivered one sheet of KRW 200 million per unit value issued to the Defendant as security, and completed each registration of ownership transfer in the Defendant’s future as Seoul District Court Branch of the Seoul District Court No. 3389 and No. 33390 on June 17, 1983.

(5) On July 5, 1984, the Nonparty paid interest on the said loan, which was to be paid by the Nonparty as a monthly rent for the said lease agreement, and thereafter delay in performing the said loan, such as paying a part of the monthly interest or not paying the said payment. As to the instant real estate, the said bank failed to perform its obligations against Seoul Trust Bank, a mortgagee of the maximum debt amounting to KRW 195 million, which was the sum of the maximum debt amount set up before the registration of ownership transfer was made in the name of the Defendant, and thus the said bank applied for an auction to exercise the right to collateral for the execution of the right to collateral security on December 19, 1985.

(6) On January 20, 1986, the Defendant declared to the Nonparty and the Plaintiff 1 to terminate the above lease contract. On February 27, 1986, the Defendant filed a lawsuit against the Nonparty and the Plaintiff 1 claiming that the above lease contract should be terminated on the ground that the Nonparty and the Plaintiff 1 did not pay the rent for more than 2 years. On February 26, 1986, the Defendant filed a lawsuit claiming the name of the building of this case. On February 26, 1986, the Seoul Trust Bank subrogated the Nonparty’s secured debt amounting to KRW 106,895,560 on behalf of the Nonparty for the preservation of the instant real estate, and terminated the registration of the establishment of each of the above joint collateral under the name of the Seoul Trust Bank.

(7) However, when the defendant was ruled against the non-party and the plaintiff 1 on the ground that the lease cannot be recognized in the above reputation lawsuit, the defendant appealed against this decision and added a preliminary argument that the defendant, upon the appeal of the Seoul Special District Court 86Na2904, received the registration of ownership transfer on the real estate of this case from the non-party et al., to seek the name of the building of this case in order to execute the security right on the premise that the transfer of ownership transfer by the non-party et al. was the registration of security right for the bond security. The Seoul Seoul Special District Court accepted the defendant's preliminary assertion on November 20, 1987, and sentenced the judgment that the non-party and the plaintiff 1 should express the building of this case to the defendant in order to exercise the security right to the non-party and the plaintiff 1. On March 15, 198, the appeal was dismissed and the judgment of the above appellate court became final and conclusive, and accordingly, the non-party et al. also ordered the defendant on February 10, 198.

B. The court below held that the registration of transfer of ownership on the real estate of this case was made for the purpose of securing the obligation, not based on a pure sales contract unrelated to the security for the obligation, as alleged by the defendant, and compared with the records, the above fact-finding and decision of the court below is acceptable, and contrary to the allegations in the grounds of appeal, there is no error of law by misunderstanding the probative value of the disposal document and misunderstanding the facts against the rules of evidence.

In addition, even though it is not bound by the facts established in the judgment on other civil cases, etc., the facts established in the already established civil cases shall be significant evidence unless there are special circumstances. Thus, it cannot be rejected without any reasonable reasoning. In particular, if the parties to two previous and previous civil cases are the same and are the same as the facts that form the basis of the dispute, it shall be further examined (see, e.g., Supreme Court Decisions 90Meu7545, Dec. 11, 1990; 92Da11848, Jun. 12, 1992; 94Da47292, Jun. 29, 1995; 94Da47292, Jun. 29, 195). Thus, the court below did not have any special circumstance to recognize the facts of the real estate transaction other than those recognized in the civil judgment (Evidence 2-2 of evidence A) related to this case. Thus, the ground of appeal concerning this part of the above evidence cannot be justified.

2. On the second ground for appeal

A. Whether the transfer of security is a weak meaning

Furthermore, as in the instant case, the lower court determined that the agreement was valid on the assertion that the Defendant acquired the ownership of the instant real estate without undergoing a settlement procedure due to the Nonparty’s non-party’s default, as well as the so-called strong meaning of transfer that does not need to undergo a settlement procedure, and that there was a special agreement between the Nonparty, Plaintiff 1, and the Defendant, at the time of completing the registration of ownership transfer of the instant real estate, to exclude the reservation or settlement procedures for accord and satisfaction, and that the market price of the instant real estate at that time is equivalent to KRW 580 million in total amount of the maximum debt amount, while the right to collateral security is set up at KRW 1840 million in total amount of the maximum debt amount, while the real value of the instant real estate falls short of the total amount of the principal and interest of the instant real estate, and thus the agreement is valid. Thus, even if the Defendant acquired the ownership of the instant real estate without undergoing a settlement procedure due to the Nonparty’s default, it is difficult to recognize the so-called meaning of transfer requiring settlement procedures, unless there are special circumstances.

In a case where a property right is transferred to a creditor for the purpose of securing a claim, the existence of a security contract is presumed to be a weak meaning of transfer for security which requires settlement procedures between the parties in the case where there is no other special agreement (see Supreme Court Decision 9Da14433, Dec. 10, 199). In comparison with the relevant evidence and records, the court below’s decision that it cannot be recognized that there was an agreement on payment in kind or a special agreement on the exclusion of settlement between the defendant’s assertion, is acceptable. Thus, there is no error of law by misunderstanding the legal principles of transfer for security and misunderstanding the facts. The allegation in the grounds of appeal on this part is not acceptable.

B. Whether procedures for settling accounts for attribution are implemented

Unless otherwise agreed, a security right to property transferred for the purpose of security of a claim may be exercised by the method chosen by a creditor among the settlement of disposal or the settlement of attribution, unless otherwise agreed upon (see Supreme Court Decision 87Meu2685, Dec. 20, 198). In order for a security right to the property to be exercised by the method of settlement of attribution to the creditor, a creditor shall complete the settlement procedure, such as: (a) evaluation at an appropriate price by the creditor; and (b) return the balance after being appropriated to the principal and interest of the secured claim; or (c) notification to the debtor in the event that the amount of the secured claim is less than the amount of the secured claim. However, the method of notification of settlement of attribution can be made orally in writing without any restriction; and (d) if the amount of the secured real estate is less than the amount of the secured claim, it is sufficient to inform the debtor of the purport that the real estate will be reverted to the creditor's provisional registration by the execution of the security right on the ground that it falls short of the amount of the secured claim.

As to the instant case, as of April 30, 198, the Defendant alleged in the ground of appeal that the principal and interest of the instant real estate would be at the time of settling the accounts for attribution of the said real estate, it is reasonable to view that the assessed value of the instant real estate falls short of the secured claim amount, even if based on the judgment of the court below, as of April 30, 198, the total amount of KRW 300,000,000,000,000,000,000,000,000,000,000,000,000,000, won, and the amount of the real estate in the instant case would be 5,766,000,00

However, the court below understood that the defendant's assertion as to the settlement of attribution was acquired as the total amount of principal and interest on bonds and subrogated amount exceeded the value of the real estate in this case without undergoing the settlement procedure, and rejected the defendant's assertion on the ground that such ground alone cannot be deemed as having completed the procedure of settlement of attribution, but it is difficult to accept it as it is in the following point.

According to the records, the defendant sent a written reply dated 26, 198, June 198, 199, and the legal brief dated September 14, 1999, and September 13, 199, to the effect that "the defendant would have been able to repurchase the real estate of this case to the plaintiff 1 on April 20, 198 in order to give the debtor an opportunity to repurchase the real estate of this case, the defendant would have been able to repurchase the real estate of this case by 4.5 billion won, i.e., the amount paid by the defendant, 30 million won of the leased principal and 1.6 million won of the subrogated principal and 4.8 billion won of the real estate of this case, and the defendant would have been able to repurchase the real estate of this case to the above 4.5 billion won of the market price of this case, and the defendant would have been able to purchase the real estate of this case by 14.7 billion won of the above real estate of this case."

Therefore, the court below should have deliberated and judged whether the value of the instant real estate at the time of the above notification falls short of the amount of principal and interest of the Nonparty’s debt, and further, whether the above notification can be deemed as having completed the procedure of settlement of attribution, and whether it is effective as a notification of settlement of attribution to Plaintiff Kim Byung-kick, considering the circumstances at the time of the above notification. However, rejection of the Defendant’s assertion solely on the grounds stated in its reasoning cannot be said to have erred by misapprehending the legal principles on the method of settlement of attribution in case the appraised value of the security in security for transfer falls short of the principal and interest of the obligation, or by failing to properly examine the meaning of the above peremptory notice (Evidence No. 4)

3. Therefore, the part of the judgment below against the defendant is reversed, and that part of the case is remanded to the Seoul High Court and it is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Han-gu (Presiding Justice)