In case the scope of warranty liability should be limited differently from the text of the mortgage contract printed in the same letter.

Articles 105, 357, and 360 of the Civil Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Han-sung, Attorneys Park Jae-soo and 1 other, Counsel for plaintiff-appellant)

Plaintiff

Defendant

Changwon District Court Decision 2015Na11179 decided January 25, 2017

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

The grounds of appeal are examined.

1. Factual basis

The reasoning of the lower judgment and the record reveal the following facts.

A. On March 10, 2009, the Defendant leased KRW 101,00,000 to Jinju-si ( Address omitted) 300 million (hereinafter “○○ building”). On April 14, 2009, the Plaintiff completed the registration of creation of a neighboring mortgage amounting to KRW 390,000,000 with respect to the real estate owned by him (hereinafter “instant real estate”) in order to secure the obligor’s awareness of the debtor, the mortgagee, the Defendant, and the maximum debt amount, KRW 390,000,000 (hereinafter “instant first collateral mortgage”). The Defendant claimed a repayment order of the lease deposit and the loan payment order issued by Jinju-si District Court (No. 2009Da2768868, 2009Hu27699) and the lease deposit was delivered at the rate of KRW 300,000,000,000,000,000.

On August 18, 2009, the Plaintiff and the Defendant drafted a written agreement stating, “The sum of KRW 340 million,00,000,000,000,000 for the first collateral collateral mortgage amount of KRW 390,000 and KRW 390,000,000 for outstanding outstanding bills, and KRW 10,000,000,000 for outstanding outstanding bills,” and if the Plaintiff repays the total amount of KRW 340,00,000,000,000 after repayment, the Defendant confirms that the Defendant repaid the said entire amount, and that the Defendant’s right should be recognized until the repayment is made.”

B. As to ○○ Building No. 701, 801, and 901 (hereinafter “○○ Building No. 701, etc.”) on October 20, 2009, Ansan completed the registration of creation of a neighboring mortgage with the mortgagee, the Defendant, and the maximum debt amount of KRW 300 million (hereinafter “instant second collateral mortgage”).

C. The Defendant, with interest rate of 30% per annum, lent KRW 76 million on December 21, 2009, KRW 15 million on February 8, 2010, and drafted a notarial deed of a monetary loan agreement, and the Plaintiff jointly and severally guaranteed the above loan obligation within the scope of principal.

D. As to May 19, 2010 ○ building No. 701, Jun. 19, 2010, the registration of the establishment of a neighboring mortgage with the mortgagee, the Defendant, and the maximum debt amount of KRW 200 million was completed (hereinafter “instant third collateral mortgage”).

E. The Defendant: (a) made a demand for distribution of KRW 340,754,480 as a collection authority with respect to the obligor’s awareness in the distribution procedure for Jinwon District Court Branch 2009tagi531; and (b) received the distribution of KRW 47,084,950 on March 9, 2010. In addition, in the voluntary auction procedure for ○○ Building 701, May 21, 2012, the court made a distribution schedule that distributes KRW 164,713,476 to the Defendant, who is the mortgagee of the instant case, as the third place of mortgage, as the distribution method for KRW 164,713,476 on September 17, 2012; and (c) revised the distribution schedule by revising the distribution schedule to distribute KRW 329,29,642 on March 18, 2015.

F. On May 26, 2014, the court prepared a distribution schedule with the content that distributing KRW 26,861,385 in the order of 8rd priority to the Defendant, a mortgagee of the first priority of the instant case (hereinafter “instant distribution schedule”). The Plaintiff raised an objection against the entire amount of dividends to the Defendant, and filed a lawsuit of demurrer against the instant distribution.

2. A. The lower court accepted the Plaintiff’s assertion on the following grounds.

(1) On August 18, 2009, the Plaintiff and the Defendant determined the secured claim of the instant collateral No. 1 as KRW 340 million. The secured claim of the instant collateral No. 2 is also KRW 340 million, and does not include loans of December 21, 2009 and loans of February 8, 2010, incurred after the said collateral was established. The secured claim of the instant collateral No. 3 collateral includes all the above secured claims arising up to the point of time.

(2) The Defendant allocated KRW 47,084,950 to KRW 340,00,000,000 as dividends in the distribution procedure of the said 2009tagae531, and the secured claim of the instant 1 collateral remains in KRW 292,915,050. After all, the amount distributed to the Defendant in the distribution procedure of KRW 701,000 for the instant 701, etc. shall be preferentially appropriated for the secured claim of the instant 2 collateral security, and the remainder shall be appropriated for the secured claim of the instant 3 collateral security. In the instant distribution procedure, any money exceeding KRW 292,915,050 to the Defendant was distributed to the Defendant, and accordingly, the secured claim of the 1 collateral of the instant 1 collateral was entirely extinguished. Accordingly, the dividend amount to the Defendant should be deleted from the distribution schedule.

B. As a written contract to establish a right to collateral security is a disposal document, barring any special circumstance, the content of the declaration of intent should be interpreted according to the language and text of the contract. However, in cases where the written contract to establish a right to collateral security is uniformly printed and used in the form of a general transaction agreement, and it can be recognized that the intent of the parties concerned was to only a specific obligation as a secured obligation, unlike the language and text of the contract, in light of various circumstances, such as the process and purpose of concluding the contract to establish a right to collateral security, the amount of the secured obligation, and the mutual relationship between the mortgagee, the debtor, and the creditor, the scope of the liability for warranty should be limited according to the intent of the parties concerned (see, e.g., Supreme Court Decisions 89Meu12152, Jul. 10, 199; 94Da89

Examining the reasoning of the lower judgment in light of the record, the lower court is justifiable to have determined the secured claim based on the foregoing legal doctrine and determined that the claim was extinguished by satisfaction of claim. In so determining, the lower court did not err by misapprehending the legal doctrine on the method of allocating secured claim of the right to collateral or by misapprehending the principle of free evaluation of evidence contrary to logical

3. Conclusion

The Defendant’s appeal is without merit, 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 Lee Dong-won (Presiding Justice)