Whether the renunciation of inheritance may affect the inheritance by substitute, initiated by the inheritee as the person to be succeeded to (negative), and whether the same applies to cases where a lineal ascendant of the person to be succeeded to by substitute due to the renunciation of inheritance by the inheritor (affirmative)

If an inheritor renounces inheritance after the commencement of inheritance due to the death of an inheritee, the inheritance becomes effective retroactively from the commencement of inheritance (Article 1042 of the Civil Act). Accordingly, if the spouse and children who are the first inheritor renounces inheritance, the inheritor shall become the inheritor in the second order. The effect of renunciation of inheritance is limited to the inheritance commenced due to the death of the inheritee, and it does not extend to the inheritance commenced by substitute for the inheritee. This is because inheritance is a cause separate from inheritance, and it is not allowed to waive inheritance until the inheritance commenced by substitute for the inheritee. This is because the lineal ascendant of the inheritee succeeds to the latter by the renunciation of inheritance. The same is also applicable to the case where the lineal ascendant of the inheritee succeeds to the latter by the renunciation of inheritance. Moreover, there is no reason to view otherwise depending on whether the lineal ascendant of the latter is active property, or a negative property, other than the inherited property, as well as the inherited property, regardless of whether the latter owns the inherent property.

Therefore, after the death of an inheritee, his/her spouse and children, who are the inheritor, have renounced inheritance in excess of the inherited property. If the lineal ascendant of the inheritee thereafter died and the inheritance by substitute has commenced pursuant to Articles 1001 and 1003(2) of the Civil Act, it shall be deemed that the inheritor granted simple approval unless the inheritor gives a qualified acceptance or a refusal of inheritance in accordance with the procedures and methods prescribed by the Civil Act. In such a case, it may be deemed that the spouse and children of the deceased inheritee already intended to give up inheritance by substitute due to the death of the inheritee’s lineal ascendant. However, if he/she recognizes the validity of the renunciation of inheritance by substitute inheritance by reason of the refusal of inheritance by clarifying the intention of renunciation of inheritance and the uniform treatment of legal relations, the system of renunciation of inheritance in order to ensure legal stability may be avoided.

Articles 1001, 103(2), 105, 1026 subparag. 2, 1041, 1042, and 1043 of the Civil Act

[Plaintiff-Appellant] Plaintiff 1 and 17 others (Law Firm Gyeong, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

Seoul Guarantee Insurance Co., Ltd. (Dongdong Law Firm, Attorneys Lee Jae-ro, Counsel for defendant-appellant)

Defendant 1 and 3 others (Law Firm Dongnam, Attorneys Han Hong-man et al., Counsel for the defendant-appellant)

Changwon District Court Decision 2013Na10875 decided May 21, 2014

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

The grounds of appeal are examined.

1. Article 1001 of the Civil Act provides that where a lineal descendant or sibling who is to become an inheritor in respect of inheritance by representation has died or becomes disqualified before the commencement of the inheritance, and there is a lineal descendant, his/her lineal descendant (hereinafter referred to as “relative by representation”) shall be the heir in the order of the person who died or becomes disqualified (hereinafter referred to as “eligible person”). In this case, the spouse of a person who died or becomes disqualified before the commencement of the inheritance shall be the co-inheritors in the order of the heir and the co-inheritors under Article 1001 (2) of the Civil Act (Article 103(2)).

All property rights and obligations of an inheritee, which are naturally succeeded to by law, due to the death of an inheritee (Article 1005 of the Civil Code), is a waiver of inheritance, in consideration of the will of an inheritor.

A renunciation of inheritance is an act that loses legal status as to inheritance, and has a significant impact on other co-inheritors, or the creditors, etc. of an heir. The Civil Act limits the period of renunciation of inheritance to three months from the date on which the heir becomes aware of the commencement of inheritance in order to clarify the existence of such declaration of intent and to uniformly handle legal relations (Article 1019(1) of the Civil Act). If an heir fails to grant qualified acceptance or give up within this period, it shall be deemed that a simple approval has been granted (Article 1026 subparag. 2 of the Civil Act). Moreover, the method of renunciation of inheritance is strictly limited to the Family Court to report renunciation to the Family Court within the above period (Article 1041 of the Civil Act). The Family Litigation Act and its rules stipulate the procedure and method of renunciation of inheritance. The heir, etc. shall make a report to the Family Court in writing stating the name and last address of the decedent, the relationship with the decedent, etc., and shall make a report on the refusal of inheritance proceedings (Article 36(3) and 75(1) of the Family Litigation Rules).

The above provisions of the Civil Act, which provide for the period, method, and procedure of renunciation of inheritance, are mandatory provisions, and in cases where a person gives up his/her inheritance before the inheritance commenced or fails to comply with the method and procedure, the waiver of inheritance shall be deemed null and void (see, e.g., Supreme Court Decisions 94Da8334, Oct. 14, 1994; 98Da9021, Jul. 24, 1998).

If an inheritor renounces inheritance after the commencement of inheritance after the commencement of inheritance due to the death of an inheritee, the inheritance becomes effective retroactively from the commencement of inheritance (Article 1042 of the Civil Act). Therefore, if the spouse and children who are the first inheritor renounces inheritance (see, e.g., Supreme Court Decision 94Da11835, Apr. 7, 195). Such renunciation of inheritance is effective only on the inheritance commenced due to the death of the inheritee, and it does not extend to the inheritance commenced by the substitute. This is because inheritance is a cause separate from the inheritance, and it is not allowed to waive inheritance before the commencement of inheritance by substitute. This is because, in addition, the lineal ascendant of the person to be succeeded to the substitute by the renunciation of inheritance is also the same in cases where the lineal ascendant of the latter succeeds to the latter. Moreover, it is unreasonable to deem otherwise depending on whether the latter’s lineal ascendant owns positive property, other than the inherited property, regardless of whether the property is a negative property, at the time of the death of the latter.

Therefore, after the death of an inheritee, his/her spouse and children, who are the inheritor, have renounced the inheritance in excess of the inherited property. If the lineal ascendant of the inheritee thereafter died and the inheritance by substitute has commenced pursuant to Articles 1001 and 1003(2) of the Civil Act, then the inheritor is deemed to have granted simple approval unless the inheritor gives up the qualified acceptance or the renunciation of inheritance in accordance with the procedures and methods prescribed by the Civil Act. In such a case, it may be deemed that the spouse and children of the deceased inheritee already intended to give up the succession by substitute due to the death of the inheritee’s lineal ascendant. However, if he/she does not give up the renunciation of inheritance by the deceased’s lineal ascendant on the ground of the renunciation of inheritance, the said refusal does not take effect unless he/she gives up the renunciation of inheritance by the deceased’s lineal ascendant on the ground of the renunciation of inheritance by clarifying the intention of refusal of inheritance and treating the legal relationship uniformly.

Meanwhile, Article 1019(3) of the Civil Act provides for the so-called special recognition system, where the spouse and children, who are the inheritor, have made an absolute acceptance (including the case deemed to have made an absolute acceptance under subparagraphs 1 and 2 of Article 1026 of the Civil Act) without knowing the fact that the inheritance obligation due to the death of their lineal ascendant exceeds inherited property without gross negligence within three months from the date on which they became aware of the commencement of inheritance, by prescribing that the qualified acceptance may be made within three months from the date on which they become aware of such fact. Therefore, even in the case of inheritance by representation, since the inheritance by representation may be protected pursuant to the above provisions, the provisions of the Civil Act concerning the procedure, method and effect of renunciation of inheritance by representation apply

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

A. On April 28, 1993, the Plaintiff concluded a small loan guarantee insurance contract with Nonparty 1 and Nonparty 2 as the Education Insurance Co., Ltd. (hereinafter “Korean Education Insurance”). Nonparty 3 jointly and severally guaranteed the obligation of indemnity under the above contract against the Plaintiff by Nonparty 1 and Nonparty 2 (hereinafter “instant obligation of indemnity”).

B. Upon delinquency in paying the principal and interest of the education insurance for Nonparty 1 and Nonparty 2, the Plaintiff subrogated for KRW 21,653,352 by adding up KRW 10,826,676, respectively, to the education insurance for July 25, 1995.

C. On November 24, 200, Nonparty 3 died, and his bereaved family members were Defendant 1, Defendant 2, Defendant 3, Defendant 4, and Nonparty 4, the spouse of Nonparty 1, Defendant 3, and Nonparty 4. The Defendants and Nonparty 4 renounced inheritance, and Nonparty 5, the mother of Nonparty 3, solely inherited Nonparty 3’s property.

At the time, on February 3, 2001, the defendants and the non-party 4 submitted a written request to waive the deceased non-party 3's inheritance of property to the Changwon District Court. Accordingly, on February 22, 2001, the above court rendered a ruling that "the plaintiff shall accept the report to waive the inheritance of the non-party 3's property of the deceased deceased non-party 3 who was the deceased on February 3, 2001."

D. After that, Non-party 5 died on February 10, 2004, and there was the deceased Non-party 3, Non-party 6, Non-party 7, Non-party 8 (Death on August 20, 195) and Non-party 9.

3. Examining the above facts in light of the legal principles as seen earlier, it is clear that the Defendants and Nonparty 4’s renunciation of inheritance only have the effect of giving up inheritance from Nonparty 3. Therefore, the instant indemnity liability owed by Nonparty 3 was inherited solely by the Defendants, who were the first inheritor after the death of Nonparty 3 and Nonparty 5, who were the second inheritor following the renunciation of inheritance by Nonparty 4. Following the death of Nonparty 5, the Defendants, who were the first inheritor, were the second inheritor, and were jointly succeeded to the inheritance by Nonparty 6, Nonparty 7, Nonparty 9, and Nonparty 4, and Nonparty 8, who were the second inheritor. Even if the Defendants were to give up inheritance after the death of Nonparty 3, it was merely a renunciation of inheritance against Nonparty 3, the mother of Nonparty 3, and thus, it cannot be deemed that the inheritance effect extends to the inheritance succession due to the death of Nonparty 5, who was the first inheritor, and that the inheritance succession had commenced within the period determined otherwise by the inheritance waiver and the inheritance succession succession.

The lower court determined that the Defendants’ waiver of inheritance against Nonparty 3 by Nonparty 5 was a result of Nonparty 5’s renunciation of inheritance due to the death of Nonparty 5, on the grounds that Nonparty 5 had no proprietary property other than the inherited property from Nonparty 3 at the time of the death, and the Defendants’ renunciation of inheritance due to the death of Nonparty 5. However, the lower court erred by misapprehending the legal doctrine on renunciation of inheritance and inheritance by representation, which affected the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)