2015Do5184 Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation)

Name of the crime: Breach of Trust)

Defendant

Defendant and Prosecutor

Law Firm Geoma

Attorney Ha Sung-won

Seoul High Court Decision 2014No1134 Decided April 2, 2015

July 15, 2021

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

The grounds of appeal are examined.

1. Summary of the facts charged and the judgment of the court below

A. The summary of the facts charged of this case is as follows: (a) the Defendant borrowed money from the victim and entered into a contract for the transfer of health care benefit bonds that the Defendant has against the National Health Insurance Corporation by providing the victim with comprehensive collateral security; (b) the Defendant violated his duty to faithfully manage the above bonds for the victim who is a mortgagee under the above contract, and thereby, (c) transferred the above bonds to a creditor of the non-indicted who is a pro-friendly non-party, and (d) received payment of KRW 696,978,160 from the National Health Insurance Corporation, thereby obtaining pecuniary benefits equivalent to the same amount; and (d) thereby, the victim suffered pecuniary damage equivalent to the above amount or the Defendant’s secured debt amount of KRW 593,60,000,000.

B. The lower court acknowledged that the Defendant was in the position of “a person who administers another’s business in accordance with a fiduciary relationship with the victim,” and found the Defendant guilty of the part of the facts charged of the instant case’s property interest and breach of trust due to the amount of property damage.

2. Judgment of the Supreme Court

A. The crime of breach of trust is established when a person who administers another’s business obtains pecuniary advantage or let a third party acquire it by acting in violation of his/her duty, thereby causing damage to another person who is the subject of the business. Therefore, the subject of the crime must be in the position of administering another’s business

In order to be "a person who administers another's business", all or part of the business concerning the management of another person's property should be the protection or management of another person's property based on the trust relationship between the parties beyond the conflict of interest in the ordinary contract, as the case where a person who administers another's business is acting for another person. The mere fact that in the ordinary contractual relationship in conflict of interest, the other party gains the benefit of satisfaction of rights or realization of a claim through the performance in good faith of the debtor, or that there is an incidental obligation to protect or take account of the other party in the performance of the contract does not mean that the debtor is a person who administers another's business, such as delegation, etc., and that the typical and essential performance of the contract, which is the typical and essential performance, is the case where the other party performs the business with a certain authority (see, e.g., Supreme Court en banc Decision 2019Do9756, Feb. 20, 200; Supreme Court en banc Decision 2019Do14340, Jun. 18, 20207).

B. In relation to monetary claims, even though a creditor gains a benefit from the satisfaction of a claim by lending money based on the debtor's trust in the performance of the payment and the debtor's faithful performance of the payment, the creditor cannot be deemed to have given his/her duty to protect or manage his/her property based on the debtor's trust. Since the performance of a monetary obligation is performed by the debtor as the performance of his/her obligation, it cannot be deemed that the creditor's business is performed by entrusting the creditor with the performance of his/her obligation. Therefore, in cases of monetary claims, the debtor does not constitute "a person who administers another's business in relation to the creditor" (see, e.g., Supreme Court Decision 2011Do3247, Apr. 28, 2011).

The same applies to a case where a debtor transfers another monetary claim to a creditor in order to secure an existing monetary obligation. “Obligation to maintain and preserve the value of a secured claim to be borne by a debtor according to a contract for security of claims is merely to achieve the purpose of security. Notwithstanding the conclusion of a contract for security of claims, the typical and essential contents of the relationship between the parties are still the realization of monetary claims, which are secured claims (see, e.g., Supreme Court en banc Decision 2019Do9756, Feb. 20, 2020).

Therefore, the obligation of a debtor to maintain and preserve the security value of a secured claim under a contract for security for claims is merely a debtor's own business, and the debtor cannot be deemed to have been in charge of the creditor's business based on a fiduciary relationship with the creditor, beyond the conflict of interest in an ordinary contract. In this case, the debtor cannot be deemed to fall under "a person who administers another's business in relation to the creditor."

C. Examining the facts acknowledged by the court below in light of the aforementioned legal principles, it does not constitute another person’s business based on a fiduciary relationship to achieve the victim’s security purpose beyond the content of the Defendant’s business of maintaining and preserving the value of collateral. Therefore, even if the Defendant transferred the secured claim to the victim prior to setting up a requisite for setting up against the obligor, and notified the third obligor of the transfer of the claim, the Defendant cannot be deemed as having been in the position of “a person who administers another’s business” in accordance with a fiduciary relationship with the victim, and thus, the crime of breach of trust is not established. Nevertheless, on the premise that the Defendant falls under this, the court below found the Defendant guilty of the amount of property interest and loss among the facts charged in the instant case. In so doing, the court below erred by misapprehending the legal principles as to “a person who administers another’s business” in the crime of breach of trust

D. For the foregoing reasons, the part of the judgment of the court below on conviction should be reversed. Since the part on acquittal with the above reversed part should be reversed, the judgment of the court below should be reversed in its entirety.

3. Conclusion

Therefore, without further proceeding to decide on the grounds of appeal by the prosecutor, 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 Lee Dong-gu

Justices Kim Jae-hyung

Justices Ansan-chul et al.

Justices Noh Jeong-hee