[1] Requirements for becoming a secured claim of a lien

[2] Where Party A supplied building materials such as cement and sand at a construction site pursuant to an agreement concluded with Party B, the contractor for the new construction of a building, the case holding that the court below erred in the misapprehension of legal principles in holding that Party A’s claim for the price of building materials becomes a secured claim for a lien on a building

[1] Article 320(1) of the Civil Code provides that "a person who possesses another person's goods or securities shall have the right to retain such goods or securities until the time when the claim arising in respect of such goods or securities becomes due and due, shall have the right to obtain reimbursement." Thus, the secured claim in the right of retention shall be "a claim arising in respect of such goods."

[2] In a case where Gap supplied building materials, such as cement and sand, to a construction site pursuant to an agreement concluded with Eul, the contractor for the new construction of a building, the case holding that the judgment below, which held that Gap's claim for the construction material price is limited to a purchase price claim under a sales contract, and cannot be deemed as a claim for the building itself, is erroneous in the misapprehension of legal principles as to the relation of relation between the claim that is the requisite for establishing a lien and the goods

[1] Article 320 (1) of the Civil Act / [2] Article 320 (1) of the Civil Act

Plaintiff

Defendant

Busan District Court Decision 201Na6769 Decided October 5, 2011

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

We examine the grounds of appeal.

1. A. According to the reasoning of the lower judgment, the lower court acknowledged the following facts by citing the first instance judgment.

(1) From Ethiopia Co., Ltd. (hereinafter “Ethiopia”), the Defendant supplied construction materials, such as cement, sand, etc., to Korea Co., Ltd. (hereinafter “Korea Co., Ltd.”) who was awarded a contract for construction of a new complex building at the lower end of Busan Y29-14 and 529-22 above at the bottom of Busan Y2, the lower end of the construction site, from April 1, 2003 to July 2004, and did not receive KRW 136,384,293 out of the price.

(2) On July 5, 2004 with respect to the above building, Echiiopia completed registration of preservation of ownership on July 5, 2004, and the Plaintiff purchased real estate (No. 503 of the fifth floor; hereinafter “the apartment of this case”) listed in the attached list of the court below from among the above building during the compulsory auction procedure for which the registration of decision to commence auction was made on February 17, 2005, and paid the price on May 6, 2010, and acquired ownership.

(3) The defendant, with the consent of Hangul and Epiadi, resided in the apartment of this case from the end of 2004 to January 20, 2005, and filed a move-in report. On March 10, 2005, the above auction procedure reported the right of retention on each unit of the above building including the apartment of this case with other construction business operators at the auction court on March 10, 2005.

B. The Plaintiff asserted that the Defendant supplied cement and sand to the said new building construction works, and that the Defendant’s claim, which is only a claim for construction material payment, cannot be a claim secured by the lien because there is no connection with the apartment of this case, and sought transfer of the apartment of this case against the Defendant. Accordingly, the lower court rejected the Plaintiff’s assertion on the ground that the Defendant’s claim for the above construction material payment is a claim secured by the lien on the apartment of this case, as long as the Defendant supplied cement and sand, which are materials necessary for the said new building construction works, and the said construction material was used in the construction works and became consistent with the composition of the apartment of this case.

2. However, we cannot agree with the above determination by the court below for the following reasons.

(1) Article 320(1) of the Civil Act provides, “A person who possesses another person’s goods or securities shall have the right to retain such goods or securities until the time when the claim arising in respect of such goods or securities becomes due and due, shall have the right to obtain reimbursement.” Thus, the secured claim in the right of retention shall be “a claim arising in respect of such goods”.

(2) However, according to the reasoning of the judgment below, the defendant only supplied the building materials, such as cement and sand, at the construction site according to an agreement with the contractor of the construction of the above building. Thus, such defendant's claim for the construction materials is merely a claim for the purchase price pursuant to the sales contract with Hanul who received the building materials, and even if the building materials supplied by the defendant were used for the new construction of the building by the contractor, etc., which led to the construction of the above building, it cannot be deemed that the purchase price claim due to the supply of the building

(3) Nevertheless, the lower court determined that the Defendant’s claim for the construction material price was recognized as having a close relation with the apartment of this case, and thus, constitutes the secured claim for the right of retention for the apartment of this case. In so determining, the lower court erred by misapprehending the legal doctrine on the close relation between the claim and the goods which are the elements for establishing a right of retention

3. Therefore, without further proceeding to decide on the remaining grounds of appeal, 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 Il-young (Presiding Justice)