In exercising the right to collateral security on the land belonging to a factory established by Article 4 of the Factory Mortgage Act, the legality of the permission of the successful bid by dividing the relevant land and machinery and apparatus into pieces.

In exercising the right to collateral security on land belonging to a factory, the land and machinery machinery equipment which are the object of the mortgage shall be put up for auction en bloc.

Articles 4, 7, 14 of the Factory Mortgage Act

Sayang Film Co., Ltd.

Seoul Civil District Court Decision 65Ra225 delivered on September 12, 1965

The original decision shall be reversed, and the decision of permission for the successful bid shall be revoked.

The award of this case shall not be granted.

The grounds of reappeal are examined.

As the appellant asserts on January 22, 1965, when the auction court publicly announced the auction date as of February 9, 1965, it is clear that the appraisal value of one of the auction objects is already determined (the appraised value is already determined). However, according to the records, it is clear that the mortgage on the auction object is established by Article 7 and Article 4 and 5 of the Factory Mortgage Act, Article 14 of the same Act on factory foundation is not applicable to the mortgage on the auction object. Therefore, the whole of the auction object can not be considered as one real estate, and therefore, the auction object can be executed only with respect to one of the auction objects (see Supreme Court Order 65Ma28, May 4, 1965). As such, the first instance court judged that the auction object was illegal without legitimate permission on the auction object. Thus, it is clear that the auction date was not in violation of the Factory Mortgage Act.

However, the Supreme Court Decision 65Ma228 delivered on the following grounds: (a) the object of the right to collateral security established by the owner of a factory on the land belonging to the factory is not only the fact that the above machinery apparatus is able to exercise the right to collateral security on only the above land if it is legally or factual reason and it is impossible for the above machinery apparatus to exercise the right to collateral security for this reason; (b) it is not impossible to exercise the right to collateral security on the machinery and apparatus as in the above case; (c) it is not included in the case where the value is not yet determined ( even after the original decision, the appraised value is already determined) so in exercising the right to collateral security on the land belonging to the factory in this case, the minimum auction price shall be determined on the land and machinery apparatus which are the object of the right to collateral security and the auction price shall be reported collectively; and (d) it is not possible to obtain the permission of the successful bid in this case, and (d) it cannot be exempted from the judgment of the court of auction on the ground that the decision of auction is unlawful.

Justices of the Supreme Court (Presiding Judge) Mag-kim Kim-bun and Magman