[1] Whether an exception to the proviso of Article 21(1) of the Trust Act, which stipulates that a trust property may be subject to compulsory execution or auction, includes a case where a truster is a debtor (negative)

[2] The validity of the attachment disposition on the property of a third party who is not a taxpayer (=effective invalidity)

[3] In a case where Gap corporation, which is a land trust company Eul, concluded a land development trust contract with Eul corporation and issued a tax invoice with Eul corporation as a supplier for the sale of a commercial building, and then built and sold a commercial building, the case affirming the judgment below that the above disposition is null and void, in case where Eul corporation's disposition of seizing Eul corporation's deposit claims, which is trust property, as the delinquent taxpayer, was issued by the head of tax office who did not pay the value-added tax

[1] According to the purport of Article 1(2) of the Trust Act, when comprehensively taking account of the following: (a) the trust property under the Trust Act is wholly and externally owned by the trustee and the truster and the truster are not reserved to the truster; and (b) the legislative purport of Article 21(1) of the Trust Act is to ensure the independence of the trust property in order to smoothly achieve the purpose of the trust; and (c) the “right arising in the course of performing the trust affairs” prescribed by the proviso of Article 21(1) of the Trust Act that exceptionally requires compulsory execution or auction against the trust property is included in the “right arising in the course of performing the trust affairs,” and it is interpreted

[2] Considering the provisions of Article 24 of the National Tax Collection Act, which provides for the requirements for seizure as a disposition for arrears, the disposition of seizure against a third party’s property, which is not a taxpayer, is void as it is impossible to legally realize the content of the disposition.

[3] In a case where Gap corporation, a land trust company, received a trust from Eul corporation and newly built a commercial building on its ground, built a land and a commercial building as trust property to return profits therefrom to Eul corporation, and issued a tax invoice by which Eul corporation becomes a supplier of Eul while building a new commercial building, and then sold it to the head of the competent tax office, who did not pay the value-added tax upon Eul corporation's report to the head of the competent tax office, and the head of the competent tax office imposed a disposition of seizing Gap corporation's deposit claims as trust property upon Eul corporation as the delinquent taxpayer, the case affirming the judgment below that the "right arising in the course of performing trust affairs" under the proviso of Article 21 (1) of the Trust Act means the right of the trustee by performing acts related to trust affairs, and on the ground that the value-added tax claim related to the above disposition does not constitute a claim against Eul corporation as a truster, and thus, the disposition of seizing Eul company's trust property based on the value-added tax claim against Eul corporation is null

[1] Articles 1(2) and 21(1) of the Trust Act / [2] Article 24(1) of the National Tax Collection Act / [3] Article 21(1) of the Trust Act, Article 24(1) of the National Tax Collection Act

[1] Supreme Court Decision 200Da70460 Decided April 12, 2002 (Gong2002Sang, 1114), Supreme Court Decision 2005Da9685 Decided September 7, 2007 (Gong2007Ha, 1548) / [2] Supreme Court Decision 92Nu12117 Decided April 27, 1993 (Gong193Ha, 158), Supreme Court Decision 2005Du15151 Decided April 13, 2006 (Gong206Sang, 819)

Korea Land Trust Co., Ltd. (Bae & Yang LLC, Attorneys Park Jae-chul et al., Counsel for the plaintiff-appellant)

Head of Busan District Tax Office

Daejeon High Court Decision 2009Nu2724 decided January 28, 2010

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 1(2) of the Trust Act provides, “The term “a trust” means the legal relationship in which a truster transfers or disposes of a specific property right to a trustee and has the trustee manage or dispose of such property right for the benefit of a beneficiary or for a specific purpose,” and Article 21(1) of the Trust Act provides, “No compulsory execution or auction shall be conducted against a trust property: Provided, That this shall not apply to the rights arising prior to the trust or the rights arising from the performance of trust affairs.”

According to the purport of Article 1(2) of the Trust Act, the trust property under the Trust Act is entirely and externally attributed to the trustee, and its ownership is not reserved to the truster in the internal relationship with the truster (see, e.g., Supreme Court Decisions 2000Da70460, Apr. 12, 2002; 2005Da9685, Sept. 7, 2007); and Article 21(1) of the Trust Act provides that the purpose of the trust is to ensure the independence of the trust property in order to smoothly achieve the purpose of the trust, the trust property under the Trust Act is exceptionally subject to compulsory execution or auction against the trust property under the proviso of Article 21(1) of the Trust Act.

Meanwhile, considering the provisions of Article 24 of the National Tax Collection Act, which provides for the requirements for seizure as a disposition for arrears, the disposition of seizure on a third party’s property, which is not a taxpayer, shall be limited to the taxpayer’s property. Thus, the disposition of seizure on a third party’s property, which is not a taxpayer, cannot be legally realized (see, e.g., Supreme Court Decisions 92Nu12117, Apr. 27, 1993; 96Da17424, Oct. 15, 1996; 2005Du15151, Apr. 13, 2006).

2. The court below found on June 12, 2004, ① the Plaintiff and C&S real estate development (hereinafter “S&S real estate development company”) concluded a sale-type land development trust contract with the Plaintiff’s land entrusted by the Nonparty company under the Trust Act, building a commercial building on the ground, selling or leasing the land and commercial building as trust property, and returning the profits therefrom to the Nonparty company. ② Accordingly, the Plaintiff issued a tax invoice with the Plaintiff as a supplier while building and selling the commercial building on the above land, ③ the Nonparty company did not pay the value-added tax return to the Defendant, and the Defendant issued the instant disposition that attached the Plaintiff’s deposit claim, which is the trust property, on October 8, 2008. The court below determined that the Plaintiff’s claim against the truster was invalid on the ground that the trust property related to value-added tax was not owned by the trustee.

In light of the above provisions, legal principles, and records, the judgment of the court below is just and there is no error in the misapprehension of legal principles as to the proviso of Article 21 (1) of the Trust Act, as otherwise alleged in the

3. Therefore, the appeal is dismissed, 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 Park Il-young (Presiding Justice)