Whether a tort is established in a case where a debtor who consented to the assignment of a claim fails to notify the assignee of the circumstances affecting the establishment or extinguishment of the claim to be transferred (negative in principle)

Even if the obligor did not withhold any objection against the assignment of claims, it is merely impossible for the assignee to oppose the assignee on the grounds that it could be set up against the assignor (Article 451 of the Civil Act), and as a matter of principle, the obligor is responsible to investigate and confirm the circumstances that may cause danger to securing the content of claims or the right of the assignee. As such, the obligor is determined to accept the assignment of claims on the premise that the assignee is well aware of the content of the claim or the legal relationship that is the cause of the claim in question, and the assignee is not obligated to verify whether the content of the claim is well aware of the content of the claim in fact and to warn the assignee of the risk. Therefore, barring any special circumstance to deem that the obligor had a duty of care to notify the assignee

Articles 2, 451, and 750 of the Civil Act

Samsung Life Insurance Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Noh Young-soo et al., Counsel for the defendant-appellant)

KS Shipping Co., Ltd. and two others (Law Firm LLC et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2012Na82321 decided June 19, 2014

The part of the judgment of the court below against Defendant SK Shipping Co., Ltd. is reversed, and that part of the case is remanded to the Seoul High Court. All appeals by the Plaintiff, Defendant U.S. Asset Management Co., Ltd. and SK Securities Co., Ltd. are dismissed. Of the costs of appeal, the part between the Plaintiff and Defendant U.S.

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

1. As to the ground of appeal No. 1 by Defendant Sk Shipping Co., Ltd. (hereinafter “Defendant Sk Shipping”)

A. After finding the facts as indicated in its reasoning based on its adopted evidence, the lower court determined as follows: ① (a) one bank (hereinafter only referred to as “one bank”) took over charterage claims held by the said company from L&C E&S Co., Ltd. (hereinafter referred to as “L&S”) upon the instant time charter contract, and became continuously and continuously liable for Defendant KS Shipping; (b) Nonparty 1, etc., the employees of Defendant E&S ships, offered the said charterage claims as security for vessel financing; and (c) Nonparty 2 concluded the instant time charter contract with the intent to use Defendant E&S credit in relation to vessel financing; and (c) the investors of the instant fund did not inform Defendant E&S bank of the purport that it did not comply with the principle of good faith or the principle of trust and good faith with the instant time charter agreement, in view of the circumstances that the said funds did not affect the conclusion of the time charter agreement with the first time charter bank, and did not inform one of the following circumstances: (a) one of the investors of the instant funds did not know that it only obtained charterage only from the intermediate charterer;

B. However, the lower court’s determination is difficult to accept for the following reasons.

Even if the obligor did not withhold any objection against the assignment of claims, it is merely impossible for the assignee to oppose the assignee on the grounds that it could be set up against the assignor (Article 451 of the Civil Act), and as a matter of principle, the obligor is responsible to investigate and confirm the circumstances that may cause danger to securing the content of claims or the right of the assignee. As such, the obligor is determined to accept the assignment of claims on the premise that the assignee is well aware of the content of the subject claim or the legal relationship that is the cause of the transfer, and the assignee is not obligated to verify whether the content of the claim is well aware of the content of the claim, and to warn the transferee of the risk. Therefore, barring any special circumstance to deem that the obligor had a duty of care to inform the assignee of the circumstances affecting

In light of the reasoning of the judgment below and the record, it is difficult to view that Nonparty 2 was aware of the forgery of a time charter agreement and the concealment of the instant additional agreement, as follows: (i) Defendant SDR did not participate in the creation of the instant fund or the Plaintiff’s investment; (ii) Nonparty 1 did not contact with the Plaintiff or Defendant SDR Co., Ltd (hereinafter “Defendant SDR”) or received information on the instant fund; and (iii) Nonparty 2 did not agree with the terms and conditions of the instant contract without considering the following circumstances, even if Defendant SDR participated as an interim charterer with the knowledge of the intent of Nonparty 2 seeking to use its credit in connection with the vessel financing, it is difficult to view that the instant agreement was invalid even if it did not agree to the terms and conditions of the instant time charter agreement or to inform the Plaintiff of the risks thereof.

C. Nevertheless, the lower court, based on its stated reasoning, determined that Defendant Sk Shipping breached its duty of care under the good faith principle to notify the circumstances affecting the establishment or extinction of charterage claims. In so determining, the lower court erred by misapprehending the legal doctrine on the obligor’s duty of disclosure in assignment of claims, thereby adversely affecting the conclusion of the judgment. The Plaintiff’s ground of appeal assigning this error is with merit.

2. As to the ground of appeal No. 1 of the asset management by Defendant Busan District Court

A. According to Articles 4(2), 56(1), and 56(4) of the former Indirect Investment Asset Management Business Act (repealed by Article 2 of the Addenda of the Financial Investment Services and Capital Markets Act, enacted by Act No. 8635, Aug. 3, 2007; hereinafter “former Indirect Investment Act”), an asset management company is a person who creates and manages an investment trust and is in a position to produce and distribute information about investment trust in the first place. An investor is also believed to have correct investment information provided by an asset management company by relianceing on the expertise and experience of the asset management company and reliance on the investment information provided by a third party related to the assets subject to the management of the investment trust property. Accordingly, the asset management company is not limited to providing the company or investor with information on the operating assets provided by a third party related to the assets subject to the management of the investment trust property, and provides the correct information after reasonably investigating the information about the profit structure and risk factors of the investment trust, and if it is not clear or insufficient to inform the distribution company or investor of such risk factors.

B. After finding the facts as indicated in its reasoning, the lower court stated that, inasmuch as the financial resources for the repayment of loans are the principal source of the vessel investment to the persons who will be the owner of the instant vessel, such as the instant funds, and that the said funds were imported, it would affect the conclusion of the instant charter agreement with the investors regarding the relevant vessel, and that, inasmuch as the instant funds were not able to invest in the vessel’s funds, the instant funds would also be able to cover the time charter payments and the sales proceeds of the instant funds to be paid to the Hank Shipping for the redemption of its investments, and that, in relation to the risks related to the charterage of the instant funds, there was no risk of change in charterage and the instant funds, but the instant funds were concluded for the period prior to the establishment of the instant funds seal charter contracts with the Defendant SNF, and thus, the risk would depend on the execution of the instant funds by the Defendant SNFFF’s seal charter contracts.

C. In light of the aforementioned legal principles and records, such determination by the court below is just. In so doing, it did not err by misapprehending the legal principles on the asset management company’s duty to protect investors, exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules

3. As to the grounds of appeal Nos. 1, 2, 3, and 4 of Defendant SDR securities

A. Under the former Indirect Investment Act, a dealer provided for in the said Act clearly understand the content of an investment prospectus or a proposal for operation provided by an asset management company, and explain it to investors in an accurate and balanced manner, and it cannot be deemed that an investor is obligated to independently verify whether the content is true and notify investors of the fact. However, in special circumstances where there are extenuating circumstances to deem that a distribution company actually led to the creation of an investment trust by substantially determining the major contents relating to the profit structure or risk factors of an investment trust, as in the case of an asset management company, the distribution company bears the duty to protect investors by reasonably investigating the profit structure and risk factors of an

B. The lower court acknowledged the following facts: (a) determined the structure of the instant fund from the stage of preparing for the establishment of the instant fund; and (b) determined that Nonparty 3, an employee of Defendant KS securities, concluded a time charter contract with Defendant KS Shipping, which is a large enterprise with good credit rating, and concluded a time charter contract with the instant fund with the Plaintiff, and thus there was no special risk of investment; (c) Nonparty 2, on October 30, 2007, prepared and delivered the data containing the same contents; (d) Nonparty 3, an employee of the instant fund, concluded a time charter contract with Nonparty 4 under the former Act, on the premise that Nonparty 3 and the instant vessel were no more than 30-38 months of charter period and 50-day charter contract with Nonparty 4, which was subject to the said circumstances, on the premise that it was possible to conclude a time charter contract with Nonparty 4, which was more likely to have been concluded during the said time charter contract with Nonparty 3 and Nonparty 4, an investment partner.

C. In light of the aforementioned legal principles and records, such determination by the court below is just. In so doing, it did not err by misapprehending the legal principles on the seller’s duty to protect investors, negligence, and proximate causal relation, or exceeding the bounds of the principle of free evaluation

D. The remainder of the grounds of appeal by Defendant SDR is nothing more than fact-finding, which is a fact-finding court, and thus, it cannot be a legitimate ground of appeal.

4. As to the Plaintiff’s ground of appeal No. 1

The lower court rejected the Plaintiff’s assertion that, in the absence of the Defendants’ tort, the amount invested in other financial instruments and the amount invested in the Fund could have been gain profit equivalent to the Plaintiff’s average yield on assets in operation or equivalent to the fixed deposit interest rate from the date of the investment in the Fund to the date of the liquidation of the Fund, and thus, the amount of lost profit should be recognized as losses. However, the lower court rejected the Plaintiff’s assertion on the ground that there was no evidence to acknowledge that the Plaintiff invested the amount of the investment in the Fund in a stable financial instrument that guarantees the term deposit or the investment principal,

In light of the relevant legal principles and records, the above determination by the court below is just, and there is no error of law by misapprehending the legal principles as to the scope of damages, which led to the failure

5. As to the Plaintiff’s ground of appeal Nos. 2, Defendant Mountain Asset Management’s ground of appeal No. 2, Defendant Samsung Asset Management’s ground of appeal No. 5

After recognizing the Defendants’ joint tort liability against the Plaintiff, the lower court limited the Defendants’ liability to 40% of the amount of damages on the ground of the following: (a) the Plaintiff was an insurance company with professional knowledge and investment experience; (b) the Fund is a private equity investment trust; (c) it is difficult to deem that the employees of Defendant M&A and E&D intentionally committed an unlawful act; (d) most of the ship funds incurred due to the depression in the marine transportation games during the fund creation period; and (e) Defendant M&A made efforts to minimize damage after checking the existence of the instant additional agreement.

Examining the reasoning of the judgment below in light of the relevant legal principles and records, the above judgment of the court below is just, and there is no error of law by misapprehending the legal principles on limitation

6. Conclusion

Therefore, the part of the judgment of the court below against Defendant KS Shipping is reversed, and that part of the case is remanded to the court below for a new trial and determination. All appeals against the Plaintiff and Defendant SE Asset Management and KS Securities are dismissed, and the costs of appeal are assessed against each losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)