The criteria for determining the existence of legitimate reasons, which is the requisite for establishing an expression agency under Article 126 of the Civil Act

Article 126 of the Civil Act

Supreme Court Decision 2012Da27001 Decided July 26, 2012 Supreme Court Decision 2012Da90931 Decided November 14, 2013

Plaintiff (Law Firm Fair and Comprehensive, Attorneys Jeong-young et al., Counsel for plaintiff-appellant)

Defendant

Suwon District Court Decision 2017Na80165 decided November 22, 2018

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

The grounds of appeal (the Defendant’s preparation of March 18, 2019, which was submitted after the deadline for submitting the appellate brief)

The paper and the reference documents of May 20, 2019 are examined to the extent that they supplement the grounds for appeal.

1. For the following reasons, the lower court determined that the Defendant was liable to the Plaintiff for the expressive representation under Article 126 of the Civil Act.

A. A. Around 2012, the Defendant’s mother, borrowed the Defendant’s name and opened a restaurant with the trade name “○○○○○○○○○○” in Gangnam-gu Seoul ( Address omitted).

B. The Plaintiff, a high school established in the Nonparty’s high school, transferred total of KRW 150 million to the Defendant’s account, which is the Nonparty’s father’s father, KRW 60 million on January 10, 2012, KRW 70 million on February 3, 2012, KRW 5 million on February 21, 2012, and KRW 150 million on February 22, 2012.

C. The Nonparty used the said money as lease deposit, store premium, interior construction cost, etc.

D. The Defendant leased the name of the Nonparty for business registration for the operation of the restaurant and for the use of the bank account, so there is a fundamental right of attorney against the Nonparty.

E. The Nonparty borrowed money from the Plaintiff as above; however, considering the Nonparty’s act deviating from the scope of the above basic power of attorney; however, considering that the Nonparty operated a restaurant under the name of the Defendant and engaged in money transaction with the Plaintiff using the account in the Defendant’s name, there was justifiable reason to believe that the Nonparty was the authority to conclude the above loan agreement with the Nonparty.

2. However, it is difficult to accept the above determination by the court below for the following reasons.

A. In order to claim the effect of an expression agent beyond the authority prescribed under Article 126 of the Civil Act, the requirement is that the other party believe that the agent has the right of representation and there is a justifiable reason to believe that the other party has the right of representation in cases where the agent expresses or explicitly expresses or performs an act other than his/her authority with an intention of representation. Here, whether the justifiable reason exists or not should be objectively observed and determined (see Supreme Court Decisions 2012Da27001, Jul. 26, 2012; 2012Da90931, Nov. 14, 2013, etc.).

B. In light of the following circumstances revealed by the record, it is difficult to view that the Nonparty, at the time of requesting the Plaintiff to remit KRW 150 million to the Plaintiff, had expressed or implicitly expressed the intention of the Nonparty to the Defendant, or had the intention of representation.

1) The Plaintiff remitted KRW 150 million to the Nonparty, who was requested from the Nonparty, who was a senior high school’s establishment, upon receipt of a request to lend money. There is no evidence to deem that the Nonparty did so or requested the Nonparty to lend money on behalf of the Defendant. Rather, the Nonparty, who was the witness of the lower court, made a statement to the effect that he requested the Plaintiff to transfer KRW 150 million to the Plaintiff for the purpose of his use.

2) There is no document stating a loan certificate or any other document in the name of the defendant with respect to the above KRW 150 million.

3) The Nonparty used a total of KRW 150 million as lease deposit, store premium, and interior construction cost, etc. in the course of operating a restaurant after borrowing an account in the name of the Defendant and completing business registration regarding a restaurant in the name of the Defendant.

C. Even if the Nonparty expressed to the Plaintiff the intent for the Defendant at the time of requesting transfer of KRW 150 million to the Plaintiff, in light of the following circumstances revealed by the record, it is difficult to deem that there was a justifiable reason to believe that the Nonparty was entitled to enter into a loan agreement for consumption with the Plaintiff on behalf of the Defendant on the sole basis of the fact that the Nonparty operated the restaurant under the name of the Defendant and engaged in financial transactions with the Plaintiff using the account in the name of the Defendant.

1) At the request of the Nonparty, the Plaintiff did not receive a power of attorney, etc. from the Nonparty when remitting large amount of money to the account under the name of the Defendant, and did not have confirmed that the Nonparty had the authority to borrow KRW 150 million on behalf of the Defendant.

2) Even according to the Plaintiff’s assertion, confirming the business registration of a restaurant registered in the name of the Defendant is after transfer of KRW 150 million to the Plaintiff. The Plaintiff merely confirmed that the account holder is the Defendant at the time of individual transfer of the said money, and that the Defendant and the Nonparty were female-related persons.

3) The Nonparty borrowed an account in the name of the Defendant, registered a restaurant in the name of the Defendant, and directly operated the restaurant.

D. Nevertheless, the court below determined that the non-party expressed his intention on behalf of the plaintiff with respect to the above 150 million won loan, and that the non-party has justifiable grounds to believe that the non-party has a legitimate right to represent the plaintiff. The court below erred by misapprehending the legal principles as to the legitimate grounds in the method of representation or the expression agency, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

3. Therefore, without examining the Defendant’s 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 Kim Jae-hyung (Presiding Justice)