Pampa Co., Ltd. (Law Firm Gong, Attorneys Lee Chang-hwan et al., Counsel for the plaintiff-appellant)

rink Co., Ltd.

rink Seoul and 3 others (Law Firm Han-gu et al., Counsel for the plaintiff-appellant)

September 18, 2014

Seoul Central District Court Decision 2012Gahap89028 Decided January 10, 2014

1. All appeals filed by the plaintiff and the defendant case are dismissed.

2. Of the appeal costs, the part arising between the Plaintiff and the Defendant case is assessed against the Plaintiff and the Defendant respectively, and the part arising between the Plaintiff and the remaining Defendants is assessed against the Plaintiff.

1. Purport of claim

A. Until May 3, 2019, Defendant Krate Co., Ltd. (hereinafter “Defendant Krate”) shall not directly engage in the purchase and slaughter business, livestock processing business, meat packaging business, livestock product sales business, nor have Defendant Krate Seoul, KSM Co., Ltd., Ltd., rink-in, rink-in, Food Co., Ltd., Ltd., Ltd. (hereinafter “the Defendants”), and other third parties (hereinafter “Defendant Krate Seoul, rink-in, rink-in, Food Co., Ltd.”), until May 3, 2019.

(b) No business of purchasing and slaughter cattle and pigs, livestock processing business, meat packaging business, and livestock product sales business shall be conducted until May 3, 2019, respectively, by May 3, 2019.

C. Until May 3, 2019, Defendant case shall not engage in a food service business of cattle and swine scrapers, nor allow Defendant Food Co., Ltd or other third parties to engage in such business.

D. Defendant Food Co., Ltd. shall not engage in food sales business of meal service facilities for cattle and pigs until May 3, 2019.

E. The defendants shall pay to the plaintiff 50 million won with 20% interest per annum from the day after the delivery date of the copy of the complaint of this case to the day of complete payment.

(1) The Plaintiff changed the scope of the business activities for which the prohibition of competitive business was sought through the revision of the purport of the claim to “food sales business of cattle and pigs” from the previous “sing, slaughter, processing, and distribution” to “sing, slaughter, livestock processing, meat packaging business, and livestock product sales business,” but the previous “processing and sale of livestock products for group meals of school hospitals, etc.” to “food sales business of cattle and pigs.” However, it does not extend or reduce the scope of the business activities seeking the prohibition of competitive business, but it is merely a different expression as a type of business under the Livestock Products Sanitary Control Act or the Food Sanitation Act, and it is difficult to view it as the alteration of the purport of the claim substantially. However, the scope of the business activities for group food sales business to “livestock products” is limited from “livestock products” to “sing and pigs,” and the period of the duty of prohibition of competitive business is limited to May 3, 2019).

2. Purport of appeal

A. The plaintiff

The part of the judgment of the first instance, excluding the part of the claim for monetary payment, shall be modified as stated in the purport of the claim (the plaintiff does not appeal the part of the claim for monetary payment that was wholly lost in the first instance, and this part is excluded from the scope of the judgment).

(b) Defendant case;

In the judgment of the court of first instance, the part against the defendant's case shall be revoked, and the part of the plaintiff's claim shall be dismissed.

1. Basic facts

A. Conclusion of a contract for assets, liabilities, and takeover of business

1) Defendant case (the first trade name was “stock company ○,” but the trade name was changed on February 8, 201) is a company established around June 1968 and engaged in the production, purchase, freezing, transportation, processing, and sale of agricultural, fishery, and related products.

2) On April 9, 2009, Defendant K Co., Ltd entered into an agreement on the acquisition of assets, liabilities, and goodwill (hereinafter “instant agreement”) with the Seoul Feed (hereinafter “Seoul Feed”) seeking to transfer the business rights of Defendant KK’s medium-sized factories and Gwangju-type factories (hereinafter “Seoul Feed”). The main contents of the instant agreement are as indicated in the relevant corresponding part of the agreement.

3) On May 4, 2009, Seoul Feed and Defendant CK entered into a contract for the acquisition of assets, debts, and business takeover of the Seoul Feed with Defendant CK’s business license, based on the instant agreement (hereinafter “instant agreement”). The main contents are as indicated in the relevant part of the agreement.

(b) Establishment of a new corporation;

Seoul Feed: (a) On May 19, 2009, the Seoul Feed Co., Ltd., a related company, established the Korea Food and Drug Integrated Disposal Business Co., Ltd., Ltd. (hereinafter “Seoul Feed”) on the following grounds: (b) on May 19, 2009, a livestock products comprehensive disposal business corporation, a subsidiary company, merged with the Korea Food and Drug Business Co., Ltd. (hereinafter “Korea Food and Drug Business Co., Ltd.”); (c) on the same day, the surviving company changed its trade name to Pampto Ri○○, but then changed its trade name to the current Plaintiff’s trade name; hereinafter, regardless of whether before or after the merger); and (d) the Plaintiff succeeded to the contractual rights and obligations of the Seoul Feed pursuant to Article 6(2) of the Agreement.

(c) Agreement on the settlement of intermediate payments and balance;

On June 1, 2009, pursuant to Article 2(3) of the instant contract, the Plaintiff and the Defendant Company entered into an agreement on the details of assets and liabilities, the timing and method of payment of intermediate payments, and the method of settlement of the balance, etc., and entered into an agreement on June 12, 2009 on the settlement of accounts of assets and liabilities, and on June 12, 2009, the list of assets and liabilities was also entered into. On July 9, 2009, the Plaintiff and the Defendant Company entered into an agreement on the settlement of accounts of the balance between the fixed amount of assets and liabilities, and the payment period and method of the balance. On the other hand, the Plaintiff and the Defendant Company entered into an additional agreement on the settlement of accounts of the payment amount of crate converted products among the inventory assets of the Defendant Company Company’s Internet domains (Internet address 1 omitted), (Internet address 2 omitted), and (Internet address 3 omitted) transfer of address following the transfer of the Defendant Company’s Internet domains.

D. Establishment of the remaining defendant companies

1) Defendant KS Seoul was respectively established on July 31, 2009, Defendant KSM and KSM was respectively established on September 15, 2009, and Defendant KS holds 100% of the shares of the said Defendants, and some of the said Defendants’ officers and employees concurrently hold the status of executive officers and employees of Defendant KS.

2) On August 14, 2009, Nonparty 1, who was an employee of the business headquarters of Defendant KK, set up Defendant Fuju for the purpose of manufacturing, processing, and selling agricultural, livestock, fishery, and related products after the instant contract was concluded.

【Ground for recognition】 In the absence of dispute, entry in Gap's 1, 6, 9, 15, 16, 17, 19, 21, 33, Eul's 1, 2, 12, Eul's 1 through 3 (including each number; hereinafter the same shall apply) and the purport of whole pleadings

2. Determination as to the defendants' request for prohibition of domestic cattle and pigs's purchase, slaughter, processing, and distribution business

A. Determination as to the claim against Defendant case

1) Parties’ assertion

A) Plaintiff’s assertion

Defendant KK was engaged in the business of purchasing, slaughter, processing, and distributing Korean cattle and pigs across the country, but it transferred all of the business to the Plaintiff through the contract of this case, and thus, each of the above businesses bears the duty of prohibiting competition under Article 41(1) of the Commercial Act.

B) Defendant Case claim

The Plaintiff and the Defendant KST, upon entering into the instant contract, did not bear the duty of no competitive business prohibition asserted by the Plaintiff. Even if the said Defendant bears the duty of no competitive business prohibition, the subject matter of the instant contract is limited to the purchase for slaughter and processing of domestic cattle and pigs, that is, to the distribution of domestic cattle and pigs purchased, to the slaughter and processing of domestic cattle and pigs, and to the distribution of cattle and pigs slaughtered and processed, and to the processing and distribution of cattle and pigs supplied by other companies. Thus, the latter is not subject to the duty of no competitive business prohibition, and the local scope of the duty of no competitive business prohibition should be limited to the Cheong-gun and its adjacent group in which the secondary factory is located.

2) Determination

A) Business transfer subject to the instant contract

As long as the formation of a disposal document is recognized as authentic, the court shall recognize the existence and content of the expression of intent as stated in the relevant disposal document, unless there is any clear and acceptable counter-proof that the content of the statement is denied. In cases where there is any difference between the parties regarding the interpretation of a contract and the interpretation of the intent of the parties expressed in the disposal document is at issue, the court shall reasonably interpret it in accordance with logical and empirical rules by comprehensively taking into account the contents of the text, the motive and background leading up to the agreement, the purpose to be achieved by the agreement, the parties’ genuine intent, etc. (see, e.g., Supreme Court Decision 2010Da60172, Aug. 1

In full view of the above evidence and evidence set forth in Nos. 4, 5, 17 and the purport of the whole pleadings, the following facts can be acknowledged:

① Upon entering into the instant agreement on April 9, 2009, the Plaintiff and the Defendant KST indicated that the subject of business takeover in the agreement is “small and medium-sized factory and Gwangju Business License” but thereafter, the Plaintiff agreed to limit the subject of sale to the middle-sized factory as a result of discussions between Nonparty 2 and the Plaintiff KST Chairman Nonparty 3, and accordingly, on May 1, 2009, the first written contract was entered into around May 1, 2009, that the subject of business takeover was “the business license including assets, liabilities, trademark rights, and customers, etc. of Defendant KK’s small and medium-sized factory, etc.” However, upon entering into the instant agreement on May 4, 2009, the term “small and medium-sized factory, etc.” was revised to “small and medium-sized factory and its related business license.”

② In addition, the instant contract entered a heavy factory as the object of the transfer of business in the form of the medium-sized business, specifying the location of the factory (location omitted) and added the phrase “excluding the Seoul-type, Gwangju-type, the imported land-related assets, liabilities, and computer systems” by setting a separate comprehensive title.

③ Prior to the conclusion of the instant contract, a mid-term factory is a livestock product comprehensive processing plant (LPC) with certification of major risk analysis points (HCCP). Employees in charge have purchased and slaughtered domestically-produced cattle and pigs, consisting of production teams, public service environment teams, purchasing teams, consignment business teams, and business innovation TF teams, and processed frying and freezing meat, and then distributed and sold them through each business office (Seoul-small & Medium Business Office, Busan-si Business Office, Daegu Business Office, and Honam Business Office, etc.) with the crypt’s crypt’s cryp as its main storage.

④ However, in addition to the products produced in the middle-class factory as above, the Defendant Company was also engaged in the business of having the sales and distribution team of each place of business after being supplied with the domestic pet and swine scrap machine separately from the third company through the sales headquarters at the Seoul Business Office. However, Article 6(3) of the instant contract stipulates that the trade name “○○” can be used for the business on the premise that the Defendant Company continues to operate the business in the place of business located in Seoul after the conclusion of the instant contract, on the premise that the instant contract was concluded, the Defendant Company may continue to operate the business in the place of business located in Seoul.

⑤ From the conclusion of the instant contract, the Plaintiff’s organization (Evidence 6-3) submitted to the Plaintiff as the revised business organization of Defendant KK still remains as the business team of Defendant KK. In fact, the business organization that was succeeded to the Plaintiff under the instant contract was limited to the number of employees related to the business of secondary factories, and otherwise, the business organization that was in charge of sales and distribution of domestic cattle and pigs remains in Defendant KK.

④ Even after the conclusion of the instant contract, Defendant K had purchased Korean cattle and pigs from a third party company and sold and distributed them through the special advertising business team and online team. The Plaintiff did not raise any objection once, even though it was well aware of such fact, and even supplied the products produced from Defendant KK to Defendant K, Defendant P, etc. and distributed them.

According to the above facts, the business meaning of "small and medium-sized factories, their related assets, liabilities, trademark rights, business partners, etc.," which are the subject of the transfer of business stated in the contract of this case, is limited to the business related to small and medium-sized factories, i.e., the purchase for slaughter and processing of domestic cattle and pigs, the slaughter and processing of domestic cattle and pigs so purchased, and the business of selling and distributing cattle and pigs slaughtered and processed as above through the business headquarters of Defendant KS. Further, it is reasonable to view that Defendant KS does not include a pure type of distribution business, such as the sale of cattle and pigs which were supplied or processed by the third company, and even if all other evidence submitted by the Plaintiff were presented, it is insufficient to recognize that the subject of the transfer of business under the contract of this case exceeds the general distribution of cattle and pigs slaughtered and processed in the middle-sized factories, and there is no other evidence to acknowledge otherwise.

B) Scope of duty not to engage in competitive business

(1) As such, the subject of business takeover pursuant to the instant contract is limited to the business related to Defendant KK’s medium-sized factories. Accordingly, Defendant KK, the transferor of the instant contract, bears the duty of prohibiting competitive activities, which should not be performed by itself or by allowing a third party to do so, from the date of entering into the instant contract to May 3, 2019, by the 10th day after the date of entering into the instant contract pursuant to Article 41(1) of the Commercial Act.

(2) The Plaintiff asserts that even if the business subject to business takeover is limited to the business related to the medium-sized factories as above, the Plaintiff’s act of purchasing and selling the domestic cattle and pigs from the third company constitutes the same type of business as that subject to the above business transfer. As such, the Plaintiff’s assertion that the Plaintiff still purchased the domestic cattle and pigs at a place equipped with the comprehensive disposal facilities of livestock products and then distributed them after slaughter and processing them. However, the Plaintiff’s assertion that the Plaintiff’s business cannot be viewed as the same type of business as that of the two. Therefore, the Plaintiff’s assertion is without merit.

(3) The Defendant Company’s assertion does not mean that, at the time of the conclusion of the instant contract, only the Plaintiff agreed specifically to prevent the Plaintiff from operating the imported meat business, and there was no separate agreement on the prohibited business with respect to the Defendant Company, Defendant Company Company does not bear a separate duty of prohibition of competitive business. However, the mere fact that the Plaintiff, as a transferee of the business, prescribed the duty of prohibition of competitive business under the special agreement between the parties with respect to the Plaintiff, who did not bear the duty of prohibition of competitive business, cannot be interpreted as exempting the Plaintiff Company from the duty of prohibition of competitive business under the Commercial Act with respect to the Defendant Company, the transferor of the business, and there is no other evidence to deem otherwise, Defendant Company Company’s assertion on this part is without merit.

In addition, as to the assertion that the duty to prohibit competitive business under the contract of this case is limited to the Chungcheongbuk-gun in which the secondary factory is located and the adjacent military forces, the business of the small and medium-sized factory, which is the object of transfer between the Plaintiff and the Defendant KK, is not limited to the business of purchasing, slaughter and processing, but to the business of nationwide sales and distribution, it cannot be interpreted that the business area is limited to the area adjacent to the small and medium-sized factory. Thus, the above assertion by the Defendant KK is without merit.

B. Determination as to the claim against Defendant KSSeoul, rinkbu acid, rink light, and Puju

1) The plaintiff's assertion

The Defendant Company established the Defendant Company, its subsidiary company, and allowed the said Defendants to sell Korean cattle and pigs, etc. with the aim of evading the obligation to refrain from engaging in competitive business under the instant contract. The Defendant Company established the Defendant Company’s existing employees of the Defendant Company to sell Korean cattle and pigs. Therefore, it is not permissible for the said Defendants to assert that the Plaintiff is a legal entity separate from the Defendant Company, and to avoid the duty to refrain from the competitive business. Therefore, the said Defendants are liable to refrain from engaging in the same competitive business as the Plaintiff Company.

Even if there is no abuse of legal personality against the above defendants, the above defendants are in a special relationship with the defendant's case or companies under the substantial control of defendant's case, and they are bypassing the duty of prohibition of competitive business against the plaintiff's plaintiff. Thus, in accordance with the third party's claim infringement legal principle, the above defendants are liable to the plaintiff for the violation of the duty of prohibition of competitive business.

2) Determination

Until May 3, 2019, Defendant KS bears the duty to prohibit competitive business with the purport that it shall not be allowed or allowed a third party to engage in the business of purchasing cattle and pigs for slaughter and processing domestically produced cattle and pigs, slaughter and processing, slaughter and processing, and distribution of slaughtered and processed cattle and pigs. Accordingly, the part exceeding the above scope is not reasonable by punishing the claim, but is not reasonable. However, it is examined as to whether Defendant KS, Seoul, rink, rink ore, and Food Co., Ltd bears the duty to prohibit competitive business, such as Defendant KS, within the scope of recognition.

A) The assertion of denial of legal personality

(1) In the case of Defendant Kchch Seoul, Kitrate, Kitrye

It is insufficient to view that the parent company's independent corporate personality of the subsidiary is an abuse of corporate personality solely on the grounds that the executive or employee of the subsidiary concurrently belongs to the status of the parent company's executive or employee, or that the parent company has a strong control over the subsidiary by holding all the shares of the subsidiary, or that the size of the subsidiary's business has increased, but the size of its capital has not increased correspondingly, etc., it is required that the parent company's assertion of its own corporate personality of the subsidiary constitutes abuse of corporate personality in relation to the subsidiary company or the creditor of the parent company. At least, it is required that the subsidiary loses its own intent or existence and the parent company exercises complete control so that it can operate the subsidiary as a part of its own business. Specifically, there is no clear distinction between the parent company and the subsidiary's property, business, and external corporate transaction activities, but both are combined. In order to achieve the illegal purpose of avoiding the parent company's legal application of the subsidiary company's corporate personality, subjective intent or purpose should be recognized (see Supreme Court Decision 2004Da26199, Aug. 25, 2006).

After the contract of this case, the above defendants were established, and the defendant Eul owned 100% of shares of each company, and part of the officers and employees of the above defendants possessed the status of executives and employees of the defendant Eul. However, such circumstance alone is insufficient to recognize that the above defendants' legal application of the law against the defendant Eul or used to achieve the illegal purpose of evading obligations, and there is no other evidence to acknowledge it. Rather, in full view of the purport of the arguments in the above evidence No. 6 and No. 15, the above defendants can only be acknowledged as having been established as a local office of the defendant Eul's legal entity prior to the conclusion of the contract of this case, and operated independently after it was established as a separate legal entity. Accordingly, since the above defendants were established for the purpose of avoiding the duty of prohibiting competitive business of the defendant Eul Eul's legal entity, the plaintiff's assertion that the above defendants bear the duty of prohibiting competitive business as above is without merit.

(2) In the case of Defendant Pure:

If an existing company establishes a new company substantially identical in the form and content of the existing company for the purpose of evading obligations, the establishment of the new company is abused the company system for the purpose of unlawful achievement of the purpose of evading obligations of the existing company. Thus, the assertion against the creditors of the existing company that the above two companies have a separate legal personality is not permissible in light of the principle of trust and good faith. Thus, the creditors of the existing company may demand the performance of obligations against either of the above two companies (see Supreme Court Decision 2002Da66892, Nov. 12, 2004, etc.).

In full view of the purport of the pleadings as a whole, it is not sufficient to recognize that Defendant Food Co., Ltd. established Defendant Food Co., Ltd with a view to evading its obligations or avoiding competition with the Plaintiff, even though it is acknowledged that Defendant D Co., Ltd established Defendant P Co., Ltd with a view to evading its obligations or avoiding competition with the Plaintiff, and there is no other recognized evidence, taking account of the overall purport of the arguments in the written evidence Nos. 1 and 3, Defendant P Co., Ltd is a company established by Nonparty 1’s investment of capital in full and establishment of Defendant C Co., Ltd., which is separate from Defendant D Co., Ltd. Accordingly, the Plaintiff’s assertion on this part is without merit.

B) Third party claim for infringement of claim

The submitted evidence alone is insufficient to recognize that the existence of the obligation not to engage in the competitive business of Defendant KS is known, and there is no other evidence to acknowledge that the Plaintiff’s assertion on this part is without merit. The Plaintiff’s assertion is without merit.

3. Determination as to the claim for prohibition of processing and selling business of cattle and pigs for group meal service to Defendant K, food, etc.

A. Determination as to the claim against Defendant case

1) The plaintiff's assertion

Defendant KK operated the import meat business (import meat import, processing, and distribution), domestic meat business (domestic meat purchase, slaughter, processing, and distribution), group meal service business (processing and distribution of livestock products for group meals such as schools and hospitals) on the whole country, and through the instant contract, transferred not only the domestic meat business but also the group meal service business to the Plaintiff.

In other words, at the time of the conclusion of the instant contract, the Plaintiff agreed not to conduct the imported meat business, but did not take over all business partners in relation to the group meal service business, regardless of imported land or domestic land, and succeeded to employment of all employees in charge of group meal service business from Defendant KK. In light of the fact that group meal service business has a unique transaction method with the business place with HACCP certification, group meal service business operated by Defendant KK was also transferred. Thus, Defendant KK bears the duty of prohibition of competitive service, which is prohibited from conducting group meal service business.

Nevertheless, the Defendant Company violated the duty of prohibition of competition, such as supplying goods for group meal services even after the conclusion of the instant contract, and thus, sought a business prohibition against the Defendant Company.

2) Determination

In light of the following circumstances that can be acknowledged by comprehensively taking account of the purport of the entire arguments, it is difficult to view the group meal service business operated by Defendant K as a part of a separate business that exists concurrently with the domestic and imported meat business. Therefore, the Plaintiff’s claim for prohibition of business, premised on the fact that the business transfer of the group meal service business was conducted, is groundless.

① In the process of concluding the instant contract, there was no discussion as to the transfer of group meal service business between the Plaintiff and Defendant KK as an independent business, and the instant contract does not fully mention the group meal service business. In addition, at the time of concluding the instant contract, the Plaintiff and Defendant KK did not engage in the imported meat business either directly or through a specially related person or through a third party in a legally and de facto control relationship, and if it violated this, the Plaintiff agreed to pay KRW 5 billion as penalty to the Defendant KK. If the Plaintiff acquired the group meal service business separately from Defendant KK, it would have to have a separate exception provision in the above penalty provision in order to conduct the business of supplying imported meat to the customer of the group meal service business. However, there is no special provision in the instant contract to the effect above.

② The Plaintiff succeeded to, or succeeded to, the sales claim of the business partners from Defendant KK, separate the imported meat from the imported meat part from the imported meat part, or succeeded to or succeeded to only the sales claim against the business partners dealing with the imported meat more than the imported meat among the business partners and the Mixed business partners (domestic and imported meat together) handling only the imported meat. On the other hand, the Plaintiff succeeded to or succeeded to the sales claim of the group food service part regardless of the imported meat and the sales rate, and the employees in charge of the group food service business of Defendant KK succeeded to the employment of all the employees in charge of the group food service business. However, most of the group food service parties limit the group food service to the slaughterhouse or livestock product processing company holding the HCCP-certified company. As a result, it is extremely extremely impossible to operate an organization meal service business as a result of the transfer of the HCCP-certified company of the instant contract, and most of the business partners and the small and medium-scale business partners were supplied with the imported meat.

③ In addition, in light of the subject of business takeover of the instant contract, the Plaintiff’s succession to the sales claim of the customer of the group meal service business cannot be deemed to have acquired the exclusive domestic land and the right to supply imported land to the customer.

4. In addition, considering the fact that the contract for group meal service business can be generally maintained only when the plaintiff's side becomes a party after the contract period of one to one year expires in a short period of not less than one year, it shall not be specially treated as an independent business part.

B. Determination as to the claim against the defendant Pharma

1) The plaintiff's assertion

Defendant CK established a food service business by the existing employees for the purpose of evading the obligation to refrain from engaging in the competitive business under the instant contract. Therefore, the assertion by Defendant PP against the Plaintiff that the Plaintiff is a legal entity separate from the Defendant DK is not permissible, and thus, Defendant PP bears the obligation to refrain from engaging in the competitive business.

In addition, Defendant Furt is in a special relationship with Defendant Frate, or is substantially controlled by Defendant Frate, and thus, Defendant Furt’s obligation not to engage in competitive business is violated bypassing it. Therefore, Defendant Furt is liable to the Plaintiff for breach of the duty not to engage in competitive business in accordance with the third party’s claim infringement doctrine.

2) Determination

As seen earlier, as long as Defendant K’s duty not to engage in competitive business cannot be acknowledged in relation to the group meal service business, the Plaintiff’s assertion that Defendant P bears the same duty not to engage in competitive business according to the theory of denial of legal personality or the legal doctrine of infringement of third party’s claim is without merit.

4. Conclusion

If so, the plaintiff's claim against the defendant's case is accepted within the scope of the above recognition, and all remaining claims against the defendant's case and the remaining claims against the defendants are dismissed as it is without merit. The judgment of the court of first instance is just in conclusion, and all appeals by the plaintiff and defendant's case are dismissed as it is without merit. It is so decided as per Disposition by the assent of all.

[Attachment]

Judges Lee Young-young (Presiding Judge)