“The meaning of “when acquiring a bill by bad faith or gross negligence” under Articles 77(2) and 10 of the Bills of Exchange and Promissory Notes Act.

The term "acquisition of a bill by bad faith or gross negligence" in Articles 77 (2) and 10 of the Bills of Exchange and Promissory Notes Act means that the holder acquires a bill of exchange with the knowledge of the improper supplementation of the blank bill and, in the event of acquisition thereof, he or she acquired the bill of exchange with the knowledge of the fact that it would prejudice the debtor.

Articles 10 and 77(2) of the Bills of Exchange and Promissory Notes Act

Supreme Court Decision 77Da2020 decided Mar. 14, 1978 (Gong1978, 10730) Supreme Court Decision 95Da10617 decided Jun. 30, 1995 (Dong)

Jung Bank Co., Ltd., Counsel for the defendant-appellee

Attorney Park Yong-dae et al., Counsel for the defendant-appellant

Busan District Court Decision 94Na1125 delivered on January 20, 1995

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The defendant's attorney's grounds of appeal are examined.

In accordance with Articles 77(2) and 10 of the Bills of Exchange and Promissory Notes Act, an issuer of a blank Promissory Notes may not set up against the holder of the Promissory Notes except when the holder has acquired the Promissory Notes in bad faith or by gross negligence. Here, the term "when acquiring the Promissory Notes by bad faith or gross negligence" in this context refers to the acquisition of the Promissory Notes by bad faith or gross negligence even though the holder knew of the fact that the holder would impair the obligor of the Promissory Notes, and even though he was aware of the fact that the holder received the Promissory Notes or paid little attention to the acquisition of the Promissory Notes, even though he was aware of the fact that the holder would impair the obligor of the Promissory Notes, it cannot be deemed that the bank acquired the improperly corrected Promissory Notes immediately due to bad faith or gross negligence solely on the basis that the bank erroneously discounted the issued Promissory Notes for the purpose of security in violation of the provisions that require discount of commercial Bills. Furthermore, the act of distributing the Promissory Notes with the drawer was punished for the purpose of violation of the agreement with the drawer.

Upon examining the reasoning of the judgment below in light of the records, the court below's rejection of the defendant's defense on the ground that it is not sufficient to recognize that the plaintiff bank knew, or was grossly negligent in not knowing, that the bill was in violation of the unfair supplement of the bill or the distribution-prohibited agreement, and there is no error of law by mistake of facts or by misunderstanding of legal principles, such as the paper paper.

Therefore, the appeal is dismissed and all 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 Chocheon-sung (Presiding Justice)