Where a so-called contract title trust agreement is concluded after the enforcement of the Act on the Registration of Real Estate under Actual Titleholder’s Name, and accordingly the title trustee concludes a real estate sales contract with a bona fide seller and completed the registration of ownership transfer under his/her name, the scope of unjust enrichment that the title trustee should return to the title truster (=the purchase fund received from the title truster, acquisition

According to Articles 4(1) and 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name, where a title truster and a title trustee entered into a contract on real estate under a title trust agreement, and the title trustee entered into a contract on real estate with the owner who was unaware of the fact that the title trustee was a party to the contract and completed the registration of ownership transfer pursuant to the said contract, the title trustee will fully acquire the ownership of the relevant real estate notwithstanding the invalidity of the title trust agreement between the title truster and the title trustee, but the title trustee is merely liable to return unjust enrichment to the title truster. In such cases, where the said contract title trust agreement was entered into after the enforcement of the Act on the Registration of Real Estate under Actual Titleholder’s Name, the title truster could not acquire the ownership of the relevant real estate from the beginning. Therefore, losses suffered by the title truster due to the invalidation of the said contract title trust agreement are the purchase fund provided to the title truster, not the relevant real estate itself, but the purchase fund provided by the title trustee. If the title trustee received acquisition tax, registration tax, etc., which should also be returned to the title truster, except for acquisition tax.

Article 4(1) and (2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 741 of the Civil Act

[Plaintiff-Appellant] 2002Da66922 delivered on January 28, 2005 (Gong2005Sang, 393)

K&C Co., Ltd. (Law Firm Yangyang, Attorneys Kim Mine-hun et al., Counsel for the plaintiff-appellant)

Defendant (Bae, Kim & Lee LLC, Attorneys Kang Yong-ok et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2007Na18500 decided Nov. 28, 2007

The part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the Seoul High Court.

We examine the grounds of appeal.

According to Articles 4(1) and 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name, where a title truster and a title trustee entered into a contract on real estate under a title trust agreement with the owner who was not aware of the fact that the title trustee was the party to the contract and completed the registration of ownership transfer pursuant to the said contract, the title trustee would acquire full ownership of the relevant real estate notwithstanding the invalidity of the title trust agreement between the title truster and the title trustee. However, where the contract title trust agreement is made after the enforcement of the Act on the Registration of Real Estate under Actual Titleholder’s Name, the title truster could not acquire ownership of the pertinent real estate from the beginning. Therefore, the damages suffered by the title truster due to the invalidation of the said contract are the purchase fund provided to the title trustee rather than the pertinent real estate itself, and therefore, the title trustee would have obtained unjust enrichment equivalent to the purchase fund provided by the title truster, which was paid by the title truster, as well as the acquisition tax and registration tax, etc., paid to the title truster to acquire the pertinent real estate under a title trust agreement.

According to the reasoning of the judgment below, the court below, based on the adopted evidence, concluded a title trust agreement between the non-party and the non-party to be awarded a successful bid in the name of the defendant on November 2000, and paid 130 million won as the successful bid price, acquisition tax and registration tax, etc., and paid all the successful bid price after obtaining a loan of 70 million won in the name of the defendant as collateral, and then recognized the completion of the registration of ownership transfer in the name of the defendant. The defendant, the title trustee, acquired the complete ownership of the real estate of this case, while the defendant, the non-party, who was the title truster, returned the full ownership of the real estate of this case to the non-party as unjust enrichment, but received 130 million won as the costs such as acquisition tax and registration tax,

However, according to the above legal principles, the defendant should return the acquisition cost of the acquisition tax and registration tax in addition to the 600 million won paid as the successful bid price of the real estate in this case, unless there are special circumstances.

Nevertheless, the lower court erred by misapprehending the legal doctrine regarding the scope of return of unjust enrichment, thereby adversely affecting the conclusion of the judgment.

The ground of appeal pointing this out is with merit.

Therefore, the part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the lower court for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)