Whether the truster can unilaterally change the beneficiary in the trust contract without the consent of the trustee (negative in principle)

A beneficiary under a trust agreement has various rights and obligations under the Trust Act, including the right to enjoy trust benefits, so determining the beneficiary in such status constitutes an important element of the trust agreement between the truster and the trustee. Therefore, a change in the beneficiary requires an agreement between the truster and the trustee who is the party to the contract and the trustee. Unless a special agreement that grants the truster a unilateral change in the trust agreement is made, the truster cannot unilaterally change the beneficiary without the consent of the trustee.

Articles 1(2) and 28 of the Trust Act

Bail Industry Co., Ltd. (Attorney Lee Sung-hoon et al., Counsel for the plaintiff-appellant)

Korea Land Trust Co., Ltd. (Law Firm Busan Dong-dong, Attorney Park head-ho, Counsel for defendant-appellant)

Dood Co., Ltd.

Busan High Court Decision 2006Na10231 Decided January 18, 2007

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

1. Trust under the Trust Act refers to a legal relationship in which a truster transfers a specific property right to a trustee, or takes other measures, and a trustee manages and disposes of such property right for a certain person (hereinafter “beneficiary”) or for a specific purpose (Article 1(2) of the Trust Act, based on a special fiduciary relationship between the truster and the trustee (hereinafter “trustee”), and the truster is entitled to various rights and obligations under the Trust Act, including the right to enjoy trust benefits. Thus, determining the beneficiary in such status constitutes an important element of the trust agreement between the truster and the trustee. Thus, the change of the beneficiary requires an agreement between the truster and the trustee who are the party to the contract, and the truster cannot unilaterally change the beneficiary without the consent of the trustee, unless the trustee provides a special agreement to grant a unilateral change to the truster in the trust agreement.

Unlike this, the allegation in the grounds of appeal that the trustee is obliged to comply with the instructions on the change of the beneficiary in light of the nature of the trust deed and the “Duty of care in good faith regarding the management and disposal of trust property of the trustee” as stipulated by Article 28 of the Trust Act cannot be accepted.

2. In the interpretation of a juristic act, where the objective meaning is not clearly revealed by the language and text expressed by the parties, it shall be reasonably interpreted in accordance with logical and empirical rules, and the common sense and transaction norms so that the parties can conform to the ideology of social justice and equity by comprehensively taking into account the following factors: the form and content of the language and text, the motive and circumstances leading up to the juristic act, the purpose and genuine intent to be achieved by the juristic act, transaction practices, etc. (see Supreme Court Decision 9Da43486, Nov. 26, 199, etc.).

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and determined that the provision that "the third party may be a beneficiary with the consent of the third party" among the contents of the instant trust contract concluded between the defendant's assistant intervenor and the defendant (proviso of Article 13 (1) of the Contract) and "the defendant's assistant intervenor shall submit the reason in writing to the defendant without delay when the beneficiary is changed, and take the prescribed procedure" (Article 27 (4) of the Contract) can only be seen as a provision that provides for the purpose of changing the beneficiary to a third party with the consent of the third party in the instant trust contract and the necessary procedure when the beneficiary is changed. It is difficult to interpret that the above provision alone provides that the defendant's assistant intervenor shall obtain the consent of the defendant, the trustee, if the beneficiary transfers, succeeds, or pledges the right to benefit (Article 15 (1) of the Contract).

In light of the above legal principles and records, the judgment of the court below is just and acceptable, and there are no errors in the misapprehension of legal principles as to the interpretation of legal act.

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Ji-hyung (Presiding Justice)