[1] The case affirming the judgment below which held that, in case where Eul corporation, which bears the obligation to borrow money and the obligation to pay construction price, paid money to Gap corporation, was appropriated for the repayment of the obligation to repay the borrowed money, since Eul corporation explicitly expressed that the obligation to pay the borrowed money was not extinguished at the time of payment of the borrowed money, and even if it was appropriated in accordance with the legal principles of statutory appropriation of performance because it did not indicate such payment, it was appropriated first for the repayment of the loan money with the interest to repay the loan money.

[2] In a case where: (a) Company A, which bears the obligation to borrow money and the obligation to pay the contract price, explicitly expressed that the payment for the obligation to borrow money was made by the contractor B, but Company A appropriated both the money paid by Company B prior to the payment of the said money to the principal of the obligation to pay the contract price; and (b) claimed that the said money was appropriated for the principal of the obligation to pay the contract price, the case affirming the judgment below which held that there was no unilateral appropriation designation contrary to Article 479(1) of the Civil Act; (c) in light of all the circumstances, there was no implied agreement between the parties at the time of the repayment of the obligation to pay the contract price or the obligation to borrow money to Company A; and (d) in light of all the circumstances, the said money was appropriated for the principal of the obligation to borrow money

[1] Articles 476(1) and 477 of the Civil Act / [2] Articles 476(1), 477, and 479 of the Civil Act

New World Co., Ltd. (Law Firm Gyeongsung et al., Counsel for the defendant-appellant)

Seo punishment Co., Ltd. (Attorney Seo Jae-sik, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2009Na75880 decided December 10, 2009; Supreme Court Decision 2009Na7580-1 Decided December 24, 2009

All appeals are dismissed. The costs of appeal are assessed against each appellant.

The grounds of appeal are examined.

1. Plaintiff’s ground of appeal

Article 476(1) of the Civil Act provides that where an obligor has assumed several obligations to the same obligee for the same kind, and the offer of performance is not sufficient to extinguish all of the obligations, the person effecting the performance may designate any of the obligations at that time and apply it to the performance. Article 477 of the Civil Act provides that if the parties concerned do not designate the obligation appropriated for the performance of obligations, it shall be appropriated to the performance of the obligation the due date has arrived if it is not yet designated, and if the entire obligation is due or has not arrived, it shall be appropriated to the performance of the obligation the discharge of which has become due, and if the benefit of performance is equal, it shall be appropriated to the obligor for the performance of the obligation the discharge of which has become due, and if the benefit of performance is equal, it shall be appropriated to the performance of the obligation which first

In light of the facts and circumstances as indicated in its reasoning based on its adopted evidence, the court below determined that the above KRW 1.1 billion was appropriated for the repayment of the loan of this case since the defendant explicitly expressed that the loan of this case was paid to the plaintiff at the time when 1.1 billion won was paid to the plaintiff. Even if the defendant did not express such indication, if the loan of this case did not arrive at the time when the due date became due, the loan of this case should be appropriated for the repayment of the loan of this case, and if the whole due date has not arrived or has not arrived, the loan of this case must be appropriated for the repayment of the loan of this case. However, the loan of this case is finalized on March 31, 2005 (30 billion won) and September 30, 2005 (1 billion won part) and the debt of this case from March 2006 to the plaintiff and the defendant, but it should be appropriated for the repayment of the loan of this case in light of the legal principles as above, even if the loan of this case remains in an uncertain extent.

Examining the above provisions and records of the Civil Act regarding appropriation of performance, the court below’s above measures are just and acceptable. In so doing, it did not err by exceeding the bounds of the principle of logic and experience and the principle of free evaluation of evidence, or by exceeding the bounds of the principle of free evaluation of evidence, thereby failing

In addition, Article 479(1) of the Civil Act provides that "if the obligor pays expenses and interest of one or more obligations, and the obligor has paid the benefits which have not been extinguished in full, such payment shall be appropriated in the order of expenses, interest, and principal." This provision limits designated appropriation and statutory appropriation, and there is no unilateral appropriation designation contrary thereto. However, according to the records, the loan of this case is not effective as it is alleged in the grounds of appeal that the Plaintiff has paid the principal of this case to the Busan Bank, which deals with the Defendant's project financing loan related to the construction of this case, by reporting its nature as if it was done more than the actual construction work, and it is received for the Defendant's convenience in connection with the construction of this case. The Defendant did not err in the misapprehension of legal principles as to the principal payment of the construction of this case, including the principal payment of 1.1 billion won prior to the Defendant's payment to the Plaintiff, and it appears that it was appropriated for the Defendant's payment of the principal of this case to the Plaintiff in the order of repayment of the principal.

2. As to the Defendant’s ground of appeal

A. In light of the circumstances stated in its reasoning, the lower court determined that the Plaintiff lent KRW 1.3 billion to the Defendant on January 5, 2005, and KRW 1.3 billion on July 15, 2005, to the Defendant.

In light of the records, the above judgment of the court below is just, and there is no error of law by misapprehending the legal principles as to the probative value and interpretation of declaration of intent.

B. In addition, the court below rejected the defendant's defense that the plaintiff offsets the plaintiff's loans against the plaintiff's claims on the ground that it is difficult to view that the plaintiff and the defendant have a claim for settlement of accounts amounting to KRW 9,393,393,393,641 ( KRW 10,321,910,000 - KRW 9,378,516,359) because the plaintiff and the defendant settled the construction cost after the completion of the construction work in this case, and the actual construction cost in this case was less than KRW 10,321,910,000 paid by the defendant.

In light of the records, the above measures by the court below are just, and there were no errors of exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or of exceeding the bounds of the principle of free evaluation of evidence.

3. Conclusion

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

Justices Kim Nung-hwan (Presiding Justice)