[1] In order for a company to claim that its representative director's act of self-transaction was invalid due to a failure to obtain approval of the board of directors, whether a third party should prove that the third party was aware of, or was grossly negligent in, the failure to obtain approval of the board of directors (affirmative)

[2] Where the representative director of a corporation did not undergo external transactions through a resolution of board of directors, the validity of the transactions (effective in principle)

[3] In a case where Gap corporation and Byung, the representative director of Eul corporation, concluded a guarantee insurance contract on behalf of Eul corporation, for the performance of the obligation to return the lease deposit of Eul corporation, and concluded the joint and several guarantee contract for the obligation to be borne by Eul corporation under the above insurance contract on behalf of Eul corporation without approval or resolution by the board of directors of Eul corporation, the case holding that the court below erred in the misapprehension of legal principles in holding that the court below did not know, or did not know, the approval or resolution by the board of directors of Eul

[1] Article 398 of the Commercial Act, Article 288 of the Civil Procedure Act / [2] Article 393(1) of the Commercial Act, Article 288 of the Civil Procedure Act / [3] Articles 393(1) and 398 of the Commercial Act, Article 288 of the Civil Procedure Act

[1] Supreme Court Decision 84Da1591 Decided December 11, 1984 (Gong1985, 165), 94Da24626 Decided October 11, 1994 (Gong1994Ha, 2963), Supreme Court Decision 2003Da64688 Decided March 25, 2004 (Gong2004Sang, 701) / [2] Supreme Court Decision 2005Da480 Decided May 27, 2005, Supreme Court Decision 2005Da3649 Decided July 28, 2005 (Gong205Ha, 1415), Supreme Court Decision 2012Da454679 Decided August 17, 2012, Supreme Court Decision 2004Da5467279 Decided March 27, 2006)

Seoul Guarantee Insurance Co., Ltd. (Law Firm Democratic, Attorneys Yoon Jae-sik et al., Counsel for defendant-appellant

Viadi Co., Ltd. (Law Firm Cheonghae, Attorneys Seo-ho et al., Counsel for the plaintiff-appellant)

Seoul Central District Court Decision 2011Na38096 Decided July 6, 2012

The judgment of the court below is reversed, and the case is remanded to the Seoul Central District Court Panel Division.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. The judgment of the court below

A. According to the reasoning of the judgment below, the court below held on November 1, 2008 that, in order to guarantee the repayment of the lease deposit with the distribution center in accordance with the logistics center operation contract of this case, the company was merely a joint and several surety ("joint and several surety contract of this case") which was concluded between the company and the non-party, and that, in order to secure the repayment of the lease deposit, the company was merely a joint and several surety's loan contract of this case which was concluded between the company and the non-party on December 31, 201 with the non-party 70 billion won, the company was merely a joint and several surety ("joint and several surety contract of this case"), and that the company did not receive treatment from the non-party 5 billion won, separately from the non-party 1's dividends contract of this case, the company did not receive treatment from the non-party 5 billion won since it was a joint and several surety company's loan insurance contract of this case with the non-party 5 billion won.

B. In addition, the court below found that the defendant company obtained the resolution of the board of directors of the defendant company at the time of signing the joint and several surety contract of this case or did not obtain the approval of the board of directors at the time of signing the joint and several surety contract of this case, and determined that the plaintiff was not aware of the approval of the board of directors or the resolution of the board of directors of the defendant company at the time of signing the joint and several surety contract of this case, and that the plaintiff did not obtain the approval of the board of directors or the resolution of the board of directors of the defendant company at the time of signing the joint and several surety contract of this case and did not obtain the approval of the board of directors at the time of signing the contract of this case as a matter of course from the financial affairs of the financial training institute of Korea and the financial institutions at the time of signing the contract of this case, and that the defendant company did not obtain the approval of the articles of incorporation or the resolution of the board of directors of this case as a joint and several surety, but did not obtain the above approval of the articles of association or the minutes of incorporation of this case.

2. Judgment of the Supreme Court

A. Examining the reasoning of the judgment below in light of the relevant legal principles and records, the part of the judgment below which determined that the joint and several surety contract of this case constitutes a large-scale loan of the company requiring the resolution of the board of directors as it constitutes an act of self-trade of directors under Article 398 of the Commercial Act, and that the defendant company did not obtain the resolution of the board of directors or approval of the board of directors at the time of concluding the said joint and several surety contract is justifiable. In so doing, contrary to what is alleged in the grounds of appeal, the court below did not err

B. However, the part that the court below determined that the plaintiff knew or was not aware of the resolution or approval of the board of directors of the defendant company with respect to the joint and several surety contract of this case is hard to accept for the following reasons.

The so-called self-transaction without the approval of the board of directors is null and void between the company and the director. However, in order to claim against a third party that the above transaction was null and void due to a failure to obtain the approval of the board of directors, a third party should prove that it was not approved by the board of directors, except that it did not obtain the approval of the board of directors (see, e.g., Supreme Court Decisions 84Meu1591, Dec. 11, 1984; 94Da24626, Oct. 11, 1994; 94Da24626, Oct. 11, 1994). Thus, even if the third party acted in good faith, it shall be deemed that the third party has acted in bad faith if it was proved that there was gross negligence in failure to know the fact that the transaction was necessary to obtain the approval of the board of directors, and that it was not necessary to protect the third party from the perspective of fair and good faith, such as trust.

In addition, even if the representative director of a corporation did not undergo a resolution of the board of directors with respect to external transactions, the resolution of the board of directors is merely an internal decision-making of the company. Thus, if the other party to the transaction knew or could have known that there was no such resolution of the board of directors, the transaction shall be effective unless the other party to the transaction knew or could have known that there was no such resolution of the board of directors (see, e.g., Supreme Court Decisions 2005Da3649, Jul. 28, 2005; 2012Da45443, Aug. 17, 2012). The circumstance that the other party to the transaction knew or could have known that there was no approval of the board of directors or that there was no resolution of the board of directors, and thus, the circumstance that the other party to the transaction knew or could have known that the internal procedure of the company necessary for the transaction was trusted, barring any special circumstance, it shall be deemed that the representative of the company was in accordance with the general rule of experience (see, etc.

Examining the aforementioned relevant legal principles and the facts and records acknowledged by the court below in light of the aforementioned legal principles and the facts and records, the non-party, the legitimate representative director of the non-party and the non-party, both of the defendant company, simultaneously representing the defendant company, is a policyholder with respect to the defendant company, and as to the defendant company, the defendant company's seal impression as joint and several surety, and as long as each corporation's seal impression was affixed to the defendant company and submitted each corporation's seal impression, it is consistent with general rule of experience that the representative of the company was trusted that the company's internal procedure necessary for the transaction was completed, and it is not necessary to investigate whether each company had lawfully completed the internal procedure such as resolution and approval of the board of directors solely on the ground that one person simultaneously represents

In addition, the court below determined that the resolution and approval of the board of directors were legally required in the joint and several surety contract of this case, and that the non-party actually controlled the company of the defendant, which cannot be presumed to have been approved by the board of directors or the resolution of the board of directors, as a matter of course, on the ground of the plaintiff's malicious or gross negligence judgment. However, the defendant company is not only responsible for proving the non-existence of the resolution and approval of the board of directors and the third party's malicious or gross negligence related thereto, but also the non-party actually controlled the above two companies in fact at the time of the joint and several surety contract of this case. Thus, it is difficult to view that there was any special reason to suspect that there was no resolution or approval of the board of directors of the defendant company as to the above joint and several surety contract of this case.

Furthermore, the plaintiff's business manual does not stipulate that the minutes of the board of directors shall be collected from the borrower or the joint guarantor who is a stock company, and even if the financial practical staff of the Korea Financial Training Institute or other cities are obligated to collect the minutes of the board of directors from the stock company which is the borrower or joint guarantor, it cannot be deemed that the plaintiff is obligated to collect the minutes of the board of directors from the company which is the borrower or joint guarantor. Thus, even if the plaintiff did not request the minutes of the board of directors from the defendant company, it cannot be concluded that there was any negligence. Even if the plaintiff did not comply with the articles of association which is requested by the defendant company to collect the minutes of the board of directors from the defendant company at the time of entering into the guarantee insurance contract of this case, it does not affect the decision or approval of the board of directors of the defendant company.

After all, the circumstances of the court below do not constitute a gross negligence that the plaintiff knew or was unable to know that there was no approval of the board of directors of the defendant company with respect to the self-transaction of this case, or that the plaintiff knew or could have known that there was no resolution of the board of directors of the defendant company with respect to the borrowing of large-

C. Nevertheless, the lower court determined that the joint and several surety contract of this case was null and void on the grounds that the Plaintiff knew or was unaware of the fact that it was approved by the board of directors of the Defendant Company or did not obtain a resolution by the board of directors, due to gross negligence. In so doing, the lower court erred by misapprehending the legal doctrine on the approval of the board of directors or the recognition of the absence of a resolution by the board

3. Conclusion

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)