Whether “competing” under the content that a school juristic person transfers its operating right and receives a transfer price in return for appointing a transferee as an executive of a school juristic person constitutes “illegal solicitation” as an element of a crime of taking property in breach of trust (negative in principle)

In full view of the contents and purport of Article 20(1) and (2), Articles 20-2, 20-3, 28(1), 47, and 73 subparag. 2 of the Private School Act, criminal punishment for the receipt of money from a school foundation under a contract for transfer of operating rights is not permissible as it goes against the principle of no punishment without the law or the principle of clarity in penal law, even if the president or a private school manager of the school receives “inception” from a transferee of a school foundation to receive money in return for the appointment of an executive of the school foundation, the contents of such solicitation cannot be deemed to have an effect on the basic property of the school foundation unless there is an explicit decision by the legislators prohibiting or punishing transfer of the right to operate the school foundation for the purpose of establishing other basic property of the school foundation. Furthermore, it cannot be said that the contents of such solicitation do not constitute a violation of the principle of no punishment without the law or the principle of no punishment without the consent of the school foundation to receive money from the principal or manager of the school foundation.

Article 12(1) of the Constitution of the Republic of Korea; Articles 1(1) and 357 of the Criminal Act; Articles 20(1) and (2), 20-2, 20-3, 28(1), 47, and 73 subparag. 2 of the Private School Act

Supreme Court Decision 2010Do16681 Decided December 26, 2013 (Gong2014Sang, 359)

Defendant 1 and one other

Defendants

Law Firm (LLC) LLC et al.

Chuncheon District Court Decision 2013No368 Decided September 11, 2013

All the judgment below is reversed, and the case is remanded to Chuncheon 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. As to the Defendants’ giving and receiving property in breach of trust in relation to the transfer and acquisition of the operating right of the educational foundation

A. In the crime of taking property in breach of trust or taking property in breach of trust as stipulated under Article 357 of the Criminal Act, “illegal solicitation” refers to a solicitation contrary to social norms and the principle of trust and good faith. In determining this, the contents of the solicitation, the types, amounts, and forms of the acquired property or property profits in relation thereto, the method and mode of providing property benefits, the integrity of transactions, which are protected legal interests, should be comprehensively considered (see Supreme Court Decision 2010Do3399, May 27, 2010, etc.).

B. Where an educational foundation governed by the Private School Act intends to sell its basic property, permission from the competent agency shall be obtained (Article 28(1)) and criminal punishment shall be imposed on the violation of such permission (Article 73 Subparag. 2). In light of the characteristics, public functions, etc. of a private school, where the securing of basic property to conduct educational activities in a private school is essential and its physical foundation is inadequate, and the existence of the school is at risk due to the defect of its physical foundation, taking into account the fact that it is inevitable for the State to participate in the management of property of the private school within a certain scope in consideration of the State and social side effects arising therefrom (see, e.g., Constitutional Court en banc Order 2011Hun-Ba14, Feb. 23, 2012).

On the other hand, there are cases where the president of a school foundation or a private school manager concludes a contract to transfer the right of operation of the school foundation to a transferee of the right of operation and receive money equivalent to the transfer of the right of operation from a transferee in return for the transfer of the right of operation (hereinafter “contract to transfer the right of operation”). In addition, the Private School Act does not provide for the purpose of restricting and prohibiting the transfer of the right of operation, but does not provide for imposing criminal punishment for the transfer of the right of operation. Furthermore, in the case of a contract to transfer the right of operation, the ownership of the basic property owned by the school foundation does not change any change in the form of appointment of the school foundation or the person designated by the transferee of the right of operation through the resolution of the board of directors. Accordingly, the Private School Act takes office with the approval of the competent agency (Article 20(1) and (2)), and where an officer newly appointed by the board of directors commits a certain act, the competent agency may cancel the appointment of the executive or suspend the performance of his/her duties (Article 20-2).3).

In full view of the contents and purport of these relevant provisions, criminal punishment for receiving transfer proceeds under a contract for transfer of operating rights is not permissible as contrary to the principle of no punishment without the law or the principle of clarity in penal laws, only with abstract risk that the transfer of operating rights to school juristic persons and the receipt of such transfer proceeds may adversely affect the basic property of the school juristic person in the future or may hinder the sound operation of the school juristic person, unless there is an explicit decision by the legislators that prohibit and punish transfer of operating rights to the school juristic

Therefore, even if the chief director of a school juristic person or a private school manager received “compacting” from a transferee of a school juristic person in return for the transfer of a school juristic person’s operating right and the appointment of a transferee as an executive of a school juristic person, such solicitation cannot be deemed an “illegal solicitation” which is an element of a crime of taking property in breach of trust, unless there exist special circumstances, such as where it is evident that the contents of such solicitation would obviously cause serious threat to the existence of the school juristic person, and it is intended to purchase and use fundamental property for any purpose other than the establishment purpose of the school juristic person in question, and thus, it cannot be deemed that such solicitation would violate social rules or the principle of good faith. Furthermore, the circumstances such as the chief director of a school juristic person or a private school manager of a private school in order to recover the funded property

C. The lower court affirmed the first instance judgment convicting Defendant 2 of this part of the facts charged, on the ground that Defendant 1’s transfer of the right to manage and operate a non-indicted 1 school foundation (hereinafter “non-indicted 1 corporation”) and its affiliated school by means of having Defendant 1 elected Defendant 1 as the chief director, does not differ from transferring the right to operate a profit-making corporation by transferring the shares owned by a large shareholder of a profit-making corporation, and thus, constitutes a case where “illegal solicitation” was received in conflict with the nature of a non-profit incorporated foundation

However, examining all the circumstances revealed in the record in light of the legal principles as seen earlier, it is reasonable to view that Defendant 1 did not dispose of the ownership of the school site and building, which is the basic property of Nonindicted Corporation 1, but transferred its operating right itself under the agreement with the intention of Defendant 1 to continue to operate the Nonindicted Corporation 1. Unlike the intention of Defendant 1 to purchase and use the basic property for any purpose other than the purpose of the establishment of Nonindicted Corporation 1, there is no circumstance to deem that Defendant 1 entered into a contract for the transfer of operating right of this case with Defendant 2, or that Defendant 1 operated Nonindicted Corporation 1 for any purpose other than the operation of the school after changing the president. Thus, even if Defendant 2 received the transfer proceeds from Defendant 1 upon solicitation from Defendant 1 to appoint the chief director of the Nonindicted Corporation 1, it cannot be deemed as contrary to the social rules

Nevertheless, the court below found the Defendants guilty of this part of the facts charged on the grounds as stated in its holding. It erred by misapprehending the legal principles on illegal solicitation, which is an element of the crime of giving and receiving property in breach of trust.

2. As to Defendant 1’s taking of property in breach of trust regarding the employment of Defendant 1

A. Examining the evidence adopted by the court of first instance maintained by the court below in light of the record, it is acceptable to maintain the judgment of the court of first instance which convicted each of the charges of this part on the ground that Defendant 1 received illegal solicitation from Nonindicted 2, 3, and 4 to employ them as teachers and staff of Nonindicted Corporation 1 and received money in return for such illegal solicitation, and that there was no error in violation of the principle of free evaluation of evidence in violation of logical and empirical rules.

B. However, as seen in paragraph (1), the part of the charge of giving property in breach of trust regarding Defendant 1’s acquisition of the operating right of Nonindicted Corporation 1 should be reversed. Since the reversed part was sentenced to one punishment for the above Defendant on the ground that there is a concurrent relation between each of the above crimes and the above crimes under the former part of Article 37 of the Criminal Act, the entire reversal cannot be exempted.

3. Conclusion

Therefore, the judgment of the court below is reversed in its entirety, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)