[1] The scope of the third party responsible for the company where the apparent representative director acted in the bill using the name of another representative director

[2] Where a third party has gross negligence in believing that he/she has the right to represent the company, whether he/she is liable to the third party of the company (negative) and the meaning of gross negligence

[1] Where an apparent representative director who is not entitled to represent the company performs an act of bill using the name of another representative director, the scope of a bona fide third party responsible for the company includes not only the other party who has acquired the bill directly from the apparent representative director but also the third party who has received the bill again by endorsement and transfer.

[2] In order to establish the liability of the company due to the act of the apparent representative director under Article 395 of the Commercial Code, the company is not required to do so without fault other than the third party's good faith, but the purport of the provision is to use a name which is recognizable as having the power of representation in appearance of the company, and to protect the third party in good faith who is believed to be responsible for the occurrence of such appearance in case where there is a cause attributable to the company, thereby promoting the trust and safety of commercial transactions by protecting the third party in good faith. Such a third party's trust must be reasonable. Thus, even if the third party believed that he has the authority to represent the company in conducting the transaction to a director who is not the representative director of the company, even if he believed that the third party has the authority to represent the company, if there is gross negligence, the company shall not be liable to the third party, and thus, the third party's gross negligence refers to the situation where the third party's act was not within the time limit of the representative director's authority of representation, and it is not necessary to protect the former third party in terms of trust.

[1] Article 395 of the Commercial Act / [2] Article 395 of the Commercial Act

[1] Supreme Court Decision 96Da36753 delivered on August 26, 1997 (Gong1997Ha, 2818) / [2] Supreme Court Decision 72Da1907 delivered on February 28, 197 (No. 21-1, 111), Supreme Court Decision 86Da2936 delivered on October 11, 198 (Gong198, 1396), Supreme Court Decision 9Da19797 delivered on November 12, 199 (Gong199Ha, 2483), Supreme Court Decision 2002Da40432 delivered on July 22, 2003 (Gong17655)

New Bank (Law Firm, Kim & Lee, Attorneys Lee Jong-soo et al., Counsel for the defendant-appellant)

Defendant Co., Ltd. (Law Firm Square, Attorneys Yu-hee et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2001Na73277 delivered on October 24, 2002

The judgment below is reversed and the case is remanded to Seoul High Court.

1. The judgment of the court below

A. Facts acknowledged by the court below

(1) From May 1, 1998 to December 9, 1998, Nonparty 1, a managing director of the Defendant Company, worked as the head of the Planning and Coordination Office, from December 10, 1998 to November 30, 1999, and as the head of the Internet business division from December 1, 199 to January 30, 200.

(2) On November 1998, Nonparty 1 and Nonparty 2 obtained a loan as collateral with the Defendant Company’s deposit, and sold the site for the golf course of Young Art Development, which was interrupted by the Corporation. Nonparty 2 established Nonparty 3, around January 1, 1999, and received a successful bid in the amount of KRW 19.8 billion in its name on January 27, 1999.

(3) When Nonparty 2 requested Nonparty 1 to deposit KRW 3 billion at the Young Enterprise Finance Branch of the Plaintiff bank, Nonparty 1, who was the general manager of the business at the time, requested the Kim Jong-il of the Defendant Company to the head of the re-general headquarters of the Defendant Company, and Kim Il-il deposited the Defendant Company’s funds amounting to KRW 3 billion at the above branch on February 26, 199.

(4) Nonparty 2 requested Nonparty 4 corporation operated by Nonparty 2 as security of the said deposit to lend KRW 2.7 billion to the said head of the said branch office.

(5) On February 26, 1999, the most general rule of the above branch visited Nonparty 2’s office in the building of the Defendant Company’s head office, along with Nonparty 2, pursuant to the direction of the new letter of trust. Nonparty 1, as to the above deposit, issued to Nonparty 5 a letter of contract establishing a collateral pledge contract for loans of Nonparty 4 corporation as collateral obligation, the name of the corporation and the corporate seal impression with the representative director, affixed the certificate of personal seal impression of the Defendant Company, and accordingly, a loan of KRW 2.7 billion was made to Nonparty 4 corporation on May 27, 1999.

(6) Afterwards, the transaction amount as of December 29, 199 between the Plaintiff bank and Nonparty 1, Nonparty 2, etc. through several transactions such as deposits, loans, repayment and extension of payment period, etc. through the above methods, reached the total amount of loans KRW 28.6 billion and the total amount of deposits KRW 30.3 billion.

(7) Meanwhile, the non-party 1 and the non-party 2 are at the risk of being aware of illegal loans if the above loans were not repaid at the year-end settlement of the defendant company. After issuing a promissory note under the name of the defendant company, they would be used to pay part of the above loans at discount from the plaintiff bank. The non-party 1 stated that the non-party 1 would be necessary at the end of the year-end financial market of the defendant company, and received a name plate and seal impression for issuing bills of the defendant company, and then the non-party 1 and the non-party 2 used the bill paper of this case at the office of the non-party 4 corporation and the foreign exchange bank with the foreign exchange bank with the cash account of the non-party 6 corporation with the face value of KRW 3 billion and the payee was at the face value of the bill of this case 1, 270 million and the defendant corporation with the face value of the bill of this case 2,000,000 won (hereinafter referred to as the "Korean bill of exchange").

(8) On December 29, 199, the branch office of the Plaintiff bank requested discount of the second bill through a table which is an employee of Nonparty 3 corporation, (A) confirmed that the name and seal impression of the Defendant company reported in one copy of the business of the Plaintiff bank and the name and seal impression of the Defendant company affixed on the second bill are the same; and (b) deposited KRW 2.67,539,727 after deducting interest rates at the rate of 6.75% per annum from the interest rates at the rate of 6.75% per annum; and (b) on the same day, Madcom requested discount of the first bill; and (c) deposited 2.97,068,494 won after deducting interest rates; (c) deposited the said discount in the account of Nonparty 305,500,000 won after deducting the above discount interest from Nonparty 35,500,300,3000,3000,000.

(9) The Plaintiff bank presented payment at the place of payment on February 11, 2000, which was prior to the date of payment of each of the said Promissory Notes, but rejected all payments on the ground of non-transaction.

B. The judgment of the court below on the main claim

The court below held that the non-party 1 was authorized to issue the Promissory Notes on behalf of the defendant company, and thus, the defendant company is responsible as the issuer of the Promissory Notes, and even if not, the defendant company is responsible as the principal claim of the plaintiff seeking the payment of the Promissory Notes in accordance with the legal principles as representative director or representative director. Since the Promissory Notes in this case was forged by the non-party 1 and the non-party 2 without the right to issue the Promissory Notes in the name of the defendant company, it cannot be held liable as the issuer of the Promissory Notes. The plaintiff bank cannot be held liable as the representative director because it was gross negligence on the part of the non-party 1, and it cannot be held liable as the non-party 1 because the bank believed that the non-party 1 is entitled to issue the Promissory Notes in this case on behalf of the defendant company (the original judgment does not explicitly stated the grounds that it is deemed that the plaintiff bank had gross negligence on the part of the plaintiff bank. However, in light of the context of the reasoning of the judgment below and the contents before and after it.

C. The judgment of the court below on the conjunctive claim

Furthermore, for reasons indicated in its holding, the lower court determined that the Defendant Company is liable for the damages incurred by the Plaintiff Company due to Nonparty 1’s tort, and that the Plaintiff Bank is also liable for (1) a continuous discount of the three promissory notes with a large face value, and did not verify the authenticity of the promissory notes with the intent to solely recover the loans from Nonparty 1 who already borrowed KRW 28.6 billion to the department in charge of the transaction of the Defendant Company, and without considering the following: (2) a discount of three promissory notes forged using the promissory notes form for Nonparty 6 Company was made; and (3) a discount of the Plaintiff Company’s deposit at the Plaintiff Company’s board of directors without examining whether the Plaintiff Company was the addressee of the promissory notes form; and (3) a discount of the Plaintiff Company’s loan at the time of the Plaintiff Company’s loan at a discount of KRW 9.5 billion without examining whether the Plaintiff Company was a company having a transaction with the Defendant Company; and (3) a discount of the Plaintiff Company’s deposit at the time of the Plaintiff Company’s loan at KRW 1500 billion.

2. The judgment of this Court

A. First, in light of the record, it is correct that the court below recognized that the Chapter 3 of the Promissory Notes of this case was forged without authority by Nonparty 1, and there is no error of law by misunderstanding the rules of evidence and misunderstanding the facts.

B. However, the judgment of the court below on the liability of the representative director is not acceptable for the following reasons.

Article 395 of the Commercial Act shall apply mutatis mutandis not only to cases where an apparent representative director performs a legal act using his/her own name, but also to cases where he/she performs an act using the name of another representative director without using his/her own name (see Supreme Court Decision 77Da2436, Feb. 13, 1979; Supreme Court Decision 86Da1228, Oct. 25, 198; Supreme Court Decision 97Da34709, Mar. 27, 1998; Supreme Court Decision 2002Da40432, Jul. 22, 2003; Supreme Court Decision 2002Da40432, Jul. 22, 2003; Supreme Court Decision 2002Da3656, Aug. 36, 2017).

In addition, in order to establish the liability of a company due to the act of an apparent representative director under Article 395 of the Commercial Act, the company is not required to do so without fault other than the third party's good faith, but the purport of the provision is to conduct a transaction by using a name which may be deemed to have the power of representation of the company, rather than the representative director, and to protect the third party in a case where there is a cause attributable to the company in connection with the occurrence of such appearance. Such a third party's trust should be reasonable. Thus, even though the third party believed that the company has the authority to represent the company in conducting the transaction to a director who is not the representative director of the company, if there is gross negligence, the company is not liable to the third party (see Supreme Court Decision 9Da19797, Nov. 12, 199). The third party's gross negligence in this context refers to the act of violating the duty of representation by 200,000 old Supreme Court's duty of representation and thus, it is reasonable to 200, 300.

According to the facts established by the court below, the non-party 1, a managing director of the defendant company, affixed the name of the representative director of the defendant company and the corporate seal impression of the defendant company, and entered into a pledge contract by issuing collateral documents, such as the certificate of the personal seal impression of the defendant company on behalf of the representative director of the defendant company. The non-party 1, a managing director of the defendant company, issued three copies of the Promissory Notes on behalf of the representative director of the defendant company, using the name plate for the issuance of the bill and the seal impression of the defendant company, and the fact that the non-party 1 is not the representative director of the defendant company, shall be deemed to have already been aware of the fact that the non-party 1 had already been the representative director of the plaintiff bank's branch office of the defendant company. Thus, the non-party 1's good faith or gross negligence is not against the non-party 1's representative director's right to issue the Promissory Notes on behalf of the defendant company. In this regard, it is difficult to view the non-party 1's representative director and the defendant company's representative director.

Nevertheless, the court below held that the defendant company is not liable for the representative director on the ground that the plaintiff bank was gross negligence. Thus, the court below erred in the misapprehension of legal principles as to the criteria for determining the third party's gross negligence in the responsibility of representative director and its application, and it is clear that the court below's error affected the judgment.

3. Conclusion

Therefore, insofar as we accept the Plaintiff’s appeal as to the primary claim, the judgment of the court below is reversed without examining the Plaintiff’s remaining grounds of appeal and the Defendant’s grounds of appeal as to the primary claim, and the case is remanded to the court below 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 Yoon Jae-chul (Presiding Justice)