Where an act of representation by a person with parental authority, who is a legal representative, causes an economic loss to a minor himself/herself, while the act of representation by a person with parental authority or a third party is an act of causing economic loss to a minor, and the other party to the act knew or could have known such fact, whether such act has the effect on the person (negative), and whether such act may be asserted against a third party acting in good faith on the ground of such circumstance (negative)

In an objective view of the act of acting as a legal representative of a person with parental authority, it is reasonable to interpret the proviso of Article 107(1) of the Civil Act that the act of bringing economic loss to a minor, while the act of acting as a legal representative causes economic loss to a minor, and if the other party to the act knew or could have known such fact, it does not affect the person. However, with respect to a third party acting in good faith who has a new legal interest based on the legal relation formed externally, any person may not oppose such situation by analogy of the provision of Article 107(2) of the Civil Act, and any third party shall be held liable to assert or prove that he/she is malicious.

Articles 107 and 920 of the Civil Act, Article 288 of the Civil Procedure Act

Supreme Court Decision 2011Da64669 Decided December 22, 2011 (Gong2012Sang, 164)

Plaintiff (Attorney Jin-hee et al., Counsel for plaintiff-appellant)

Defendant

Suwon District Court Decision 2015Na15563 decided December 17, 2015

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

The grounds of appeal are examined.

1. In an objective view of the act of acting as a legal representative of a person with parental authority, on the other hand, causing economic loss to the minor himself/herself, while a person with parental authority or a third party is an act that gives economic benefits to the minor, and if the other party to the act knew or could have known such fact, it is reasonable to interpret that the act does not have the effect on the person by analogical application of the proviso of Article 107(1) of the Civil Act (see Supreme Court Decision 2011Da64669, Dec. 22, 2011). However, with respect to a third party in good faith who has a new legal interest based on the legal relationship formed externally, any person may not oppose the third party by analogical application of the provisions of Article 107(2) of the Civil Act. The third party’s assertion and burden of proving that the act

2. A. The lower court determined that the instant sales contract was a contract concluded by a person with parental authority for the abuse of power, and its effect does not extend to the Plaintiff and Nonparty 1. The registration of transfer of ownership, which was completed in the future of Nonparty 2 on the ground of the said sales contract, was invalid, and if Nonparty 2 did not acquire any right to each of the instant real estate, even if Nonparty 2 sold each of the instant real estate to the Defendant by an unentitled person, the registration in the name of the Defendant was invalid, which is not in conformity with the substantive legal relationship.

B. However, the above determination by the court below is difficult to accept in the following respect.

1) Review of the reasoning of the lower judgment and the record reveals the following facts.

A) Around June 30, 2011, Nonparty 3, as a person of parental authority, sold each of the instant real estate to Nonparty 2 on behalf of the Plaintiff and Nonparty 1 (hereinafter “instant sales contract”), and around that time, completed the registration of ownership transfer in the future of Nonparty 2.

B) On August 26, 2013, Nonparty 2 completed the registration of ownership transfer based on a sales contract on August 22, 2013 in the name of the Defendant for each of the instant real estate.

C) The Plaintiff filed a lawsuit seeking cancellation of the registration of transfer of ownership in the future of Nonparty 2, and on January 23, 2015, the instant sales contract was concluded by Nonparty 3’s abuse of parental authority, and its effect does not reach the Plaintiff and Nonparty 1. Therefore, Nonparty 2 was sentenced to the judgment that the Plaintiff is obligated to cancel the registration of transfer of ownership, and Nonparty 2 appealed against Nonparty 2, but the appeal was dismissed on June 24, 2015.

D) Since the registration of ownership transfer completed in the future of Nonparty 2 is null and void, the Plaintiff filed the instant lawsuit by asserting that the registration of ownership transfer in the name of the Defendant was also null and void. The Defendant respondeded in the written reply dated October 22, 2013 that “the content of the Plaintiff’s assertion of the cause of the instant claim is not known to the Defendant at all.”

2) Examining the above facts in light of the legal principles as seen earlier, the Defendant acquired each of the instant real estate from Nonparty 2 and completed the registration of ownership transfer, thereby having a new legal interest based on the legal relationship formed externally through the abuse of parental authority by Nonparty 3. On the record, it is difficult to find that the Defendant was aware of the fact that the instant sales contract was concluded by Nonparty 3’s abuse of parental authority at the time of purchase of each of the instant real estate from Nonparty 2 from Nonparty 2. Therefore, there is room to deem that the instant sales contract cannot be asserted against the Defendant on the ground that the instant sales contract was concluded by Nonparty 3’s abuse of parental authority

3) If circumstances arise, the lower court should have deliberated whether the Defendant could oppose the Plaintiff by examining whether Nonparty 3’s abuse of parental authority was a bona fide third party.

C. Nevertheless, the lower court, without examining and determining whether the Defendant is a bona fide third party with respect to the abuse of parental authority, determined that the registration of the Defendant’s name was invalid on the sole basis of the circumstances as indicated in its reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on the validity of the abuse of parental authority against a bona fide third party, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on

3. Therefore, without further proceeding to decide on the remaining grounds of appeal, 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 Kim Shin (Presiding Justice)