[1] The point at which the interruption of prescription by “a seizure” is terminated (=the time the seizure is cancelled or the enforcement procedure is terminated)

[2] Whether a debtor or a third party debtor may terminate an insurance contract itself after seizure of a policyholder's insurance claim (affirmative), and whether an order of seizure against a claim for insurance money is invalidated (affirmative)

[3] In a case where the seizure itself becomes null and void because the obligee’s claim against the obligor due to the attachment of a claim based on the disposition on default has ceased due to the termination and effectiveness of a basic contract relationship or the completion of extinctive prescription, etc., whether the cause of interruption of prescription is terminated (affirmative)

[1] When the prescription has been interrupted, the period of prescription that has lapsed until the interruption shall not be included therein, but shall newly run from the time when the cause of interruption ceases to exist (Article 28(2) of the Framework Act on National Taxes and Article 178(1) of the Civil Act), and the effect of the interruption of prescription by “a seizure” among the causes of interruption may be deemed to have expired when the seizure is rescinded or the execution procedure is terminated.

[2] Even if a seizure of a policyholder’s claim for insurance money is made, the obligor or the third obligor may terminate the insurance contract itself, which is the basic contractual relationship, and when the insurance contract is terminated, the claim for insurance money arising from the contract is extinguished, and thus the seizure order subject thereto becomes invalidated.

[3] In a case where the prescription of a creditor's claim against the debtor is suspended due to a disposition on default, not only the time when the disposition on default by a seizure is completed as claims collection, etc., but also when the seized claim does not exist due to the termination, effectiveness, or expiration, etc. of the basic contract relationship, and even when the seizure itself becomes invalidated, the disposition on default cannot proceed any longer. Thus, the cause for interruption of prescription should be deemed terminated, and the prescription period shall begin anew thereafter

[1] Article 28(2)4 of the Framework Act on National Taxes, Articles 175 and 178(1) of the Civil Act / [2] Articles 223 and 227 of the Civil Execution Act, Article 649(1) of the Commercial Act, Article 543 of the Civil Act / [3] Article 28(2)4 of the Framework Act on National Taxes, Articles 175, 178(1), and 543 of the Civil Act, Articles 223 and 227 of the Civil Execution Act

[1] Supreme Court Decision 2014Da45317 Decided November 26, 2015 / [2] Supreme Court Decision 2012Da105161 Decided July 12, 2013

Plaintiff

Korea

Busan District Court Decision 2016Na40764 Decided July 8, 2016

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

The grounds of appeal are examined.

1. Where prescription has been interrupted, the period of prescription that has lapsed until the interruption shall not be included therein, but shall newly run from the time when the cause of interruption ceases to exist (Article 28(2) of the Framework Act on National Taxes and Article 178(1) of the Civil Act); and the effect of interruption of prescription based on “a seizure” among the causes of interruption may be deemed to have expired when the seizure is rescinded or the execution procedure is terminated (see Supreme Court Decision 2014Da45317, Nov. 26, 2015).

Meanwhile, even if a policyholder’s claim for insurance money is seized, the obligor or the third obligor can terminate the insurance contract itself, which is the basic contractual relationship. If the insurance contract is terminated, the claim for insurance money arising from the contract is extinguished, and thus the seizure order subject to such termination is invalidated (see Supreme Court Decision 2012Da105161, Jul. 12, 2013).

In cases where the prescription of a creditor's claim against the debtor is suspended due to a disposition on default, not only when the procedure for disposition on default by the seizure is terminated as claims collection, etc., but also when the seized claim does not exist due to the termination, effectiveness, or expiration, etc. of the basic contract relationship, and the seizure itself becomes invalidated, the procedure for disposition on default shall no longer proceed. Therefore, the cause for interruption of prescription shall be deemed terminated, and the prescription period shall begin anew from that time.

2. According to the reasoning of the judgment below, on June 25, 2004, the court below affirmed the judgment of the court of first instance dismissing the Plaintiff’s claim for confirmation of existence of the Plaintiff’s obligation on the ground that: (a) on January 23, 2006, the Plaintiff entered into an insurance contract of pure security type 2 (“instant insurance contract”); and (b) on January 23, 2006, the Defendant seized the Plaintiff’s claim for insurance claim and the claim for the refund of insurance premium under the instant insurance contract (hereinafter “instant seizure”); and (c) on the ground that the interruption of prescription remains in force until the seizure is revoked, the Defendant’s claim for confirmation of existence of the Plaintiff’s obligation remains in force by a disposition for arrears.

3. However, it is difficult to accept the above determination by the court below for the following reasons.

It is reasonable for the lower court to view that the statute of limitations for the Defendant’s tax claim was suspended due to the instant seizure. However, according to the records, since the Plaintiff’s insurance contract was invalidated on December 1, 2006 due to the nonperformance of the Plaintiff’s insurance premium after the instant seizure, the insurance claim under the instant insurance contract was extinguished due to the invalidation of the said insurance contract, and the statute of limitations for the claim for the repayment of insurance premium arising therefrom was two years pursuant to Article 62 of the former Commercial Act (amended by Act No. 12397, Mar. 11, 2014). The statute of limitations for the claim for the repayment of insurance premium arising therefrom was expired on December 30, 2008, which was the time when the right was exercised.

Therefore, the instant seizure becomes null and void upon the occurrence of no further existence of the seized claim, and accordingly, the cause for the interruption of extinctive prescription by the instant seizure shall be deemed to have ceased. As such, from this point of view, the extinctive prescription of the Defendant’s taxation claim is deemed to have expired on November 30, 2013 after the lapse of five-year extinctive prescription under Article 27(1)2 of the former Framework Act on National Taxes (amended by Act No. 11604, Jan. 1, 2013).

Nevertheless, the lower court’s determination that the interruption of the statute of limitations on a tax claim continues on the grounds stated in its holding is erroneous by misapprehending the legal doctrine on the interruption of the statute of limitations after the interruption of the statute of limitations, thereby adversely affecting the conclusion of the judgment

4. 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 Kim Yong-deok (Presiding Justice)