[1] Whether multiple claims to be sought as a simple combination are permitted to be joined as selective or preliminary claims (negative), and where the court rendered a judgment that only one of these claims is accepted and dismissed and only the defendant appealed, the scope of the appellate court's judgment (=the defendant's appeal)

[2] Whether "the consent of all shareholders" can be made by implied means, which is a requirement for exempting directors from liability to the company (affirmative)

[3] General monitoring duty to be borne by a director of a stock company

[4] Whether an executive officer or employee of a company has a legal obligation to comply with the major shareholder's instructions in violation of duties arising from delegation relations with the company (negative)

[5] In a case where a financial institution acquires corporate bonds issued by a debtor and appropriated them for the repayment of the debtor's existing credit loans as the acquisition price (negative)

[6] Whether the short-term extinctive prescription under Article 766(1) of the Civil Act applies to the liability for damages caused by a director’s breach of duty to the company (negative)

[7] In a case where a director's liability for damages is recognized, whether the amount of damages can be limited in consideration of all the circumstances such as the background leading up to the director's breach of duty (affirmative)

[1] Article 253 of the Civil Procedure Act / [2] Articles 400 and 415 of the Commercial Act / [3] Article 382-3 of the Commercial Act / [4] Article 382-3 of the Commercial Act / [5] Article 382-3 of the Commercial Act / [6] Articles 39(1) and 414(1) of the Commercial Act, Article 766(1) of the Civil Act / [7] Article 399

[5] Supreme Court Decision 2006Do1813 decided Jun. 1, 2007 (Gong2007Ha, 102) / [6] Supreme Court Decision 84Meu1954 decided Jun. 25, 1985 (Gong1985, 1049) / [7] Supreme Court Decision 2002Da60467, 60474 decided Dec. 10, 2004 (Gong2005Sang, 87) Supreme Court Decision 2005Da3476, 34773 decided Dec. 7, 2006

The Korea Deposit Insurance Corporation, a joint trustee in bankruptcy of the modern life insurance company

Defendant 1 and five others (Attorneys Yellow-il et al., Counsel for the defendant-appellee)

Defendant 5 and two others (Law Firm Yang, Attorneys Kim Jae- Jae et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2004Na17087 delivered on July 15, 2005

All appeals are dismissed. The costs of appeal between the plaintiff and the deceased non-party shall be borne by the plaintiff, and the remainder by each party.

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

1. Plaintiff’s ground of appeal

A. As to the first ground for appeal

Since there is no logical relation, it is not allowed to request a consolidation of several claims to be claimed purely simply as simple or conjunctive claims. If the plaintiff files a lawsuit in such a form, the first instance court deliberated on the merits of all the claims, and subsequently accepted only one of them, and rendered a judgment dismissing the remaining claims, it shall be deemed that the court has judged that the above claims are a simple consolidation in accordance with the original nature. Therefore, if only the defendant files an appeal against the above quoted claims, all the claims in the simple or simple relation should be judged as a whole to the appellate court, but the scope of the appellate court's trial shall be limited to the defendant's appeal among the disputed claims.

According to the records of this case, the plaintiff filed the suit against the deceased non-party as the cause of the claim. ① The damages claim of 5.989 billion won related to the business of acquiring the company's head office, ② the damages claim of 2.985 million won related to the credit loan to Yongnam Family Co., Ltd. (hereinafter "Ynam Family"), ③ the damages claim of 13.634 billion won related to the sale and purchase of development trust, ④ the damages claim of 795 million won related to the real estate lease, ④ the damages claim of 7.5 billion won related to the real estate lease, were selected claims, and the court of first instance accepted part of the claim amount of the total damages claim and the damages claim of 7.95 billion won. The court of first instance accepted part of the claim amount related to the business of acquiring the company's head office after examining all the causes of the above claims, and only the deceased non-party's appeal. Thus, according to the above legal principles, each of the above claims is limited to the non-party's selective grounds of appeal.

Meanwhile, at the court below, the plaintiff extended the claim amounting to 2 billion won and the damages for its delay to claim the plaintiff's 2 billion won and the claim is based on the above 1 claim related to the business of acquiring the head office, and the plaintiff also arranged the claim to seek the plaintiff's 2 or 4 above as claimed in the court of first instance if the above claim is rejected. In conclusion, the plaintiff's 2 or 4 claims related to the business of acquiring the head office of this case should be added to the above 2 or 4 claims in the damages claim related to the business of acquiring the head office of this case. As seen above, the plaintiff's 2 or 4 claims cannot be joined as a conjunctive claim because they have no logical relation with the damages claim related to the business of acquiring the head office's office's office's office's office's office's office's office's office's office's office's 2 or 4 claims are not permitted. Therefore, the court below's judgment is justified and there is no error of law in the misapprehension

B. Regarding ground of appeal No. 2

Based on the findings of fact, the court below rejected the plaintiff's claim on the ground that the discontinuance of construction was not attributable to Gap Co., Ltd. (hereinafter "A") but caused by Gap's request, and that there is no proximate causal relation between the defendant's duty failure to collect contract deposit and the amount of tort and the amount of settlement of accounts, and there is no error in the misapprehension of legal principles as to causation, and there is no other error in the misapprehension of legal principles as to causation. The ground of appeal that the new construction of the company's office for shipbuilding life was attributable to Gap because the new construction of the company's office for shipbuilding life was suspended due to the bankruptcy of development. It cannot be justified as a legitimate ground of appeal, and it cannot be seen that the court below erred in finding facts belonging to the exclusive authority of the fact-finding court and recognized facts beyond the limit of the principle of free evaluation of evidence.

2. As to the grounds of appeal by Defendant 1, 3, 4, 8, and 9

(a) Whether directors, etc. are released from liability under Article 450 of the Commercial Act;

The cancellation of the responsibility of directors, etc. under Article 450 of the Commercial Act is limited to the matters approved at an ordinary general meeting as stated in the financial statements, etc.; however, the fact that the shipbuilding life acquired private equity bonds issued by the new company (hereinafter “new company”) and the Defendants neglected to perform their duties and caused damage to the shipbuilding life at the time of the lending of credit to the Yong-Namn, etc. is not known to the fact that an officer received a warning due to exceeding the limit on loans to its own affiliated groups attached to the audit report attached to the financial statements. Thus, the court below held that the Defendants’ liability cannot be deemed to have been cancelled, and there is no error in the misapprehension of legal principles as to the cancellation of the liability of directors, etc., as alleged in the

(b) Whether the liability under the consent of all stockholders, etc. under Article 400 of the Commercial Act is exempted;

The liability of directors, etc. may be exempted with the consent of the total shareholders pursuant to Articles 400 and 415 of the Commercial Act. In this case, the consent of the total shareholders is not necessarily required to be made explicitly and actively, and can be made by implied declaration of intention in the process of acquiring the entire shares of the company. However, there should be circumstances to deem that the transferee of the entire shares expressed his/her intention not to impose any liability for non-performing loans arising from the director, etc. on the director, etc., on the director, etc., on the non-performing loans.

In light of the records, the court below's determination that the directors' liability is not exempted by implied declaration of intention of all shareholders, just because the Hyundai Life Insurance Co., Ltd. accepted 100% of the shares of the Chosun Life and determined the acquisition amount at a discounted rate when absorbing shipbuilding Life by acquiring 100% of the shares of the Chosun Life and merged shipbuilding Life. The judgment below is acceptable in accordance with such legal principles, and there is no violation of the misapprehension of legal principles as to exemption of directors' liability, etc

C. Whether directors who have written resolution are liable

As a member of the board of directors, directors of a stock company are not bound to express their intent on the agenda presented to the board of directors, but have a duty to comprehensively monitor the performance of duties by directors in charge of other affairs as well as the affairs in charge, and such duty cannot be avoided by being a non-standing director, so long as a director of a stock company does not perform his duties in substance by ex post facto ratification of the resolution of the board of directors without attending the board of directors. In this regard, we affirm the lower court’s determination that Defendant 8 and 9 cannot be exempted from liability for damages due to the neglect of duties, and there is no error in the misapprehension of legal principles as to the director’s responsibility.

(d) Whether immunity is granted according to instructions given by large shareholders;

In addition, a company and a major shareholder of a company have separate legal personality and cannot be deemed to have a legal obligation to follow the direction of a major shareholder in violation of the duty of delegation with the company. Thus, there is no evidence to support that the court below did not have an instruction of Park Ho-ho, a major shareholder at the time when shipbuilding life acquired privately issued bonds and extended credit to Yong-Nam, and that even if such instruction was given, the Defendants cannot be exempted from liability due to the breach of duty is acceptable in accordance with such legal principles and there is no error in the misapprehension of legal principles as to the responsibility of directors, etc.

(e) Whether a legitimate loan was made under an exception to the detailed rules on credit investigation operations;

In light of the records, the court below, based on the evidence adopted by the court below, found that the new position of the new position of the newly accepted private equity bonds has decreased considerably compared to that of the previous year, and that it was difficult to meet financial costs due to operating profits. The financial structure and business situation of the end of 1995, such as the size of the loan considerably exceeded the sales amount, and that of the end of 1995, it was extremely poor in the credit assessment of the Korean Credit Rating Information at the end of 1995. According to the rules on the credit investigation of the Joseon Life, the credit loans and loans are the E-performing companies whose credit loans and loans are prohibited in accordance with the rules on the credit assessment of the Korean Credit Rating Information at the end of 195. In addition, it was difficult to reduce the sales amount and to cover financial costs due to operating income, and it was extremely poor in the financial structure and business situation of the Korean representative director's credit evaluation information at the time of December 12, 1996.

(f) Whether the private placement bonds are exchanged;

Realization refers to the repayment of existing debts through a new loan only formally without actually receiving funds, and constitutes a separate loan, except in extenuating circumstances, but in reality, it is merely an extension of the maturity of the existing debts. Therefore, the mere fact that a financial institution acquired corporate bonds issued by a debtor and appropriated the acquisition price for the repayment of the debtor's existing credit loan cannot be deemed to be a substitution (see Supreme Court Decision 2006Do1813, Jun. 1, 2007).

In this regard, the court below's rejection of the defendants' assertion that the new private placement bonds are exchanged is just and there is no error in the misapprehension of legal principles as to the substitution.

G. Whether reimbursement has been made

Examining the lower court’s fact-finding in light of the records, which rejected the Defendants’ assertion on the payment of the purchase price of the new privately offered bonds and the credit loans in Yong-Nam Nam-do, on the grounds that there is insufficient evidence to acknowledge such assertion, the lower court cannot be deemed to have acknowledged facts beyond the bounds of the principle of logic and experience and free evaluation of evidence. Therefore, the allegation in

H. Whether short-term extinctive prescription is applied

Since the liability for damages caused by the breach of duty by a director or an auditor of a stock company under Articles 399(1) and 414(1) of the Commercial Act is a non-performance liability due to delegation relationship, the short-term extinctive prescription under Article 766(1) of the Civil Act is not applicable (see Supreme Court Decision 84Meu1954 delivered on June 25, 1985). Thus, the lower court’s rejection of the Defendants’ short-term extinctive prescription claim is justifiable and otherwise there is no error of law by misapprehending the legal principles as to

I. Whether limitation on liability for damages is significantly unreasonable

In a case where a director or auditor is liable for compensating the company for damages by committing an act in violation of Acts and subordinate statutes or the articles of incorporation or neglecting his duties, the scope of compensation for damages may be limited in light of the principle of fair compensation for damages, taking into account all the circumstances such as the contents and nature of the relevant business, the background leading up to the relevant director or auditor’s breach of duties and the manner of the relevant violation, the degree of involvement in the occurrence and expansion of damages of the company, the degree of contribution to the ordinary director or auditor, the pertinent director or auditor’s profit from the violation, the existence of the pertinent director or auditor’s profit from the violation, the existence of the company’s organizational structure, and the establishment of risk management system, etc. Furthermore, the fact-finding or determination of the ratio is within the exclusive authority of the fact-finding court unless it is recognized that it is remarkably unreasonable in light of the principle of equity (see, e.g., Supreme Court Decisions 2002Da6047, 60474, Dec. 10, 2006>

In light of the above legal principles and records, the lower court’s fact-finding or the lower court’s determination on the Defendants’ liability mitigation ratio cannot be deemed to be considerably unreasonable in light of the principle of equity. Thus, contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles regarding limitation of liability

3. As to the ground of appeal by the defendant Materne

(a) Credit assessment for all affiliated companies groups;

In light of the records, the court below's finding of the court below that there is no evidence to acknowledge Eul's 30th group as belonging to Eul's 30th group is in violation of logical and empirical rules and the principle of free evaluation of evidence is not exceeded the limit of the principle of free evaluation of evidence. Thus, the court below's decision which rejected the defendant's assertion that Eul's 30th group's 30th group's 10th group's 10th group's 20th group's 30th group's 20

(b) Whether a legitimate loan was made under an exception to the detailed rules on credit investigation operations;

In light of the records, the court below, based on the evidence adopted by the court below, found that the Yong-Naman did not have the prior resolution of the representative director in the course of the loan, and it was difficult for the representative director to meet the financial costs due to the operating profit, and that the loan was extremely poor in the financial structure and business situation as of December 1996 by the credit assessment of the Korea Credit Rating Information at the time of December 1996, and was 42, in accordance with the credit assessment of the Korea Credit Rating Information at the time of December 196, 196, and was the E-Class E inferior business entity whose credit loans and loans are prohibited in accordance with the Credit Investigation Business Regulations of Joseon Life, although it was the E-Class E inferior business entity whose credit loans and loans are prohibited in accordance with the credit assessment of the Korea Credit Rating Information at the time of December 1996, 196, and thereby caused losses due to the result of the lending of the loan without a clear credit security, and the judgment of the court below that the defendant could not be exempted from the responsibility due to perform its duties.

(c) Whether directors cancel their liability under Article 450 of the Commercial Act;

The cancellation of directors' liability under Article 450 of the Commercial Act is limited to the matters approved at an ordinary general meeting as stated in the financial statements, etc.; however, the court below's decision that the defendant neglected to perform his/her duties and caused damage to shipbuilding life in the course of extending the limit of loans to self-affiliated groups, etc. is just and acceptable in holding that the defendant's liability cannot be deemed to have been cancelled in this purport, and there is no error in the misapprehension of legal principles as to the cancellation of directors' liability, as alleged in the grounds for appeal.

D. Whether the principle of good faith is violated

The auditor of a stock company or a person who merges with a stock company, knowing the fact of the loss caused by the director's breach of duty, did not refer to an ordinary general meeting by stating the fact of the loss caused by the director's breach of duty in the financial statements, etc., and thus, the claim for damages against the director of a stock company is not in violation of the good faith principle. In this regard, the court below's decision that the claim for damages against the defendant did not violate the good faith principle is just and acceptable.

(e) Whether exemption has been granted pursuant to the provisions of inspection and sanction of financial institutions;

According to Article 26 of the Regulations on the Inspection and Sanctions of Financial Institutions, the defendant asserts that the credit-related person's exemption provision is stipulated in the grounds of appeal and credit-related person's act should be exempted in accordance with the above provision since he fulfilled his duty of due care as a good manager. However, this is first asserted in the appeal and it cannot be a legitimate

4. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against them by applying Article 98 of the Civil Procedure Act to them. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Ill-sook (Presiding Justice)