[1] The meaning of “storage” in the crime of embezzlement / Whether the legal or de facto consignment relationship necessary for the establishment of embezzlement is limited to the trust worth protecting the crime of embezzlement (affirmative), and the standard for determining whether there is a consignment relationship (affirmative)

[2] In cases of bilateral title trust, in violation of the Act on the Registration of Real Estate under Actual Titleholder’s Name, where the title truster transfers the title of the real estate owned by him/her to the title trustee, whether the title trustee is in the position of “a person who takes custody of another’s property” in relation to the title truster (negative); and whether embezzlement is established in relation to the title truster when the title trustee disposes of the real estate entrusted by him/her at will (negative)

[1] Inasmuch as custody in the crime of embezzlement under Article 355(1) of the Criminal Act refers to the possession of property through a consignment relationship, the legal or de facto consignment relationship between the custodian of the property and the owner of the property (or the owner of other principal rights) should exist in order to constitute the crime of embezzlement. Such consignment relationship may be established not only by a contract such as loan of use, lease, delegation, etc. but also by business management, customs, assistance, and trust rule. However, in light of the fact that the intrinsic nature of the crime of embezzlement unlawfully obtains another’s property entrusted based on a fiduciary relationship, it is reasonable to determine that the consignment relationship is a new trust worth protecting the crime of embezzlement. Whether there is a consignment relationship is determined by considering the relationship between the custodian of the property and the owner of the property, the duty to maintain the status of custody of the property is imposed, and the situation surrounding the custody of the property is considered as necessary under the criminal law.

[2] The purpose of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) is to contribute to the sound development of the national economy by preventing anti-social acts, such as speculation, tax evasion, and evasion of law, which abuse the real estate registration system, and by promoting normalization of real estate transactions and stabilization of real estate prices through the registration of ownership and other real rights to real estate under the name of the actual titleholder’s name so as to coincide with the substantive legal relationship (Article 1). According to the Real Estate Real Name Act, any person shall not register any real right to real estate under the name of the title trustee pursuant to the title trust agreement (Article 3(1)), a title trust agreement and any change in real rights to real estate arising therefrom shall be null and void (Article 4(1) and (2) main sentence). In the event of a violation of Article 3(1) of the Real Estate Real Name Act, a title truster and a title trustee are subject to criminal punishment (Article 7).

In light of the content and attitude of the regulations on the title trust relationship under the Real Estate Real Name Act, in the case of bilateral title trust between the title trustor and the title trustor, in violation of the Real Estate Real Name Act, the title trust agreement, the delegation agreement incidental thereto, the title trust real estate based on the premise of the title trust agreement, and the return agreement on the disposal price for the disposal of the property, shall be null and void.

Furthermore, the de facto consignment relationship that may be asserted as having existed on the basis of an invalid title trust agreement, etc. between the title truster and the title trustee is merely an illegal relationship that constitutes a crime against the Real Estate Real Name Act, and cannot be deemed as a new trust worth protecting under the Criminal Act.

A title trustee is obligated to cancel the registration of transfer of ownership to a title truster; however, the registration of transfer of ownership is null and void from the beginning, and the title trustee merely complies with the claim that the title truster seeks the cancellation due to a claim for exclusion of disturbance based on ownership. Even if a disposal act made with a third party is likely to be effective pursuant to Article 4(3) of the Real Estate Real Name Act, it is merely the purport of setting an exception to the invalidation of a title trust agreement in order to protect a third party, which is the transaction partner, and cannot be deemed a premise that there exists any consignment relationship between the title truster and the title trustee that makes the said disposal act valid. Therefore, the title trustee cannot be deemed to be in the position of “a person who keeps another’s property” in relation to the title trustee on the ground of the existence of the duty to cancel

Therefore, in case of bilateral title trust in violation of the Real Estate Real Name Act, even if the title trustee disposes of the trusted real estate at will, the crime of embezzlement is not established in relation to the title truster.

This legal doctrine equally applies to a case where a title trust agreement was made before the enforcement of the Real Estate Real Name Act, and the actual name registration was not made within the grace period as prescribed by the said Act, and a disposal act was made after the said title trust agreement and the change in real rights was invalidated by the registration

[1] Article 355(1) of the Criminal Act / [2] Article 355(1) of the Criminal Act, Articles 1, 3(1), 4, and 7 of the Act on the Registration of Real Estate under Actual Titleholder’s Name

[1] [2] Supreme Court en banc Decision 2014Do6992 Decided May 19, 2016 (Gong2016Sang, 817) / [1] Supreme Court en banc Decision 2017Do17494 Decided July 19, 2018 (Gong2018Ha, 1801) / [2] Supreme Court Decision 99Do3170 Decided October 12, 199 (Gong199Ha, 2384), Supreme Court Decision 9Do527 Decided February 22, 200 (Gong2000Sang, 89Do1906 decided April 25, 200) (amended by Supreme Court Decision 2009Do1906 decided April 26, 2008)

Defendant

Defendant and Prosecutor

Attorney Lee Jong-hoon

Busan District Court Decision 2016No3127 Decided October 27, 2016

All appeals are dismissed.

The grounds of appeal are examined.

1. As to the prosecutor's grounds of appeal

A. As to the acquittal portion

1) Inasmuch as custody in the crime of embezzlement under Article 355(1) of the Criminal Act refers to the possession of property through a consignment relationship, in order to constitute the crime of embezzlement, there exists a statutory or de facto consignment relationship between the custodian of property and the owner of property (or any other principal owner). Such consignment relationship may be established not only by a contract such as loan of use, lease, delegation, etc., but also by business management, customs, assistance, and trust rule. However, in light of the fact that the intrinsic nature of embezzlement unlawfully obtains another person’s property entrusted based on a fiduciary relationship, it is reasonable to determine that the consignment relationship is based on trust worth protecting the crime of embezzlement (see Supreme Court en banc Decision 2014Do6992, May 19, 201). In light of the relationship between the custodian of property and the owner of property and the circumstances surrounding the custody of property, etc., whether there is a consignment relationship should be normatively determined by taking into account whether there is a need to keep the property in custody by imposing an obligation on the custodian as it is in the criminal law (see Supreme Court en banc Decision 201747Do1974.

The purpose of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) is to contribute to the sound development of the national economy by preventing any anti-social acts, such as speculation, tax evasion, and evasion of laws, which abuse the real estate registration system, and by promoting the normalization of real estate transactions and the stabilization of real estate prices, by having any ownership and other real rights to real estate registered under the name of the person having the actual right so as to coincide with the substantive legal relationship (Article 1). According to the Real Estate Real Name Act, any person shall not register any real right to real estate in the name of the title trustee pursuant to the title trust agreement (Article 3(1)), a title trust agreement and any change in real rights to real estate made pursuant to the title trust agreement shall be null and void (Article 4(1) and (2) main sentence of Article 3(1) of the Real Estate Real Name Act, which prescribes that any registration made under the name of the title trustee pursuant to the title trust agreement shall be prohibited,

In light of the details and attitude of the regulations on title trust relations under the Real Estate Real Name Act, in cases of bilateral title trust between a title truster and a title truster, in violation of the Real Estate Real Name Act, where the title truster transfers the title of his/her own real estate to a title trustee, both the title trust agreement, delegation agreements incidental thereto, title trust real estate premised on a title trust agreement, and the refund agreement on the disposal price thereof are null and void (see, e.g., Supreme Court Decisions 2006Da35117, Nov. 9, 2006; 2013Da55300, Sept. 10, 2015).

Furthermore, the de facto consignment relationship that can be asserted as having existed on the basis of an invalid title trust agreement, etc. between the title truster and the title trustee is merely an illegal relationship that constitutes a crime against the Real Estate Real Name Act, and cannot be deemed as a new trust worth protecting under the Criminal Act (see Supreme Court en banc Decision 2014Do6992, supra).

A title trustee is obligated to cancel the registration of transfer of ownership to a title truster; however, the registration of transfer of ownership is null and void from the beginning, and the title trustee merely complies with the claim that the title truster seeks the cancellation due to a claim for exclusion of interference based on ownership. Even if there is a possibility that a disposal act made with a third party may be effective pursuant to Article 4(3) of the Real Estate Real Name Act, it is merely the purport of setting an exception to the invalidation of a title trust agreement to protect a third party, which is the transaction partner, and cannot be deemed a premise that there exists any consignment relationship between the title truster and the title trustee that makes the said disposal act valid. Therefore, the title trustee cannot be deemed to be in the position of “a person who keeps another’s property” in relation to the title trustee on the ground of the existence of the duty to cancel registration

Therefore, in case of bilateral title trust in violation of the Real Estate Real Name Act, even if the title trustee arbitrarily disposes of the trusted real estate, the crime of embezzlement is not established in relation to the title truster.

This legal doctrine equally applies to a case where a title trust agreement was made before the enforcement of the Real Estate Real Name Act, and the actual name registration was not made within the grace period as prescribed by the said Act, and a disposal act was made after the said title trust agreement and the change in real rights was invalidated by the registration made thereunder

In cases where a bilateral title trust was made in violation of the Real Estate Real Name Act, the title trustee shall be held liable for embezzlement against the title truster if the title trustee disposes of the real estate trusted under his/her name at will by deeming that the title trustee is in the position of “a person who takes custody of another’s property” in relation to the title truster, and thus, the title trustee shall be held liable for embezzlement within the scope of 99Do3170, Oct. 12, 1999; Supreme Court Decisions 99Do5227, Feb. 22, 2000; 99Do1906, Apr. 25, 2000; 203Do4893, Dec. 26, 2003; 2008Do1209, Aug. 20, 2009; 2009Do54147, Nov. 26, 2009; etc.

2) Based on the circumstances indicated in its reasoning, the lower court acquitted the title truster, on the ground that the Defendant cannot be deemed to be in the position of “a person who takes custody of another’s property” as referred to in the crime of embezzlement against the victim, who is the title truster.

3) Examining the reasoning of the lower judgment in light of the foregoing legal doctrine, the lower court did not err in its judgment by misapprehending the legal doctrine regarding a person who keeps another’s property in the crime of embezzlement.

B. As to the guilty part

The prosecutor also appealed the guilty portion of the judgment of the court below, but the appellate brief or the appellate brief does not contain specific grounds for objection as to this part.

2. As to the Defendant’s ground of appeal

According to Article 383 subparagraph 4 of the Criminal Procedure Act, only in cases where death penalty, life imprisonment, or imprisonment with or without prison labor for more than ten years is imposed, an appeal on the grounds of unfair sentencing is allowed. Thus, in this case where a minor sentence is imposed against the defendant, the argument that the punishment is too unreasonable is not legitimate grounds for appeal.

3. Conclusion

Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)