A. Whether in securities and credit transactions, the legal relationship between the customer and the securities company deposits securities with the securities company or offers the securities as security is a consumer contract

(b) Whether the voluntary disposal of securities offered as security by a securities company becomes a default on customers;

A. If a customer intends to view that the legal relationship of depositing or offering securities as security is a consumption contract for a securities company, the ownership of the securities is attributed to the securities company by depositing or offering the securities as security, and the securities company can arbitrarily consume or dispose of them. Thus, if a customer requests the return of the securities deposited or offered as security to the securities company, the securities company may return the securities in the same kind and issue as the securities that the securities company has deposited or offered as security, and the purport of an agreement is that the securities company may return the securities to the customer if the securities company must return the securities to the customer, the ownership of the securities deposited or offered as security can be attributed to the securities company, or the securities company may arbitrarily consume or dispose of the securities. In addition, the agreement cannot be deemed that the ownership of the securities deposited or offered as security belongs to the securities company and thus the securities company can not be arbitrarily consumed or disposed of by the securities company.

B. In light of the agreement on the creation of a credit transaction account concluded between a customer and a securities company and the proviso of Article 45 of the Securities and Exchange Act, ownership of securities offered as security by a customer to a securities company is still a customer until the time of return, and a securities company is obligated to keep the securities in custody so as not to go against the purpose of the security. If the securities are disposed of in violation of this, the customer is liable for nonperformance to the customer, and if the customer suffers loss, the loss shall be compensated in cash,

(a)Article 49 of the Securities and Exchange Act, Section 702 of the Civil Code, Section 390, Section 394 of the Civil Code, Section 45 of the Securities and Exchange Act,

B. Supreme Court Decision 92Da6242,6259 delivered on July 10, 1992 (Gong1992, 2364) 93Da2618 delivered on September 28, 1993 (Gong1993Ha, 2969) and 93Da37236 delivered on February 22, 1994

Plaintiff

Korea New Securities Co., Ltd., Counsel for defendant-appellant

Seoul High Court Decision 92Na57334 delivered on June 30, 1993

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

We examine the Plaintiff’s ground of appeal.

1. According to the reasoning of the judgment below, the court below rejected the plaintiff's claim for additional securities sale and purchase of 43,800,000 shares from the defendant as collateral for the above loan after concluding a contract to establish a credit transaction agreement with the defendant, and then offered 1,000 shares for the above loan as collateral for the above loan. Since the plaintiff's interest rate on the above loan falls short of 130% as originally set forth due to the decline in the stock price, the plaintiff's interest rate on the above loan was less than 130% at the time of request of the plaintiff to provide additional security within a certain period of time, and the defendant's interest on the above loan was received 450 shares as additional security for the above loan, and the defendant's employees did not express their intent to explicitly provide the above loan as collateral for the above loan, and thus, it did not change the plaintiff's right to request additional securities sale and purchase to the defendant's interest on the loan account to the defendant's new securities sale and purchase as collateral for the above loan account.

2. If the legal relationship that the Plaintiff deposited or offered each of the above securities to the Defendant as a security is a consumption contract, even if the Plaintiff disposed of the above securities at will, it shall be deemed that the Defendant is not liable for default. However, if the above legal relationship is intended to be seen as a consumption contract, it shall be deemed that the ownership of each of the above securities belongs to the Defendant by depositing or offering them as a security, and thus it may be consumed or disposed of by the Defendant at will. The above facts acknowledged by the court below are not sufficient to deem that the ownership of each of the above securities belongs to the Defendant and the Defendant can be consumed or disposed of at will. In other words, the purport of the agreement that the Plaintiff may return the securities deposited or offered as security to the Defendant in the same manner as the securities can be returned to the Defendant if the Defendant would return the above securities to the Plaintiff, and that the ownership of the securities deposited or offered as security belongs to the Defendant, or that the Defendant could not be arbitrarily consumed or disposed of, or that the securities deposited or disposed of by the Defendant cannot be deemed to belong to the Defendant.

Rather, as stipulated in the Credit Transaction Agreement (No. 2) of this case, the defendant can keep the delivered securities only for the purpose of security and dispose of them only when the requirements for the exclusive exercise of security right arise. In light of the proviso of Article 45 of the Securities and Exchange Act, the securities held by a securities company as security for a customer can be offered as security for obligations within the extent not exceeding the amount of the claim concerned with the consent of the customer in writing. In light of the fact that the ownership of the securities offered as security by the plaintiff is still liable until the time of return, and the defendant is liable to compensate the plaintiff for the default of the obligation if he disposes of the above securities in violation of the purpose of security, and the defendant is liable to compensate for the loss in money unless there is any special circumstance if the plaintiff suffered loss. The defendant is mixed with the securities offered as security by the plaintiff with the securities deposited or offered as security by another customer, and it cannot be viewed as keeping it otherwise.

Nevertheless, the court below held that even if the legal relationship that the plaintiff deposits the securities to the defendant is a consumer contract, and the defendant disposed of the securities owned by the plaintiff without authority on the ground that the plaintiff's claim for return of deposited securities against the defendant is not a specific claim, the defendant is not liable for damages due to nonperformance of obligation in relation to the plaintiff. The court below erred by misunderstanding legal principles as to the nature of the securities company's act of safekeeping securities, etc., and it is obvious that such illegality affected the judgment.

3. 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 Cho Chang-tae (Presiding Justice)