[1] The legal nature of guarantee insurance and whether the provisions of the Civil Act concerning guarantee insurance apply to guarantee insurance contracts (affirmative)

[2] In a case where the principal obligation remains effective at the time of the act of making a contribution by the guarantor, but the principal contract was rescinded and the contract was terminated retroactively, whether the claim for return of unjust enrichment against the guarantor’s creditor should be made (affirmative)

[1] The term "guarantee insurance" is a non-life insurance contract, the guarantee of which is to take over by the insurer the recovery of the damage to be suffered by the insured (beneficiary under a contract) due to the nonperformance by a policyholder having any legal relation with the insured, and its formally aims at the same effect as a guarantee contract with the nature of a guarantee, since an insurance contract which covers the obligor's default as an insured event or in substance, it aims at the same effect as a guarantee contract. Thus, a guarantee insurance contract is to compensate for the damage suffered by the insured as stipulated in the terms and conditions and within the scope of the amount of the insurance contract, and unless contrary to its nature, the provisions of the Civil Act concerning guarantee insurance apply

[2] In principle, the guaranteed obligation aims at the same benefit as the principal obligation, but it is separate from the principal obligation. On the other hand, the surety’s act of extinguishing the principal obligation is premised on the existence of the principal obligation. Thus, even if the principal obligation remains effective at the time of the surety’s act of contributing to the principal obligation, if the principal obligation becomes extinguished retroactively due to the rescission of the principal contract, the surety may claim against the obligee who received the payment for unjust enrichment.

[1] Article 428 of the Civil Code, Article 638 of the Commercial Code / [2] Articles 428, 430, and 741 of the Civil Code

[1] [2] Supreme Court Decision 2003Da43858 Decided February 13, 2004 / [1] Supreme Court Decision 89Da25912 Decided May 8, 1990 (Gong1990, 1243), Supreme Court Decision 95Da46265 Decided October 10, 197 (Gong1997Ha, 3380), Supreme Court Decision 98Da53707 Decided June 8, 199 (Gong199Ha, 1335), Supreme Court Decision 9Da53483 Decided December 8, 200 (Gong201Sang, 242), Supreme Court Decision 2000Da71053505 Decided May 10, 202 (Gong20050505Ha decided May 10, 2005)

Seoul Guarantee Insurance Co., Ltd. (Attorney Choi Sung-sung, Counsel for defendant-appellant)

Korea Land Corporation (Law Firm Barun, Attorneys Park Ho-ho, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2003Na40301 Delivered on March 18, 2004

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

1. The term "guarantee insurance" is a non-life insurance contract, the purport of which is to accept by an insurer the recovery of the damage suffered by an insured creditor under a contract with a policyholder having a certain legal relation due to the nonperformance of an obligation of the insured, and its formally aims at the same effect as a guarantee contract with the nature of a guarantee. Thus, a guarantee insurance contract is formally based on the legal relationship of a principal contract, etc., and it is to compensate for the damage suffered by the insured as prescribed by the terms and conditions of the contract and within the scope of the amount of the insurance contract (see Supreme Court Decision 9Da53483, Dec. 8, 200). Unless contrary to its nature, the provisions of the Civil Act concerning guarantee insurance apply to a guarantee insurance contract (see Supreme Court Decision 200Da70156, May 10, 200).

In addition, the purpose of the surety obligation is to provide the same benefit as the principal obligation, but it is separate from the principal obligation (see Supreme Court Decision 2000Da9734, Aug. 27, 2002, etc.). Meanwhile, the surety’s act of extinguishing the principal obligation is premised on the existence of the principal obligation. Thus, even if the principal obligation remains effective at the time of the surety’s act of contributing to the principal obligation, if the principal obligation becomes extinguished retroactively due to the rescission of the contract, the surety may claim for the return of unjust enrichment against the obligee receiving the reimbursement.

2. According to the reasoning of the judgment below, the court below decided that the plaintiff's non-performance guarantee insurance contract of this case was 20 days before purchasing the real estate as stated in the judgment of the court below from December 27, 1994 to KRW 1,567,94,40, and that the remainder of the purchase price except for KRW 149,40,00 out of the purchase price was to be paid in installments 17 times until December 27, 1998 (hereinafter "the sales contract of this case"). The defendant, on the ground that the non-performance guarantee insurance contract of this case was 6 days after the non-performance guarantee insurance contract of this case, 3 days after the non-performance guarantee insurance contract of this case was non-performance guarantee insurance contract of this case, 13,225 square meters out of the land for which the non-performance guarantee insurance contract of this case was non-performance guarantee insurance contract of this case, and that the defendant had already been paid to the defendant on the ground that the non-performance guarantee insurance contract of this case was non-performance guarantee insurance contract of 6 days.

However, we cannot accept the above determination by the court below for the following reasons.

According to the legal principles as seen earlier, the instant guarantee insurance contract is a contract which assumes the premise of the instant sales contract, which is a principal contract, and provides for compensation within the scope of the amount of insurance coverage as stipulated by the terms and conditions for the damage suffered by the Defendant, the insured, by failing to perform each of the above installment payments pursuant to the sales contract. The purpose of the instant guarantee insurance contract is to formally and substantially carry out the same effect as the guarantee contract with the nature of the guarantee. However, since the Plaintiff, the insured, as the insurer, paid each of the installment payments to the Defendant, in accordance with the terms and conditions of the guaranteed insurance contract, as the Plaintiff, as the insurer, paid the insurance money equivalent to the amount of the respective installment payments, and then the said sales contract becomes retroactively null and void due to the Defendant’s rescission of the instant sales contract on the ground of the non-performance of the payment of the remainder,

Nevertheless, the court below determined that the plaintiff did not have the right to claim restitution of unjust enrichment against the defendant for the above reasons and rejected the plaintiff's claim of this case. Thus, the court below erred in the misapprehension of legal principles as to the right to claim restitution of unjust enrichment due to the cancellation of sales contract, which is the principal contract of performance guarantee insurance contract

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 Zwon-won (Presiding Justice)