In a passive lawsuit seeking confirmation of non-existence of the remainder of the obligation, excluding the amount of the debtor’s identity, where the legal relationship that is the purpose for seeking confirmation of non-existence exists in a lawsuit seeking confirmation of non-existence of the remainder of the obligation, the court shall take measures (i.e., judgment of partial loss) / Whether there is a legal interest in seeking confirmation of non-existence of the right of retention exceeding the scope that can be asserted against the person who reported the right of retention in the auction procedure against the person who reported the right of retention (affirmative); and in a case where only part of the amount claimed as the secured claim of the right of retention can be asserted as the right of retention in the auction procedure, whether the court shall render a judgment against the part of the right of retention (affirmative in principle) / Whether the same applies to a case where a buyer in the real estate auction procedure claims confirmation of the non-existence of the right against the person who reported the right of retention in the real estate auction procedure (affirmative)

Articles 203, 250, and 288 of the Civil Procedure Act; Articles 91(5) and 268 of the Civil Execution Act; Article 320(1) of the Civil Act

Supreme Court Decision 2007Da6772 Decided May 31, 2007, Supreme Court Decision 2011Da70756 Decided November 24, 201, Supreme Court Decision 2011Da70756 Decided March 10, 2016 (Gong2016Sang, 566)

Plaintiff (Law Firm Open, Attorneys Park Jung-jin et al., Counsel for the plaintiff-appellant)

Pung Housing Co., Ltd. and one other

Suwon District Court Decision 2016Na60492 decided February 8, 2018

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

The grounds of appeal are examined.

1. The lower court: (a) concluded the instant subcontract with Defendant Pungsung Housing Co., Ltd. (hereinafter “Defendant Pungsung Housing Co., Ltd.”) at KRW 119,795,235,000; and (b) concluded the instant subcontract with Defendant Pungsung Housing Co., Ltd. (hereinafter “Defendant Pungsung Housing Co., Ltd”) at KRW 119,79,235,000; and (c) concluded each of the instant subcontract with Defendant Pungsung Housing Co., Ltd. at KRW 17,60,00,000; and (d) completed each of the instant construction projects under the instant contract and the subcontract; (b) completed each of the instant construction projects; (c) on the premise that the Defendants’ respective claims for each of the said construction costs cannot be deemed to have been extinguished by repayment; (d) on the ground that each of the aforementioned claims for the Defendants’ respective construction costs cannot be deemed to have been extinguished by repayment, the lower court dismissed all of the Defendants’ claims for the auction of the instant stores (Defendant Pung Housing Co.

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

A. If a debtor seeks confirmation of non-existence of the remaining obligation excluding the amount of the debtor's non-existence of the claim, then in such passive confirmation lawsuit, the legal relationship which is the purpose of seeking confirmation of non-existence should be divided, and where only a part exists in quantity, the entire claim should not be dismissed, and the part of the existing legal relationship should be ruled against the plaintiff (see Supreme Court Decision 2007Da6772, May 31, 2007, etc.). Since the mortgagee who requested voluntary auction of real estate has legal interest in seeking confirmation of non-existence of the right of retention exceeding the scope that can be set up against the person who reported the right of retention in the auction procedure as well as in the auction procedure, there is a legal interest in seeking confirmation of non-existence of the right of retention exceeding the scope that can be set up against the person who reported the right of retention in the auction procedure, barring any special circumstance, the court shall render a judgment against the part of the right of retention partially against the plaintiff (see Supreme Court Decision 2013Da9409, Mar. 10, 2016).

B. In light of the following circumstances revealed through the records, it cannot be deemed that there is sufficient evidence by the Defendants as to the existence of all the secured claims of each right of retention reported by the Defendants. Rather, it is reasonable to view that the actual amount of each of the secured claims of each right of retention, which is the secured claims of each right of retention, does not fall short of the reported amount of each right of retention

(1) On November 1, 2013, Defendant Pungdong reported the right to retention with the claim amounting to KRW 20,404,022,284, including the amount of the construction cost due under the instant contract, as the secured claim during the voluntary auction procedure for the instant store on November 1, 2013. At the time, the amount of the said credit includes KRW 12,502,674,881 (i.e., loan amounting to KRW 10,125,75,77,370 + KRW 2,376,917,511). However, it is difficult to view that Defendant Pungdong’s loan claim against Pungdong was related to the instant store which is the object of the right to retention in consideration of the nature of the right, and thus, the amount of credit should be excluded from the amount of the secured claim of the right to retention reported by Defendant Pungdong Housing.

(2) On the same day, Defendant Lee Jong-sung filed an objection on the same day on the grounds that, at the above auction procedure, the claim amounting to KRW 954,060,254, including the unpaid construction cost under the instant subcontract was the secured debt, and the above amount was equal to the principal and interest of the payment order (No. 2012,4319, Suwon District Court), which became final and conclusive upon filing an application against Defendant Lee Jong-sung Housing on November 9, 2012. However, the Nonparty, who was appointed as the manager in the rehabilitation procedure against the said company as the representative director of the Defendant Pung-sung Housing, filed an objection on the grounds that the Nonparty did not have any obligation to report the right to the unpaid construction cost under the instant subcontract of this case on August 2010, which was the date of filing the application for the said payment order, the Nonparty was the representative director of the Defendant Lee Jong-chul system. As such, even if all the Defendants’ representative directors were not aware of the aforementioned large amount of construction cost after the instant subcontract between the Defendants.

(3) The Defendants appear to have been in fact to have received the agreed amount from other buyers in the auction procedure regarding the remaining real estate in addition to the instant store in addition to the instant store, and such agreed amount may be deemed to have been actually paid by the buyers to the Defendants claiming a lien on behalf of the debtor, e.g., the Defendants’ respective payment claims for the construction price. Nevertheless, there is no circumstance that such agreed amount was deducted from the secured claim of each lien reported by the Defendants in the auction procedure for the instant store.

C. Meanwhile, the fact that the Plaintiff alleged in the instant lawsuit that each of the above construction price claims claimed by the Defendants had not been extinguished due to repayment should be clearly stated as long as the amount of each of the construction price claims actually existed, and that the Defendants’ payment from other buyers should also be deducted from each of the above construction price claims is apparent.

D. Examining these circumstances in light of the legal principles as seen earlier, in the instant case where: (a) the actual amount of each non-paid claim, which is the secured claim of each right of retention claimed by the Defendants, could not reach the amount of the secured claim of each right of retention reported by the Defendants; (b) even if the Plaintiff’s assertion that all of the secured claims have ceased to exist due to repayment as determined by the lower court, the lower court should have deliberated and determined the specific amount of the secured claim of each non-paid construction cost; and (c) if each amount falls short of the amount of the secured claim of each right of retention reported by the Defendants, the lower court should not dismiss all the Plaintiff’

E. Nevertheless, the lower court rejected all of the Plaintiff’s claims in this case without properly deliberating and determining the scope of the Defendants’ claims secured by each lien. In so doing, the lower court erred by misapprehending the legal doctrine on the subject of a lawsuit seeking confirmation without failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)