[1] The elements to acknowledge that, in case where a promissory note was endorsed for the purpose of collateral for another person's obligation, a guarantee contract under the civil law between the endorser and the creditor was established

[2] The case holding that the fact that the endorser of a promissory note knew and endorsed the contents of the lending relationship between the debtor and the creditor, or that the creditor did not lend the loan in absence of the guarantee of the endorser, and that the endorser was well aware of such circumstances, it is insufficient to serve as the basis for imposing a civil liability on the endorser

[1] Even if there was awareness of the purpose of the use of a promissory note as a collateral for a specific person’s obligation to an endorser of a promissory note, such fact may be one of the active factors in recognizing that the endorser of a promissory note has the intent to bear a civil guarantee obligation, and it cannot be inferred that a guarantee contract under the civil law is established between the endorser of a promissory note and the obligee. Furthermore, from such fact, even if the obligee bears a civil guarantee obligation as to the obligation which is the cause of endorsement from the standpoint of the obligee, the endorser had the intent to demand the endorser as well as his/her intent to demand and endorsement in response to the obligee’s intent and the content of the obligation. In other words, the endorser did not merely provide credit to the obligee in the form of a civil guarantee as a mere liability under the Bills of Exchange and Promissory Notes Act, but also extended credit in the form of a civil guarantee, in view of the relationship between the obligee and the endorser, the motive leading up to endorsement, the process and method of negotiations between the endorser and the obligee, and the circumstances surrounding transactions.

[2] The case holding that the fact that the endorser of a promissory note knew and endorsed the contents of the lending relationship between the debtor and the creditor, or that the creditor did not lend the loan in absence of the guarantee of the endorser, and that the endorser was well aware of such circumstances, it is insufficient to serve as the basis for imposing a civil liability on the endorser.

[1] Articles 105 and 428 of the Civil Act, Articles 15(1) and 77(1)1 of the Bills of Exchange and Promissory Notes Act / [2] Articles 105 and 428 of the Civil Act, Articles 15(1) and 77(1)1 of the Bills of Exchange and Promissory Notes Act

[1] Supreme Court Decision 2006Da17928 decided September 7, 2007 (Gong2007Ha, 1556)

Plaintiff 1 and one other (Law Firm Sung, Attorney Kang Jong-soo, Counsel for the plaintiff-appellant)

Defendant (Law Firm Han River, Attorneys Kim Jong-young, Counsel for defendant-appellant)

Seoul High Court Decision 2008Na78684 decided May 14, 2009

The part of the lower judgment against the Defendant regarding the ancillary claim is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined.

In a case where a promissory note is endorsed for the purpose of collateral for another person’s obligation, it may be problematic whether the endorser bears only the obligation under the law on the bill or further bears the civil obligation to the obligee. Since the act of guarantee under the civil law is a juristic act which is strictly distinguishable from that of the rights and obligations on the bill, the issue of whether there is such existence is a matter of interpretation between the parties. In addition, the general legal principles on the method of determining the intent of guarantee, which is the requisite for the establishment of guarantee agreement, must be based on the premise of the intention of the guarantor, and the existence of such intent of guarantee should be determined by comprehensively taking into account the motive and background of the parties’ involvement in the transaction, the purpose of the transaction, the practice of transaction, and the degree of existence of the parties’ intent to establish a promissorysory note, but it is necessary to strictly limit the existence of the intent of guarantee or the scope of endorsement as well as the degree of guarantee agreement between the endorser and the obligee’s intent to use the promissory note in the civil law, in light of the legal principles as to what extent the obligor’s obligation is established.

According to the reasoning of the judgment below, the court below found that ○○○○○ Construction Co., Ltd. was a corporation operating ○○○○○○○○ Construction Co., Ltd. upon the Defendant’s request for loans, and that ○○○○○○○○ Construction Co., Ltd. was the same as the Defendant’s representative director before the issuance of each of the Promissory Notes. Nonparty 1 Co., Ltd. was able to borrow money from 200 to ○○○○○ Construction Co., Ltd., which was the Defendant’s own credit. Accordingly, upon the Defendant’s request for loans, the lower court determined that ○○○○○ Construction Co., Ltd., Ltd. was 0 and 100, the Defendant was able to issue the Promissory Notes Co., Ltd.’s loan to Nonparty 1, which was 00 and 200, respectively, and that the Defendant was 1 and 200,000 won for each of the Defendant’s loans to ○○ Construction Co., Ltd.

However, in light of the aforementioned legal principles and records, the above determination by the court below is not acceptable for the following reasons.

First, according to the reasoning of the lower judgment and the record, Nonparty 4, who is the plaintiffs, at the time of each of the instant loans, represented the plaintiffs, and the plaintiffs or Nonparty 4 did not have any transaction with the defendant prior to endorsement of each of the instant promissory notes, and even at the time of each of the instant loans, Nonparty 3, a director of Nonparty 1 Co., Ltd., received each of the instant promissory notes endorsed by the defendant from Nonparty 3, a director of Nonparty 1 Co., Ltd., and paid money to the above Nonparty 3, etc. before and after each of the instant loans, and there was no direct negotiating relationship or arrangement relationship between the plaintiffs and the defendant.

In addition, since the non-party 1 corporation demanded the defendant's endorsement due to low credit in borrowing money, the lender who borrowed money from the plaintiffs is still a non-party 1 corporation and the defendant provided credit, and the interest was remitted in the name of the non-party 3 and the non-party 5 who is a director of the non-party 1 corporation or remitted money in the name of the non-party 1 corporation, it is doubtful whether the court below can be viewed that the substantial profit from each of the loans of this case belongs to the defendant (and, according to the records, there is no evidence to find that each of the loans of this case was used for the construction of the ○ Building and the ○○ Special School, which is a profit-making business

In addition, the fact that the defendant knowingly endorsed the lending relationship between the plaintiffs and the non-party 1 corporation, or that the plaintiffs did not lend each of the loans of this case in the absence of the defendant's guarantee, and that the defendant was well aware of such circumstances may serve as a basis for imposing the defendant's liability under the Bill of Exchange and Promissory Notes Act, but it is insufficient to serve as a basis for imposing the defendant's liability under the Civil Code.

Therefore, even if the court below stated that the defendant cannot be deemed to guarantee the civil liability for each of the loans in this case, the court below erred by misapprehending the legal principles on the recognition of civil liability due to endorsement of promissory notes, and by exceeding its judgment criteria, which affected the conclusion of the judgment.

Therefore, without examining the Defendant’s remaining grounds of appeal, the part against the Defendant regarding the conjunctive claim is reversed, and that part of 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 Shin Young-chul (Presiding Justice)