Whether a lien acquired prior to the effectiveness of seizure due to an auction after the establishment of the right to collateral security may oppose the successful bidder in the auction procedure (affirmative)

In principle, pursuant to Article 91(5) of the Civil Execution Act, a purchaser of a real estate in an auction procedure shall be held liable for the repayment of claims secured by the lien to the lien holder pursuant to Article 91(5). However, in cases where the debtor acquired a lien by transferring possession to the creditor of the construction cost related to the real estate after the seizure takes effect after the entry of a decision to commence the auction on the real estate, such as a building owned by the debtor, etc., and the seizure takes effect, such possession goes against the prohibition of disposition of seizure under Articles 92(1) and 83(4) of the Civil Execution Act as it constitutes a disposal act likely to reduce exchange value of the object, and thus, the possessor cannot oppose the purchaser of the auction procedure on the ground of the above lien. However, such legal principle does not apply to cases where the lien has been acquired before the seizure takes effect due to an auction, but it does not change because the right of retention becomes the time of acquisition of the right, or was established through the auction

Articles 83(4), 91(5), and 92(1) of the Civil Execution Act

Supreme Court Decision 2005Da22688 Decided August 19, 2005 (Gong2005Ha, 1503) Supreme Court Decision 2006Da22050 Decided August 25, 2006 (Gong2007Sang, 263)

Plaintiff 1 and 21 others (Attorneys Kang Jong-chan et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm Shin, Attorneys Choi Young-soo et al., Counsel for defendant-appellant)

Busan High Court Decision 2007Na17697 decided August 21, 2008

All appeals are dismissed. The costs of appeal are assessed against each party.

The grounds of appeal are examined.

1. Plaintiff’s ground of appeal

The selection of evidence and the fact-finding belong to the exclusive jurisdiction of a fact-finding court unless there are special circumstances such as violation of the principle of free evaluation of evidence (see Supreme Court Decision 2005Da77848, May 25, 2006, etc.). In addition, in real estate auction procedure, if the exercise of a lien is based on fraudulent claims, the sale price may unreasonably drop, thereby impairing the fairness of auction and impairing the rights of interested parties, and thus, it is necessary to carefully determine whether a lien

In full view of the adopted evidence, the court below acknowledged the fact that the plaintiffs occupied only the part of the office of this case among the building of this case, and accepted the confirmation of lien and the claim for obstruction of possession only to the part of the office of this case among the building of this case, and dismissed the claim for confirmation of lien and the claim for prohibition of obstruction of possession and the claim for prohibition of obstruction of possession and the recovery of possession. In light of the above legal principles and records, the court below's fact-finding and

2. As to the Defendant’s ground of appeal

In principle, the buyer at the auction procedure for real estate is liable to repay the claim secured by the lien to the lien holder pursuant to Article 91(5) of the Civil Execution Act. However, in case where the debtor acquired the lien before the seizure takes effect due to the completion of the entry registration of the decision to commence the auction on real estate, such as a building owned by the debtor, and the debtor transferred possession to the creditor of the construction cost related to the above real estate, and thereby has the creditor obtain the lien, the transfer of such possession goes against the prohibition of disposition of seizure under Articles 92(1) and 83(4) of the Civil Execution Act, since it constitutes a disposal act likely to reduce the exchange value of the object, and thus the possessor cannot oppose the buyer in the auction procedure on the ground of the above lien (see Supreme Court Decision 2005Da22688, Aug. 19, 2005). However, this legal principle does not apply to the case where the lien has been acquired before the seizure takes effect due to an auction, and it does not change from the time of acquisition of the right to collateral.

In full view of the admitted evidence, the court below held that on September 27, 2002, the right to collateral security was established against the National Agricultural Cooperative Federation of 1.82 billion won with respect to the building of this case; the non-party company acquired the ownership of the building of this case on September 2, 2003; the construction of the building of this case to remodel it into a bath bath not later than May 2, 2004; the plaintiffs performed part of the above construction from the non-party company after being awarded a contract with the non-party company; the non-party company did not receive the construction cost due to the non-party company's default on or before June 9, 2004; thereafter, the National Agricultural Cooperative Federation applied for voluntary auction on the building of this case; thereafter, the decision of the court below that the plaintiffs violated the legal principles as to the right to collateral security on July 15, 2004, and did not err in the misapprehension of the legal principles as to the right to collateral security and the record.

Meanwhile, Supreme Court Decision 86Meu1718 Decided March 10, 1987 cited in the ground of appeal by the defendant cannot set up against the successful bidder of the procedure for compulsory auction established after the establishment of a collateral security right, because the lessee who acquired the right of lease with opposing power cannot set up against the successful bidder of the procedure for compulsory auction established after the establishment of a collateral security right, it is not appropriate to invoke

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against each losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Young-ran (Presiding Justice)