Plaintiff Co., Ltd. (Law Firm Taeyang, Attorneys Ma-sung et al., Counsel for plaintiff-appellant)

Daegu Metropolitan City (Law Firm Daegu General Law Office, Attorneys Park Jin-jin, Counsel for the plaintiff-appellant)

May 10, 2007

Daegu District Court Decision 2006Gadan85003 Delivered on November 7, 2006

1. Revocation of a judgment of the first instance;

2. The defendant shall pay to the plaintiff 22,00,000 won with 20% interest per annum from June 22, 2006 to the day of complete payment.

3. All costs of the lawsuit shall be borne by the defendant.

4. Paragraph 2 can be provisionally executed.

The judgment of the first instance is revoked. The defendant shall pay to the plaintiff 22,00,000 won with 20% interest per annum from the day after the delivery date of a copy of the complaint of this case to the day of complete payment.

1. Basic facts

The following facts are acknowledged in full view of the contents of evidence No. 1 (as evidence No. 1-2), evidence No. 3, evidence No. 5, 6, evidence No. 1-3, evidence No. 2-1 through 3, evidence No. 4-1 through 5, and evidence No. 5.

A. On December 24, 2004, the Defendant concluded a construction contract with Nonparty 1 Co., Ltd. (hereinafter “Nonindicted Company 1”) and the “children’s Traffic Safety Experience Education Education Center” with respect to the construction of the first contract amounting to KRW 2,129,912,50, and the construction period from December 27, 2004 to December 21, 2005.

B. On October 1, 2005, the plaintiff and the non-party 1 entered into a subcontract agreement (hereinafter "the subcontract agreement in this case") with respect to "A. Lhoho Construction" during the above construction work (hereinafter "the subcontract price in this case"), from October 1, 2005 to November 30 of the same year (hereinafter "the subcontract contract in this case"), and the non-party 1 entered into an agreement to pay directly to the plaintiff under Article 14 of the Fair Transactions in Subcontracting Act (hereinafter "the Subcontract Act") and Article 4 of the Enforcement Decree of the same Act (hereinafter "the direct payment agreement in this case"), and submitted to the defendant on October 21, 2005, the plaintiff and the non-party 1 submitted a letter of evidence No. 1 (the evidence No. 1-2 in this case) to the defendant. However, on October 21, 2005, the plaintiff and the non-party 1 submitted the above agreement to the defendant with respect to the non-party 1's claims and the collection order against the defendant.

C. On January 18, 2006, after completing the above title construction, the Plaintiff requested a direct payment of the subcontract price to the Defendant. However, the Defendant rejected the Plaintiff’s request for direct payment on the ground that other creditors’ claim attachment and collection order, provisional seizure against Nonparty 1 (a claim attachment, etc. against Nonparty 1’s claim for construction price against the Defendant by the third creditor of Nonparty 1; hereinafter “instant claim attachment and collection order, etc.”) had been served prior to and concurrent, and on February 13, 2006, deposited KRW 422,745,720 of the contract price of Nonparty 1’s execution (hereinafter “the deposit of this case”).

2. The parties' assertion

A. The plaintiff's assertion

The plaintiff asserts that there was an agreement between the defendant and the non-party 1 on the direct payment of the subcontract price. At that time, the defendant's obligation to pay the subcontract price has occurred, and at the same time, the defendant's obligation to pay the contract price to the non-party 1 has expired.

B. Defendant’s assertion

In this regard, the defendant asserts that the plaintiff only accepted the submission of the instant direct payment agreement, and that there is no agreement on direct payment with the plaintiff.

In addition, even if it is deemed that there was an agreement on the direct payment of the subcontract price, the ordering person shall bear the obligation to pay the subcontract price directly to the subcontractor at the time of “request for the direct payment of the subcontract price” as stipulated in Article 14(1) of the Subcontract Act. The defendant asserts that, as long as there was an agreement on the direct payment of the subcontract price by the plaintiff prior to receiving the request for the direct payment of the contract price, the defendant had already been served with the seizure and collection order, etc. prior to receiving the request by the plaintiff, the defendant's

3. Determination

A. Determination as to whether there was an agreement between the plaintiff, the defendant, and the non-party 1 on the direct payment

The instant direct payment agreement was prepared between the Plaintiff and Nonparty 1, and was submitted to the Defendant, and the Plaintiff, the Defendant, and Nonparty 1 did not have any express agreement to pay the instant subcontract price directly to the Plaintiff. The same is acknowledged as seen earlier.

In this case, the defendant's direct payment guarantee agreement for the non-party 2 was not issued to the non-party 5's non-party 2. The defendant's direct payment guarantee agreement for the non-party 2 was not issued to the non-party 5's non-party 1's non-party 2's non-party 5's non-party 2's non-party 1' and the non-party 2's non-party 2's non-party 3's non-party 4's non-party 5's non-party 2's non-party 9's non-party 2's non-party 2's non-party 1's non-party 2's non-party 4's non-party 1's non-party 2's non-party 4's non-party 1' and the non-party 2's non-party 3's non-party 1's non-party 1's non-party 2's non-party 1'.

(1) The Defendant asserted that the Defendant could not grant the direct payment of the subcontract price to the Plaintiff on the ground that Nonparty 1 had already issued the preceding seizure order at the time of submitting the direct payment agreement. However, as the amount of the preserved claim under the preceding seizure order is KRW 41,248,893, the amount of the preserved claim under the preceding seizure order is KRW 41,248,893, as recognized in the preceding seizure order, and as recognized in the above Section 2, it is difficult to see that the preceding seizure order of this case was within the remaining scope of the construction price. Since the sum of the seized amount and the subsidies was within the remaining construction price, it is difficult to see that there was a direct payment agreement between three parties at the time of submitting the direct payment agreement. Thus, the above judgment does not affect the above judgment by delivery of the seizure and collection order of this case

B. Determination as to whether the Defendant may refuse payment of the subcontract price on the ground of the seizure and collection order, etc. of the instant claim

(1) After the submission of the instant agreement, there was a collection order, etc. before the Plaintiff requested the payment of the subcontract price of this case, and whether the Defendant’s obligation to pay to Nonparty 1 was extinguished at any time.

(2) First, the provisions of Article 14 of the Subcontract Act applicable to the instant case are as follows.

The ordering person of paragraph (1)

Where the person placing an order under subparagraph 2 agrees to pay the subcontract price directly to the subcontractor to the subcontractor, the principal contractor, and the subcontractor.

In the case of the occurrence of the cause under paragraph (2) of this Article, the obligation to pay the price to the prime contractor by the ordering person, and the obligation to pay the subcontract price to the subcontractor by the prime contractor, shall be considered to be extinguished within the scope.

(3) In accordance with the above provision, the time of extinguishment of the " obligation to pay the price to the principal contractor by the ordering person" as stipulated in Article 14 (2) of the Subcontract Act is a case where there occurs a cause under the provisions of paragraph (1) 2, and there is a question as to whether the "where the ordering person has agreed to pay the subcontract price directly to the subcontractor by the ordering person, the principal contractor, and the subcontractor" under Article 14 (2) 2 of the Subcontract Act is "when the ordering person has agreed to pay the subcontract price directly to the subcontractor, or when the subcontractor has requested the direct payment of the subcontract price equivalent to the portion manufactured, repaired, constructed, or provided services."

(4) In light of the legislative intent of the Subcontract Act for the protection of small subcontractors, ② If there is an agreement between the parties to the subcontract, a subcontractor may have the expectation interest that he may directly receive the subcontract price after the agreement is reached. In addition, there is a right to seek the direct payment only when there is a request for the direct payment, as in the instant case, if multiple seizure or provisional seizures are executed by a third-party creditor of the principal contractor before the request for the direct payment, the subcontractor would excessively infringe the subcontractor’s above expectation. ③ Meanwhile, Article 4(1) of the Enforcement Decree of the Subcontract Act provides that “The request for the direct payment of the subcontractor pursuant to the provisions of Article 14(1) of the Act takes effect from the time when the expression of intention was delivered to the ordering person, and the fact that the expression of intention was delivered shall be proved by the subcontractor,” and thus, it does not necessarily require that the direct payment of the subcontract price should be made by the Defendant to the Plaintiff, as in the instant case, even if there is no specific stipulation between the ordering person and the subcontractor.

C. Sub-committee

Therefore, the defendant is obligated to pay directly to the plaintiff the subcontract price within the scope that the defendant agreed to pay directly to the plaintiff. Among the defendant's principal contractor's obligation for the construction price to the non-party 1 company, the above scope of the obligation has expired on October 21, 2005, which is the date of the above agreement. Even if the third creditor of the non-party 1 company seizes or provisionally seized the claim for the construction price to the defendant of the non-party 1 company, the effect of the seizure or provisional seizure does not reach the part that is equivalent to the amount that the plaintiff should pay directly to the plaintiff.

4. Conclusion

Therefore, the defendant is obligated to pay to the plaintiff 22,00,000 won of the subcontract price and damages for delay calculated at the rate of 20% per annum from June 22, 2006 to the day of full payment, as requested by the plaintiff, from June 22, 2006, which is the day following the delivery date of the copy of the complaint of this case. Thus, the plaintiff's claim of this case is justified, and the judgment of the court of first instance with different conclusions is unfair, and it is so decided as per Disposition by cancelling this and ordering the payment of the above amount.

Judges Lee Jong-soo (Presiding Judge)