[1] In a case where the representative director of a corporation infringes on the owner's right to use and benefit from other person's real estate by having an employee control and manage other person's real estate without any legitimate authority in relation to business performance, whether the

[2] In a case where a contractor who was awarded a contract for a construction work on a building owned by the debtor transferred the possession of a building from the debtor before the completion of the registration of the entry of the decision on commencing auction, but completed the construction work after the completion of the registration of the entry of the decision on commencing auction and completed the construction work after the seizure became effective, whether the contractor may oppose the buyer in the auction procedure on the ground of the lien

[1] In a case where the representative director of a corporation intentionally or negligently inflicts loss on another person due to an illegal act while performing his/her duties, the corporation shall be liable for damages to a third party pursuant to Articles 389(3) and 210 of the Commercial Act, and the representative director shall also be jointly and severally liable with the corporation pursuant to Article 750 of the Civil Act or Articles 389(3) and 210 of the Commercial Act. Therefore, in a case where the representative director of a corporation infringes on the owner’s right to use and benefit by having an employee control and manage another’s real estate without legitimate authority in connection with the performance of duties, the possessor of real estate is merely a company, and the representative director is not an independent possessor, and thus, is not a party to the request for delivery of real estate, etc., even if he/she cannot become the other party to the illegal possession of real estate, he/she shall be deemed separately liable for damages arising from the illegal act forming and maintaining the state of possession of real estate by the representative director’s illegal possession.

[2] A lien is established only when a claim arising with respect to the subject matter is due (Article 320 of the Civil Act). Meanwhile, in cases where a lien is acquired after the registration of the entry of the decision on commencing auction was completed on the real estate owned by the debtor and the seizure became effective, it cannot be set up against the buyer in the auction procedure regarding the real estate. Therefore, even if the contractor who has been awarded a contract for construction work, such as extension and reconstruction of the building owned by the debtor, was transferred the possession of the building from the debtor before the registration of the entry of the decision on commencing auction was completed, if the contractor acquired the construction work after the completion of the registration of the decision on commencing auction and then acquired the claim for the construction work after the seizure became effective, then the contractor cannot set up against

[1] Articles 210 and 389(3) of the Commercial Act, Article 750 of the Civil Act / [2] Article 320 of the Civil Act, Articles 83(4), 91(5), and 92(1) of the Civil Execution Act

[1] Supreme Court Decision 79Da1230 Decided January 15, 1980 (Gong1980, 12541), Supreme Court Decision 2005Da55473 Decided May 31, 2007 (Gong2007Ha, 954) / [2] Supreme Court Decision 2008Da70763 Decided January 15, 2009 (Gong2009Sang, 158), Supreme Court Decision 201Da5214 Decided October 13, 201 (Gong201Ha, 2348)

Seoul High Court Decision 200Na11460 decided May 1, 200

S Nam Construction Co., Ltd.

Defendant 2 (Attorney Kim Young-ro, Counsel for defendant-appellant)

Seoul High Court Decision 2010Na75305 decided May 26, 2011

The part of the judgment of the court below against Defendant 2 is reversed, and that part of the case is remanded to the Seoul High Court. The appeal by the Defendant Yong-Nam Construction Corporation is dismissed. The costs of appeal by the Defendant Chungcheongnam Construction Corporation are assessed against the above Defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Plaintiff’s ground of appeal

A. Where the representative director of a stock company causes damage to another person by intention or negligence in the course of performing his duties, the stock company shall be liable for damages to the third person pursuant to Articles 389(3) and 210 of the Commercial Act. The representative director shall also be jointly and severally liable with the stock company pursuant to Article 750 of the Civil Act or Articles 389(3) and 210 of the Commercial Act (see Supreme Court Decisions 79Da1230, Jan. 15, 1980; 2005Da5473, May 31, 2007).

Therefore, in a case where the representative director of a corporation infringes on the owner’s right to use and benefit from the real estate by having the employee control and manage another’s real estate without any legitimate authority, even though the possessor of the real estate is merely a company and the representative director is not an independent possessor, it shall not be the other party to the request for extradition of the real estate, the liability for damages arising from the illegal act that formed and maintained the illegal possession state of the real estate by intention or negligence shall be deemed separately borne by the company. This is because the representative director is not the possessor of the real estate, and that the representative director is the person who committed the illegal act by causing the illegal possession state of the company due to the execution

B. The court below rejected the claim on the ground that, based on the adopted evidence, Defendant Synam Construction Co., Ltd. (hereinafter “Defendant Co., Ltd”) illegally occupied the instant land and buildings, which resulted in the Plaintiff’s owner’s failure to use or profit from the instant land and buildings, and that the Defendant Co., Ltd., (hereinafter “Defendant Co., Ltd”) was liable for damages arising therefrom, on the ground that it merely occupied Defendant Co., Ltd. as the representative body of the Defendant Co., Ltd., who is not an individual

C. However, we cannot agree with the above judgment of the court below for the following reasons.

According to the facts and evidence admitted by the court below, since Defendant 2 reported the right of retention while conducting an auction on the land and buildings of this case as the representative director of the defendant company, and had employees, etc. of the defendant company manage them, it can be known that he maintained the status of possession for the defendant company by asserting the right of retention and excluding the plaintiff, even after the plaintiff acquired the ownership by winning a successful bid. As seen below, the defendant company cannot oppose the plaintiff as the right of retention, and such possession constitutes an illegal possession without legitimate authority.

Examining these facts in light of the legal principles as seen earlier, Defendant 2’s act of having employees, etc. of the Defendant Company control and manage the instant land and building constitutes a tort that infringes on the Plaintiff’s ownership due to the execution of business by the Defendant Company. Thus, even if the possessor of the instant land and building is the Defendant Company, Defendant 2 cannot be exempted from liability for damages arising from the said tort.

The lower court, which determined otherwise, is bound to have misunderstanding the legal doctrine on tort liability between the corporation and its representative body, and failed to exhaust all necessary deliberations, which affected the judgment. The allegation in the grounds of appeal to the same purport is with merit.

2. As to Defendant Company’s ground of appeal

A. Ground of appeal as to the suspension of possession

The lower court determined that the Defendant Company’s possession of the instant building was suspended on or before March 22, 2007, taking into account the following circumstances: (a) the date and use of telephone and facsimile installation; (b) the overdue charge and use of electricity; and (c) the current status of the instant building at the time of appraisal and assessment; and (d) the date and use of telephone and facsimile installed in the instant building; and

In light of the evidence duly admitted, the above determination by the court below is just and acceptable, and there is no illegality that affected the conclusion of the judgment by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules or omitting judgment.

B. Ground of appeal concerning additional construction

A right of retention is established only when a claim arising with respect to the subject matter is due (Article 320 of the Civil Act). Meanwhile, in cases where a lien is acquired after the entry registration of the decision on commencing auction on real estate owned by an obligor becomes effective as the registration of the entry of the decision on commencing auction was completed, it cannot be set up against the buyer in the auction procedure regarding such real estate (see, e.g., Supreme Court Decision 2008Da70763, Jan. 15, 2009). Therefore, even if the contractor who received a contract for construction, such as extension, renovation, etc., of the building owned by the obligor transferred possession of the building from the obligor before the registration of the entry of the decision on commencing auction becomes final and conclusive after the completion of the registration of the entry of the decision on commencing auction and the acquisition of the claim for construction price becomes effective, the contractor cannot set up against the buyer in the auction procedure on the ground of such lien (see Supreme Court Decision 2011Da5214, Oct. 13, 2011).

According to the facts acknowledged by the court below, each of the compulsory auction decisions was registered on April 13, 2006 and March 2, 2007 on the instant land and buildings, and even based on the Defendant Company’s assertion, the instant additional construction was completed after February 13, 2008. In light of the above legal principles, the Defendant Company cannot oppose the Plaintiff, the purchaser of the auction procedure, on the ground of a lien based on the above additional construction cost claim.

The judgment of the court below to the same purport is just, and there is no error of law that affected the conclusion of the judgment by misunderstanding the legal principles as to the effect of prohibition of attachment.

3. Conclusion

Therefore, the part of the lower judgment against Defendant 2 is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The appeal by the Defendant Company is dismissed, and the costs of appeal against the dismissed appeal are assessed against the Defendant Company. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)