The meaning of “a person who administers another’s business,” who is the subject of the crime of breach of trust, / In a case where a debtor provides a creditor with stocks as security for security to secure a pecuniary obligation, whether it constitutes “a person who administers another’s business” in relation to the creditor (negative); and in such a case, whether a crime of breach of trust is established in a case where a debtor reduces or loses the security value by disposing of a security to a third party

Article 355(2) of the Criminal Act

Supreme Court en banc Decision 2019Do9756 Decided February 20, 2020 (Gong2020Sang, 723) Supreme Court Decision 2015Do8332 Decided March 26, 2020 (Supreme Court Decision 2018Do14596 Decided March 27, 2020)

Defendant

Defendant

Attorney Lee Dong-chul

Seoul Eastern District Court Decision 2013No92 decided October 17, 2013

The judgment of the court below (including the part not guilty in the grounds) shall be reversed, and the case shall be remanded to the Seoul Eastern District Court.

The grounds of appeal are examined.

1. Breach of trust against the victim non-indicted 1 corporation (hereinafter “non-indicted 1 corporation”)

A. The crime of breach of trust is established when a person who administers another’s business obtains pecuniary advantage or has a third party obtain such benefit by acting in violation of his/her duty, and thereby causes damage to another person who is the subject of the business, so the subject of the crime must be in the position of administering another’s business. Here, the subject of the crime must be in the position of administering another’s business. In order to be “a person who administers another’s business,” the subject of the crime should be in the position of administering another’s business. The typical and fundamental contents of the relationship, such as where the whole or part of the business concerning the management of another’s property is performed on behalf of another person, must be in the protection or management of another person’s property based on the trust relationship between the parties going beyond the relationship of conflict of interest in the ordinary contract. In the ordinary contract relationship in a relationship of conflict of interest, the other party obtains the benefit of satisfaction of rights in the contract or the realization of claims through the performance of the other party’s duty of protecting or taking care of the other party in performing the contract

In a case where a debtor provides a creditor with stocks as a security for securing a pecuniary obligation, i.e., the debtor’s obligation to maintain and preserve the value of the security, or not to damage, reduce or destroy the security, or to cooperate with the creditor or his/her designated person at the time of the execution of the security right, such as the obligation to deliver the security to the creditor or his/her designated person, etc. In addition, the obligation to be borne by the debtor under a security contract is for the achievement of the purpose of the security, i.e., the realization of a claim through the execution of the security right, i., the realization of a security contract or the repayment of the secured obligation, regardless of whether the contract was entered into or before or after the establishment of the security right, the typical and essential contents of the relationship between the parties still exist. In such a case, the debtor cannot be deemed to have been entrusted with the creditor’s business on the basis of a trust relationship with the creditor beyond an ordinary contract. Thus, in relation to the creditor, even if the debtor reduces or loses the value of the security to a third person to dispose of the security, thereby resulting in the creditor’s execution of the security right.

B. The summary of this part of the facts charged is that the defendant, the representative director of the non-indicted 2 Company (hereinafter "non-indicted 2 Company"), was the creditor of the non-indicted 2 Company and the defendant possessed 72,000 shares of the non-indicted 3 Company (hereinafter "the non-indicted 3 Company") in order to preserve the shares and cooperate in the procedures for the delivery of the shares in order to exercise the rights of the non-indicted 1 Company, the mortgagee of the non-indicted 1 Company, who is the right holder of the non-indicted 1 Company, the defendant acquired the above 72,00 shares as security and delivered the share certificates by borrowing the money from the non-indicted 4, etc., thereby acquiring the financial profits equivalent to approximately KRW 20 million in the market price of the shares of this case

C. However, in light of the legal principles as seen earlier, even if Nonindicted Company 1 is a creditor of Nonindicted Company 2 and a mortgagee of the instant shares, and the Defendant is obligated not to infringe on the right to transfer security of Nonindicted Company 1, it cannot be deemed that it constitutes “a person who administers another’s business” in relation to Nonindicted Company 1 for this reason.

Nevertheless, the lower court found the Defendant guilty of the reduction in the above facts charged on the premise that, in case where the security for transfer of a security for the shares was established in order to secure a monetary claim and the obligor holds the relevant share certificates, the act of reducing the value of the security by making the obligee liable to preserve them so that the obligee can achieve the purpose of the security and unfairly disposing of them, and thus, on the premise that the obligor, as the obligor, is in a position to manage his/her business in accordance with the agreement on the security for claims against the obligee, and determined the Defendant not guilty of the part of the breach of trust whose market price is KRW 200 million of the instant shares on the grounds of the reasons stated in its reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on “a person who administers another

2. Scope of reversal

As above, the part of the judgment of the court below regarding the victim non-indicted 1’s breach of trust should be reversed. Since the part on acquittal with the above reversed part should also be reversed, the judgment of the court below should be reversed in its entirety.

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below (including the part on acquittal in the grounds of appeal) 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

Justices Park Sang-ok (Presiding Justice)