Plaintiff 1 and one other (Seoul Law Firm, Attorneys Lee Gyeong-min et al., Counsel for the plaintiff-appellant)

Hosung General Construction Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Park Sang-hwan et al., Counsel for the plaintiff-appellant)

May 13, 2014

Suwon District Court Decision 2013Gahap1775, 2013Gahap2693 (Joint Judgment) Decided October 2, 2013

1. As to the distribution procedures cases with the District Court 2010 34077, 2010 3840 2010 23671, 2010 2368 2368, 2010 37380 2010 2012 29857 2012 2012 29857

A. Of the plaintiffs’ claims on the distribution schedule prepared on February 12, 2013 by the District Court, the part for correction of the distribution schedule that reduces the amount of dividends to the defendant by 86,595,381 won (the part for which the claim is expanded in the trial) is dismissed; and

B. Of Plaintiff 1’s claim as to the distribution schedule prepared on March 12, 2013, the District Court dismissed the lawsuit on the part for correction of the distribution schedule increased by KRW 1,519,769 (the part for which the claim was expanded in the trial) by the amount of the dividend against Plaintiff 1 (the part for which the claim was expanded).

2.The judgment of the first instance shall be modified as follows:

With respect to the distribution procedures cases in the District Court 2010 34077, 2010 2010 18440 (Duals), 23671, 2010 23671, 2010 2368, 2010 37380 (Consolidated), 2012 29857 (Duals)

A. Of the distribution schedule prepared by the Jung-gu District Court on February 12, 2013, the amount of each of 0 won for the plaintiffs' dividends to the attached Table 5 "the amount of 1,521,609,780 won for the defendant, respectively, shall be corrected to 66,879,829 won as stated in the attached Table 5 calculation sheet;

B. Of the distribution schedule prepared by the District Court on March 12, 2013, the amount of dividends against Plaintiff 1 shall be 86,956,042 won, the amount of dividends against Plaintiff 2 shall be 73,981,568 won, the amount of dividends against Plaintiff 2 shall be 162,457,379 won, and the amount of dividends against the Defendant shall be corrected to 1,519,769 won, respectively.

C. Each of the plaintiffs' remaining claims against the defendant are dismissed.

3. Ten percent of the total litigation cost shall be borne by the plaintiffs, and ninety percent by the defendant.

1. Purport of claim

With respect to the distribution procedures of Jung-gu District Court 2010 34077, 2010 2010 2010 23671, 2010 23671, 2010 2368, 2010 2010 37380 2012 2987 2012 2012 2987 2012 2012 2012 1, 2013 1, 200 1,521,60 780 20 580 5,2848 20 50 50 202 5,75 202 1,207 1,75 207 1,7482 of the dividend amount for each of the plaintiffs' claims against the plaintiffs (the plaintiffs' claims for correction of the dividend amount against the defendant).

2. Purport of appeal

A. The plaintiff's purport of appeal

The judgment of the court of first instance shall be amended as follows: (1) with respect to the distribution procedures for the plaintiffs among the distribution schedule prepared on February 12, 2013 prepared by the above court as stated in the attached Table 5 attached hereto, the distributed amount of KRW 1,521,609,780 won against the defendant shall be corrected as KRW 666,879,829,780, 1840, 2010, 23671, 2010, 23678, 23688, 2010, 2010, 2010, and 237380, 2010, 2010, and 20536, 2975, 2017, and 2057, 206, 297, and 2057, and 37,57, and 200,000 won against the plaintiff among those prepared on March 12, 2013.

B. The defendant's purport of appeal

The part against the defendant in the judgment of the court of first instance shall be revoked, and the plaintiffs' claims corresponding to the revoked part shall be dismissed.

1. Basic facts

A. The reasoning for this Court’s explanation is as follows: (a) the corresponding part of the judgment of the court of the first instance (No. 3, No. 2, and No. 8, No. 4) is identical to that of the corresponding part of the judgment of the court of the first instance except for the amended part as follows; and (b) thus,

B. The amended portion

1) On the part of the first instance court, the 6th sentence 7 to 9 of the 6th sentence is as follows.

“3) Based on the Daejeon District Court Decision 2012TTTT 2012TT 16421, the Nonparty applied for an order of seizure and assignment of claims for KRW 86,595,381 out of dividends in the auction of real estate (hereinafter “auction of this case”) in the procedure of the auction of auction of real estate (hereinafter “auction of this case”) with respect to each building listed in the attached Table 2 attached hereto, which the Defendant had against the Republic of Korea against the third debtor, and the decision was confirmed on January 1, 2013.”

2) On the 6th page through 7th page 2 of the judgment of the first instance court, the phrase “the auction of real estate (hereinafter “instant auction”) in the auction procedure of this case” is deemed to read “the auction procedure of this case”. The phrase “the auction procedure of this case” is deemed to read “the auction procedure of this case.”

3) Each “this Court” set forth in Chapters 5, 15, 6, 2, 4, 21, 7, and 15 shall be raised to each “Council District Court”.

4) On the 8th page “Witness” is the witness of the first instance trial.

5) On the 8th page 3, the term “this Court” means “court of the first instance”.

2. Judgment on the Defendant’s defense prior to the merits

At the first instance court, the Plaintiffs filed a claim to correct the amount of KRW 1,521,60,780 against the Defendant in the amount of KRW 666,879,829, among the instant distribution schedule under the first instance court’s distribution schedule, and filed a claim to correct the amount of KRW 1,521,609,780 to KRW 580,284,448. The Plaintiffs expanded the claim to the effect that the claim to correct the amount of dividends against the Defendant in the instant distribution schedule under the first instance court’s correction of the amount of dividends to KRW 1,521,609,780 from May 13, 2014.

In addition, Plaintiff 1 filed a claim for correction of KRW 86,956,042 of the dividend amount against Plaintiff 1 among the instant dividend table, and filed a claim for correction of KRW 86,956,042 at the trial, and submitted the “application for extension of claim and modification of cause of claim” as of May 13, 2014 at the trial, thereby revising the purport that the claim for this part of the instant dividend table No. 2 to request correction of KRW 0 of the dividend amount against Plaintiff 1 as KRW 88,475,810 among the instant dividend

However, a lawsuit of demurrer against distribution shall be filed within one week from the date of distribution (Article 154(3) of the Civil Execution Act), and the part in which the plaintiffs extended the purport of the claim in the trial as above, 86,595,381 won (=66,879,829 won - 580,284,448 won) of the amount of dividends against the defendant in the first distribution schedule of this case, which the plaintiffs sought correction of the distribution schedule which reduces the amount of dividends against the defendant in the amount of 1,519,769 won (=8,475,810 won - 86,956,042 won) among the second distribution schedule of this case, and the part in which the plaintiffs raised a claim for correction of the distribution schedule to increase the amount of dividends to the defendant in the amount of 1,519,769 won (Article 154(3) of the Civil Execution Act), which was the date of distribution of this case, with the plaintiffs' respective grounds for objection to 2131.

3. Determination as to the cause of action

(a) Formation of the right of indemnity;

This Court's reasoning is that the corresponding part of the judgment of the court of first instance (No. 8, 7, and 18) is the same as that of the corresponding part of the judgment of the court of first instance (No. 8, 7, and 18).

(b) A copy of the subrogation of the person performing the obligation;

1) The Plaintiffs, as a surety or a joint surety, have a legitimate interest in repaying the obligations of the instant loans (to the extent of the respective rights of reimbursement against Songk-in pursuant to Articles 481, 482(1), and 483(1) of the Civil Act, may subrogate the part of the instant loans, which is extinguished by the Plaintiffs’ subrogation, as a repayment obligee, among the claims of the instant loans, within the scope of the respective rights of reimbursement against Songk-in, and may also subrogate the right to such security in order to

However, as seen earlier, it is reasonable to view that each of the instant Group C collective security interests, within the scope of the maximum debt amount, the entire claim amount of the instant loans, together with the instant Group C collective security interests, has been secured by the entire secured real estate as a kind of security interest (see Articles 370 and 321 of the Civil Act). In light of the above, barring any special circumstance, barring any special circumstance, it is reasonable to view that each of the instant Group C collective security interests, along with the instant Group A collective security interests and the instant Group B collective security interests, has been secured by the entire claim amount of the instant loans, to the extent of the maximum debt amount.

As above, insofar as each of the instant Group C’s collective security rights also covers the part that expired by subrogation of the Plaintiffs among the claims for the instant loans, the Plaintiffs may exercise not only the right to collateral security regarding 108 and 201 of the instant Group C’s collective security rights, but also the right to collateral security (hereinafter collectively referred to as the “instant collective security rights”) in proportion to the amount that they have been repaid by subrogation of the creditors of Fue Mutual Savings Bank.

2) Judgment on the defendant's assertion

In regard to this, the Defendant asserts that the instant Group C’s collective security right, the instant Group A’s collective security right, and the instant Group B’s collective security right are individual, cumulative, and thus, they are not joint collateral. Therefore, the Defendant asserts that even if the Plaintiffs repaid some of the secured claims of the instant Group C’s collective security right and the instant Group B’s collective security right as a surety, they cannot subrogate each of the instant Group C’s collective security right, which differs from the secured claims.

In light of the following circumstances revealed in the facts as seen earlier, Feul Mutual Savings Bank acquired the entire collateral security right of this case to secure the present and future debts, including the loan claims against Yeul Mutual Savings Bank. The aggregate amount of the maximum debt amount of the entire collateral security right of this case exceeds the amount of the loan claims of this case, but the individual maximum debt amount of the entire collateral security right of this case falls short of the original amount of the loan claims of this case, and if the entire collateral security right of this case is deemed to have a joint collateral relationship between each group, Peul Mutual Savings Bank is 4,00,000 won, which is the maximum debt amount of the entire collateral security right of this case, and also falls short of the original amount of the loan claims of this case, it is reasonable to view that Feul Mutual Savings Bank and the plaintiffs, who is the party to the contract establishing the entire collateral security right of this case, as the whole collateral security right of this case, are not set within the individual scope of each of the maximum debt amounts of the entire collateral security rights of this case, but within the scope of each of the individual collateral security right of this case.

However, even if the entire right to collateral security of this case is not in the relationship of joint mortgage between each group as above, the plaintiffs can exercise the right to collateral security of this case by subrogation. Thus, the defendant's above assertion is not accepted in full view of the following circumstances.

① Although the entire collateral security right of this case does not overlap with the scope of each maximum debt amount, it does not change to secure the identical claim, which is the claim for the loan of this case, even though the entire collateral security right of this case does not overlap with the scope of each maximum debt amount, and cannot be deemed as dividing the claim for the loan of this case into several claims with the maximum debt

② It is deemed that Plaintiff 1 jointly and severally guaranteed the entire debt of the instant loan, and there is no ground to view that Plaintiff 1 jointly and severally guaranteed only the debt amount classified according to the maximum debt amount of the specific collective security right among the entire collective security right in the instant case. The Plaintiff 1 provided as security, and the ○○ apartment, and the Dodong land offered as security by the Plaintiffs, along with other real estate, are linked to each other. However, it is deemed that the entire claim for the instant loan is secured within the scope of the maximum debt amount of the right to collateral security established for each of the instant loans, and it is difficult to view that only the specific claim divided according to the maximum debt amount among the claims for the instant loans is secured.

(3) The reason why the Civil Act recognizes the subrogation of the obligee to exercise the right of subrogation against the obligee’s claim and further the right of subrogation against the obligee’s claim is to effectively guarantee the satisfaction of the obligee’s claim for reimbursement against the obligor. Although several mortgages for securing existing claims have been set in installments according to the maximum debt amount, if the exercise of other mortgages enjoyed by the obligee is not permitted to the obligee who subrogated for the same claim even though several mortgages are the same, the purpose of the above provision is to secure the right of reimbursement by the obligee, so long as the scope of collateral against existing claims is set in installments according to the maximum debt amount.

④ Even in a case where several secured claims are established which are not in a joint mortgage relationship because the scope of the secured claims is set up on the basis of the maximum debt amount, and the secured claims, such as the plaintiffs, have to be preserved in the order of execution of each secured claims, so the status of the secured claims is unstable. In most cases, in the situation where the secured claims are performed by subrogation or where the secured claims are implemented, it is necessary to allow the exercise of the secured claims by the creditor to secure the right to indemnity following the repayment to the secured claims. On the other hand, even if the secured claims such as the defendant do not take place on the part of the secured claims, it is expected that the secured claims of the secured claims should be preferentially reimbursed from the exchange value of the secured claims less the maximum debt amount of the senior secured claims. If the secured claims of the secured claims cannot be exercised on the part of the secured claims of the secured claims on the part of the secured claims on the secured claims despite the subrogation of the secured claims by the secured claims on the secured claims, the junior mortgagee may gain profits other than the network.

C. Scope of subrogation by the person performing the obligation

This Court's reasoning is the same as that of the corresponding part of the judgment of the court of first instance (No. 13, No. 9, and No. 14). Thus, this Court cites it as it is in accordance with the main sentence of Article 420 of the Civil Procedure Act.

(d) Correction of a distribution schedule;

1) Method of distribution

Therefore, the remainder, which remains after deducting the amount distributed to the pertinent tax attachment authority, small lessee, and IMNs from the actual amount of dividends (hereinafter “the remainder of the remaining maximum debt amount”) should be set to the maximum maximum debt amount and distributed first to the Plaintiffs.

However, in the instant case, the remaining sale price (the remaining sale price on the date of the first distribution of this case was KRW 1,608,205,161, and the remaining sale price on the date of the second distribution of this case was KRW 162,457,379) is not only the aggregate of the remaining maximum debt amount, but also 2,224,463,842 won, which is the aggregate of the respective subrogated payment on the part of the plaintiffs' claim for reimbursement (=1,211,463,842 won by the plaintiff 1's subrogation + KRW 1,01,463,842 won by the plaintiff 2's subrogation + KRW 1,01,00,000 by the plaintiff 2). Thus, in the instant case, the amount to be distributed to the plaintiffs can be deemed to be the amount that the plaintiffs applied for distribution by real estate within the extent of the amount divided

In regard to this, the defendant filed an excessive report on the claim by calculating interest rate of 25% per annum, rather than the rate of 5% per annum for each substitute payment in the auction procedure of this case. Based on legitimate interest rate of 5% per annum, the plaintiffs calculated the amount of each claim for reimbursement by the plaintiffs. If the plaintiffs distribute the amount of the claim reported in the auction procedure of this case according to the ratio of the amount distributed to each real estate which is the object of auction, part of the real estate, the amount of the claim so distributed exceeds the amount claimed by the plaintiffs. However, in the case of other real estate, the amount of the claim to be distributed to the plaintiffs is below the amount claimed by the plaintiffs, and in the case of the latter, the amount to be distributed to the plaintiffs shall be calculated by the amount claimed by the plaintiffs, and in the case of the latter, the amount to be distributed to the plaintiffs shall be calculated by the amount of the claim to be distributed to the plaintiffs as above. However, since it is clear that the sum of each claim by the plaintiffs does not reach the original claim of each plaintiffs, the plaintiffs can be freely apportioned within the remaining maximum amount of real estate for auction.

(ii) the amount of legitimate dividends;

A) The first distribution date of the instant case

Therefore, from the date of the first distribution of this case, the amount of 1,608,205,161 won for the plaintiffs 1, and 875,843,592 won for the remaining sale price for the plaintiff 1 (i.e., KRW 1,608,205,161 won x 1,211,463,842 won x 224,224,463,842 won ; hereinafter the same shall apply) within the scope of the amount calculated by dividing the amount to be distributed to the plaintiffs 1 on the date of the first distribution of the attached Table 5, among the amount of the plaintiff 2, the amount of 732,361,568 won for the remaining sale price for the plaintiff 1 (i.e., KRW 1,608, 205,161 x 1,103,204,2384,281) for each of the plaintiff 2.

Next, 86,879,829 won (i.e., KRW 1,608,205,161 - KRW 503,504,015 - KRW 437,821,317) remaining after distributing the remaining proceeds to the plaintiffs should be distributed first to the non-party who is a full creditor. As such, the amount of legitimate dividends against the defendant is KRW 580,284,448 (=66,879,829) - KRW 86,595,381).

B) The second distribution date of the instant case

On the date of the second distribution of this case, the reasonable amount to be distributed to the plaintiffs, and 162,457,379 won for the remaining sale price for the plaintiff 1 (=162,457,379 won x 1,211,463,842 won / 2,424,463,842) 73,981,568 won for the plaintiff 2 (=162,457,379 won x 1,000,000 won /2,224,463,842 won).

In addition, if all of the remaining proceeds are distributed to the plaintiffs, there is no money to be distributed to the defendant.

3) Correction of the distribution schedule

A lawsuit of demurrer against a distribution filed by a creditor is to resolve a dispute surrounding the amount of distribution among the creditors who are the opposing parties, so the judgment of the lawsuit must change the ownership of the distribution portion relatively among the creditors who are the plaintiff and the defendant (see Supreme Court Decision 2000Da41844, Feb. 9, 2001).

The amount of KRW 1,521,60,780 against the defendant in the first distribution schedule of this case should be revised to KRW 580,284,448, which is the legitimate dividend amount as seen earlier. However, as seen earlier, the lawsuit against the defendant relating to KRW 86,595,381 out of the amount for which correction of reduction was sought is unlawful, the amount of dividends against the defendant must be revised to KRW 66,879,829,829. Accordingly, the amount of dividends against the defendant must be corrected to KRW 854,729,951 (= KRW 1,521,609,780 - KRW 66,879,829) which is erroneously distributed to the plaintiffs. Accordingly, if the amount is distributed to each real estate in proportion to the legitimate dividend amount to the plaintiffs according to the following formula, each of the plaintiffs' dividends against the plaintiffs should be corrected to the "amount of KRW 00 in [Attachment 1] column."

[ Food] Attached 54,729,951 won / 941,325,332 won (= KRW 503,504,015 + KRW 437,821,317) of the amount of money erroneously distributed to the Defendant

In addition, as seen earlier, the amount of legitimate dividends against Plaintiff 1 on the date of the second distribution of this case or the amount for correction of the dividend amount against Plaintiff 1 is illegal. As such, the amount of dividends against Plaintiff 1 in the second distribution schedule of this case is 86,956,042 (==8,475,810 - KRW 1,519,769) shall be revised as KRW 73,981,568. Lastly, the amount of dividends against Defendant 1 shall be revised as KRW 0,00,00,000, and KRW 1,519,769,000,000,000,000,000,000 won and KRW 1,519,769.

4. Conclusion

Therefore, since the part of the plaintiffs' claims in this case expanded in the trial is unlawful, each of them is dismissed, and the defendant's appeal is partially accepted and the judgment of the court of first instance is modified as above, it is so decided as per Disposition.

[Attachment]

Judges Park Jung-hwa (Presiding Judge)