[1] In a case where the retirement of an existing regular director becomes final and conclusive, and an ad hoc director was duly appointed pursuant to the procedure under the former Private School Act, and the duties are terminated, whether the right to take emergency measures as to the right to appoint an ad hoc director can be recognized (negative)

[2] Where the normal operation of a school juristic person is possible, whether the competent administrative agency may appoint a regular director after deliberation by the Private School Dispute Mediation Committee pursuant to Article 25-3 (1) of the Private School Act regardless of whether temporary directors exist (affirmative)

[3] In a case where the Superintendent of an Office of Education appointed a temporary director of an educational foundation, appointed a regular director and approved the appointment of a director by the Superintendent of an Office of Education, and the civil judgment that a resolution of appointment of a regular director was null and void by the above temporary director became final and conclusive, the case affirming the judgment below that the above disposition was lawful

[1] If the retirement of an existing regular director becomes final and conclusive, and a temporary director has been duly appointed pursuant to the procedure under the former Private School Act (amended by Act No. 7802 of Dec. 29, 2005), the authority as a director of the ordinary affairs belongs to the temporary director regardless of the reason for appointment. Thus, there is no room to recognize the right to manage general affairs as a right to manage general affairs in a manner that the retired director continues to perform his/her previous duties in accordance with Article 691 of the Civil Code, and there is no need to recognize the right to manage general affairs in a manner that the retired director will continue to perform his/her previous duties. Even if the temporary director ends his/her duties, it cannot be said that the right to handle such emergency is newly granted to a director who has retired in the past at the time, and only a kind of right to appoint a director after separation

[2] In light of the fact that Article 25-3(1) of the Private School Act appears to include the purpose of pursuing prompt normalization of the operation of school juristic persons, it shall be deemed that the competent authorities may appoint directors following a deliberation by the Private School Dispute Mediation Committee pursuant to Article 25-3(1) of the Private School Act, regardless of whether temporary directors exist, so long as it is no longer necessary to appoint temporary directors because it is possible to operate school juristic persons normally.

[3] In a case where the Superintendent of an Office of Education appointed a temporary director of a school foundation, appointed a regular director and approved the appointment of a regular director by the Superintendent of an Office of Education, the Superintendent of an Office of Education again issued a disposition to appoint a regular director as a result of the civil judgment that the resolution of appointment of a regular director is null and void, the case affirming the judgment of the court below holding that it is not unlawful that the Superintendent of an Office of Education issued a disposition to appoint a regular director who is not a temporary director pursuant to Article 25-3 (1) of the Private School Act, on the ground that the reason for appointment of a temporary director was resolved in light of the circumstances that the temporary director was ordinarily operated by the school foundation after the appointment of the director, although the temporary director was already legally appointed, it cannot be deemed that the retired director has the authority to appoint a regular director.

[1] Article 16 (1) 4 and Article 25 of the former Private School Act (amended by Act No. 7802 of Dec. 29, 2005); Article 691 of the Civil Act / [2] Articles 25 and 25-3 (1) of the Private School Act / [3] Articles 25 and 25-3 (1) of the Private School Act

[1] Supreme Court en banc Decision 2006Da19054 Decided May 17, 2007 (Gong2007Sang, 873)

Plaintiff (Attorney Han-ho et al., Counsel for the plaintiff-appellant)

1. A co-litigation intervenor and one other (Attorney Kim Jong-soo, Counsel for the plaintiff-appellant)

Gyeonggi-do Superintendent of an Office of Education (Law Firm Filiwon, Attorneys Choi Jung-sik, Counsel for defendant-appellant)

Intervenor joining the Defendant (Law Firm, Attorney Choi Gyeong-hoon et al., Counsel for defendant-appellant)

Seoul High Court Decision 2009Nu23350, 37670 decided February 17, 2010

All appeals are dismissed. The costs of appeal are assessed against the plaintiff and the intervenor of co-litigation.

The grounds of appeal by the plaintiff and the co-litigants are examined together.

1. Whether the right to take emergency measures to select and appoint directors to the former directors, including the plaintiff, is recognized;

If the retirement of an existing regular director becomes final and conclusive, and a temporary director has been appointed lawfully in accordance with the procedures under the former Private School Act (amended by Act No. 7802 of Dec. 29, 2005, hereinafter “former Private School Act”), the authority as a director of the ordinary affairs belongs to the temporary director regardless of the reason for appointment, so there is no room to recognize the right to handle general affairs as an authority to handle general affairs in order to ensure that the retired director continues to perform his/her previous duties in accordance with Article 691 of the Civil Act by analogying Article 691 of the Civil Act, and later even if the temporary director terminates his/her duties, such right to handle emergency affairs cannot be newly granted to a director who has retired in the past at that time, and only a part of the right to appoint a director after separating the general administrative affairs is recognized or newly granted (see Supreme Court en banc Decision 2006Da19054, May 17, 2007).

According to the reasoning of the judgment of the court below, the court below rejected the defendant's previous provisional directors' right to appoint and appoint directors on July 9, 2004 on the ground that the non-party filed a lawsuit against the defendant seeking nullification of the provisional directors' appointment of the school foundation (hereinafter referred to as "new school") on July 9, 2004; that the non-party was eligible to request the appointment of temporary directors since he had an interest in the operation of the new school as the founder of the new school; the non-party transferred the management right to the defendant (hereinafter referred to as "participating") to preserve the property of the new school that he embezzled and lost; and upon the above request, the defendant's appointment of temporary directors on July 9, 2004 conforms to the basic property of the new school foundation as the basic property for the preservation of the new school; and that the appointment of temporary directors on July 9, 200, conforms to the purpose of Article 1 of the former Private School Act, which constitutes an infringement upon the plaintiff's previous provisional directors' right to appoint and appoint.

In light of the facts duly admitted by the court below, the above determination by the court below is just in accordance with the legal principles as seen earlier, and there is no error of law by misunderstanding the legal principles as to the right of emergency disposal of retired directors in school

2. Whether the Defendant’s disposition to appoint directors under Article 25-3(1) of the Private School Act (amended by Act No. 8545, Jul. 27, 2007; hereinafter “Private School Act”) is unlawful

According to the reasoning of the judgment below, the court below acknowledged that the defendant appointed nine provisional directors of the new teaching institute as of July 9, 2004, and the above provisional directors as the regular directors of the new teaching institute on July 13, 2004 and recognized that the defendant was directors of the new teaching institute on July 14, 2004, the board of directors of the new teaching institute was normally held and decided on all the matters stipulated in its authority in the articles of incorporation. The defendant's total loss of basic property for profits of the new teaching institute revealed at the time of the comprehensive audit in 2004 was compensated on March 30, 2005. Meanwhile, the court below rejected the judgment of the court below that the appointment of the new temporary directors was made on July 13, 2004 by the above provisional directors, and it did not err in the misapprehension of the legal principles as to the appointment of the new temporary directors under Article 5 of the Private School Act, since the civil judgment that invalidated the resolution of the appointment of the new temporary directors on September 10, 20, 2008.

Meanwhile, in light of the fact that Article 25-3(1) of the Private School Act appears to include the purpose of pursuing prompt normalization of the operation of school juristic persons, so long as the normal operation of school juristic persons is possible and it is no longer necessary to appoint temporary directors, the competent authorities should be deemed to have appointed directors following deliberation by the Private School Dispute Mediation Committee (hereinafter “Mediation Committee”) pursuant to Article 25-3(1) of the Private School Act, regardless of whether temporary directors exist.

The court below's decision that the defendant may appoint a regular director pursuant to Article 25-3 (1) of the Private School Act, regardless of whether the reason for the appointment of a temporary director has expired as of July 9, 2004, is just in accordance with the above legal principles, and the defendant can first appoint a regular director pursuant to Article 25-3 (1) of the Private School Act only after the temporary director has been appointed pursuant to Article 25-3 (1) of the Private School Act, since the normal operation of the new teaching institute was possible at the time of the disposition in this case. We cannot accept the allegation in the grounds of appeal that the defendant can appoint a regular director pursuant to

3. Whether the disposition in this case is unlawful in deviation from discretionary power

The Mediation Committee shall deliberate on matters concerning the promotion of normalization of school foundations for which temporary directors are appointed, and other matters deliberated upon by the competent authorities, and immediately notify the competent authorities of the result of such deliberation, the competent authorities shall comply with the result of such deliberation (see Article 24-2 (2) through (4) of the Private School Act).

According to the reasoning of the judgment below, the court below determined that the defendant's previous directors, including the plaintiff and the non-party, and the intervenor's opinion in formulating the promotion plan for the normalization of the new private teaching institute was not legitimate since the defendant had already been appointed legally. The non-party's previous directors, including the plaintiff, cannot be deemed to have a right to appoint a regular director in light of the circumstances that embezzled the property of the new private teaching institute and transferred the management right to preserve it. In particular, the non-party's basic property destroyed by the non-party was compensated by the intervenors, and the non-party's resolution on the appointment of a new director was invalid on July 13, 2004. However, in light of the circumstances that the new director's appointment of the new director was operated normally after the appointment of the above appointed non-party, it was reasonable to prepare and submit the promotion plan for the normalization of the previous directors to the non-party 2, who were appointed by the Mediation Committee, and the defendant did not have a right to appoint a new director in accordance with the above 7th resolution.

In light of the contents of Articles 24-2 and 25-3 of the Private School Act and facts duly admitted by the court below, the above determination by the court below is just and acceptable, and there is no error of law by misunderstanding the legal principles of discretionary power as to the appointment of directors by the competent authorities under Article 25-3 (1) of the Private School Act.

4. Conclusion

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

Justices Ahn Dai-hee (Presiding Justice)