Whether a substantial creditor who trusted the name of a shareholder prior to issuance of share certificates has a benefit to cancel a title trust agreement on behalf of a substantial shareholder in order to preserve his/her own claim and to seek confirmation of a shareholder’s right against a nominal shareholder (affirmative)

If a person who has entrusted a shareholder’s title with respect to the shares before issuance of share certificates terminates a title trust agreement with a trustee, the right of the shareholder to the relevant shares is returned to the title truster solely by the declaration of termination. In such a case, where a shareholder’s title holder registered in the register of shareholders substantially contests shareholder’s rights, a substantial shareholder is entitled to seek confirmation of shareholder’s rights against the shareholder’s title holder on the register of shareholders. The same applies to cases where a substantive shareholder’s creditor terminates a title trust agreement on behalf of a substantive shareholder for the purpose of preserving his/her own claim and seeks confirmation of shareholder’s rights against the shareholder’s title holder. The same does not apply to cases where a substantive

Article 250 of the Civil Procedure Act, Articles 335(3), 336(1), and 337(1) of the Commercial Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

Plaintiff 1 and one other (Attorney Lee Jae-deok, Counsel for the plaintiff-appellant)

Defendant 1

Defendant 2

Daejeon District Court Decision 201Na6333 Decided November 22, 2011

All appeals are dismissed. The costs of appeal are assessed against each appellant.

The grounds of appeal are examined.

1. Regarding the plaintiffs' grounds of appeal

Examining the reasoning of the judgment below in light of the records, we affirm the judgment below that it is not sufficient to recognize that the facts of the shares by Defendant 2 merely based on the evidence in this case were the actual ownership of the Nonparty, and the Nonparty was trusted to the Defendant’s name. In so doing, the court below did not err by violating the law of logic and experience and exceeding the bounds of

2. As to Defendant 1’s ground of appeal

A. Ground of appeal No.1

If a person who has entrusted a shareholder’s name with respect to the shares before the issuance of share certificates terminates a title trust agreement with a trustee, the right of the shareholder to the relevant shares shall be returned to the title truster only by the declaration of the termination thereof. In such a case, in a case where a shareholder’s name recorded in the register of shareholders contests substantial shareholder’s rights, the actual shareholder has a benefit to seek confirmation of shareholder’s rights against the shareholder’s name on the register of shareholders (see, e.g., Supreme Court Decision 97Da38510, Jun. 12, 1998). The same applies to a case where the actual shareholder’s creditor terminates the title trust agreement on behalf of the actual shareholder and seeks confirmation of shareholder’s rights against the shareholder’s name in order to preserve his/her own claim, and the same applies to a case where the actual shareholder’s right holder terminates the

According to the reasoning of the judgment below and the records, the plaintiffs filed a lawsuit seeking confirmation of the shareholders' rights of this case against the defendant 1 who denied the title trust agreement by the non-party on behalf of the non-party on behalf of the non-party in order to preserve his claim. In such a case, the shareholders' rights of this case were returned to the non-party by the declaration of intention of termination of the title trust agreement that the plaintiffs represented by the non-party, and as long as the defendant 1 contests the ownership of his claim, it shall be deemed that there is a benefit to seek confirmation of the actual shareholders' rights of the non-party on behalf of the non-party as the plaintiff. Further, it shall not be deemed that the plaintiffs can seek implementation of the transfer procedure against the company or there was no direct dispute between the non-party and the defendant 1.

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the interest in confirmation, as alleged in the grounds of appeal

B. Ground of appeal No. 2

After recognizing the facts as indicated in its reasoning based on the adopted evidence, the lower court determined that it is reasonable to view the instant shares listed in Defendant 1’s name as the Nonparty’s trust to the said Defendant and substantial shareholder as the Nonparty.

In light of the records, the above determination by the court below is acceptable, and there is no error of law by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, by misapprehending the legal principles on the burden of proof, or failing to exhaust all necessary deliberations, etc.

3. 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 Park Poe-dae (Presiding Justice)