[1] Whether an exception to the proviso of Article 21(1) of the Trust Act, which stipulates that a trust property may be subject to compulsory execution or auction, includes a case where a truster is a debtor (negative)

[2] In a case where Gap corporation, which is a land trust company Eul, built a commercial building on the ground after being entrusted with land from Eul corporation, built a commercial building on the ground, and sold or leased land and commercial building as trust property, concluded a sale-type land development trust contract with profit return to Eul, and issued a tax invoice with Eul company as its supplier while building and selling the commercial building accordingly, and the head of the tax office having jurisdiction over Eul company did not pay the value-added tax after filing a return thereon with the head of the tax office having jurisdiction over Eul company's disposition of seizing unsold portion among the commercial buildings, which are trust property, the case affirming the judgment below holding that the above disposition is null and void on the ground that Eul's claim against the truster Eul for value-added tax related to the above disposition does not constitute "right arising in the course of performing trust affairs" under the proviso

[1] Article 21(1) of the Trust Act (wholly amended by Act No. 10924, Jul. 25, 201) / [2] Article 21(1) of the Trust Act (wholly amended by Act No. 10924, Jul. 25, 201)

[1] Supreme Court Decision 2000Da70460 Decided April 12, 2002 (Gong2002Sang, 1114), Supreme Court Decision 2005Da9685 Decided September 7, 2007 (Gong2007Ha, 1548)

Korea Land Trust Co., Ltd. (Bae & Yang LLC, Attorneys Park Jae-chul et al., Counsel for the plaintiff-appellant)

Head of Busan District Tax Office

Daejeon High Court Decision 2009Nu2700 decided January 21, 2010

The appeal is dismissed. The costs of appeal are assessed against the defendant.

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

Article 1(2) of the Trust Act provides, “The term “a trust” means the legal relationship in which the truster transfers or disposes of a specific property right to the trustee, and the truster is the trustee, for the benefit of the beneficiary, or for the management or disposal of the property right for a specific purpose,” and Article 21(1) of the Trust Act provides, “No compulsory execution or auction shall be conducted against the trust property: Provided, That this shall not apply to the rights arising before the trust is made or the rights arising from the performance of the trust affairs.”

According to the purport of Article 1(2) of the Trust Act, the trust property under the Trust Act shall be wholly and externally attributed to the trustee, and its ownership in the internal and external relationship with the truster is not reserved to the truster (see, e.g., Supreme Court Decisions 2000Da70460, Apr. 12, 2002; 2005Da9685, Sept. 7, 2007); and Article 21(1) of the Trust Act comprehensively takes into account the legislative intent of ensuring the independence of the trust property to facilitate the purpose of the trust, taking into account the following as a whole: (a) the trust property under the Trust Act shall be exceptionally subject to compulsory execution or auction against the trust property under the proviso of Article 21(1) of the Trust Act; and (b) the term “right arising in the course of performing the trust affairs”, which provides that the trustee may be subject to compulsory execution or auction against the trust property

Upon citing the judgment of the court of first instance, the court below acknowledged the following facts: ① on June 12, 2004, the Plaintiff and C&S real estate development company (hereinafter “SS real estate development company”) entered into a sale-type land development trust contract with the Plaintiff’s land in trust from the non-party company under the Trust Act, building a commercial building on its ground, selling or leasing the above land and commercial building as trust property, and return the profits therefrom to the non-party company; ② accordingly, the Plaintiff newly constructed the above commercial building and sold it to the non-party company; ③ the non-party company issued a tax invoice with the non-party company as a supplier while selling it in units; ③ the non-party company reported the value-added tax to the Defendant, but did not pay the value-added tax; and the Defendant issued the disposition of this case on October 8, 2008 with the non-party company as the truster, and determined that the value-added tax claim related to the disposition of this case does not constitute the "value-added tax on trust business" under the proviso to Article 21(1) of the Trust Act.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the proviso of Article 21 (1) of the Trust Act, as otherwise alleged in the ground of appeal.

Therefore, the appeal is 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 Yang Chang-soo (Presiding Justice)