[1] The meaning of "in relation to the performance of affairs" and the standard for determining the elements for establishing an employer's liability under Article 756 of the Civil Code

[2] In a case where the victim knew, or did not know, that his act does not constitute an employer's act of performing his duties by gross negligence, whether the employer's liability is recognized (negative), and the meaning of "victim's gross negligence" as an exemption from employer's liability

[1] Article 756 of the Civil Code / [2] Article 756 of the Civil Code

[1] Supreme Court Decision 2007Da75921 Decided May 14, 2009 / [2] Supreme Court Decision 2012Da61377 Decided April 10, 2014

Plaintiff 1 and six others

ABD Securities Co., Ltd. (Law Firm Gyeongpyeong, Attorneys Yang Young-tae et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2012Na74634 decided April 11, 2013

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. The phrase “in relation to the performance of affairs,” which is the requirement for an employer’s liability under Article 756 of the Civil Act, means that when an employee’s unlawful act appears objectively to be an employee’s business activity, an act of performing affairs, or an act related thereto, such act shall be deemed to have been performed without considering the offender’s subjective circumstances. The issue of whether an employee is objectively involved in the performance of affairs should be determined by considering the degree of the employee’s inherent duty and tort and the degree of the employee’s risk occurrence of damage and the degree of the employee’s responsibility for failing to take preventive measures (see Supreme Court Decision 2007Da75921, May 14, 2009).

In addition, even in cases where an employee's tort appears to fall within the scope of performing his/her duties in appearance, if the victim himself/herself knew or was unaware of his/her gross negligence that his/her act does not fall under the act of performing his/her duties, the employer shall not be held liable. The victim's gross negligence exempted from the employer's liability refers to a situation where it is deemed reasonable to deem that the employee's act considerably violates the duty of care required of the general public by believing it as an act within his/her authority and thus, the employee's act was not lawfully performed within his/her authority, even though he/she could have known that it was not lawfully performed within his/her authority (see, e.g., Supreme Court Decision 2012Da61377, Apr. 10, 2014).

B. Based on its stated reasoning, the lower court determined that, inasmuch as the Nonparty, who is the head of the Defendant’s ○○○○○ branch, deceivings the Plaintiffs, and received investment money from the Plaintiffs as a means of investment in financial products, the Nonparty’s tort constitutes an act of performing the Defendant’s business objectively, on the ground that the Nonparty’s tort constitutes an act of performing the Defendant’s business affairs, and that the Defendant is an employer of the Nonparty, who

Furthermore, the court below rejected the Defendant’s assertion that the Plaintiffs cannot be held liable for employer’s liability on the grounds that the Plaintiffs’ act was either aware of or without gross negligence that the Nonparty’s act did not constitute the Defendant’s act of performing the Defendant’s business and did not constitute an individual relative, but did not have any personal relationship with the Nonparty. The Defendant’s ○○○○ branch ○○○○○○○ was entrusted to the Defendant by trusting the Nonparty’s status, which is the Nonparty, and gave the Nonparty an investment money to the Nonparty. The Nonparty explained to the effect that the Nonparty was bound to receive the investment money first from the Nonparty or a third party’s account due to the investment method or the characteristics of the investment product, and that there is a possibility that the investment transaction was made through the personal account or the third party’s name account in the name of employees in the securities company or asset management company. In light of the fact that the Plaintiff’s personal account or the third party’s personal account was opened at the Defendant’s branch and did not use the already opened account, and that they were aware of the Nonparty’s act of gross negligence or gross negligence.

Examining the record in light of the aforementioned legal principles, the above determination by the court below is acceptable. Contrary to the allegations in the grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal principles on relation to office performance or intent or gross negligence of the victim.

The Supreme Court Decision cited in the ground of appeal by the Defendant is inappropriate to be invoked in the instant case as it differs from the instant case.

2. Regarding ground of appeal No. 2

Examining the record in light of the relevant legal principles, the lower court is justifiable to have recognized the damages suffered by the Plaintiffs due to the Nonparty’s tort as stated in its holding. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules

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-young (Presiding Justice)