When a company's creditor of a partnership company or a partner with unlimited liability has occurred.

An unlimited partnership company is substantially a partnership joint company and the company's obligations are the common obligations of each partner. The unlimited partnership company's employees' liabilities naturally arise when the company bears its obligations. It does not occur only when the company's assets are "when the company is unable to fully pay its obligations with its assets" or "when the compulsory execution against the company's assets is not effective" and it is reasonable to deem that the company's creditors constitute such a case and set forth the requirements to assume the responsibility that the company's members may claim supplementary performance of its liability. In addition, it is reasonable to deem that the provisions concerning the unlimited partnership company apply mutatis mutandis to matters that are not otherwise provided for in the chapter of the limited partnership company (Article 269 of the Commercial Act), and the liability of the limited partnership company's creditors to the company is the same as the liability of the

Articles 212 and 269 of the Commercial Act

Plaintiff (Law Firm Hex, Attorneys Kim Dong-dong et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm, Kim & Lee, Attorneys Kim Tae-chul et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Na5857 decided August 30, 2006

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Article 212(1) of the Commercial Act provides that "if it is impossible for a company to fully pay its obligations with its assets, each member of the partnership company shall be jointly and severally liable," and Article 212(2) of the Commercial Act provides that "if a compulsory execution against the company's assets is not effective, the same shall apply to the preceding paragraph." Since an unlimited partnership is substantially a common enterprise and its obligations are substantially common obligations of each member, the liability of the company's members is naturally arising from the statutory provisions if the company bears its obligations, and it does not occur only when "if the company's assets cannot be fully paid its obligations with the company's assets," or "if compulsory execution against the company's assets are not effective," it is reasonable to deem that the company creditor falls under such a case, and it is also reasonable to deem that the requirements under which each member of the unlimited partnership company may claim a supplementary performance of liability among the members of the unlimited partnership company by proving that it falls under such case. In addition, since the provisions on unlimited partnership companies apply mutatis mutandis to matters not otherwise.

2. According to the judgment below and evidence employed by the court below, the non-party 1 was the general partner of the non-party 2 limited partnership company; the non-party 2 issued 12 copies of promissory notes worth 6,454,250,00 among the plaintiff from January 5, 200 to July 1, 200; the non-party 1 and the defendant, the non-party 2 and the non-party 3, the non-party 1, the ownership of each of the above real estate owned by the non-party 1, the non-party 2, the non-party 3, the non-party 2, the non-party 2, the non-party 2, the non-party 3, the non-party 2, the non-party 2, the non-party 2, the non-party 2, the non-party 3, the non-party 2, the non-party 2, the non-party 2, the non-party 2, the non-party 2, the non-party 2, the plaintiff 2, the non-party 2, the above decision

3. Examining these facts in light of the legal principles as seen earlier, the Plaintiff issued the said promissory note to the Plaintiff at the same time, and the Plaintiff also held a claim identical to the Plaintiff’s claim against Nonparty 1, who is the general partner of Nonparty 2’s limited partnership. Thus, prior to the conclusion of the instant payment contract in accord, the Plaintiff’s claim against Nonparty 1 was established. The Plaintiff’s claim against Nonparty 1 against the Plaintiff becomes final and conclusive as the decision to authorize composition against Nonparty 2 limited partnership became final and conclusive, and the said claim against the Plaintiff was also established until the date of closing argument at the time of the lower judgment, as prescribed by the conditions of composition pursuant to Article 299 of the former Bankruptcy Act (repealed by Act No. 7428 of March 31, 2005), Article 61 of the former Composition Act (amended by Act No. 7428 of March 31, 2005).

Nevertheless, the court below held that since the debt fulfillment period against the plaintiff by the non-party 2 limited partnership company is not due until the date of the closing of argument in the court below, it cannot be deemed that the property of the non-party 2 limited partnership company cannot be fully paid out or compulsory execution against the property of the non-party 2 limited partnership company is not effective. As a result, it cannot be deemed that the non-party 1 is liable for the repayment against the plaintiff, and thus, it constitutes a case where the preserved claim against the fraudulent act was not established. The court below erred by misapprehending the legal principles as to the time of occurrence of liability of the general partner with unlimited liability and the preserved claim

The ground of appeal pointing this out is with merit.

4. Therefore, without examining the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)