[1] The subject matter of a trial by the court in the civil procedure and whether the principal facts that the party did not assert in the pleading can be used as the basis of the judgment (negative)

[2] In a case where Gap corporation's public interest corporation entered into a comprehensive discretionary investment contract with Eul corporation and deposited bank deposits, which are fundamental property, into a consignment transaction account in the name of Eul corporation that established Eul corporation, and Byung corporation's branch office Byung invested most of the money in ship-related fund and lost and suffered considerable damage to the principal amount of investment, the case holding that Gap corporation's act of joining the fund against Eul corporation was invalid as an act of disposal of basic property which did not obtain permission from the competent authority, and sought a return of unjust enrichment equivalent to the amount of the investment amount of the fund, the court held that Gap's assertion that the conclusion of the investment contract (purchase of beneficiary certificates) which is basic property of the public interest corporation is null and void is included in the assertion that the conclusion of the discretionary investment contract on basic property of the public interest corporation is null and void, and thus the above discretionary investment contract was null and void without obtaining permission from the competent authority under Article 11 (3) of the Act on the Establishment and Operation of Public Interest Corporations, which is a mandatory provision, and the judgment below

[1] Article 203 of the Civil Procedure Act / [2] Article 203 of the Civil Procedure Act, Article 11 (3) of the Act on the Establishment and Operation of Public Interest Corporations

[1] Supreme Court Decision 81Meu550 Decided April 27, 1982 (Gong1982, 557), Supreme Court Decision 201Da61646 Decided May 9, 2013

Seoul High Court Decision 201Na14488 decided May 2, 2012

Mez Comprehensive Financial Securities Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Lee Dong-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2014Na2006334 decided January 15, 2015

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

The grounds of appeal are examined.

1. Case overview

The record reveals the following facts.

A. The Plaintiff is a public interest corporation established pursuant to the Act on the Establishment and Operation of Public Interest Corporations (hereinafter “Public Interest Corporation Act”) on March 20, 2003 for the purpose of scholarship business. At the time of establishment, the Plaintiff’s fundamental property was KRW 500 million of time deposit deposited in one bank.

B. On May 28, 2003, the Plaintiff entered into a comprehensive discretionary investment contract with the Defendant (hereinafter “instant discretionary investment contract”) and deposited KRW 500 million in the consignment transaction account in the name of the Plaintiff established in the Defendant.

C. The Nonparty, who was the head of ○○○ Sports Association branch of the Defendant’s branch, has invested the said money in bonds with repurchase agreement, corporate bonds, funds, etc. in accordance with the instant discretionary investment contract and paid the Plaintiff revenues therefrom. However, on March 6, 2008, the Nonparty purchased the beneficiary certificates of KRW 480 million from the money entrusted by the Plaintiff (hereinafter “instant fund”). The instant fund is a structure that constructs, purchases, or rebuilds ships with the funds raised by investors, etc., and distributes profits therefrom to investors. The instant fund was unable to run a business originally scheduled due to the aggravation of shipping games, etc. following the global financial crisis around October 2008. On August 3, 2011, the assessed amount of the fund decreased as KRW 9 million.

2. Judgment of the first instance court

The Plaintiff filed the instant lawsuit seeking compensation against the Defendant. The cause of the instant lawsuit was the Plaintiff’s investment in the fund of this case, thereby incurring damages equivalent to KRW 480 million of the principal of the investment, which was incurred by the Nonparty, who was an employee of the Defendant, in violation of the suitability principle while recommending investment. As such, the Defendant is obligated to compensate the Plaintiff as the Nonparty’s employer or joint tortfeasor. The first instance court, without any explanation to the Plaintiff, has invested in the instant fund, which caused excessive risk in light of the Plaintiff’s investment purpose, investment experience, and degree of risk preference, etc. without any explanation, constitutes a tort against the Plaintiff. Accordingly, the Defendant partially accepted the Plaintiff’s claim on the ground that the Nonparty, as the Nonparty’s employer, was liable to compensate the Plaintiff for damages suffered by the Plaintiff due to the said tort.

3. The judgment of the court below

As to the judgment of the first instance, both the Plaintiff and the Defendant appealed. The Plaintiff added the claim for return of unjust enrichment at the lower court to the primary claim, and changed the initial claim for damages. The primary claim is that “The act of joining the Fund was null and void as an act of disposal of fundamental property which was not permitted by the competent authority, or based on the declaration of intent by deception. Therefore, without any legal cause, the Defendant is obligated to return it to the Plaintiff, since it was unjust for the amount of KRW 480 million invested in the Fund.”

With respect to the Plaintiff’s primary claim, the lower court deemed that the Plaintiff’s claim that the investment contract (purchase of beneficiary certificates of this case), which is the Plaintiff’s basic property, is null and void, included in the assertion that the conclusion of the instant discretionary investment contract with respect to the basic property, was null and void. Based on the foregoing factual basis, the lower court determined that the instant discretionary investment contract was null and void since it did not obtain permission from the competent authority in accordance with Article 11(3) of the Public Interest Corporation Act, which is a mandatory provision, in order for the Plaintiff to conclude a comprehensive discretionary investment contract with respect to the basic property. Ultimately, the lower court determined that the instant discretionary investment contract was null and void on the ground that the Defendant received KRW 50 million from the Plaintiff’s basic property, which is based on the instant discretionary investment contract, which is null and void from the Plaintiff, and thus, the Defendant was obligated to refund the remainder after deducting the money collected by the Plaintiff from the Defendant by the closing date of arguments in the lower court after concluding the instant discretionary investment

4. Judgment of the Supreme Court

Since the subject of a trial in civil procedure is specified and limited by the Plaintiff’s intent, the court shall determine the subject matter requested by the parties only within the scope of the application. In addition, the principal facts cannot be used as the basis of the judgment unless the parties assert any assertion in the pleading (see, e.g., Supreme Court Decisions 81Meu550, Apr. 27, 1982; 201Da61646, May 9, 2013).

According to the records, the plaintiff consistently asserted that "the purchase of beneficiary certificates of the fund of this case as the fundamental property of the plaintiff was null or void or cancelled since it added the claim for return of unjust enrichment at the court below to the principal claim, and consistently made the claim until the closing of argument in the court below, the defendant merely claimed the return of the plaintiff's amount of 480 million won invested in the fund of this case." It can be known that the contract of this case is null and void or the defendant alleged unjust enrichment of 500 million won deposited in the plaintiff under the above contract. In addition, since the purchase of beneficiary certificates of this case by the fund of this case as of March 6, 2008 is null and void or cancelled, the defendant returned the purchase price of the above beneficiary certificates as unjust enrichment." Thus, since the discretionary investment contract of this case as of May 28, 2005 is null and void, the defendant cannot be viewed as a separate claim for return of unjust enrichment of 50 million won deposited by the plaintiff."

If so, the court below erred by misapprehending the principle of disposition and the principle of pleading as stipulated in Article 203 of the Civil Procedure Act by rendering a judgment on the matters which the plaintiff did not file. The defendant's ground of appeal assigning this error is with merit.

5. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices

Justices Park Jung-hwa (Presiding Justice)