The person who exercises the right of set-off against the claims belonging to the trust property held by the trustee company under the Securities Investment Trust Business Act (=trustee company)

The trust property kept by a trust company under the Securities Investment Trust Business Act in trust with funds, etc. collected by investors from investors, shall be the owner of the trust company, and therefore, the set-off right with automatic bonds belonging to the trust property shall also be exercised by the trustee company, and in this case, it shall be the obligation borne by the trustee company, and such set-off shall be subject to restrictions under the relevant provisions of the Trust Act and the Securities Investment Trust Business Act. In accordance with the relevant provisions of the Securities Investment Trust Business Act, the trust company is responsible for managing and operating the trust property as a good manager, but the rights other than voting rights shall be exercised by the trustee company through the trustee company under the proviso of Article 25(1) of the same Act, so even in relation to the set-off right, the truster company may exercise the right of set-off against the trust company under the direction of the trustee company to the trustee company, or may not exercise the right of set-off against its own claims

Articles 17(4) and 25(1) of the Securities Investment Trust Business Act

The bankruptcy trustee of the bankrupt Dong Dong-ho Pisn Pis Co., Ltd. (Law Firm Han, Attorneys Sung-min et al., Counsel for the plaintiff-appellant)

Korea Investment Trust Securities Co., Ltd. (formerly: Pacific Law Firm, Attorneys Kim Sung-jin et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2000Na51478 delivered on June 27, 2001

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

The trust property kept by a trust company under the Securities Investment Trust Business Act in trust with funds, etc. collected by investors from investors, shall be the owner of the trust company, and therefore, the set-off right with automatic bonds belonging to the trust property shall also be exercised by the trustee company, and in this case, it shall be the obligation borne by the trustee company, and such set-off shall be subject to restrictions in accordance with the relevant provisions of the Trust Act and the Securities Investment Trust Business Act. In accordance with the relevant provisions of the Securities Investment Trust Business Act, the trust company is responsible for managing and operating the trust property as a good manager, but the rights other than voting rights shall be exercised by the trustee company through the trustee company under the proviso of Article 25(1) of the same Act. Therefore, even in relation to the set-off right, the truster company may exercise the set-off right by ordering the trustee company to the trustee company, but it may not exercise the set-off right with specific contents.

The decision of the court below that made the conclusion is correct, and there is no error in the misapprehension of legal principles as otherwise alleged in the ground of appeal.

Furthermore, in light of the purport of Article 20 of the Trust Act, which provides for the principle of independence of trust property or prohibition of offsetting against trust property, and Article 17 (4) of the Securities Investment Trust Business Act, the court below held that claims against beneficiaries of other trust property than the beneficiary's right to claim for redemption of beneficiary certificates, etc. against trust property in which the beneficiary joined, shall not be offset against each other. This decision is based on the assumption that the defendant, the truster company, can offset claims belonging to the trust property held by the trustee with automatic claims, and the legitimacy of this decision does not affect the conclusion of the judgment, as seen above, unless the defendant, the truster company, is unable to offset such claims. Accordingly, the grounds of appeal on this point cannot be accepted without the need to determine the legitimacy thereof

Therefore, the appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Ji-dam (Presiding Justice)