Where the main sentence of Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name is applied to the registration of ownership transfer under the name of the debtor who is the title trustee is null and void, whether it constitutes a fraudulent act to conclude a sales contract with a third party on the said real estate and complete the

Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 406 of the Civil Act

Supreme Court Decision 2005Da54104 Decided December 27, 2007

Plaintiff (Law Firm Shinh, Attorneys Park Jong-chul et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm Chungcheong, Attorneys Hong-ho et al., Counsel for the defendant-appellant)

Seoul Central District Court Decision 2007Na29545 Decided May 16, 2008

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

If a debtor completes the registration of transfer of ownership in the name of a title trustee pursuant to the so-called middle omission registration type title trust or the third party title trust agreement, the main sentence of Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Act”) is applied to the registration of transfer of ownership in the name of the debtor. Since the above real estate is not owned by the debtor, it cannot be deemed as a debtor’s general obligees’ joint security. Even if the debtor concludes a sales contract with a third party on the above real estate and completed the registration of transfer of ownership, it cannot be deemed as causing a decrease in the debtor’s responsible property. Thus, it cannot be deemed as a fraudulent act detrimental to the debtor’s general creditors (see, e.g., Supreme Court Decisions 9Da55069, Mar. 10, 200; 2005Da54104, Dec. 27, 2007).

According to the reasoning of the judgment below and the records, on May 17, 2001, the defendant purchased the apartment in this case from the non-party 2 corporation that was not aware of the above title trust with the defendant's funds, and completed the registration of ownership transfer under the name of the non-party 1. After the non-party 1 became two houses for one household, it can be known that the defendant owned the ownership of the apartment in this case and completed the registration of ownership transfer under the name of the non-party 3 only in the name of the non-party 3, with the agreement between the defendant and the non-party 1 and the non-party 3 on June 12, 2002, but only in the name of the ownership, the non-party 1 acquired the ownership of the apartment in this case under the name of the non-party 3 and the non-party 1 acquired the ownership transfer registration under the name of the non-party 3 in this case. However, the non-party 1, who was the title trustee, bears an obligation to return the ownership transfer registration under the non-party 1 and the title trust.

Therefore, in light of the above legal principles, the registration of transfer of ownership in the name of Nonparty 3 is null and void pursuant to the main sentence of Article 4(2) of the Act, and the apartment of this case is not owned by Nonparty 3, and it cannot be deemed as a responsible property for the joint collateral of the general creditors of Nonparty 3. Therefore, even if Nonparty 3 completed the registration of transfer of ownership with respect to the apartment of this case, it cannot be deemed as causing the reduction of the liability property of Nonparty 3. Thus, it cannot be deemed as a fraudulent act detrimental to the general creditors of Nonparty 3.

On the premise that the title trust agreement between the defendant and the non-party 3 and the transfer registration of the non-party 3, which was completed based thereon, is valid, the court below erred in holding that the act of the non-party 3 completed the registration of ownership transfer on the apartment of this case to the defendant due to the performance of the existing obligation owed to the defendant and does not constitute a fraudulent act. However, the conclusion that the above non-party 3's act does not constitute a fraudulent act against the plaintiff who is the creditor is correct, and therefore, the argument in the grounds for

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.

Justices Jeon Soo-ahn (Presiding Justice)