In cases where a title truster made a registration under the name of a title trustee pursuant to an invalid title trust agreement in violation of the Act on the Registration of Real Estate under Actual Titleholder’s Name, whether seeking cancellation of such registration against the title trustee is prohibited on the ground of illegal consideration under Article 746 of the Civil Act (negative), and whether the same applies to cases where the title truster made a title trust in order to avoid restrictions

[Majority Opinion] In full view of the language, content, structure, and legislative purpose, etc. of the provisions of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”), it cannot be readily concluded that the act constitutes illegal consideration as a matter of course solely on the ground that the real estate real name was registered under the name of the title trustee pursuant to an invalid title trust agreement in violation of the Real Estate Real Name Act. The same applies to the case where

① Under the premise that the ownership of real estate is attributed to the actual right holder, the Real Estate Real Name Act regulates title trust agreements and changes in real rights according thereto.

First, the Real Estate Real Name Act states that a title trust agreement (Article 4(1)) and any change in the real right (main sentence of Article 4(2)) with respect to real estate held by a registration under a title trust agreement are null and void. Even if a registration is made in the future of a title trustee pursuant to a title trust agreement, any change in the real right with respect to real estate does not take effect. This means that the real estate ownership remains in the title truster regardless of the registration, in the case of a registered title trust, the ownership of which is made from the title trustee pursuant to a title trust agreement. As a result, the title truster may request the title trustee

Article 4(3) of the Real Estate Real Name Act provides that a title trust agreement and the invalidity of any change in real rights pursuant thereto shall be “not effective against a third party.” This provision aims to protect a third party, and is premised on the title truster, who is entitled to file a claim for the implementation of the procedure for registration cancellation by asserting that the registration under the name of the title trustee is null and void. In other words, in the case of title trust, if the real estate ownership belongs to the title trustee, the third party is naturally entitled to acquire the right based on the ownership, and therefore, there is no need to establish a provision for protection of

Article 4 of the Real Estate Real Name Act (hereinafter “Real Estate Real Name Act”) is a provision that constitutes the basic framework of the Real Estate Real Name Act. Any interpretation that deviates from this can be allowed only on an exceptional basis, only when necessary to avoid unreasonable consequences.

Second, the Real Estate Real Name Act does not merely impose a penalty on a title truster who violates the obligation to register the real estate under the name of the actual right holder as a sanction on the violation itself (Article 5(1)1), but also imposes an obligation to register the real right to real estate under the name of the title truster without delay, and impose a non-performance penalty in addition to the penalty if such violation is committed (Article 6). The purpose of the non-performance penalty system is to remove the state of illegality and secure effectiveness of the Real Estate Real Name Act by indirectly compelling the title truster to take psychological pressure on the title truster to resolve the inconsistency between the name of the registration and the substantive legal relationship. The system of non-performance penalty also orders the title truster to restore the registration of the real estate under the name of the actual right holder, under the premise that the ownership of the real estate

② The legislator’s intent to enact the Real Estate Real Name Act is based on the premise that the ownership of real estate held in trust is attributed to the actual right holder.

At the time of the enactment of the Real Estate Real Name Act, various measures to be taken to effectively restrain title trust were discussed. The legislators enacted the Real Estate Real Name Act based on a legislative bill that vests the ownership of real estate held in trust to the title trustor, rather than the legislative bill that vests in the title trustee. There was a legislative proposal that amends the precedents that deemed that the ownership of real estate held in trust belongs to the title trustor, but this was not adopted among the title trustor and the title trustee. However, the reason was that there was a need to respect the long-standing practices formed on the basis of the general legal awareness of our society and transaction practices.

③ The application of the illegal consideration provision to title trust brings about unreasonable consequences contrary to the concept of justice with respect to the attribution of goods, as well as the attitude of judicial precedents and the provisions of the Real Estate Real Name Act.

In typical cases involving illegal consideration, such as delivery of money for the purpose of bribery or advance payment related to commercial sex acts, all members of our society are aware that the provider’s payment should be refused against good morals and other social order. In such a case, the court’s refusal to accept the claim for return also accords with the purpose of relevant legal norms. However, beyond imposing sanctions on the title truster pursuant to legal provisions, such as criminal punishment or imposition of penalty on the title truster, deprivation of the right to real estate from the title truster solely on the ground that title trust is prohibited under the Real Estate Real Name Act does not accord with the legal sentiment of the general public.

The proviso of Article 746 of the Civil Act provides that “if an illegal cause exists only on the part of the beneficiary,” the provider may demand the return of the property provided for illegal cause. This is because, even in cases where the provision on illegal consideration applies to a juristic act that violates good morals and other social order, if there exists an illegal cause only to the beneficiary, it would be contrary to the sense of legal justice that the provider does not protect the payer identical to the beneficiary. Furthermore, in cases where the illegality of the beneficiary is significantly larger than that of the provider, and thus, does not allow the provider’s claim for return is contrary to equity and good faith, the application of the main sentence of Article 746 of the Civil Act is excluded to grant the provider’s claim for return. This is the interpretation and application of Article 746 of the Civil Act

In order to determine whether a title trust registration, which is null and void due to a violation of the Real Estate Real Name Act, constitutes illegal consideration, the provisions of the Real Estate Real Name Act and its normative purpose should be considered. The legislators prescribe, on the premise that ownership of real estate held in trust belongs to the title trustor, the relationship between Articles 103 and 746 of the Civil Act is clearly resolved in the Real Estate Real Name Act itself. In light of such legislative structure, it is not desirable to distinguish whether title trust prohibited under the Real Estate Real Name Act is anti-social or anti-social and to distinguish whether to apply

(4) The property rights of all citizens shall be guaranteed, and the contents and limitations thereof shall be determined by Act (Article 23(1) of the Constitution of the Republic of Korea). The essential parts of the property rights of the title truster over the trusted real estate shall not be infringed, beyond those scheduled under the Real Estate Real Name Act, only with the purport of

If the Real Estate Real Name Act stipulates that only a title trust agreement is null and void, and any change in real rights pursuant thereto is valid, the right to real estate would always be naturally reverted to the title trustee, and the title truster would lose his/her right to the real estate. In such a case, the title truster should accept the direct deprivation of his/her own property, and therefore, is likely to infringe on the essential part of his/her property

⑤ There is no reason to determine differently whether the provision regarding illegal consideration is applied to a title trust to avoid restrictions under the Farmland Act.

Inasmuch as a disposition order under the Farmland Act, which is merely an administrative order, is not fulfilled, it cannot be readily concluded that such an act violates the mandatory law, and thus, the payment made for the purpose of evading the disposal order cannot be deemed illegal consideration solely on the ground that it does not constitute illegal

Considering the content of the Real Estate Real Name Act, the Farmland Act, the degree and method of imposing sanctions, etc., the illegality of the Real Estate Real Name Act is greater than that of the Farmland Act. As seen above, the registration of title trust completed pursuant to a title trust agreement in violation of the Real Estate Real Name Act cannot be deemed illegal consideration. Even if a title trust agreement was concluded in a manner of avoiding a disposal order under the Farmland Act, such as where a title trust agreement was made by means of avoiding a disposal order under the Farmland Act, the application of the provision of illegal consideration may not be determined differently solely on the ground that the act

[Dissenting Opinion by Justice Jo Hee-de, Justice Park Sang-ok, Justice Kim Seon-soo, and Justice Kim Yong-hwan] (A) Comprehensively taking into account the meaning of illegal consideration as stipulated in Article 746 of the Civil Act, the legislative process and purpose of the Real Estate Real Name Act, the perception of general public from the present society in view of title trust in our society, and the contents and limitations of property rights under the Constitution, in violation of the Real Estate Real Name Act, registration completed to the title trustee pursuant to an invalid title trust agreement

① In light of the changes in the age of normalization of real estate transactions and establishment of a real estate real name system, the importance of transparent asset transactions, and the perception of the general public in society as to the need to prevent title trust, which is an anti-social act abusing the real estate registration system, there is sufficient legal basis to determine that registration completed with the title trustee pursuant to an invalid title trust agreement constitutes illegal consideration.

② At the time of the enactment of the Real Estate Real Name Act, legislators had anticipated that the illegal consideration scheme would be applied to a title trust agreement prohibited under the Real Estate Real Name Act, and the title trustor would lose the right to real estate held in title trust.

③ The Real Estate Real Name Act requires that a real right to real estate be registered in the name of the actual right holder, and prohibits a title trust agreement, which is an act contrary thereto, and null and void the effect of any change in real rights. Nevertheless, in cases where a title trust agreement is made in violation of the Real Estate Real Name Act and the registration is completed accordingly, it is a matter to be separately determined in accordance with the requirements stipulated in Article 746 of the Civil Act, whether it is impossible for a title truster to file a claim for return of real estate held in title trust as illegal consideration. It is unreasonable to exclude the application of the illegal consideration scheme

④ Under the Real Estate Real Name Act, the penalty surcharge and the charge for compelling performance have been imposed in order to indirectly compel the title trustor to resolve the state of title trust in violation of the Real Estate Real Name Act, as in the enactment of the Real Estate Real Name Act, as well as the grace period for the existing title trustor was given. On the other hand, it cannot be interpreted that the title trustor was premised on the ownership of the real estate held in title trust to the actual right holder, or that it was intended to exclude the application

⑤ Even if the title truster loses his/her right to real estate held in title trust by affirming the application of the illegal consideration scheme, it cannot be deemed as an essential infringement of property right, as stipulated in the Constitution and Acts.

(B) If a title trust agreement was concluded with another person who became a title trustee under the title trust agreement in violation of the Real Estate Real Name Act and completed the registration of ownership transfer for the real estate held in title trust, such title trust agreement is null and void pursuant to Articles 3 and 4(1) of the Real Estate Real Name Act, and is a juristic act contrary to social order. The registration of ownership transfer under the title trustee’s name that was completed pursuant to such title trust agreement shall be deemed illegal consideration under Article 746 of the Civil Act, barring any special circumstance. Therefore, the title truster cannot file a claim against the title trustee for the return of the real estate held in title trust due to the invalidity of the title trust agreement, and the title truster cannot file a claim for the cancellation of the registration under the name of the title trustee, and may not claim the return

Article 23(1) of the Constitution of the Republic of Korea; Articles 103 and 746 of the Civil Act; Articles 1, 3, 4, 5(1)1, 6(1), and 7 of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Articles 8, 10, 11, and 59 subparag. 1 (see current Article 58 subparag. 1) and 62 of the former Farmland Act (Amended by Act No. 16073, Dec. 24, 2018);

Supreme Court Decision 9Do275 delivered on June 11, 1999 (Gong1995Sang, 618), Supreme Court Decision 2002Da373 Delivered on August 27, 2002, Supreme Court Decision 2003Da41722 Delivered on November 27, 2003 (Gong2004Sang, 199), Supreme Court Decision 2004Da2788, 27495 Delivered on September 3, 2004, Supreme Court Decision 207Hun-Ba205 Decided 207Hun-Ba, Supreme Court Decision 2004Da641637 Decided February 15, 207, Supreme Court Decision 2007Hun-Ba165 Delivered on September 27, 2004 (Gong204Ha, 1650).

Plaintiff (Law Firm Shin, Attorneys Yang Sung-soo et al., Counsel for plaintiff-appellant)

Defendant (Attorney Clinical-gu, Counsel for defendant-appellant)

Daejeon District Court Decision 2013Na102495 Decided November 26, 2013

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Issues;

The Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) defines as “title trust agreement” an agreement between a person having the real right to real estate and another person to hold or hold the real right to real estate internally and between him/her, and stipulates that the person having the actual right shall hold or hold the real right to real estate under his/her name (Article 2 subparag. 1), and declares that the title trust agreement and any change in the real right pursuant thereto are null and void (Article 4(1) and (2)).

The key issue of the instant case is whether the title truster’s seeking cancellation of the registration against the title trustee is prohibited on the ground of illegal consideration under Article 746 of the Civil Act, and whether the title truster’s offering of title trust in order to avoid restrictions under the Farmland Act, where the registration was made under the name of the title trustee in violation of an invalid title trust agreement.

2. Whether a title trust registration completed pursuant to an invalid title trust agreement in violation of the Real Estate Real Name Act constitutes illegal consideration

In full view of the language, content, structure, and legislative purpose of the provisions of the Real Estate Real Name Act, solely on the ground that a registration was made under the name of a title trustee pursuant to an invalid title trust agreement in violation of the Real Estate Real Name Act cannot be readily concluded as illegal consideration (see, e.g., Supreme Court Decision 2003Da41722, Nov. 27, 2003). The same applies to the case where a title trust was held in order to avoid restrictions under the Farmland Act as in the instant case

A. Under the premise that ownership of real estate is reverted to the person having the actual right, the Real Estate Real Name Act regulates title trust agreements and changes in real rights pursuant thereto.

First, the Real Estate Real Name Act stipulates that a title trust agreement (Article 4(1)) and any change in real rights (main sentence of Article 4(2)) with respect to real estate, made by a registration under a title trust agreement, are null and void. Even if a registration is made in the future of a title trustee pursuant to a title trust agreement, any change in real rights with respect to real estate does not take effect. This means that the ownership of real estate remains as it remains in the title truster regardless of the registration, in the case of a registered title trust, in which the ownership transfer is made from the title trustee pursuant to a title trust agreement to the title truster pursuant to the title trust agreement (see the proviso of Article 4(2) of the Real Estate Real Name Act, even if the title trustee becomes a party to the contract to acquire a real right to real estate and the other party is aware of the existence of a title trust agreement (see the opposite interpretation of the proviso of Article 4(2) of the Real Estate Real Name Act). The same applies to this case, which is premised on the fact that the real estate ownership belongs to the other party,

Article 4(3) of the Real Estate Real Name Act provides that a title trust agreement and the invalidity of any change in real rights pursuant thereto shall be “not effective against a third party.” This provision aims to protect a third party, and is premised on the title trustor’s right to file a claim for the implementation of the procedure for registration cancellation by asserting that the registration under the name of the title trustee is null and void. In contrast, in the case of title trust, if the real estate ownership belongs to the title trustee, the third party is naturally entitled to acquire a right based on the ownership, and thus, there is no need to establish a provision for protecting a third party under

Article 4 of the Real Estate Real Name Act (hereinafter “Real Estate Real Name Act”) is a provision that constitutes the basic framework of the Real Estate Real Name Act. Any interpretation that deviates from this can be allowed only on an exceptional basis, only when necessary to avoid unreasonable consequences.

Second, the Real Estate Real Name Act does not merely impose a penalty on a title truster who violates the obligation of registration under the name of the actual right holder as a sanction on the violation itself (Article 5(1)1), but rather imposes an obligation to register the real right to real estate under the name of the title truster without delay, and impose a non-performance penalty in addition to the penalty if the title truster violates this obligation (Article 6). The purpose of the non-performance penalty system is to remove the state of illegality and secure effectiveness of the Real Estate Real Name Act by indirectly compelling the title truster to take psychological pressure on the title truster to resolve the inconsistency between the title of registration and the substantive legal relationship (see, e.g., Supreme Court Decision 2014Du6456, Jun. 28, 2016). The non-performance penalty system also orders the title truster to restore the registration of the real estate held in trust under the premise that the ownership of the real estate held in trust belongs to the actual right holder.

B. The legislative intent of the legislators who enacted the Real Estate Real Name Act is premised on the fact that the ownership of real estate held in trust belongs to the actual right holder.

At the time of the enactment of the Real Estate Real Name Act, various measures to be taken to effectively restrain title trust were discussed. The legislators enacted the Real Estate Real Name Act based on a legislative bill that vests the ownership of real estate held in trust to the title trustor, rather than the legislative bill that vests in the title trustee. There was a legislative proposal that amends the precedents that deemed that the ownership of real estate held in trust belongs to the title trustor, but this was not adopted among the title trustor and the title trustee. The reason was that there was a need to respect the long-standing practices formed on the basis of our society’s general legal awareness and transaction practices.

C. The application of the illegal consideration provision to title trust brings an unreasonable result contrary to the concept of justice with respect to the attribution of goods, as well as the attitude of judicial precedents and the provisions of the Real Estate Real Name Act.

The provision on illegal consideration under Article 746 of the Civil Act is a special provision on the right to claim for return of unjust enrichment, and its purpose is to maintain the legal justice passively by refusing legal protection against the person who committed illegal consideration, namely, the person who filed the claim for return of unjust enrichment (see Supreme Court Decision 93Da5234 delivered on December 22, 1994).

Although there are differences in most cases where illegal consideration is dealt with, the illegal cause exists in both the provider and the beneficiary. There are circumstances in which it is difficult for the beneficiary to recognize the legitimacy of holding the payment between the parties concerned. Therefore, if the result of the application of the illegal consideration provision is contrary to substantive justice, the application of the illegal consideration provision should be avoided. The Supreme Court has maintained a strict interpretation of the concept of “illegalness” under Article 746 of the Civil Act, thereby uniformly applying the illegal consideration provision or expanding the scope of application without permission.

Money that was delivered to a third party for delivery of a bribe falls under illegal consideration and the ownership of money belongs to the beneficiary (see Supreme Court Decision 9Do275, Jun. 11, 199). In cases where a person engaged in sexual traffic has paid prepaid money as a means of inducing, inducing, or coercing sexual traffic while employing a person engaged in sexual traffic, the provision regarding illegal consideration applies and the claim for return of the prepaid payment is prohibited (see Supreme Court Decisions 2004Da27488, Sept. 3, 2004; 201Da65174, Jun. 14, 2013; 2011Da65174, Jun. 14, 2013). In a typical case pertaining to the delivery of money for the purpose of bribe offering or the prepaid payment related to sexual traffic, all members of our society are aware that the said person’s payment should be in violation of good customs and other social order, and in such a case, the court does not accept such claim for return from the title truster or the title truster’s right to criminal punishment.

The proviso of Article 746 of the Civil Act provides that “if an illegal cause exists only on the part of the beneficiary” means that the provider may demand the return of the property provided for an illegal cause even if the illegal cause exists. This is because, in cases where the provision on illegal consideration applies only to the beneficiary with respect to a juristic act that violates good morals and other social order, if there exists an illegal cause, it would be contrary to the sense of legal justice that the provider does not protect the payer as the same as the beneficiary. Furthermore, in cases where the illegality of the beneficiary is significantly larger than that of the provider, and the denial of the provider’s claim for the return is contrary to the equity and good faith principle, the provision of the main sentence of Article 746 of the Civil Act grants the provider’s claim for the return by excluding the application of the main sentence of Article 746 of the Civil Act (see, e.g., Supreme Court en banc Decision 2004Da50426, Feb.

A title trustee, even though he/she was aware that the act of lending his/her name for the title truster was prohibited by any Act, was an act prohibited by the Act, and the title trustee carried out a title trust agreement and cooperateed therein. As seen in this case, in the case of a title trust agreement with a view to evading a disposal order under the Farmland Act, the illegality of the title trustee as well as the title trustee is not small. The title trustee did not pay any consideration for acquiring the trusted real estate. Nevertheless, applying the illegal consideration provision to the title trust, thereby devolving the ownership of

In particular, in a case where farmland lease is null and void due to a violation of the former Farmland Act, and a lessor claims damages for illegal consideration on the ground that the lessee has no title during the lease period, the Supreme Court held that “an act causing payment may not only violate good morals and other social order in light of its content, nature, purpose, connection, etc., but also constitute a violation of good morals and other social order, such as anti-sociality, anti-competitive ethics, and morality, or a return of the act performed in violation of the mandatory law, even though the payment was made in violation of the mandatory law, etc.” (see, e.g., Supreme Court Decision 2013Da7987, 7987, 7994, Mar. 15, 2017). This shows that the application of Article 746 of the Civil Act can be limited in consideration of the normative purpose of the mandatory law subject to the violation even in a case where the violation of Article 103 of the Civil Act is committed.

In order to determine whether a title trust registration, which is null and void due to a violation of the Real Estate Real Name Act, constitutes illegal consideration, the provisions of the Real Estate Real Name Act and its normative purpose should be considered. The legislators stipulate, under the premise that ownership of real estate held in trust belongs to the title trustor, the relationship between Articles 103 and 746 of the Civil Act is clearly resolved in the Real Estate Real Name Act itself. In light of such legislative structure, it is unreasonable to consider whether title trust prohibited under the Real Estate Real Name Act is anti-social or non-social and to distinguish the application of illegal consideration.

D. All citizens’ property rights are guaranteed, and the contents and limitations thereof shall be determined by Act (Article 23(1) of the Constitution). The purport of prohibiting title trust is not less than what is stipulated in the Real Estate Real Name Act, but not less than what is stipulated in the Real Estate Real Name Act.

If the Real Estate Real Name Act stipulates that only a title trust agreement is null and void, and any change in real rights pursuant thereto is valid, the right to real estate would always be finally reverted to the title trustee, and the title truster would lose his/her right to such real estate. In such a case, the title truster must accept the result of his/her direct deprivation of property, and thus, is highly likely to infringe on the essential part of his/her property right. The same applies to the Constitutional Court’s reasoning that Article 4(1) and (2) of the Real Estate Real Name Act does not violate the Constitution (see, e.g., Constitutional Court en banc Decision 9Hun-Ga18, May 31, 200

The Real Estate Real Name Act opens a possibility that a title truster may fully recover ownership by invalidating both a title trust agreement and any change in real rights arising therefrom, and does not prohibit a title truster from exercising his/her right, such as recovery of registration, based on other legal relations, based on which the title truster is a party’s right to property and the achievement of the purpose pursued by the law (see, e.g., Supreme Court Decisions 2002Da373, Aug. 27, 2002; 9Hun-Ga18, May 31, 2001). It is the attitude of the Real Estate Real Name Act to regulate real estate title trust and to seek harmony between the guarantee of property rights under the Constitution.

E. There is no reason to determine differently the application of the illegal consideration provision on the ground that the title trust was conducted in order to avoid restrictions under the Farmland Act.

According to the Farmland Act, a person who intends to acquire farmland shall obtain the qualification certificate for acquisition of farmland issued by the head of the office where the farmland is located, and where it is found that farmland was owned with the qualification certificate for acquisition of farmland issued by fraudulent or other illegal means, imprisonment for not more than three years or a fine not exceeding 30 million won may be imposed, and the obligation to dispose of the relevant farmland arises. If a person fails to comply with the disposal order without justifiable grounds, charges for compelling the performance are imposed once a year. However, on the sole ground that the act did not comply with the disposal order under the Farmland Act, which is merely an administrative order, it cannot be readily concluded that the act violates the mandatory law,

In prohibiting title trust, the Real Estate Real Name Act prohibits a title truster who violates the obligation to register with the actual right holder, provides that the title truster may be punished by imprisonment for not more than five years or by a fine not exceeding 200 million won, by imprisonment for not more than three years, or by a fine not exceeding 100 million won, or by a fine not exceeding 30/100 of the value of the relevant real estate. In addition, the title truster may be punished by a penalty not exceeding 30/100 of the value of the relevant real estate, and the real right to the relevant real estate is not registered under his/her own name even upon the imposition of the penalty. As such, the maximum imprisonment and fines are higher than those imposed on a title truster who violates the obligation to register with the actual right holder under the Farmland Act. On the other hand, a person who violates the obligation to register with the actual right holder under the Real Estate Real Name Act may be punished by imprisonment, fine, penalty, or a fine not exceeding the enforcement fine not only

Considering such contents of the Real Estate Real Name Act, the Farmland Act’s regulatory provisions, and the degree and method of sanctions, etc., the illegality of the Real Estate Real Name Act is greater than that of the Farmland Act. As seen above, the registration of title trust completed pursuant to a title trust agreement in violation of the Real Estate Real Name Act cannot be deemed illegal consideration. In the instant case where a title trust agreement was made in violation of the Real Estate Real Name Act by evading a disposal order under the Farmland Act, the application of the provision on illegal consideration cannot be determined differently solely on the ground that there was a combination of a title trust agreement and a simple non-performance of

3. Consolidatedness of the lower judgment

The lower court determined that the registration of ownership transfer in the name of Nonparty 2, who completed the title trust agreement between Nonparty 1 and Nonparty 2 on the instant real estate, is null and void, and that the Defendant, who completed the registration of ownership transfer on the instant real estate due to the inheritance due to the agreement division, was liable to implement the registration procedure for ownership transfer on the instant real estate on the ground of the deceased Nonparty 1’s inheritance of the right to the instant real estate due to the title

The lower judgment is justifiable in light of the foregoing legal doctrine. In so doing, the lower court did not err by misapprehending the legal doctrine as to the reflectivity of a title trust agreement or illegal consideration in order to circumvent a disposal order under

4. Conclusion

The Defendant’s appeal is dismissed as it is without merit, 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, except for a dissenting opinion by Justice Jo Hee-de, Justice Park Sang-ok, Justice Kim Seon-soo, and Justice Kim Yong-hwan. There is a concurrence with the Majority by Justice Kim Jae-hyung and a concurrence with the Dissent by Justice

5. Dissenting Opinion by Justice Jo Hee-de, Justice Park Sang-ok, Justice Kim Ri-soo, and Justice Kim Jong-hwan

A. Judicial decision is necessary to eradicate real estate title trust.

The Joseon Real Estate Registration Decree enacted in 1912, which was enacted in 1912, made registration of the right to real estate owned by a clan in the name of a clan inevitably impossible, and it was the beginning time to register the right to real estate owned by a clan in the name of a clan, and recognized the validity by the judgment of the Joseon High Court and the subsequent Supreme Court precedents, and used widely among the clans as well as the general public. However, the title trust not only conflicts with the establishment requirements principle, which is the foundation of the real estate legislation adopted by the Civil Act of Korea, but also has been abused or abused as a means of evasion of laws that avoid regulation of real estate speculation or tax liability, along with the intermediate omission

In the Real Estate Registration Special Measures Act, enacted on August 1, 1990, the cases of title trust are largely divided into two cases where title trust is conducted; prohibition is made in the case of title trust for the purpose of evading tax imposition, etc.; prohibition is made in the case of registration under a title trust agreement due to other reasons (Articles 7, 8, and 9). However, even if a title trust agreement is in violation of the aforementioned Act, it does not deny the validity of the said judicial legal act; thus, there was no effective means to impose sanctions on title trust in the event of the violation (Article 7, 8, and 9). The title truster was able to recover the right to the real estate held in title trust by entering into a title trust agreement, and thus, there was inducement to enter into a title trust agreement notwithstanding the risk of sanctions, such as criminal punishment.

From the reflective consideration of this, the Real Estate Real Name Act was enacted on March 30, 1995, and the above Act deemed the title trust on real estate as an anti-social act, and thus, the title trust agreement and the effect of any change in real rights pursuant thereto was null and void (Article 1, Article 4(1) and the main text of Article 4(2)).

However, even after the Real Estate Real Name Act that provides for a title trust agreement as null and void, the court accepted most of the rights of the title truster to claim the return of the title truster’s real estate held in title trust, and punished the title trustee who arbitrarily disposed of the real estate held in title trust as embezzlement. As a result, the title truster was aware that there was no legal obstacle to restoring the right to the real estate held in title trust, the registration was completed to the title trustee. Meanwhile, the existence of the title trust agreement is not easy unless the title trustee cooperates with the other party to the title trust agreement. Accordingly, the Real Estate Real Name Act is a sanction against the offender, and the title trust agreement still runs, notwithstanding the fact that the title trust agreement still

Even though the validity of title trust has been recognized by judicial precedents for more than 80 years, the legislators enacted the Real Estate Real Name Act and declared that the validity of title trust was null and void is because the harm caused by title trust was extremely serious and the need for normalization of real estate transactions by eradicating this is imminent. If the Supreme Court en banc Decision re-renders a judgment that registration completed to a title trustee pursuant to an invalid title trust agreement does not constitute illegal consideration, the eradicating of real estate title trust will become a human resource. This does not seem to be the intention and objective of the legislators who enacted the Real Estate Real Name Act that stipulates that the title trust agreement is null and void before 20 years, notwithstanding the long-term practice. It is time when legislative measures are needed to effectively eradicate real estate title trust.

B. Title trust in violation of the Real Estate Real Name Act constitutes illegal consideration.

In full view of the meaning of illegal consideration prescribed in Article 746 of the Civil Act, the legislative process and purpose of the Real Estate Real Name Act, the perception of the general public on the title trust in our society, and the contents and limitations of property rights under the Constitution, a registration completed to a title trustee pursuant to an invalid title trust agreement in violation of the Real Estate Real Name Act shall be deemed illegal consideration, barring any special circumstance. Specific reasons are

(1) “Unlawful” in illegal consideration refers to an act contrary to good morals and other social order. At present, title trust in violation of the Real Estate Real Name Act is a juristic act contrary to social order, and accordingly, registration in the name of the title trustee that is completed constitutes illegal consideration may be deemed to have been formed by the general public.

The main text of Article 746 of the Civil Act provides, “If a person provides property or labor for an illegal cause, he/she shall not demand the return of such benefit.” Here, “illegal cause” refers to a case where an act which is the cause violates good morals and other social order (see Supreme Court Decision 83Da430, Nov. 22, 1983). In such a case, “a juristic act contrary to social order” (i.e., the specific content of a juristic act contrary to social order is not a fixed change, but may vary depending on the time and place, and should be determined in accordance with the sound, fair, and reasonable concept of our society.

The purpose of the Real Estate Real Name Act is to contribute to the sound development of the national economy by preventing anti-social acts, such as speculation, evasion of taxes, evasion of laws, etc. which abuse the real estate registration system, the normalization of real estate transactions, and the stabilization of real estate prices, by having the ownership and other real rights to real estate registered under the name of the actual right holder so as to coincide with the substantive legal relationship (Article 1). In order to achieve this purpose, this Act, except for special cases for clans, spouse, and religious organizations (Article 8), prescribes that any person shall not register any real right to real estate in the name of the title trustee pursuant to the title trust agreement (Article 3(1)), and that any change in real rights to real estate held by a title trust agreement and any registration made pursuant thereto shall be null and void (Article 4(1) and (2) main sentence). In other words, the Real Estate Real Name Act explicitly declares that any title trust agreement that is not

On December 31, 1997, after the enactment of the Real Estate Real Name Act, the Act on Real Name Financial Transactions and Confidentiality (hereinafter “Real Name Financial Transactions Act”) was enacted and implemented, a financial transaction under a real name was conducted. Even after the enforcement of the Act on Real Name Financial Transactions and Confidentiality, the law and illegal acts, such as creating various funds, raising unsound funds, evading taxes, etc. using a deposit account in another person’s name, continued, but the Supreme Court held that the deposit contract title holder who registered a real name verification shall be deemed to have expressed his/her intent to enter into a deposit contract with a financial institution, barring any special circumstances, after the implementation of the Act on Real Name Financial Transactions and Confidentiality, and that the financial transaction shall be treated regularly and rapidly and the transparent financial transaction need to be conducted in order to normalize the financial transaction (see Supreme Court en banc Decision 2008Da45828, Mar. 19, 2009).

The principle that transactions should be conducted in the name of the actual right holder should be established not only in financial transactions but also in real estate transactions. Considering the following circumstances: (a) the supply of land cannot be increased due to the increase in demand for land characteristics; and (b) the strong desire for our people’s land arising from family-based agriculture society, which has become a highly industrial society, tend to be used as a means to increase the price of land; and (c) the need to establish the real name system in real estate transactions is greater.

At the time of the enactment of the Real Estate Real Name Act, the title trust was established as a lawful juristic act by the previous precedents, and it was not possible to take into account the transaction behavior and trust of the general public formed on the basis thereof. Therefore, the application of the illegal consideration scheme to a title truster’s claim seeking recovery of the right to real estate held in title trust by seeking cancellation of registration, etc. under the name of the title trustee was difficult to accept in light of the general public’s legal sentiment.

However, more than 20 years have passed since the Real Estate Real Name Act, which prohibits title trust and imposes criminal punishment for the violation, was enacted, and the perception that the general public view of title trust in our society has been significantly different from that of the general public at the time of the enactment of the Real Estate Real Name Act. Real Estate Real Name System was established in a single social order among the general public, and as the perception of the general public was formed in a way that respects transparency in property transactions, the title trust in violation of the Real Estate Real Name Act was formed in a way that respects transparency in property transactions.

In light of the changes in the age of normalization of real estate transactions and establishment of a real estate real name system, the importance of transparent asset transactions, and the awareness of the general public in society, which is currently formed regarding the need to prevent title trust, which is an anti-social act abusing the real estate registration system, there is sufficient legal basis to determine that registration completed with the title trustee pursuant to an invalid title trust agreement constitutes illegal consideration.

(2) At the time of the enactment of the Real Estate Real Name Act, the legislators had anticipated that the title trustor may lose the right to real estate held in title trust by applying the illegal consideration scheme with respect to the title trust agreement prohibited under the Real Estate Real Name Act.

After the enactment of the Real Estate Real Name Act, the Ministry of Finance and Economy published on April 1995, the Ministry of Finance and Economy, which is the competent authority, revealed the matters discussed in the legislative proposal process, and stated as follows: “In the case where the court deems that title trust was illegal and decides as illegal consideration, the ownership is not recovered, thereby making it substantially difficult for the title trustor to recover his/her property right, thereby ensuring the effectiveness of the prohibition of title trust.” In light of the above, the legislators at the time did not exclude the possibility of applying the illegal consideration scheme.

In short, the legislators did not adopt a uniform method that stipulates that the ownership of real estate held in title trust belongs to the title trustee, and the courts affirmed the application of the illegal consideration scheme in specific cases and did not intend to block the possibility of determining that the ownership belongs to the title trustee.

(3) The Real Estate Real Name Act provides that a title trust agreement and any change in real rights pursuant thereto shall be null and void from the reflective consideration that the previous Real Estate Registration Special Measures Act was effective to effectively restrain title trust by deeming the judicial effect of a title trust agreement to be valid. The Real Estate Real Name Act stipulates that a title trust agreement is null and void, and that whether a registration made pursuant to an invalid title trust agreement is recognized as illegal consideration is a matter of difference in the structure or theoretical aspect of

Article 4(2) of the Real Estate Real Name Act, which stipulates that a title trust agreement is null and void under our legal system without recognizing the identity and uniqueness of real rights, is natural to deem that any change in real rights pursuant to the title trust agreement becomes null and void. In a number of cases where a certain legal act is null and void, the Supreme Court has denied the return of benefits granted pursuant to an invalid legal act by applying the illegal consideration scheme. The same applies to cases where a representative prohibits a claim for return of prepaid payments paid in connection with commercial sex acts. Article 10 of the Act on the Punishment of Acts of Arranging Sexual Traffic provides that a claim against a person who has engaged in sexual traffic or a person who employs a person who has engaged in sexual traffic in relation to the act of arranging commercial sex acts shall be null and void regardless of the form or name of the relevant contract. Nevertheless, in cases where the Supreme Court paid the prepaid payment by means of inducing, soliciting, or coercion sexual traffic while employing a person engaging in commercial sex acts, the Supreme Court prohibits the claim for return of the illegal consideration scheme from applying the illegal consideration scheme (see, e.g., Supreme Court Decision 20048Da27414.

The Real Estate Real Name Act requires that a real right to real estate be registered in the name of the actual right holder, and prohibits a title trust agreement, which is an act contrary thereto, and null and void the effect of any change in real rights. Nevertheless, in a case where a title trust agreement is made in violation of the Real Estate Real Name Act and the registration is completed accordingly, it is a matter to be separately determined in accordance with the requirements prescribed in Article 746 of the Civil Act, whether it is impossible for a title truster to file a claim for return of real estate held in title trust as illegal consideration. It is unreasonable to exclude the application of the illegal consideration scheme

(4) Under the Real Estate Real Name Act, the penalty surcharge and the charge for compelling performance have been imposed in order to indirectly compel the title truster to resolve the title trust status in violation of the Real Estate Real Name Act, as well as the grace period for the existing title truster in enacting the Real Estate Real Name Act. On the contrary, it cannot be interpreted that the title truster was premised on the ownership of the real estate held in title trust to the actual right holder, or that he/she had tried to exclude the application of the illegal consideration scheme. Determination of the application of the illegal consideration scheme on the grounds of penalty surcharge and the charge for compelling performance

(5) Even if the title truster loses his/her right to real estate held in title trust by affirming the application of the illegal consideration scheme, this cannot be deemed as an essential infringement of property rights, as it is stipulated in the Constitution and laws.

According to the Constitution, all citizens’ property rights are guaranteed, but the contents and limitations of the Act may be determined by law (Article 23(1)); the exercise of property rights shall conform to public welfare (Article 23(2)); and the State may impose necessary restrictions and obligations with respect to land, as prescribed by Act, for the efficient and balanced utilization, development and preservation of the national land (Article 122). Unlike other property rights, it is necessary to reflect the interests of the community more strongly. Thus, at least the title trust on real estate is directly connected with the public order of the State and society and the general interest. The title trustor, who concluded a title trust agreement in violation of the Real Estate Real Name Act and made the title trustee complete the registration on the title trust real estate in violation of the Real Estate Real Name Act, should be accepted even if the illegal consideration provision under Article 746 of the Civil Act is applied to the title trust real estate to the title trustee so that the ownership of the title trust real estate is lost. This is a result of the intrinsic infringement of property rights under Article 746 of the Real Estate Real Name Act.

C. A title truster’s claim for return of real estate held in title trust is not permissible.

If a title trust agreement was concluded with another person in violation of the Real Estate Real Name Act and completed the registration of ownership transfer on real estate held in title trust with another person who became the title trustee pursuant thereto, such title trust agreement is null and void pursuant to Articles 3 and 4(1) of the Real Estate Real Name Act, and is a juristic act contrary to social order as well as illegal consideration under Article 746 of the Civil Act, barring any special circumstance. Therefore, the title truster cannot claim against the title trustee for the return of real estate held in title trust due to the invalidity of the title trust agreement, and the title truster cannot claim for the cancellation of the registration under the name of the title trustee by asserting the ownership of real estate held in title trust, and cannot claim the return of real estate held in title trust by claiming the implementation of the procedures for ownership transfer registration based on the

D. This is the length of the judiciary to fulfill its responsibility to correct social order.

In our society, the first precedents recognized the validity of real estate title trust among the general public. The Speaker’s Civil Act, which was in force at the time when the Joseon High Court recognized the validity of real estate title trust, was governed by the principle of intent as to any change in real rights. However, the Civil Act enacted on February 22, 1958 and enforced on January 1, 1960, selected the requirement for establishment as to any change in real rights. The Supreme Court, supra, should have reviewed the fundamental issue of real estate title trust. However, even though the Real Estate Real Name Act, which provides that real estate title trust agreement should be null and void as anti-social acts, was enacted and implemented, the Supreme Court, even after the enactment and enforcement of the Real Estate Real Name Act, determined that the remaining title trustee’s registration completed on real estate title trust, such as the protection of rights of the title truster, cannot be deemed illegal consideration, even if there is no inconvenience in the establishment of the Real Estate Real Estate Real Name Trust Act prior to the enactment of the Real Estate Real Estate Real Name Trust Act, and even if there is no reason for the Supreme Court to eliminate the judicial system.

In our society, the real estate real-name system and the financial real-name system play a very important role in achieving the sound development of the national economy and creating a transparent society by seeking the normalization of real estate transactions and financial transactions. The legislative measures, such as the enactment and implementation of the Real Estate Real Name Act and the Financial Real Name Act, were supported. The Supreme Court, in response to this request, has contributed to the establishment of the financial real-name system by determining that the contracting party to the deposit contract is the title-holder, barring any special circumstances. On the other hand, the real-name system was not so,

Even if the Real Estate Real Name Act considers the title trust as an anti-social act and provides for criminal punishment, if the title trust is not eradicated, the judiciary should be deemed to have a legal basis for determining it as illegal consideration. This is also confirmed in legislative materials. Although the need to eradicate the title trust exists, there is a view that it is possible only through a new legislation rather than the current Civil Act and the Real Estate Real Name Act. However, it is reasonable for the judiciary to determine whether the benefits arising from an invalid juristic act constitutes illegal consideration under Article 746 of the Civil Act, rather than by law. Even if there is a method to rectify the adverse effects of the title trust of real estate in our society, it is difficult for the National Assembly to see that there was a significant change in the real estate title trust and real estate property social order in our society, as long as the Real Estate Real Name Act was enacted and enforced for 20 years, it is reasonable to view that the benefits arising from the invalid juristic act constituted illegal consideration.

With respect to the application of the illegal consideration scheme prescribed by the Civil Act, all illegal acts are not to be completely eradicated. It is more so more so if an illegal act is possible only with an agreement between the parties violating the Act. If the law enacted a prohibition norm to achieve a legitimate purpose and enacted a penal provision, the judiciary should not neglect efforts to eradicate the illegal act through the possible means prescribed by the Constitution and the Act against the parties violating the Act. As long as it is possible to punish the title trustor in violation of the Real Estate Real Name Act by applying the illegal consideration scheme prescribed by the Civil Act, and such a measure is an effective means to achieve the purpose of the Real Estate Real Name Act, there is no reason to apply the illegal consideration

The illegal consideration scheme stipulated in Article 746 of the Civil Act makes it impossible for the title truster to recover his/her right to real estate held in title trust via the illegal consideration scheme, is the most strong and effective means that can be presented under the current legislative system to eradicate the title trust. If the title truster is likely to permanently lose his/her right to real estate held in title trust if the title truster is defeasible and does not cooperate with the title truster, then the inducement to enter into the title trust agreement would be significantly decreased at the risk of such risk.

The Real Estate Real Name Act (hereinafter “Real Estate Real Name Act”) set a grace period of one year for the title trustor who had the title trustee complete the registration in accordance with the existing title trust agreement, and during that grace period, recognized the existing title trust agreement as valid, and stipulated that the real estate real-name registration or the sale of real-name registration be made (Article 11). Notwithstanding the provisions of the said grace period, the title truster who violated the Real Estate Real Name Act (hereinafter “Real Estate Real Name Act”) has not restored the registration completed in accordance with the existing title trust agreement until the lapse of 20 years, or has concluded a title trust agreement prohibited by the Real Estate Real Name Act (hereinafter “Real Estate Real Name Act”) after the enforcement of the Real Estate Real Name Act and completed the registration to the title trustee accordingly. Even if the Supreme Court recognizes the title trustee’s registration as illegal consideration and thereby causes any disadvantage, this is not a case where the title truster’s property right is in essence infringed. Even if there is room for infringement of the title truster’s property right, it should be deemed inevitable to contribute to the sound development of the real estate and establish social order.

If the infringement of property rights under the Constitution is anticipated to be genuine, the application of the illegal consideration scheme to a title trust agreement in violation of the Real Estate Real Name Act reflects the change in the perception of the general public in relation to title trust in violation of the Real Estate Real Name Act. As such, it is also possible to restrict the retroactive effect of a change in precedents, such as applying such new legal doctrine only when the registration under a title trust agreement has been completed after the issuance of the en banc Decision in this case. If the title trustor’s trust in the existing precedents that have been formed after the enactment of the Real Estate Real Name Act is protected through such a method, the concern about

E. We examine whether the lower judgment regarding the instant case was justifiable in accordance with the foregoing legal doctrine.

(1) The lower court determined that, solely on the ground that the instant title trust agreement was concluded to avoid a farmland disposal order under the Farmland Act, the registration made in Nonparty 2 pursuant to an invalid title trust agreement in violation of the Real Estate Real Name Act does not constitute illegal consideration. Therefore, since the registration of ownership transfer made in the title trust agreement between Nonparty 1 and Nonparty 2 with respect to the instant real estate is null and void, the Defendant, who completed the registration of ownership transfer on the instant real estate due to the inheritance by agreement division following the death of Nonparty 2, was obliged to implement the registration procedure for ownership transfer on the instant real estate on the ground that the deceased Nonparty 1 succeeded to the right to the instant real estate by agreement division.

(2) However, the instant title trust agreement was concluded in violation of the Real Estate Real Name Act and thus null and void. The ownership transfer registration in Nonparty 2, which completed the instant land in accordance with the said title trust agreement, constitutes illegal consideration. The Plaintiff did not prove any special circumstance that the ownership transfer registration in Nonparty 2 pursuant to the instant title trust agreement did not constitute illegal consideration. Therefore, the Plaintiff, who inherited Nonparty 1’s right, may not file a claim for return of the title trust real estate by means of seeking the implementation of the ownership transfer registration procedure based on the ownership transfer registration procedure for the instant land due to the inheritance due to the division, upon the death of Nonparty 2.

(3) Nevertheless, the lower court determined that the transfer registration of ownership in Nonparty 2 did not constitute illegal consideration and received the Plaintiff’s claim in this case. In so determining, the lower court erred by misapprehending the legal doctrine on the title trust agreement and illegal consideration invalidated under the Real Estate Real Name Act, thereby adversely affecting the conclusion of the judgment.

For the foregoing reasons, we express our concurrence with the Majority Opinion.

6. Concurrence with the Majority by Justice Kim Jae-hyung

I would like to supplement the majority opinion from the perspective of the distinction between legislation and jurisdiction.

A. The Constitution provides that “The legal officer shall judge independently in accordance with his conscience and in accordance with the Constitution and laws,” and that judges shall be bound by the Constitution and laws (Article 103). However, a judge cannot exclude the application of a law in a trial because he/she himself/herself judges that the law is unconstitutional, and the Constitutional Court has the authority to propose a trial on the constitutionality of a law in a case where there is a reasonable doubt that the law, which is the premise of a trial, is in violation of the Constitution (Article 107(1) of the

The judicial power belongs to a court comprised of judges (Article 101(1) of the Constitution), and the judicial power includes the authority to interpret the law applicable to trials. Judges shall independently judge according to their conscience, but the authority to interpret the law is not unlimited. The starting point of statutory interpretation is the language and text of the law. The interpretation of the law is, in principle, faithfully interpret the ordinary meaning of the language and text. Furthermore, the interpretation of the law is based on the principle, and furthermore, should be the most reasonable interpretation that is compatible with the specific case by additionally using the systematic and logical interpretation method that takes into account the legislative intent and purpose, history of enactment and amendment, harmony with the entire legal order, relationship with other Acts and subordinate statutes, etc. However, if the text and text of the law consists of relatively clear concepts, in principle, other interpretation methods are not necessary or limited (see Supreme Court Decision 2006Da81035, Apr. 23, 2009).

The legislators have broad legislative formation rights within the limits permitted by the Constitution. Interpretation of statutes by a judge in the direction to respect the legislative formation right accords with the principle of separation of powers and the principle of the rule of law under the Constitution. Therefore, a judge should not distort, distort, or substitute the legislative intent expressed in a law through statutory interpretation, and pay attention not to exceed the limits in accordance with the meaning of language and the purpose

As to matters that are not prescribed by law, it is permissible for a judge to supplement the gap in law by analogying the provisions that regulate matters similar thereto. This means not only finding out the possible meaning of the text through interpretation, but also creating a law that requires a judge to intermediate other legal norms. However, it is not permissible for a judge to form the law at any time on the grounds that there is no explicit provision in the law. “Deficiency or gap in the law” which is allowed to establish the law refers to a gap in the regulations that the legislators did not intend; “application for delay” refers to a gap in the regulations that the legislators did not intend; and “application for delay” refers to a lack of necessary legal regulations because the legislators did not recognize the situation of such problem; and if a rational legislators, it means that the similar provision in the neighboring area was applied in the manner of applying the same provision as the similar provision in the neighboring area to the situation (see Supreme Court en banc Decision 2012Da74236, Mar. 22, 2018).

In all cases where it is considered that legislation is ex post facto unreasonable, the court may not change it through a judgment. In a case where the legislators clearly aware of and explicitly regulate a certain problem situation, a judge may not present a “legal gap” where a judge can supplement a defect through the formation of the law. If the legal discipline proposed by the legislators significantly go against the concept of social justice, and is extremely unfair and constitutional interpretation, and if it is doubtful that the unconstitutionality is not all removed, a judge should make a request for adjudication on the unconstitutionality of a law, and should not distort, modify or substitute the decision of the legislators under the pretext of statutory interpretation or statutory formation.

In short, the legal formation of a judge shall not go beyond the legislative intent clearly recognizable by the legislators, and the so-called judicial decision may not substitute for the legislative decision. If a judge does not make a constitutional interpretation to realize fundamental rights guaranteed by the Constitution, it must be avoided. In particular, if the text of a law is clear and the legislative intent expressed in the legislative process conforms to the text of a law, the judicial branch must respect the legislative intent expressed in the law. To overcome the legislative limit by the judicial process, it must only be done within the framework of the Constitution and the law, and to contribute to the development of the law by interpreting and applying the law to the extent appropriate.

B. Whether there exists any legislative decision shall be determined in consideration of the language, content, and system of the law as well as the legislative intent and purpose expressed in the legislative process. As seen in the Majority Opinion, the Real Estate Real Name Act appears to be clear that the ownership of real estate held in trust belongs to the title trustor in its language and structure, and it is also clearly known in the legislative process that this conforms to the legislative intent.

On January 27, 1995, the government pre-announcementd the "Act on the Registration of Real Estate under Actual Owner's Name". Under this Act, a title trust agreement is null and void (Article 4(1)). Accordingly, there was no effect of any change in real rights to real estate between the title holder of the immediately preceding registration and the title trustee (Article 4(2) main text). Various discussions have been held in the "Public Hearing on Real Estate Real Name" which was held to gather opinions on the draft pre-announcement of legislation on February 8, 1995.

The National Assembly submitted to the National Assembly a legislative bill (No. 141034) containing the same contents as the pre-announcement of legislation and a title trust agreement only becomes null and void, and accordingly, “the legislative bill (No. 141049) on the regulation on title trust of real estate takes effect according to the “registration made between the registrant and the title trustee.” As a result of the deliberation, as an alternative to a somewhat modify the legislative bill to be submitted, “the legislative bill on the registration of real estate under the name of the actual right holder (No. 141057)” which all invalidates a title trust agreement and any change in real rights, was finalized and decided by the Provisional Assembly on March 18, 1995, and enacted the Real Estate Real Name Act. For that reason, if a real right to real estate under title trust is a title trustee, the title trust may be eradicated and legal relations may be clarified, but it was unconstitutional in relation to the provision on the guarantee of private property rights and the prohibition of deprivation of property rights by retroactive legislation (see the Legislation Committee’s minutes No. 133th meeting minutes of March 17, 194, 193).

On April 195, immediately after the enactment of the Real Estate Real Name Act, the Ministry of Finance and Economy, which is the competent authority, provides for the following explanation: “The title truster and the title trustee may be deemed to have a certain agreement on the substantive truth regarding the ownership of real estate held in a trust, irrespective of the terms of the contract and the form of registration.” If the title truster and the title trustee deny it as the mandatory law and respect only the registration appearance, and prescribe that the real estate held in a trust is owned by the title trustee, it is highly likely to be unconstitutional as an infringement on the essential part of the property right. Moreover, deeming the title truster who becomes the contracting party after the payment of the purchase

As can be seen, the legislators enacted the Real Estate Real Name Act for the purpose of prohibiting title trust, and concluded that ownership of real estate held in trust belongs to the title trustor, and would follow the existing legal principles of judicial precedents that deemed that the ownership of real estate held in trust belongs to the title trustor. The Dissenting Opinion cited the part that the illegal consideration may be applied in the case of real estate title trust, but this merely refers to a supplementary reference and does not interfere with the understanding of the legislative intent as above.

C. Whether to apply the provision on illegal consideration to a matter that does not expressly provided for in the law is sufficient to be determined by the interpretation of Article 746 of the Civil Act. However, given that the Real Estate Real Name Act provides for the provision on the ownership of real estate held in title trust, this provision ought to be considered in determining whether to apply the provision on illegal consideration. In other words, when determining whether a title trust registration constitutes illegal consideration, the pertinent provision of the Real Estate Real Name Act should be closely observed and the application of the provision on illegal consideration ought to be taken into account in compliance with the legislative intent and purpose of the Real Estate Real Name Act, so that the legislators’ decision that enacted the Real Estate Real Name Act may not be damaged. Furthermore, as seen in the Majority Opinion, construing that the ownership of real estate held in trust belongs to the title trustor in accordance with the language and text of the Real Estate Real Name Act clearly prescribed, ought not be deemed to be in violation of the Constitution or contravenes the concept of social justice. Accordingly, the judiciary that construed and applied the law ought to respect the basic decision of the legislator. Although the Real Estate Real Name Act provides administrative sanction to recover registration in its name.

The Dissenting Opinion criticizes the existing Supreme Court precedents that recognized the validity of title trust even after the enforcement of the current Civil Act, and argues that the judicial precedents should be modified to correct the errors of the judiciary. However, the judicial decision on real estate title trust after the enforcement of the Real Estate Real Name Act ought to start from this Act. The existing precedents that deemed the validity of real estate title trust should no longer be meaningful, except in cases where exceptions are recognized by this Act. Likewise, as in this Act, whether to apply the illegal consideration provision to real estate title trust ought to be determined by considering the meaning and purpose of this Act. Even if a judge considers it reasonable, a method explicitly contrary to the Real Estate Real Name Act currently being implemented cannot be selected.

D. The limitations or deficiencies of the Real Estate Real Name Act were pointed out in the process of the instant public pleading and trial. Many citizens share awareness of real estate title trust and need to improve the title trust system. The Majority Opinion does not oppose the necessity of legislative improvement. However, the Majority Opinion clearly points out that applying the illegal consideration provision against the legislative decision and the language and text of the Real Estate Real Name Act for the sole purpose of eradicating title trust goes beyond the bounds of the judiciary.

Legislative resolution is the most effective way among various measures to solve title trust, but it has the advantage of choosing various methods that do not infringe the principle of property rights guarantee under the Constitution. The Dissenting Opinion refers to a lot of controversy that the Supreme Court may limit the retroactive effect of the change of precedents through the en banc Decision as an alternative. However, this problem can be treated as a simple transitional provision if it is resolved by legislation.

It is a matter that is difficult for the court to determine at any time and at any time. However, it is not easy for the court to resolve all the problems of our society. If it is intended to resolve the problem to be resolved by legislation with the judiciary, the function of the legislation and the judiciary are mixed with the function of the judiciary, and ultimately, it may cause incompetence to the law. In determining whether invalid title trust registration in violation of the Real Estate Real Name Act is illegal consideration, construing it in accordance with the language and structure of the Real Estate Real Name Act, consistent with the legislative intent, would ultimately contribute to the development of legal culture and maturity.

For the foregoing reasons, I would like to supplement the reasoning of the Majority Opinion.

7. Concurrence with the Dissenting Opinion by Justice Jo Hee-de and Justice Park Sang-ok

A. Regarding the issues of real estate title trust and measures to eradicate such issues

(1) Whether real estate title trust is a problem of why is why it is.

Article 186 of the Civil Act provides that the acquisition and loss of real rights due to a juristic act on real estate shall take effect only with the declaration of intention of the parties concerned and only with the registration thereof shall take effect (Article 186 of the Civil Act). Therefore, a person who fails to obtain registration under his/her name, unless otherwise provided by law (Article 187, etc. of the Civil Act) is unable to acquire real rights. In order to register his/her right on real estate in another person’s name, a person who fails to register his/her right on real estate in another person’s name shall be governed by the Trust Act. However, the previous Supreme Court

However, it is unreasonable to allow an exception to the requirement principle by giving the title "title trust" to an act that merely uses a "title trust" as a means of real estate speculation and tax evasion under the Trust Act. This would result in granting legal justification for real estate title trust, which is made for the purpose of speculation, tax evasion, etc. In our society, the reality that real estate title trust is abused as a means of real estate speculation and is abused for the purpose of evading taxes on real estate or other regulations under public law is a big problem.

(2) What measures were taken to eradicate real estate title trust.

Under the Inheritance Tax Act amended on December 31, 1981 (Article 32-2), gift tax may be imposed by deeming title trust as a donation. This was the measure taken by the Supreme Court prior to that ruling that title trust can not be deemed a trust under the Trust Act because only the registration is transferred to a trustee, and the right and obligation of management and disposal is not granted actively and exclusively, and thus, it cannot be deemed a trust under the Inheritance Tax Act (see Supreme Court Decision 78Nu396, Jan. 16, 1979).

The Real Estate Registration Special Measures Act, enacted on August 1, 1990, prohibits title trust in principle for the purpose of evading tax imposition (Article 7(1)). However, the Supreme Court recognized that the above provision cannot be considered as a mandatory provision and recognized it as a valid judicial effect (see Supreme Court Decision 92Da42651, Aug. 13, 1993).

Only when the Real Estate Real Name Act was enacted on March 30, 1995 and enforced on July 1, 1995, the real estate title trust agreement was null and void in principle except for special cases stipulated in the Real Estate Real Name Act.

(3) Whether there was a change after the enforcement of the Real Estate Real Name Act.

Before the enactment of the Real Estate Real Name Act, there was a provision prohibiting title trust for the purpose of evading tax imposition and punishing any violator. The difference between the previous and the Real Estate Real Name Act provides that a title trust agreement and any change in real rights pursuant thereto shall be null and void. However, even after the enforcement of the Real Estate Real Name Act, the Supreme Court accepted the title truster’s exercise of the right to real estate held in title trust against the title trustee (see, e.g., Supreme Court Decision 2002Da35157, Sept. 6, 2002). As a result, only difference between the imprisonment and the fine imposed when the fact of title trust is discovered, and there is no legal obstacle to asserting and exercising the right to real estate held in title trust against the title trustee.

B. Regarding the responsibility and countermeasures of the judiciary

(1) The judiciary has any responsibility.

The reason why the Joseon High Court recognized that the title trust was valid at the beginning is that even though the property of the clan exists, it was impossible to register the title trust in the name of the clan, and it was inevitable to register the title trust in the name of the clan. If so, the previous Supreme Court recognized that the title trust was valid only in inevitable cases. Even after the implementation of the current Civil Act, which took the requirement of establishment not the principle of intention, there was no change in the attitude of the Supreme Court. Even though the title trust agreement was null and void through the enactment of the Real Estate Real Name Act, the Supreme Court maintained the previous attitude to guarantee the title truster’s right to the real estate held in the title trust without a clear ground, even though there was a grace period to resolve the previous title trust relationship, and there was a legislative measure such as criminal punishment in the event of a violation of the Real Estate Real Name Act. As a result, the Supreme Court precedents led to the consolidation of the real estate title trust law to promote speculative speculation and tax evasion through the real estate title trust.

(2) What is the effective measure to be taken by the Supreme Court is.

The Supreme Court has to follow the possible methods under the Constitution and relevant laws, and it has become time to consider the application of the illegal consideration scheme in specific cases.

Under the Real Estate Real Name Act, a title truster’s title trust agreement and any change in real rights pursuant thereto are null and void. The title truster ultimately claims and exercises the right to real estate held in title trust by seeking the cancellation of registration made in the name of the title trustee null and void due to the deterioration of the said provision. The main text of Article 746 of the Civil Act provides for the illegal consideration scheme in which a person cannot file a claim for return of benefits arising out of an illegal cause that contravenes good morals and social order. Any person who provided benefits for illegal cause may not file a claim for return of unjust enrichment, as well as may not file a claim for return of unjust enrichment based on ownership (see, e.g., Supreme Court en banc Decision 79Da483, Nov. 13, 1979). Real estate title trust agreement made in violation of the Real Estate Real Name Act shall be deemed to constitute an illegal act contrary to good morals and other social order. Considering the registration made

(3) Whether the Real Estate Real Name Act purports to exclude the application of the illegal consideration provision.

Illegal consideration is a system prescribed in the Civil Act as a general law, but it does not need to exclude the application of the illegal consideration scheme regarding a title trust agreement prohibited under the Real Estate Real Name Act. Rather, the Real Estate Real Name Act explicitly stipulates that a title trust agreement prohibited by this Act is an anti-social act (Article 1), and provides a foundation to apply the illegal consideration scheme by placing a criminal punishment provision (Article 7) against a violator. In the legislative process of the Real Estate Real Name Act, it is confirmed that the court has considered the possibility of applying the illegal consideration scheme regarding a title trust agreement in violation of the Real Estate Real Name Act.

(4) Whether to resolve by legislation can not be decided by a judgment.

Determination of whether a title trust agreement in violation of the Real Estate Real Name Act constitutes illegal consideration is a matter of interpretation and application of Article 746 of the Civil Act. Interpretation and application of a law in a specific case is naturally possible by the court and is also the inherent duty of the court. It is rather inappropriate to place a separate provision on illegal consideration in the Real Estate Real Name Act. It is rather inappropriate for the Supreme Court’s precedent to recognize the validity of real estate title trust, thereby passing the title trust toward the present. The Supreme Court also has made efforts in various fields, such as legislative measures, to solve such a reality that is liable to the Supreme Court, it is difficult for the Supreme Court to take measures to reverse it. The Supreme Court should also make every possible effort under the current legislative system.

C. Regarding whether the illegal consideration provision can be applied to real estate title trust

(1) Whether real estate title trust is an anti-social act.

There is no objection to the fact that the title trust of real estate prohibited by the Real Estate Real Name Act is an anti-social act. Article 1 of the Real Estate Real Name Act provides that “The prevention of anti-social acts, such as speculation, evasion of taxes, and evasion of laws, etc. that abuse the real estate registration system” is the purpose of the Act. Therefore, the assertion that the title trust of real estate is an anti-social act in principle, and that it is not an anti-social act

(2) Whether a real estate title trust is illegal or illegal.

In view of the fact that real estate title trust is an anti-social act, there is a view that the “illegal” under Article 746 of the Civil Act does not constitute “illegal”. “illegal” in illegal consideration refers to a flexible concept that differs depending on the time and place as an act contrary to good morals and other social order. The perception at the time of the enactment of the Real Estate Real Name Act at the time and at the time of the enactment of the Real Estate Real Name Act, which is recognized as valid by the immediately preceding precedents, and at the present point of view that the Real Estate Real Name Act prohibited in the Real Estate Real Name Act and declared as null and void for more than 20 years, there is a change in perception as to whether real estate title trust is illegal or not. There is a problem to determine whether real estate title trust is illegal at the present time. There is no disagreement as to the appropriateness and necessity of the Real Estate Real Name Act which has already been established along with the enforcement of the Real Estate Real Name Act, and the real estate transaction is not an illegal act contrary to good morals and other social order. In this reality, interpreting that a title trust agreement in violation of the

(3) Whether applying the illegal consideration provision to real estate title trust infringes on the nature of property rights under the Constitution.

The view denying the application of the illegal consideration scheme lies in the logic that, if recognized, the title truster’s property right is inherently infringed upon, and thus, is contrary to the Constitution. However, according to our Civil Act, the transfer of a right would not take effect unless a registration is made with respect to real estate under title trust. In addition, insofar as a title truster, who does not have any registration, voluntarily waives the right to real estate guaranteed under the Civil Act, insofar as he/she had the title trustee complete the registration on real estate under title trust with respect to his/her own intent, the right to real estate should not be protected under the Civil Act. In addition, the Constitution stipulates that the right to property should be guaranteed by the State, at the same time, and the content and limitation thereof should be determined by law, and the exercise of property right should be adequate for public welfare. The Real Estate Real Name Act clearly states that the exercise of property right to real estate should be appropriate for public welfare. To protect the title truster in violation of the Real Estate Real Name Act with the view of preventing the infringement of property right. Even if the illegal consideration scheme is applied, there may be concerns about infringement of property rights.

(4) Whether the application of the illegal consideration provision affects the people's legal life and economic activities.

Even if a title truster prevents the title truster from exercising his/her right to real estate held in the title trust, thereby preventing the title truster from achieving the purpose of the title trust, good citizens will not suffer any inconvenience. Rather, if the application of the illegal consideration scheme is denied, the application of the illegal consideration scheme would continue to exist, such as real estate speculation and tax evasion using the title trust, and resulting in damage to the majority of citizens who abide by the law. There is doubt as to whether there is a possibility of legislation that is more effective of the title trust agreement, such as the current Real Estate Real Name Act, and criminal punishment against the violator, and whether to apply the illegal consideration scheme is to be determined through a court’s decision in a specific case

As above, I express my concurrence with the Dissenting Opinion.

Justices Jo Hee-de (Presiding Justice)