The purpose of Article 24(3)5 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents is to stipulate “a contract that becomes a partner other than the matters stipulated in the budget” as a resolution of the general meeting. In the event an executive officer of a union concludes a contract that is a partner’s burden without a prior resolution of the general meeting, whether a crime violating Article 85 subparag. 5 of the same Act is established (affirmative); and / In the event that a general meeting has resolved that such a contract will be concluded under the provision of information that sufficiently predicts the degree of the partner’s burden in the process of a prior resolution of the general meeting,

The purpose of Article 24(3)5 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 12960, Jan. 6, 2015; hereinafter “former Act”) stipulating “a contract that becomes a partner’s burden, other than the matters stipulated in the budget,” as the resolution of a general meeting, is to ensure that a member’s intent is reflected in matters that directly affect the rights and obligations of the members. Therefore, if an executive officer of a cooperative entered into a contract that becomes a partner’s burden without prior resolution, thereby constituting a crime violating Article 85 subparag. 5 of the former Act. However, it is difficult to make a prior resolution at a general meeting on all the affairs to be promoted by a rearrangement project association in light of the purpose and content of the contract to be promoted by the general meeting in advance, and the degree of the member’s burden to be borne by the general meeting, and if so, it can be deemed that a prior resolution has been passed.

Therefore, while concluding an increase in the burden of a union without a general meeting resolution so that the interests of the union members may not be infringed, it is necessary to interpret it harmoniously so that it does not interfere with the smooth implementation of a rearrangement project, considering it as a prior resolution, if it is decided that such a contract will be concluded in a situation where information that could sufficiently anticipate the degree of the union members'

Article 24(3)5 (see current Article 45(1)4) and Article 85 subparag. 5 (see current Article 137 subparag. 6) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 12960, Jan. 6, 2015)

Supreme Court Decision 2009Do14296 Decided June 24, 2010 (Gong2010Ha, 1526) Supreme Court Decision 2015Do9533 Decided September 10, 2015

Defendant

Defendant

Law Firm Dongin Law LLC, Attorneys Han Dong-gu et al., Counsel for the defendant-appellant

Seoul Eastern District Court Decision 2017No1420 decided December 22, 2017

The judgment below is reversed, and the case is remanded to the Seoul Eastern District Court.

The grounds of appeal are examined.

1. A. The purport of Article 24(3)5 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 12960, Jan. 6, 2015; hereinafter “former Act”) stipulating “a contract that becomes a partner’s burden, other than the matters stipulated in the budget,” as a resolution by a general meeting, is to ensure that the association’s executive officers may reflect the intent of the union members in matters that directly affect the rights and obligations of the union members. Therefore, if an association’s executive officer entered into a contract that becomes a partner’s burden without prior resolution, thereby constituting a crime against Article 85 subparag. 5 of the former Act. However, in light of the purport of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 12960, Jan. 6, 2015; hereinafter “former Act”), the purpose and content of the contract to be promoted in advance, and the degree of the burden to be borne by the union members may be deemed to have undergone a prior resolution by the general meeting (see Supreme Court Decision 2013.

B. Therefore, it is necessary to interpret a contract to increase the burden of a union without a general meeting resolution so that the interests of the union members may not be infringed upon by concluding a contract with the burden of the union, but where it has resolved that such a contract will be concluded in a state where information sufficiently predicted the degree of the union members' burden is provided in the process of a resolution at the existing general meeting, deeming

2. A. The summary of the facts charged in the instant case (except for the portion of innocence) is that the Defendant, the president of the Housing Redevelopment Association, borrowed the amount of KRW 117 billion and additionally borrowed KRW 26.4 billion to the members without a resolution of the general meeting, in excess of the relocation expenses decided to borrow at the general meeting of the Association.

B. As to this, the lower court found the Defendant guilty on the ground that the interest cost to be borne by a partner may increase as a result of an additional loan of KRW 26.4 billion, even though a separate general meeting resolution is required, it was necessary to further borrow 26.4 billion without going through this.

3. However, the lower court’s determination is difficult to accept for the following reasons.

A. According to the evidence duly admitted by the first instance court and the lower court, the following facts are revealed.

① On December 30, 2014, the instant association estimated the total project cost of KRW 4,25.6 billion at an extraordinary general meeting, and resolved to borrow the said project cost through a financial institution, etc.

② Under the management and disposal plan plan decided by the above extraordinary general meeting, the total amount of interest to be borne by the association by borrowing the relocation expenses shall be included in financial expenses (the relocation expenses shall be borrowed from the financial institution and the association shall bear only the interest on the relocation expenses).

③ Meanwhile, the association decided to conclude a contract for construction works with the contractor at the above special meeting, and the contract for construction works was anticipated to borrow KRW 203 billion from the project cost to the partner and the relocation allowance to be borrowed KRW 17 billion from the partnership.

④ On April 2, 2015, the Mutual Association set the CD interest rate of moving expenses and business expenses to be borrowed by the Mutual Association at the special meeting of the Mutual Association + 3% + delegated the authority to select a financial institution that presented the most favorable conditions and borrow funds to the board of representatives.

⑤ On June 23, 2015, the Defendant entered into a loan agreement on the instant loan for consumption, whereby the Defendant would borrow KRW 1,43.4 billion of project costs and relocation expenses, between the contractor and the contractor.

(6) On July 30, 2015, following a resolution of the board of representatives on September 22, 2015, the Defendant entered into a business agreement between the Corporation, community credit cooperatives, and cooperatives to provide members of the community credit cooperatives with a total of KRW 1,43.4 billion at the interest rate of 2.98% per annum.

B. Examining the foregoing factual basis in light of the legal principles as seen earlier, it should be deemed that the union concluded a loan agreement for consumption to borrow the moving expenses at the meeting of December 30, 2014 and April 2, 2015 at the meeting of April 2, 2015, and the amount limit would be within the scope not exceeding the total of 20.1 billion won per annum with the CD interest rate +3% per annum, and it could be sufficiently anticipated that the union members would bear financial expenses within the scope of 20.1 billion won due to the moving expenses.

However, even if the Defendant agreed to take out the moving expenses exceeding KRW 26.4 billion in excess of the amount of KRW 17 billion scheduled at the existing general meeting, it is clear in the calculation that the financial expenses of the moving expenses decided by the general meeting would not exceed KRW 20.1 billion. Rather, according to the Defendant’s lending of the moving expenses at a rate of 2.98% much less than the expected interest rate decided by the general meeting, the total financial expenses of the moving expenses would also be reduced than the estimated amount at the general meeting.

Therefore, as long as the amount of the moving expenses is limited to the interest, the total amount of the interest and the limit of the interest rate are already decided at the general meeting, and the moving expenses are borrowed within the scope not exceeding the limit of the interest and the interest rate, there is sufficient room to view that the defendant was already subject to prior resolution at the general meeting as stipulated in Article 85 subparagraph 5 of the former Urban Improvement Act before concluding the loan agreement of this case that will be the burden of the union members.

C. Nevertheless, the lower court found the Defendant guilty of the instant facts charged on the ground that it is necessary to adopt a separate general meeting resolution on increased relocation expenses on the grounds stated in its reasoning, such as that there is no specific content on the size of borrowings and interest expenses to be actually carried out in the existing special meeting agenda. In so determining, the lower court erred by misapprehending the legal doctrine on contracts that need a resolution of the general meeting under the former Urban Improvement Act, thereby adversely affecting the conclusion of the judgment. The Defendant’

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim So-young (Presiding Justice)