[1] The duty of care to be borne by a financial institution when it replies to a bank inquiry made by an accounting firm which is a third party at the customer's request

[2] In a stock transaction of a closed company, whether ordinary investors trust the audit report of the company's financial statements and such audit report may be deemed to have been made as reference data for determination (affirmative)

[3] Whether the reason for the court's discretionary discretion mitigation is the reason for the court's discretionary discretion (affirmative)

[4] The case holding that where a financial institution is liable to compensate investors for losses caused by the purchase of stocks, but the financial institution is not liable to compensate the entire purchase price of stocks even if the company had no economic value due to the failure to pay such stocks, in case where the financial institution purchased stocks in trust and purchased the stocks based on the fraudulent audit report prepared based on the return of the financial transaction details to the accounting firm

[1] Article 750 of the Civil Code / [2] Article 750 of the Civil Code, Article 197 (1) of the Securities and Exchange Act, Article 17 (2) of the Act on External Audit of Stock Companies / [3] Articles 393, 396, and 763 of the Civil Code, Article 134 of the Civil Procedure Act / [4] Articles 393, 396, 750, and 763 of the Civil Code, Article 134 of the Civil Procedure Act

[1] [2] Supreme Court Decision 2006Da20405 Decided July 26, 2007 (Gong2007Ha, 1342) / [2] Supreme Court Decision 96Da41991 Decided September 12, 1997 (Gong1997Ha, 3078), Supreme Court Decision 2005Da28082 Decided January 11, 2007 (Gong2007Sang, 270) / [3] Supreme Court Decision 96Da3013 Decided October 25, 1996 (Gong196Ha, 3434), Supreme Court Decision 2005Da3476, 34733 Decided December 7, 2006

Plaintiff 1 and four others (Attorney Kim Hun-hwan, Counsel for the plaintiff-appellant)

National Bank Co., Ltd. (Law Firm Sejong, Attorneys Song-sung et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2004Na13252 Delivered on January 12, 2005

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

We examine the grounds of appeal.

1. The court below found the following facts in full view of the admitted evidence.

A. On December 27, 2001, the plaintiffs purchased stocks of scambling Co., Ltd., a non-disclosure company from co-defendant 6 of the first instance court, etc. The total amount of the shares they purchased is 1.6 million won, and the total amount of the purchase price is 2.4 billion won. The plaintiffs' shares in the above company's shares due to the purchase of shares was 26.67%, which became the largest shareholder of the above company, and thereafter, the plaintiff 1 had participated in the management of the above company.

B. On December 31, 200, the Plaintiffs reviewed audit reports and promotional books including the balance sheet as of December 31, 200, and purchased the shares of the above company with the belief that the above company had a term deposit of KRW 1 billion (hereinafter “the instant term deposit”) in the Defendant bank, and that there was no restriction of withdrawal of the right of pledge, etc. on the said deposit. In fact, the right of pledge was established against the instant term deposit amount of KRW 1 billion in the first instance trial co-defendant 6.

C. (Name omitted) The omission of the establishment of the above pledge in an audit report prepared by the accounting firm was due to the omission of the establishment of pledge in response to the present financial transaction details on January 31, 2000 by the Defendant Bank’s (title omitted) accounting firm on December 31, 2000 at the request of the said company. Meanwhile, even though the said company had a term deposit of KRW 2 billion in the Hanmi Bank, the said company had a pledge.

D. On January 2002, when the above company was sealed in the financing shortage, the plaintiff 1 and the co-defendant 6 of the first instance court agreed to use the term deposit amounting to 3 billion won, which was held by the defendant bank and the Hanmi bank, but the co-defendant 6 of the first instance court did not clearly answer. As a result, the defendant bank and the Hanmi bank did not inquire about the defendant bank and the Hanmi bank, and as a result, the above term deposit was found to be in the condition that each of the above term deposits cannot be withdrawn due to the establishment of the right of pledge (the term deposit of this case was appropriated for the repayment of the secured obligation on August 13, 202).

E. On October 7, 2002, the above company disposed of the outstanding shares of approximately KRW 1.7 billion due to the shortage of funds, and accordingly, the plaintiffs purchased shares of the above company did not have economic value.

2. A financial institution has a duty of care to provide accurate and sufficient credit information so that it does not mislead a customer (see Supreme Court Decision 2006Da20405, Jul. 26, 2007). However, a bank inquiry may request a financial institution to verify whether the details of financial transactions recorded in the company’s account books are actually identical to those of the auditor’s audit report in light of the public trust and expertise that the financial institution should have established at the request of the customer. In addition, according to the records, it can be seen that “the response of return is essential for the public notice of appropriate accounting information through the establishment of sound and transparent accounting practices of our country.” In light of the original function of the bank inquiry document and the contents of the bank inquiry statement of this case, it should be seen that the financial institution’s 206Da20405, supra, was aware that it was the one of the most important factors of the company’s financial statements or the one of the purchase prices of the company’s stock subject to the disclosure of the audit report of this case.

In light of the above legal principles and facts, although there are some inappropriate parts at the time of the judgment below's explanation, the defendant bank is obligated to compensate the plaintiffs for damages caused by such unlawful acts, since the defendant bank committed an incomplete audit report by reliance on such improper audit report and purchasing the shares of the above company, and the plaintiffs incurred damages by purchasing the shares of the above company. The judgment of the court below did not err in the misapprehension of the rules of evidence or misunderstanding of legal principles as to the establishment of illegal acts, which affected the conclusion of the judgment.

On the other hand, if the plaintiffs knew that the right of pledge was established on the term deposit of this case, they should be deemed to have purchased at least the price lower than the purchase price as seen earlier. Thus, the ground that the existence of the term deposit of this case did not constitute an important factor of determination that the company purchased the shares of this case cannot be deemed to have not occurred. The argument in the grounds of appeal on this point is not acceptable.

3. However, in relation to the scope of damages to be compensated by the Defendant Bank, the lower court did not use the term deposit in this case, resulting in the failure to pay the said company, and the Plaintiffs’ purchased shares were entirely of no economic value. Accordingly, it is difficult to accept for the following reasons to view that the damages suffered by the Plaintiffs due to the tort by the Defendant Bank were equivalent to the amount of stock price decline, and that the Defendant Bank is obligated to pay the Plaintiffs a total of one billion won, which is a part thereof, as requested by the Plaintiffs.

Compensation for damages caused by a tort shall be limited to ordinary damages, and damages caused by special circumstances shall be liable only when the tortfeasor knew or could have known of such circumstances (Article 763, Article 393 of the Civil Code).

First, in this case, if it is recognized that the plaintiffs purchased the shares of this case even without the faith of the defendant bank, the ordinary damages suffered by the plaintiffs due to the tort of this case shall be deemed to be damages suffered by purchasing the shares at a price higher than the actual price.

In fact, the plaintiffs suffered damages corresponding to the total purchase price of the shares in this case due to the above company's default. However, the part exceeding the ordinary damages in this case occurred due to the special circumstances such as dishonor, and cannot be deemed as damages to the extent that it would normally occur in the event of a bad faith by the financial institutions such as this case in light of the general sense of society. Thus, the defendant bank is liable to compensate for damages only when the defendant bank knew or could have known the special circumstances of the occurrence of such default. Thus, the facts acknowledged by the court below alone are difficult to view that the defendant knew or could have known of such special circumstances, and there is no evidence to acknowledge them in the records.

On the other hand, if the victim's negligence is recognized in relation to the application of the comparative negligence system under the Civil Act, the court shall consider the liability for damages and the amount thereof in determining the liability for damages, and even if the person liable for damages did not assert the victim's negligence, the court shall ex officio examine and determine it (see Supreme Court Decision 96Da30113, Oct. 25, 1996, etc.). This legal principle also applies to the grounds for mitigation of liability (see Supreme Court Decision 2005Da34766, 34773, Dec. 7, 2006, etc.).

In this case, if it is recognized that the plaintiffs did not purchase the shares of this case without the insolvency of the defendant bank, it may be deemed that the plaintiffs suffered losses due to the tort of the defendant bank. However, according to the facts acknowledged by the court below and the records, the above company had considerable assets, even if the plaintiffs were not to purchase the shares of this case, and the plaintiffs continued to hold the shares of this case without any specific measures despite the fact that the defendant bank knew of the insolvency of the defendant bank on January 7, 2002 after the expiration of the first month, and the above company did not incur losses due to the insolvency of the funds of this case around October 7, 2002. According to these facts, it cannot be deemed that the above shares of this case were not worth at all at the time when the plaintiffs were to pay the purchase price or bad faith. However, if the above company had funds of KRW 1 billion, it is difficult to conclude that the defendant bank continued to pay losses to the above company's management due to the change of the funds of this case, and it does not appear that the above company did not have any losses.

Nevertheless, for the above reasons, the court below ordered the defendant bank to pay a total of KRW 1 billion as part of the purchase price of the shares of this case on the premise that the defendant bank shall be liable for damages of KRW 2.4 billion, which is the total purchase price of the shares of this case, to the plaintiffs. Such judgment below is erroneous in the misapprehension of legal principles as to the scope of compensation for damages caused by tort, which affected the conclusion of the judgment.

On the other hand, in this case, the Korea-U.S. bank and the defendant bank are liable for joint tort. It seems that considerable difference will occur in terms of the contents of the damages suffered by the plaintiffs and the scope of compensation for damages. Therefore, it is clearly necessary to judge this.

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

Justices Shin Hyun-chul (Presiding Justice)