Plaintiff 1 and two others (Attorney Tae-tae et al., Counsel for the plaintiff-appellant)

Korea Credit Guarantee Fund et al. (Law Firm Democratic, Attorneys Jeong Byung-hun et al., Counsel for the defendant-appellant)

September 28, 2006

Seoul Eastern District Court Decision 2005Gahap8314 Delivered on February 9, 2006

1. The plaintiffs' appeals against the defendants are all dismissed.

2. The appeal costs are assessed against the plaintiffs.

The judgment of the court of first instance shall be revoked. Of the distribution schedule prepared by the above court on June 23, 2005 with respect to the distribution procedure case of Seoul Eastern District Court 2004Ma1526, the amount of dividends of KRW 81,849,607 against Plaintiff 1 shall be KRW 549,126,672, and KRW 81,849,607 against Plaintiff 2 shall be KRW 549,126,672, KRW 135,69,69,031, KRW 135,69,301,969, and KRW 1,098,253,345, and KRW 2,50,000 for the amount of dividends against Defendant 20,000 shall be deleted, respectively.

1. Basic facts

The following facts are either disputed between the parties, or acknowledged by Gap evidence 1, 12, and Eul evidence 1-1, 2, or 1-2, by integrating the purpose of all pleadings:

A. On October 19, 2004, Sung-nam City was adjudicated by the Central Land Expropriation Committee, which expropriates the shares of 441.35/4663 shares (the combined shares of the two parcels, hereinafter “instant land”) among the shares of 4,400 square meters and the shares of 441.35/4663 shares (the combined shares of the above two parcels, hereinafter “instant land”) among the shares of 251 square meters and the shares of 4,400 square meters in Jung-dong, Jung-gu, Seoul Special Metropolitan City, which was owned by the Nonparty, as public land.

B. On June 7, 2004, the defendant Credit Guarantee Fund received a seizure and collection order as to KRW 1,068,655,896 of the above land expropriation compensation claim against the non-party's Sungnam city, based on a claim based on an executory exemplification of the judgment in the Seoul District Court 94Da11805 claim amount. On December 6, 2004, the defendant Credit Guarantee Fund received a seizure and collection order as to the non-party's claim for the payment of taxes and public charges against the non-party 2 corporation on the ground of the claim under the original copy of the judgment.

C. Around October 2003, Defendant 2 Co., Ltd. was rendered a favorable judgment against the Nonparty to implement the procedure for the registration of ownership transfer of the instant land. On September 23, 2004, in order to preserve the Nonparty’s claim for the subject of the non-performance of the non-party’s obligation for the registration of ownership transfer, Defendant 2 Co., Ltd. received a provisional disposition against Sungnam-si on September 23, 2004. Thereafter, on November 27, 2004 by a new agreement with the non-party, Defendant 2 acquired KRW 2,50,000,000 from the non-party out of the said compensation for land expropriation, and the non-party notified the transfer of the claim at Sungnam-si on November 30, 2

D. On December 4, 2004, on the ground that it is unclear to whomever the Defendant Credit Guarantee Fund’s seizure and collection order and the Defendant Company 2’s provisional injunction order prohibiting the payment of the compensation amount should be made concurrently, the Plaintiff deposited KRW 3,988,795,150 of the land expropriation compensation (hereinafter “instant deposit”) and filed a report on the reasons for deposit at the same time, based on Article 248 of the Civil Execution Act.

E. Meanwhile, among the Nonparty’s claim for deposit withdrawal against the Republic of Korea (U.S. District Court Sungnam Branch Branch Branch’s Cash Accounting Official), Plaintiff 1 and 2 were subject to the Nonparty’s claim for deposit withdrawal amounting to KRW 1,900,000 on March 29, 2005, and Plaintiff 3 received each claim attachment and collection order as to KRW 1,575,000 on April 1, 2005.

F. Under the distribution procedure of the Seoul Eastern District Court 2004Ma1526 (hereinafter “instant distribution procedure”), the above court prepared on June 23, 2005 the distribution amount of the Defendant Credit Guarantee Fund’s dividends of KRW 1,098,253,345, and the amount of the dividends of Defendant 2 corporation to KRW 2,50,00,000, and KRW 81,849,607, and KRW 135,698,031, the amount of the dividends of Plaintiff 1, and KRW 2,500,000, and KRW 81,849,607, and KRW 3 of the said amount of dividends of Plaintiff 3 at KRW 135,69,031. The Plaintiffs appeared on the above distribution date and raised an objection against Defendant Credit Guarantee Fund, while Plaintiff 3 raised an objection against each of the Defendants.

2. Determination as to the legitimacy of the instant lawsuit

A. Relevant issues

(1) Deposit for enforcement under Article 248(1) of the Civil Execution Act

Even if only one seizure exists and the creditor does not compete with each other, the garnishee may deposit the full amount of monetary claims related to seizure pursuant to Article 248 (1) of the Civil Execution Act.

(2) The completion period to demand a distribution in the compulsory execution procedure against the claim

Article 247(1)1 of the Civil Execution Act provides that in cases where a third-party obligor deposits his/her obligation in a compulsory execution procedure against a claim and the distribution procedure has commenced, a creditor who has an executory exemplification may demand a distribution until “when a third-party obligor reports the grounds for deposit”. Therefore, after a third-party obligor deposits the execution pursuant to Article 248 of the Civil Execution Act and reports the grounds for deposit, the third-party obligor is not entitled to make a lawful demand for distribution pursuant to the so-called “the effect of blocking the entry into a distribution” even if he/she is a person to whom an additional seizure, collection

(3) Standing to sue a lawsuit of demurrer against distribution

A person who has standing to sue in a lawsuit of demurrer against distribution shall be limited to creditors or debtors who have appeared on the date of distribution on the date of distribution and have raised an objection on the substantive matters concerning the distribution schedule. However, in order for creditors to be present on the date of distribution as well as to file an objection on the substantive matters concerning the distribution schedule, the mere fact that they are creditors against the executory obligor under substantive law is insufficient, and the creditors who have not lawfully made a demand for distribution shall not have the right to file an objection on the date of distribution and on the date of distribution, as to the substantive matters concerning the distribution schedule. Therefore, even if such creditors appeared on the date of distribution and raised an objection against the distribution schedule, they are illegal objection and they have no standing to file a lawsuit of demurrer against distribution.

B. Determination

(1) In this regard, the Plaintiffs filed a lawsuit of demurrer against distribution by asserting that the seizure and collection order of Defendant Credit Guarantee Fund and the acquisition by transfer of Defendant 2’s claim are null and void, and the remaining creditors except the Defendants should receive dividends in proportion to distribution. The Plaintiffs filed a lawsuit of demurrer against distribution by asserting that the distribution order was unlawful, since it is apparent that the Defendant received the seizure and collection order of the claim only after December 4, 2004 from the date on which the reason for deposit was reported in the distribution procedure of this case commenced by the execution deposit of Sungnam City, Sungnam City, which is the garnishee. As long as the demand for distribution is illegal, the Plaintiffs cannot be deemed as a person who made a lawful demand for distribution, and as long as the demand for distribution is illegal, it shall be deemed unlawful.

(2) The plaintiffs asserted that the effect of blocking the subscription of dividends under Article 247 (1) 1 of the Civil Execution Act is limited to cases where creditors conflict with interests, and the effect of blocking the subscription of dividends due to the deposit is insufficient to repay the enforcement cost and the total amount of the claims. In the case of the deposit of this case, there is no competition between seizures, and there is no possibility that the effect of blocking the subscription of dividends may occur, and even if the effect of blocking the subscription comes into effect, it

In this case, there was only a seizure and collection order of Defendant Credit Guarantee Fund's claim amounting to KRW 1,068,655,896 at the time of the deposit of this case. Thus, there was no competition between seizure and seizure. The above seizure amount does not exceed KRW 3,98,795,150, which is the total deposit amount. However, Sungnam-si, which is the third debtor, deposited the total amount of claims related to seizure pursuant to Article 248 of the Civil Execution Act after the seizure of some of the above amount, and the execution court proceeded with the distribution procedure of this case as to the whole deposit amount. In this case, it is difficult to view that the application of Article 247 (1) 1 of the Civil Execution Act is excluded due to lack of competition, and even in such a case, it is only possible to recognize legitimate right to demand a distribution only to the person who made a demand prior to the report on the reason of deposit pursuant to Article 247 of the Civil Execution Act, and it is not allowed to join the distribution procedure without restriction.

3. Conclusion

Therefore, the plaintiffs' lawsuit of this case against the defendants is dismissed as it is unlawful, and the judgment of the court of first instance is justified as it is consistent with this conclusion, and all appeals by the plaintiffs are dismissed as it is without merit. It is so decided as per Disposition.

Judges Lee Young-gu (Presiding Judge)