Where it is possible to deny the corporate personality of the company and assume the responsibility for the individual behind it and to claim the performance of the obligation borne by the individual prior to the incorporation of the company.

In principle, a stock company is an independent right independent from its shareholders. However, in the event that an individual operates a business without establishing a company and then establishes a company with the same business purpose, physical facilities, and human resources, the company has the form of a juristic person, but it merely takes the form of a juristic person. In substance, it is against the principle of trust and good faith to deny the liability of an individual on the ground that the company is a separate person, even in exceptional cases where the company is used as a means to avoid legal responsibility for the individual. Thus, it is against the principle of trust and good faith to deny the legal personality of the company and to impose liability on the individual behind it.

Furthermore, in a case where it is recognized that an individual and the shareholders of the company are in a dominant position to substantially operate a newly incorporated company by virtue of their economic interests and to use it in their own mind, the following should be comprehensively examined: (a) an individual’s asset change details related to the establishment of the company; (b) whether reasonable consideration has been paid for the transfer of an individual’s assets to the company; (c) whether the individual’s assets have been useful for the company; and (d) whether the company bears obligations to a third party; and (e) whether the company and the individual bear obligations to the company prior to the establishment of the company, on the ground that it is a separate personality, it is extremely unreasonable to deny the company’

Article 2 of the Civil Act, Article 169 of the Commercial Act

[Plaintiff-Appellant] Plaintiff 1 et al. (Gong2001Sang, 485) and 2007Da90982 decided Sep. 11, 2008 (Gong2008Ha, 1365)

Plaintiff (Law Firm Dong, Attorneys Kim Jong-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2001Na11448 decided May 1, 200

Seoul High Court Decision 2018Na2042338 decided October 30, 2019

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

The grounds of appeal are examined.

1. In principle, a stock company is an independent right independent from its shareholders, and thus does not deny its independent legal personality. However, in the event that an individual conducts business without establishing a company and then establishes a company with the same business purpose, physical facilities, and human resources, the company has the form of a legal entity, but it merely takes the form of a legal entity. In substance, it goes against the principle of trust and good faith to deny the individual's liability on the ground that the company is a separate person, even in exceptional cases where the company is used without permission to avoid legal liability to the individual, or where it is used without permission to avoid legal liability to the individual, it is against the principle of an exceptional case where the company is a separate person (see, e.g., Supreme Court Decisions 97Da21604, Jan. 19, 2001; 2007Da90982, Sept. 11, 2008).

Furthermore, in a case where it is recognized that an individual and the shareholders of the company are in a dominant position to substantially operate a newly incorporated company by virtue of their economic interests and to use it in their own mind, the following should be comprehensively examined: (a) an individual’s asset change details related to the establishment of the company; (b) whether reasonable consideration has been paid for the transfer of an individual’s assets to the company; (c) whether the individual’s assets have been useful for the company; and (d) whether the company bears obligations to a third party; and (e) whether the company and the individual bear obligations to the company prior to the establishment of the company, on the ground that it is a separate personality, if it is deemed that the denial of the company’

2. Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On October 2012, Nonparty 1, the husband of the Plaintiff, concluded a sales contract on behalf of the Plaintiff with Nonparty 2 to sell the instant land owned by the Plaintiff and a factory building on the ground thereof (hereinafter collectively referred to as “instant real estate”) at KRW 1.5 billion.

B. Nonparty 2 requested Nonparty 1 to change the name of the purchaser to Nonparty 3 as Nonparty 3, who is an infant, in the instant real estate in the future, to Nonparty 1. Accordingly, on May 9, 2013, Nonparty 1 entered into a sales contract on behalf of the Plaintiff with Nonparty 3 to sell the instant real estate in KRW 1.3 billion, and entered into a sales contract with Nonparty 1 to sell the road shares and civil engineering works (Contac) out of the instant land in the amount of KRW 330 million (hereinafter collectively referred to as “instant sales contract”).

C. On August 13, 2013, Nonparty 3 prepared a confirmation of the fact that “The amount payable out of the price of the instant sales contract is KRW 160,00,000,000” (hereinafter “the obligation of this case”) to the Plaintiff, Nonparty 3 signed and sealed Nonparty 2 as the guarantor, who signed and sealed Nonparty 2’s name and seal of the “Ykman-kin Factor” of the private business chain operated by the said confirmation document.

D. On April 2004, Nonparty 3 opened a personal business chain’s “duduk factoring” and operated business, such as manufacturing printed boxes, and reported the closure of business on October 31, 2015. On November 19, 2015, Nonparty 3 established a defendant for the purpose of printing business and manufacturing high-class knife boxes (printed boxes) and took office at the representative director. The location of the location of the two knife factoring and the location of the Defendant’s head office are the same.

E. On November 19, 2015, Nonparty 3 entered into a comprehensive acquisition agreement with the Defendant that comprehensively transfers all of the business, such as the assets and liabilities of “Yemank Factor,” and around that time, Nonparty 3 transferred the entire business property of Jink-kin factoring to the Defendant, and completed the registration of transfer of ownership on the instant real estate on January 22, 2016. The said transfer proceeds were decided to be based on a separate agreement, but no separate agreement was made thereafter, and Nonparty 3 acquired only 50% of the shares issued by the Defendant as a consideration for transfer. Although the Defendant comprehensively assumed all of the liabilities on the account books of Jinkknk-kin factoring, the instant obligation was not taken over.

F. The Defendant was established with capital of KRW 300 million and thereafter up to 50% shares, 30% shares of Nonparty 3, 30% shares of Nonparty 3, and 20% shares of Nonparty 3’s father, respectively. Since the establishment of the Defendant’s director, 3, Nonparty 3, Nonparty 2, and Nonparty 4 were three persons, and only the representative director was changed from Nonparty 3 to Nonparty 2 on June 10, 2016.

3. We examine the above facts in light of the legal principles as seen earlier.

In order to avoid the instant debt, Nonparty 3 established the same defendant with the aim of evading the Defendant’s personal business chain, business purpose, physical facilities, and human resources. Nonparty 3 only owns 50% shares, and the Defendant’s shareholders except Nonparty 3 also have a dominant position in which Nonparty 3 could use the Defendant in substance while operating the Defendant. In addition, in addition to the fact that at the time of the establishment of the Defendant, all of the assets of Jinknk Ra Factor, including the instant real estate owned by Nonparty 3, were transferred to the Defendant, while Nonparty 3 did not receive any consideration in addition to the acquisition of 50% of the Defendant’s shares established as capital at KRW 30 million, on the ground that the Defendant, a stock company, is an independent person with Nonparty 3 independent of the Plaintiff’s shareholder, it is extremely contrary to the justice and equity. Therefore, the Plaintiff may claim for the performance of the instant debt against the Defendant as well as Nonparty 3.

The lower court’s determination that the Defendant is obligated to perform the instant obligation is justifiable in accordance with the foregoing legal doctrine. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules

4. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jong-hee (Presiding Justice)