Whether the excess portion is appropriated for the original where the amount of pre-paid interest exceeds the amount calculated according to the maximum interest rate under the Interest Limitation Act by making the amount actually received by the debtor as the original (affirmative)

Articles 2 and 3 of the former Interest Limitation Act (Amended by Act No. 10925, Jul. 25, 201)

Plaintiff

Defendant

Incheon District Court Decision 2011Na24715 decided May 25, 2012

1. The judgment of the court of first instance is reversed, and the judgment of the court of first instance is modified as follows. A. The defendant shall pay to the plaintiff 85,483,880 won with an interest of 30% per annum from April 19, 2009 to the date of full payment. B. The remaining claims of the plaintiff are dismissed. 2. The total costs of the lawsuit are five minutes, and the plaintiff shall be borne by the plaintiff and the remainder by the defendant.

The grounds of appeal are examined.

1. Plaintiff’s ground of appeal

According to the provisions on the maximum interest rate under Article 2(1), (3), (4), and Article 3 of the former Interest Limitation Act (amended by Act No. 10925, Jul. 25, 201); and Article 2(1) of the Interest Limitation Act (amended by Act No. 10925, Jul. 25, 201); the maximum interest rate under a contract for lending and borrowing money is 30% per annum; the contractual interest is null and void; where the obligor voluntarily pays the interest exceeding the maximum interest rate, the amount equivalent to the interest paid in excess shall be appropriated for the principal; where the advance interest is deducted from the principal; where the amount deducted in advance exceeds the amount calculated according to the said maximum interest rate, the excess portion shall be deemed appropriated for the principal.

According to the reasoning of the judgment of the court below, the plaintiff agreed to lend KRW 100,000,000 to the Dai-do Development Co., Ltd. on August 18, 2008 (hereinafter " Dai-do Development") by setting the interest rate of KRW 10,000 per month and October 17, 2008. On August 19, 2008, the plaintiff delivered KRW 90,000,000 after deducting KRW 10,000,000 from the interest rate of KRW 10,000 per month for Dai-do Development. The defendant jointly and severally guaranteed the loan obligations of this case with the non-party who is the husband, and the non-party paid KRW 5,00,000 to the plaintiff as interest of the loan of this case around September 200 and October 208.

According to these facts, 250,00 won with interest rate of 30,000 won per annum of 30% under the Interest Limitation Act when the loan of this case was delivered to the Plaintiff (i.e., 10,000 won, 20,000 won per annum of 30,000 won per annum of 30,000 won per annum of 305,000 won per annum of 285,000 won per annum of 285,000 won per annum of 30,000 won per annum of 285,000 won per annum of 30,000 won per annum of 285,000 won per annum of 30,000 won per annum of 30,000 won per annum of 86,000 won per annum of interest rate of 30,000 won per annum of 285,000 won per annum of loan of this case).

Nevertheless, the court below held that when the loan of this case was delivered, the amount of KRW 90 million actually received by the Plaintiff out of the amount of KRW 10 million deducted by prior interest rate of KRW 30 million shall be appropriated for KRW 7.75 million per annum for KRW 2.2 million per annum. The non-party appropriated the excess interest rate of KRW 5 million under the Interest Limitation Act out of each of the five million interest paid by the non-party to the loan of this case for the loan of this case as above erroneously calculated interest rate of KRW 76,288,906 and the damages for delay at a rate of KRW 30% per annum from November 1, 2008 to the date of full payment. In so doing, the court below erred by misapprehending the legal principles as to the appropriation of the principal of a prior interest exceeding the limit under the Interest Limitation Act, which affected the conclusion of the judgment.

2. As to the Defendant’s ground of appeal

This part of the ground of appeal is without merit, which is justified in the selection of evidence and fact-finding which belong to the full power of the fact-finding court.

3. Ex officio determination

According to the records, although it is apparent that the plaintiff claimed 10 million won as the purport of the claim of this case and 30% interest per annum from April 19, 2009 to the date of full payment, the court below ordered the payment of 76,288,906 won and the damages for delay at the rate of 30% per annum from November 1, 2008 to the date of full payment. Thus, the court below erred in the misapprehension of the principle of disposition right under Article 203 of the Civil Procedure Act.

4. Conclusion

Therefore, the judgment of the court below shall be reversed, and this case shall be remanded to the Supreme Court. The defendant is obligated to pay to the plaintiff 85,483,880 won and damages for delay at the rate of 30% per annum, which is the agreed interest rate within the maximum interest rate under the Interest Limitation Act, from April 19, 2009 to the date of full payment, as the plaintiff seeks. The plaintiff's claim of this case shall be accepted within the scope of the above recognition, and the remaining claims shall be dismissed. Thus, the judgment of the court of first instance shall be modified, and the costs of lawsuit shall be borne, and it is so decided as per Disposition by the assent of all participating Justices

Justices Lee Sang-hoon (Presiding Justice)