[1] Standard for determining whether there exists an expression of intent to waive the prescription benefit

[2] Whether the expression of intent to waive the benefit of extinctive prescription can be deemed to have existed immediately in a case where an obligation that constitutes grounds for interruption of extinctive prescription is approved after the expiration of the statute of limitations

[3] In a case where an obligor partly repaid an obligation after the expiration of the extinctive prescription, whether the obligor may impliedly approve the entire obligation (affirmative in principle)

[1] An obligor entitled to the benefits of prescription may waive the benefits of prescription after the completion of the statute of limitations, and this is an expression of intent to avoid receiving legal benefits due to the completion of the statute of limitations. Moreover, the determination as to whether there exists an expression of intent to waive such benefits of prescription should be made objectively and reasonably in accordance with logical and empirical rules, and common sense of society so that it conforms to the ideology of social justice and equity by comprehensively considering the substance, motive and background of the act indicated or the expression of intent, the purpose and genuine intent of the parties to achieve by expressing intent, etc.

[2] Article 32 Subparag. 3 of the Debtor Rehabilitation and Bankruptcy Act provides that the interruption of prescription is effective in cases where a list of individual rehabilitation creditors has been submitted. On the other hand, the recognition of an obligation as a ground for interruption of the extinctive prescription is established by notifying the obligor, who is a party to the interruption of the extinctive prescription, of the so-called concept that the obligor, who is a party to the interruption of the prescription, knows the other party’s right or his/her obligation to the person who is expected to lose the claim upon the completion of the prescription period, and no such intent is required. On the contrary, to recognize waiver of the prescription interest after the expiration of the prescription period, there is a need for the effect that the obligor, who is receiving the benefit of prescription, would not receive any legal benefit from the completion

[3] If an obligor partly repaid an obligation after the completion of the extinctive prescription, the entire amount of the obligation shall be deemed to have been impliedly approved unless there is any dispute. In this case, it is presumed that the obligor renounced profits with the knowledge of the fact that the statute of limitations has expired. Thus, barring special circumstances where the obligor did not raise any objection by the time when the right to collateral security, the obligor’s real estate owned by the obligor, was sold at auction and the proceeds were distributed, and the obligor was not aware of the progress of the auction procedure and was appropriated for the repayment of part of the obligation, the obligor may be deemed to have renounced the benefit of prescription by impliedly approving the obligor’s obligation with the knowledge of the completion of the statute of limitations. However, in the event that the statute of limitations has expired, an ordinary obligee against the obligor may assert extinctive prescription by subrogation of the obligor within the extent necessary to preserve his/her claim in his/her own position, even if the obligor did not raise any objection in the distribution procedure, if other obligee raised an objection and invoked the obligor

[1] Article 184(1) of the Civil Act / [2] Article 32 subparag. 3 of the Debtor Rehabilitation and Bankruptcy Act, Articles 168 subparag. 3 and 184(1) of the Civil Act / [3] Articles 162, 168 subparag. 3, 184(1), and 404 of the Civil Act

[1] Supreme Court Decision 201Da21556 Decided February 28, 2013 (Gong2013Sang, 547) / [2] Supreme Court Decision 2011Da21556 Decided February 28, 2013 (Gong2013Sang, 547) / [3] Supreme Court Decision 2001Da3580 Decided June 12, 2001 (Gong2001Ha, 1586), Supreme Court Decision 201Da109500 Decided May 10, 2012 (Gong2012Sang, 9955)

[Defendant-Appellee] K&C Co., Ltd. (Law Firm Cheong & Cheong, Attorneys Park Jae-ki et al., Counsel for defendant-appellee

Defendant (Attorney Kim Byung-gu et al., Counsel for the defendant-appellant)

Daejeon District Court Decision 2013Na19395 Decided March 26, 2014

The judgment of the court below is reversed, and the case is remanded to Daejeon District Court Panel Division.

The grounds of appeal are examined.

1. An obligor entitled to the benefits of prescription may waive the benefits of prescription after the completion of the extinctive prescription, and this is an expression of intent to avoid receiving legal benefits due to the completion of the extinctive prescription. Moreover, whether there exists an expression of intent to waive such benefits of prescription should be objectively and reasonably determined in accordance with logical and empirical rules, and the common sense of society so as to conform to the ideology of social justice and equity by comprehensively considering the substance, motive and background of the act indicated and the expression of intent, the purpose and genuine intent of the parties to achieve by expressing intent, etc. (see, e.g., Supreme Court Decision 2011Da21556, Feb. 28, 2013).

2. According to the reasoning of the lower judgment, the lower court determined that: (a) on January 20, 2012, the Nonparty recognized the fact that the Nonparty reported the Defendant’s claim as individual rehabilitation claims on the list of creditors on January 20, 2012 ( Daejeon District Court 2012Da2721, Daejeon District Court 201; and (b) on the ground that Article 32 Subparag. 3 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”) provides that the prescription period is interrupted; and (c) the recognition of the obligor after the completion of the prescription period is the waiver of the prescription interest; (d) the Nonparty appears to have renounced the prescription interest; and (e) further, the Nonparty could not be deemed to have invalidated the waiver of the prescription interest on the ground that the said individual rehabilitation application was dismissed without the commencement decision; and (e) on June 5, 2013, the Nonparty rejected the Defendant’s claim for the waiver of the statute of limitations interest on the grounds that the Nonparty did not raise any objection against the distribution of KRW 50 million to the Defendant’s claim.

3. However, it is difficult to accept the judgment of the court below in the following respect.

A. Article 32 Subparag. 3 of the Debtor Rehabilitation Act provides that the interruption of extinctive prescription is effective in cases where a list of individual rehabilitation creditors has been submitted. Meanwhile, as a ground for interruption of extinctive prescription, the recognition of an obligation as a ground for interruption of extinctive prescription is established by notifying the obligor, who is the party subject to the benefit of prescription, to the effect that he/she knows the other party’s right or his/her obligation to the person who is expected to lose the claim upon the completion of the extinctive prescription, and no effect is required therefrom. On the contrary, for the waiver of the benefit of prescription to be recognized after the expiration of the prescription, there is a need for an effective intent that the obligor who is entitled to the benefit of prescription would not receive any legal benefit from the completion of the prescription period. Therefore, even if the approval of the obligation falling under the ground for interruption of extinctive prescription was obtained after the expiration of the prescription, it cannot be readily concluded that

According to the reasoning of the lower judgment and the evidence admitted, the following facts are revealed: (a) the period of extinctive prescription expires on June 20, 2008; (b) the Nonparty submitted the list of individual rehabilitation creditors at the time of application for commencement of individual rehabilitation procedures on January 20, 2012; and (c) indicated the Defendant’s claim amounting to KRW 50 million, which is the secured claim of the instant right to separation; and (d) the attached attached documents, indicated the amount of the instant secured claim as KRW 50 million; (b) the estimated amount of the instant secured claim; and (c) the Defendant’s claim amount which cannot be repaid even after the exercise of the right to separation; and (d) dismissed the Nonparty’s application for commencement of individual rehabilitation procedures; and (e) there is no assertion or proof that the Defendant received the above list of individual rehabilitation creditors or was aware of the fact that the said list was submitted.

In this case, inasmuch as the period of extinctive prescription has expired for the Defendant’s claim at the time when the Nonparty submitted the list of individual rehabilitation creditors, the issue is whether the Nonparty may be deemed to have renounced the extinctive prescription benefits after the expiration of the extinctive prescription period, rather than for the legal effect prior to the expiration of the extinctive prescription period under the Debtor Rehabilitation Act. However, in light of the following: (a) in general, the obligor ceases to enforce compulsory execution or prevents the exercise of security right for a certain period; (b) and (c) in order to ultimately be exempted from the obligation upon completion of repayment according to the repayment plan, it is difficult to deem that the Nonparty had an intention to waive the extinctive prescription benefits by stating the Defendant’s right to collateral security, the period of extinctive prescription has expired in the list of creditors upon filing an application for individual rehabilitation; and (d)

B. In a case where an obligor partly repaid an obligation after the completion of the extinctive prescription, barring any dispute, the entire amount of the obligation shall be deemed to have been impliedly approved unless it is found that the obligor renounced its benefit with the knowledge of the completion of prescription. Therefore, in a case where the right to collateral security with the obligation for which the extinctive prescription has expired is implemented and the obligor did not raise any objection until the obligor was appropriated for partial repayment of the obligation, barring special circumstances, such as where the obligor was unaware of the progress of the auction procedure, the obligor may be deemed to have renounced its benefit by impliedly approving the obligor’s obligation (see Supreme Court Decision 2001Da3580, Jun. 12, 2001, etc.). However, in a case where the extinctive prescription has expired, an ordinary obligee against the obligor may not assert the extinctive prescription as the obligee, but may not assert the obligor’s benefit by subrogation within the necessary limit for preserving his claim (see Supreme Court Decision 201Da10500, May 10, 2012).

According to the reasoning of the lower judgment and the evidence adopted, the period of extinctive prescription of the instant secured claim was expired on June 20, 2008, and the Nonparty did not raise any objection against the amount distributed to the Defendant on the date of distribution. However, the Plaintiff, the Nonparty’s obligee, who was the Nonparty’s obligee, raised an objection against the amount distributed to the Defendant by subrogationing the Nonparty, and thereby, the sales price of the instant real estate was not appropriated for the repayment of the Defendant’s obligation. Therefore, it cannot be deemed that the Nonparty implicitly approved the Defendant’s obligation with the knowledge of the completion of extinctive prescription in the distribution procedure, thereby waivering the benefit of prescription

C. Nevertheless, the lower court determined that the Nonparty renounced each of the extinctive prescription benefits after the expiration of the extinctive prescription period, solely based on the circumstance where the Nonparty submitted the list of individual rehabilitation creditors by entering the secured claim in the list of individual rehabilitation creditors of this case, but the Nonparty did not object to the amount distributed by the Defendant directly. In so doing, the lower court erred by misapprehending the legal doctrine on the waiver of extinctive prescription benefits, thereby adversely affecting the conclusion of the judgment. The allegation contained in

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices

Justices Park Sang-ok (Presiding Justice)