[1] The standard for determining whether an executive officer of a financial institution has breached his/her duty of due care as a good manager

[2] Whether the occurrence of losses incurred to a financial institution is presumed to have been presumed to have caused the failure by the representative director or director to perform his/her duties (negative)

[3] In a case where a director of a financial institution causes loss to the company by unilaterally performing his/her duties under a general and abstract expectation that it would merely benefit in the company's business when making a project financing loan, whether such a director's act is within the discretionary scope of the business judgment permissible (negative)

[4] In a case where a financial institution suffered loss after taking project financing loans to Gap, Eul, Byung, and Jung companies, respectively, for which the apartment building project was performed, the case holding that the court below erred in the misapprehension of the duty of care without any further review, even though there is room to deem that the loan to Eul companies was performed by the officers of the financial institution in charge of loan business as to the above loans to Gap, Byung, and Jung companies, but there is no violation of the duty of care

[1] An executive officer of a financial institution has the duty of due care as a good manager to the financial institution to which he/she belongs, and thus, he/she has performed his/her duty as an executive officer at the time of faithfully performing his/her duty. However, even if a financial institution is liable for damages due to non-performance of duty against the executive officer on the ground of neglect of duty related to loan, if the financial institution is liable for damages due to non-performance of duty as a result of the loan, it cannot be readily concluded that the judgment of the executive officer who issued the decision of loan violates the duty of due care as a good manager by asking the executive officer who immediately issued the decision of loan for the liability not to incur damages, etc. to the non-collection of the loan. If a reasonable executive officer of a financial institution conducted a loan examination in good faith for the largest interest of the company in accordance with appropriate procedures with reasonable information in the situation, the business judgment of the executive officer is within the permissible discretion, and thus, the financial institution’s executive officer has fulfilled his/her duty of due care or duty of due care as a good manager. In light of the terms and conditions of the loan decision.

[2] In a case where a representative director or director is liable for damages due to nonperformance on the ground of a failure to perform his/her duties against the corporation, the liabilities of the representative director or director for the performance of his/her duties shall not result in any unclaimed damages, etc., but shall take necessary and appropriate measures with the duty of due care as a good manager for the benefit of the corporation. Thus, it is difficult to presume the fact of default immediately with the result that the losses from unclaimed amounts occurred among the loans

[3] The so-called project financing loan is a financial transaction that evaluates the feasibility of a specific project related to real estate development and makes the future cash flow generated from the project as the main source of repayment of the principal and interest of the loan. Thus, the determination of the loan repayment ability is mainly dependent on the evaluation of the feasibility of the project. In such a case, a director of a financial institution has collected, investigated, and examined the necessary information sufficiently while examining the feasibility of the project as a requirement for the loan, and based on this procedure, conducted reasonable trust and good faith to be consistent with the maximum interest of the financial institution, and made a reasonable decision on the management under the good faith and trust. If the contents of the loan are considerably unreasonable and are within the scope of ordinarily selected as a director, the director cannot be held liable for damages to the company even if the result was incurred later. However, if a director of the financial institution did not perform his duties through this process but merely causes losses to the company by unilaterally performing his/her duties under the general and abstract expectation that it will benefit the company's business, it cannot be deemed that the director's act of management discretion is allowed within the scope of business judgment.

[4] In a case where a financial institution suffered losses after taking project financing loans to Gap, Eul, Byung, and Jung companies that carry out apartment building projects, but failed to recover the loans, the court held that the court below erred in the misapprehension of legal principles as to executive officers of the financial institution's duty of care, although the financial institution's decision-making process and contents on loans to Gap, Byung, and Jung companies were not considerably unreasonable, and thus it was not possible to recover the loans. However, the court below erred in the misapprehension of legal principles as to executive officers of the financial institution's duty of care. However, as to the loans to Eul company, the legal dispute about the land purchase for a long time can be delayed due to the prolonged delay of the purchase of the land for the project site, and it can be deemed that the profitability of the project might deteriorate, without undergoing a thorough examination, even though there is room to deem that the executive officers of the lending company violated the duty of care.

[1] Articles 382(2) and 399 of the Commercial Act, Article 681 of the Civil Act / [2] Articles 382(2) and 399 of the Commercial Act, Article 681 of the Civil Act / [3] Articles 382(2) and 399 of the Commercial Act, Article 681 of the Civil Act / [4] Articles 382(2) and 399 of the Commercial Act, Article 681 of the Civil Act

[1] Supreme Court Decision 2001Da52407 decided Jun. 14, 2002 (Gong2002Ha, 1650), Supreme Court Decision 2004Da41651, 41668 decided Nov. 9, 2006 (Gong2006Ha, 2053) Supreme Court Decision 2006Da33609 decided Jul. 26, 2007 (Gong2007Ha, 1346) / [2] Supreme Court Decision 96Da30465, 30472 decided Dec. 23, 196 (Gong197Sang, 512) / [3] Supreme Court Decision 2006Da393905 decided Jul. 10, 2008; 2006Da3903505 decided Dec. 5, 20125)

Korea Deposit Insurance Corporation (Attorney Kang Dong-dong et al., Counsel for the plaintiff-appellant)

Defendant

Seoul High Court Decision 2008Na118674 decided September 10, 2009

The part of the judgment of the court below against the plaintiff regarding the claim for damages due to loans of KRW 8.4 billion shall be reversed, and this part of the case shall be remanded to the Seoul High Court. The remaining appeal shall be dismissed.

The grounds of appeal are examined.

1. We examine the grounds of appeal Nos. 1, 2, 4, and 5.

A. An executive officer of a financial institution is obligated to perform his/her duty as an executive officer when he/she faithfully performs his/her duty. However, in a case where a financial institution is liable for damages due to nonperformance of his/her duty against an executive officer on the ground of his/her failure to perform his/her duty related to a loan, even if the loan was caused to a difficult recovery or impossible recovery, it cannot be readily concluded that the judgment of the executive officer who issued the loan decision violates the duty of due care or loyalty as a good manager. If an executive officer of a financial institution conducts a loan examination for the maximum interest of the company in accordance with due procedures with reasonable information and good faith, the business judgment of the executive officer is within the permissible scope of discretion, and the executive officer of the financial institution fails to perform his/her duty of due care or loyalty. However, even if the loan was caused to a difficult recovery or impossible recovery, it shall not be deemed that the executive officer who exercised his/her duty of due to its failure to perform his/her duty of due to the foregoing breach of the duty of due care as a 20-160-14 others.

B. According to the reasoning of the judgment below, with respect to the loan 1 of this case, the court below acknowledged the following facts: 4. The loan 1 of this case was 5.0 billion won for the purpose of the loan 2 of this case, 5.0 billion won for the non-party 2 of this case, 5.0 billion won for the non-party 2 of this case's loan 5.0 billion won for the non-party 2 of this case's loan 1 of this case's loan 40.6 billion won for the non-party 2 of this case's loan 50 billion won for the non-party 4 of this case's loan 1 of this case's loan 50 billion won for the non-party 2 of this case's loan 50 billion won for the non-party 4 of this case's loan 50 billion won for the non-party 2 of this case's loan 1 of this case's loan 50 billion won for the non-party 2 of this case's apartment lot 2 of this case's loan 1 of this case'

The lower court determined to the effect that, in light of such facts and circumstances, the KNS Mutual Savings Bank took measures to preserve claims, such as offering collateral and offering joint and several surety for all obligations arising from the instant loan, and the rate of increase in sales, which is an index of growth and activity, reached 40.29%, in the case of Agols, it decided to the effect that, in particular, it was a plan to receive loans of KRW 10,00,000,00 for a tourist loan approved as a result of credit examination, and that the KNS Mutual Savings Bank failed to perform its duty of care for 10,000,000,000, and that the KNS Mutual Savings Bank did not perform its duty of care for 10,000,0000 loans of KRW 10,000,000,000,000,000 from 10,000,0000,000 from 230,000.

C. As to the instant three loans, the lower court acknowledged the following facts: (a) the purpose of the instant three loans was to use the instant three loans, which is the purchase price for an apartment building constructed in 200 Dong 200, Gangnam-dong 200; (b) the Suhyup Bank obtained the entire purchase of the instant three loans on September 12, 2005, prior to the implementation of the instant three loans; (c) the registration of the trust for disposal of the entire project site; and (d) notified the Financial Supervisory Service of the intent to handle the PF loans for the instant three apartment projects on the terms of the installment repayment, etc. on the condition of the priority repayment from the sale price; and (e) the 206-4 of the said apartment project site, which was established in the order of priority on 306-4; and (e) the 206th of the 206th of the 206th of the 2nd of the 2nd of the 2nd of the 2nd of the 2nd of the 3rdn&C C&C; and (iii of the 36th of the 2nd of the new trust trust agreement on the 36th of the loan.

The lower court determined that: (a) the instant three loans and the instant three loans are sold to the Settlement Finance Corporation at approximately 25% of the instant three loans without taking any measures to preserve claims for the instant three loans at the time when the Plaintiff was in arrears for seven months; (b) the said three loans and the said three loans were treated as hub loan for the special inspection of the Suhyup Bank, which were repaid through the loans extended by the KF Bank; and (c) E- Asian Development, a joint and several surety, relatively good credit and financial standing, including the fact that sales in an apartment house project implemented by the KF Bank, has been completed; and (d) it seems difficult to determine that the instant three loans and three loans were sold to the Settlement Corporation at the price of approximately 25% of the instant three loans without taking any measures to preserve claims for the instant development, a joint and several surety, at the time of the instant three-month arrears; and (e) the Defendant’s management and supervision over the instant loans and the instant three-party loans were not in violation of the duty of due diligence from August 31, 2005 to May 30, 206.

D. As to the instant four loans, the lower court acknowledged the following facts: the purpose of the instant four loans was to use the instant four loans, which was the purchase price for the land of an apartment building constructed on the ground and ten parcels of land in Yongnam-gun, Yongnam-gun; Hyundai Construction Co., Ltd., on November 23, 2004, much before the instant four loans were implemented; on the condition that the entire land purchase contract and the completion of authorization and permission related to the instant four loans were to participate in the construction project in Yongnam-gun apartment; on December 1, 2005, Hyundai Marine Fire Insurance Co., Ltd., Ltd., 400, 00, 00, 000, 000, 000, 000, 000, 000, 000, 00,000,000,000,000,000,000,000,000,00,000,00,00,00.

The lower court determined to the effect that the Plaintiff sold the instant 4 loans to the Financial Corporation at approximately 25% price of the loans, and that the Plaintiff sold the instant 4 loans to the Financial Services Commission at around 6 months in arrears, based on the following facts: (a) the fact that the instant 4 loans were treated as a hub loan extended by Hyundai Marine Fire Insurance Co., Ltd.; (b) the Plaintiff’s business site for the instant 4 loans handled for a full-time period from August 31, 2005 to May 30, 2007 by the supervisor was located at a relatively reasonable basis from the area planned for the relocation of the Do Office and development of the Namnam-gun City; and (c) other areas where many development ties, such as the development of the west Coast Tourism City and the attraction of the International Motor Vehicle Racing (F-1) were located; and (d) the Defendant’s sales of the instant 4 loans to the Financial Supervisory Service and the Defendant’s management of the instant loans that were not performed by the supervisor from August 31 to May 230, 2016, 2006.

E. In light of the above facts in light of the above legal principles, the court below is just in rejecting the plaintiff's assertion that each of the above loans was not in violation of the defendant's duty of care, and there is no violation of the rules of evidence or misunderstanding of legal principles as alleged in the ground of appeal. Thus, the ground of appeal disputing this point cannot be accepted

2. We examine the third ground for appeal.

The so-called project financing loan is a financial transaction that evaluates the feasibility of a specific project related to real estate development and evaluates the future cash flow to be generated from the project as the main source of repayment of the principal and interest of the loan, so the decision on the loan repayment ability made in the loan depends mainly on the evaluation of the feasibility of the project.

In such a case, if a director of a financial institution sufficiently collects, investigates, and examines the information necessary for examining the feasibility of a project as a requirement for a loan, and thereby makes a reasonable decision on the management in accordance with the financial institution’s maximum interest and good faith, and the contents thereof are considerably unreasonable and within the scope of ordinary selection as a director, the director cannot be held liable for damages to the company even if the result was incurred later. However, if a director of a financial institution unilaterally performs his/her duties under a general and abstract expectation that it would be beneficial to the company’s business, rather than performing his/her duties through such a process, if the director of the financial institution unilaterally causes losses to the company, he/she cannot be deemed to have made a reasonable decision on the management in accordance with the principle of good faith and good faith. Thus, such a director’s act cannot be deemed to be within the discretionary scope of the business judgment (see Supreme Court Decision 2006Da3935, Jul. 10, 2008).

According to evidence, the court below acknowledged the fact that the special prosecutor conducted 0.0 to 10.0 on March 13, 2006 the Financial Supervisory Service's 20.0 to November 10, 206 that the owner of the loan of this case was subject to precautions pursuant to Article 14 (2) 2 (c) of the Regulations on Inspection and Sanctions of Financial Institutions on the ground of negligence in reviewing the feasibility of the loan of this case, but it also recognized the effect of the transfer of the loan of this case 2 to 0.0 to 200 to 6.0 to 10.0 to 6.0 to 6.0 to 6.0 to 20 to 6.0 to 20 to 6.0 to 6.0 to 20 to 3rd Mutual Savings Bank's disposal plan for the improvement of the loan of this case, each of the owners of the loan of this case to 3rd Mutual Savings Bank's new acquisition of the ownership of each of the loan of this case on the date of expiration of the loan of 2000 to 3rd Mutual Savings Bank.

In addition, the lower court determined as follows: (a) such PF loan is the principal source of repayment of the principal and interest of loan which will occur in future businesses; (b) Bred loan, which is a land purchase fund premised on real estate development, is in the form of a representative PF loan handled by a mutual savings bank, which is a second financial right; (c) this case’s loan also is considered as hub loan loan repayment through a new bank, which is a first financial right,; (d) in determining the ability to repay loan, the assessment of feasibility of the relevant real estate development project takes a significant weight in assessing the ability to repay loan; and (e) physical or human collateral is not the only method of recovery; (e) the director’s failure to perform his duties in breach of the duty of due to breach of the good manager’s duty of care in performing his duties; and (e) the “Acts and subordinate statutes” refers to acts in violation of the laws and regulations, namely, Presidential Decree, Ordinance of the Prime Minister, Ordinance of the Ministry of Government Administration, etc.; and (e) the Financial Supervisory Service’s failure to perform its duty of care and supervision of the Financial Supervisory Service.

However, such determination by the court below is difficult to accept in light of the aforementioned legal principles and the following circumstances.

Even according to the decision of the court below, the defendant received a large amount of loan of 8.4 billion won in total for the purpose of purchasing the land for the construction project of the construction project of the construction project of the construction project of the construction project of the construction project of the construction project of the construction project of the construction project of the construction project of the construction project of the construction project at the time of the loan of this case from the owner of the land at the time of the loan of this case and received a legal opinion to the effect that there is a possibility of dispute over the validity of the sales contract between the owner of the land and the owner of the building site.

In addition, according to evidence, the Defendant submitted a MOU stating that “S is able to sell the right to purchase the subject site and assist the development plan.” However, the above MOU was effective until August 5, 2004, which was at the time of the loan of this case, and the period of validity was until June 30, 2005, the above MOU had already expired and the period of validity had already lapsed. In light of the fact that most of 43 parcels of the project site at the time of the loan of this case were 43 parcels of the contract at the time of the loan of this case, and some of the contractors were notified of the cancellation of the sales contract at the time of the loan of this case, and some contractors were still seeking payment of remaining land for the loan of this case on the premise that the sales contract with the so-called housing still remains valid, and that some contractors were able to obtain the loan of this case at the time of the loan of this case and the loan of this case at the time of the above 2004 loan of this case.

However, the loan of this case 2 is the hub loan that the construction company is scheduled to receive the repayment of the loan through the project financing scam which occurred in the first financial right. At the time, the new bank at the time submitted a letter of intent for the loan on the condition of “the completion of the responsibility of the third-party exchange company,” etc., and the third-party exchange company, which is scheduled to execute, planned to participate in the above project on the condition that the project is not at issue, such as securing the ownership of the land at the construction company and completing the relocation of the occupant, etc.” Thus, if the owner of the project site fails to secure the ownership of the site within the period ordinarily required for the purchase of the site, it is difficult to expect the participation of the third-party exchange company on the premise of securing the ownership of the project site or the project financing of the first financial right on the premise thereof.

In addition, even if it is possible to promote domestic business, if huge funds are loaned from a mutual savings bank, which is a second financial right, and the project is promoted under a high interest agreement, if the purchase of the project site is delayed for a long time due to legal disputes, etc., the profitability of the project may deteriorate, and the aggravation of the business profitability and the impossibility of collecting the loan may lead to the aggravation of the loan.

Therefore, in such a case, the defendant has a duty of care as a director of a financial institution to execute a loan only when it is judged that the project is being implemented according to the plan, regardless of the above circumstances, and if a large amount of loan is implemented without such procedures, it is difficult to view that the defendant made a reasonable decision by fulfilling the duty of care for the examination of the loan.

In addition, according to Article 121 of the Loan Regulations, "a loan shall be managed to prevent the use of the loan from handling to preserving claims, and faithfully implement the conditions of approval." According to the records, although five companies that received a loan after dealing with the second loan of this case have renounced the initial housing project and used 6.2 billion won out of the loan as the stock acquisition price for the construction of Siel City Co., Ltd., the fact that 8.4 billion won has been extended for two months on June 28, 2006 without confirming the progress of the first scheduled housing project, etc., the defendant's negligence is likely to be recognized in terms of neglecting such loan management (the first instance court's negligence seems to be impossible due to some land owners' behavior, but it seems that the defendant's ability to implement the project is difficult to find out the situation of some of the construction project due to the lack of the defendant's ability to implement the project.

Therefore, the court below should proceed further to examine whether the defendant's examination during the loan process, especially whether the project could be carried out in fact, and whether the project could not be delayed for a long time due to legal disputes, and then make a reasonable decision based on it, and whether the defendant fulfilled his duty of care in extending the loan period thereafter (if it is recognized that the fact that the defendant failed to fulfill his duty of care has occurred due to the breach of such duty of care, it should also be examined about whether the plaintiff's assertion in this part is legitimate.

Nevertheless, the court below concluded that it is not sufficient to recognize that the defendant violated the duty of care in making the two loans of this case without examining the above part. The court below erred in the misapprehension of legal principles as to the violation of the duty of care as a good manager of a financial institution. The plaintiff's ground of appeal pointing this out has merit.

3. Conclusion

Therefore, the part of the judgment of the court below regarding the loans of this case 2 is reversed, and that part of the case is remanded to the court below for a new trial and determination. The remaining appeal by the plaintiff is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-bok (Presiding Justice)