Newton Venture8 Fund (Law Firm Sang-ju, Attorney Yoon Young-young, Counsel for the defendant-appellant)

C&C Entertainment et al. (Law Firm Site, Attorneys Lee Jong-hwan et al., Counsel for the plaintiff-appellant)

June 27, 2006

Seoul Central District Court Decision 2004Gahap78757 Decided May 13, 2005

1. The defendants' appeal is dismissed.

2. The costs of appeal shall be borne by the Defendants.

1. Purport of claim

The defendants jointly and severally pay to the plaintiff 50 million won with 20% interest per annum from the day after the delivery of the complaint to the day of full payment.

2. Purport of appeal

The judgment of the first instance is revoked, and the plaintiff's claim is dismissed.

1. Discharge of obligation to return investment money;

(a) Facts of recognition;

(1) On April 6, 2001, pursuant to the Support for Small and Medium Enterprise Establishment Act and its subordinate statutes, the Plaintiff Cooperative is a newton Investment Corporation (the amount of one share of investment in 45 shares is KRW 50,000), the Small and Medium Business Corporation (the special partner), the non-party corporation (the non-party corporation), the Korea Development Bank (the 20 share of investment), the Fisheries Cooperatives (the 20 share of investment), the non-party corporation (the 20 share of investment), which is an executive partner.

(2) 피고 주식회사 앤캐릭엔터테인먼트(이하 피고 앤캐릭이라 한다)와 소외 주식회사는 2001. 5. 10. 피고 앤캐릭이 자체 개발하여 저작권을 소유하고 있는 캐릭터인 ‘페닝’에 관한 모든 형태의 애니메이션물, 온라인 및 오프라인 게임물, 출판물 등을 공동으로 기획, 제작하고 다방면으로 사업화하기로 하는 공동사업계약을 체결하고, 우선제작사업으로 ‘열대펭귄 페닝(가제)’이라고 하는 제목으로 지상파 TV용 3D 애니메이션 26편의 제작을 추진하기로 약정하였는데, 마케팅비용을 포함하여 위 사업의 소요예산을 40억 원으로 책정하였다.

(3) 피고 앤캐릭은 위 제작사업의 투자자를 모집하던 중 소외 주식회사가 유한책임조합원으로 있던 원고 조합으로부터 투자를 받기로 하여, 2001. 8. 31. 원고 조합과 피고 앤캐릭 및 그 대표이사인 피고 2 사이에, ‘열대펭귄 페닝’이라고 하는 제목으로 TV용 3D 애니메이션 26편을 피고 앤캐릭이 제작하고, 원고 조합은 그 제작사업에 투자하기로 하는 내용의 ‘TV용 3D 애니메이션 제작과 수익배분에 관한 계약’이 체결되었다가, 위와 같이 피고 앤캐릭과 소외 주식회사 사이에 체결된 ‘열대펭귄 페닝’에 관한 공동사업계약에 따라 소외 주식회사가 위 애니메이션의 제작 및 판매를 담당하기로 하였으므로 소외 주식회사를 공동계약당사자로 추가하기로 하여, 2001. 9. 3. 계약 당사자를 원고 조합과 피고 앤캐릭 및 소외 주식회사(이하 소외 주식회사와 피고 앤캐릭을 합하여 피투자회사들이라 한다)로 바꾸어 위와 같은 내용의 계약(이하 이 사건 투자계약이라 한다)을 체결하면서 아래와 같이 약정하였다.

[Article 3] The Plaintiff Union made an investment in a manner that deposits KRW 1.5 billion in the account of Defendant C&C, and the investment ratio of the Plaintiff Union is 37.5%.

[Article 4(1)] The investment company shall preferentially allocate all profits in proportion to the investment shares of the plaintiff union and other investors in order to preferentially repay the investment principal raised by the plaintiff union from the total profits generated in relation to the above animation production project.

[Article 4(6) of the Investment Company shall make up for the shortage of the investment principal in the event that the total amount of distribution received by the Investment Company within three years from the investment of the Investment Company does not exceed 100% of the investment principal. The Investment Company shall not raise an objection against the shortage of the investment principal paid by the Investment Company to the Investment Company from the total profit accrued thereafter.

[Article 6] The non-party corporation is the complete date of production of Part 26 of the said TV time lease until November 2002. However, the production schedule and the time schedule may be extended once every three months with the agreement of the plaintiff corporation and the non-party corporation.

[Article 7(1) and (2)] After entering into a contract, the investment company shall open an account in the name of each investment company in the bank designated by the Plaintiff Union, and the Plaintiff Union shall pay and manage the total amount of the investment through the said account. The Plaintiff Union shall immediately deposit 100% of the investment amount in cash after entering into the contract to the account of Defendant C&C character, and the Defendant C&C shall deposit 100% of the investment amount in the account of the Nonparty Company immediately after the deposit of the investment amount.

[Article 8 (4)] The amount equivalent to 50% of the investment principal of the Plaintiff Union shall be disbursed from the account of the non-party corporation after the Plaintiff Union's actual inspection at the time when the progress of the project is 50%.

(4) At the time of concluding the contract on September 3, 200, Defendant 2 and Nonparty 2, the representative director of the non-party corporation, jointly and severally guaranteed all obligations under the above investment contract against the Plaintiff Association of the investment company.

(5) On September 4, 2001, Defendant LAC’s character received an investment amount of KRW 1.5 billion from the Plaintiff’s Union and paid it to Nonparty Co., Ltd. The Nonparty Co., Ltd. produced 13 copies of the Defendant LAC character’s character “sponing” until July 2003, and supplied them to the Plaintiff’s cultural broadcast, thereby broadcasting in MBC TV. The Defendant paid KRW 90,000 to the Plaintiff Union on October 13, 2003, but thereafter suspended production of the remainder 13.

[Basis] Facts without dispute, Gap evidence 1, Eul evidence 2-1, Gap evidence 2-2, Gap evidence 3, 4, 5, Gap evidence 6-1 through 6, Eul evidence 1, 2-1 and 3-2, and the purport of the whole pleadings

B. According to the above facts, since the total amount of profit of the Plaintiff Union was less than the investment principal by September 4, 2004 when three years have passed since the Plaintiff Union invested falls short of the investment principal, according to the investment loss preservation agreement stipulated in Article 4 (6) of the above investment contract, barring any special circumstance, the Defendants are jointly and severally liable to pay 50 million won and damages for delay, which the Plaintiff seeks as part of the remaining 1.41 billion won after deducting the amount of profit distribution amount already paid from the Plaintiff’s investment principal from 1.5 billion won.

2. Judgment on the defendants' assertion

A. First, the Defendants asserted that the Plaintiff’s association’s subsidization of the investment amounting to KRW 1.5 billion to the non-party corporation, a limited partner, violates the mandatory provisions, such as Article 12(5) of the Small and Medium Enterprise Establishment Support Act, which provides that the managing member of the association may not conduct transactions with related parties and major investors of the association, and thus, the instant investment contract is null and void. Accordingly, the Defendants asserted that there exists no obligation to return the investment principal under Article 4(6) of

Therefore, Article 8 (1) 4, which applies mutatis mutandis pursuant to Article 12 (5) of the Small and Medium Enterprise Establishment Support Act, provides that "any other act that causes damage to the purpose of establishment, as prescribed by the Presidential Decree," which shall not be an executive member. Article 9 (4) 1 of the Enforcement Decree of the above Act provides that "act of trading with specially related persons, major investors, etc. of a start-up investment cooperative" shall be prohibited under the above Act, and the non-party corporation is a limited partner who has invested 42 units in the Plaintiff union. However, the above provision does not apply to the relationship between the Plaintiff union and the non-party 2, among the investment contract of this case, since the character does not fall under a specially related person, major investor, etc. whose transaction is limited under the above Acts and subordinate statutes, and since each of the above provisions is merely a regulation and thus it cannot be deemed that the validity of the investment contract of this case is affected. Thus, the above assertion by the Defendants cannot be accepted.

B. The Defendants also set up an investment loss compensation agreement under Article 4(6) of the Investment Contract of this case under the condition to suspend the production of the said animation (the production of the said animation 26th is completed). However, since the said animation production project was discontinued in the middle and is now making efforts to resume the project, the said condition has not yet been fulfilled. However, there is no evidence to prove that the said investment loss compensation agreement was decided as a condition to suspend the success of the said animation production project, the said assertion by the Defendants cannot be accepted without further review.

C. Next, according to Article 4(6) of the Investment Contract of this case, the Defendants asserted that the Plaintiff’s association did not raise any objection to the obligation to return the investment principal to the Plaintiff association at the expiration of three years after the investment was made. However, according to the latter part of the Investment Contract, the Plaintiff’s obligation to return the investment principal to the Plaintiff association is to preserve the shortage of the investment principal from the total profit accrued after the investment was made. As Defendant L&C’s character is currently conducting the above animation production business, the due date for the return of the investment principal under the Investment Contract of this case has not yet arrived. However, the latter part of the above provision states that the Plaintiff’s obligation to return the investment principal has not yet been recovered after the expiration of the due date for the return of the investment principal of this case (three years), if the Plaintiff association fails to recover the investment principal of this case, the obligation to return the investment principal is not immediately extinguished, but can not be interpreted

D. The Defendants suspended production of only 13 percent of the above animation, and the Plaintiff’s association failed to perform the duty of due diligence on the account of the non-party corporation as the managing body of the invested principal at the time of completion of production of the above Part 13 pursuant to Articles 7(1), (2) and 8(4) of the Investment Contract as seen earlier, if the Plaintiff union properly performed the duty of due diligence on the account of the non-party corporation, the amount of KRW 750 million, which is 50 million of the invested principal would not have been disbursed. Thus, the Plaintiff union asserted that the Defendants did not have the right to return the invested principal amount of KRW 50 million, which is 50 million of the invested principal. However, the above agreement clause merely provides that the non-party corporation shall have the duty of due diligence on the expenses incurred after the production of Part 13, and further, the Defendants’ assertion cannot be accepted.

E. Finally, according to the investment contract of this case, the Defendants agreed to make every effort to facilitate the production of Part 26 animation and at the same time bear the obligation to disburse and manage expenses of KRW 1.5 billion investments in the Plaintiff Union. ① The Defendants would have been able to gain profits of KRW 26 billion if the Plaintiff Company manufactured the whole Part 26, but the Defendants would have been able to obtain profits of KRW 13 billion due to the violation of the Plaintiff Union's management obligation, but the Defendants did not produce only 13 parts and 13 parts of the remaining 13,000 won of the expected profits of KRW 4,70,000,000 and KRW 3.5,000,000,000 won of the sale price of the above 13,000,000 won of animation and KRW 1.3,57,000,000 of the sales price of the above 13,000,000 won of the Plaintiff Association.

Therefore, each provision of the investment contract of this case claiming that the Defendants imposed the management obligation on the Plaintiff Union is nothing more than granting the authority of the Plaintiff Union as an investor to monitor or supervise whether the amount of investment is being executed in good faith through the details of deposit and withdrawal of the account of the non-party corporation, and it cannot be deemed that it imposes the management obligation on the Plaintiff Union (the management obligation can be deemed to be borne by Defendant C&C, a joint production business entity). In addition, there is no evidence to acknowledge that the Plaintiff Union neglected the management of the non-party corporation as alleged by the Defendants, and therefore, the aforementioned offset defense by the Defendants cannot be accepted.

3. Conclusion

Therefore, the defendants are jointly and severally liable to pay to the plaintiff 50 million won and the damages for delay at the rate of 20% per annum from October 12, 2004 to the date of full payment of the complaint of this case, as requested by the plaintiff. Thus, the plaintiff's claim of this case seeking performance is accepted, and the judgment of the court of first instance is just in conclusion, and therefore, the defendants' appeal is dismissed.

Judges Lee In-bok (Presiding Judge)