In a case where a debtor’s legal act constitutes a fraudulent act and thus restitution is made on the ground of revocation, whether the debtor bears the obligation to return unjust enrichment to the beneficiary or subsequent purchaser (affirmative in principle); and in a case where the debtor’s other co-debtor gains a profit for which the obligation is extinguished, whether the joint debtor bears the obligation to return unjust enrichment directly to the beneficiary or subsequent purchaser (negative)

Where a debtor's juristic act constitutes a fraudulent act and thus restitution is made on the ground of revocation, the debtor shall bear the obligation to return unjust enrichment to the beneficiary or subsequent purchaser, except in extenuating circumstances.

As above, the obligor’s liability property is restored to its original state, and the obligee obtains satisfaction of the claim from the obligor, and thus the obligor’s other co-debtor is also entitled to benefit from the extinction of his/her obligation. In such a case, a co-debtor does not assume a direct obligation for return of unjust enrichment on the part of the beneficiary or subsequent purchaser, separate from the fact that the liability relationship between the obligor and another co-debtor is established according to the legal nature or content of the joint obligation. Therefore, even where the obligor’s joint obligor subrogated for the beneficiary

Articles 406(1) and 741 of the Civil Act

Limited Liability Companies, the UNCIS Korea Asset Management Loans

Defendant 1 and one other (Attorney Early LLC, Counsel for the defendant-appellant)

Gwangju District Court Decision 2014Na10195 Decided May 27, 2015

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

The grounds of appeal are examined.

1. The judgment of the court below

A. The reasoning of the lower judgment reveals the following facts.

(1) On April 17, 2009, Sungsung Construction Co., Ltd. (hereinafter “Ssung Construction”) entered into a pre-sale agreement with Defendant 2 on the instant real estate, and completed the provisional registration of the right to claim ownership transfer based on the pre-sale agreement in the future of Defendant 2 on the same day. On March 19, 2010, Defendant 2 transferred the right to claim ownership transfer based on the pre-sale agreement to Defendant 1, and completed the supplementary registration prior to the provisional registration on April 9, 2010 with respect to the instant real estate, and on the same day, Defendant 1 completed the principal registration based on the provisional registration on the grounds of sale as of March 19, 2010.

(2) On this ground, the Korea Credit Guarantee Fund and the Bank Business Loannet (hereinafter “bank Businessnet”) alleged that the aforementioned sales reservation and the sales contract constituted fraudulent act, and filed a lawsuit against the Defendants for revocation of fraudulent act (Seoul District Court 2010Kahap7791, Gwangju District Court 2012Kadan25963). The court revoked the above sales contract and the reservation for sale within the limit of KRW 40,400,00 for the Credit Guarantee Fund, and 48,400,000 for the Bank Business Loannet, respectively, and ordered the Defendants to compensate for its equivalent value. The above judgment became final and conclusive thereafter.

(3) The Nonparty, the representative director of the Sungsung Construction, paid the above amount of compensation on behalf of Defendant 1. On September 2012, 2012, the Nonparty paid 40,400,000 won, etc. to the Korea Credit Guarantee Fund as the depositee, and deposited 8,530,410 won, etc. on November 2012, with the Bank Businessnet as the depositee. The Nonparty jointly and severally guaranteed the reimbursement liability of the principal obligor Sungsung Construction with respect to the Credit Guarantee Fund.

(4) The Plaintiff asserted that the Nonparty, on behalf of the Defendants, paid the Defendant’s compensation liability and claimed reimbursement against the Defendants. Based on the Nonparty’s executory exemplification of a notarial deed, the Plaintiff seized the Nonparty’s claim for reimbursement against the Defendants, and sought full payment against the Defendants.

B. The court below acknowledged that the non-party paid the equivalent amount on behalf of Defendant 1 at the request of Defendant 1, and rejected the Defendants’ assertion that the non-party borrowed money from Defendant 1 and paid the equivalent amount as the repayment of the borrowed amount. Furthermore, since the non-party paid the equivalent amount in lieu of the equivalent amount compensation and the Defendants exempted the Defendants from the equivalent amount liability, the non-party determined that the non-party has a claim for reimbursement against the Defendants. The Defendants asserted that the non-party’s claim cannot be claimed against the Defendants since the non-party’s claim was extinguished as the co-debtor of the Credit Guarantee Fund and the Bank

2. Judgment of the Supreme Court

A. The allegation in the grounds of appeal that the Nonparty borrowed money from Defendant 1 and repaid the amount of compensation with the payment of the borrowed money is nothing more than disputing the selection of evidence and fact-finding, which are the exclusive authority of the lower court, as a fact-finding court. In light of the record, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules or by misapprehending the legal doctrine, contrary to what

B. The judgment of the court below that rejected the Defendants’ assertion that the Plaintiff deemed the Plaintiff to have the claim for reimbursement against the Defendants is justifiable. The reasons are as follows.

(1) Where a debtor’s legal act constitutes a fraudulent act and restitution is made on the ground of its revocation, barring special circumstances, the debtor bears the obligation to return unjust enrichment to the beneficiary or subsequent purchaser.

In such a case, a co-debtor does not bear a direct obligation for return of unjust enrichment against a beneficiary or a subsequent purchaser, separate from the fact that a liability relationship is established between the debtor and another co-debtor according to the legal nature or content of a co-debtor’s joint obligation. Therefore, even in cases where a co-debtor on behalf of a beneficiary or a subsequent purchaser on behalf of the beneficiary or a subsequent purchaser, barring any special circumstance, it should be deemed that a co-debtor may claim reimbursement against the beneficiary or subsequent purchaser, barring any special circumstance.

(2) Examining the facts acknowledged by the court below in light of the aforementioned legal principles, the Korea Credit Guarantee Fund, the cancelled creditor, and the Banknet, received compensation for the equivalent amount recovered from the debtor's property held responsible for the sex exchange construction, and they also extinguished to the extent of the non-party's joint and several liability obligations. However, the non-party cannot be deemed as unjust enrichment in relation to Defendant 1, the subsequent purchaser, who is the non-party. Furthermore, in light of the nature and content of the debt owed to the Sungsung Construction Fund, and the Bank Businessnet, the non-party cannot be deemed as having a relation of the non-party’s liability for indemnity regarding the debt extinguished by the withdrawal of the sex exchange construction. (1) In light of the nature and content of the debt owed to the Korea Credit Guarantee Fund, the non-party is a primary debtor, the non-party is a joint and several surety, and ② in relation to the Bank Business Net Construction, the non-party et al., as the joint guarantor of the Han Industrial Corporation, the primary debtor.

(3) The allegation in the grounds of appeal is justifiable in holding that the Nonparty’s joint and several liability was extinguished along with the Nonparty’s joint and several liability due to the payment of equivalent compensation, and that the Nonparty bears the obligation to return unjust enrichment against Defendant 1, and on the grounds as seen above, it cannot be accepted for this reason. The lower court’s determination that the Nonparty acquired the right of indemnity by subrogation of the liability to pay equivalent compensation on behalf of the Defendants is justifiable. 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 against logical and empirical rules

3. Conclusion

The Defendants’ appeals are without merit, and all of them are dismissed, and the costs of appeal are assessed against the losing parties. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)