[1] Whether a member becomes a person subject to cash settlement in a case where he/she loses his/her status due to subsequent causes, such as expulsion or withdrawal from a reconstruction association (affirmative)

[2] In a case where a reconstruction association should implement liquidation procedures for its invested property against the owner of land, etc. who lost its membership, whether it should be interpreted in accordance with the articles of association except as provided by the Act on the Maintenance and Improvement of Urban Areas and

[3] Where a member of a reconstruction association loses his/her status after completing the registration of ownership transfer based on trust in the future for the land owned by the reconstruction association, whether the reconstruction association shall exercise its new right to sell in order to acquire the ownership of the land (negative)

[1] Where a partner fails to file an application for parcelling-out or withdraws, he/she shall be subject to cash settlement by losing his/her status as a partner. In cases where a partner loses his/her status due to ex post facto reasons such as expulsion or withdrawal from a reconstruction association, he/she shall be subject to cash settlement from the beginning, as in cases where he/she

[2] Article 18(1) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) provides that “a cooperative shall be a corporation,” and Article 27 of the same Act provides that “Except as otherwise provided in this Act, the provisions governing incorporated associations shall apply mutatis mutandis to a cooperative.” As to the rights and duties of members of an incorporated association under Article 56 of the Civil Act, the Civil Act provides that “the status of members of an incorporated association shall not be transferred or succeeded to,” and as a matter of principle, the articles of association of an incorporated association shall govern the remaining matters. Therefore, in cases where a reconstruction association must implement liquidation procedures on its invested property against the owner of land, etc. who lost its membership status, it shall be construed in accordance

[3] The purport of Article 47 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) stipulating that a reconstruction association shall liquidate the land, etc. in cash against the owner of land, etc. who failed to file an application for parcelling-out or who withdrawn the application for parcelling-out, shall be deemed to have determined that a member shall pay in cash, instead of recognizing the return of the kind invested by the member, in cases where the member is to liquidate by losing his/her status as the member after performing the obligation of investment in kind in accordance with the articles of association after performing the obligation of investment in kind. This does not change in cases where a trust relationship is terminated because a member loses his/her status as a member after completing the registration of ownership transfer based on a trust in the future of a reconstruction association as to

[1] Articles 16(2) and (3), 19(1), 20(1)3, 39, and 47 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents / [2] Articles 18(1), 20, 27, and 47 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, Article 56 of the Civil Act / [3] Articles 39 and 47 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents

[1] Supreme Court Decision 2009Da81203 Decided August 19, 2010, Supreme Court Decision 2010Da57824 Decided January 13, 201, Supreme Court Decision 2011Da16127 Decided September 26, 2013 (Gong2013Ha, 1877)

The Nam-gu Seoul Metropolitan Government Reconstruction Housing Association (Attorney Gyeong-soo et al., Counsel for the plaintiff-appellant)

Defendant 1 and two others (Attorneys Kim Dong-jin et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2011Na72815, 2012Na36717 decided October 18, 2012

All appeals are dismissed. The costs of appeal are assessed against the Defendant (Counterclaim Plaintiff).

The grounds of appeal are examined.

1. Determination on the grounds of appeal as to the principal lawsuit

A. Since the consent of the owners of land, etc. to establish a reconstruction association which is the project implementer of a housing reconstruction project (hereinafter “project implementer”) is merely one of the procedural requirements necessary to issue an authorization to establish an association, a reconstruction association still has the status of a project implementer, unless the disposition to establish an association is revoked or null and void. Therefore, even if the owners of land, etc. who originally agreed to establish an association in the course of implementing a new reconstruction resolution to supplement the initial resolution in preparation for the assertion that there is a defect in the establishment resolution before the authorization to establish an association, such circumstance alone does not constitute “a person who does not consent to the establishment of the association” or “a member’s status” (see Supreme Court Decision 2010Da57824, Jan. 13, 201). However, where a member fails to file an application for parcelling-out or withdraws from the association, it shall not be deemed that the owner of land, etc. falls under “a person who does not consent to the establishment of the association” or that a member loses the status of a housing reconstruction association after cancellation or withdrawal.

Meanwhile, Article 18(1) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) provides that “a cooperative shall be a corporation,” and Article 27 of the same Act provides that “Except as provided in this Act, the provisions governing incorporated associations shall apply mutatis mutandis to a cooperative.” As to the rights and duties of members of an incorporated association under Article 56 of the Civil Act, the Civil Act provides that “the status of members of an incorporated association shall not be transferred or succeeded to,” and as a matter of principle, the remaining matters shall be governed by the articles of association of an incorporated association. Therefore, even where a reconstruction association ought to implement liquidation procedures on the property invested by the owner of a plot of land, etc. who loses its membership status against the

In addition, Article 47 of the Urban Improvement Act provides that a reconstruction association shall liquidate the land, etc. in cash against the owner of a plot of land, etc. who failed to apply for parcelling-out or has withdrawn an application for parcelling-out in accordance with the articles of association, the purport of the provision that a partner shall pay in cash without recognizing the return of the kind invested by him/her where he/she is to liquidate by losing his/her status as a partner after performing an obligation of investment in kind pursuant to the articles of association. This does not change in cases where a partner loses his/her status as a partner after completing the registration of ownership transfer based on a trust in the future of the reconstruction association as to the land, etc. owned by him/her for reasons of impossibility of achieving its purpose

Therefore, in cases where a reconstruction association bears the obligation to pay liquidation money to the owners of lands, etc. who have lost their status as a member pursuant to Article 47 of the Urban Improvement Act, the owners of lands, etc. under the principle of equity bears the obligation to transfer the ownership of land, etc. to a reconstruction association without limitation of rights, and in principle, the obligation to transfer ownership without registration of restriction of rights and the obligation to pay liquidation money to the reconstruction association. However, in cases where the owners of lands, etc. have completed the registration of ownership transfer due to a trust in the future of the reconstruction association on land, etc. owned by the owners of lands, etc., without any obligation to separately transfer ownership to obtain liquidation money (see Supreme Court Decision 2008Da37780, Oct. 9, 2008). In cases where a trust relationship is terminated due to the forfeiture of membership status of a member, the real estate already trusted belongs to the reconstruction association as a matter of course, and the ownership transfer registration due to a cancellation registration of trust registration and the reversion of trust property to the owners of lands, etc. is unnecessary (see Supreme Court Decision 90Da40Da.

B. According to the facts acknowledged by the lower court, the Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) 1 and the Nonparty consented to the first reconstruction resolution regarding the establishment of the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) association. The Plaintiff association obtained authorization for the establishment of a reconstruction association from the competent administrative agency, and Defendant 2 and 3 purchased apartments from the Nonparty and completed the registration of the transfer of ownership. Thereafter, the Plaintiff association newly prepared a written consent form for the reconstruction resolution and made the second reconstruction resolution, but the Defendants did not consent to the second reconstruction resolution.

In light of the above facts in light of the legal principles as seen earlier, Defendant 1 and the Nonparty consented to the first reconstruction resolution, and acquired the status of the Plaintiff’s association member upon obtaining authorization to establish the association, and Defendant 2 and 3 succeeded to the status of the association member from the Nonparty. Accordingly, the Defendants do not lose their membership solely on the ground that the Defendants did not consent to the second reconstruction resolution. However, as recognized by the lower court, Defendant 1 was expelled from the Plaintiff’s association on June 29, 2008, and Defendant 2 and Defendant 3 was rendered a final and conclusive judgment in favor of the Plaintiff association by filing a lawsuit seeking confirmation of the status of non-members. Thus, the Defendants only lose their membership status as the Plaintiff association, and constitute a person subject to cash settlement under Article 47 of the Urban Improvement Act.

In addition, according to the facts acknowledged by the court below, since the registration of ownership transfer for each apartment of this case was completed due to the trust in the future of the Plaintiff Union in accordance with the mediation protocol or the final judgment of the lawsuit claiming ownership transfer filed against the Defendants against the Defendants, the Defendants lose their membership and terminate their trust relationship, thereby the ownership of the above apartment belongs to the Plaintiff Union finally and conclusively, and the Plaintiff Union is obligated to pay the Defendants the liquidation money in accordance with Article 47 of the Urban Improvement Act

C. According to the reasoning of the judgment below, under the premise that the Plaintiff Union should exercise the right to sell even after the completion of the registration of ownership transfer based on trust, the court below determined that the Plaintiff Union is liable to pay the purchase price or liquidation money to the Defendants, on the following grounds: (a) there is no need to go through the peremptory procedure to exercise the right to sell; and (b) it can be deemed that the Plaintiff Union exercised the right to sell that the Plaintiff Union completed the registration of ownership transfer based on the conciliation protocol against Defendant 1; and (c) Defendant 2 and Article 3 are similar to that expelled from the partnership, thereby analogical application of Article 39 or

Examining the judgment of the court below in light of the legal principles as seen earlier, the premise that the Plaintiff Union should exercise the right to demand sale is erroneous, but the conclusion that each apartment house of this case belongs to the Plaintiff Union, and that the Plaintiff Union is obligated to pay the liquidation money under Article 47 of the Urban Improvement Act is justifiable. Accordingly, there is no error of law affecting the conclusion

2. Determination on the grounds of appeal as to the counterclaim

According to the reasoning of the judgment below, the court below determined that the registration of transfer of ownership in the name of the plaintiff association as to each apartment of this case is valid, and that the defendants can only receive the amount equivalent to the market price from the plaintiff as the sale price or the settlement money, and could not seek the restoration of ownership by asserting the cancellation or termination

In light of the above legal principles, although the court below’s explanation of its reasoning was inappropriate, the conclusion that rejected the Defendants’ assertion is justifiable, and there is no error of law affecting the conclusion of the judgment.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-bok (Presiding Justice)