2013Na67077 Damage, etc.

1. A stock company;

2. B;

3. C

D Corporation

Seoul Central District Court Decision 2012Gahap42739 Decided August 22, 2013

October 2, 2014

November 20, 2014

1. All appeals filed by the plaintiffs are dismissed.

2. Of the plaintiffs' claims added in the trial, the part of the plaintiffs' claims for restitution based on subrogation shall be dismissed, and all of the remaining claims shall be dismissed.

3. The costs of appeal (including the costs of appeal due to the addition of the claim in the trial) shall be borne by the plaintiffs.

The judgment of the first instance shall be revoked. The defendant revoked the judgment of the plaintiff A (hereinafter referred to as "the plaintiff A") with respect to 2,420,00,000 won and 2,00,000,000 won among them, from October 17, 2008 to 20,000,000 won, from January 27, 2009 to 220,000,000 won, from November 1, 2010 to 300,50,000 won for each of the plaintiff B (hereinafter referred to as "the plaintiff B") with respect to 302,50,000,000 won for 250,000,000 won for each of them, from 20,000,000 won for restitution to 10,50,710,000 won for 20,000 won for each of them, from 205,2005.7.

1. Basic facts

A. On October 17, 2008, G: (a) between the Defendant (in this case, F was the sole representative director); (b) between the Plaintiff and the Plaintiff, the Plaintiff purchased the land for the land other than 317,455m2 (hereinafter “instant land”) in the Hancheon-gun, Hongcheon-gun, Hongcheon-gun, which was purchased by the Defendant for the development of the golf course at the time, for KRW 15 billion; and (c) at the time of entering into a contract, five billion won shall be paid as the down payment; and (d) the remainder of ten billion won shall be paid to G by raising funds necessary for the authorization business of the golf course and acquiring the permission of the golf course in the instant land, and at the same time by transferring the name thereof (hereinafter “the instant sales agreement”). (1)

B. G paid 3 billion won out of the down payment to the Defendant on the day of the instant sales agreement, and the said 3 billion won amount was raised by G from the Plaintiffs (Plaintiff A2 billion won, Plaintiff B250 million won, Plaintiff C750 million won).

C. After that, on November 10, 2008, the Defendant converted to a joint representative director system in order to facilitate the business of authorization and permission of golf courses on the instant land pursuant to the instant sales agreement, and G, along with the existing representative director F, was appointed as a joint representative director and completed the registration on November 14, 200.

D. However, after having taken office as a joint representative, G: (a) on January 5, 2009 under the name of the Defendant without the consent of F; and (b) on January 5, 2009, when the Plaintiffs make joint investments in the membership golf course business with the instant land managed by the Defendant and G as the business site, G means to develop the instant land as the golf course site and distribute business profits; (c) Plaintiff A is 40%, Defendant and G is 40%, Plaintiff B is 5%, and Plaintiff C is 15% of each share of the instant land; (d) Defendant and G are responsible for obtaining authorization and permission as the membership golf course on the instant land; and (e) the period is indicated as until October 2010. Where the Defendant and G did not obtain authorization and permission within the period of January 10, 2010, or where the Plaintiffs are deemed to have been able to enter into an agreement on the instant project, the Plaintiffs are entitled to rescind the agreement with the Defendant’s representative director and the Plaintiff’s joint signature.

E. According to the special terms and conditions of the instant investment agreement, “G” confirm that “B (G and one other)” under the instant sales agreement is “A” under the investment agreement with G and the instant investment agreement, and the rights and obligations of “B (G and one other)” under the instant sales agreement are identically infringed on the Plaintiff A, who is a partner.

F. After that, the Plaintiffs were transferred to the Agricultural Cooperatives under the name of the Defendant, which was managed separately by G on January 21, 2010, KRW 200 million by the Plaintiff A, KRW 25 million by the Plaintiff C, and KRW 75 million by the Plaintiff C under the name of the Defendant for each design authorization service cost, and received each receipt in the name of the Defendant from G. Each of the above receipts was written by stating that G was “F without the consent of the joint representative director,” and written next to that, with the seal impression of the joint representative director of G, such as the above paragraph (d).

G. Meanwhile, on May 3, 2011, the Plaintiffs sent a notification to the Defendant and G on the following grounds: “In spite of the payment of a total of KRW 3.3 billion under the instant investment agreement, the Defendant and G did not entirely proceed with the procedures for granting the instant golf course; thus, the Defendant and G returned the said KRW 3.3 billion and compensate for damages; and on July 7, 201, the Chuncheon District Court 201Kahap143, which issued a provisional attachment on the instant land with the claim amount of KRW 3.3 billion. The Defendant was aware that G used the said notification and provisional attachment order with the claim amount of KRW 3.3 billion from the Plaintiffs.

【Non-contentious facts, Gap’s entries in Gap’s evidence Nos. 1, 3, 5, 7 through 10, 15, 19, 22, 23 (including provisional numbers), Eul’s evidence Nos. 5, 6, and 8, and the purport of the whole pleadings

2. Determination on the cause of the claim

A. Claim for restitution due to the cancellation of the instant investment agreement (main cause of claim)

1) Plaintiffs’ assertion

A) Since G is not only one of the co-representatives of the defendant, but also delegated by the defendant the authority to exercise the power of representation independently, G is valid the instant investment agreement concluded by G on behalf of the defendant.

B) Even if G did not have the authority to independently conclude the instant investment agreement on behalf of the Defendant, the Defendant continued to hold 3 billion won under the instant investment agreement even after the conclusion of the instant investment agreement, and received 300 million won from the Plaintiffs as design authorization service costs. The Plaintiffs did not raise any objection against the provisional seizure on July 7, 201 by making the said amount as the claim amount. Rather, the Defendant should be deemed to have ratified the instant investment agreement, as it continued to communicate with the Plaintiffs and notified the progress of golf course business.

C) Even if not, since the Defendant entered into the instant trade agreement with G and took office as a joint representative director, G are allowed to use the name of the representative director solely after G was appointed as a joint representative director, it is liable for the act of the representative director as prescribed in Article 395 of the Commercial Act.

D) As above, the Defendant bears the obligation under the instant investment agreement, and pursuant to the instant investment agreement, the Plaintiffs paid each of the following amounts: (a) Plaintiff A paid KRW 2.2 billion to the Defendant; (b) Plaintiff A paid KRW 275 million to Plaintiff B (250 million out of the down payment + the service cost for designing authorization + KRW 250 million in the down payment); and (c) Plaintiff C paid each of the aforementioned damages for delay to the Plaintiffs (750 million in the down payment + the service cost for designing authorization + KRW 7550 million in the down payment). Since the Defendant failed to obtain the authorization for the instant land by October 2010, the Defendant expressed its intent to cancel the instant investment agreement due to the Defendant’s nonperformance; and (b) the Defendant paid each of the aforementioned damages for delay to the Plaintiffs, and thus, the Defendant shall pay each of the aforementioned damages for delay to its original state.

2) Determination

A) Validity of the sole representative act

The purpose of the joint representative system in a stock company is to ensure the uniformity of business performance by allowing several representative directors to exercise their power of representation only in the external relationship, to exercise caution in exercising their power of representation, and to prevent abuse or misuse of the power of representation among the representative directors (see, e.g., Supreme Court Decision 89Meu3677, May 23, 1989). Thus, the joint representative director has the right to jointly represent the company, and even if one of the joint representative directors has been individually delegated the exercise of his power of representation on a specific matter by another joint representative director, the act is naturally an act of non-representative and has no effect on the company. However, each testimony of witness H and witness at the first instance trial, which alone concluded the investment agreement in the name of the defendant, and thus, to promote the profits of the company by preventing any abuse or misuse of the power of representation among the representative directors (see, e.g., Supreme Court Decision 89Meu3677, May 23, 1989).

B) Ratification

The evidence Nos. 16 and 18 alone is insufficient to recognize the fact that the defendant (one person, inter alia, the co-representative F) had continued contact with the plaintiffs and had known the progress of the golf course business on the land of this case. Even if such fact is acknowledged, it is difficult to recognize that the defendant ratified the act of non-representative of G with respect to the investment agreement of this case solely on such circumstances and other circumstances alleged by the plaintiffs, and there is no other evidence to acknowledge it. Accordingly, this part of the plaintiffs' assertion is not acceptable.

C) Whether the representative director is responsible

In a case where several representative directors jointly represent the company and have registered it, in a case where there is a reason attributable to the existence of the appearance, such as explicitly or implicitly approving, permitting, or neglecting, etc. that one of the joint representative directors performs a juristic act using the name of the representative director, the company shall be liable for the juristic act done solely on behalf of the company against a third party in good faith by the joint representative director. However, as to the act of one of the joint representative directors who arbitrarily used the name of the representative director without permission of the company, the company’s liability shall not be returned to the company even if it was negligent for the company to the third party (see, e.g., Supreme Court Decision 94Da50908, Nov. 21, 1995).

With respect to the instant case, it is insufficient to recognize that G and the Defendant, prior to the instant investment agreement, entered into the instant trade agreement with G and the Defendant, and accordingly the Defendant took the office of a joint representative, G, a joint representative director, F or the Defendant, who is the Defendant’s co-representative, to independently engage in a legal act using the name of the representative director after the appointment of a joint representative director, and there is no other evidence to acknowledge it.

Therefore, we cannot accept the plaintiffs' above assertion that the defendant is responsible for the expression representative under Article 395 of the Commercial Act.

B. Claim for restitution following the cancellation of the instant trading agreement (the grounds for preliminary or selective claims)

1) Plaintiffs’ assertion

At the time of the instant purchase and sale agreement, the Defendant received KRW 3 billion directly from the employees I of the Plaintiffs, and even if the written agreement (No. 10, No. 5, the evidence No. 5, the same as the evidence No. 10, the evidence No. 5) was written at the time, the instant purchase and sale agreement was concluded with the Plaintiffs as directly related parties with G, along with G. Even if not, the meaning of the above 'G et al.' is that even if G subsequently designates the Plaintiffs as the parties, the Defendant would not raise any objection, and thereafter G additionally designate the Plaintiffs as the parties to the instant purchase and sale agreement through the terms of the instant investment agreement, and thereby, the Plaintiffs became the parties to the instant purchase and sale agreement. However, the Defendant still failed to implement the terms of the instant purchase and sale agreement on the grounds of the Defendant’s default, and the Defendant is obligated to return the total amount of KRW 3.3 billion paid by the Plaintiffs to its original state.

2) Determination

According to the statements in Gap evidence Nos. 10 and 16 and witness H and witness I of the first instance trial, the above agreement of this case is written as "the party to the agreement of this case" and "F (F) and "G non-party 1 (B)". On the date of the trade agreement of this case, the defendant's employees I attached to G and gave three copies of the check of KRW 3 billion in total face value to F with the defendant's representative director, although the above fact of recognition is not sufficient to recognize that the above agreement of this case was concluded directly between the plaintiffs and the defendant, or that the defendant consented to the additional designation of the plaintiffs as parties to the contract of this case after the conclusion of the contract of this case. The defendant's joint representative director did not appear to have been present in the party's questioning without any justifiable reason, and there is no evidence to acknowledge that the defendant's agreement of this case was concluded as genuine between the defendant and the defendant's representative director, and there is no reason to believe that the defendant's statement of this case's agreement was concluded with G.

(c) Claim for return of unjust enrichment (the cause of preliminary or selective claim)

The plaintiffs paid KRW 3.3 billion to the defendant in accordance with the investment agreement of this case. If the investment agreement of this case is null and void as a non-representative act, the defendant would have made the above 3.3 billion won unjust enrichment without any legal ground. Thus, the defendant asserts that the defendant has a duty to return the above amount to the plaintiffs. However, as seen above, the defendant received the above 3.3 billion won from the defendant pursuant to the trade agreement of this case concluded lawfully and effectively with G (the down payment is part of the down payment, and the 3.3 billion won is part of the down payment, and the 3.3 billion won is a cost to raise G funds for the approval of the golf course for the land of this case pursuant to the trade agreement of this case) and it cannot be deemed that the above amount is paid from the plaintiffs without any legal ground. Thus, the above plaintiffs' assertion

(d) Claim based on subrogation of creditors (the cause of preliminary or selective claims);

If the conclusion of the instant investment agreement with the Defendant is not recognized, the Plaintiffs eventually lent KRW 3.3 billion to G, and the Plaintiffs have a loan claim equivalent to the same amount against G. Since the Defendant failed to perform the obligation under the instant trade agreement between G, G is entitled to exercise the right of rescission for nonperformance against the Defendant, and the Plaintiffs exercise the right of rescission for the instant purchase and sale agreement against G by designating the above loan claim against G as the preserved right. Accordingly, the Defendant asserts that the Plaintiffs are obliged to pay KRW 3.3 billion to G by restitution following the cancellation of the instant trade agreement. However, even if it is recognized that the Plaintiffs have a loan claim amounting to KRW 3.3 billion against G, as long as there is no specific assertion and proof by the Plaintiffs as to the fact that G currently is insolvent, this part of the Plaintiffs’ claim is unlawful in itself because it does not have a need to preserve the requirements for exercising the right of subrogation, which is a requirement for exercising the right of subrogation.

(e) Claim for damages under Articles 389(3) and 210 of the Commercial Act (claim for Preliminary or Selective Claim);

1) Plaintiffs’ assertion

Even if the instant investment agreement, which was entered into by one of the joint representative directors of the Defendant, solely by G, does not take effect against the Defendant, G, as if G independently was entitled to represent the Defendant, received KRW 3.3 billion from the Plaintiffs, thereby causing damages equivalent to the same amount. As such, the Defendant is liable for compensating the Plaintiffs for damages suffered by the Plaintiffs pursuant to Articles 389(3) and 210 of the Commercial Act.

2) Determination

In accordance with Articles 389(3) and 210 of the Commercial Act, a corporation shall be liable for damages caused by its representative director's illegal acts to another person. The term "in the course of performing its business" refers to cases where the representative director does not belong to the business itself, but where he seems to fall under the scope of the representative director's business after observing from the appearance of the act. However, even if the representative director's act is deemed to fall under the act of performing his business, he shall not be liable for damages if the other party knew or was negligent by gross negligence that the act does not fall under his business or authority (see, e.g., Supreme Court Decision 2003Da6707, Feb. 25, 2005).

As to the instant case, the following circumstances are acknowledged in addition to the overall purport of oral argument, i.e., the Plaintiffs knew of the terms of the instant trading agreement concluded between G and the Defendant prior to the conclusion of the instant investment agreement, and therefore, it appears that G was well aware of the circumstances that G was appointed as the Defendant’s joint representative director for convenience in implementing the instant trading agreement; ② the Plaintiffs voluntarily stated that G and F were the Defendant’s joint representative director at the time of the instant investment agreement; ③ the representative director representing the Defendant’s substantial interest is F rather than G in light of the circumstances described in the above ① (i) and (ii) the fact that in concluding the instant investment agreement, the Plaintiff was not aware of the fact that G was entrusted with the authority of sole representative from the Defendant or F, and thus, the Plaintiffs did not know of the fact that G was not authorized to conclude the instant investment agreement solely, and therefore, this part of the Plaintiffs’ assertion is without merit (On the other hand, it is difficult for the Plaintiffs to recognize the causal relation between G and the Defendant’s joint representative of G to the amount of KRW 300 billion.

3. Conclusion

Therefore, the part of the plaintiffs' claims for restitution based on subrogation of creditors is unlawful and dismissed, and all of the remaining claims are dismissed as it is without merit. The judgment of the court of first instance on the main claim and the conjunctive claim based on unjust enrichment is justified as it is in conclusion, and all of the appeals of the plaintiffs are dismissed as it is without merit, and the part of the plaintiffs' claims for restitution based on subrogation of creditors which are selectively added at the court of first instance is dismissed, and all of the claims for restitution based on the cancellation of the sale agreement of this case and claims for damages based on tort are dismissed. It is so decided as per Disposition

Judges Lee Young-young

Judges Postal System

Judges Kim Young-sik

1) However, in the letter of the instant trade agreement (Evidence No. 5), the parties to the agreement indicate that the parties to the agreement are the "Defendant Representative Director F (A) and one other (B)."