[1] Whether an appraisal business entity is liable for damages under Article 26 (1) of the Public Notice of Values and Appraisal of Lands, etc. Act in a case where an appraisal business entity falsely entered the lease relationship of a security entrusted with appraisal in the appraisal document (affirmative with qualification)

[2] The case holding that where an appraisal business entity conducted a lease relationship of a collateral through a building owner who is not a lessee under his/her understanding upon a financial institution’s prompt demand for appraisal and assessment, but it has been found to be false, the appraisal business entity is not liable

[1] Article 26 (1) of the Public Notice of Values and Appraisal of Lands, etc. Act provides that "if an appraisal business operator causes damage to an appraisal requester or a bona fide third party by making an appraisal at the request of a third party significantly different from the reasonable price at the time of the appraisal or by making a false statement on the appraisal document, an appraisal business operator shall be liable for such damage." The term "appraisal" refers to determining the economic value of property such as land and its fixtures and indicating the result at the price". In case where a financial institution requests an appraisal business operator to conduct an appraisal of a security at the same time on the existence of a lease agreement opposing the object of appraisal and the amount of the lease deposit, the direct object of the appraisal is in the economic value of the security itself. Although an appraisal of lease relations is a business incidental thereto, an appraisal business operator is engaged in the appraisal of land and buildings at the request of a financial institution as well as the appraisal business operator, so that the appraisal business operator is liable for damage to the property by making the appraisal business operator make a false statement on the security in the appraisal relation of the security.

[2] The case holding that where an appraisal business entity conducted a lease relationship of a collateral through a building owner who is not a lessee under his/her understanding upon a financial institution’s prompt demand for appraisal and assessment, but it has been found to be false, the appraisal business entity is not liable for damages

[1] Article 2 and Article 26 (1) of the Public Notice of Values and Appraisal of Lands, etc. Act / [2] Article 26 (1) of the Public Notice of Values

1. The term “the term” means “the term” means “the term “the term” means “the term” means “the term.

Japanese Certified Public Appraisal Corporation (Attorney Park Jong-chul, Counsel for the plaintiff-appellant)

Seoul High Court Decision 95Na40474 delivered on December 24, 1996

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. As to the ground of appeal on the violation of the rules of evidence

According to the reasoning of the lower judgment, the lower court recognizes the following facts.

The plaintiff is a financial institution with the purpose of credit installment savings and loan. The defendant is an appraisal corporation established on the basis of the Public Notice of Values and Appraisal of Lands, etc. (the Act before amended by Act No. 5108, Dec. 29, 1995; hereinafter the "Land Price Publication Act") by conducting an appraisal of land, etc. at the request of a financial institution, etc. as its business. The defendant entered into an appraisal business agreement with the plaintiff on August 16, 191, to compensate the plaintiff for damages caused to the plaintiff by the defendant's intentional or negligent defect appraisal, and the lease relationship with the defendant's appraisal report in accordance with the above business agreement is an appraisal item.

In concluding the above appraisal business agreement, the plaintiff and the defendant agreed to complete appraisal within three days when they received a request for appraisal as to the period of appraisal, and the above three-day period should be calculated from the day following the date when the defendant received a request for appraisal, and for public holidays and appraisal, the above three-day period should be calculated from the day when the defendant's business office is located, and the number of days after sending a written appraisal to an area other than the administrative district in which the defendant's business office is located, and the above three-day period should be secured from the actual appraisal

In appraising 80 proposals by the time of appraisal according to the plaintiff's request under the above Convention after the conclusion of the agreement, the defendant has investigated the lease relationship according to the form of each letter in which the lessee prepared and delivered by the plaintiff at the plaintiff's request is required to affix his/her own signature and seal without utilizing the column of the lease relationship in the form of an appraisal report under the above agreement.

On March 30, 1993, the Plaintiff requested the Defendant to conduct an appraisal of the building site and buildings listed in the attached list of the lower judgment, which are multi-family detached houses owned by Nonparty 1 and Nonparty 2, the collateral offered by the Nonparty Company, for the purpose of offering a secured loan, and requested the Nonparty Company to conduct an appraisal on a day, contrary to the contents of the above agreement, in order to promptly handle a secured loan against the Nonparty Company.

Therefore, the Defendant started the appraisal of this case pursuant to the above agreement between the Plaintiff and the Defendant, but the Defendant did not have the right of compulsory investigation as to whether or not the lease was made, and thus, the investigation of the lease depends on the voluntary statement of the lessee or his family members stated in the owner column of the security at the time of the appraisal. When the appraisal cannot be conducted due to the absence of the lessee of the security at the time of the appraisal, the Plaintiff’s side should promptly dispose of and change the appraisal of the security, and then confirm the lease relationship on the part of the Plaintiff. Thus, under the Plaintiff’s understanding, the Plaintiff confirmed the lease relationship between Nonparty 1 and Nonparty 2, the owner of the security of this case, who was not the lessee, and Nonparty 3, the owner of the security of this case, through Nonparty 1 and Nonparty 2’s mother and Nonparty 3, who was employed during the appraisal at the Plaintiff’s request, and prepared a lease agreement in the form of the attached Form, and submitted to the Plaintiff a written report confirming the lease relationship with the Plaintiff’s signature to the Plaintiff on the 31st of the same month.

On April 2, 201 of the same year, the Plaintiff received and kept each copy of the form created by the Plaintiff in the name of each lessee and lessor (No. 6-2-5) and the copy of the monthly rent contract (No. 6-10 of the same title) separately from the above lease agreement entered into by the Defendant on April 2, 201. Accordingly, the name of the lessee compared with the above lease agreement entered into by the Defendant is only different, and the remaining matters, including each lease deposit, are the same as each other.

In granting a real estate mortgage loan, the Plaintiff extended a loan to the Defendant within the limit of 80% of the remainder after deducting the lease deposit from the appraised value of the relevant collateral. On April 2, 1993, the Plaintiff set up a collateral security amount of KRW 855,000,000 with respect to the instant collateral, and loaned KRW 570,000 to the Defendant. On April 27, 1993, the Plaintiff extended an additional amount of KRW 220,000,000, including the loan and other loans within the said loan limit.

After all, as the non-party company did not pay interest on the above loan, the plaintiff applied for auction of the security of this case to 700,000,000 won, and the security of this case was adjudicated at the auction court. As a result of the investigation by the auction court, it was revealed that the non-party 4 and the non-party 3 actually leased and reside in each part of the building of this case in 235,00,000 won, and eventually, on August 30, 1994, the plaintiff was paid 235,00,000 won from the successful bid price of the security of this case and the total amount of the expenses for execution and the deposit of the non-party 4,925,220 won other than the amount of dividends of the non-party 4,963,968,058 won.

In light of the records, the above fact-finding by the court below is just and there is no violation of the rules of evidence against the rules of evidence. The grounds for appeal pointing this out are not acceptable.

2. As to the ground of appeal on misapprehension of legal principles as to the liability for damages under the Public Notice of Values Act

Article 26 (1) of the Land Price Disclosure Act provides that "When an appraisal business operator causes damage to a client or a bona fide third party by making an appraisal at the request of a third party significantly different from the reasonable price at the time of the appraisal or by making a false statement on the appraisal document, an appraisal business operator shall be liable for such damage." The "appraisal" refers to "an appraisal that determines the economic value of property such as land and its fixtures and expresses the result at the price" (Article 2 subparagraph 2 and 4 of the Land Price Disclosure Act).

However, while requesting the appraisal of the instant collateral to the Defendant, the Plaintiff requested the appraisal of the existence of a lease agreement with respect to the object of appraisal and the amount of the lease deposit, so the direct object of the appraisal is the economic value of the instant collateral itself, and the factual investigation of the lease relationship as above is incidental thereto, and it does not naturally become the contents of the appraisal of the instant collateral. However, the appraisal business operator is also engaged in the appraisal of land and buildings at the request of a financial institution (Article 20 (1) 5 of the Land Price Publication Act). Thus, in conducting the appraisal of the instant collateral, the Defendant, who is an appraisal business operator at the request of a financial institution, made a false statement on the lease relation of the instant collateral in the documents of appraisal and assessment by intention or negligence, thereby causing the Plaintiff, who is the client of the appraisal, to make the appraisal and assessment of the value of the instant collateral, thereby causing damage to the Plaintiff, the Defendant is liable to compensate for the damage caused thereby.

However, according to the facts duly established by the court below, as the defendant could not investigate the relationship with the absence of the lessee at the time of the appraisal of this case, it is difficult to view that there was any negligence on the defendant in making a false statement, even if it is found that there was any negligence on the part of the defendant in making a false statement, since the defendant confirmed the lease relationship of this case through the non-party 1 and the non-party 2, the owner of the security of this case, who is not the lessee, through the non-party 3, who is the mother of the non-party 1 and the non-party 2, who is the non-party 3, the owner of the security of this case, and then prepared a lease report stating the contents thereof, and delivered it to the plaintiff.

The court below's rejection of the plaintiff's claim for damages under Article 26 (1) of the Public Notice of Values Act is just in its result, and there is no error in the misapprehension of legal principles as to the liability for damages under the Public Notice of Values and Appraisal Act as pointed out in the ground of appeal by the court below

3. As to the ground of appeal on misapprehension of legal principles as to liability for damages caused by default and tort

According to the reasoning of the judgment of the court below, the defendant confirmed the relationship of lease at the plaintiff's later time through the mother of the non-party 1 and the non-party 2, who is the owner of the security of this case, and prepared and delivered the above lease protocol to the plaintiff. Thus, the defendant fulfilled his duty of care in appraisal and assessment. Further, even if the defendant did not fulfill his duty of care in the above appraisal and assessment, when the plaintiff provided the loan of this case, he received a letter and contract under the name of the lessor and the lessee, and confirmed the contents of the lease separately from the contents stated in the above lease investigation statement prepared by the plaintiff, in the above appraisal and assessment of the loan of this case, the court below rejected all claims for damages due to the violation of the above duty of care and the plaintiff's damages due to the above loan of this case on the ground that there is a proximate causal relation between the defendant's violation of the above lease and the plaintiff's damages due to the above secured loan of this case.

In light of the records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the contents of default, the duty of care, the proximate causal relation between damages, and tort liability. The grounds of appeal on this point also cannot be accepted

4. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the plaintiff-Appellant. It is so decided as per Disposition by the assent of all Justices who reviewed the appeal.

Justices Park Jong-chul (Presiding Justice)