Plaintiff (Law Firm, Kim & Lee LLC, Attorneys Kim Jong-soo et al., Counsel for the plaintiff-appellant)

Defendant 1 and two others (Law Firm Sejong, Attorneys Kim Jong-hun et al., Counsel for the defendant-appellant)

May 14, 2020

Seoul Central District Court Decision 2017Da5237813 Decided December 14, 2018

1. All appeals by the Defendants are dismissed.

2. The costs of appeal are assessed against the Defendants.

1. Purport of claim

A. The Plaintiff:

(1) Defendant 1 received KRW 4,441,500 from the Plaintiff and, at the same time, received shares listed in Section 1 of the attached Table;

(2) Defendant 2 received KRW 2,680,00 from the Plaintiff and, at the same time, received shares listed in Section 2 of the same Schedule;

(3) Defendant 3 received KRW 2,680,00 from the Plaintiff, and at the same time, received shares listed in paragraph (3) of the same list.

indicate each intention to transfer;

B. The Defendants notify ○○○○○ (corporate registration number: registration number omitted, and Gangnam-gu Seoul (resident omitted) that each of the shares listed in the above A was transferred to the Plaintiff.

2. Purport of appeal

The judgment of the first instance is revoked. All of the Plaintiff’s claims against the Defendants are dismissed.

1. Basic facts

A. ○○○○○○○ (hereinafter “instant company”) was established on September 21, 201 by designating the Plaintiff as the representative director, as a company engaging in film, broadcast, and other multimedia and performance-related service business. The Defendants were inside directors of the instant company.

B. As of December 31, 2013, the face value of the shares of the instant company is 500 won, and the total number of shares issued is 170,113 shares. Of them, Defendant 1 owns 17,767 shares, Defendant 2, and Defendant 3 respectively 10,720 shares.

C. On June 27, 2014, the Plaintiff, the Defendants, and Nonparty 1, Nonparty 2, Nonparty 3, and Nonparty 4 entered into a partnership agreement with the effect that they jointly operate the instant company (hereinafter “instant partnership agreement”). The content of the instant partnership agreement is as follows (hereinafter “instant continuous service clause”).

Article 6. A. Partners are required to serve in the company until one year after the end of the obligation to serve. Nevertheless, if one of the partners retires arbitrarily before the end of the obligation, all of the shares of the company in possession shall be transferred at par value to the representative director. If the representative director voluntarily retires before the end of the obligation to serve, all of the shares held by the former representative director shall be transferred at par value. (c) If one of the partners retires before the end of the obligation to serve, not arbitrary withdrawal before the end of the obligation to serve, one of them shall be assigned at par value. In accordance with the period from the date of establishment of ○○○○○○○○○○ Foundation (by September 21, 201) to which the principal has been assigned at least 3% of the shares held by the former representative director at least 4% of the shares for the purpose of sale of the same ○○○○○○○○○○○○○ Foundation.

D. On September 17, 2014, the instant company held a general meeting of shareholders and resolved to dismiss the Defendants from office.

[Ground for Recognition: Facts without dispute, entries in Gap evidence 1 through 4 (including paper numbers; hereinafter the same shall apply) and the purport of the whole pleadings]

2. Determination

A. Determination on the cause of the claim

According to the above facts, the Defendants are obligated to serve in the company until one year after the date when the instant company became M&A or IPO pursuant to paragraph (a) of the continuous service clause of this case. As the Defendants were dismissed by the resolution of the general meeting of shareholders of the instant company on September 17, 2014, the Defendants were released from office, not arbitrary retirement prior to the termination of the above continuous service obligation. Accordingly, the Defendants constitute (c) of the instant continuous service clause (c) of the instant continuous service clause, and thus, the Defendants are obligated to sell 50% of the shares of the instant company to the Plaintiff, the representative director of the instant company, at their face value.

Therefore, Defendant 1 is obligated to transfer the shares listed in paragraph (1) of the attached Table at the same time with the payment of KRW 4,441,500 (i.e., KRW 8,883 x face value of KRW 500) from the Plaintiff. Defendant 2 is obligated to transfer the shares listed in paragraph (2) of the same Table at the same time with the payment of KRW 2,680,00 from the Plaintiff (i.e., 5,360 x face value of KRW 50 %). Defendant 3 is obligated to transfer the shares listed in paragraph (2) of the same Table at the same time with the payment of KRW 2,680,00 from the Plaintiff to the Plaintiff. Defendant 3 is obligated to transfer the shares listed in paragraph (3) of the same Table at the same time with the payment of KRW 10,720 x KRW 500 x face value of KRW 500). The Defendants are obligated to notify each of the above shares to the Plaintiff.

B. Determination of the defendants' assertion

(1) The assertion that this case’s continuous service provision does not apply to the case where the Defendants withdraw without any cause attributable to them

(A) The Defendants asserted that the continuous service clause of this case applies only to the case where there is a cause attributable to the withdrawing person, and thus, it cannot be applied to the Defendants who were withdrawn from the company of this case by a resolution of the general meeting of shareholders without any cause attributable to them.

(B) As the interpretation of a juristic act clearly establishes the objective meaning that the parties gave to the act of expressing the intent, where there is a conflict of opinion regarding the interpretation of the contract between the parties, the interpretation of the juristic act shall be reasonably interpreted in accordance with logical and empirical rules by comprehensively taking into account the contents of the text, the motive and background leading up to the agreement, the purpose to be achieved by the agreement, the parties’ genuine intent, etc. (see Supreme Court Decision 2005Da68295, May 12, 2006, etc.).

(C) In light of the following circumstances, it is difficult to accept the Defendants’ aforementioned assertion since it exceeded the scope of interpretation of the instant continuous service provision, in light of the following circumstances, which can be seen by comprehensively taking account of the overall purport of the pleadings with respect to the testimony of Nonparty 5 and Nonparty 4, as indicated in the evidence Nos. 3, 5, 6, and 9 and 17, and the testimony of Nonparty 5 and Nonparty 4.

① The instant continuous service clause provides that the “voluntary retirement” of a partner and the “a resignation, not a voluntary retirement” of a partner under Paragraph (a) of the same Article, and that of a partner is classified into two cases, and each item is prescribed exclusively for each other.

② Article 7(2) of the instant trade agreement provides that “When one of the partners violates the contractual obligations, the partners shall demand to perform the said contractual obligations within a certain period, and, notwithstanding the highest notice, the said partner shall terminate the said contract and immediately take effect from the date of the notification of termination, if the said partner fails to perform the said contractual obligations,” and Paragraph (c) of the same Article provides that “a partner who is responsible for the termination of a trade agreement shall waive all the rights to the company and at the same time transfer all the rights to the representative director and bear all the expenses.” Unlike the instant continuous employment clause, it is reasonable to deem that the instant continuous employment clause applies to the partner’s breach of duty and the existence of the cause for the breach of duty to return to the representative director as the condition of termination and waiver of the right

③ At the time of receiving a request from an investor for the preparation of a partnership agreement on June 2014, Defendant 2 pointed out the risk of the said provision on the premise that: (a) where a partner who does not have any cause attributable to the Plaintiff withdraws from the board of directors by a decision of the board of directors, the case constitutes “non-voluntary retirement.”

④ As one of the most dangerous factors to leave a joint business starters at Lone Star business company, it seems natural to conclude a partnership business agreement in the form of setting the period of compulsory employment as in the instant business agreement and transferring a certain share to the company at a par value according to the length of service at the time of the violation, because the core human resources sharing technology and ideas have a significant share to retire with the company’s growth.

(D) Therefore, the defendants' above assertion is without merit.

(2) The assertion that the fulfillment of conditions is contrary to good faith

The defendants asserted that the plaintiff is a party to receive direct benefit through the fulfillment of the terms of dismissal of the defendants and led the defendants to dismiss the defendants unfairly against the good faith, so the defendants cannot assert the effect of the fulfillment of the terms of continuous service in this case pursuant to Article 150(2) of the Civil Act.

As seen earlier, this case’s continuous service provision provides that “The stocks to be transferred by the representative director from the partners who violated the duty of continuous service are temporary parling in order to grant the old share for the purpose of human resources management, and this share ratio in the process of decision-making such as the prime class may be restricted to voting rights.” Accordingly, the Plaintiff cannot arbitrarily dispose of the stocks to be transferred from the Defendants, and the exercise of voting rights may also be restricted. Thus, it cannot be readily concluded that the Plaintiff gains profit due to the fulfillment of the terms of dismissal of the Defendants.

In addition, as seen earlier, the dismissal of the Defendants was made at the general meeting of shareholders of the instant company, and shareholders, including institutional investors, can be understood as a result of the best choice for their own interest, and cannot be said to have been dismissed independently by the Plaintiff. The evidence submitted by the Defendants alone is insufficient to recognize that the Plaintiff led the dismissal of the Defendants against the good faith and trust, and there is no other evidence to acknowledge it otherwise.

Therefore, the above assertion by the Defendants cannot be accepted.

(3) Claim for anti-social legal act or unfair legal act

(A) The Defendants asserted that the continuous service clause of this case gains unjust profits such as the acquisition of shares by abusing their superior status, and that the Defendants are null and void as anti-social legal acts that impose unfair dismissal and significant financial disadvantage.

However, even if the plaintiff is in the position of representative director of the company of this case, he cannot arbitrarily dismiss the defendants from the office of director of the company of this case by taking advantage of his status, and it cannot be readily concluded that the plaintiff gains unfair profits due to the dismissal of the defendants. Thus, the above assertion by the defendants is without merit.

(B) In addition, the Defendants asserted that the instant trade agreement is null and void in accordance with Article 104 of the Civil Act, as the Plaintiff had the Defendants prepare the instant trade agreement by using the following experience: (a) the instant trade agreement is an unfair legal act.

An unfair legal act stipulated in Article 104 of the Civil Act is established when the victimized party was in a state of poverty, rashness, or inexperience, and the other party knowingly committed a juristic act with intent to use it in bad faith and with intent to use it, and there is an objective obvious imbalance between payment and consideration (see, e.g., Supreme Court Decision 2009Da50308, Jul. 15, 2010).

In full view of the statements in Eul evidence Nos. 3 and 4, the fact that the plaintiff led to the conclusion of the instant partnership agreement is acknowledged. However, in light of the following circumstances, which can be seen by comprehensively taking account of the overall purport of the arguments as seen earlier, ① institutional investors demanded the conclusion of the instant partnership agreement with each other, ② investors participated in the contents of the instant partnership agreement and demanded the time when the instant company was invested, ③ there was discussions on the interpretation of the instant continuous service provision and its risk among the partners at the time when the investor was requested to prepare the partnership agreement on June 2014, and ③ there was discussions on the interpretation of the instant continuous service provision and its risk. In light of the fact that the plaintiff led to the conclusion of the partnership agreement in this case, it is insufficient to recognize that the plaintiff had the Plaintiff enter into the partnership agreement in this case by using flag, rash, and non-experience experience among the Defendants, and there is no other evidence to acknowledge it otherwise.

Therefore, the above assertion by the defendants is without merit.

3. Conclusion

Therefore, the plaintiff's claim against the defendants shall be accepted in its entirety on the grounds of its reasoning, and the judgment of the court of first instance is just in its conclusion, and the defendants' appeal is dismissed in its entirety on the grounds of its ground.

(attached Form omitted)

Judges Kim Hyun-tae (Presiding Judge)