1. A school foundation's school foundation's school foundation's school foundation's office

Small Enterprise Co., Ltd. (Law Firm Yang Hun-Ga, Attorneys Yellow-hee et al., Counsel for the plaintiff-appellant)

November 2, 2016

Daegu District Court Decision 2015Gahap202845 Decided March 24, 2016

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. The defendant shall pay to the plaintiff 4,010,000,000 won with 20% interest per annum from the day after the delivery of a copy of the complaint of this case to the day of complete payment.

1. Facts of recognition;

A. The Plaintiff is an educational foundation that conducts specialized education on high level general education and industry, and the Defendant is a company that conducts a housing construction project and a housing site preparation project. Nonparty 1 is a person who was a director of the Plaintiff’s chief director and was in charge of the business of transferring ○○ Industrial High School (hereinafter “instant high school”) under the Plaintiff’s control (hereinafter “instant school relocation business”).

B. On August 31, 2010, the Superintendent of the Daegu Metropolitan City Office of Education announced a four-year educational plan, “a strategy for the implementation of the direction and pledge of Daegu education,” which includes the project of moving a specialized high school to the North-gu area of Daegu Metropolitan City, and actively led the transfer of a private specialized high school to the North-gu North-gu area. Accordingly, the Plaintiff, who operated the instant high school, where the teachers (school teachers) were old at the time of the middle of the private specialized high school and became difficult to recruit students in the region, transferred the instant high school to the North-gu Office of Education of Daegu Metropolitan City (hereinafter “Seoul Office of Education”), in response to the above proposal.

C. From November 30, 2010 to secure the prospective site for the relocation of the instant high school, the Plaintiff entered into a contract with Nonparty 8, the owner of the instant high school to purchase KRW 1.5 billion from Nonparty 6, the owner of the instant high school, and paid part of the down payment under each of the above sales contract, using the deposit deposit owned by the instant high school, to the effect that the Plaintiff applied for approval of the financing plan for the relocation project from Nonparty 6, the owner of the instant high school, KRW 1.5 billion, KRW 740 million from Nonparty 7, the owner of the instant land, KRW 3.4 billion from Nonparty 7, the owner of the instant land, KRW 3.40 million, and KRW 3.49 billion from the owner of the instant land. However, the Daegu District Office of Education applied for approval of the financing plan for the relocation project in the name of the Plaintiff’s prospective site for the relocation of the school, and the said plan cannot be paid as the down payment for the relocation of the school in the name of the Plaintiff.

D. Around March 2011, the Plaintiff entered into a contract with the Defendant to implement the school relocation project with the content that “First of all, after acquiring the prospective site for the school relocation in the name of the Defendant, the said land was transferred to the Plaintiff, and the interest on the loans from the Korea Foundation for the Promotion of Private School shall be borne by the Defendant, and the Defendant shall settle the amount at the time the school relocation project is completed, and the Defendant shall implement the school relocation project in the instant case.”

Article 3 (Terms and Conditions of Contracts for Relocation of Schools) ① (1) The interest on loans received from the Korea Foundation for the Promotion of Private School in connection with the Relocation of Schools (△△△ 76, 77, 75-3), which is included in the main sentence, shall be paid from time to time under Article 5 (Final Settlement of Contract Amount for Relocation of Schools and Right to Use Existing School Sites) (1) The contract amount under Article 4 (2) of this Agreement shall be paid from time to time, and the contract amount paid shall be settled at the time of completion of the relocation of schools.

E. In the assessment of the educational environment completed on June 22, 201, the result of “the need to take measures to prevent noise and ensure access roads” was as follows, and the Daegu Office of Education directed the Plaintiff to secure access roads to the prospective site for the relocation of the instant school. On July 4, 2011, the Plaintiff entered into an additional agreement with the Defendant to establish access roads at the Defendant’s expense (hereinafter “Additional Agreement”) as follows:

In accordance with the details of Article 3 of the Agreement on the Implementation of Projects for Relocation of Schools concluded on March 3, 201, the Plaintiff and the Defendant entered into an additional agreement to implement the following matters under the Defendant’s responsibility in relation to the project for relocation of schools. The following matters are additionally agreed to be implemented under the Defendant’s responsibility. The authorization, permission, site purchase, road construction, etc.

F. On August 3, 2011, the Plaintiff submitted to the Daegu District Office of Education an application for approval of a plan for the change of school location, wherein the purchase price of the site to be transferred to the instant school was KRW 7.5 billion, and the Daegu District Office of Education issued an order to supplement the plan for raising funds, such as presenting reasonable grounds for calculation of the purchase price of KRW 7.5 billion, and the part of securing access roads. On September 6, 2011, the Plaintiff attached an appraisal report (value assessed at approximately KRW 7.3 billion) assessed on the premise that access roads were secured. As for the financing plan, the Plaintiff received loans from the Korea Foundation of the Promotion of Private School (value assessed at KRW 7.3 billion), but the interest on the loans shall be transferred from the Defendant to the corporate account for donations, etc., and if it is difficult to open the road until the opening of the access road is made, Nonparty 1’s president is first opened. The Daegu District Office of Education approved the plan for the change of the location of the instant high school on September 15, 2011.

G. From October 21, 201, the Defendant purchased KRW 3.49 billion in total from around October 21, 201, the prospective site for the relocation of the instant school, and subsequently completed the registration of ownership transfer in the Plaintiff’s future on February 7, 2012 and September 5, 2012. The Plaintiff paid KRW 3.5 billion in total to the Defendant as purchase price for the prospective site for the relocation of the instant school, around February 6, 2012, and KRW 7.5 billion in total, around February 14, 2012.

H. On February 22, 2013, the Plaintiff entered into an additional agreement with the Defendant regarding the establishment of access roads (hereinafter “Additional Agreement”) with regard to the establishment of access roads as follows (hereinafter “Additional Agreement”).

In order to efficiently promote the purchase of a site by taking into account that the scheduled school opening date of the instant high school is nine months, the Defendant, pursuant to Article 15(2) of the Agreement on the Entrustment of Compensation Affairs (B. 2013) and Article 15(2) of the said Agreement, at the same time, shall enter into a compensation agreement with the Plaintiff and the North-gu Seoul Metropolitan City North-gu Seoul Metropolitan Government on the construction of the access road as follows:

(i) According to the Plaintiff’s additional agreement on February 22, 2013, the Defendant purchased the land of Daegu North-gu ( Address 4 omitted) to be incorporated into the access road around April 23, 2014, and subsequently donated the said land to the North-gu, Daegu-gu, Seoul-gu, on December 29, 2014.

(j) On December 31, 2012, the Board of Audit and Inspection determined that the Plaintiff purchased the prospective site for school relocation from the Defendant at a high price, and notified the results of the audit to the Daegu Office of Education. On December 31, 2012, the Daegu Office of Education demanded that the Plaintiff “the amount obtained by the Defendant’s unjust enrichment in the course of the sales contract for the prospective site for school relocation (4 billion won) was returned from Nonparty 1 or the Defendant.” On January 25, 2013, the Plaintiff purchased the prospective site for school relocation from the Defendant at KRW 3.49 billion, the original acquisition price of the instant site for school relocation from the Defendant, even if the Plaintiff purchased the prospective site for school relocation from the Defendant at KRW 3.49 billion, the Plaintiff purchased the prospective site for school relocation from the Defendant as the cost for developing the prospective site for school site (i) purchase and establishment cost for access roads, ② purchase interest for the site purchase interest, ③ public charges, brokerage charge, ④ treatment of civil petitions, etc., and there is no difference in the request to purchase.

(k) As a result of the Board of Audit and Inspection, Nonparty 1 accused Nonparty 1 to the prosecution, and Nonparty 1 was indicted on charges of occupational breach of trust (Seoul Central District Court 2014No3855). On December 17, 2015, the appellate court (Seoul High Court 2014No3855) acquitted Nonparty 1 on charges of occupational breach of trust, on the premise that “Although the Daegu Office of Education does not explicitly approve the purchase cost of the site scheduled for the relocation of the school, unlike the conditions attached to the approval of the school location change plan, including the interest on the loan, access road opening cost, etc., unlike the conditions attached to the approval of the school location change plan, Nonparty 1 paid the Defendant the purchase cost of the site scheduled for the relocation of the school, including the interest on the loan, etc., under the understanding and approval of the public officials in charge of the Daegu Office of Education, thereby making the Defendant repay the loan with the funds received from the Plaintiff, and the prosecutor appealed the final appeal by the prosecutor, which was pronounced on March 24, 2016.

【Fact-finding without dispute over the ground for recognition】 The evidence Nos. 1 and 2 (including each number; hereinafter, the same shall apply), Eul's evidence Nos. 1 through 11, and the purport of the whole pleadings

2. Summary of the plaintiff's assertion

A. According to the contract for the implementation of the relocation project of a school, the Plaintiff agreed to pay the interest on the loans that the Plaintiff received from the Korea Foundation for the Promotion of Private School. According to each additional agreement, the Defendant, including all of the above costs, sold the prospective site for the relocation of the school of this case to the Plaintiff for KRW 7.5 billion (=the above KRW 7.5 billion - the prospective site for the relocation of the school of this case - the purchase cost of the prospective site for the relocation of the school of this case 3.49 billion). Accordingly, the Defendant is obliged to pay the Plaintiff the above unjust enrichment of KRW 4.1 billion and interest for delay.

B. Even if there was an agreement between the Plaintiff and the Defendant on the settlement of interest on loans and the cost of opening access roads to the Defendant, according to Article 16(1) of the Private School Act, matters concerning the acquisition, disposal, and management of an educational foundation’s property are deliberated and resolved upon by the board of directors. According to Article 28(1) of the Private School Act, when a school foundation intends to impose obligations, it shall obtain permission from the competent agency. However, as a school foundation, the Plaintiff did not obtain the resolution of the board of directors or the approval of the Daegu Office of Education, which is the competent agency, on the interest on loans and the cost of opening access roads. Therefore, the agreement that the Plaintiff calculated on the settlement of the interest on loans and the cost of opening access roads to the Defendant is null and void. The Defendant is obliged to pay the Plaintiff the interest on the loans that it acquired without any legal cause KRW 40

C. Both the Plaintiff and the Defendant were practically under Nonparty 1’s control. Nonparty 1 used Nonparty 1’s representative director, who was in bad faith as the Plaintiff’s board of directors for the benefit of the Defendant, demanded the Plaintiff to pay the Defendant the purchase price of the prospective site for the transfer of the school of this case, including the interest on the loan and the cost of opening the access road, in violation of the explicit burden of expenses between the Plaintiff and the Defendant, and thus, paid the Defendant a total of KRW 4 billion.1 billion. This constitutes an abuse of Nonparty 1’s power of representation. Accordingly, the Defendant is obligated to pay the Plaintiff the interest on the loan that was acquired without any legal cause and the cost of opening the access road, and interest for delay.

3. Judgment on the plaintiff's first argument

We examine whether the Plaintiff and the Defendant agreed to pay the Defendant interest on the loans and the cost of establishing access roads, which the Korea Private School Promotion Foundation received in connection with the instant school relocation project.

As seen earlier, Article 3(4) of the Act on the Implementation of Projects for the Relocation of Schools states that the Defendant bears the interest on loans received from the Korea Foundation for the Relocation of Schools in connection with the instant school relocation project, and the additional agreement on July 4, 201 states that the land purchase following the opening of access roads and the construction of roads shall be implemented under the Defendant’s responsibility, and the additional agreement on February 22, 2013 states that the Defendant bears the cost of the purchase of access roads and the construction cost, etc.

However, in full view of the following facts and circumstances, which are acknowledged by comprehensively taking account of the aforementioned facts and the purport of the entire arguments as seen earlier, it is insufficient to view that the Plaintiff and the Defendant agreed to pay the Defendant the interest on loans and the cost of opening access roads from the Korea Foundation in connection with the instant school relocation project, and there is no other evidence to acknowledge this. Therefore, the evidence submitted by the Plaintiff alone does not recognize that the Defendant obtained unjust enrichment equivalent to KRW 4 billion. Therefore, the Plaintiff’s assertion is without merit.

① Although the Plaintiff intended to independently implement the instant school relocation project, the Daegu Office of Education did not approve the school juristic person’s account, access road, etc., and changed to the implementation of the school relocation project through the Defendant by changing the direction of the project. In light of the foregoing circumstances, it is very exceptional that the Defendant, who received the service from the Plaintiff, is obliged to bear the expenses to be borne by the Plaintiff (such as the cost of labor cost, work performance, etc.) in excess of the expenses to be incurred by the Defendant in performing the service of the school relocation project (such as site purchase, financial cost, and access road construction cost).

② On September 6, 2011, the Plaintiff submitted to the Daegu District Office of Education an application for approval of a location change plan to the effect that “the Plaintiff will build a road before the opening of a new school, and if it is difficult to build a new road due to school funds, the Plaintiff will first build a new road at his own expense,” and submitted an appraisal report that evaluates the appraised value including the purchase cost of access roads and the opening cost of access roads at the site purchase cost. It was also understood that the Plaintiff would actually resolve the problem of opening access roads at the expense of the Plaintiff, and that the Daegu District Office of Education approval is a plan that the Plaintiff will bear the cost of opening access roads.

③ In the case of interest on a loan, the Plaintiff, whose financial situation was insufficient, was bound to borrow the funds from the Korea Foundation for the Promotion of Private School in order to raise the funds for the Project for the Relocation of Schools, and the interest on the loan in the process is inevitably generated. Therefore, the interest on the loan should have been borne by the Plaintiff from the beginning, and there is no evidence to acknowledge the need for the Plaintiff to fully bear the loan or the opposing interest to be obtained by the Defendant on behalf of the Plaintiff.

④ A contract for the relocation of a school or each additional agreement is added to the provision that the Plaintiff and the Defendant undergo the procedure of settlement after completion of the project. As seen above, the interest on a loan or the cost of opening access roads shall be borne by the Plaintiff, or the Defendant shall be borne by the Defendant on the surface to obtain approval of the project plan from the Daegu Office of Education; however, there is a lot of room to regard the cost as a provision for settlement after completion of the project, and if not, there is no reason to conclude a separate provision for settlement that may cause future disputes in the contract.

⑤ On September 15, 2011, the Plaintiff obtained the approval of the location change plan from the Daegu Office of Education with total project cost of KRW 30.1 million as the project cost for the instant school relocation project as KRW 30.1 million. However, the aforementioned project cost of KRW 30.3 million includes “loan interest”, “entry road purchase cost, construction cost, etc.” (see, e.g., evidence 15 and evidence 11-10, etc.).

④ Nonparty 1 consistently asserted that “the interest on loans and the cost of opening access roads was borne by the Plaintiff from the beginning” in the instant criminal trial, and the Seoul High Court (Seoul High Court Decision 2014No3855) also rendered a judgment of innocence as to the charge of occupational breach of trust by Nonparty 1 on the premise that “the public official in charge of the Daegu District Office of Education understood that the Plaintiff bears the interest on the loans and the cost of opening access roads, etc.,” and the Prosecutor appealed, but the dismissal of appeal was pronounced.

7) The Plaintiff filed a request for review with the Board of Audit and Inspection to the effect that “the Plaintiff estimated the site purchase cost of KRW 7.3 billion in the project cost for the school relocation project and approved it on September 15, 201, and that the Daegu Office of Education approved the site purchase cost of KRW 7.3 billion in the amount of KRW 7.3 billion in the amount of land purchase, including the loan of the site purchase cost, the purchase and construction cost of access roads, and the purchase and construction cost of access roads,” and that “the land purchase interest, the purchase cost of access roads, the purchase cost of access roads, and the construction cost of access roads, are the cost to be borne by the Plaintiff.” As such, the Plaintiff himself recognized that the interest on the loan or the construction cost of access roads is the cost to be borne by the Plaintiff, unlike the written statement of the project relocation agreement or each additional agreement.

④ The Plaintiff did not raise any objection while purchasing the prospective site for the transfer of the instant school from the Defendant at KRW 7.5 billion including the interest on the instant loan and the cost of opening access roads. The Board of Audit and Inspection notified the audit results that the said KRW 7.5 billion was unfair and demanded by the Daegu Office of Education to recover unjust enrichment, the Plaintiff alleged that the Plaintiff should bear the interest on the loan and the cost of opening access roads, rather than that, if the Plaintiff demanded the redemption of unjust enrichment, the amount of the interest on the loan and the cost of opening access roads should be borne by the Plaintiff. In light of the above circumstances, the Plaintiff’s assertion that the Defendant would bear the interest on the loan and the cost of opening access roads from the beginning is difficult to readily accept.

4. Judgment on the second argument by the plaintiff

We examine whether the agreement that the Plaintiff calculated the interest on the loan and the cost of opening access roads to the Defendant is null and void without obtaining a resolution of the board of directors or approval from the competent authorities.

Matters concerning the acquisition, disposal, and management of property of a school foundation are subject to deliberation and resolution by the board of directors (Article 16(1) of the Private School Act); and where a school foundation intends to assume obligations, it shall obtain permission from the competent agency (Article 28(1) of the Private School Act). Where a school foundation acquires or disposes of property of a school foundation without deliberation and resolution by the board of directors under Article 16(1) of the Private School Act, or performs an act of bearing obligations without permission from the competent agency under Article 28(1) of the Private School Act, such act shall not be effective; and it shall not take effect where a school foundation ratified the act of bearing obligations later (see Supreme Court Decision 2014Da64752, Jun. 9, 2016, etc.)

First of all, in light of the above legal principles, we examine whether there was a resolution of the board of directors on the agreement that the Plaintiff calculated the interest on the loan and the cost of opening access roads to the Defendant.

In light of the above facts, Gap's evidence 11, Eul's evidence 2, and 9's each statement of the plaintiff's purchase price, which can be acknowledged by comprehensively taking account of the facts acknowledged by the purport of the whole pleadings, the plaintiff concluded a contract to purchase 3.49 billion won from the land owners around November 2010 and paid the down payment. However, the plaintiff's response was received from the office of education that "it is impossible to conclude a sales contract for the anticipated site for school relocation before approval of the plan for school location change." The plaintiff acquired the anticipated site for school relocation from the defendant around March 201, and agreed that the defendant would bear interest on loans and the cost of establishing access roads for 3.4 billion won before the resolution of the board of directors' 7 billion won prior to the change of the plan, and that the plaintiff would have been aware of the change of the plan's existing site for school location to 3.7 billion won prior to the resolution of the board of directors' 1.7 billion won prior to the change of the plan.

Then, in light of the above legal principles, we examine the agreement between the Plaintiff and the Defendant to settle the interest on the loan and the cost of opening access roads and whether the permission of the Daegu Office of Education, the competent authorities, was granted.

In light of the above facts, Gap's No. 2 and No. 9 and No. 11, the Daegu Office of Education, which can be acknowledged by comprehensively taking account of the facts acknowledged by the purport of the plaintiff's loan purchase price of No. 300 million won, the plaintiff was aware that the plaintiff entered into a contract to purchase 3.49 billion won from the land owners, such as non-party 6, etc. on the planned site for relocation of the school. Nonetheless, the Daegu Office of Education, on August 2011 and September 2, 201, stated the plan to change the location of the site for relocation of the school and the purchase price of No. 40 billion won on the premise that the plaintiff was not aware of the fact that "the purchase price of the loan of No. 30 billion won was 5 billion won for the loan of No. 400,000 won for the loan of No. 500,000,000 won for the loan of No. 3,500,000 won for the loan of Daegu Office of Education.

5. Judgment on the third argument by the plaintiff

We examine whether Nonparty 1, who is the president of the plaintiff, made the plaintiff settle a total of KRW 4 billion of the interest on loans and the cost of opening access roads to the defendant, against the defendant, constitutes an abuse of the power of representation and thus null and void.

As seen earlier, it is recognized that Nonparty 1 was a director of the Plaintiff’s chief director, and that Nonparty 1 had the Plaintiff settle the Plaintiff’s total sum of the interest on loans and the cost of opening access roads with respect to the Defendant after the Plaintiff’s resolution.

However, in full view of the following facts and circumstances, which are acknowledged as being comprehensively based on the aforementioned facts and the overall purport of the arguments, the subject of the school relocation project of this case, i.e., the Plaintiff, regardless of the Plaintiff’s interest, seems to bear the business expenses. Accordingly, the Plaintiff and the Defendant share the interest on the loans and opened the road by purchasing access roads, and it appears to have agreed to pay the construction expenses from time to time to time to time to the Defendant, and settle all the expenses at the time of completion of the school relocation project. The Plaintiff acquired a new building instead of the existing school building through the school relocation project of this case. The Plaintiff acquired a new building through the existing old school relocation project of this case by actively leading the Daegu Office of Education. The Plaintiff’s plan for school location change was approved by the Daegu Office of Education. Accordingly, it is insufficient to recognize that the above facts alone made the Plaintiff settle the interest on the loans to the Defendant and the expenses for opening access roads with the intention of promoting the interest on the loans of Nonparty 1 or the Defendant’s interest. Therefore, there is no evidence to acknowledge otherwise.

6. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

Judges Sung-su (Presiding Judge)