[1] Whether the latter part of Article 368(2) of the Civil Act may apply mutatis mutandis to cases where part of the real estate owned by the employer was sold first, and the wage obligee was given preferential payment from the auction proceeds, and the mortgagee of the real estate at auction was at a disadvantage than the case where the wage claim is simultaneously distributed from the above several real estate (affirmative)

[2] In a case where the Korea Workers' Compensation and Welfare Service has received preferential dividends in a certain auction procedure due to the exercise of the right by subrogation of the relevant employee's wages, etc. against the relevant business owner, whether the relevant employee or the Korea Workers' Compensation and Welfare Service who subrogated to the said employee in order to receive dividends in preference to other auction procedure in subrogation of the relevant employee's wages, etc. subrogated by the Korea Workers' Compensation

[1] Article 368 of the Civil Act, Articles 84(1), 88(1), 148, and 268 of the Civil Execution Act, Article 38 of the Labor Standards Act / [2] Articles 7, 8, and 27 of the Wage Claim Guarantee Act, Articles 368 of the Civil Act, Articles 84(1), 88(1), 148, and 268 of the Civil Execution Act, Article 38 of the Labor Standards Act

[1] Supreme Court Decision 97Da9352 delivered on December 22, 1998 (Gong1999Sang, 183) Supreme Court Decision 2002Da48399 Delivered on December 10, 2002 (Gong2003Sang, 351) Supreme Court Decision 2005Da1972 Delivered on June 23, 2005

U&S Specialized Co., Ltd. (Law Firm Rotex, Attorneys Authorized Containers et al., Counsel for the plaintiff-appellant)

KNFT Specialized Co., Ltd. (Attorney Ba-il et al., Counsel for defendant-appellant)

Cheongju District Court Decision 2013Na25720 decided January 28, 2014

The judgment of the court below is reversed, and the case is remanded to Cheongju District Court Panel Division.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. A. Wage claims are so-called statutory secured claims secured by mortgages, taxes, etc. on the whole property of the employer. Where part of the real estate owned by the employer has been sold first and the wage creditors have been preferentially paid out of the auction proceeds in accordance with the preferential rights, and where the mortgagee of the real estate at such auction proceeds has been at a disadvantage than concurrently distributed wage claims from the above several real estate under Article 368(1) of the Civil Act, the latter part of Article 368(2) of the Civil Act shall apply mutatis mutandis, and where the wage creditors have been at a disadvantage as above, the mortgagee who was at a disadvantage as above may receive dividends from other real estate auction procedures by subrogation to the extent of the amount which would have been able to receive reimbursement from other real estate at the same time (see Supreme Court Decisions 97Da9352, Dec. 22, 1998; 2002Da48399, Dec. 10, 2002).

B. According to Articles 7, 8, and 27 of the Wage Claim Guarantee Act, in cases where the Korea Workers' Compensation and Welfare Service entrusted with the authority of the Minister of Employment and Labor has paid unpaid wages, etc. on behalf of the business owner, the said employee’s subrogation of the relevant business owner’s claims, such as wages, etc., and the right to preferential payment recognized as the employee’s claims, etc., such as wages shall continue to exist as a matter of course in the right of subrogation of the Korea Workers’ Compensation and Welfare Service. Furthermore, in cases where the Korea Workers’ Compensation and Welfare Service has received preferential dividends in any auction procedure following the exercise of the right to subrogation of individual workers’ claims such as wages, etc., as seen earlier, the mortgagee may receive dividends in preference to other auction procedures by subrogation of the relevant worker’s claims such as wages, etc., but the relevant worker or the Korea Workers’ Compensation and Welfare Service who has subrogated thereof may receive dividends only in cases where the relevant

2. Review of the reasoning of the first instance judgment cited by the lower court and the record, including the duly admitted evidence, reveals the following facts.

A. The defendant is the first secured mortgage holder of real estate in the opposite Dong-dong, Seongbuk-gu, Sungnam-gu, Seoul Special Metropolitan City (hereinafter "the real estate of this case") and real estate in the management of Jincheon-gun, Jincheon-gun, Jincheon-gun, Jincheon-gun (hereinafter "the second real estate of this case"). The plaintiff is the first secured mortgage holder of the third secured real estate in the real estate in the protruding-gun, Jin-gun, Jincheon-gun, Seoul Special Metropolitan City (hereinafter "the third real estate of this case"), which is owned by the non-party company.

B. The Korea Workers’ Compensation and Welfare Service paid KRW 403,61,100 in total as substitute payment by paying KRW 141,204,140 to Nonparty 1 and other 20 (hereinafter “Nonindicted 2, etc.”) among the employees of the non-party company as well as KRW 262,456,960, and to Nonparty 2 and other 20 (hereinafter “non-party 2, etc.”) respectively, as part of the wages and retirement allowances for the last three months for which the right of priority repayment is recognized in accordance with the Labor Standards Act and the Wage Claim Guarantee Act.

C. Meanwhile, on April 6, 2012, in the case of auction of real estate rent in real estate amounting to the non-party company’s possession, the Suwon District Court Branch of Sungnam-gu, 201, the 1403,661,100 won paid by the Korea Workers’ Compensation and Welfare Service as substitute payment in the order of April 1, 2012, and the 22,120,270 won of the highest wage and retirement allowance out of the distribution amount by non-party 3 and non-party 20 (hereinafter “non-party 3, etc.”) who are the workers of the non-party company, were distributed to the non-party company’s employees in the order of 2,98,060 won, and the defendant, who is a mortgagee, was distributed to the non-party 3,753,614,762 won in the order of 3rd priority.

D. On August 2, 2011, the Cheongju District Court Decision 2011Hu13282, the Korea Workers' Compensation and Welfare Service paid the substitute payment to Nonparty 1, etc. on August 2, 2011, in lieu of Nonparty 1, etc. on behalf of Nonparty 1, etc., for the auction proceeds of the instant real estate (hereinafter referred to as "the instant real estate") and received a demand for distribution on April 13, 2012 by withdrawing the demand for distribution on April 17, 2012 from the auction proceeds of the instant real estate (hereinafter referred to as "the instant claim amount"), according to the repayment of the said amount, the Jcheon-gun Office, a person holding the right to delivery on April 17, 2012, received a dividend of KRW 2,795,50, and KRW 7,030,011,341 (the maximum claim amount of KRW 10 billion) in the second priority.

E. On August 1, 2011, before the completion date of demand for distribution, the Korea Labor Welfare Corporation paid to Nonparty 1, etc. on August 1, 2011, the above substitute payment amounting to KRW 262,456,960, which was paid to Nonparty 1, etc. on the ground that Nonparty 3, etc. received a demand for distribution on August 1, 201, prior to the completion date of demand for distribution. As stated in paragraph (c) of the above, the Defendant: Korea Labor Welfare Corporation and Nonparty 3, etc. received a disadvantage due to the first priority wage claim amounting to KRW 425,781,370, the sum of the top priority wage claim in the auction proceeds of the instant real estate; and, after the completion date of demand for distribution, the Korea Labor Welfare Corporation and Nonparty 3, etc. on April 16, 2012, by subrogationing the Plaintiff on July 31, 2012, the date of distribution date, the Korea Labor Welfare Corporation and Nonparty 1365381,57.

3. Examining these facts in light of the legal principles as seen earlier, the Defendant, who is the mortgagee at a disadvantage than the case where the Korea Workers' Compensation & Welfare Corporation and the Nonparty 3, who is the wage obligee, have first sold the real estate of this case among the real estate owned by the non-party company by auction and subrogated the wage obligee according to the lien, may receive a preferential dividend from the auction proceeds of the real estate of this case 3 in subrogation of the Korea Workers' Compensation and Welfare Corporation and the non-party 3, etc. who is the first priority applicant. However, if the Korea Workers' Compensation and Welfare Corporation or the non-party 3, etc. did not lawfully demand a distribution even at this time, the Defendant shall demand a distribution for the wage claim

However, according to the facts established by the court below, in the auction procedure of the real estate No. 3 of this case, the Korea Workers' Compensation and Welfare Service only demanded the distribution of the wages and retirement allowance claims of Nonparty 1, etc. on behalf of Nonparty 1, etc., and did not demand the distribution as to the wages and retirement allowance claims of Nonparty 2, etc., and the defendant also did not have legitimate demand for distribution. Thus, as long as the defendant did not find any circumstance that Nonparty 2, etc., who is the previous creditor, or the Korea Workers' Compensation and Welfare Service had already made a demand for distribution as to the wages and retirement allowance claims of Nonparty 2, etc., which are to be subrogated, or that he could naturally receive a distribution without the demand for

4. Nevertheless, on the grounds indicated in its reasoning, the lower court determined otherwise, on the grounds indicated in its reasoning, that: (a) deeming that the mortgagee subrogated the senior wage obligee to receive a lawful demand for distribution in order to receive a distribution in the proceeds of the auction of other real estate, the purport of having the said mortgagee make it impossible to receive a lawful demand for distribution in excess of the total amount of legitimate demand for distribution; (b) did not regard whether the Korea Workers’ Compensation and Welfare Service, who subrogated part of the wage obligee, subrogated the wage obligee within a certain scope; and (c) what scope of the amount among the individual claims of the subrogated wage obligee, should be limited to the amount of the individual claims of the subrogated wage obligee; and (d) determined that, if the Korea Workers’ Compensation and Welfare Service received a distribution at the same time from each of the instant real estate, the total amount of the wage claims distributed to the Korea Workers’ Compensation and Welfare Service out of the proceeds of auction

Therefore, in so determining, the court below erred by misapprehending the legal principles as to the scope of subrogation by the mortgagee who subrogated the senior wage obligee and the necessity of legitimate demand for distribution by the creditor who has the right to preferential reimbursement under substantive law, which affected the conclusion of the judgment. The ground of appeal assigning this error

5. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Young-chul (Presiding Justice)