[1] Whether the contractor's guarantor is liable to guarantee the duty to return advance payment upon termination of the contract for private construction works (affirmative in principle) and the scope of the guarantee liability borne by the joint guarantor of the contract for private construction works

[2] The relationship between the surety and the surety under the main contract, which guarantee the contractor's performance of the contractor's obligation to return advance payment (=joint surety), and whether one of them can exercise the right to demand reimbursement against the other party pursuant to Article 448 of the Civil Code in a case where one of them extinguished his obligation at his own expense (affirmative)

[3] In a case where Gap corporation, a guarantee insurance company, concluded an advance payment guarantee insurance contract with Byung corporation, a principal contractor of apartment construction work, and Eul corporation, the insured, and Byung corporation, as the principal contractor of apartment construction work, paid the insurance money to Eul corporation when the contract was discontinued due to Byung's default, and subsequently exercised the right to indemnity against Jung corporation, the case holding that Gap corporation may exercise the right to indemnity against Jung corporation, but the judgment below erred in the misapprehension of legal principles

[1] The obligation to return an advance payment is a kind of obligation to restore the obligation arising from the rescission of the contract by the contractor, and the guarantor is also liable to guarantee the obligor’s obligation to compensate for damages and the obligation to restore the obligation, barring any special circumstances. Therefore, the contractor’s guarantor is also liable to guarantee the obligation to return an advance payment under a contract for private construction works, barring any special circumstance. The contractor’s obligation to guarantee an advance payment shall also be determined by the interpretation of a legal act based on individual specific cases by taking into account various kinds of guarantee certificates, the terms of the contract, the details of the contract, the circumstances of the guarantee, etc. However, unless there is any special agreement, as well as the

[2] The surety and the surety under the main contract guarantee that the contractor owes the obligation to return advance payment to the contractor pursuant to the contract for work and the surety under the main contract are in the relationship of joint surety as to the obligor's obligation to return advance payment to the contractor who is the obligee. Thus, if one of them extinguished the obligor's obligation to pay or pay it at his own expense, if there is no special agreement as to the reimbursement between them, he may exercise the right to demand reimbursement against the other party under Article 448 of the Civil Code.

[3] In a case where Gap corporation, a guarantee insurance company, concluded an advance payment guarantee insurance contract with Eul corporation, a principal contractor of apartment construction work, and Eul corporation, the principal contractor of apartment construction work, and Eul corporation, as the insured, paid insurance proceeds to Eul corporation upon the discontinuance of the construction work due to Byung's default, and then exercised the right of indemnity against Jung corporation, the case holding that the court below erred by misapprehending legal principles as to the liability of joint and several sureties in the contract for construction work, in light of the following: (a) the fixed company signed and sealed the contract as the principal contractor's guarantor without the proviso to the non-liability for the advance payment; (b) Byung company's obligation to pay to Eul corporation is jointly and severally liable to pay the advance payment; and (c) the obligation to be borne by Byung company is a joint guarantor with regard to the obligation to return advance payment; and (d) Gap company and Jung company are jointly and severally liable to pay the advance payment, and thus,

[1] Articles 105, 428, 429, and 664 of the Civil Act / [2] Articles 448 and 664 of the Civil Act / [3] Articles 428, 429, 449, and 664 of the Civil Act; Articles 47 and 57(2) of the Commercial Act

[1] Supreme Court Decision 94Da38250 delivered on February 9, 1996 (Gong1996Sang, 873), Supreme Court Decision 94Da54702 delivered on March 22, 1996 (Gong1996Sang, 1336), Supreme Court Decision 99Da2073 delivered on October 8, 199 (Gong199Ha, 22955), Supreme Court Decision 2003Da5134 delivered on March 25, 2005 (Gong2005Sang, 651) / [2] Supreme Court en banc Decision 97Da14576 delivered on June 27, 199, Supreme Court Decision 2005Da37108 delivered on June 19, 2008, Supreme Court en banc Decision 205Da310528 delivered on June 28, 2008)

Seoul Guarantee Insurance Co., Ltd. (Attorney Ha Dong-dong, Counsel for defendant-appellant)

Empis Co., Ltd. (Attorneys Seo Sung-sung et al., Counsel for the defendant-appellant)

Gwangju District Court Decision 2011Na8856 Decided November 18, 2011

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

The grounds of appeal are examined.

1. The obligation to return an advance payment is a kind of obligation to restore the obligation arising from the rescission of the contract by the contractor (see, e.g., Supreme Court Decision 94Da54702, Mar. 22, 1996). The surety is also liable to guarantee the obligor’s obligation to pay damages and the obligation to pay damages arising from the obligor’s nonperformance unless there are special circumstances (see, e.g., Supreme Court Decision 94Da38250, Feb. 9, 196). In the contract for private construction, the contractor’s guarantor is also liable to guarantee the obligation to return the advance payment, unless there are special circumstances.

In addition, the guarantee liability of a joint and several surety for private construction contract shall be determined by the interpretation of a legal act on an individual basis in consideration of the existence of various guarantee certificates, the contents of the contract, the circumstances of the guarantee, etc. However, in the absence of any special agreement, the guarantee of monetary liability and the guarantee of execution should be deemed to include the guarantee of performance like the responsibility of the contractor (see, e.g., Supreme Court Decisions 9Da2073, Oct. 8, 199; 2003Da5134, Mar. 25, 2005).

2. According to the reasoning of the lower judgment and the evidence duly admitted by the lower court, the first instance court’s joint Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co., Ltd. (hereinafter “Co-Defendant Co-Defendant”) concluded a contract for the construction of machinery for Section A-1 BL with the contract amount of KRW 2,228,718,416 on October 11, 2007 and the contract amount of KRW 2,228,718,416 on the contract amount. Article 6 of the above contract amount included the fact that the first contractor Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co-Defendant Co., Ltd., Ltd., Ltd. (hereinafter “Seoul Construction Co., Ltd.”), which was ordered to submit KRW 398,718,2007.

In addition, in light of the legal principles as seen earlier, it is reasonable to view that the Defendant jointly and severally guaranteed the obligation to return advance payment, including the obligation to return advance payment, was jointly and severally guaranteed by the contractor, in the contract document stating that the Defendant is not liable to pay advance payment to the contractor without the proviso, and the obligation to be borne by the company Japan is the obligation arising out of commercial activities.

Meanwhile, the guarantor and the guarantor under the main contract guaranteed the performance of the obligation to return advance payment to the contractor pursuant to the contract for work and the guarantor under the main contract shall be deemed to be in the relationship of joint guarantor as to the performance of the obligation to return advance payment to the contractor, who is the creditor. Thus, if one of them extinguished his obligation at his own expense or at his own expense, even if there is no special agreement on the claim for reimbursement among them, he may exercise the right to demand reimbursement against the other party pursuant to Article 448 of the Civil Act (see, e.g., Supreme Court Decisions 97Da14576, Jun. 27, 1997; 2005Da37154, Jun. 19, 2008). Thus, the plaintiff, who fulfilled the obligation to return advance payment to the contractor under the above advance payment contract, can exercise the right to demand reimbursement against the defendant.

It cannot be deemed that the circumstances determined by the lower court solely based on the circumstances that the Defendant only stated in the subcontract as a contractor and did not constitute a joint and several surety, etc., or that Japan Construction received the Plaintiff’s performance guarantee insurance policy regarding advance payment, or the Defendant stated that the employee in charge of Japanese Construction was the performance guarantee in the meaning of the performance guarantee, etc. do not constitute a case where any special circumstance exists to deem otherwise.

Nevertheless, solely based on its reasoning, the lower court determined that the Defendant did not bear the joint and several surety obligation with respect to the advance payment repayment obligation and thus, the Plaintiff cannot claim reimbursement against the Defendant. In so doing, it erred by misapprehending the legal doctrine on the responsibility of the joint and several surety in the construction contract, thereby affecting the conclusion of the judgment.

3. 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 Lee In-bok (Presiding Justice)