In cases where a bill is issued for the payment of an existing obligation or for the payment of an existing obligation is extinguished by repayment, offsetting, etc., whether the existing obligation is extinguished (affirmative)

In cases where a bill is delivered for the payment of existing debts or for the payment of the existing debts and the existing claims exist concurrently with a bill, the existing claims are extinguished by the repayment or set-off, etc. of the bill. This legal doctrine also applies to cases where a creditor performs the payment of a bill or set-off, etc. between the holder of the bill and the debtor after the creditor endorsed and transferred the bill to a third party.

Article 460 of the Civil Code, Article 9(1) of the Bills of Exchange and Promissory Notes Act

Busan Occupational Industries Co., Ltd. (Attorney Woo-ho et al., Counsel for defendant-appellant)

Nasan Co., Ltd. (Law Firm Pacific, Attorneys Nacheon-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 99Na14473 delivered on August 31, 1999

The judgment below is reversed. The case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. According to the reasoning of the judgment below, the court below, based on the evidence adopted in its judgment, issued and delivered to the non-party corporation Nasan Co., Ltd. (hereinafter referred to as the "non-party corporation") a total sum of 926,917,784 won from July 31, 1997 to October 31 of the same year, and issued and delivered 12 copies of promissory notes equivalent to the same amount as the price for the goods from the non-party company (the promissory notes as shown in attached Table 1 to 12 of the judgment below) from the non-party company as the price for the goods. On the other hand, the non-party company supplied part of the price for the good faith welfare ordered by the non-party company to the non-party corporation, which is the sub-party corporation, with the supply of them to the non-party corporation, the amount of 25,000,000 won at its face value, 179,000 won and 187,000 won of the above promissory notes (the non-party No. 1978.

Based on the above factual basis, the court below held as follows on the premise that the plaintiff had a reorganization claim of KRW 759,870,684 in total and voting rights equivalent to the same amount with respect to the non-party company, a reorganization company, barring any special circumstances. Furthermore, the court below determined as follows: "the plaintiff delivered the non-party company's promissory note of this case, which was in possession of the commercial building from the non-party Nasan Construction Corporation (hereinafter "Nasan Construction"), as the sale price, and the non-party company's defense that "the non-party company terminated all obligations such as the non-party company's purchase price of the non-party company since it received and possessed the non-party Nasan Construction from the plaintiff."

First, according to the evidence of the court below, the non-party company's claim for the sale order of this case was suspended on January 14, 198 and the non-party company's order for commencement of the company's reorganization proceedings and preservation of its property was applied for the non-party company's sale order before February 19 of the same year, and the non-party company's claim for the sale order of this case was made for the non-party company's total purchase price of 4, 5, and 6 of the non-party complex building which was newly constructed under the name of "○○○'s address 1 omitted," and the non-party company's claim for the sale order of this case was still rejected for the non-party company's sale order of this case's purchase price for non-party company's purchase and sale order of this case's non-party company's non-party company's non-party company's non-party company's non-party company's non-party company's non-party company's non-party company's non-party company's non-party company's non-party bonds.

2. In a case where a bill is issued for payment of an existing obligation or for securing payment of an existing obligation and the existing obligation exists concurrently with a bill, if the existing obligation exists due to repayment or set-off, etc., the existing obligation becomes extinct as well. This legal doctrine also applies in a case where, after an obligee endorsements and transfers a bill to a third party, the obligee and the obligor are repaid the bill or set-off, etc.

However, according to the reasoning of the judgment below, the plaintiff supplied the non-party company with the well-being and possessed the promissory note in this case as the price for the goods, which was issued, delivered, endorsed, or transferred the commercial building from Nasan Construction to Nasan Construction, and all of them were endorsed, transferred to Nasan Construction. The non-party company, the issuer of the promissory note in this case, was the holder of the non-party company, set-off against the claim for the promissory note in this case and collected all the claim for the loan against Nasan Construction in this equal amount. Thus, the plaintiff's claim for the promissory note in this case issued for the payment or the payment of the purchase price for the goods against the non-party company was legally extinguished by a set-off between Nasan Construction and the non-party company. Accordingly, the plaintiff's claim for the purchase price for the goods against the non-party company was also achieved

In addition, the court below held that the plaintiff and Nasan Construction and the non-party company purchased the above commercial building in order to secure the payment of goods, etc. to the non-party company, i.e., "the obligation to pay the non-party company's unpaid goods, etc., is not extinguished by the conclusion of the sales contract of this case, but the plaintiff has reached an agreement between three parties, "the contents that the plaintiff will continue to pay the non-party company's unpaid goods, etc., until the non-party company is transferred the ownership of the commercial building according to the sales contract." As long as the plaintiff could not purchase the commercial building, the non-party company's obligation to pay the goods to

However, according to the reasoning of the judgment below, the agreement of the non-party 2, who actually controlled the non-party company's Nasan Construction, etc. to enter into the sales contract of this case, can be seen as having Nasan Construction collected the Promissory Notes as the sales price, and its purpose was to reduce the amount of the debt of the non-party company by offsetting the non-party company's loan claims against the non-party company's loan claims. Thus, the non-party company's intent to enter into the sales contract of this case was merely the intention of collecting the Promissory Notes with the sales price of commercial buildings and extinguishing the claim for the payment of the goods against the non-party company that existed concurrently by extinguishing the claim for the payment of the commercial buildings. It is difficult to see that the non-party company's agreement to enter into the sales contract

Meanwhile, in light of the Plaintiff’s position, if the Plaintiff had agreed to enter into a sales contract for the purpose of securing the payment of the goods price claim, it is concluded only once the contract is concluded. At its own option, it is no longer necessary to pay the goods price claim from the non-party company or transfer the ownership of the commercial building from the Nasan Construction. Nevertheless, the transfer cycle of the instant promissorysory note was reached with the instant sales contract even though it is not necessary to transfer it to the non-party company’s bills. However, it is difficult to view the circumstance that the possibility of the repayment of the goods price claim would no longer take place due to the non-party company’s default, and it would be difficult to continue to continue to maintain the claim for the goods price even in cases where the claims are extinguished due to the delivery of the instant promissory note, by transferring the instant promissory note delivered for the purpose of reducing the size of the company’s debt and securing the payment of the goods price claim in response to the other party’s intent to reduce the size of the company’s debt.

If so, at the time of the conclusion of the instant sales contract, it cannot be said that there was an agreement between the Plaintiff, Nasan Construction and the non-party company to continue to exist only the claim for the price of the goods even after the extinction of the bill payment claim. However, on the premise of the existence of such agreement, the court below rejected the defendant's defense that the non-party company's obligation for the price of the goods against the Plaintiff continues to exist without extinguishing the set-off even between the non-party company and Nasan Construction, and the claim for the price of the goods is extinguished as a result of the extinction of the bill payment claim. The court below did not err in the misapprehension of legal principles as to the parties' intention leading to the conclusion of the instant sales contract, or the relation of the bill payment claim granted for the performance

3. Therefore, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition with the assent of all participating Justices.

Justices Lee Yong-woo (Presiding Justice)