The case holding that in the division or merger after division of a company under Article 530-2 (1) and (2) of the Commercial Act, even if the newly incorporated company or the other party to the division and merger determined that the company does not succeed to all the obligations of the company before the division, it shall be liable for joint and several repayment of the company's obligations before the division under Article 530-9 (1)

The case holding that in the division or merger through division of a company under Article 530-2 (1) and (2) of the Commercial Act, if the newly incorporated company or the counterpart company to the division and merger does not decide to bear only the obligation concerning the assets invested among the obligations of the company prior to the division, but does not succeed to all the obligations of the company prior to the division, Article 530-9 (2) and (3) of the Commercial Act providing the exception to the principle of joint and several liability shall not apply, and therefore, the company shall be jointly and severally liable for the obligations of the company prior to the division pursuant to Article 530-9 (1) of the Commercial Act regardless of whether the procedure for protecting creditors under Article 527-5 of the Commercial Act was

Articles 530-2 (1) and (2), and 530-9 of the Commercial Act

Plaintiff (Attorney Dog-won et al., Counsel for plaintiff-appellant)

Defendant Co., Ltd. (Ynam Law Firm, Attorney Park Byung-tae, Counsel for defendant-appellant)

Daegu District Court Decision 2004Da18214 Delivered on January 25, 2005

March 24, 2006

1. The defendant's appeal is dismissed.

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

1. Purport of claim

The defendant shall pay to the plaintiff 96 million won with 5% interest per annum from May 16, 2002 to the service date of a copy of the complaint of this case, and 20% interest per annum from the next day to the day of complete payment.

2. Purport of appeal

The part against the defendant in the judgment of the first instance is revoked, and the plaintiff's claim corresponding to the above revocation is dismissed.

1. Basic facts

[Grounds for recognition] The identification of Gap 1 through 3 (including the paper numbers), Eul 1 through 3, and 6 through 8 (including the paper numbers), the testimony of non-party 1 as witness of the first instance court, and the purport of the whole pleadings.

A. The contract and implementation of the instant construction project between the Plaintiff and Nonparty 2 Company

(1) The non-party 2 Co., Ltd. contracted each electrical construction among the construction works of Gyeongnam (detailed address omitted) hotel (detailed name omitted) hotel construction works and Daejeon (detailed address omitted) ground parking building construction works.

(2) On July 25, 2001, the Plaintiff (former trade name: omitted) and Nonparty 2 Co., Ltd. manufactured the Electricity board necessary for the said electrical construction at a place designated by Nonparty 2 Co., Ltd. (hereinafter “instant construction”), and entered into a contract with Nonparty 2 Co., Ltd. to receive KRW 160,000 (value-added tax of KRW 10,000) from Nonparty 2 Co., Ltd. with the payment. On the same day, the Plaintiff was paid KRW 40,000 in advance, and the remainder was paid within 10 days after the completion of the instant construction.

(3) After that, the Plaintiff received KRW 40 million from Nonparty 2 Co., Ltd. the intermediate payment of the instant construction cost, and completed the instant construction work on May 16, 2002.

B. Establishment of a non-party 3 corporation by division of the non-party 2 corporation

(1) The non-party 2 corporation decided to divide the portion of the electrical construction business into the part of the business and establish the non-party 3 corporation, based on the balance sheet and the list of properties as of December 31, 2002, and transferred the divided electrical construction business part to the non-party 3 corporation. However, although the rights and obligations pertaining to the above electrical construction business part are succeeded to by the non-party 3 corporation, the rights and obligations are not succeeded to, but remain in the non-party 2 corporation, and the non-party 3 corporation issued 20,50 common shares and allocated them in whole to the non-party 2 corporation.

(2) On March 10, 2003, the non-party 2 corporation obtained the approval of the above division plan at the special resolution at the special shareholders' meeting of the non-party 2 corporation. On March 19, 2003, the non-party 2 corporation announced that the creditors who have an objection to the above division of the company should file an objection within one month, and completed the registration of incorporation of the non-party 3 corporation on May 1, 200 (hereinafter referred to as the "instant division").

C. Merger with the defendant by division of the non-party 3 corporation

(1) The defendant is a company established on February 20, 1995 for the purpose of electrical construction business, manufacturing and selling electrical equipment, etc.

(2) The non-party 3 corporation and the defendant divided the part of the electrical construction business among the business part and decided to merge with the defendant (the non-party 3 corporation remains in existence by adding fire fighting equipment construction business and construction construction business as its objective business). In the written agreement, the non-party 3 corporation divided the part of the electrical construction business as of May 31, 2003 based on its balance sheet and inventory, and the defendant merged the above divided electrical construction business as of July 9, 2003 with the date of the merger by division. However, although the defendant succeeded to the rights and obligations related to the electrical construction business part, the non-party 3 corporation did not succeed to the obligations, and determined that it exists in the non-party 3 corporation.

(3) On May 31, 2003, the non-party 3 corporation and the defendant obtained approval of the above special resolution at each special shareholders' meeting on May 31, 2003. On June 3, 2003, the creditors who have an objection to the above merger after the above merger after the daily newspaper and the ordinary daily bulletin as of June 3, 200 are informed that they should raise an objection within one month, and there is no objection, and the non-party 3 corporation completed the registration of each of the above merger after the above merger on July 9, 200 (hereinafter "the above merger after division").

2. The defendant's obligation to pay the construction price

A. Whether joint liability is recognized

(1) The parties' assertion

(A) The Plaintiff: The Defendant is obligated to pay to the Plaintiff the instant balance of the construction to the Plaintiff of Nonparty 2, the instant balance of the construction from Nonparty 2 Co., Ltd., and the part of the electrical construction business from Nonparty 3 was divided and succeeded to the Defendant who divided and merged the part of the electrical construction business from Nonparty 3. Therefore, the Defendant is obligated to pay to the Plaintiff the remainder of the construction of this case (the cost of KRW 160 million + value added tax 16 million + KRW 16 million) and its delay damages (pre-paid 40 million + intermediate payment 40 million).

(B) Defendant: (a) at the time of the instant division and the instant merger after division, Nonparty 3 and Defendant agreed not to succeed to the obligations of Nonparty 2 and Nonparty 3, respectively; and (b) the Defendant did not succeed to the obligations of Nonparty 2, and thus, cannot accept the Plaintiff’s request on the ground that the Defendant did not succeed to the obligations of Nonparty 2

(2) Provisions and interpretation of the Commercial Act

A company may be divided to form one or more companies, and a merger with one or more existing companies during the division (hereinafter referred to as "merger after division"), and where a company is to be incorporated by division, the details thereof shall be entered in the plan for division if it is prescribed in Article 530-9 (2) of the Commercial Act (Article 530-5 (1) 8 of the Commercial Act), and where part of the company to be divided merges with another company and the other company (hereinafter referred to as "the other party to a merger after division") survives, if it is prescribed in Article 530-9 (3) of the Commercial Act (Article 530-6 (1) 7 of the Commercial Act), the details thereof shall be entered (Article 530-6 (1) 7 of the Commercial Act).

In addition, a company established through a division or a merger after division or a surviving company is jointly and severally liable to protect creditors of the company prior to the division or the merger after division in principle (Article 530-9(1)). However, if the principle of joint and several liability is too strict, it may act as an element to block the utilization of the company division system. Thus, upon a special resolution of the general meeting of shareholders, a company established through the division or the merger after division or a surviving company which has received investments pursuant to the written agreement of the division or the merger after division shall only bear the obligations related to the invested assets of the company prior to the division or the merger after division (see Articles 530-9(2) and (3), 530-3(2)). However, since such principle of joint and several liability has a significant influence on creditors’ interests, the company to be divided shall individually submit the procedure for protecting creditors (see Article 530-9(2) and (3) and Article 530-30-4(2) of the Act).

In addition, in the case of a merger by split, the creditor protection procedure under Article 527-5 of the Commercial Code should be taken (Article 530-11(2)).

On the other hand, if a creditor fails to raise an objection within the objection period, the company shall be deemed to have approved the division (Articles 530-9(4), 530-11(2), 527-5(3), and 232(2)), the company incorporated by a division or a company surviving a division or merger shall succeed to the rights and obligations of the company to be divided as prescribed by the written agreement of the division or merger (Article 530-10). In the case of so-called “material division” in which a company to be divided acquires the total number of stocks of the company to be incorporated by a division or merger after division, the provisions of Articles 530-2 through 530-11 of the Commercial Act concerning the general company division shall apply mutatis mutandis (Article 530-12).

(3) Determination

In this case, ① the part of the divided electrical construction business between the non-party 2 corporation and the non-party 3 corporation at the time of the division of this case (the common share issued by the non-party 3 corporation was allocated to the non-party 2 corporation, so it constitutes the so-called physical division under Article 530-12 of the Commercial Act) shall be transferred to the non-party 3 corporation, and the right to the part of the electrical construction business shall be succeeded to the non-party 3 corporation, but the non-party 3 corporation has obtained approval of the general meeting of shareholders of the non-party 2 corporation as to the division plan which is determined to exist in the non-party 2 corporation without succession. ② The non-party 3 corporation and the defendant shall merge the part of the divided electrical construction business at the time of the merger of this case between the non-party 3 corporation and the defendant, but the defendant

As such, in the division of this case, the non-party 3 corporation did not succeed to the debts related to the property invested by the newly incorporated company, and the decision of each of the following is that the defendant, who is the other party to the division and merger, did not succeed to the debts related to the property invested by the defendant, while the division of this case, shall be permitted under the principle

However, in the case of this case, it does not provide that the company shall not succeed to all the obligations of the company prior to the division, and therefore, it shall be deemed that Article 530-9 (2) and (3) of the Commercial Act, which provide exceptions to the principle of joint and several liability, provides for the exception of the principle of joint and several liability. Therefore, regardless of whether the creditor protection procedure under Article 527-5 of the Commercial Act has been taken, the company shall be jointly and severally liable pursuant to Article 530-9 (1) of the Commercial Act. Thus, in the case of the division of this case, the company of this case and the non-party 3 corporation are jointly and severally liable to pay to the plaintiff the remainder of the construction contract of this case, which is the company's obligations before the division of the non-party 2 corporation, and the defendant shall be jointly and severally liable to the plaintiff as to the merger of this case.

B. Whether the obligee of the remainder of the construction in this case is Nonparty 4 and the amount of the claim

(1) The defendant asserts that the creditor of the remainder of the construction of this case is not the plaintiff but the non-party 4 who operated the Han-electric Power, and that the amount of the claim is KRW 59 million.

(2) However, the result of the fact-finding on the evidence Nos. 4-1, 2, Eul evidence Nos. 5, Eul evidence Nos. 9-1, Eul evidence Nos. 9-1, the testimony of Non-party 5 and the testimony of Non-party 1 in the court of first instance as shown in the defendant's above argument is difficult to believe in light of the statements Nos. 1, 2, and 4 as well as the testimony of Non-party 1 in the court of first instance (the non-party 4 operated the new power as a private company separately from the plaintiff). The non-party 4 issued a tax invoice under the name of the representative of the new power company and the plaintiff who is the representative director was not strictly distinguished from the plaintiff, and there is no other evidence to acknowledge this otherwise, and the defendant's above assertion is without merit.

C. Whether to bear value-added tax

(1) The defendant asserts that since the plaintiff did not pay the value-added tax of KRW 16 million out of the plaintiff's claim amount, the defendant's burden is improper.

(2) However, as seen earlier, the Defendant is obligated to pay the value-added tax to the Plaintiff regardless of whether it was paid by the Plaintiff, so the Defendant’s assertion is without merit.

3. Conclusion

Therefore, the defendant is obligated to pay to the plaintiff the amount of KRW 96 million for the remainder of the construction of this case and damages for delay calculated at the rate of 5% per annum as stipulated in the Civil Act from May 27, 2002 to February 26, 2004, the delivery date of a copy of the complaint of this case from May 27, 2002 to February 26, 2004, and 20% per annum as stipulated in the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the next day to the day of full payment. Thus, the plaintiff's claim of this case of this case is justified within the scope of the above recognition, and the remaining claims are dismissed as it is without merit. The judgment of the court of first instance is just, and the defendant's appeal is dismissed as it is without merit.

Judges Kim Chang-tae (Presiding Judge)