[1] Whether an exception to the proviso of Article 21(1) of the Trust Act, which stipulates that a trust property may be subject to compulsory execution or auction, includes a case where a truster is a debtor (negative)

[2] In a case where Gap corporation completed the registration of ownership transfer of real estate based on trust to Eul corporation, and Gap corporation failed to pay the property tax subject to the above real estate, and local governments requested delivery of property tax and additional dues from the auction procedure for the above real estate and received preferential dividends, the case holding that the judgment below erred in the misapprehension of legal principles, even though it is impossible to seize trust property owned by the trustee or receive dividends from the auction procedure for the trust property

[1] According to the purport of Article 1(2) of the Trust Act, the trust property under the Trust Act is entirely and externally owned by the trustee and its ownership is not reserved to the truster in the internal and external relationship with the truster, and Article 21(1) of the Trust Act is legislative intent to ensure the independence of the trust property in order to smoothly achieve the purpose of the trust. In full view of the fact that the trust property under the Trust Act is wholly and externally owned by the truster and its legislative intent, the "right arising in the course of carrying out the trust affairs" under the proviso of Article 21(1) of the Trust Act that exceptionally requires compulsory execution or auction against the trust property is included in the "right arising in the course of carrying out

[2] In a case where Gap corporation completed the registration of ownership transfer of real estate based on trust to Eul corporation, and where Gap corporation failed to pay the property tax subject to the above real estate, and the local government claimed for delivery of property tax and additional dues from the auction procedure for the above real estate and received preferential dividends, the case holding that the judgment below erred by misapprehending legal principles that Gap corporation's property tax and additional dues against Eul corporation constitutes "the right arising from the process of trust affairs" under the proviso of Article 21 (1) of the Trust Act and can be received from the auction procedure for the trust property owned by Eul corporation because it is not possible to seize the trust property owned by the trustee or receive dividends from the auction procedure for the execution court for the trust property

[1] Articles 1(2) and 21(1) of the Trust Act (wholly amended by Act No. 10924, Jul. 25, 201) / [2] Articles 1(2) and 21(1) of the Trust Act (wholly amended by Act No. 10924, Jul. 25, 201)

[1] Supreme Court Decision 200Da70460 Decided April 12, 2002 (Gong2002Sang, 1114) Supreme Court Decision 2010Du4612 Decided April 12, 2012 (Gong2012Sang, 806) Supreme Court Decision 201Du686 Decided April 13, 2012

Korea Asset Management Corporation (Law Firm Cheong, Attorneys Lee Jae-ap et al., Counsel for the plaintiff-appellant)

Seosung-si (Law Firm Law Firm, Attorneys Doh-il et al., Counsel for the plaintiff-appellant)

Suwon District Court Decision 2010Na5172 decided July 9, 2010

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

The grounds of appeal are examined.

1. The judgment of the court below

A. The lower court acknowledged the following facts in full view of the evidence duly admitted.

(1) On December 12, 2002, Seoul Mutual Savings Bank (hereinafter “Seoul Mutual Savings Bank”) (hereinafter “Seoul Mutual Savings Bank”) was set up a right to collateral security of KRW 6 billion with respect to the instant real estate from the mid-to long-term debt amount, which was changed to the mid-to long-term hotel of the company (hereinafter “the later company”).

(2) On February 16, 2005, the non-party company completed the registration of ownership transfer based on the trust with respect to the real estate in this case on the multi-real estate trust company.

(3) The non-party company failed to pay the property tax (legal date July 10, 2006 and September 10, 2006) and the property tax (legal date July 10, 2007 and September 10, 2007) in 206, which is subject to the taxation of the real estate of this case, and the defendant demanded the delivery of KRW 43,898,270 in total property tax and additional dues in the voluntary auction procedure of the real estate of this case that was conducted upon application by the Seoul Mutual Savings Bank.

(4) On August 13, 2009, the execution court distributed 43,898,270 won out of 3,041,351,831 won to the defendant who is deemed as the person who is entitled to deliver the pertinent tax, to the defendant in the first order. The execution court prepared a distribution schedule with the content that the remaining amount is distributed to the plaintiff who is transferred the right to collateral security from the Seoul Mutual Savings Bank in the second order, and the plaintiff raised an objection to the whole amount of the above distribution to the defendant on the date of distribution

B. The court below held that since the pertinent property tax and additional dues imposed on the trust property fall under “the right arising from the process of performing the trust affairs” as stipulated in the proviso of Article 21(1) of the Trust Act, which is capable of compulsory execution or auction on the trust property, it is reasonable to prepare a distribution schedule with the content that the court of execution distributes the amount to be actually distributed to the defendant who is the right to deliver the pertinent tax, in preference to the plaintiff who is the right to collateral security, because the trust property itself is attached to the trust property or the execution court is proceeding with the procedure of disposition on default or is proceeding with the auction on the trust property, it is reasonable to set up a distribution schedule with the content that the execution court distributes

2. Judgment of the Supreme Court

However, we cannot accept the judgment of the court below for the following reasons.

Article 1(2) of the Trust Act provides, “The term “a trust” means the legal relationship in which the truster transfers or disposes of a specific property right to the trustee, and has the trustee manage or dispose of such property right for the benefit of the beneficiary or for a specific purpose,” and Article 21(1) of the Trust Act provides, “No compulsory execution or auction shall be conducted against the trust property: Provided, That this shall not apply to the rights arising prior to the trust or the rights arising from the performance of trust affairs.”

According to the purport of Article 1(2) of the Trust Act, the trust property under the Trust Act shall be included only in cases where the trustee is the debtor, and the truster shall not be included in cases where the trustee is the debtor, taking into account the following: (a) the title of the trust property under the Trust Act shall be entirely and externally attributed to the trustee; and (b) the title of the trust is not reserved to the truster in the internal relationship with the truster (see Supreme Court Decisions 2000Da70460, Apr. 12, 2002; 201Du6866, Apr. 13, 2012, etc.); and (c) the legislative intent of Article 21(1) of the Trust Act is to ensure the independence of the trust property in order to smoothly achieve the purpose of the trust.

Therefore, notwithstanding the fact that the trust property and additional dues on the non-party company, the truster, can be distributed in the auction procedure for the trust property owned by the plaintiff, the trustee, because the trust property and additional dues on the trust property cannot be seized or received in the auction procedure conducted by the court of execution for the trust property based on the truster's taxation claim, the court below determined otherwise that the trust property and the trust property can be distributed in the auction procedure for the trust property owned by the plaintiff, the trustee. In so determining, the court below erred by misapprehending the legal principles on "the right arising in the course of performing the trust affairs" under the proviso of Article 21(1)

3. Conclusion

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

Justices Lee Sang-hoon (Presiding Justice)