[1] Method of returning legal reserve of inheritance

[2] The standard time for calculating the market price of the donated property (=the time of commencement of inheritance) and the time for calculating the market price in case where the return of the original property is ordered due to impossibility of return of the original property (=the time of closing of argument in fact-finding

[3] The case holding that it is not impossible to perform the duty to return the original property, barring special circumstances, such as where the person liable to return the property does not hold the share certificates donated to the decedent, even though the person liable to return the property does not own the share certificates themselves, barring special circumstances, such as the acquisition of the shares

[4] Whether new shares issued by the consolidation of shares is commended before consolidation and its identity is maintained (affirmative)

[1] The Korean Civil Code recognizes the system of legal reserve of inheritance and provides for the method of return of legal reserve of inheritance in accordance with Articles 1112 through 1118, but it does not have any separate provision as to the method of return of legal reserve of inheritance. However, in light of the provision of Article 1115(1) that "the person liable to return the property may claim the return of the property to the extent that it is deficient," the person liable to return shall normally return the property which is subject to gift or testamentary gift, but if it is impossible to return the property, the equivalent

[2] The scope of return of legal reserve of inheritance is based on the amount of legal reserve of inheritance calculated by multiplying the amount of the property received by the claimant for legal reserve of inheritance by the ratio of legal reserve of inheritance. In calculating the amount of legal reserve of inheritance, the market price of the property received by the obligor shall be calculated at the time of the commencement of inheritance, and where the scope of the property to be returned to the obligor is determined, and where the return of the original property is ordered due to impossibility of return of the original property due to impossibility of return of the original property, the value shall be calculated as at the

[3] The case holding that it is not impossible to perform the duty to return the original property, barring special circumstances, such as where the person liable to return the property fails to hold the share certificates donated to the decedent, even though the person liable to return the property does not own the share certificates themselves

[4] In the event of consolidation of shares, the company issues new shares (Article 442(1) of the Commercial Act), and shareholders receive new shares to the extent that the shares are reduced to the extent that they are combined. Accordingly, the share certificates exchanged pursuant to this provision are still representing shares before the consolidation and maintaining its identity.

[1] Article 115 (1) of the Civil Act / [2] Articles 113 and 1115 (1) of the Civil Act / [3] Article 1115 (1) of the Civil Act / [4] Article 442 (1) of the Commercial Act

[2] Supreme Court Decision 95Da17885 delivered on February 9, 1996 (Gong1996Sang, 904) / [4] Supreme Court Decision 93Da49482 delivered on December 13, 1994 (Gong195Sang, 468)

[Plaintiff-Appellant] (Law Firm Tae Tae, Attorneys Kim Sung-soo et al., Counsel for plaintiff-appellant)

Defendant 1 (Attorney Han-soo et al., Counsel for defendant-appellant)

Defendant 2 and eight others

Seoul High Court Decision 2003Na50759 Delivered on August 24, 2004

The part of the lower judgment against Defendant 1 and the part against the said Defendant against which the Plaintiff lost is reversed, and that part of the case is remanded to the Seoul High Court. The remaining part against Defendant 1 and the appeal against the Defendants other than the said Defendant are dismissed. The costs of appeal against the Defendants other than Defendant 1 are assessed against the Plaintiff.

1. Fact-finding and judgment of the court below

The court below, based on its adopted evidence, found that the plaintiff was a child born out of wedlock of the non-party, and the non-party died on December 17, 1995 and acquired the status of co-inheritors by filing a final and conclusive judgment in favor of the co-inheritors. The deceased non-party donated most of the common shares of the first stock company that he operated to Defendant 1 before the birth to the non-party, cash, and donated a lot of property other than the above shares, etc. to the other Defendants, and accordingly, acknowledged that the defendants should return the plaintiff's shortage of legal reserve in proportion to

Based on the facts acknowledged above, the court below held that the remaining Defendants except Defendant 1 hold the donated shares until now, and therefore, they shall return them. The value of shares, which is the basis for calculating the number of shares to be returned at this time, shall be based on the value at the time of the commencement of the inheritance. However, since the 10 share shares after the commencement of the inheritance of this case were consolidated into 3 share shares, 10 share shares again into 2 share shares, and the value of 1 share shares at the time of the commencement of the inheritance of this case is equal to 0.06 share value at the time of the commencement of the inheritance, the above Defendants shall return the reserved share to the Plaintiff at the time of the commencement of the inheritance of this case by 6% of the number of shares calculated by dividing the reserved share value per share of the 1 stock company at the time of the commencement of

Furthermore, the court below held that since Defendant 1 offered the shares donated as above to the creditor bank as collateral and did not hold them by the execution of the collateral, it cannot be returned to the plaintiff. If it is impossible to return the original claim against the claimant as a result of disposing of the property donated by the donee, the value of the property shall be returned at the time of commencement of the inheritance. However, the court dismissed the plaintiff's claim against the above defendant for the return of shares among the main claim against the plaintiff, and ordered the payment of money equivalent to the value at the time of commencement of the inheritance.

2. Judgment of the Supreme Court

The Korean Civil Code recognizes the system of legal reserve of inheritance and provides for the method of return of legal reserve of inheritance in Articles 1112 through 1118, but it does not provide for the separate provisions on the method of return of legal reserve of inheritance. However, in light of the provisions of Article 1115, Paragraph 1, Article 1115, Paragraph 1, the person liable to return shall normally return the property which is subject to gift or testamentary gift, but if it is impossible to return the property itself, the amount equivalent to the value shall be returned.

Meanwhile, the scope of return of legal reserve of inheritance is based on the amount of legal reserve of inheritance calculated by multiplying the amount of the property received by the claimant for legal reserve of inheritance by the ratio of legal reserve of inheritance at the time of the commencement of inheritance (see Supreme Court Decision 95Da17885 delivered on February 9, 1996). In calculating the amount of legal reserve of inheritance, the market value of the property donated by the Defendants should be calculated as at the time of the commencement of inheritance (see Supreme Court Decision 95Da17885 delivered on February 9, 196). If the scope of the property to be returned to the pertinent Defendant is determined, and it is impossible to return the property as seen above, and thus

Based on the above legal doctrine, the subject and scope to be returned to the Plaintiff in this case shall be viewed.

A. The part of defendant 1

It is difficult to accept the decision of the court below that the court below acknowledged that the return of shares to Defendant 1 was impossible during the return of legal reserve of inheritance and ordered the return of the equivalent value, and recognized that the return of legal reserve of inheritance itself calculated as at the time of the commencement of inheritance is the amount to be returned.

First of all, according to the court below's acknowledged, Defendant 1 is a common share of No. 1 and according to the records, even after the consolidation of shares was conducted on two occasions, it can be known that the total outstanding shares were held more than two million shares. Thus, Defendant 1 can perform the duty to return the original shares by acquiring the prescribed quantity of shares out of the above shares and transferring them to the Plaintiff, unless there are special circumstances such as that the common share of No. 1, which is a substitute, cannot be acquired from a third party and returned from a third party. Therefore, it cannot be said that the duty to return shares to the Plaintiff merely because the above Defendant did not own the share certificates donated by the deceased Nonparty.

Therefore, the court below should have partly accepted the plaintiff's primary claim by ordering the return of 6% of the number of shares calculated at the time of commencement of the inheritance in accordance with the return ratio of defendant 1, if it is possible to return the original claim after examining the existence of the above special circumstances. If it is impossible to return the original claim due to any circumstance, the court below should have calculated and ordered the amount equivalent to the market price at the time of the closing of argument of the court below to have returned the original claim.

Therefore, the judgment of the court below on the part of defendant 1 is erroneous in the misapprehension of legal principles as to the target of return of legal reserve of inheritance and the basis of calculation in return of the value. Thus, defendant 1's ground of appeal pointing this out

Furthermore, we examine the scope of reversal.

First of all, the lower court’s erroneous judgment against Defendant 1 is clear that it affected the conclusion of the judgment on the main claim regarding the claim for return of shares among the part against the Plaintiff against the Defendant 1, and therefore, the part against the Plaintiff against the Defendant is reversed.

On the other hand, with respect to the portion of the claim for monetary payment as the original claim for cash donation among the primary claims, since the court below did not specify the scope of the claim to be returned to the plaintiff among the donated cash, and judged that the above part of the claim for monetary payment was justified in whole, the court below accepted Defendant 1's allegation in the grounds of appeal and calculated the legitimate legal reserve to be returned or paid to the plaintiff, the court below's error in the above part of the claim for monetary payment, which the plaintiff sought as the primary claim, cannot be determined at all, and affected this part. Thus, this part of the judgment below should also be reversed.

B. The remainder of the Defendants

When the consolidation of shares takes effect, the company issues new shares (Article 442(1) of the Commercial Act), and shareholders receive the number of new shares reduced to an extent equal to the combined shares. Accordingly, the share certificates exchanged pursuant to this is still identical to that of the shares before the consolidation (see Supreme Court Decision 93Da49482, Dec. 13, 1994). As such, the Defendants are obliged to return to the Plaintiff the shares reduced by the consolidation of shares calculated by dividing the number of shares calculated at the price per share of the stock company 1 at the time of the commencement of the inheritance by the number of shares calculated by the consolidation of shares at the time of the commencement of the inheritance. Furthermore, even if the shares are reduced to be substantially returned to the Plaintiff, this is due to the consolidation of shares, and thus, the Defendants are not obligated to return the

In the same purport, the decision of the court below ordering the remaining Defendants except Defendant 1 to return 6% of the number of shares calculated as at the time of commencing the inheritance is just, and there is no error of law such as the calculation method of legal reserve amount, the standard period of calculation, the objects of return, and the reduction of capital, as otherwise alleged in the grounds of appeal

3. Conclusion

Therefore, the part against Defendant 1 in the judgment below against the defendant 1 (the part accepting the claim for payment of money among the main claim and the part accepting the conjunctive claim) and the part against the plaintiff against the defendant 1, which reversed the main claim (the share transfer claim), and remanded this part of the case to the court below for a new trial and determination. The part against the plaintiff 1 and the remaining part against the defendant 1 (the part dismissing part of the preliminary claim) and the appeal against the defendants other than the above defendant are all dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yoon Jae-sik (Presiding Justice)