The intent of Article 18-2 subparag. 4 of the former Mutual Savings Banks Act prohibiting the provision of “performance guarantee or security” by a mutual savings bank, and whether such provision is effective (affirmative)

Article 18-2 Subparag. 4 of the former Mutual Savings Banks Act (Amended by Act No. 10175, Mar. 22, 2010); Article 105 of the Civil Act

Supreme Court Decision 2003Da1601 Decided June 11, 2004 (Gong2004Ha, 1148) Supreme Court Decision 2004Da2199 Decided June 25, 2004, Supreme Court Decision 2005Da2024 Decided November 10, 2005

The bankruptcy trustee of a mutual savings bank prior to the date of the bankrupt, Korea Deposit Insurance Corporation (Law Firm Cump, Attorneys Dohh-soo et al.

Agricultural Company ELD Co., Ltd and two others (Law Firm White, Attorneys Han-soo et al., Counsel for the plaintiff-appellant)

Jeonju District Court Decision 2013Na3159 decided August 23, 2013

The part of the judgment below against the plaintiff is reversed, and that part of the case is remanded to the Jeonju District Court Panel Division.

The grounds of appeal are examined.

1. As to the second ground for appeal

A. The facts acknowledged by the court below are as follows.

(1) While implementing the Real Estate Ep (PF) development project on the site of the project in Incheon reinforced military forces, ELI&D Co., Ltd. (hereinafter “ELD”) already borrowed KRW 8 billion from the preceding mutual savings bank (hereinafter “former mutual savings bank”) and became difficult to obtain additional loans due to the same person’s loan restriction, etc.

(2) On December 30, 2008, a mutual savings bank extended KRW 3.59 billion to Defendant Kbble Loans Co., Ltd. (hereinafter “Defendant Kbble Loans”) and extended the same amount to Defendant Kbble loans on the same day.

(3) On the preceding day, the mutual savings bank, Defendant Dable loans, and LIB loans prepared the “Agreement on Terms and Conditions for Loan Repayment,” as to each of the above loans on the same day. The contents are as follows: “In the event that Defendant Dable loans are overdue or the preceding day is subject to business restrictions, Defendant Dable loans shall be immediately transferred to the mutual savings bank on the preceding day, and Defendant Dable loans shall be transferred to the mutual savings bank on the preceding day, and Defendant Dable loans shall be transferred to Defendant Dable loans on the preceding day on the ground that Defendant Dable loans are transferred to the mutual savings bank on the preceding day by the third beneficial rights certificate for Defendant Dable loans on the instant project site.”

(4) The instant business site was sold to the movables Promotion Co., Ltd. (hereinafter “The Movable Property Promotion”). Accordingly, on April 3, 2009, the movables Promotion took over the above loans obligations for Defendant Gabble loans from ELC, and on the preceding day, the mutual savings bank, Defendant Kbable loan and movable property promotion agreement are identical with the terms and conditions of the above loan repayment. However, the agreement that changed ELV into the movable property promotion (hereinafter “Agreement on April 3, 2009”).

(5) Since the promotion of movable property failed to pay interest on the above loan to Defendant KV loan, Defendant KV loan also was unable to pay interest on the loan to a mutual savings bank prior to the preceding day, Defendant KV loan received a loan from Defendant KVD Co., Ltd. (hereinafter “Defendant ELD”) to pay interest on the loan from the mutual savings bank prior to the preceding day in order to pay interest on the loan.

(6) On November 5, 2009, a mutual savings bank extended a loan of KRW 300 million to Defendant ELD (hereinafter “instant loan”) and Defendant Dack’s loan and Defendant 3 jointly and severally guaranteed the above loan obligations.

(7) At the time of the above loan, Defendant ELD, mutual savings banks, and Defendant KSB loan drafted a written agreement (hereinafter “instant agreement”). The content of the agreement is that “where Defendant KSB loan becomes aware of the repayment of the loan claims for the promotion of movable property, Defendant KSB loan and the preceding mutual savings banks immediately perform the agreement and the trust property acquisition agreement on April 3, 2009, and at the same time, Defendant KSB loan and KRW 3.6 billion are reverted or transferred to the mutual savings bank on the preceding day, and at the same time, Defendant KSB loan and KRW 200 million are exempted (including the joint and several debt obligations for Defendant KSB loan and Defendant ELD on the preceding day of the preceding day of the loan).”

(8) On the date of receiving the instant loan, Defendant ELD remitted KRW 193,00,000 out of the total amount to Defendant KSB loan, and Defendant KSB loan repaid the overdue interest on the existing loan to the mutual savings bank prior to the said money.

(9) Afterwards, the promotion of movable property did not pay existing loans and overdue interest, etc. to Defendant KV loans. The principal and interest of the instant loans against Defendant LVD as of September 26, 2010 is KRW 302,137,366.

(10) On August 17, 2010, a mutual savings bank was declared bankrupt by the Jeonju District Court, and the Plaintiff was appointed as a trustee in bankruptcy of a mutual savings bank on the day preceding the same day.

B. The court below held that the defendants' defense of the claim in this case where the plaintiff sought the loan in this case and the joint and several surety payment against the defendants was justified since the movable promotion agreement in this case agreed to exempt 200 million won out of the loan in this case where the movable promotion was unable to repay the debts equivalent to 3.6 billion won against the defendant's movable loan, but the movable promotion failed to repay the debts, and therefore, the movable promotion did not repay the above debts. Thus, the court below rejected the plaintiff's assertion that the above debt exemption agreement in this case's agreement was invalid because it was concluded to take over the risk of default on the defendant's movable promotion loan in this case's movable promotion's agreement on the preceding day of the loan in this case's agreement, and that the above debt exemption agreement in this case's agreement constitutes "guarantee or collateral provision" prohibited under Article 18-2 subparagraph 4 of the Mutual Savings Bank Act, and it can be seen that the creditor's debt exemption agreement in this case's preceding day of the loan in this case's first day of the loan promotion and the loan's loan in this case's net interest.

C. However, we cannot accept the above determination by the court below for the following reasons.

The legislative purpose of Article 18-2 subparag. 4 of the former Mutual Savings Banks Act (amended by Act No. 10175, Mar. 22, 2010; hereinafter “former Mutual Savings Banks Act”) is to prevent a mutual savings bank from offering a guarantee for debts or offering a security, except as otherwise prescribed by Presidential Decree. This is to ensure that a mutual savings bank, the purpose of which is to contribute to the development of the national economy by promoting the financial convenience of ordinary people and small-scale enterprises, protecting its customers, and maintaining credit order, falls short of the capital structure due to the management’s reckless and insufficient act of incurring debt obligations, thereby hindering the performance of its duties and impairing the interests of ordinary people and small-scale enterprises by disturbing credit order. The above provision is not a simple regulation, but an effective provision (see Supreme Court Decisions 2004Da2199, Jun. 25, 2004; 2005Da2244, Nov. 10, 2005; hereinafter referred to as “the above risk of guaranteeing or accepting obligations between the parties to the pertinent mutual savings bank”.

Examining the facts in light of the aforementioned legal principles, in the event that the movable promotion of movable property does not pay the principal and interest of loans equivalent to approximately KRW 3.6 billion to Defendant KV loan normally, and the cause of nonperformance occurs, it may be deemed that the credit risk occurs to Defendant KV loan, which is the direct creditor of the movable property promotion, as well as that the credit risk occurs to Defendant LV, who is the direct creditor of the movable property promotion, for the payment of overdue interest of Defendant KV loan. Under such premise, the mutual savings bank prior to the default of the obligation of the movable property promotion, subject to the condition of the obligation of the movable property promotion, exempted the principal and interest of the loans equivalent to KRW 3.6 billion from the loans of this case against Defendant LVD and its joint and several surety credit obligation. Accordingly, it is reasonable to deem that the mutual savings bank’s act of exempting the principal and interest of KRW 200 million from the loans of this case to guarantee the credit risk of Defendant LVD due to the nonperformance of the obligation under the agreement of this case is null and void in violation of Article 18-2 subparag.

D. Nevertheless, the lower court determined otherwise on the grounds stated in its reasoning that the debt exemption agreement under the instant agreement is valid. In so doing, the lower court erred by misapprehending the legal doctrine on the “liability guarantee or the provision of security” under the former Mutual Savings Banks Act, thereby adversely affecting the conclusion of the judgment. The Plaintiff’s ground of appeal assigning this error is with merit.

2. Conclusion

Without further proceeding to decide on the remaining grounds of appeal, the part against the Plaintiff among the judgment below is reversed, and that part of 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 In-bok (Presiding Justice)