National Bank Co., Ltd. (Law Firm Pok, Attorneys Hong Sung-sung et al., Counsel for the defendant-appellant)

KSA Co., Ltd. (Attorney Huwon-won, Counsel for the plaintiff-appellant)

September 16, 2015

1. The defendant shall pay to the plaintiff 1,562,424,381 won and 169,854,360 won with 18% interest per annum from April 19, 2014 to the date of full payment, and 642,110,17 won with 17% interest per annum from April 19, 2014 to the date of full payment.

2. The costs of the lawsuit are assessed against the defendant.

3. Paragraph 1 can be provisionally executed.

The same shall apply to the order.

1. Facts of recognition;

A. The plaintiff's claim

1) On June 28, 2007, the Plaintiff entered into an agreement on the automatic passbook loan transaction with the Won Information Industry Co., Ltd. (hereinafter “Nonindicted Company”) on the limit of KRW 100 million and the due date on June 27, 2008, and carried out the loan accordingly. Around June 25, 2008, the Plaintiff agreed to extend the due date to June 26, 2009, and agreed to increase the credit limit to KRW 170 million on November 1, 2008.

B) On October 8, 2008, the Plaintiff concluded a credit transaction agreement with the non-party company's maximum amount of USD 700,000,000 in US law, and opened a credit letter with the non-party company as the applicant, but the non-party company did not pay the price by January 20, 2009, on January 21, 2009, because the non-party company did not pay the price by January 20, 2009.

C) Around March 2009, Nonparty Company lost the benefit of time due to its obligations (hereinafter “each of the instant obligations”) and (b) (hereinafter “each of the instant obligations”). On March 25, 2009, the Plaintiff disposed of the bad debt and managed it as a special bond after classifying it as a special bond.

2) On February 11, 2014, the Plaintiff filed a lawsuit, such as a loan, against a non-party company, and was sentenced to a judgment on February 11, 2014, that “the company outside Korea shall pay to the Plaintiff 1,472,459,611 won, and 642,10,177 won per annum 17% per annum from August 27, 2013 to the date of full payment, and 169,854,360 won per annum from August 27, 2013 to the date of full payment,” and the above judgment became final and conclusive as it is (the above judgment as of April 18, 2014).

(b) Division and merger;

1) On November 4, 2009, the non-party company entered into a merger after division with the Defendant (hereinafter “instant merger after division”) under the following terms and conditions.

A) The non-party company divides part of its property (the registration number No. 200 of the electrical construction business) and the divided part shall be divided and merged by the defendant, and the non-party company shall continue to exist.

B) The Defendant comprehensively succeeds to the rights and obligations of the license, equipment and personnel of the electrical construction business part, which is part of the business of the non-party company.

C) On November 4, 2009, the non-party company transferred to the Defendant all the rights and obligations regarding the property partitioned on the basis of the balance sheet and inventory of property as of November 4, 2009, and the Defendant comprehensively succeeds to this. The Defendant succeeds to the rights and obligations regarding the contract for construction works currently being executed and the defect repair of completed construction works.

D) Pursuant to Article 530-9(3) of the Commercial Act and Article 530-10 of the Commercial Act, the Defendant succeeds to the matters related to the electrical construction business of the non-party company comprehensively.

E) Major assets that the Defendant succeeds to the entirety by the division of the non-party company are as follows.

① License for the electrical construction business of the non-party company

(2) Matters concerning the performance and management of the non-party company involved.

3. Tools, equipment and technical personnel related to the electrical construction business of the non-party company

4. All investments, loans, and debts invested by the non-party company to the Electrical Construction Financial Cooperative.

2) On November 19, 2009, the non-party company and the defendant adopted a resolution to approve the instant merger agreement by holding a temporary general meeting of shareholders on November 19, 2009. The non-party company completed the merger by split on December 22, 2009, and the defendant completed the merger by split on December 30, 2009.

[Ground of recognition] Unsatisfy, entry of Gap 1 to 9 evidence, entry of Eul 1 to 3 evidence, purport of whole pleadings

2. Determination as to the cause of action

According to the above facts, the defendant is jointly and severally liable for the debt of this case against the plaintiff of the non-party company pursuant to Article 530-9 (1) of the Commercial Act, barring any special circumstance, the defendant is obligated to pay to the plaintiff 1,562,424,381 won and 169,854,360 won with 18% interest per annum from April 19, 2014 to the date of full payment, 642,110,17 won with 17% interest per annum from April 19, 2014 to the date of full payment.

3. Judgment on the defendant's assertion

A. The assertion

1) Article 530-9(1) of the Commercial Act does not apply to the instant merger agreement, since its substance is transfer of business.

2) A) The Defendant succeeded only to the obligations of the non-party company with respect to the electrical construction business of the non-party company according to the instant merger agreement, and the non-party company fulfilled all creditor protection procedures. Thus, the Defendant is not liable for each of the obligations of this case unrelated to the electrical construction business.

B) Even if the non-party company did not implement the highest procedure against the plaintiff during the creditor protection procedure, the plaintiff is not likely to incur unexpected damages due to the merger after division because the non-party company disposed of each of the claims of this case on March 25, 2009, which was before the merger after division, and renounced its recovery. Therefore, the creditor protection procedure is unnecessary. In addition, since the defendant trusted that the non-party company performed the creditor protection procedure, it should be protected pursuant to Article 39 of the Commercial Act.

3) It is reasonable to deem that each of the instant claims has arrived at least on March 25, 2009 and January 21, 2009. Since the instant lawsuit was filed on June 2, 2014, five years thereafter, the extinctive prescription has already expired.

4) The Plaintiff, as a manager negligence, made each of the instant claims into bad debts and did not recover them properly, and eventually disposed of bad debts. Nevertheless, seeking joint and several liability against the Defendant who entered into the instant merger agreement without knowing the existence of each of the instant claims is an abuse of rights.

B. Legal principles

1) The Commercial Act provides that a company established by a division or a surviving company through a merger after division (hereinafter referred to as a “beneficiary company”) is jointly and severally liable to repay the company’s obligations before the division (Article 530-9(1) of the Commercial Act): Provided, That a beneficiary company may, by special resolution of the general meeting of shareholders, provide that only the beneficiary company shall assume obligations with respect to the company’s obligations, among those of the company to be divided. In such cases, if the split-off company survives after the split-off (Article 530-9(2) and (3) of the Commercial Act), the beneficiary company shall bear only obligations that are not the beneficiary company (Article 530-9(2) and (3) of the Commercial Act). In such cases, the company to be split-off shall publicly notify that a merger is raised within two weeks from the date the general meeting of shareholders approves the merger and notify the creditors thereof separately (Articles 530-9(4), 530-11(2) and 527-5 of the Commercial Act), and Article 530-2(2) of the Commercial Act shall be deemed approved.

2) Where a divided company and a beneficiary company do not bear joint and several liability for the obligations of the company prior to the division, there is a change in the debtor's property and has a significant influence on creditors' interests, and thus, it shall be given individually to creditors known to the company that is divided for the protection of creditors. Therefore, a change in the debt relationship between the divided company and the beneficiary company into the divided debt relationship shall be deemed a requirement that the divided company had properly completed individual procedures for creditors known to the creditors. If such individual peremptory notice is omitted, the effect of the divided debt relationship shall not occur to the creditors, and in principle, the company that is divided with the beneficiary company shall be jointly and severally liable for the repayment (see Supreme Court Decision 201Da38516, Sept. 29, 201). However, where it is deemed that creditors are involved in the division and are in a position of being aware of the company division in advance, and that there is no possibility of unexpected damages, such as the waiver of a prior objection to the division of the company, the company and the beneficiary company shall be jointly and severally liable with the company (200.

3) Where a beneficiary company is jointly and severally liable for any obligation other than that to be borne by each party’s separate plan or written agreement pursuant to Article 530-9(1) of the Commercial Act, it is a statutory liability imposed to protect creditors who are disadvantageously affected in the collection of claims due to a corporate division, and barring any special circumstance, it is difficult to view that there is a subjective joint and several liability relationship with regard to the statutory joint and several liability. Therefore, it is reasonable to view that the beneficiary company has a non-joint and several liability relationship with respect to any obligation other than that to be borne by each party’s separate plan or written agreement (Supreme Court Decision 2009Da95769 Decided August 26, 2010).

C. Determination

1) In determining the objective agreement of expression of intent for the formation of a contract, in cases where there is a contract which is a disposal document, barring special circumstances, the existence and content of the expression of intent should be recognized as stated in the contract, so long as the agreement of this case, which is a disposal document, stipulates that the electrical construction business license, etc. shall be transferred by means of division and merger, the application of the provisions of the Commercial Act concerning division and merger shall not be excluded by

2) A) The mere fact that the Plaintiff disposed of the bad debt of each of the instant claims cannot be said to be unnecessary in the creditor protection procedure.

B) We examine whether the procedure to protect creditors was taken at the time of the instant merger after division.

(1) In light of the overall purport of the arguments in the above evidence, the following facts are acknowledged: (a) on November 20, 2009, at the △△△△△ newspaper, a public announcement was made to the effect that “The non-party company and the Defendant divided the electrical construction business of the non-party company on November 19, 2009, and the divided portion of the non-party company’s electrical construction business, and the Defendant decided to succeed to the rights and obligations of the non-party company, so that the creditors and shareholders dissatisfied with the division and merger may raise an objection within one month from the date of this public announcement.”

D. However, there is no other evidence to acknowledge it as to whether the non-party company notified the plaintiff within two weeks from November 19, 2009, which was the date of the resolution of the general meeting of shareholders regarding the merger and division.

Article 22(1) of the Civil Act provides that the Plaintiff shall be deemed to have received the notification of the merger by split and merger from the non-party company at the time of the merger by split and merger, and the Plaintiff shall not be deemed to have received the notification of the merger by split and merger from the non-party company at the time of the merger by split and merger by taking into account the fact that the location and quantity of the seals shown in the first chapter of the written agreement of the merger between the Plaintiff and the Defendant (B-1) held by the Defendant and the upper part of the written agreement of the merger by split and merger

C) In addition, Article 39 of the Commercial Act provides that a person who has registered matters different from the fact intentionally or by negligence may not oppose the difference to a third party acting in good faith. Even if the defendant heard and trusted the fact that he completed the creditor protection procedure from the non-party company that is a party to the merger agreement, it cannot be said that the defendant is a bona fide third party protected under the above provision.

3) All of the claims of this case against the non-party company were due on or around March 2009. However, since the Defendant’s obligation owed to the Plaintiff by the Plaintiff is due to the division of the company and the obligor’s obligation is due to changes in the obligor’s responsible property, and the registration of the merger takes place in order to protect the obligee who is disadvantageously affected in the recovery of the claim (limited to the quasi-joint and several liability relationship with the obligation of the non-party company), it is reasonable to deem that the extinctive prescription runs from the registration date of the merger, which is the time when the Plaintiff is able to exercise its right to the Defendant (the claim of this case was filed on June 2, 2014), the statute of limitations has not expired.

4) The plaintiff's lawsuit of this case cannot be viewed as abuse of right solely on the ground that each of the claims of this case was disposed of bad debt depreciation due to insolvency, and the defendant concluded the merger agreement of this case without knowing the existence of each of the claims of this case

5) Accordingly, the Defendant’s assertion is rejected in entirety.

4. Conclusion

Thus, the plaintiff's claim of this case is justified and accepted.

Judges Shin Young-hee