Where a security right to collective movable property is created by specifying several kinds of movable property as the type and storage place, whether all the same kind of movable property in the same storage place is the object of the security right to movable property (affirmative), and where the weight of movable property is recorded in the registration record, other than the kind and storage place, whether the object is limited to the weight (negative in principle)

In full view of Article 3(2) of the Act on Security over Movable Property, Claims, Etc., Article 35(1)1(a), (b), and (2) of the Regulations on Registration, etc. of Security over Movable Property, Claims, Etc., Article 6(1)1(a), (b), and (3) of the Business Procedure Guidelines Concerning Application for Registration of Security over Movable Property, Claims, Etc. (Supreme Court Regulations No. 1710), and the legislative structure and purport of Article 6(1)1(a), (b), and (3), where multiple movables are specified as types and storage places, the security right over collective movable property, i.e., collective movable property, at the same storage place, is the object of a security right over movable property. Even if the weight was recorded in the registration record, barring any special circumstance, such as that the parties agreed to designate the weight of the movable property and restrict the object, it shall not be deemed that the weight is limited to that of the object, and the weight is merely an indication of reference matters.

Article 3(2) of the Act on Security over Movable Property, Claims, Etc.; Article 35(1)1 and (2) of the Rule on the Registration, etc. of Security over Movable Property, Claims, Etc.

Co., Ltd.

Daejeon District Court Order 2020 Mata89 dated October 21, 2020

The special appeal is dismissed.

The grounds of special appeal are examined.

1. Case summary

The reasoning of the lower judgment and the record reveal the following facts.

A. On August 30, 2016, our bank (hereinafter “Korea bank”) concluded a contract to establish a collateral security right with respect to a class of movable property, which is a movable property owned by ASP World, as prescribed by the Act on Security over Movable Property, Claims, Etc. (hereinafter “The Act on Security over Movable Property and Claims”) in order to secure the obligation to lend a loan to ESP World (hereinafter “ASB”) on the same day (hereinafter “the instant movable property security right”). On the same day, the registration record concluded a contract to establish a collateral security right with respect to a movable property, which is a movable property owned by ESP World, until August 30, 2021, and on the same day (hereinafter “the instant movable property security right”). In the registration record, the “type of movable property” column and “place/Characteristics of storage” column as “type of movable property”, and “the method of entry into the BSP and factory thickness” column as “the method of entry into the BSP and factory thickness” column.

B. On May 21, 2020, the applicant received the decision of provisional seizure on the corporeal movables owned by the ASW World [SB Branch District Court Decision 2020Kahap50577, Seosan support (hereinafter “Sesan support”)]. On May 26, 2020, the Seosan support enforcement officer executed provisional seizure on 256 items of the steel board located in the ASW World factory.

The Bank filed an application for an auction to enforce the instant movable property security interest (Sesan Branch Branch No. 2020No. 484, hereinafter “instant auction”). On July 1, 2020, the Seosan Support Execution Officer issued an attachment on 256 items of the said Madem No. 256, and on August 10, 2020, issued a public notice for the sale of corporeal movables, and set the appraised value and the minimum sale price at KRW 902,00,000 in total.

C. The applicant filed an objection seeking the revocation of the execution of the seizure of the said movable in the instant auction procedure, which was conducted by the Seosan Support Execution Officer.

2. Scope of collateral.

A. Article 3 of the Act on Security over Movable Property provides that “ even if multiple movable properties (including movable properties to be acquired in the future) exist, a registration of security may be made for the purpose of setting the type, place, and quantity of the object or setting it by other similar methods.” This is to ensure that, when a security interest is established for a single movable in a number of movable properties, regardless of whether they are currently owned or acquired in the future, it can be sufficiently specified without limiting the specific method of the object.

Article 35 of the Regulations on the Registration, etc. of Security against Movable Property and Claims provides for the registration of movable property and claims. If collateral is movable property, two methods to specify movable property are classified into two categories. First, in cases of specifying movable property according to the characteristics of movable property, the types of movable property prescribed by the regulations of the Supreme Court and information that can be distinguished from other movable property, such as the manufacturing number or product number (Article 1(1)1(a)) shall be recorded [Article 1(1)1(a)]. This is related to cases where a security right against movable property is established on an individual movable property. Second, in cases of specifying the place of storage of movable property, the types of movable property prescribed by the regulations of the Supreme Court and the location of the place of storage of movable property shall be recorded [the main sentence of Article 1(1)1(b)]. This is limited to cases where a security right against movable property is established on an aggregate movable property, and it is recognized only to cases where the whole movable property of the same kind in the same place is designated as movable property (proviso to paragraph (1)1)1(b)1)1)1)1)2).

Article 6 of the Guidelines for Handling Affairs Concerning Application for Registration of Security against Movable Property and Claims (amended by Presidential Decree No. 1710) provides for the matters to be registered in an application for the specification of movable property and claims. Paragraph (1) 1(a) provides for the entry of “where movables are specified according to the characteristics of movable property, the description given to each movable property, such as the type of movable property, the manufacturing number of movable property, the product number, etc.,” and Paragraph (1) 1(b) provides for the entry of “where movables which are the subject matter of security are specified according to the storage place, the type of movable property and the specific location of the storage place of movable property (including the lot number in cases of land, and the number of buildings, if any).” Meanwhile, Paragraph (3) provides for “The name, size, weight, material quality, manufacturing date, color, form, the name of the storage place, possessor, etc. of movable property which is beneficial for specifying movable property.”

In full view of such provisions, structure, and legislative intent, where multiple movables are specified as a type of movable property and a storage place, namely, where a security right for collective movable property is created, the entire movable property in the same storage place is the object of a security right for movable property. Even if the type and storage place are recorded in the registration record, barring special circumstances, such as the parties’ agreement to designate the weight and restrict the object, the object cannot be deemed limited to the weight, and the weight is merely that recorded as reference matters for indicating the object.

B. According to the reasoning of the lower judgment and the record, the following facts are revealed.

The security interest in the movable property of this case identified the object of the contract according to the type and the storage place.

Article 5 of the contract to establish a collateral security right provides that “Where the proposal of collateral security is not consistent with or omitted from the entry in the list of collateral items in the end of this contract, and a creditor makes a request, the pledger shall immediately take the registration of alteration, registration of correction, etc.” (Article 5). Paragraph (2) provides that “Where the issuer adds or replaces all or part of the proposal of collateral security, if the addition or replaced is a movable of the same kind as the collateral items, the additional or replaced object shall be secured by this contract without any separate contract.” The list of collateral items in the end of this contract states “a special agreement” as “in the event of transformation or processing of collateral, the effect of the collateral security right shall be infringed.”

C. Examining these facts in light of the legal principles as seen earlier, the following conclusions are derived.

The security interest in the instant movable property was designated as a collective movable property according to the type and storage place. Despite the addition, replacement, transformation, or processing of the sign board, there was an agreement between the parties to the instant movable property with the intent to use the entire sign board located in the Esp&D factory as an object of the object. As such, the entire sign board located in the instant factory is a collateral. The weight recorded in the registration record is merely an indication as a reference to specify the object, and it cannot be deemed as limited by weight. Therefore, even if the enforcement officer executed the attachment of the entire sign board located in the instant factory at the instant auction procedure, it cannot be deemed that the scope of the movable property security interest exceeded the scope of the movable property.

D. In the same purport, the lower court rejected the applicant’s assertion that the enforcement officer exceeded the scope of the instant movable property security interest in the instant auction procedure. In so doing, the lower court did not err by misapprehending the legal doctrine on the scope of the security interest in movable property, contrary to what is alleged in the grounds of special appeal, thereby adversely affecting

3. Whether the minimum sale price has been defective in calculating the minimum sale price;

The lower court determined as follows. An enforcement officer, while publicly announcing the auction procedure of this case, calculated the minimum comprehensive sale price of the subject matter of auction by totaling KRW 902,00,000 for the subject matter of auction, and appears to have included KRW 3,523,438, which is divided by 256 items on the list of subject matter of auction as the assessed amount by item. Considering the characteristics of comprehensive sale, even if the enforcement officer assessed the subject matter of auction by item, and calculated the total sale price by whole without calculating the minimum comprehensive sale price by item, it cannot be deemed that there is a defect in the method of calculation solely for such reasons.

Examining the reasoning of the lower judgment in light of the record, the lower court’s order did not err by misapprehending the legal doctrine as otherwise alleged in the grounds of special appeal. Other grounds of special appeal are new arguments in the special appellate trial, and thus, are not legitimate grounds of special appeal against the lower judgment.

4. Conclusion

The special appeal of this case is dismissed as it is without merit. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Dong-won (Presiding Justice)