2018Da235576 Agreements

2018Da235583 (Joint) Agreements

Plaintiff:

Law Firm Pyeongan et al., Counsel for the defendant-appellant

Defendant 1 and two others

Defendants, LLC et al., Counsel for the Defendants-appellant and three others

Seoul High Court Decision 2017Na201, 218 (Consolidated) Decided April 27, 2018

October 15, 2020

All appeals are dismissed.

The costs of appeal are assessed against the Defendants.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Basic factual basis

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

A. The Defendant Innice Development Industry Co., Ltd. (hereinafter “Defendant Innice Development Industry”), the Defendant Innice Development Co., Ltd. (hereinafter “Defendant Innice Development”), and the two companies together are companies incorporated for the purpose of real estate development business. Defendant 1 actually operates the Defendant Company.

around August 2013, Defendant Company acquired the right to implement multi-family housing development projects ( Address 1 omitted) other than Suwon-si (hereinafter referred to as "○○-dong project").

The Plaintiff entered into a joint agreement with Defendant 1 on August 31, 2013 in the name of the wife Nonparty 1. The details thereof are that the Plaintiff invested KRW 3 billion in the ○○dong business, and Defendant 1 paid KRW 30 billion out of the profit from the operation of the ○○dong business to the Plaintiff, and transfers 30% of shares to the Plaintiff or the Plaintiff’s person designated. The Plaintiff and Nonparty 1 entered into a primary additional agreement with Defendant 1 and Nonparty 2 on September 4, 2013, changing the Plaintiff’s investment amount to KRW 3.6 billion in total, and KRW 3.9 billion in shares. On September 9, 2013, the Plaintiff changed the Plaintiff’s investment amount to KRW 4.3 billion in total from September 3, 2013 to KRW 4.3 billion in shares.

On October 2013, the Plaintiff requested Defendant 1 to make an investment in the amount of KRW 750,000,000 from October 4, 2013 to November 11, 2013, which is necessary for Defendant 1 to participate in the urban environment rearrangement project in Jongno-gu Seoul ( Address 2 omitted) (hereinafter referred to as “Class 2 project”).

B. On April 10, 2014, the Plaintiff entered into a final agreement with Defendant 1 and ○○dong Business to determine the timing and method of return of investment, etc. paid to paper business (hereinafter “final agreement”). The Defendant Company jointly and severally guaranteed Defendant 1’s obligation to the Plaintiff. The main contents of the final agreement are as follows.

(1) The amount invested by the Plaintiff is KRW 4.75 billion in investment and KRW 5 billion in total of KRW 300 million in stock price (Article 1 referred to as “investment amount”).

(2) Of the investment principal, KRW 2.5 billion shall be paid from the time of granting a PF loan to the end of August 2015, to the end of August 1, 2015, and KRW 1.05 billion shall be paid when the sale rate exceeds KRW 90 billion ("time of payment of the investment principal" of Article 3).

(3) Defendant 1 shall pay 10 billion won with the Plaintiff’s investment profit and shall bear taxes and shall not raise any objection in relation thereto (Article 4 “investment profit”).

(4) In the case of the Plaintiff’s investment profit of KRW 5 billion, Defendant 1 paid KRW 5 billion to Nonparty 1 as the person designated by the Plaintiff when the apartment sales rate of ○○dong business exceeds KRW 70%, and the Plaintiff paid KRW 5 billion to Defendant 1 as the investment amount of the business in the paper with Defendant 1’s cooperation by using the certificate of beneficial interest (Article 5(1)).

Defendant 1, among the Plaintiff’s investment profits, paid KRW 5 billion to Nonparty 3 who was designated by the Plaintiff at “financial rights” and “ lower priority to the lender” when the sales rate of the apartment units of the ○○-dong business exceeds KRW 70% (Article 5(2)). The Defendant Innice Development Industry, on August 28, 2014, entered into a management trust contract with the truster and beneficiary, Korea Asset Trust Co., Ltd., the trustee, Korea Asset Trust Co., Ltd., the trustee, and AbSM No. 1 and AbSM No. 3 were designated as the first priority beneficiary of the joint beneficiaries of the ○-dong business, Dae Forest Industry Co., Ltd., and the joint beneficiaries of the 2nd priority beneficiary of the joint corporation, and Nonparty 4 of Defendant 1’s husband and Nonparty 3 were designated as the first priority beneficiary of the joint corporation.

On August 28, 2014, Defendant Indian Development entered into a management-type land trust agreement on apartment complexes among Korea Asset Trust Co., Ltd. and ○○○ Dong business, and the content of the remainder except the upper limit of the upper limit of the first profit was the same as the trust agreement on apartment complexes (hereinafter referred to as “instant trust agreement” in this case. The instant trust agreement was amended on July 28, 2015. The instant trust agreement was amended on July 28, 2015. The third priority beneficiary is the hythaccin company and the htyp capital company, and Nonparty 4 is the first priority beneficiary. Accordingly, the Defendant Company was able to receive a dividend or reimbursement in the fifth priority order.

D. The sale of apartment units in the ○○ Dong project began on October 28, 2014. The apartment complex was sold on December 14, 2014 for the apartment complex, and on December 26, 2014 for the apartment complex, 70% of the apartment complex was sold on December 26, 2014, and 10% thereafter. 2. Whether the final agreement is a monetary loan for consumption

A. For the following reasons, the lower court rejected the Defendants’ assertion that Article 4 and Article 5 of the final Arrangement is a monetary loan agreement and determined as an agreement for payment of profits under an investment contract. The final arrangements and the previous agreements set forth the Plaintiff’s investment method and timing, the method and proportion of profit distribution between the Plaintiff and the Defendants, the business share of the Plaintiff and Defendant 1 in relation to the investment that was invested or would be invested in an OO business, etc. whose success is unknown.

The final agreement provides that a PF loan shall be returned when the investment principal is a PF loan or when the sale rate exceeds 90%, and that the investment profit shall be paid when the sale rate exceeds 70%. The time the final agreement was made is prior to the conclusion of the instant trust agreement or the apartment is sold in lots. Therefore, it is difficult to deem that the Defendants agreed to pay the investment principal or the investment profit to the Plaintiff.

The final arrangement provides a different method or condition of return by clearly separating loans, investment principal, stock price, and investment profit, but the final arrangement provides that "investment profit" is "investment profit."

B. Examining the reasoning of the lower judgment in light of the record, the lower court did not err in its judgment by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the legal nature of the final agreement.

3. Interpretation of Article 5 of the Final Agreement

A. Interpretation of a juristic act is clearly confirming the meaning which the party gave to the act of indication.

As such, a reasonable interpretation of the meaning given by a party to an act of indication ought to be made according to the contents of the language and text, regardless of what the party’s internal intent is not cited in the used language and text. In a case where the meaning is not clearly expressed in accordance with the language and text expressed by the party, it shall be reasonably construed in accordance with logical and empirical rules, general common sense and transaction norms, by comprehensively taking into account the form and content of the language, motive and background leading up to the juristic act, the purpose and genuine intent to be achieved by the party by the juristic act, transaction practices, etc. (see Supreme Court Decisions 93Da2629, Oct. 26, 1993; 2008Da9095, 90101, May 14, 2009; 2015Da3914, 3921, 3938, Mar. 27, 2018).

(b)Article 5(1) of the Final Agreement;

(1) For the following reasons, the lower court determined that the Defendants agreed to transfer to the Plaintiff the preferential right to benefit that can actually be distributed or reimbursed KRW 5 billion on the condition that the apartment sale rate exceeds 70%. Article 4 of the final arrangement provides for the Defendants’ obligation to pay KRW 10 billion on the basis of the title “investment profit”. Article 5(1) of the final arrangement provides for an uncertain means of payment, namely, the fulfillment of the conditions that exceed 70% of the apartment sale rate as to the Defendants’ obligations or the right to benefit, under the title “payment date of investment profit.”

If the right to benefit under Article 5(1) of the Final Arrangement is not known as possible, it would not be determined that the right to benefit should be transferred when the apartment sale rate exceeds 70% under the title of "the obligation to make a fixed payment under Article 4 of the Final Arrangement" and "the due date for the investment profit" in Article 5. In general, apartment construction projects, the apartment sale rate of which exceeds 70%, are assessed as successful projects.

Therefore, Article 5(1) of the Final Agreement states that if the apartment sale rate is expected to exceed 70% and the Defendants are expected to return considerable profits, the Defendants may be deemed to have transferred preferential rights to the Plaintiff, which may actually distribute or be reimbursed KRW 5 billion to the Plaintiff.

(2) Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, the lower court did not err in its judgment by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine on the probative value of disposal documents or the interpretation of legal acts, contrary to what is alleged in

(1) For the following reasons, the lower court determined that the Defendants agreed to transfer the first priority right or the corresponding priority right to the Plaintiff under Article 5(2) of the final agreement. Article 5(2) of the final agreement stipulates the type and priority of the right to benefit, which the Plaintiff shall pay to the Plaintiff designated, as follows: “Financial right and the lower order subsequent to the lender.” However, the instant trust agreement set the first priority right to financial right and the lender’s priority right to benefit.

(2) Examining the following circumstances revealed through the record, it is difficult to readily conclude that the Defendants agreed to transfer to the Plaintiff the first priority right or the equivalent priority right, but it is reasonable to deem that the Defendants agreed to transfer the first priority right rather than the third priority right stipulated in the instant trust agreement.

The instant trust agreement provides for a financial company, such as ABM company and ABM company, the first beneficiary of the instant trust agreement, and the second beneficiary of the instant trust agreement. The Si construction is determined by the second beneficiary of the instant trust agreement. Since the ○○ East Business bears the obligation to complete the construction regardless of the delay in the payment of the construction cost, etc., the Si construction is in charge of a financial company that bears the responsibility to complete the construction. Therefore, the Defendants need to designate the Si construction as the first beneficiary in order to secure the claims for the construction cost, etc. Therefore, the Plaintiff, as the Plaintiff who lent or invested funds to the 00 project and the 00 project, could have known such circumstances.

As can be seen from the expression that the sale rate of ○○ Dong business should exceed 70%, an investment stipulated in Article 5 of the final arrangement is entitled to receive a profit. As can be seen, the investment is an essential cost of the business, namely, a loan to a financial company and construction cost for the start-up business. Therefore, it can be interpreted that an investment is a beneficial right that can preferentially pay the cost that is essential for the ○○ Dong business and receive a preferential payment for the remaining profits.

The Defendant Company designated Nonparty 4 as the third priority beneficiary under the instant trust agreement, but changed to the third priority beneficiary, the second priority beneficiary company and the KTF capital company. Nonparty 4 did not correspond to “financial right, the lender group,” and the hythae Capital is not directly related to the OO business. Therefore, it is difficult to view that the Plaintiff and the Defendants, at the time of the final agreement, intended to designate those persons or companies as above as the first priority beneficiary rather than the Plaintiff as “financial right, and the lender group.”

If the Plaintiff’s preferential right is deemed equal to, or superior to, the third priority right, there is no reason to determine “financial right” under Article 5(2) of the final Agreement, “ lower priority than the lender,” as prescribed by Article 5(2) of the final Agreement. In full view of the motive, circumstance, purpose to be achieved through an agreement, intent of the parties, etc. under Article 5(2) of the final Agreement, the Defendants may be deemed to have agreed to transfer the said preferential right to a person designated by the Plaintiff rather than the third priority right under the instant trust agreement.

(4) Nevertheless, there are some inappropriate parts in the reasoning of the lower judgment that determined that the preferential right under Article 5(2) of the final Agreement is a secondary preferential right or a preferential right corresponding thereto. However, even if the preferential right under Article 5(2) of the final Agreement is a preferential right prior to the third priority right, it is difficult to view that the lower court erred and adversely affected the conclusion of the judgment on the grounds that the refusal of performance and the calculation

4. Requirements for damages and calculation of the amount of damages due to non-performance;

A. Where an obligor clearly expresses his/her intent not to perform his/her obligation, the obligee may cancel the relevant contract, or claim damages against the obligor for reasons of non-performance, even before the due date under the principle of good faith. In such cases, whether the obligor clearly expresses his/her intent not to perform his/her obligation ought to be determined by comprehensively examining the behavior of the parties related to the performance of the obligation and the specific circumstances before and after the contract, etc. Meanwhile, in cases where the obligor is able to claim for rescission of the relevant contract or damages without a peremptory notice by clearly expressing his/her intent to refuse performance, the amount of damages due to the obligor’s non-performance ought to be calculated based on the market price of the object of performance at the time of refusal (see Supreme Court Decision 2005Da6337, Sept. 20,

B. The lower court accepted the Plaintiff’s first preliminary claim seeking damages on the grounds of nonperformance of obligation on the following grounds.

(1) Since the apartment sale rate of ○○dong Business was fulfilled with the conditions stipulated in Article 5 of the final agreement in excess of 70% on December 26, 2014, the Defendants are obligated to transfer the right to preferential benefit to the Plaintiff. In light of the fact that the agreement between the first instance court and the lower court in the instant case is a monetary loan agreement, or that the right to preferential benefit as stipulated in Article 5 of the final agreement is claimed as the Defendant Company’s right to preferential benefit, and that the Defendant clearly expresses his/her intent not to comply with the Plaintiff’s claim, the Defendants should be deemed to have refused to perform the obligations stipulated in Article 5 of the final agreement.

(2) In order to perform the duty under Article 5(2) of the final Agreement on April 16, 2015, Defendant 1 issued to Nonparty 3 a certificate of beneficial rights in the name of Nonparty 4 as to KRW 5 billion out of the first priority profit amount of Nonparty 4-4, which is stipulated in the apartment complex trust agreement, to Nonparty 1, and notified the transfer of the certificate of beneficial rights to Korea Asset Trust Co., Ltd., a trustee in the name of the development industry on the same day.

However, it is difficult to recognize that Nonparty 4 transferred the right of preferential benefit to the Plaintiff and notified Nonparty 4, who is the first beneficiary. The evidence submitted by the Defendants alone is insufficient to recognize that Nonparty 4 delegated the Defendants with the right of preferential benefit and the right of notification of transfer or transfer. Therefore, it is difficult to deem that the Defendants fulfilled their obligations under Article 5(2) of the final Agreement.

(3) In light of the fact that the parties to the final agreement are the Plaintiff, Article 4 of the final agreement explicitly stated the parties to the investment profit as the Plaintiff. Article 5(1) of the final agreement sets the Plaintiff’s duty of re-investment on the premise that the parties to the investment profit accrue are the Plaintiff, and Nonparty 1 is the Plaintiff’s wife and Nonparty 3 is the Plaintiff’s wife, it is reasonable to deem that the parties to the right to benefit as stipulated in Article 5 of the final agreement are the Plaintiff. (4) Korea Asset Trust Co., Ltd. began to pay to the first, second, and third priority beneficiaries as of September 5, 2016, and was able to pay the fourth priority beneficiaries. At that time, ○○ Dong Business was fully apartment sales. In light of these circumstances, ○○dong Co., Ltd., a second priority beneficiary, was fully repaid by the Korea Asset Trust Co., Ltd., Ltd., which received reimbursement from the Defendants. In light of these circumstances, the Defendants’ duty of preferential payment as stipulated in the first or the final agreement continued proceedings at the lower court.

C. Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the record, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the refusal of performance and the calculation of damages

5. Whether the principle of pleading has been violated;

In the lower court’s first preliminary claim, the Plaintiff sought damages against the Defendants on the ground of nonperformance, and the second and third preliminary claim expressed to the Defendant Company the intent to designate the Plaintiff and Nonparty 3 as the third and fourth priority beneficiary, and requested the issuance of the certificate of priority interest.

In preparation for the dismissal of the first preliminary claim, the Plaintiff merely made the second and third preliminary claim, and did not made the first preliminary claim on the premise that the Defendants are obligated to deliver the certificate of priority interest to the third and fourth priority claims. Therefore, the lower court did not accept the first preliminary claim in excess of the Plaintiff’s claim. Therefore, contrary to what is alleged in the grounds of appeal, the lower court did not err by violating

6. Conclusion

The Defendants’ appeals are dismissed in entirety as it is without merit, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

The presiding Justice shall mobilization by the presiding Justice

Justices Kim Jae-sik in charge

Justices Min Min-young

Justices Noh Tae-ok