[1] Where calculating the subrogation rate pursuant to the main sentence of Article 482(2)4 and 5 of the Civil Code, whether a person who concurrently holds the position of a guarantor and a person who has pledged his/her property to secure another's property shall be deemed one person (affirmative)

[2] In a case where a number of guarantors or one of the persons who have pledged his/her property to secure another's obligation on his/her behalf falls short of his/her own share, whether subrogation can be made pursuant to Article 482 (2) 5 of the Civil Code (negative)

[3] In a case where a guarantor or a person who has pledged his/her property to secure another's property has already reduced or increased the principal obligation at the time of payment by subrogation, whether the amount of subrogation by the guarantor or the person who has pledged his/her property to secure another's property exceeds the amount to be borne shall

[1] Article 482(2)4 and 5 of the Civil Code provides that a person who has pledged his/her property to secure another's property shall, in proportion to the value of the property, set a share of subrogation between the guarantor and the other person who has pledged his/her property to secure another's property to secure another's property to secure another's property to secure another's property in proportion to the value of the property. It is difficult to set a reasonable standard for mediating mutual interests as between the guarantor and the person who has pledged his/her property to secure another's property to secure another's property to secure another's property and to secure another's property to secure another's property in a formal proportion to the number of persons. Unless there are special circumstances such as special agreements between the parties, it is reasonable to set the subrogation ratio according to the number of persons, which is fair and consistent with the ordinary intention and expectation of the person who has pledged the property to secure another's property to secure another's property. In this case, the same should also be taken into account even in cases where the person who concurrently serves with the guarantor and the person who is a surety.

[2] Article 482(2)5 of the Civil Act provides that, in cases where a person who has pledged his/her property to secure another's property and a person who has pledged his/her property to secure another's property are jointly and severally liable for the same obligation, one of them is to first make a payment by subrogation or by auction, thereby subrogated the obligee's rights to other persons, first of all, the person who has made the subrogation, etc. shall obtain unjust profits or continuous subrogation, and shall dispose of the subrogation relation fairly, the order and sharing ratio between the subrogation. According to the above provision, where several guarantors and the person who has pledged his/her property to secure another's property are to have the entire principal obligation repaid by one of them, the amount calculated by multiplying the entire principal obligation by the subrogation ratio as stipulated in Article 482(2)5 of the Civil Act shall be borne by each one, and where one of the several guarantors or one of the persons who has pledged his/her property to secure another's property and another person who has been subrogated is not entitled to have another person's right of subrogation calculated by the amount of subrogation or auction.

[3] In a case where the portion of the principal obligation established at the time of subrogation between several suretys and suretys is determined in accordance with Article 482 (2) 5 of the Civil Code, when the principal obligation has been reduced due to repayment of the principal obligor, exemption of the obligation, etc., or interest and delay damages have increased, in principle, the portion of the obligation of the surety or surety at the time of the increase or decrease corresponding thereto. Therefore, if the principal obligation has already been reduced due to repayment of the principal obligor, exemption of the obligation, etc. at the time of subrogation by the surety or suretys, or there is a increase in interest and delay damages due to the repayment of the principal obligor, exemption of the obligation, etc., whether the amount of subrogation by the surety or suretys

[1] Article 482 (2) 4 and 5 of the Civil Code / [2] Article 482 (2) 5 of the Civil Code / [3] Article 482 (2) 5 of the Civil Code

Plaintiff 1 and 6 others (Attorney Seo-sik et al., Counsel for the plaintiff-appellee)

Defendant 1 and two others (Attorneys Lee Im-soo et al., Counsel for the defendant-appellee)

Korean Bank (Law Firm Geosung, Attorneys Gu Dong Dong-dong et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2006Na53025, 53032 decided August 16, 2007

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

1. Regarding ground of appeal No. 1

A. Ratification of an invalidation is a single act with knowledge of the invalidation and the effect of such an act is not required in certain ways, and thus, it may be made explicitly or implicitly. However, implied ratification is recognized when there are circumstances where the principal sufficiently understood the legal status of the act in question and it is recognized that the result of the act belongs to himself/herself based on his/her truth while recognizing the legal status of the act in question. Thus, the determination shall be made with careful consideration by comprehensively examining various circumstances related thereto (see, e.g., Supreme Court Decisions 2001Da59217, Oct. 11, 2002; 2009Da37831, Sept. 24, 2009).

According to the reasoning of the judgment below, the court below determined that: (a) Nonparty 1 (hereinafter “the deceased”) was deceased on April 9, 1982, who was the owner of each of the above land listed in [Attachment 1]’s list No. 4 (hereinafter “the real estate of this case”; (b) the deceased’s testament certificate was prepared on September 15, 1981, stating that each of the real estate of this case was donated to Nonparty 2 Co., Ltd. (hereinafter “the will of this case”); (c) Defendant 1, the deceased’s heir, was unable to report inheritance tax to the head of Dongsan District Court on July 7, 1982; and (d) the Dongsan District Court requested that Nonparty 2, the subsequent wife of the deceased, were present in preparation for imposition of inheritance tax on the deceased’s inherited property; and (d) the Plaintiff’s testimony was made on July 9, 198, and (e) the Plaintiff’s title transfer registration was made on the deceased’s property of this case No. 3. 97.

However, it is difficult to accept such determination by the court below. First, it is difficult to conclude that Plaintiff 2 testified to the head of the tax office that he did not request the above transfer of the deceased’s own land as above, and that Nonparty 3 and Nonparty 2 testified to the effect that he would leave the deceased’s land to three directors of the ○○ Group including Nonparty 2, etc. before the deceased’s birth. It cannot be concluded that Plaintiff 2 had known that the instant testament certificate was forged, and that the ownership transfer registration, which was completed in the name of Nonparty 2, was null and void on the basis of the instant testament certificate, could not be seen as having known that there was an invalid disposal act which would be implied ratification on the deceased’s share in inheritance among each of the instant real estate at the time of the above testimony. In addition, according to evidence duly adopted by the court below, the court below did not change the judgment of the court below to the extent that the heir did not exercise the right to demand reimbursement of inheritance tax on the ground that the heir was not aware of the remaining inheritance tax on March 26, 19, 1986.

Therefore, it is difficult to see that Plaintiff 2 ratified the transfer of ownership on the ground of the invalidity of the cause by Nonparty 2’s inheritance shares among each of the instant real estate through the aforementioned testimony.

The judgment of the court below is erroneous in the misapprehension of legal principles as to ratification of invalidation, which affected the conclusion of the judgment. The plaintiff 2's ground of appeal assigning this error is with merit.

B. The principle of trust and good faith under the Civil Act is an abstract norm that the parties to a legal relationship should not exercise their rights or perform their duties in a manner that violates the principle of trust and good faith, taking into account the other party’s interests, and thus, in order to deny the exercise of such rights on the ground that it violates the principle of trust and good faith, the other party has provided good faith to the other party, or the other party has a good faith from an objective point of view, and the exercise of rights against such other party’s good faith has to reach an extent that is not acceptable in light of the concept of justice (see, e.g., Supreme Court Decisions 9Da53490, May 15, 2001; 2005Da4284, May 10, 2007).

According to the reasoning of the judgment below, the court below decided to the effect that the transfer registration of ownership in the name of Non-Party 2 Co., Ltd. on one’s own inheritance shares among each of the real estate of this case is not allowed against the good faith principle by asserting that the above testimony had been presented as above, and that the transfer registration of ownership in the name of Non-Party 2 Co., Ltd. on one’s own inheritance shares in the real estate of this case is null and void, in full view of the following facts: (a) Plaintiff 2 testified in the tax office's employee; and (b) Plaintiff filed a lawsuit claiming revocation of disposition of revocation of inheritance tax, such as inheritance tax, etc. against the Dong Busan Tax Office's tax office's disposition of imposition of inheritance tax, etc.; and (c) the inheritance tax imposition disposition was revoked after the death of the deceased.

However, it is difficult to accept this decision of the court below. First, the court below held that Defendant 1, 2, and 3, the principal owner of the ○○○ Group, who is in fact a testamentary donee, had the seal impression of the deceased, affixed on the testamentary document of this case after the deceased's death, and held that the testamentary document of this case could have been prepared voluntarily by the above Defendants to reduce inheritance tax after the deceased's death, and rejected the establishment of the testamentary document of this case. Meanwhile, the defendants are as the representative director of the non-party 2 corporation at the time when the ownership transfer registration was completed in the name of the non-party 2 corporation. Thus, it is reasonable to view that the non-party 2 corporation was aware that the ownership transfer registration, which was completed in the name of the non-party 2 corporation as to each of the real estate of this case, was null and void based on the testamentary document of this case.

In addition, the Defendants did not assert that they had a new interest in the inheritance shares of Plaintiff 2 among each of the instant real estate, such as the above Plaintiff’s testimony and the acquisition of any right, etc., but did not assert that they had a new interest in the inheritance shares of Plaintiff 2. As a result, each of the instant real estate provided by the Deceased as a physical collateral was sold by auction and a partial repayment of debts was made, the Defendants merely dispute whether the said Plaintiff, one of the inheritors of the Deceased, could make a subrogation against the Defendants in accordance with Article 482(2)5 of the Civil Act as to his inheritance shares

Therefore, solely based on the circumstances stated in the judgment of the court below, it is difficult to view that the above plaintiff provided any faith to the defendants as to the fact that his share in inheritance among each of the real estate of this case was transferred to the non-party 2 corporation through the aforementioned testimony, etc., or from an objective point of view, such faith was in a legitimate state. The above plaintiff's assertion of his share in inheritance among the real estate of this case cannot be viewed as being acceptable in light of the concept of justice as it exercises rights against the defendants' good faith. The above plaintiff did not raise any objection against the validity of the testamentary deed of this case or the transfer of ownership thereon during the past 20 years prior to the death of the deceased, or there is no objection against the validity of the testamentary deed of this case or the transfer of ownership thereon

Therefore, the above plaintiff's assertion that the registration of transfer of ownership completed in the name of the non-party 2 corporation with respect to his share of inheritance among each of the real estate of this case against the defendants is null and void cannot be deemed as contrary

The lower court erred by misapprehending the legal doctrine on the principle of good faith, thereby adversely affecting the conclusion of the judgment. The Plaintiff 2’s ground of appeal assigning this error is with merit.

2. Regarding ground of appeal No. 2

A. Article 482(2)4 and 5 of the Civil Act provides that a person who has pledged his/her property to secure another's property shall be liable to each other in proportion to the value of the property. The provisions that a person who has pledged his/her property to secure another's property and another person who has pledged his/her property to secure another's property shall be equally liable to each other in proportion to the number of persons formally without considering all the value or financial resources of the guarantor's property and the value of the property provided by the person who has pledged his/her property to secure another's property to secure another's property shall not be able to set reasonable criteria for mediating mutual interests, such as between the guarantor and the person who has pledged his/her property to secure another's property and the person who has secured his/her property limited liability. Unless there are special agreements between the parties, it is reasonable to set the subrogation ratio according to the number of persons, so that it is reasonable and consistent with the ordinary intention and expectation of the person who has pledged his/her property to secure another's property. In such cases, the same should be taken into consideration.

Examining the reasoning of the judgment below in light of the above legal principles, the court below is just in holding that the above Defendants, a joint guarantor, and a surety, should be deemed one person in calculating the number of persons under Article 482 (2) 5 of the Civil Act, and there is no error in the misapprehension of legal principles as to the interpretation and application of the main sentence of Article 482 (2) 5 of the Civil Act, as otherwise alleged in the grounds of appeal by the plaintiffs, in order to secure an emergency relief financial obligation (hereinafter "the debt of this case") to the defendant bank, the non-party 2, the non-party 5, and the non-party 6 corporation, the non-party 5, and the non-party 6 corporation, a defendant 1, 2, and 3, jointly and severally guaranteed the debt of this case, and set up a collateral security on some of their own real estate.

B. Article 482(2)5 of the Civil Act provides that, in cases where a person who has pledged his/her property to secure another person's property and a person who has pledged his/her property to secure another person's property are jointly and severally liable for the same obligation, one of the two persons is first subrogated to the other person by paying by subrogation or by auction (hereinafter "performance by subrogation, etc."), first of all, the person who has subrogated to the other person shall obtain unjust profits or continue to do so, and to handle the subrogation relation fairly, the order and sharing ratio between the subrogation is stipulated in the order of subrogation between several guarantors and the person who has pledged his/her property to secure another person's property. According to the above provision, even if one of the several guarantors and the person who has pledged his/her property to secure another's property are fully and severally liable for the principal obligation, the amount calculated by multiplying the total amount of the principal obligation by the subrogation ratio as stipulated in Article 482(2)5 of the Civil Act shall not be deemed to have been borne by the obligee's respective right of subrogation, etc.

Examining the reasoning of the judgment below in light of the above legal principles, in order to subrogate the rights of Defendant 1, 2, and 3, which are joint and several suretys and joint and several suretys, on the ground that the real estate of this case inherited from part of the deceased’s inheritors and Nonparty 7’s inheritors, was sold by auction and redeemed part of the debt of this case, the amount of debt repayment due to the auction exceeds the part on the part of the plaintiffs in subrogation relation under Article 482(2)5 of the Civil Act.

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the interpretation and application of Article 482 (2) 5 of the Civil Act, as alleged in the ground of appeal by plaintiffs 4.

C. In a case where several guarantors and a person who has pledged his/her property to secure another’s obligation determine the portion of the liability in subrogation relationship pursuant to Article 482(2)5 of the Civil Act, if the principal obligation initially established is reduced by the repayment of the principal obligor, exemption of the obligation, etc., or the interest and delay damages increase by the principal obligor, as a matter of principle, the portion of the liability of the guarantor or the person who has pledged his/her property to secure another’s property at the time of the increase in the interest and delay damages shall be reduced or increased accordingly. Therefore, if the principal obligation has already been reduced by the repayment of the principal obligor, exemption of the obligation, etc. at the time of the vicarious payment, etc., or there is a increase in

According to the reasoning of the judgment below, each of the real estate owned by the non-party 5 Co., Ltd., one of the primary debtor of the instant debt, was sold at auction, and repaid the debt amount equivalent to KRW 29,760,037,210 in aggregate. After that, each of the instant real estate and other real estate offered by the deceased as security for the instant debt before the death were sold at each auction and repaid the instant debt amounting to KRW 8,926,90,691 in aggregate. In light of the above legal principles, in order to determine whether the amount of debt repaid by auction of each of the instant real estate and other real estate in this case exceeds the portion to be borne by the plaintiffs as of the time of the repayment of the debt, the circumstances where the debt amount exceeded KRW 29,760,037,210 for the auction of real estate owned by the non-party 5 Co., Ltd., the primary debtor before the repayment of the debt and the circumstances where

Nevertheless, the lower court did not consider all the circumstances in which the debt amount of this case was partially repaid by Nonparty 5 Co., Ltd., the primary debtor, prior to the repayment of debt by auction of each real estate of this case, and thereby the debt amount of this case was decreased. Without examining how much interest and delay damages were added to the debt amount of this case at the time of repayment of debt by auction of each real estate of this case, the lower court determined to the effect that the amount of debt repayment by auction of each real estate of this case does not exceed the part on the part of the Plaintiffs. In so determining, the lower court erred by misapprehending the legal doctrine on interpretation and application of Article 482(2)5 of the Civil Act, thereby adversely affecting the conclusion of the judgment, by failing to exhaust all necessary deliberations. The Plaintiffs’ ground of appeal assigning this error is with merit.

3. Conclusion

Therefore, without further proceeding to decide on the grounds of appeal against the Defendant bank, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Nung-hwan (Presiding Justice)