[1] The criteria for calculating property damage caused by the illegal act of an excessive sale

[2] The case holding that the court below erred in calculating the loss caused by the excessive sale, as long as the loss caused by the excessive sale is limited to the transaction expenses disbursed during the period of the excessive sale

[1] Articles 393, 750, and 763 of the Civil Act; Article 107 of the Securities and Exchange Act / [2] Articles 393, 750, and 763 of the Civil Act; Article 107 of the Securities and Exchange Act

[1] Supreme Court en banc Decision 91Da33070 delivered on June 23, 1992 (Gong1992, 2235) Supreme Court Decision 2003Da49542 Delivered on December 26, 2003 (Gong2004Sang, 230) Supreme Court Decision 2002Da12659 Delivered on January 26, 2006

Plaintiff 1 and one other (Law Firm Asia, Attorneys Yu Young-gu et al., Counsel for the plaintiff-appellant)

Defendant Co., Ltd. (Law Firm Rate, Attorneys Seo Il-young et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2003Na81029 delivered on July 22, 2004

Of the lower judgment, the part concerning the conjunctive claim against Plaintiff 1-1 for KRW 60,000,000 as of April 4, 2002 is reversed, and that part of the case is remanded to the Seoul High Court. The remaining appeals by Plaintiff 1 and the appeals by Plaintiff 2 are all dismissed. The costs of appeal between Plaintiff 2 and the Defendant are assessed against Plaintiff 2.

The grounds of appeal are examined.

1. As to the total amount of KRW 300 million deposited on August 20, 200 and September 6, 2002

A. As to the main claim

According to the reasoning of the judgment of the first instance as cited by the court below, the court below acknowledged the facts as stated in its reasoning after compiling the adopted evidence. The court below rejected all the plaintiffs' claims that the defendant is liable to return deposit money to the defendant, on the ground that the defendant did not have any obligation to return deposit money unless the defendant withdraws all the above money with the plaintiffs' consent, since the defendant did not have any obligation to return the deposit money to the defendant, regardless of the defendant. The court below rejected all of the plaintiffs' claims that the non-party 1 and the non-party 1 deposited 100 million won in the plaintiffs' account on September 6, 2002 in the course of monetary transaction.

Examining the adopted evidence by the court of first instance cited by the court below in light of the records, the above fact-finding and judgment by the court of first instance are just and acceptable. Although the court below has presented some inappropriate statements on the grounds of the judgment below, there is no violation of the rules of evidence, incomplete deliberation, or misapprehension of legal principles as to managers under the Commercial Act, as alleged in the grounds of appeal. The argument in the grounds

B. As to the claim for refund of deposit among the first preliminary claim

According to the reasoning of the first instance judgment cited by the lower court, the lower court rejected the Plaintiffs’ assertion on the premise that, in depositing KRW 230 million received from the Plaintiffs in the borrowed name account and the management account under the name of Nonparty 2 opened in the Defendant Company, there is no evidence to acknowledge that there was an explicit or implied agreement between the Plaintiffs and the Defendant to vest in the right to return the above money, the Plaintiffs’ claim on the premise that the Plaintiffs is the subject of the right to return the money deposited in the account of Nonparty 2 and Nonparty 1.

Examining the relevant evidence in light of the records, the fact-finding and judgment of the court below are justified. The court below did not err in the misapprehension of the rules of evidence, incomplete deliberation, or misapprehension of the legal principles as to the subject of the claim to return deposits. The allegation in the grounds of appeal as to this point is not acceptable.

C. As to the claim for damages and the second preliminary claim based on employer's liability among the first preliminary claim

According to the reasoning of the judgment of the first instance as cited by the court below, the court below acknowledged facts based on the adopted evidence, and rejected all the plaintiffs' claims against the defendant that the non-party 1 was liable for damages based on the employer's liability on the ground that the non-party 1 was the head of the defendant's branch office, who received funds from the plaintiffs in order to invest in the stocks, etc., rather than being deposited for the defendant's business, and was merely an individual transaction investing in his own account and responsibility. In addition, even if the non-party 1's investment proposal and receipt of funds are partly related to the defendant's business, it is hard to see that the non-party 1's act of receiving the investment proposal and receipt of funds considerably deviates from the ordinary business execution method as the head of the defendant's branch office of the non-party 1. The plaintiffs are also aware of such circumstances or was grossly negligent as to

Examining the evidence admitted by the court of first instance as cited by the court below in light of the records, the above fact-finding and judgment of the court below are just and acceptable. The court below did not err in the misapprehension of the legal principles as to the rules of evidence, the violation of the rules of evidence, and the employer liability, as otherwise alleged in the grounds of appeal. The argument

2. As to 60 million won deposited by the plaintiff 1 on April 4, 2002

A. As to the main claim

According to the reasoning of the judgment of the first instance cited by the court below, the court below rejected the plaintiff 1's assertion that the non-party 1 made a stock transaction with the deposit of the plaintiff 1 without being delegated by the plaintiff 1 and there is no evidence to acknowledge that the non-party 1 made a stock transaction by using the plaintiff 1's account at will without being delegated by the plaintiff 1, and on the contrary, it is recognized that the non-party 1 made a stock transaction with the deposit of the plaintiff 1 without being delegated by

Examining the relevant evidence in light of the records, this fact-finding and judgment by the court below is justified. The court below did not err in the misapprehension of the rules of evidence, the violation of the rules of evidence, and the misapprehension of the legal principles as to the comprehensive discretionary trade, as otherwise alleged in the grounds of appeal. The argument in the grounds of appeal

B. As to the conjunctive claim

Property damage caused by an excessive sale refers to the difference between the property disadvantage caused by an unlawful harmful act, that is, the property condition that would have existed without the excessive sale and the property condition after the excessive sale had been terminated (see, e.g., Supreme Court Decisions 91Da33070, Jun. 23, 1992; 2002Da12659, Jan. 26, 2006).

Since the over-the-counter trading is a requirement for establishing a customer’s account control by a securities business entity, such as an agreement on the over-the-counter trading, and thus, even without the over-the-counter trading, the first deposit is not remaining, but the normal discretionary trading by a securities business entity was made. Therefore, if the price fluctuations during the over-the-counter trading period, barring any special circumstance, it is reasonable to deem that a change in the financial status occurred due to the price fluctuation even if there was no over-the-counter trading.

Therefore, the asset status that would have existed if there was no over-the-counter transaction, and the investment risk should be reflected in the case where a normal discretionary transaction was conducted. Thus, it shall be the amount obtained by deducting the loss expected to have occurred if a normal discretionary transaction was conducted by using the price fluctuation rate of deposit and stocks at the time when the over-the-counter transaction was commenced, and the transaction cost at the time when the over-counter transaction was conducted by appropriately assessing the loss and the transaction cost (the balance after the over-the-counter transaction). Ultimately, the difference between the amount and the balance at the time when the over-counter transaction was completed shall be deemed as damage caused by over-the-counter transaction in principle.

However, in fact, it is extremely difficult to accurately estimate “for losses or transaction expenses anticipated to be incurred in the event of normal discretionary trading,” solely based on statistical data, such as the fluctuation rate of stock price index, etc., the court which determines the final amount of damages to be borne by the securities businessman, in calculating damages according to the above method, need to adjust liability for damages in consideration of such special circumstances in the pertinent transaction. Furthermore, as long as it does not violate the empirical rule, logical rule, or the principle of fairness, it should be calculated by the difference between “the account situation at the time when the excessive trading begins” and “the account balance at the time when the excessive trading ends” and “the account balance at the time when the excessive trading ends,” as long as normal daily trading was conducted, the liability for damages may not be reduced within a reasonable scope, by appropriately taking into account the circumstances that the transaction expenses, such as the corresponding commission, etc., would have been spent even if there was no excessive trading.

However, the court below acknowledged the fact that the amount deposited by Plaintiff 1 in the account of this case is KRW 60,000 and the balance assessment amount is KRW 3,415,438 at the time of the end of the over-the-counter transaction, but the total transaction expenses, such as commission, etc. paid during the over-the-counter transaction period, were 48,767,304, and on the ground that the damage incurred from over-the-counter transaction is limited to the transaction expenses paid during the over-the-counter transaction period, the court below calculated the amount of KRW 48,767,304, which is the total transaction expenses paid during the over-the-counter transaction period. Such judgment below erred in the misapprehension of legal principles as to the scope of damage in proximate causal relation with the over-the-counter transaction, thereby calculating the damage. The ground of appeal by Plaintiff 1, 1, pointing this out, is with merit.

3. Conclusion

Therefore, the part of the judgment of the court below regarding the conjunctive claim against the plaintiff 1-1's deposit 60,000,000 won on April 4, 2002 is reversed, and that part of the case is remanded to the court below for a new trial and determination. The remaining appeals by the plaintiff 1 and the appeal by the plaintiff 2 are all dismissed, and the costs of appeal between the plaintiff 2 and the defendant are assessed against the plaintiff 2, the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Hyun-chul (Presiding Justice)