The articles of incorporation of a foundation established under the Civil Act provide that a foundation may create a collateral when it obtains permission or approval from the competent authority, and accordingly, where a foundation establishes a collateral on its basic property with permission or approval from the competent authority, whether the foundation must obtain permission from the competent authority for sale of its basic property by exercising the right to collateral security (negative)

In accordance with the articles of incorporation, the articles of incorporation of an incorporated foundation stipulate to the effect that the basic property cannot be created, but can be created if the competent authority grants permission or approval. In the event that the basic property of an incorporated foundation is created as a collateral with respect to the basic property of the incorporated foundation under the Civil Act with the permission or approval of the competent authority in accordance with the articles of incorporation, it is not necessary to obtain the permission

Article 40 subparag. 4, and Article 43 of the Civil Act

Sung Pung (Attorney Jeong-ju, Counsel for the defendant-appellant)

Daejeon District Court Order 2017Ra261 dated September 4, 2018

The reappeal is dismissed.

The grounds of reappeal are examined.

1. Case summary

The main contents of this case are that the Re-Appellant's decision of permission for sale without permission of the competent authority was illegal when the auction procedure was conducted after the Re-Appellant's basic property was conducted.

2. As to the assertion that there is a defect in the establishment of the right to collateral security

The lower court determined that the instant mortgage contract was lawful, which was concluded by Nonparty 1, the representative of the re-appellant, as the representative’s duty after the expiration of his term of office, prior to the appointment of the representative after the expiration of the term of office.

In light of the relevant 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 against logical and empirical rules, or by misapprehending the legal doctrine on the scope of representative authority, etc.

3. As to the assertion that the decision of permission for sale is illegal

A. The articles of incorporation of an incorporated foundation established to the effect that the basic property cannot be created, but can be created if the competent authority grants permission or approval. In accordance with the articles of incorporation, where the basic property of an incorporated foundation is established with the permission or approval of the competent authority pursuant to the provisions of the articles of incorporation, it is reasonable to deem that the permission of the competent authority is not necessary to sell the basic property by exercising the right to collateral security established as such.

B. The record reveals the following facts.

1) Article 7 of the articles of incorporation of the re-Appellant, a foundation foundation, provides that “The basic property may not be transferred, exchanged, mortgaged or disposed of, except in extenuating circumstances, it may be disposed of upon approval of the competent authority through a resolution of the board of directors.”

2) On September 17, 2015, the re-appellant passed a resolution of the board of directors to provide each of the instant real estate, which is an endowment, as collateral in order to raise funds for the construction of the Park Training Center at the time of Yanancheon, and completed on January 19, 2016 the registration of the establishment of a neighboring mortgage amount of KRW 2.5 billion with respect to each of the instant real estate by setting the maximum debt amount as a mortgagee with the permission of the Minister of Culture, Sports and Tourism, who is the competent authority. The auction of each of the instant real estate was commenced on July 4, 2016 upon the application of Nonparty 2, who was partially transferred the right to collateral security from the Daean Construction

3) The sales statement of each real estate of this case stated that "the competent authority shall obtain a permit to provide basic property security at the time of the creation of collateral," and there was no content that permission from the competent authority was needed at the time of a decision to grant a sale permit under the conditions of special sale.

4) Although Nonparty 3 and two others purchased each of the instant real estate at the highest price on the date of sale on May 2, 2017, they did not obtain again permission from the competent authority in relation to the purchase of each of the instant real estate. The executing court decided to grant a permit for sale on May 10, 2017.

C. Examining these facts in light of the legal principles as seen earlier, insofar as the Re-Appellant concluded a mortgage-based contract on each of the instant real estate, which is the basic property of the Incorporated Foundation, with the approval of the competent authority in accordance with the articles of incorporation, a court of execution may render a decision to permit sale even if the competent authority did not re-approve the sale. Although the lower court was insufficient, the lower court’s conclusion that the decision to permit sale of the instant case was lawful is justifiable. In so doing, it did not err by misapprehending

4. Therefore, the reappeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)