[1] Whether a national tax claim imposed on a truster in relation to a trust property constitutes a “right arising from a cause arising before the trust” under the proviso of Article 21(1) of the Trust Act, which exceptionally provides that a trust property may be subject to compulsory execution or auction (negative in principle), and whether a “right arising from the process of trust affairs” under the same provision also includes cases where the truster is a debtor (negative)

[2] In a case where Gap corporation, a land trust company, entered into a real estate security trust agreement with Eul corporation, which provides for the preservation and management of officetels constructed on the land and the ground thereof, and issued a tax invoice with Eul corporation as its supplier while selling in lots or leasing officetels accordingly, and the head of tax office, who did not report value-added tax to the head of the competent tax office and pay it, imposed a disposition of seizing Eul company's trust property on Eul as its delinquent taxpayer, the case affirming the judgment below that the delinquent value-added tax claim does not constitute "right arising before the trust" under the proviso to Article 21 (1) of the Trust Act, and it cannot be deemed as "right arising in the course of performing the trust business" under the same provision, and thus, the above disposition is null and void

[1] Article 21(1) of the Trust Act (wholly amended by Act No. 10924, Jul. 25, 201) / [2] Article 21(1) of the Trust Act (wholly amended by Act No. 10924, Jul. 25, 201)

[1] Supreme Court Decision 96Da17424 delivered on October 15, 1996 (Gong1996Ha, 3388), Supreme Court Decision 2000Da70460 Delivered on April 12, 2002 (Gong2002Sang, 1114), Supreme Court Decision 2005Da9685 Delivered on September 7, 2007 (Gong2007Ha, 1548)

Korean Asset Trust Co., Ltd. (Law Firm Hun-Ba, Attorney Kim Han-soo, Counsel for defendant-appellant)

Head of Yeongdeungpo Tax Office

Seoul High Court Decision 2011Nu5874 decided September 7, 2011

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 1(2) of the Trust Act provides that “The term “trust” means the legal relationship in which the truster transfers or disposes of a specific property right to the trustee, and has the trustee manage or dispose of such property right for the benefit of the beneficiary or for a specific purpose,” and Article 21(1) of the same Act provides that “No compulsory execution or auction shall be conducted against the trust property: Provided, That this shall not apply to the right arising prior to the trust or the right arising from the performance of trust affairs.”

According to the purport of Article 1(2) of the Trust Act, in cases where the trust property under the Trust Act is not subject to seizure under the Trust Act even if national tax is imposed on the truster in relation to the trust property before the trust is performed, it shall not be deemed as falling under "the right arising from a cause arising before the trust" under the proviso of Article 21(1) of the Trust Act, which exceptionally permits compulsory execution or auction against the trust property, and does not include "the right arising from a cause arising from a trust" under the proviso of Article 21(1) of the Trust Act which is exceptionally permitted to compulsory execution or auction against the trust property, or "the right arising from a trust" under the proviso of Article 21(1) of the Trust Act is not included in compulsory execution or auction of the trust property (see, e.g., Supreme Court Decisions 200Da70460, Apr. 12, 2002; 2005Da9685, Sept. 7, 2007).

In full view of the adopted evidence, the lower court determined as follows: ① the Plaintiff and Future Do Co., Ltd. (hereinafter collectively referred to as “non-party company”) concluded a real estate security trust agreement with the Plaintiff on February 19, 2003 and October 2006, under the Trust Act, to preserve and manage the land and officetels constructed on the land of the non-party company as trust property and to realize and settle the officetel at the time of default; ② a tax invoice issued by the non-party company as its supplier while selling or leasing the above officetel; ③ the value-added tax was placed on each deposit account in the name of the Plaintiff; ③ the non-party company did not report on the trust property of the non-party company’s payment of the value-added tax; and ③ the trust property of the non-party company was not subject to the trust property claim of the non-party company under the proviso to the Real Estate Holding Tax Act, which was the trust property claim of this case, and thus did not constitute the trust property claim of this case.

In light of the above provisions, legal principles, and records, the above judgment of the court below is just and there is no error in the misapprehension of legal principles as to the proviso of Article 21 (1) of the Trust Act.

Therefore, the appeal is dismissed, 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.

Justices Park Poe-young (Presiding Justice)