[1] In a case where the distribution of a security deposit is terminated in accordance with the procedure for revoking a ship auction by providing a security, whether the right of the execution creditor, etc. who was provided a security ceases to exist (affirmative), and whether the right of the secured party, who did not participate in the distribution procedure, is also extinguished (negative)

[2] The case holding that in case where Eul, Eul, Eul, Eul, and Eul, Eul, a first-class collective security right holder, filed a request for auction to execute the security right after Eul, Eul, Eul, a first-class collective security right holder, filed a lawsuit against Eul, such as cancellation of the right to collateral security, and Gap, which was decided to cancel the execution procedure by providing a guarantee, but the judgment against Gap was finalized in the subsequent lawsuit, and Eul, Eul, a security right holder, who did not participate in the distribution procedure, did not request the distribution of dividends in the procedure for cancellation of the ship auction, and Eul, received the total amount of dividends, the case holding that Eul, Eul, a second-class collective security right holder, who filed a request for the auction, was extinguished by the completion of the distribution procedure

[1] The cancellation system of the ship auction procedure provides for the procedure where the suspension of execution becomes invalid due to the cancellation of the ship auction procedure's execution order and the distribution to the execution creditor and the distribution creditor, in cases where the seizure of the ship is prohibited due to the execution of the auction procedure's execution order and the seizure of the ship's ownership or security right's loss subject to the debtor, etc. is difficult to recover from the loss suffered by the debtor, etc. in the event of the execution of the disputed enforcement title or security right's execution. In such cases where the debtor, etc. submitted documents concerning the suspension of execution while disputing enforcement title or security right and provided a guarantee equivalent to the total amount of claims and execution expenses of the execution creditor and the distribution creditor's creditor, etc., and where the above suspension of execution order loses its effect due to the cancellation of the auction procedure's execution order, it does not affect the execution creditor and the distribution creditor's right to the ship auction procedure's expiration of the auction procedure's execution right due to the lack of the above dispute such as the debtor, etc.

[2] The case holding that, in case where Eul, Eul, Eul, Eul, and Eul, Eul, the first mortgagee, filed a request for auction to exercise the security right after making a request for auction from Eul, Eul, Eul, the first mortgagee, and Eul, Eul, the first mortgagee, filed a lawsuit against Eul for cancellation of the right to collateral security and received a decision to cancel Eul's execution procedure by providing a guarantee, but the judgment against Gap was finalized in the subsequent lawsuit and the procedure for distributing the security deposit was conducted, and Eul, Eul received the total amount of dividends as to Eul's ships owned by Eul, the case held that Eul, the first mortgagee, the second mortgagee, who did not participate in the distribution procedure due to Gap's failure to demand dividends during the procedure for cancellation of the ship auction, did not extinguish even if the distribution procedure was completed, and each right to collateral security, which was defined as Eul, was not extinguished even if the security holder who applied for the auction against the guarantee provided during the procedure for cancellation of the ship auction, and did not receive dividends in the first mortgagee due to lack of the

[1] Articles 91(2), 181(1) and (2), and 269 of the Civil Execution Act / [2] Articles 91(2), 181(1) and (2), and 269 of the Civil Execution Act

Plaintiff (Attorney Noh Tae-tae, Counsel for defendant-appellant)

Tran Heavy Industries Co., Ltd and two others (Defendant 2 and 3, Counsel for the defendant-appellant)

Daegu District Court Decision 201Na2225 decided May 13, 2011

All appeals are dismissed. The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined.

1. Under the title of Article 181 of the Civil Execution Act, with respect to a compulsory auction against a ship, the Civil Execution Act provides that "a revocation of the procedure for compulsory auction by offering a security" is "a revocation of the procedure for compulsory auction by offering a security". When a debtor submits a document to suspend or restrict compulsory execution under Article 49 subparagraph 2 or 4 of the Civil Execution Act and provides a creditor with a security corresponding to the execution expenses prior to the purchase of the creditor's claim and the creditor who demanded a distribution, the court shall cancel the procedure other than the distribution procedure upon request (Paragraph 1) and when the suspension of execution becomes null and void due to the submission of the document under Paragraph 1 of the same Article, the court shall distribute the security deposit under Paragraph 1 of the same Article (Paragraph 2) and also applies mutatis mutandis to the auction for exercising

The cancellation system of the ship auction procedure provides for the procedure to distribute the security deposit provided as above to the execution creditor and the distribution creditor in a case where the suspension of execution becomes invalid due to the cancellation of the auction procedure by the execution of the ship's auction procedure where the seizure of the ship is prohibited due to the execution of the seizure order and the departure of the ship's port is so high that it is difficult to recover the loss suffered by the debtor, etc. in the event where the seizure is executed based on the disputed enforcement title or security right due to the dispute or security right. In a case where the debtor, etc. presented a document of suspension of execution in the course of disputing the enforcement title or security right and offered a guarantee equivalent to the total amount of the execution expenses and the execution expenses of the execution creditor and the distribution creditor, etc., and where such suspension of execution has become invalid due

In light of the purport and contents of the aforementioned system to revoke the ship auction procedure, unlike the procedure of compulsory execution or the procedure of sale by auction of the ship itself which is the object of the exercise of the security right, the revocation of the ship auction procedure by the provision of the guarantee differs from that of the ship owner because the ship owner does not lose the ownership of the ship, and thus, the nature of the procedure is different. Therefore, Article 91(2) of the Civil Execution Act does not apply to “All mortgages over sold real estate shall be extinguished by sale.” In addition, in the case of an auction for the exercise of the security right, the execution creditor (the secured party who filed an application for auction in the case of an auction for the exercise of the security right) or the right of the distribution creditor shall be extinguished by the completion of the procedure of distribution of the deposit under Article 181(2) of the Civil Execution Act. However, in the case of the secured party who did not participate in the distribution procedure due to the revocation

(4) Upon examining the reasoning of the judgment of the court of first instance, the court of first instance, which had been lawfully admitted by the court of first instance, ordered the non-party 2 to deposit the above amount of KRW 70 billion on October 13, 197 to the non-party 1, 200,000 won on the ground of the transfer of the contract, and ordered the non-party 2 to deposit the above amount of KRW 70 billion on March 7, 1998 to the non-party 1 to the non-party 700,000 won on the non-party 70,000 won on the non-party 1 to secure the above amount of KRW 50,000,000,000 won on the non-party 2. The court of second instance, which had been ordered to deposit the above amount of KRW 705 billion on the non-party 2,000,000 won on the non-party 30,000 won on the non-party 2.

Examining these facts in light of the legal principles as seen earlier, it is difficult to view that each of the collective security rights held by Defendant Tran Heavy Industries Co., Ltd. and Defendant 2, who did not participate in the distribution procedure, did not extinguish even if the distribution procedure was completed on the cancellation of the ship auction of this case. Moreover, there is no evidence to acknowledge that each of the collective security rights held by the above Defendants’ names was invalid due to lack of the cause.

However, in the case of Defendant 3, as a secured party who applied for an auction on the guarantee provided in the procedure for revoking the auction of the ship of this case, even if the guarantee was insufficient to receive dividends from the senior mortgagee due to lack of the guarantee (if the guarantee provided for the cancellation of the ship execution is insufficient, an immediate appeal may not be filed under Article 17(1) of the Civil Execution Act, but if the decision to revoke the auction of the ship of this case becomes final and conclusive due to the lack of the guarantee, the mortgage of Defendant 3 cannot be raised any further as to the shortage of the guarantee, and the cancellation of the auction of the ship of this case was extinguished

3. Therefore, the court below should dismiss the claim for cancellation of the registration of the establishment of each of the establishment of a mortgage in the name of the defendant Samsung Heavy Industries Co., Ltd. and the defendant 2. However, the court below erred by deeming the claim for cancellation of the registration as unlawful on the ground that the registration of the establishment of each of the establishment of a mortgage in the above Defendants’ names is subject to entrustment of cancellation. However, in the instant case where only the plaintiff appealed, the court below cannot render a judgment of dismissal disadvantageous to the plaintiff under the principle of prohibition of disadvantageous alteration. Thus, the plaintiff'

In addition, Defendant 3’s right to collateral security has ceased to exist due to the completion of the above distribution procedure as seen earlier, and the registration of creation of a neighboring mortgage ought to be cancelled as the subject matter of the entrustment of cancellation. Therefore, the part claiming cancellation of the registration is unlawful as there is no benefit of lawsuit. The lower court did not err by misapprehending the legal doctrine regarding the benefit of lawsuit, or omitting

4. Therefore, all appeals are 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 Shin Young-chul (Presiding Justice)