In a case where a trust is established with the purport that a truster transfers real estate owned by the truster to a trustee as the priority beneficiary, the truster as the beneficiary, and the truster’s beneficiary, in the event of nonperformance under the Trust Act, the truster’s disposal of the trust real estate, appropriate the trust property for the repayment of claims by the priority beneficiary, etc., and return the remainder to the truster, whether the truster’s right to benefit under the security trust agreement constitutes a truster’s responsible property (affirmative) / In a case where the truster’s passive property exceeds active property or the truster’s excessive debts fall short of debt, whether the truster’s disposal act constitutes a fraudulent act (affirmative); and the method of restitution following the revocation of fraudulent act (affirmative);

In cases where the truster transfers real estate owned by the truster to the trustee as the priority beneficiary and the truster as the beneficiary in order to secure a monetary claim, and where the truster transfers the real estate owned by the truster to the trustee in accordance with the Trust Act, and there is a security trust to dispose of the trust real estate, appropriate the trust real estate for the repayment of claims, etc. by the priority beneficiary, and return the remainder to the truster, the beneficial rights under the security trust agreement held by the truster in relation to the trust real

The truster’s disposal of real estate held in a security trust as above constitutes a fraudulent act detrimental to the truster’s general creditors, if the truster’s passive property exceeds active property or exceeds the debt, by disposing of it to a third party with the consent of the beneficiary and the trustee before the termination of the original trust contract.

In such cases, if the registration of transfer of ownership completed in the third party's future following the revocation of fraudulent act is simply cancelled, it shall be restored to the portion which was not the joint security of the general creditors. In this case, the truster's legal act shall be cancelled and the compensation for damages shall be ordered within the limit of the appraised amount of the right to benefit under the security trust agreement held by the truster with respect to real estate.

Articles 406(1) and 407 of the Civil Act

Supreme Court Decision 2012Da111401 Decided December 12, 2013

Jwon Tourism Co., Ltd. (Law Firm LLC, Attorneys Gangnam-gu et al., Counsel for the plaintiff-appellant)

Defendant

Incheon District Court Decision 2015Na3488 Decided April 8, 2016

The judgment below is reversed, and the case is remanded to the Incheon District Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Review of the reasoning of the lower judgment and the evidence duly admitted by the lower court reveals the following facts.

A. On January 3, 2005, the Plaintiff sold the land and its ground buildings listed in the [Attachment 5] List to 8,900,000,000 won and the intermediate payment of KRW 400,000 and the intermediate payment of KRW 4,500,000,000 for the remainder of 4,00,000,000 (hereinafter “the remainder of this case”) as well as the remainder of 4,00,000,000 after completing the registration of ownership transfer on the said land and building to Hab Co., Ltd. (hereinafter “Habn&C”).

B. On November 29, 2006, LAW Co entered into a business agreement with six financial institutions, including interesting Korea Life Insurance Co., Ltd and Dongyang Construction Industry (hereinafter “instant business agreement”) for the implementation of a new aggregate building called ○○○○○○○○○○○ (hereinafter “instant aggregate building”) on the land listed in the attached Table 5 of the judgment of the court below and the land listed in the attached Table 5 of the judgment of the court below and on the ground of Seocheon-gu, Seocheon-si ( Address omitted).

C. Furthermore, since December 2006, LAW Co commenced the prior sale of the instant aggregate building from around December 2, 2006, but due to low sale, it was unable to fully repay the principal and interest of the instant aggregate building to the lender until August 21, 2009. Furthermore, LAWC entered into a real estate security trust agreement (hereinafter “the instant trust agreement”) with the Asian Trust Co., Ltd on October 22, 2009 with regard to the unsold portion of the instant aggregate building (hereinafter “instant unsold portion”) as the priority beneficiary as the lender, with regard to the unsold portion of the instant aggregate building as the beneficiary, and completed the registration of ownership transfer in the future due to the registration of ownership transfer due to the registration of Asian trust.

D. After that, while the lender intended to dispose of the unsold portion of this case as a public sale on account of the outstanding principal and interest of loan, etc., it was no longer possible to sell it, it decided to discount and sell each of the real estate corresponding to the unsold portion of this case through a regular meeting with B&C, etc. Furthermore, on April 1, 2011, B&C entered the real estate sales contract in the separate list as KRW 1,673,40,000, and KRW 100,000, and KRW 100,000, and KRW 200,000, and KRW 200,000, and KRW 20,000, and KRW 10,000, and KRW 20,000, and each of these real estate sales contracts as stated in the separate list as stated in the judgment below (hereinafter “No. 107, 200, KRW 30,010, 201,” respectively.

E. After cancelling a trust agreement with the Asian Trust with the consent of the lender group, which is the priority beneficiary of the instant trust agreement, the B&C Co., Ltd completed the registration of ownership transfer on May 12, 201 in accordance with each of the instant sales agreements, with respect to No. 106, August 25, 2011, with respect to No. 105, Oct. 28, 2011, as to No. 107, and No. 108, Oct. 28, 2011. Then, the Defendant completed each of the instant sales agreements on the same day, following the completion of the registration of ownership transfer on the grounds of each of the instant sales agreements, the National Federation of Korea, the National Federation of Korea, and the debtor, and the registration of the establishment of each of the

F. On May 27, 2013, the Plaintiff filed a lawsuit against B&C Co., Ltd. seeking the payment of the remainder of the instant case. On November 12, 2014, the Plaintiff rendered a judgment that Non-A&C Co., Ltd paid KRW 4,000,000,000, and the said judgment became final and conclusive.

2. Based on its stated reasoning, the lower court determined that each of the instant real estates could not be included in the active property of B&C as it was no longer owned by B&C as it became a collateral trust for the Asian trust at the time of each of the instant sales contracts, and it is difficult to view that each of the instant sales contracts lacks the joint security of claims against B&C, or that the joint security already fell short of one story, and that each of the instant sales contracts was difficult to constitute a legal act with the intent to prejudice the general creditors of B&C, including the Plaintiff.

3. However, we cannot agree with the above judgment of the court below.

A. Where a trustor transfers real estate owned by the trustor to a trustee as the priority beneficiary in order to secure a monetary claim, and the trustor’s beneficiary as the beneficiary pursuant to the Trust Act, and where a trust is established to dispose of the trust real estate and appropriate the trust real estate for the repayment of claims by the priority beneficiary, etc., and return the remainder to the truster, the right to benefit under the security trust agreement held by the truster with respect to the trust real estate constitutes a trust property provided as joint collateral to the truster’s general creditors (see Supreme Court Decision 2012Da11401, Dec. 12, 2013).

The truster’s disposal of real estate held in a security trust is a fraudulent act detrimental to the truster’s general creditors, if the truster’s passive property exceeds active property or exceeds his/her liability, by disposing of it to a third party, etc. with the consent of the beneficiary and the trustee before the termination of the original trust agreement, and thereby, the truster’s disposal of such real estate constitutes a fraudulent act as detrimental to the truster’s general creditors.

In such cases, if the registration of transfer of ownership completed in the third party's future following the revocation of fraudulent act is simply cancelled, it shall be restored to the portion which was not the joint security of the original general creditors, and shall be in violation of fairness and fairness. In such cases, the truster's legal act shall be cancelled within the limit of the appraised amount of the right to benefit under the security trust agreement held by the truster and the compensation for the value shall be ordered.

B. Examining the above facts in light of the legal principles as seen earlier, the responsible property under the condition that LAWC has established each of the instant real estate as a collateral trust in the Asian trust will be the beneficial right to each of the instant real estate under the instant trust agreement. Furthermore, each of the instant sales contracts, if LAWC acquired the consent of the lender and the trustee, who is the first beneficiary, before the occurrence of the grounds for termination of the original scheduled trust agreement, sold each of the instant real estate, and completed the registration of ownership transfer for each of the instant real estate in the future, and subsequently completed the registration of ownership transfer for a series of acts that completed the registration of ownership transfer for each of the instant real estate and completed the registration of ownership transfer for the Defendant, thereby extinguishing the above beneficial right to each of the instant real estate, which is the liability property of LAWC Co., Ltd., which is the more active property or becomes more debts, and if LAWC was aware of such facts, each of the instant contracts constitutes a fraudulent act detrimental to the general creditors of LAW.

C. Therefore, the lower court should first examine whether the right to benefit under the instant trust contract on each of the instant real estate is valuable as active property, and if there is no value as active property, the lower court should terminate the trust contract, recover each of the instant real estate, and transfer the registration of ownership transfer to the Defendant in the future, thereby not constituting a fraudulent act. On the other hand, if the said right to benefit is valuable as active property, the lower court should determine whether each of the instant sales contracts constitutes a fraudulent act by examining whether the said right to benefit falls under a fraudulent act by examining whether the said right to benefit, i.e., whether the said right to benefit was placed in an excessive state of debt or whether the said excessive state of debt has deteriorated.

D. Nevertheless, without examining the above issues, the lower court concluded that each of the instant real estate was a collateral trust in Asian trust at the time of each of the instant sales contracts, and that it cannot be included in the active property of B&C, and that the instant sales contract constitutes a juristic act with intent to impair the general creditors of B&C, including the Plaintiff. In so doing, the lower court erred by misapprehending the legal doctrine on the determination of fraudulent act in a lawsuit seeking revocation of a fraudulent act, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

4. It is so decided as per Disposition by the assent of all participating Justices on the bench, without examining the remaining grounds of appeal by the plaintiff, and the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination.

Justices Kwon Soon-il (Presiding Justice)