The meaning of “a person who administers another’s business,” who is the subject of the crime of breach of trust, / In a case where a creditor, in a monetary claim obligation, lends money on the basis of the debtor’s trust in performance of his/her performance and obtains a benefit of satisfaction of a claim through the debtor’s faithful performance, whether the debtor constitutes “a person who administers another’s business” in relation to the creditor (negative)

Article 355(2) of the Criminal Act

Supreme Court en banc Decision 2019Do9756 Decided February 20, 2020 (Gong2020Sang, 723) Supreme Court en banc Decision 2015Do8332 Decided March 26, 2020

Defendant

Defendant

Attorney Jeon Il-il et al.

Seoul High Court Decision 2018No687 decided September 5, 2018

The judgment of the court below (including acquittal in the grounds) shall be reversed, and the case shall be remanded to the Seoul High Court.

The grounds of appeal are examined.

1. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) (hereinafter "Specific Economic Crimes Act").

A. Since the crime of breach of trust is established when a person who administers another’s business obtains pecuniary benefits or causes a third party to obtain such benefits through an act in violation of one’s duty and thereby causes damage to another person who is the subject of the business, the subject of the crime must be in the position of managing another’s business. Here, the subject of the crime should be in the position of administering another’s business. In order to be “a person who administers another’s business,” such as where all or part of the business regarding the management of another’s property is performed on behalf of another person, the typical and fundamental substance of the relationship between the parties should be in protecting or managing another person’s property based on a fiduciary relationship with the other party beyond an ordinary relative relationship (see, e.g., Supreme Court Decisions 86Do2490, Apr. 28, 1987; 2008Do11722, Feb. 26, 201; 2008Do10479, Jan. 20, 2011>

Even if a creditor in a pecuniary claim relationship obtains benefit from the satisfaction of a claim based on the debtor's trust in the performance of his/her pecuniary obligation, the creditor cannot be deemed to have given his/her duty to protect or manage his/her property based on the debtor's trust. Since the debtor performs his/her pecuniary obligation as a performance of his/her pecuniary obligation, it cannot be deemed that he/she administers the creditor's business. Therefore, in relation to the debtor's pecuniary obligation, the debtor cannot be deemed to fall under "person who administers another's business." The same applies to a case where the debtor agrees to transfer his/her movable property to a creditor to secure a monetary obligation or provides it as a security for the debtor. The debtor is not obliged to provide a movable as security, namely, to maintain and preserve the value of security, to maintain and preserve the value of security, or to deliver it to the creditor or his/her designated person at the time of executing the security right, and thus, the debtor cannot be deemed to have fulfilled his/her obligation to establish a security right or an obligation to cooperate in the execution of security contract for another person's pecuniary obligation.

B. The summary of this part of the facts charged is that the defendant, the representative director of the non-indicted 1 corporation (hereinafter "non-indicted 1 corporation"), was given a loan from the non-indicted 2 corporation (hereinafter "non-indicted 2 corporation"), and entered into a security agreement to transfer the ownership of five construction machinery listed in the first instance judgment (hereinafter "construction machinery of this case"), which is an unregistered construction machinery, to the non-indicted 2 corporation, and to preserve, manage, and use it until the loan is repaid (hereinafter "this case's security agreement"), and thus, the non-indicted 2 corporation performed its duty of care as a good manager to keep the construction machinery of this case offered as a security security so that the purpose of the security can be achieved, the defendant violated the above duty, thereby acquiring pecuniary profits and causing property damage equivalent to the amount of money to the non-indicted 1 corporation. Accordingly, the court below determined that the defendant's act of selling the construction machinery of this case to the non-indicted 2 corporation constitutes a crime of breach of trust under the Specific Economic Crimes Act (hereinafter "the crime of trust Act").

C. However, in light of the legal principles as seen earlier, even if the instant construction machinery was concluded by the method of occupying and amending the possession of the instant construction machinery for the purpose of securing the obligation to Nonindicted Co. 2, as long as it cannot be deemed that Nonindicted Co. 1 or the Defendant entrusted Nonindicted Co. 2 with the business of Nonindicted Co. 2 on the basis of the trust relationship with Nonindicted Co. 2, the Defendant cannot be deemed to constitute “a person who administers another’s business” in relation to Nonindicted Co. 2. Therefore, the Defendant’s disposal of the instant construction machinery as indicated in the facts charged cannot be deemed to constitute a crime of breach of trust. Nevertheless, the lower court, on the premise that the Defendant was in the status of a person who administers another’s business, constituted a crime of violation of the Specific Economic Crimes Act (Misappropriation). In so doing, the lower

2. As to fraud

According to Article 383 subparagraph 4 of the Criminal Procedure Act, only in cases where death penalty, life imprisonment, or imprisonment or imprisonment without prison labor for more than ten years has been imposed, an appeal on the grounds of unfair sentencing shall be allowed. In this case where a more minor sentence has been imposed on the defendant, the argument that the punishment is too unreasonable shall not be a legitimate ground

3. Scope of reversal

For the above reasons, the part of the judgment of the court below which violated the Specific Economic Crimes Act (Misappropriation) should be reversed (including the part which the court below judged as not guilty on the ground of the relation with the above reversed part and the single crime). In addition, since the court below sentenced a single punishment on the ground that the violation of the Specific Economic Crimes Act (Misappropriation of trust) and the remaining part of the fraud which the court below affirmed are concurrent crimes under the former part of

4. Conclusion

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

Justices Kwon Soon-il (Presiding Justice)