In case where a successful bidder in a compulsory auction procedure pays the price of real estate at a successful bid, but the registration of transfer of ownership in the name of the debtor, which is the basis of the compulsory auction, becomes null and void, and the procedure for compulsory auction becomes null and void, whether the claim for return of unjust enrichment against the dividends of the auction creditor is made (affirmative) and whether the liability for warranty stipulated in Article 578(1) and (2)

Although a successful bidder receives a successful bid of real estate through a compulsory auction and completes a registration of ownership transfer in the future, if the ownership transfer registration in the debtor's name, which is the basis of the procedure for compulsory auction, becomes invalid and it becomes impossible to acquire the ownership of the auction real estate, such compulsory auction is null and void, so the successful bidder may request the creditor of auction to return the amount he/she received out of the auction proceeds in accordance with the general unjust enrichment doctrine, and there is no room for recognizing the debtor of auction under Article 578 (1) and (2) of the Civil Act or the creditor's liability for warranty.

Articles 578 and 741 of the Civil Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jong-soo and 1 other, Counsel for plaintiff-appellant)

Plaintiff

Jeon-soo et al.

Defendant 1 and three others (Attorney Kim Hong-won, Counsel for the defendant-appellant)

Daegu High Court Decision 2002Na9203 delivered on September 25, 2003

All appeals by the Defendants against the Plaintiff’s succeeding intervenors are dismissed. The costs of appeal are assessed against the Defendants.

Although a successful bidder has received a successful bid of real estate through a compulsory auction and completed a registration of ownership transfer in the future, if the ownership transfer registration in the debtor's name which forms the basis of the procedure for compulsory auction becomes invalid and thus it becomes impossible to acquire the ownership of the auction real estate, such compulsory auction is null and void, so the successful bidder may request the creditor of auction to return the amount he received out of the auction proceeds in accordance with the general unjust enrichment doctrine, and there is no room for recognizing the debtor of auction under Article 578 (1) and (2) of the Civil Act or the creditor's liability for warranty (see Supreme Court Decisions 91Da21640, Oct. 11, 1991; 92Da1574, May 25, 1993, etc.).

In full view of his admitted evidence, the court below acknowledged the following facts: (a) the plaintiff was awarded a successful bid price and completed a registration of ownership transfer in full with respect to the building and site of this case; (b) the defendants received a dividend of KRW 900 million equivalent to the maximum debt amount as a mortgagee with respect to the building and site of this case during the compulsory auction procedure; (c) the dividends against the defendants were deposited as a result of the objection raised; and (d) the judgment became final to cancel the registration of ownership transfer in the name of Ebberg Co., Ltd., the debtor of the procedure for compulsory auction, on the ground that the registration of ownership preservation for the building of this case was invalid; and (e) the procedure for compulsory auction for the building of this case is limited to the real estate owned by others, not owned by the debtor at the time of the commencement of the compulsory auction procedure, and thus, (e) the defendants, who received a dividend in the procedure for compulsory auction, have the obligation to transfer the right to claim damages of KRW 89,929,624, out of dividends deposited to the plaintiff.

In addition, the lower court determined that the Plaintiff’s claim for return of unjust enrichment cannot be deemed as contrary to the principle of good faith or the principle of equity solely on the grounds that there was a preliminary registration for cancellation of registration of preservation of ownership on the instant building, or that the Plaintiff was a director of the Baberg Co., Ltd.,

Furthermore, the lower court determined that the Defendants had the duty to transfer the right to claim the payment of dividends on the instant building in proportion to the amount of claims that the Plaintiff succeeded to the Plaintiff’s claim for the return of unjust enrichment against the Defendants

In comparison with the evidence of the record, the above fact-finding by the court below is just and there is no illegality such as failure to conduct necessary deliberation or erroneous fact-finding in violation of the rules of evidence, and the fact-finding by the court below is just and there is no illegality such as misunderstanding of the legal principles as to unjust enrichment and warranty liability, misunderstanding of the legal principles as to the principle of good faith and equity.

In addition, the court below did not err by failing to determine the defendants' assertion, and even if the defendants asserted in the court below that the assignment of claims to the plaintiff succeeding intervenors should be cancelled as a fraudulent act regardless of their invalidity as a false declaration of conspiracy, it is clear that the court below rejected such assertion as there is no evidence to acknowledge such assertion. Thus, the court below's failure to determine it did not affect the conclusion of the judgment.

We cannot accept the arguments in the grounds of appeal.

Therefore, all appeals by the Defendants against the Plaintiff-Successors are dismissed, and all costs of appeal are assessed against the Defendants. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Hong-hoon (Presiding Justice)