Where directors of a stock company have issued promissory notes in the name of the company with respect to their individual obligations without approval by the board of directors, and so-called "transaction" under Article 398

If a director of a stock company issues a promissory note for the payment of his personal obligations without the approval of the board of directors, the company may assert a causal relationship that such bill is issued for the payment of the obligations accepted without the approval of the board of directors.

Article 398 of the Commercial Act

Ethalms

Modern Industry Corporation

Government support of the first instance court, Seoul High Court Decision 64Na655 delivered on March 11, 1965

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

As to the ground of appeal 1 by the Plaintiff’s attorney

Among the transactions stipulated in Article 398 of the Commercial Act, not only acts of a conflict of interest to be established between a director and a stock company, but also acts of assuming the obligation of a director or an individual debtor with respect to the obligation of a director or an individual debtor with respect to which the creditor has been exempted, and eventually, such act is considered to be disadvantageous to the director and the company. The Promissory Notes is issued for the payment of the obligation to the plaintiff who is the party to the above assumption of obligation.

Since this case's bill can claim the causal relationship that the bill was issued for the payment of the obligation accepted without the approval of the board of directors under the illegal provision, the conclusion of the original judgment is not justified and discussed ultimately.

As to the grounds of appeal No. 2, it is clear that the issuance of this case's bill has not been approved by the defendant company, and there is no error in violation of the rules of evidence or incomplete hearing in the original judgment, by explaining the reasoning of the original judgment.

The issue is groundless.

Therefore, according to Articles 400, 395, and 384 of the Civil Procedure Act, it is so decided as per Disposition by the assent of all participating judges.

The judges of the Supreme Court, the two judges of the two judges of the Supreme Court (Presiding Judge)