[1] Whether a creditor who made an objection to a distribution has standing to sue a lawsuit of demurrer against the distribution schedule by attending on the date of distribution without making a lawful demand for distribution by the deadline for the completion of the demand for distribution (negative)

[2] The period of filing a lawsuit of demurrer against distribution (=within one week from the date of distribution) and the point of time to determine whether the period of filing a lawsuit of demurrer against distribution has been complied with where the purport of the claim was modified as a lawsuit of demurrer against distribution during the course of lawsuit (=the time when

[3] In a case where a creditor, etc. with an executory exemplification does not make a lawful demand for distribution by the deadline for demanding a distribution, and is excluded from the distribution, whether a claim for the return of unjust enrichment may be filed against other creditors who received the dividend (negative)

[1] A creditor who has an executory exemplification, a creditor who has effected a provisional seizure subsequent to the registration of a decision to commence the auction, a creditor who has the right to demand a preferential reimbursement under the Civil Act, the Commercial Act, and other Acts, may receive a distribution only when he/she makes a demand for distribution by not later than the completion period to demand a distribution (Articles 88(1) and 148 subparag. 2

A person standing to sue in a lawsuit of demurrer against distribution shall be limited to creditors or debtors who have appeared on the date of distribution on the date of distribution and have raised an objection on the substantive basis with respect to the distribution schedule. If a creditor as a creditor intends to appear on the date of distribution and raise an objection against the distribution schedule as a substantive, he/she shall be limited to only a creditor against an executory obligor under the substantive law, and have lawfully made a demand for distribution by the deadline for the completion of the demand for distribution. The creditor who has not lawfully made a demand for distribution shall be present on the date of distribution on the date of distribution on the date of distribution on the date of distribution and has no right to raise an objection against the distribution schedule, and even if

[2] In full view of the provisions of Article 154(1) and (3) of the Civil Execution Act, the main text of Article 262(1) and (2), and Article 265 of the Civil Procedure Act, creditors or debtors who have raised an objection on the date of distribution should file a lawsuit of demurrer against distribution within one week from the date of distribution. In the event that the purport of a claim of demurrer is modified as a lawsuit of demurrer against distribution during the course of a lawsuit, whether the period of filing a lawsuit has been complied with shall be determined based on the time when the

[3] In a case where a creditor entitled to receive a distribution did not receive his/her share of distribution, and thereby other creditors who did not have rights receive the said share of distribution, the creditor who could have received the distribution may file a claim for return of unjust enrichment against other creditors who received the distribution, regardless of whether the creditor raised an objection to distribution or whether the distribution schedule has been fixed.

However, a creditor, etc. with an executory exemplification may receive a distribution only in the case where he has made a demand for distribution by the completion period for the demand for distribution, and in the case where he has not made a lawful demand for distribution, he may not receive a distribution from the proceeds of sale, unless he has made a demand for distribution. If such a creditor fails to make a lawful demand for distribution and the distribution has been made by preparing a distribution schedule excluded from the distribution, and the distribution has been made, it cannot be deemed that there exists no legal ground merely because the money equivalent to the

[1] Articles 8(1), 148 subparag. 2, 151(3), and 154(1) of the Civil Execution Act / [2] Articles 154(1) and (3) of the Civil Execution Act, Articles 262(1) and (2), and 265 of the Civil Procedure Act / [3] Articles 88(1), 148 subparag. 2, 149, 151(3), and 154(1) of the Civil Execution Act, Article 741 of the Civil Act

[1] Supreme Court Decision 2003Da27696 Decided August 22, 2003, Supreme Court Decision 2018Da258289 Decided June 13, 2019 / [3] Supreme Court Decision 98Da12379 Decided October 13, 1998 (Gong198Ha, 260), Supreme Court Decision 2005Da14595 Decided August 25, 2005 (Gong2005Ha, 1559), Supreme Court en banc Decision 2014Da206983 Decided July 18, 2019 (Gong2019Ha, 1617)

Plaintiff

Earth Telecommunications Corporation

L&C Specialized Co., Ltd. and one other

Gwangju District Court Decision 2015Na51568 Decided October 12, 2016

The appeal is dismissed. The costs of appeal shall be borne by the intervenor assisting the plaintiff, and the remainder shall be borne by the plaintiff.

The grounds of appeal are examined.

1. Case summary

The Nonghyup Bank Co., Ltd. (hereinafter “CF”) filed an application for voluntary auction on August 3, 2012 with respect to the land owned by Nonparty 1 as a mortgagee with a claim for a loan against Nonparty 1 as a secured claim (Seoul District Court Decision 2012TF).

The Plaintiff prepared a notarial deed with Nonparty 1 on April 8, 2013 as a person who has a loan claim against Nonparty 1. On the basis of the above notarial deed, the Plaintiff received a seizure and collection order, and filed a report on the right and demand for distribution in the auction court.

On April 11, 2013, the date of distribution, the auction court prepared the instant distribution schedule, and the details thereof are as follows. Since Defendant U&S Technology Specialized Company (hereinafter “Defendant limited liability company”) is a creditor who has taken over a claim against the said collateral security right from the Nonghyup Bank, it distributes KRW 10,451,919 to the Defendant limited liability company. The Korea Federation of Credit Guarantee Foundations (hereinafter “Defendant foundation”) that is a foundation foundation (hereinafter “Defendant foundation”) distributes KRW 4,07,690 to the Defendant foundation, since it is a creditor who has seized a claim against the indemnity under a credit guarantee agreement concluded with Nonparty 1 as a preserved claim.

Nonparty 2, the Plaintiff’s agent, appeared on the aforementioned date of distribution and raised an objection against the entire dividend amount of the Defendants. On the same day, the Plaintiff filed a lawsuit of demurrer against distribution, and on October 8, 2013, the Plaintiff filed a lawsuit of demurrer against distribution with the previous primary claim, and submitted the application for modification of the lawsuit to add the first preliminary claim and the second preliminary claim to the first instance court.

The primary claim is a lawsuit of demurrer against a direct distribution filed by the Plaintiff. The primary claim is to delete all the dividend amounts of the Defendants among the instant distribution schedule and to correct that the Plaintiff distributes them to the Plaintiff. The primary claim is the lawsuit of demurrer against a distribution filed by the Plaintiff by subrogation of Nonparty 1, and is to delete all the dividend amounts of the Defendants among the instant distribution schedule and seek correction as the distribution of dividends to Nonparty 1. The primary claim constitutes a claim for return of unjust enrichment, which constitutes a claim for return of unjust enrichment and a claim for receiving dividends acquired by the Defendants pursuant to the instant distribution schedule constitutes unjust enrichment, and thus, the said claim is transferred to the Plaintiff and the notification of

2. The judgment of the court below

The lower court dismissed all of the instant lawsuit on the ground that the part of the instant lawsuit’s primary claim, the part of the first conjunctive claim, and the second conjunctive claim are unlawful, and the reasons are as follows.

The completion period to demand a distribution in the instant auction procedure is October 15, 2012. The Plaintiff made a demand for distribution on April 8, 2013. Even if it is understood that the said demand for distribution was made to be a creditor with an executory exemplification as prescribed by Article 88(1) of the Civil Execution Act, the said demand for distribution does not have any effect, and therefore, the primary claim part among the instant lawsuit and the secondary preliminary claim are unlawful.

The Plaintiff submitted to the court of first instance an application for amendment to add the preliminary claim and the secondary preliminary claim on October 8, 2013, after the lapse of one week from April 11, 2013, which was the date of distribution on which the Plaintiff raised an objection, to the first instance court. As such, the first preliminary claim and the second preliminary claim are unlawful.

3. Supreme Court Decision

A. The part of the main claim in the lawsuit of this case

(1) A creditor who has an executory exemplification, a creditor who has effected a provisional seizure subsequent to the registration of a decision to commence the auction, or a creditor who has the right to demand a preferential reimbursement pursuant to the Civil Act, the Commercial Act, and other Acts, may receive a distribution only when he/she makes a demand for distribution by not later than the completion period to demand a distribution (Articles 88(1) and 148 subparag. 2

A person standing to sue in a lawsuit of demurrer against distribution shall be limited to creditors or debtors who have appeared on the date of distribution on the date of distribution and have raised an objection practically to the distribution schedule. If a creditor as a creditor intends to appear on the date of distribution and have raised an objection as to the distribution schedule, he/she shall be limited to only a creditor against an executory debtor under the substantive law, and have lawfully made a demand for distribution by the deadline for the completion of the demand for distribution. The creditor who has not lawfully made a demand for distribution does not have the right to attend on the date of distribution on the date of distribution and raise an objection as to the distribution schedule, and even if he/she has appeared on the date of distribution and raised an objection as to the distribution schedule, he/she shall not have the right to file a lawsuit of demurrer against distribution (see Supreme Court Decisions 2003Da27696, Aug. 22, 2003; 2018Da258289, Jun. 13, 20

(2) Examining the reasoning of the lower judgment in light of the foregoing legal doctrine and the record, only a creditor who has an executory exemplification and has demanded a distribution by the completion date of the demand for distribution may receive the distribution. However, since the Plaintiff did not lawfully demand a distribution by October 15, 2012, which is the completion date of the demand for distribution, the Plaintiff did not have standing to sue to file a lawsuit of demurrer against distribution. In so doing, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules, or by misapprehending the legal doctrine on the qualifications of a person entitled to make a demurrer against distribution, contrary to what

B. Part of the first preliminary claim in the instant lawsuit

(1) Article 154(1) of the Civil Execution Act provides, “A creditor who has raised an objection against a creditor who does not have an executory exemplification of executive titles (excluding provisional seizure creditors) and other creditors shall file a lawsuit of demurrer against distribution.” Article 154(3) provides, “A creditor who has raised an objection shall file a lawsuit of demurrer against a distribution. When a creditor who has raised an objection or an obligor fails to submit documents attesting the fact that a lawsuit has been filed against the executing court within one week from the date of distribution, or when the said creditor or obligor fails to submit documents attesting the fact that the lawsuit has been filed under paragraph (1) or an exemplification of a judgment suspending

The main text of Article 262(1) of the Civil Procedure Act provides, “The plaintiff may alter the purport or cause of the claim until the closure of pleadings (in the case of a judgment without holding any pleadings, when a judgment is pronounced) within the extent that does not change the basis of the claim,” and Article 262(2) of the Civil Procedure Act provides, “The alteration of the purport of the claim shall be made in writing.” Article 265 of the Civil Procedure Act provides, “The same shall apply when a judicial claim necessary for the interruption of prescription or the protection of statutory period has been instituted, or when a written claim has been submitted to the court pursuant to Article 260(2), 262(2) or 264(2).”

Comprehensively taking account of the aforementioned relevant provisions, creditors or debtors who have raised an objection on the date of distribution have to file a lawsuit of demurrer against distribution within one week from the date of distribution. However, whether the period of filing a lawsuit of demurrer against distribution has been complied with should be determined based on the time when a written application for modification of the purport of the claim is submitted to the court.

(2) Examining the reasoning of the lower judgment in light of the foregoing legal doctrine and the record, even if the Plaintiff raised an objection by subrogationing Nonparty 1, Apr. 11, 2013, which was the date of distribution, the Plaintiff did not file a lawsuit of demurrer against distribution by subrogationing Nonparty 1 within one week thereafter, and failed to observe the filing period as of October 8, 2013, when the first instance court submitted an application for modification of a lawsuit to add the first preliminary claim, which was when filing the first instance court. In so doing, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules, or by misapprehending the legal doctrine on the qualifications of persons entitled to object of objection against distribution, contrary to what is alleged in

C. Of the instant lawsuit, the second preliminary claim

(1) In a case where a creditor entitled to receive a distribution did not receive his/her share of distribution, and thereby other creditors who did not have rights receive the said share of distribution, the creditor who could have received the distribution may file a claim for return of unjust enrichment against other creditors who received the distribution, regardless of whether the said creditor raised an objection to distribution or whether the distribution schedule has been fixed.

However, as seen in the above 3. A. (1), only a creditor, etc. with an executory exemplification may receive a distribution by not later than the completion period for the demand for distribution, and where a lawful demand for distribution has not been made, he/she shall not receive a distribution from the proceeds of sale. If such a creditor is prepared a distribution schedule that is excluded from the distribution because he/she did not make a lawful demand for distribution and the distribution has been made, if he/she lawful demand for distribution, the amount equivalent to the amount that could have been entitled to the distribution has been distributed to other creditors, it cannot be deemed that there is no legal ground (see Supreme Court Decisions 98Da12379, Oct. 13, 1998; 2005Da14595, Aug. 25, 2005).

(2) We examine the reasoning of the lower judgment in light of the aforementioned legal principles and records.

The conjunctive claim is a claim for return of unjust enrichment for which the Plaintiff did not receive the share to be distributed by himself and thereby, the Defendants received the said share, and thus, the Defendants’ claim for the transfer and notification of the transfer of the claim to receive dividends. Such claim for return of unjust enrichment may be made regardless of whether the claim for distribution was raised or whether the distribution schedule became final and conclusive, and there is no limitation on the filing period of

However, as a creditor with an executory exemplification, only if he/she demanded a distribution by not later than the completion period for the demand for distribution, the Plaintiff is entitled to receive a distribution. Since he/she did not lawfully demand a distribution by not later than October 15, 2012, which is the completion period for the demand for distribution, he/she cannot receive a distribution from the proceeds of sale. In cases where the Plaintiff lawful demand for distribution, it cannot be deemed that there exists no legal ground on the ground that the money equivalent to the amount that could have been

Although the lower court did not dismiss and dismissed the second preliminary claim among the instant lawsuit, it was erroneous for the lower court to have rejected the second preliminary claim. However, in this case where only the Plaintiff and the Plaintiff’s Intervenor appealed, the lower court cannot pronounce a more unfavorable dismissal judgment against the Plaintiff in accordance with the principle of prohibition of disadvantageous alteration.

4. Conclusion

The appeal by the Plaintiff and the Intervenor is dismissed as it is without merit, and the costs of appeal are assessed against the Intervenor. The remainder is assessed against the Plaintiff. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Dong-won (Presiding Justice)