Whether there is a benefit in the protection of rights in case where a fraudulent act is rescinded or terminated and a property seeking return by revocation of a fraudulent act is returned to a debtor while a lawsuit seeking revocation of a fraudulent act and restitution is pending (negative in principle)

Article 406(1) of the Civil Act

Supreme Court en banc Decision 2012Da952 Decided May 21, 2015 (Gong2015Ha, 831)

Plaintiff (Law Firm Seoul subsidies, Attorneys Lee In-bok et al., Counsel for the plaintiff-appellant)

Defendant 1 and one other (Attorneys Shin Young-young et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2016Na2039260, 203927, 2039284 decided January 12, 2018

The part of the lower judgment regarding Defendant North Korean Agricultural Cooperative is reversed, and that part of the lower judgment is revoked, and the part of the lower judgment is dismissed. Defendant 1’s appeal is dismissed. The total cost of the lawsuit between the Plaintiffs and Defendant North Korean Agricultural Cooperative is borne by the said Defendant, and the cost of the appeal between the Plaintiffs and Defendant 1 is borne by Defendant 1.

The grounds of appeal are examined.

1. The part against Defendant 1

According to the reasoning of the lower judgment, on February 28, 2014, the lower court determined that the instant payment contract concluded by Defendant 1 with the Nonparty on February 28, 2014 constitutes a fraudulent act, and that it is difficult to deem that Defendant 1 was unaware of the Nonparty’s ordinary creditor, and thus, revoked the instant payment contract and ordered restitution accordingly.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the property subject to revocation of fraudulent act, the nature of payment in kind, the trust of beneficiaries, etc., or by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, without exhaust all necessary deliberations.

2. The part regarding Defendant North Korean Agricultural Cooperative (hereinafter “Defendant Agricultural Cooperative”)

Where a creditor files a lawsuit against a beneficiary seeking revocation of a fraudulent act and restitution of the said fraudulent act on the ground of a debtor's fraudulent act, and the creditor has rescinded or terminated such fraudulent act while the lawsuit is pending and the creditor has returned to the debtor by punishing the property for which the revocation of such fraudulent act was sought, barring any special circumstance, the purpose of the lawsuit seeking revocation is already realized and the benefit of protecting the rights is no longer effective (see, e.g., Supreme Court en banc Decision 2012Da952, May 21, 2015).

According to the reasoning of the lower judgment and the record, on March 28, 2014, the Plaintiff’s Nonparty and the Nonparty entered into a mortgage establishment agreement and an additional mortgage establishment agreement with Defendant No. 3,49 square meters of forests and fields owned by the Nonparty on March 28, 2014. The registration of the establishment of a mortgage was completed on March 28, 2014, as the receipt of No. 20892, and No. 20896, Mar. 28, 2014, on which the Plaintiff’s Nonparty and the Nonparty completed the registration of the establishment of a mortgage for the reasons of each of the above contracts. However, the fact that each of the above establishment was revoked on March 14, 2018,

Examining these facts in light of the legal principles as seen earlier, the part of the judgment below on the ground that the above contract in this case was revoked and restored to its original state on the ground that the contract in this case was a fraudulent act, which claimed cancellation of the registration of creation of a new mortgage in this case, was unlawful since there was no benefit of protection of rights. Therefore, the ground of appeal assigning this error

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal by Defendant North Korea Agricultural Cooperative, the part of the judgment below regarding Defendant North Korea Agricultural Cooperative is reversed, and this part is sufficient for the Supreme Court to directly render a judgment. Accordingly, pursuant to Article 437 of the Civil Procedure Act, the first instance judgment is revoked, and the part of the lawsuit is dismissed. Defendant 1’s appeal is dismissed. The total costs of the lawsuit between the Plaintiffs and Defendant 1 are borne by the said Defendant and the costs of the appeal between the Plaintiffs and Defendant 1 are assessed against the Defendant 1. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ko Young-han (Presiding Justice)