[1] The purpose of the provision of Article 666 of the Civil Act concerning the contractor's right to claim the settlement of mortgage, and whether the orderee's act of setting up a mortgage upon the contractor's right to claim the settlement of mortgage constitutes a fraudulent act (negative in principle

[2] In a case where a claim for construction price is transferred, whether the right to claim for mortgage under Article 666 of the Civil Code is also transferred along with the right to claim for construction price (affirmative in principle), and whether the act of the contractor establishing a mortgage on new building upon the claim for mortgage by the transferee of the claim for construction price from the contractor of new building constitutes a fraudulent act (negative in principle

[1] Article 666 of the Civil Code provides that "the contractor of the real estate construction may request the contractor for the establishment of a mortgage on the real estate to secure a claim for remuneration." The purpose of this provision is to enable the contractor to receive a preferential payment of the construction price from the object in fact by granting the contractor a right to demand the right to demand the settlement of mortgage where the ownership of the object is originally reverted to the contractor, considering the fact that the object is completed by the contractor's material and effort, and such status of the contractor is not more strengthened than that of exercising the right to demand the settlement of mortgage on the object, and thus it does not unfairly disadvantage the general creditors of the contractor. In light of the fact that the contractor for new construction does not constitute a fraudulent act unless there are special circumstances.

[2] Inasmuch as a contractor’s right to claim for mortgage of a new building under Article 666 of the Civil Act is an obligatory right to secure a claim for construction price, and is recognized as incidental to a claim for construction price. Barring special circumstances, such as where a claim for construction price is transferred between the parties and an agreement not to transfer it together, it is reasonable to deem that a right to claim for mortgage is also transferred along with the right to claim for mortgage. Therefore, barring any special circumstances, the act of a contractor for new building’s right to claim for construction price from a contractor for new building by a transferee of a claim for mortgage of a new building does not constitute

[1] Articles 406(1) and 666 of the Civil Act / [2] Articles 406(1) and 666 of the Civil Act

[1] Supreme Court Decision 2007Da78616, 78623 decided Mar. 27, 2008 (Gong2008Sang, 612)

Plaintiff (Attorney Lee In-bok et al., Counsel for plaintiff-appellant)

same-sex L&A Co., Ltd. (Law Firm Woon et al., Counsel for the defendant-appellant)

Daegu High Court Decision 2014Na2618 decided January 28, 2015

Of the judgment of the court of first instance, the part accepting an additional claim by the plaintiff in excess of the winning part of the judgment of the court of first instance is reversed, and that part of the case is remanded to

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

In full view of the circumstances as indicated in its reasoning, the lower court determined that the single-sale franchise and retail company (hereinafter referred to as “short-time distribution”) has the obligation to pay the Plaintiff the sum of KRW 2.2 billion as stated in the conciliation clause (1) and KRW 7.2 billion as stated in the second (c) of the penalty, and KRW 9.2 billion as stated in the conciliation clause, to the Plaintiff.

Examining the reasoning of the lower judgment in light of relevant legal principles and records, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical

2. Regarding ground of appeal No. 2

In light of the records, the court below is just in holding that daily distribution was in excess of the obligation at the time of establishing the instant collateral security, and contrary to what is alleged in the grounds of appeal, there is no violation of the principle of free evaluation of evidence against logical and empirical rules.

3. As to the grounds of appeal Nos. 3 and 4

A. Article 66 of the Civil Act provides, “A contractor of a real estate construction may request for the establishment of a mortgage on the real estate to secure a claim for remuneration.” The purpose of this provision is to enable the contractor to receive a preferential payment of the construction price from the object in fact by granting the contractor a right to demand the settlement of mortgage where the ownership of the object is originally reverted to the contractor in consideration of the completion of the object by the contractor’s material and effort, and it does not unfairly disadvantage the general creditors of the contractor because the status of the contractor is not more strengthened than that of exercising the right of retention over the object, and thus, it does not constitute a fraudulent act unless there are special circumstances (see Supreme Court Decision 2007Da78616, 78623, Mar. 27, 2008, etc.).

However, a contractor’s right to demand mortgage as stipulated in Article 666 of the Civil Act is a contractual claim recognized to secure a claim for the construction cost, and is recognized as incidental to a claim for the construction cost. Therefore, barring any special circumstance, such as where a contractor transfers only a claim for the construction cost between the parties and agrees not to transfer the claim for the construction cost together, it is reasonable to deem that a right to demand mortgage is also transferred along with the right to demand mortgage if a claim for the construction cost is transferred. Therefore, barring any special circumstance, the act of a contractor of a new building by a contractor of a new building upon a claim for the settlement of mortgage

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) On July 26, 1989, the Seodaemun Construction Industry Co., Ltd. (hereinafter referred to as “Seong Construction”) entered into a first contract between the Plaintiff and the Plaintiff to construct the instant building in the instant land owned by the Plaintiff with a view to 21.94 billion won for the construction cost. On August 17, 1989, the Plaintiff entered into a second contract with the Plaintiff to newly construct the instant building in the cost of construction in the amount of KRW 2.7 billion for the construction cost, between daily distribution and daily distribution on January 20, 192, after the Plaintiff was appointed as the representative director.

2) As a part of the construction cost of the instant building was not received at the time from the daily distribution, the Daegu District Court terminated the second contract on June 30, 1997, and subsequently filed a lawsuit against the Plaintiff and the daily distribution, etc. on December 22, 2000 against the Plaintiff and the daily distribution, etc., and sentenced on December 21, 200, the court of Seoul District Court to the effect that “one-day distribution is 1,883,648,626 won and one,317,564,30 won among them, shall be paid damages for delay.” The above judgment became final and conclusive on January 21, 201.

3) On July 27, 2010, the Seodaemun Construction: (a) drafted an agreement on the transfer and takeover of claims to transfer all of the claim for the construction price of the instant building to the Defendant; and (b) notified the transfer of claims to the Defendant on the 30th day of that month in distribution.

4) On October 22, 2013, 201, 200, 200 Do 14222, 2011, 200 Do 13333, 200 Do 300,000, 2000, 2000 Do 300,000 Do 300,000,000 Do 14528, 2000.

C. Examining the above facts in light of the legal principles as seen earlier, barring any special circumstance by transferring and notifying the Defendant of the transfer of the claim for the construction cost for the distribution of Seog Construction on a short-time basis, it shall be deemed that the claim for the construction cost as well as the claim for the construction cost as well as the claim for the construction cost as to the distribution of Seo Seog Construction to secure it was transferred to the Defendant. Therefore, among the instant mortgage-backed contract, there is considerable room to regard the part for securing the above claim for the construction cost as arising from the exercise

D. Nevertheless, the lower court rejected the Defendant’s assertion that the contractor’s right to demand mortgage was established by exercising the right to demand mortgage on the ground that the contractor’s right to demand mortgage ceases to exist, and determined that all of the contract establishing the instant mortgage was a fraudulent act. In so determining, the lower court erred by misapprehending the legal doctrine on the establishment of fraudulent act by exercising the right to demand mortgage or the right to demand mortgage under Article 666 of the Civil Act, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds

4. Conclusion

Therefore, among the judgment below, the part accepting the plaintiff's claim in excess of the winning part of the judgment of the court of first instance is reversed, and that part of 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 Kwon Soon-il (Presiding Justice)