[1] Whether Article 663 of the Commercial Act provides that "the principle of prohibition against disadvantageous changes to policyholders, etc." applies to the conclusion of a corporate insurance contract (negative)

[2] Whether "expenses for prevention of damage" under Article 680 (1) of the Commercial Act and "defense expenses" under Article 720 (1) of the same Act are distinguished from each other (affirmative), and in the case where the insurance clause has separate provisions relating to the expenses for prevention of damage, whether such provisions are naturally applicable to the defense expenses (negative)

[3] Whether a party's assertion of the facts stated in the documentary evidence or an indirect statement of the principal facts exists when considering the party's overall observation of the party's arguments by presenting documentary evidence and stating the intent of proof (affirmative)

[1] The principle of prohibition against disadvantageous change of policyholders, etc. under Article 663 of the Commercial Act is excluded when a policyholder and an insurer enter into an insurance contract for so-called enterprise insurance that determines the terms and conditions of the contract on an equal economic basis.

[2] "Expenses for prevention of damage" under Article 680 (1) of the Commercial Act refers to expenses necessary or beneficial to an act performed in order to prevent damage caused by an insured event or to mitigate damage as well as to prevent the spread of damage in the event that an insured event covered by the insurer occurs. "defense expenses" under Article 720 (1) of the same Act refers to expenses incurred in relation to judicial or extra-judicial acts performed by the victim in case where the victim claims compensation against the insured by suffering human and material damage caused by an insured accident. Since these two expenses are distinct, even if there is a separate provision relating to the expenses for prevention of damage in common terms and conditions applicable to an insurance contract, such provision shall not be deemed to apply to defense expenses as a matter of course.

[3] The determination of the facts that the parties did not assert on the major facts constituting the legal requirements should be in violation of the principle of pleading. However, the parties’ assertion on the major facts should be deemed as having asserted the facts indicated in the documentary evidence or as being indirectly asserted by considering the parties’ arguments as a whole by submitting documentary evidence to the court as well as by presenting documentary evidence to the court, and making statements to the purport of proof.

[1] Article 663 of the Commercial Act / [2] Articles 680 (1) and 720 (1) of the Commercial Act / [3] Article 203 of the Civil Procedure Act

[1] Supreme Court Decision 96Da23818 delivered on December 20, 1996 (Gong1997Sang, 354), Supreme Court Decision 99Da5236 delivered on November 14, 200 (Gong2001Sang, 28), Supreme Court Decision 2004Da18903 Delivered on August 25, 2005 (Gong2005Ha, 1551), Supreme Court Decision 2003Da5073 Delivered on March 23, 2006 / [2] Supreme Court Decision 2002Da22106 delivered on June 28, 200 (Gong2002Ha, 1810) / [3] Supreme Court Decision 2004Da2064829 Delivered on July 27, 209, Supreme Court Decision 2007Da2097829 Delivered on June 29, 2005)

Modern Securities Co., Ltd. (Attorney Kang Jung-soo, Counsel for defendant-appellee)

Seoul Guarantee Insurance Co., Ltd. (Law Firm Jinho, Attorneys Yoon-won et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2004Na47835 delivered on March 24, 2005

All appeals are dismissed. The costs of appeal are assessed against each party.

We examine the grounds of appeal.

1. Judgment on the Plaintiff’s grounds of appeal

Article 63 of the Commercial Act provides that "the principle of prohibition against disadvantageous change of policyholders, etc." is excluded when a policyholder and an insurer enter into an insurance contract for so-called enterprise insurance that determines the terms and conditions of the contract on an equal economic basis (see Supreme Court Decision 2004Da18903, Aug. 25, 2005).

Examining the reasoning of the judgment below in light of the records and the above legal principles, the court below acknowledged the facts as stated in its judgment after compiling the adopted evidence, and there is no error in the misapprehension of legal principles as to the legal nature of expenses for preventing damage, the scope of application of Article 63 of the Commercial Act, the validity and interpretation of Article 3-2 of the Commercial Act, and the validity and interpretation of Article 3-2 of the Commercial Act, since Article 3 (2) of the General Terms and Conditions applicable to each of the Fidelity Guarantee Insurance Contracts applies to unfavorable changes to the insured under Article 680 (1) of the Commercial Act, even if they were to change disadvantage to the insured under Article 680 (2) of the Commercial Act, it is valid between the plaintiff and the defendant, and therefore, the plaintiff cannot seek payment of expenses for preventing damage incurred without the consent of the defendant in violation of Article 3 (2) of the above General Terms and Conditions.

2. Judgment on the Defendant’s grounds of appeal

A. Regarding ground of appeal No. 1

"Expenses for prevention of damage" under Article 680 (1) of the Commercial Act refers to expenses necessary or beneficial to an act performed to prevent the occurrence of damage or the expansion of damage in the event of an insured accident secured by the insurer, as well as to prevent the spread of damage. "defense expenses" under Article 720 (1) of the Commercial Act refers to necessary expenses incurred in relation to judicial or non-judicial proceedings, in case where the victim claims compensation against the insured by suffering human and material damage caused by an insured accident, and the above two expenses are distinguishable. Thus, even if there are separate provisions relating to expenses for prevention of damage in common terms and conditions applicable to an insurance contract, such provisions shall not apply to defense expenses as a matter of course (see Supreme Court Decision 2002Da22106, Jun. 28, 2002).

Examining the reasoning of the judgment below in light of the records and the above legal principles, the court below was just in finding facts as stated in its reasoning after compiling the adopted evidence. Article 3 (2) of the above general terms and conditions applies only to the cost of preventing damage, and does not apply to the cost of defending damage, and otherwise, unless there is any provision on the cost of defending damage under the above general terms and conditions, Article 16 of the above general terms and conditions, which is subject to the laws and regulations of the Republic of Korea, shall apply to the cost of defending damage pursuant to Article 16 of the Commercial Act. However, even if the plaintiff paid each attorney's cost without the consent of the defendant in relation to each claim for damages caused by the tort committed by the non-party 1 and 2, the defendant is liable to pay each attorney's cost to the plaintiff as the cost of defending damage pursuant to Article 720 (1) of the Commercial Act, and there is no error of law

B. Regarding ground of appeal No. 2

Recognizing the fact that a party did not assert any material fact that constitutes a legal requisite fact, it shall be deemed to be in violation of the principle of pleading. However, in a case where not only a direct assertion of the party’s major fact, but also a party’s assertion of the material fact may be deemed to have asserted the facts indicated in the documentary evidence or to have made an indirect assertion by presenting documentary evidence to the court and making a statement of the purport of proof, it shall be deemed that there exists an assertion of the principal fact (see Supreme Court Decision 2002Da62432, Feb. 24, 200

In light of the above legal principles and the records, the plaintiff mainly sought the cost of each attorney-at-law paid to the defendant as the cost of preventing damage under Article 680 (1) of the Commercial Act. However, in light of the allegations and the evidence submitted, the plaintiff's assertion that the above cost of each attorney-at-law should be paid as the cost of defense under Article 720 (1) of the Commercial Act is included in the plaintiff's assertion. Thus, the court below held that the defendant is liable to pay part of the above cost of each attorney-at-law as the cost of defense under Article 720 (1) of the Commercial Act, and it cannot be said that it violates the principle of pleading.

Therefore, the defendant's ground of appeal on this part is without merit.

3. Conclusion

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

Justices Kim Young-ran (Presiding Justice)