In a case where the debtor's obligation to the bank is stipulated as the secured obligation in a document establishing a mortgage agreement which approves the basic terms and conditions of bank credit transactions, whether the debtor's obligation to the bank is also included in the secured obligation to the bank by transferring the bill issued by a third party to the bank for a third party on behalf of a bill (affirmative)

According to the provisions of the Basic Terms and Conditions for Credit Transactions, a debtor is obligated to provide a security at the request of a bank when it is necessary to preserve the claim, and such obligation to provide a security applies not only to the case where a debtor bears the obligation through credit transactions with a bank, but also to the case of a so-called round bill, where a debtor acquires bills issued by a bank from a third party through credit transactions with a third party and bears the obligation of a bill against a bank. In light of this, in accordance with a bank's demand to provide a security, a mortgagee approves the basic terms and conditions for credit transactions with a bank and establishes a collateral security on behalf of a debtor, and as long as the contract for collateral security specifies the debtor's obligation to pay bills to the bank as the secured obligation of the collateral, it is reasonable to interpret the secured obligation of such collateral security to include the bill issued by the

Articles 105, 357, and 360 of the Civil Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jae-young and 1 other, Counsel for plaintiff-appellant)

[Judgment of the court below]

Korea Light Bank (Law Office, Attorney Ji-hun et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 97Na15175 delivered on September 2, 1997

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

1. According to the reasoning of the judgment of the court below, upon citing the reasoning of the judgment of the court of first instance, the plaintiff, who was the representative director of the non-party Ycheon Industrial Co., Ltd. (hereinafter referred to as "non-party Ycheon Industrial Co., Ltd.") established the non-party 1,30,000 won and the maximum debt amount of the non-party 1,30,000 won with respect to the real estate of this case, which he owns, as the right to collateral security. On January 17, 198, the non-party company established the right to collateral security with an additional maximum debt amount of KRW 7,00,000 won with respect to the real estate of this case as the right to collateral security, established the right to collateral security with an additional maximum debt amount of KRW 7,000,000,000,000,000 from the defendant's collateral security contract and rejected the defendant's claim against the non-party 2,50,000 won.

2. However, we cannot accept the judgment of the court below for the following reasons.

Article 1(2) of the Statement of Contract to Set up a Mortgage (Evidence 1 and 2) which is used to conclude the mortgage contract of this case provides that the scope of the secured obligation is "a bill loan, bill discount, certificate loan, current and future payment guarantee (including bond guarantee) which the debtor bears to the creditor, and all incidental obligations, such as debts, guaranteed obligations, interest, debts, premiums, etc. on bills or checks due to foreign exchange or other credit transactions, and all other credit transactions." The first head of Article 1 provides that "the mortgagee shall approve and set up a collateral agreement for the secured obligation of subparagraph 2, which is submitted separately by the creditor to his bank credit transaction and the debtor to return, and then the mortgage is established." On the other hand, the term of the contract to set up a collateral contract of this case is stated as "a bill or set up a collateral transaction agreement for the secured obligation of the creditor under subparagraph 2, which is an additional bill or set up by the debtor's signature and seal." On the other hand, the bank's new credit transaction (Article 7(1) and 2) shall apply to all the terms and conditions of this case.

According to these provisions of the Basic Terms and Conditions for Credit Transactions, a debtor is obligated to provide a security at the request of a bank when it is necessary to preserve the claim, and such obligation to provide a security applies not only to the case where a debtor bears the obligation through a credit transaction with a bank, but also to the case of a so-called round bill in which the debtor acquires bills issued by a bank through a third party's credit transaction with a third party and bears the obligation of a bill against the bank. In light of this, in accordance with a bank's demand to provide a security, a mortgagee approves the basic terms and conditions for credit transaction with a bank and establishes a collateral security on behalf of the debtor, and as long as the contract for collateral security specifies the debtor's obligation of bill against the bank as the secured obligation of the collateral, it is reasonable to interpret that such secured obligation of the collateral security includes the obligation of a bank

Therefore, if the Defendant received endorsement and transfer of the Promissory Notes issued by the non-party company as credit transactions with the Daeup Construction Co., Ltd., barring any special circumstance, the obligation of the non-party company of this case is also included in the secured obligation of the non-party company, and the obligation of the Promissory Notes cannot be deemed as not included in the secured obligation solely on the ground that the Defendant was not acquired as a credit transaction with the non

Nevertheless, the court below held that the obligation of this case’s promissory note is not included in the secured obligation of the right to collateral security solely on the ground that the Defendant was endorsed and transferred by a third party, not the non-party company. The court below erred in the misapprehension of legal principles as to the interpretation of the contract of collateral security and the basic terms of bank credit transaction, which affected the conclusion of the judgment. The ground of appeal assigning

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and 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 on the bench.

Justices Lee In-hee (Presiding Justice)