In a case where a real owner unilaterally registers, etc. in the name of a nominal owner regardless of the intent of a nominal owner, whether the provisions on deemed donation of the former Inheritance Tax and Gift Tax Act apply (negative), and the burden of proof thereof

Article 41-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002) applies to property, the transfer or exercise of the right of which requires registration, etc., where the actual owner and the nominal owner agree or communicates and make registration, etc. in the future of the nominal owner. Therefore, where a registration, etc. is made unilaterally by using the nominal owner regardless of the intent of the nominal owner, it may not be applied. In this case, the tax authority can only prove that the actual owner is different from the nominal owner, and the burden of proof that the registration, etc. of the nominal owner was made by the unilateral act of the actual owner regardless of the intent of

Article 41-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) (see current Article 45-2(1))

Supreme Court Decision 84Nu748 delivered on March 26, 1985 (Gong1985, 644) Supreme Court Decision 89Nu3465 delivered on February 27, 1990 (Gong1990, 813) Supreme Court Decision 90Nu5023 Delivered on October 10, 1990 (Gong1990, 2315), Supreme Court Decision 95Nu13531 Delivered on May 31, 1996 (Gong196Ha, 2057)

Plaintiff 1 and two others (Law Firm Barun et al., Counsel for the plaintiff-appellant)

Head of Leecheon Tax Office and one other

Seoul High Court Decision 2006Nu13949 decided June 29, 2007

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

We examine the grounds of appeal.

1. Regarding ground of appeal No. 1

The legal fiction provision of Article 41-2(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002; hereinafter “the Act”) shall apply in cases where the actual owner and the nominal owner register in the name of the nominal owner under an agreement or communication with respect to the property which requires the transfer or exercise of the right, etc., so it may not apply in cases where the actual owner and the nominal owner register in the name of the nominal owner unilaterally regardless of the intent of the nominal owner (see, e.g., Supreme Court Decisions 84Nu748, Mar. 26, 1985; 95Nu13531, May 31, 196). In such cases, if the tax authority proves that the actual owner is different from the nominal owner, it shall be proved that the unilateral act of the real owner was conducted in the name of the nominal owner regardless of the intent of the nominal owner (see, e.g., Supreme Court Decisions 89Nu365309, Feb. 27, 190900

Therefore, in order to apply the provision on deemed donation, the argument in the grounds of appeal on the burden of proving that the tax authority must objectively prove that there has been an agreement or communication between the actual owner and the nominal owner or at least in an objective and external aspect is not acceptable.

However, in light of the legal principle that the burden of proof is a nominal holder, the judgment of the court below that rejected the plaintiffs' assertion on the theft is difficult to accept for the following reasons

According to the reasoning of the judgment below, the court below acknowledged the fact that Nonparty 1’s address and contact number are stated in each application for the opening of the securities account under the name of the plaintiffs, and that Nonparty 1’s signature and sealed it. However, as stated in its reasoning, the court below maintained friendship with Plaintiff 1 and 2 on a regular basis at the time of Nonparty 1; the plaintiffs lent their resident registration certificates to Nonparty 1; the plaintiffs borrowed their resident registration certificates from a large number of securities companies; the plaintiffs 1 and 2 opened the securities account under the names of the plaintiffs and used them for the entry and withdrawal of their trading stocks; the securities account was leased by the plaintiffs 1 and 2 with the consent to the opening of the securities account; the part of the securities account under the name of the plaintiff 1 was written in detail, and the name of the plaintiff 1’s spouse was used in the name of the right holder of the establishment registration for debt evasion under the name of the right holder of the securities account under the name of the plaintiff 1 and the plaintiff 12 were not sufficient to recognize that the plaintiff 1 and the non-party 1 were used directly between the plaintiff 1 and the plaintiff 1.

However, according to the reasoning of the judgment below and the records, the plaintiffs 1 consented to the opening of an account for his own stock transaction or for the non-party 1's own stock transaction, and applied to the securities company for the opening of an account, each of the securities account at E-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S.

In addition, according to the fact-finding with respect to a securities company in which each of the securities accounts in the name of the plaintiffs was opened, when an agent visits at the time of applying for the opening of the securities account, the proxy certificate and personal seal impression affixed to the principal's seal impression, and the identity card of the principal are needed. It does not appear that the application for the opening of each securities account in the name of the plaintiffs in question was accompanied by the plaintiffs' personal seal impression certificate. In the testimony of the non-party 2, who was a subordinate employee of the non-party 1, stated that the securities company opened the securities account at the time only with the identity card and seal of the nominal holder's name, and that the securities company did not have opened the securities account at the time of the issuance of the securities account (refer to the evidence No. 13-4 of the plaintiff No. 16, Nov. 16, 200). On the other hand, it appears that the non-party 1 and the non-party 4's spouse's shares were recorded in the shareholders' list or the securities account of this case.

In full view of all these circumstances, it is sufficient to conclude that the securities account in the name of the plaintiffs related to each disposition of this case was established as a unilateral act of the non-party 1, regardless of the intent of the nominal owner, regardless of the intent of the nominal owner. Therefore, the court below should have reviewed more closely the details of issuance of identification cards by the plaintiffs, the circumstances leading up to the establishment of each securities account in the names of the plaintiffs, the differences in the application form, and the suitability of relevant evidence, etc., and should have judged the rejection of the plaintiffs' assertion on the identity theft, but the court below rejected the plaintiffs' assertion on the identity theft only based on the circumstances as stated in the above judgment. Such decision of the court below is erroneous in the incomplete hearing or the violation of the rules of evidence because it failed to exhaust all necessary deliberations,

2. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Dai-hee (Presiding Justice)