In cases where a mortgagee becomes unable to obtain a complete satisfaction of his/her claim due to the act of destroying, damaging or reducing part of the common security of the right to collateral without authorization, whether the mortgagee acquires a right to claim damages (affirmative), and in cases where the right to collateral security becomes final and conclusive after such unlawful act, the method and standard for calculating the damages suffered by the mortgagee.

If the mortgagee becomes unable to obtain a complete satisfaction of his/her claim solely with the remainder of the mortgaged property due to an act of destroying, damaging, or reducing the value of the jointly mortgaged property without authority, the mortgagee shall obtain a claim for damages based on the unlawful act. In such cases, where the right to collateral security becomes final and conclusive after such unlawful act, the amount of the claim that cannot be satisfied with the value of the remainder of the mortgaged property within the scope of the maximum debt amount and the value of the part of the mortgaged property which is destroyed, damaged, or reduced in the value of the collateral (hereinafter “the extinguished part”). Here, the amount of the claim that cannot be satisfied with the value of the remainder of the mortgaged property is calculated based on the value of the mortgaged property, if the amount of the right to collateral security has been determined or can be determined at the auction procedure commenced upon the execution of the said right to collateral security or at the request of a third party, the amount shall be calculated based on the said amount, and if not, the value of the extinguished part of the mortgaged property shall

Articles 357 and 750 of the Civil Act

National Agricultural Cooperative Federation (Attorney Kim Jong-chul, Counsel for defendant-appellant)

Defendant Social Welfare Foundation

Jeonju District Court Decision 2005Na6726 Decided June 16, 2006

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

The grounds of appeal are examined.

If the mortgagee becomes unable to obtain a complete satisfaction of his/her claim only with the remainder of the mortgaged property due to an act of destroying, damaging, or reducing the value of the jointly mortgaged property without authority, the mortgagee shall obtain a claim for damages based on the tort. In such cases, in cases where the right to collateral security becomes final and conclusive after such tort, the amount of the claim that cannot be satisfied with the value of the remainder of the mortgaged property within the scope of the maximum debt amount and the value of the part of the mortgaged property which is destroyed, damaged, or reduced in the value of the collateral (hereinafter referred to as "the extinguished part of the mortgaged property"). Here, the amount of the claim that cannot be satisfied with the value of the remainder of the mortgaged property is calculated based on the amount of the claim, if the amount to be distributed to the mortgagee has been determined or can be determined at the auction procedure commenced upon the enforcement of the said right to collateral security or upon the application of a third party, the amount shall be calculated based on the date of closing the argument at the fact-finding court in the lawsuit for damages.

As acknowledged by the court below, in this case, where some of the real estate which is the object of the right to collateral security is destroyed by the defendant, and the sale of the remaining real estate was conducted in the auction procedure, but the sale was revoked in the appeal procedure, and the above auction procedure was dismissed, and the amount to be distributed to the plaintiff was not reached the stage of determination of the amount to be apportioned, the court below is just in accordance with the above legal principles as it calculated at the time of closing the argument in the court below. Further, even after examining the evidence duly admitted by the court below, the court below did not err in the misapprehension of law by exceeding the limit of the principle of free evaluation of evidence as to the value of the above building at the time of closing the argument in the court below, and therefore, the plaintiff and the defendant's ground of appeal

Therefore, all appeals by the plaintiff and the defendant are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Sung-tae (Presiding Justice)