2014Da288000 De-mortgage

A

B

Seoul High Court Decision 2013Na53658 Decided April 4, 2014

February 12, 2015

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 2

A. The impossibility of performance of an obligation refers to a case where the obligee cannot expect the realization of the obligor’s performance in light of the empirical rules or transaction norms in the social life, not simply and physically impossible (see, e.g., Supreme Court Decision 96Da14616, Jul. 26, 1996).

In addition, even if a seller who is obligated to transfer the ownership of real estate to a third party completes the registration of transfer of such real estate, the seller’s registration of ownership of such real estate shall restore the registration and no special circumstance exists that makes it possible for the seller to transfer the ownership of such real estate to a third party, it can be deemed that the buyer’s obligation to transfer the ownership of such real estate has come to an impossible status (see, e.g., Supreme Court Decision 2009Da91

B. Review of the reasoning of the lower judgment and the evidence duly admitted reveals the following facts.

(1) On May 6, 2005, C Co., Ltd. (hereinafter referred to as “C”) has entered into an offer supply contract (hereinafter referred to as “instant contract”) with the Defendant on the supply price (sale price) KRW 873,00,000,000,000 and KRW 350,000,000,000,000, which included each of the following contents as to the supply price (hereinafter referred to as “instant commercial building”).

(A) Article 3 (1) of the contract of this case provides that "At the time of sale in this case, the contract of this case shall be concluded preferentially with the above number of houses and the recommended type of business (ASP)" under paragraph (1) of this case.

(B) Under the title of Article 10 of the contract of this case, "the amount of subscription (investment)" in Paragraph (2) of this case provides that "the amount of subscription shall be paid to the defendant 20% (70 million won) at the time of sale in this case" and Paragraph (5) of this case provides that "the sale in this case shall be executed within July 11, 2005".

(2) In the event that C fails to perform the instant contract, the Defendant demanded C to provide a security in order to recover the total amount of KRW 420 million of the subscription price and the proceeds therefrom, and accordingly, on May 9, 2005, the registration of establishment of the right to create a political party against the Plaintiff, the obligor, the mortgagee, and the mortgagee of the right to collateral security (hereinafter “the instant real estate”) was completed with respect to the real estate listed in the attached list 1 of the lower judgment, which was registered under the Plaintiff’s name on May 9, 2005 (hereinafter “the instant real estate”). On September 6, 2006, the registration of establishment of the right to create a new mortgage with the same content was revoked.

(3) Meanwhile, on June 24, 2005, C entered into a land trust agreement with the Korea Asset Trust Co., Ltd. (hereinafter “Korea Asset Trust”) with respect to parliamentary government E, etc. (hereinafter “instant trust agreement”) and completed the registration of ownership transfer based on the Korean Asset Trust. However, the instant trust agreement and its special agreement stipulate the following matters in relation to F’s new construction and sale:

(A) Article 2(1) of the instant trust agreement provides that “C is the purpose of the instant trust agreement to enable beneficiaries and preferential beneficiaries to enjoy trust benefits pursuant to the instant trust agreement by providing that “The purpose of the instant trust agreement is to ensure that the beneficiaries and preferential beneficiaries may enjoy trust benefits pursuant to the instant trust agreement by constructing a trust building and paying expenses incurred in performing trust affairs, while selling, leasing, managing, and operating the trust property, while selling, leasing, managing, and operating the trust property.”

(B) Article 12 of the terms of the instant trust agreement provides that “The method of performing trust affairs is important.” (4) provides that “A may enter into a contract related to the performance of the trust business in the name of C before the date on which the scale of the business specified in Article 11(3) is determined, and in principle, “A” shall succeed to the contractual status of C by applying Article 11(3) mutatis mutandis. However, the Korean assets trust may not succeed to the status of C, and C and the beneficiary shall not raise any objection to the judgment of the said Korean assets trust.” (2) Section 7 provides that “A may succeed to the Korean assets trust in the name of C even after the date on which the above business scale is determined, and even in this case, the purpose and procedure specified in paragraphs (1) through (6) of this Article shall apply mutatis mutandis.”

(C) Article 25 of the instant trust agreement provides that “The period of the instant trust agreement shall be 48 months from the date of the conclusion of this agreement. However, where there is an extension of the period of the trust from the beneficiary by 30 days before the expiration of the period of the trust, C and the Korea Asset Trust may extend the period by consultation.”

(D) Article 35 of the Special Agreement provides that "C or beneficiary may terminate this trust contract only where any of the following causes arises," and in any other case, shall not terminate this trust contract." Article 35 of the Special Agreement provides that "if the obligation to pay the Korean Asset Trust due to this trust expires completely, and the preferential right to benefit is terminated entirely," and subparagraph 2 of the same Article provides that "if the beneficiary has deposited the Korean Asset Trust with the Korean Asset Trust sufficient money to complete termination of the obligation to pay the Korean Asset Trust and the right to preferential benefit as stated in subparagraph 1 of this paragraph."

(E) Under the title of Article 27 of the instant trust contract, "the trust contract of this case" provides that "where the purpose of the trust has been achieved (as referred to in subparagraph 1), where the purpose of the trust cannot be achieved (as referred to in subparagraph 2), where the period of trust expires (as referred to in subparagraph 3), and where the contract is terminated in accordance with Article 26 (as referred to in subparagraph 4)."

(F) Under the title of Article 28 of the instant trust agreement, “delivery of the trusted real estate, etc. upon the termination of the trust agreement”, the Korea Asset Trust shall issue the trusted real estate, etc. to the beneficiary in accordance with any of the following methods after obtaining approval from the beneficiary for the final settlement of the trust, in accordance with the certificate of beneficial rights and redemption.” Under subparagraph 1, the Korea Asset Trust provides that “The Korea Asset Trust shall transfer the trusted real estate to the beneficiary in accordance with the existing condition after the cancellation of the trust registration

(G) Under Article 40 of the Special Terms and Conditions of the instant Trust Contract, the parties to the instant Trust Contract may not amend the terms and conditions of the instant Trust Contract without all of the first beneficiary’s prior written consent, except as otherwise expressly provided for in this Trust Contract. However, where all of the parties other than the second beneficiary agree to the amendment of the instant Trust Contract, the said Trust Contract may be amended without the consent of the second beneficiary." (2) In Paragraph (2) of the same Article, where the first beneficiary considers it necessary for the exercise and preservation of the first beneficiary’s preferential interest, and the first beneficiary jointly requests the amendment of the instant Trust Contract, the parties to the instant Trust and the related parties to the instant Trust Contract shall amend the instant Trust Contract at the request of the first beneficiary, unless there are reasonable grounds.

(h) Under the title of Article 34 of the instant trust agreement, “The matters not provided for in the trust agreement shall be dealt with by mutual agreement between C, Korea Asset Trust and Beneficiary”.

C. (1) According to the above facts, where C is unable to perform the instant contract due to reasons such as the rescission of the instant contract, the secured obligation of the instant right to collateral security shall be the obligation to return KRW 420 million, total of the subscription amount and the profits to the Defendant (hereinafter “instant obligation to return”). The right to the instant obligation to return may be exercised in cases where the performance of the instant contract becomes impossible, and thus, the period of extinctive prescription shall run from that time.

(2) Meanwhile, the reasoning of the lower judgment reveals the fact that the Defendant’s claim under the instant contract was not succeeded to the Korea Asset Trust in the process of concluding the instant trust agreement.

However, in light of the above legal principles, in order to recognize that the execution of the instant contract was impossible, the above facts alone are insufficient, and it should be recognized that the instant trust contract and new construction, sale, etc. pursuant thereto could not expect the realization of the instant contract execution, such as the supply of the instant commercial building under the instant contract.

However, according to the provisions of the instant trust contract and its special terms and conditions, C is deemed to be able to sell the instant commercial building to the Defendant by obtaining the consent of the first priority beneficiary even after the conclusion of the instant trust contract, or by obtaining the consent of the said first priority beneficiary, C, Korea Asset Trust, and the beneficiary, etc., and as such, termination and termination of the instant trust contract is allowed. Although the possibility of termination is low, it cannot be fully denied the possibility that C may sell the instant commercial building to the Defendant through the termination and termination of the contract. In light of the empirical rules or transactional concept, in light of the fact that the instant trust contract was concluded, or only the fact that the instant contract was not succeeded to the national asset trust, and it is difficult to conclude that C cannot expect the realization of the execution of the instant contract.

D. Nevertheless, the lower court determined that, on the grounds of the fact that the instant trust contract was concluded on July 2005, which was the date of the conclusion of the instant trust contract, the sales of the instant commercial building was practically impossible under the instant trust contract, and that the instant return obligation was extinguished by the statute of limitations due to the lapse of five years after the lapse of the commercial extinctive prescription period, and subsequently, accepted the Plaintiff’s claim seeking cancellation of the registration of the establishment of the instant commercial building, which was the secured claim, based on which the instant trust contract was not succeeded.

Therefore, in so determining, the lower court erred by misapprehending the legal doctrine on impossibility of performance, thereby adversely affecting the conclusion of the judgment. The ground of appeal assigning this error is with merit.

2. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment below is reversed, and the case is remanded to the court below 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 Kim Jae-young

Justices Lee In-bok

Justices Kim In-bok, Counsel for the defendant

Justices Go Young-young