[1] Whether Article 85 subparag. 5 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents applies to a case where an officer of an association was appointed or dismissed through a resolution of a formal general meeting but there is a defect in absence or invalidation (affirmative)

[2] Whether it constitutes a crime of occupational embezzlement, where the representative of a corporation paid the litigation costs for the director who received the decision of provisional disposition suspending the performance of duties for the director

[1] Article 24 (3) 8 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents provides that "the appointment and dismissal of partnership officers shall be subject to a resolution by the general meeting." Article 85 subparagraph 5 provides that "the executives of an association which voluntarily promotes the projects under the subparagraphs of Article 24 (3) without going through a resolution by the general meeting under the provisions of Article 24 shall be subject to punishment." Considering the legislative purport, etc. of the above provision, even if the partnership officers are formally selected and dismissed through a resolution by the general meeting, if there is a defect in the absence or invalidation of the resolution by the general meeting, the appointment and dismissal of partnership officers shall be limited to those without the resolution by the general

[2] In a case where a provisional disposition against a director of a corporation to suspend the performance of director's duties is determined, it is apparent that the performance of duties by the director of the corporation concerned would substantially interfere with the corporation's performance of duties. Thus, unless there is no room for dispute because the absence of director's qualification is objectively obvious, it is necessary for the corporation to oppose the above provisional disposition. If the representative of the corporation has paid the litigation expenses concerning the case to the director who is the respondent of the provisional disposition case within the necessary scope, it constitutes the payment of expenses necessary for the corporation's performance of duties, and it cannot be deemed that the corporation has embezzled the corporation's expenses

[1] Article 21 (3) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 9444 of Feb. 6, 2009), Article 24 (3) 8 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents / [2] Article 356 of the Criminal Act

[2] Supreme Court Decision 89Do1102 delivered on June 26, 1990 (Gong1990, 1632) Supreme Court Decision 2003Do1174 delivered on May 30, 2003 (Gong2003Ha, 1498)

Defendant 1 and one other

Prosecutor

Law Firm Southern, Attorney Yellow-han et al.

Seoul Eastern District Court Decision 2007No1333, 2008No188 decided Oct. 30, 2008

The part of the judgment of the court below on Defendant 1's non-guilty as to the violation of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents on March 3, 2007 is reversed, and this part of the case is remanded to the Panel Division of Seoul East District Court

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Article 24(3)8 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) provides that “the appointment and dismissal of partnership officers shall undergo a resolution of a general meeting,” and Article 85 Subparag. 5 provides that “the executives of an association which voluntarily promotes the projects under each subparagraph of Article 24(3) without going through the resolution of a general meeting under Article 24 shall be punished.” Considering the legislative purport of the above provision, even if the partnership officers are appointed and dismissed formally through the resolution of a general meeting, if there is a defect in the absence or invalidation of the resolution of the general meeting, the appointment and dismissal of partnership officers shall be deemed as without the resolution of the general meeting, barring special circumstances.

According to the reasoning of the judgment below, the court below determined that even if the resolution of the general meeting of this case, which delegated the authority to appoint partnership officers to the head of the association, is null and void against Article 21(3) of the former Act and Article 24(3) Subparagraph 8 of the Act on the Maintenance of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 9444 of Feb. 6, 2009), this constitutes a case where the resolution of the general meeting does not exist objectively, or where it is deemed null and void, unlike the case where the general meeting’s resolution does not exist objectively, or where it is deemed null and void, it cannot be deemed that there exists an intentional existence of the entity of the resolution of the general meeting

However, in light of the above legal principles, so long as the resolution of the general meeting of this case that delegates the appointment of partnership officers to the head of the association is null and void in violation of the relevant provisions of the Act on the Maintenance of Urban Areas and Dwelling Conditions, the above defendant is deemed to be subject to Article 85 subparagraph 5 of the Act on the Maintenance of Urban Areas and Dwelling Conditions as he promoted the appointment of partnership officers without going through the resolution of the general meeting. Accordingly, the judgment of the court below that found the defendant not guilty of violating the Act on March 3, 2007 as not guilty is erroneous in the misunderstanding of legal principles under Article 85 subparagraph 5

2. Regarding ground of appeal No. 2

According to the reasoning of the judgment below, the court below found facts as stated in its reasoning, and found that the association of this case operated reserve funds for unexpected business expenses related to the rearrangement project through the resolution of the general meeting of the association members dated January 29, 2005 and July 1, 2006, and delegated the board of representatives with authority to execute the project in whole within the limit of 7 billion won by integrating the whole rearrangement project. Each promotional personnel service contract of this case stated in the facts charged of the association of this case is an unexpected urgent work, and its project expenses are clearly included in reserve funds, and its execution amount is minor, so it determined that the defendants' violation of the Urban Improvement Act was acquitted.

In light of the records, the above fact-finding and decision of the court below is just, and there is no error in the misapprehension of legal principles as to the interpretation of Article 24(3)4 and 5 of the Act on the Maintenance and Improvement of Urban Areas.

3. As to the third ground for appeal

In a case where a decision of provisional disposition against a director of a corporation to suspend the performance of a director's duties is made, it is clear that the performance of a director's duties would substantially interfere with the corporation's performance of duties. Thus, a corporation needs to bring an objection against such provisional disposition unless there is no room for dispute because the absence of director's qualifications is objectively obvious. Thus, even if the representative of the corporation pays the litigation expenses of the director who is the respondent of the provisional disposition case from the corporation's expenses to the necessary extent, it constitutes the payment of expenses necessary for the corporation's performance of duties, and it cannot be deemed that the corporation's expenses have been embezzled (see Supreme Court Decisions 89Do1102 delivered on June 26, 1990; 2003Do174 delivered on May 30, 2003, etc.).

According to the reasoning of the judgment below, the court below determined that the defendants 1, the president of the partnership of this case, as the representative of the association of this case, should resist the above appeal case in light of the progress of the appeal case, main issues, etc. of the application for provisional disposition suspending the execution of duties of the president of the association of this case as to the defendant 1, and therefore, it is necessary that the defendants paid the attorney appointment fee as the budget of the association with regard to the above appeal case

In light of the records, the above judgment of the court below is just, and there is no error of law by misapprehending the legal principles on occupational embezzlement.

4. As to the fourth ground for appeal

According to the reasoning of the judgment below, the court below acknowledged facts as stated in its holding, and found that the association of this case was not guilty of the charge of violating the Act on the Maintenance of Urban Areas and Dwelling Conditions of December 13, 2006, on the ground that the execution of the project is necessary and minor for the purpose of operating various litigation costs and attorney-at-law fees through a resolution of the general meeting of the association members dated January 29, 2005 and July 1, 2006, considering the whole improvement project and delegated the authority to the board of representatives within the limit of 1.5 billion won in total. The defendants' execution of the attorney-at-law fees of this case is necessary for the association and its execution amount is minor.

In light of the records, the above fact-finding and decision of the court below is just, and there is no error in the misapprehension of legal principles as to the interpretation of Article 24(3)4 and 5 of the Act on the Maintenance and Improvement of Urban Areas.

5. Conclusion

Therefore, among the judgment below, the part of not guilty as to Defendant 1's violation of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents on March 3, 2007 is reversed, and this part of the case is remanded to the court below for a new trial and determination. The prosecutor's remaining appeals are dismissed. It is so decided as per Disposition by the assent of all participating

Justices Cha Han-sung (Presiding Justice)