2018Da235309 Agreements

A Stock Company

Law Firm Mancheon (Law Firm Lee & Lee, Attorney Park Jae-young, Counsel for the defendant-appellant)

Law Firm Barun (Attorney in charge)

B

Attorney Lee Jae-chul, Counsel for the plaintiff-appellant

Seoul High Court Decision 2018Na2008802 Decided April 19, 2018

October 25, 2018

The part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined.

1. In the event a dispute over the interpretation of a contract between the parties becomes an issue of interpretation of the parties’ intent expressed in a disposal document, the parties’ text and text, motive and background leading up to the agreement, the purpose to be achieved by the agreement, the parties’ genuine intent, etc. shall be comprehensively considered, and the relevant interpretation shall be reasonably interpreted in accordance with logical and empirical rules (see, e.g., Supreme Court Decision 2015Da207044, Jul

2. The court below acknowledged the following facts based on the employment evidence.

A. The plaintiff is a company mainly aimed at corporate management consulting and corporate merger mediation, etc., and the defendant is a person who is engaged in real estate development business in Belize.

B. Around November 25, 2009, the Defendant had a pledge against E Co., Ltd. (hereinafter “E”)’s shares 1020,000 won (hereinafter “instant shares”) with respect to the loan claim equivalent to KRW 4.1 billion with respect to F Co., Ltd. (hereinafter “F”). Around November 25, 2009, the Defendant tried to collect business funds by either receiving repayment of the loan principal and interest amounting to KRW 4.3 billion with due date from F or G, or disposing of the said shares as collateral. However, as the business funds are urgently needed prior to the due date, and it is inevitable to sell the instant shares to F Co., Ltd. (hereinafter “F”), the Defendant sold the Plaintiff’s actual manager C of the instant shares at a high price, and by making a proposal to divide profits exceeding a certain amount, and made a request to lend KRW 1.00,000,000.

D. Accordingly, on October 13, 2010, the Plaintiff entered into a monetary loan agreement with the Defendant (hereinafter “instant contract”) with the following terms and conditions. ① The Plaintiff lent KRW 1 billion to the Defendant, the Defendant borrowed it, ② the repayment date on November 24, 2010; ③ the principal and interest interest shall be paid; ③ the amount collected exceeds KRW 2.4 billion in the collection of the Defendant’s credit against F, 50,000,000,000,000 won in excess shall be paid as interest, and even if the amount collected falls short of KRW 1 billion, the obligation to repay the principal shall not be affected. On the same day, the Plaintiff and the Defendant concluded a contract for the provision of collateral and the modification of the pledge by providing the Defendant with the above loan interest as collateral. Around that day, the Defendant borrowed KRW 230,000,000,000 for the Defendant’s loan of KRW 1 billion with the Defendant’s loan of this case; and the Plaintiff paid the principal and interest to the Defendant.

E. The Defendant attempted to dispose of the shares of this case to a third party on January 201, when G et al. failed to repay the principal and interest KRW 4.3 billion, and intended to dispose of the shares of this case to a third party at KRW 4.3 billion. On February 16, 2011, the Defendant drafted a letter of commitment stating that “The Defendant promised to pay KRW 1 billion borrowed from C and KRW 500 million in addition thereto immediately upon completion of the sale of E shares at KRW 10.2 billion and the receipt of any balance.”

3. Based on the above facts, the lower court alleged that the instant contract was an investment contract that the Defendant agreed to pay KRW 1 billion of investment income as an investment contract, and determined that the Plaintiff’s claim seeking the payment of investment income amounting to KRW 800,000,000 of investment income and its delay damages, excluding KRW 1.2 billion paid at KRW 2 billion of investment income, was null and void for the following reasons.

A. According to the instant contract, regardless of whether to purchase and sell shares of E, the Plaintiff is obliged to repay the principal at the fixed due date. The Plaintiff mainly guarantees 500,000 shares E, and the language and text explicitly stated that the loan for consumption is a loan agreement, and thereafter, the amount paid under the instant contract is the borrowed amount.

B. Since the Plaintiff knows that the money paid to the Defendant under the instant contract would be invested in the Belgium Development Project operated by the Defendant, it cannot be deemed that the Defendant invested in the business related to the “sale of EE shares with a security interest” and did not participate in the process of stock disposal. The amount of interest is conditionally determined, and it cannot be readily concluded that the amount of interest was an investment. The Plaintiff and the Defendant recognized the value of the instant shares at least KRW 2.4 billion at the time of the instant contract as a maximum of KRW 4.3 billion at the time of the contract, but the Plaintiff and the Defendant agreed to determine the interest amount linked to the disposal value, and thus, it cannot be deemed that the nature of the interest is different even if the interest was not

4. However, it is difficult to accept the above decision of the court below as it is. As recognized by the court below, the contract of this case was concluded by requesting the defendant to present KRW 1 billion at the time of making a proposal to dispose of the shares of this case to C at a high price and divide profits exceeding a certain amount into two parts. At the time, the defendant must sell the shares of this case immediately in the situation where the business fund is urgently needed to dispose of the shares of this case.

However, at the time of the contract, the Plaintiff agreed to receive half of the amount exceeding KRW 2.4 billion out of the amount recovered by the Defendant by disposing of the instant shares in return for the provision of KRW 1 billion to the Defendant. If the amount to be recovered by the Defendant is not more than 2.4 billion, the Plaintiff could not be paid the price for the provision of KRW 1 billion. Meanwhile, it does not appear that at the time of the contract, the circumstance is that at the time of the contract, whether the Defendant could recover F’s claim against F in excess of KRW 2.4 billion, and that the amount could have been anticipated to a certain degree. The Defendant agreed to pay KRW 50 million, except for the amount to be paid KRW 500,000,000,000,000,000 to C in return for the disposal of the instant shares.

As above, the contract of this case was concluded as the defendant's proposal to divide profits when disposing of the stocks of this case more than a certain amount. At the time, the defendant was to obtain an opportunity to sell the stocks of this case to a higher price in lieu of immediately receiving funds from the plaintiff in the circumstances where business funds are needed, and the plaintiff mainly made investments in the company. The plaintiff could receive considerable profits when the disposal price of the stocks of this case is higher under the contract of this case, while the disposal price does not exceed 2.4 billion won, it could not receive any compensation when the disposal price does not exceed 2.4 billion won, and there is no evidence suggesting that the profits have been clearly accrued. The defendant prepared a letter of promise to pay the remaining 50 million won except for the amount to be paid to D even after disposing of the stocks of this case to a third party. In full view of the motive and background of the contract of this case, the purpose to achieve the contract of this case, the parties' intent, etc., the contract of this case was to provide the plaintiff to dispose of the stocks of this case at a reasonable price.

Nevertheless, solely based on its reasoning, the lower court determined that the instant contract was deemed a monetary loan agreement and thus null and void, thereby adversely affecting the conclusion of the judgment by misapprehending the legal doctrine on the interpretation of the contract. The allegation contained in the grounds of appeal on this point is with merit.

5. Therefore, the part of the lower judgment against the Plaintiff is reversed, and that part of 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 Kim Jae-soo

Justices Kim Jong-il

Chief Justice Lee Dong-won

Justices Park Il-san