[1] Whether Article 65 of the former Fisheries Cooperatives Act (amended by the Banking Act) applies to credit business where a fisheries cooperative by district lends facility funds to its members even after the exclusion of banking business under the Banking Act from the scope of business operated by district fisheries cooperatives (negative)

[2] The case holding that in a case where a credit guarantee agreement issued by a fisheries cooperative Gap, which was a district fisheries cooperative Eul, for a loan to Eul corporation, provided as security that "the full amount of the credit guarantee shall be terminated by acquiring first-class additional security for the factory building to be constructed in the site for shipbuilding" was exempted from liability for all or part of the liability for the guarantee if the credit guarantee agreement violates the special agreement under the credit guarantee agreement, but the Eul did not return the loan, and as Eul did not comply with its obligation under Article 19 of the Mutual Financial Credit Business Manual for the whole loan, the Credit Guarantee Fund may be exempted from liability for all the loan in accordance with the mutual financial loan agreement, etc.

[1] Article 65 of the former Fisheries Cooperatives Act (amended by Act No. 6256 of Jan. 28, 200) included the mutual financial business with respect to the scope of business that a district fisheries cooperative (hereinafter “fisheries”) is allowed to carry out, and the bank business under the Banking Act was included in the scope of its members’ mutual financial business. However, Article 65 of the amended Fisheries Cooperatives Act (amended by Act No. 731 of Dec. 31, 2004) excluded the bank business under the Banking Act from the scope of business where a district fisheries cooperative can carry out. Accordingly, Article 11(2) of the former Bank of Korea Act (amended by Act No. 6018 of Sep. 7, 199) was deemed to be a financial institution before the amendment of the Fisheries Cooperatives Act, but after the amendment, a credit cooperative is deemed to be a credit union member under Article 95(1)2 of the Credit Cooperatives Act, and thus, may no longer apply to a credit cooperative with respect to its members under the Credit Cooperatives Act.

[2] In a case where the credit guarantee agreement for the Korea Credit Guarantee Fund issuance issued by the Korea Credit Guarantee Fund that was provided as security by Gap, a fisheries cooperative for each district, provided the credit guarantee agreement that "the first priority of the construction of a factory building to be constructed in the site for assistance, shall be terminated in full by acquiring the first priority of the construction of a factory building in the site for assistance," and the credit guarantee agreement provides that the Corporation shall be exempted from liability for all or part of the guarantee liability when the special agreement for assistance was breached, but the Corporation requested the Korea Credit Guarantee Fund to pay the guaranteed liability, since Eul did not return the loan, the case held that the lending institution cannot obtain the security under the special agreement if the facility is appropriated by the debtor and the construction of the facility is not completed, it is reasonable to view that the Korea Credit Guarantee Fund as a district fisheries cooperative for which Article 19 of the Mutual Financial Credit Business Manual established by the President of the Korea Credit Guarantee Fund did not comply with the mutual financial loan operation manual, and it is reasonable to view that the Corporation did not perform its duty to provide credit guarantee for the whole portion of the loan without complying with Article 19 of the mutual loan agreement.

[1] Article 65 of the former Fisheries Cooperatives Act (amended by Act No. 6256 of Jan. 28, 200) (see current Article 60), Article 65 of the former Fisheries Cooperatives Act (amended by Act No. 731 of Dec. 31, 2004) (see current Article 60), Article 11(2) and (2) of the former Bank of Korea Act (amended by Act No. 6018 of Sep. 7, 1999), Article 95(1)2 of the Credit Unions Act / [2] Article 65 of the former Fisheries Cooperatives Act (amended by Act No. 6256 of Jan. 28, 200), Article 65 (see current Article 60), Article 65 of the former Fisheries Cooperatives Act (amended by Act No. 7311 of Dec. 31, 2004), Article 65 (1) and (2) of the former Credit Cooperatives Act (amended by Act No. 9701 of Dec. 19, 2097 of the current Act)

Jindo-gun Fisheries Cooperatives (Law Firm LLC, Attorneys Kim Nung-hwan et al., Counsel for the plaintiff-appellant)

(Attorney Kim Jae-soo, Counsel for the plaintiff-appellant)

National Federation of Fisheries Cooperatives (Law Firm Dara, Attorneys Min Byung-il et al., Counsel for the plaintiff-appellant)

Gwangju District Court Decision 2014Na50339 Decided January 7, 2015

The appeal is dismissed. The costs of appeal are assessed against the Plaintiff, including the part resulting from supplementary participation.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the fourth ground for appeal

The court shall decide whether the arguments are true in accordance with logical and empirical rules, based on the principle of social justice and equity, with free evaluation of evidence taking into account the purport of the entire pleadings and the result of examination of evidence. The facts duly confirmed by the court of final appeal that the court below did not go beyond the bounds of the principle of free evaluation of evidence (Articles 202 and 432 of the Civil Procedure Act).

For reasons indicated in its holding, the lower court determined to the effect that the Plaintiff’s loans to Korea Heavy Industries Co., Ltd. (hereinafter “Korea Heavy Industries”) KRW 8 billion (hereinafter “instant loans”) was a facility loan to raise funds for the installation of the facilities of Korea Heavy Industries, and that the scope of the facilities subject to the loans is limited to the facilities subject to civil engineering works and building works as stipulated in the standard contract form (hereinafter “instant contract form”) submitted by Korea Heavy Industries to the Plaintiff on July 30, 2007, which was submitted by Korea Heavy Industries.

The allegation in the grounds of appeal is purporting to dispute the fact-finding that led to the judgment of the court of fact-finding, and is merely an error in the selection of evidence and the determination of the value of evidence belonging to the free evaluation evidence of the court of fact-finding. While examining the reasoning of the judgment below in light of the aforementioned legal principles and the evidence duly admitted, the judgment of the court below is not erroneous in the misapprehension

2. As to the grounds of appeal Nos. 2 and 3

For the reasons indicated in its reasoning, the lower court: (1) although the Plaintiff, a district fisheries cooperative (hereinafter “FF”) was providing credit guarantee services issued by the Defendant with respect to the instant loan (hereinafter “the instant credit guarantee agreement”) as collateral; (2) stated the terms and conditions of the instant credit guarantee agreement in the terms and conditions for providing the Defendant’s credit guarantee services on the back of the instant credit guarantee agreement stating that “1.0 billion won or more than 10 billion won was set up on the 55 parcels of a shipbuilding site, and that the Defendant would not be liable for all or part of the guaranteed terms and conditions, including the instant credit guarantee terms and conditions; and (3) stated the terms and conditions for providing credit guarantee services in the terms and conditions for providing the Defendant’s credit guarantee services (hereinafter “the instant credit guarantee agreement”). The lower court determined that the Defendant would naturally be liable for all or part of the guaranteed terms and conditions under the instant agreement with the Defendant’s credit guarantee service provider’s credit guarantee service provider’s credit guarantee service agreement, and that the Defendant’s credit guarantee service provider’s credit guarantee service provider and its credit guarantee service provider’s credit guarantee service agreement should be deemed as follows.

According to the reasoning of the judgment below and the evidence duly admitted, the plaintiff accepted the contents of the above agreement as a member compromise of the defendant joining the defendant, and in accordance with the provisions of the above agreement, it was found that the plaintiff constructed an electronic data processing system for the issuance of electronic guarantee certificates with the defendant and received the letter of credit guarantee in accordance with the method of transmitting and receiving the electronic guarantee certificates using it. In addition, in light of the above legal principles and the evidence duly admitted, the judgment of the court below did not err in the misapprehension of legal principles as alleged in the grounds of appeal, such as the interpretation of a standardized contract and a disposal document, the duty to explain the standardized contract, the relation between the plaintiff and the defendant joining the defendant, and the legal principles as to the validity and ratification

The Supreme Court precedents cited in the grounds of final appeal are different from this case, and thus are inappropriate to be invoked in this case.

3. As to the grounds of appeal Nos. 1 and 5

A. Article 65 of the former Fisheries Cooperatives Act (amended by Act No. 6256 of Jan. 28, 200) included a bank business under the Banking Act with mutual finance business for members of a cooperative, but Article 65 of the amended Fisheries Cooperatives Act (amended by Act No. 731 of Dec. 31, 2004) excluded a bank business under the Banking Act from the scope of business where a district fisheries cooperative can carry out. Accordingly, Article 11(2) of the former Bank of Korea Act (amended by Act No. 6018 of Sep. 7, 1999) stipulates that the credit cooperative business sector deemed a financial institution pursuant to Article 65(2) of the former Fisheries Cooperatives Act (amended by Act No. 6256 of Jan. 28, 200) shall be deemed to be a financial institution, but after that amendment, the court below’s determination that the Plaintiff was a credit cooperative’s member of a financial institution under the Credit Cooperatives Act’s loan operation regulations and its related facilities shall not apply to the Plaintiff.

B. However, in a case where the Plaintiff, a district fisheries cooperative, lends facility funds to its members, the Plaintiff must comply with the Mutual Financial Credit Business Manual established by the president of the National Federation pursuant to the Credit Union Act and the Mutual Financial Business Supervision Regulations based thereon. However, Article 19 of the Mutual Financial Credit Business Manual provides for the following matters: (a) in principle, the amount of the funds for facilities should be paid in installments based on the amount of the funds according to the planned purpose; (b) the amount of the funds should be verified by documentary evidence; and (c) the amount of the funds should be verified by documentary evidence after checking the demand of relevant documentary evidence or construction progress after the payment; and (d) the said details

As seen earlier, in this case, where the credit guarantee agreement of this case provides that "the first priority of the construction of a factory building in the building site of this case shall be acquired as a collateral and the full termination of this credit guarantee," and the exemption clause of this case applies to the acquisition of collateral in case of a violation of the special agreement of this case, the exemption clause of this case shall not be held liable for all or part of the guarantee liability, and where the facility fund is appropriated by the debtor and the relevant facility is not completed, it is entirely impossible for the lending institution to acquire collateral under the above special agreement. Thus, as in the case of a financial institution to which Article 4 (2) of the operating rules of mutual financing business applies, it is a district fisheries district to which Article 19 of the mutual financing business manual of the same contents applies, as in the case of a financial institution where Article 4 (2) of the operating rules of this case applies, it is reasonable to view that the credit guarantee fund as a district fisheries bank is responsible for the credit guarantee only for the part performed without complying with Article 19 of the mutual financing business manual, and exempted from its liability for credit guarantee (see Supreme Court Decision 28197Da29897.

However, in full view of the facts and circumstances acknowledged by the court below, it can be seen that the Plaintiff committed a loan in violation of the duty under Article 19 of the Mutual Financial Credit Business Manual by failing to properly investigate the nature and nature of the instant loan and by paying the entire amount of the instant loan to the Heavy Industries without properly investigating the construction work, including preparing false confirmation and investigation documents stating that the construction work was carried out, while handling the instant loan corresponding to facility funds, and that the construction work was conducted, and that the construction work was conducted without complying with the above duty as to the entire loan as recognized by the court below. Accordingly, the Defendant may be exempted from the liability to guarantee the entire loan of this case on the ground of the violation of the duty.

C. Therefore, the reasoning of the court below is partly erroneous, but the conclusion of the court below that the plaintiff is not liable to guarantee the whole of the loan of this case according to the special agreement for the acquisition of collateral of this case is acceptable. In so doing, it did not err by misapprehending the legal principles on the legal nature of district fisheries, the scope of application of operating rules, the scope of exemption of the defendant, etc., failing to exhaust all necessary deliberations, or by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules.

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party, including the portion arising from the participation in the appeal. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim So-young (Presiding Justice)