In a case where the issue was whether the extinctive prescription of Company A’s debt to Company B was suspended due to the commencement of voluntary auction procedure upon the application of Company B for the real estate owned by Company B, the case affirming the judgment below which accepted the extinctive prescription defense by Company B, etc.

In a case where the issue was whether the extinctive prescription of Company A’s debt to Company B was suspended due to the commencement of voluntary auction procedure upon the application of Company B on the real estate owned by Company B, the case affirming the judgment of the court below which accepted the objection to the expiration of the extinctive prescription by Company B, on the ground that the notification of seizure under the General Terms and Conditions for Credit Transactions cannot be deemed to have been applied since the notification of seizure cannot be deemed to have been made under the provisions of the

Article 176 of the Civil Act

Plaintiff Co., Ltd. (Law Firm Han-won, Attorneys Yu Jung-won et al., Counsel for the plaintiff-appellant)

Defendant 1 and one other (Attorney Kim Jong-il, Counsel for the defendant-appellant)

Seoul High Court Decision 2009Na20286 decided July 24, 2009

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

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

1. Regarding ground of appeal No. 1

This is about the issue of whether the extinctive prescription of the debt of this case against the non-party bank of the defendant company is suspended due to the commencement of the auction procedure of this case upon the application of the non-party bank for the real estate owned by the defendant 2.

Articles 18 and 16(2) of the General Terms and Conditions for Bank Credit Transactions claiming that the Plaintiff applied to credit transactions between the Defendant Company and the Nonparty Bank, including the instant credit transactions, shall immediately report to the Nonparty Bank in writing when the address of the Defendant Company is changed. If a written notice or any other document sent by the Nonparty Bank to the final address reported by the Defendant Company is delayed or not delivered to the Defendant Company, it shall be deemed that the notice or any other document was delivered at the expiration of the ordinary mailing period. The Plaintiff asserts that the notice or any other document sent by the Nonparty Bank to the final address reported by the Defendant Company would have been delivered at the time of the expiration of the ordinary mailing period. In the above auction procedure, as long as the notice or any other document was served by the Defendant Company as a means of delivery, even if it was sent to the final address of the Defendant Company, according to the above terms and conditions, it shall be deemed that the notice or any other fact of seizure under the decision to commence the auction procedure was delivered to the Defendant Company, as stipulated in Article 176

However, the above basic terms and conditions are applicable to credit transactions between the defendant company and the non-party bank. It cannot be said that the above provision applies to the auction procedure unrelated to this, or notification on the fact of seizure on the decision of commencement of auction conducted by the auction court more specifically.

In addition, according to the records, Article 18 of the above basic terms and conditions, in addition to the above matters, provide that "if an expression of intent is an important declaration, such as a set-off notice or a claim for the repayment of obligation before the time limit, it shall be deemed that it has reached only the case by the certificate of content of the delivery certificate." In this context, "an expression of intent" shall be deemed to have reached only the case by the certificate of content of the delivery certificate" (see, e.g., Supreme Court Decision 229Da229, Apr. 2, 201). It shall be reasonable to view that the notice of seizure, which has a significant effect on the legal relations between the parties, such as the interruption of extinctive prescription, constitutes "an important declaration of intent" as provided in the above proviso. Therefore, even if the above provision applies to the auction procedure, the Plaintiff's assertion that there is a notification of seizure under the above provision regarding the document, such as the decision of commencing the auction delivered by simple delivery method, shall not be accepted.

The court below rejected the plaintiff's assertion of interruption of extinctive prescription and accepted the defendants' defense for the completion of extinctive prescription as a result, is therefore justified. The ground of appeal is without merit.

Although the Plaintiff asserts that the judgment of the court below is in violation of the above Supreme Court Decision 87Meu1605 Decided December 8, 1987, the provision dealt with by the above Supreme Court Decision is different from the terms and conditions of the contract in this case as seen earlier. Therefore, this part of the assertion is without merit.

2. Regarding ground of appeal No. 2

The plaintiff asserts that since Defendant 2, a surety, was aware that the above auction procedure was held by Defendant 2, his representative director, the defendant company, also knew of this procedure, and in such a case, even if there was no notification about the seizure to the defendant company, the interruption of the extinctive prescription due to the seizure should be viewed as effective.

However, above all, there is no evidence showing that Defendant 2 knew of the above auction procedure before the completion of the extinctive prescription of this case. Accordingly, this part of the grounds for appeal cannot be accepted.

3. Conclusion

Therefore, the appeal is dismissed and the costs of the lawsuit are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Ji-hyung (Presiding Justice)