2020Da253430 Action

Plaintiff:

Law Firm LLC et al., Counsel for defendant-appellant

Attorney Kim Jong-soo et al.

Defendant 1 and two others

Law Firm Sejong (LLC)

Attorney Kim Jae-hun et al.

Seoul Central District Court Decision 2019Na4532 Decided June 25, 2020

March 11, 2021

All appeals are dismissed.

The costs of appeal are assessed against the Defendants.

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

1. Factual basis

The reasoning of the lower judgment and the evidence duly admitted by the lower court reveal the following facts.

A. The instant company was established on September 21, 201 and runs film, broadcasting, and other multimedia and public performance-related service business. The Plaintiff is the representative director of the instant company, and the Defendants were inside directors.

B. As of December 31, 2013, the face value of the shares of the instant company is 500 won, and the total number of shares issued is 170,113 shares. Of them, Defendant 1 owns 17,767 shares, Defendant 2, and Defendant 3 respectively.

C. On June 27, 2014, the Plaintiff, the Defendants, Nonparty 1, Nonparty 2, Nonparty 3, and Nonparty 4 entered into a partnership agreement with the instant company to jointly operate the instant company (hereinafter “instant partnership agreement”). Among them, the main contents of Article 6 (hereinafter “instant continuous service clause”) that set forth the obligation for continuous service are as follows.

(1) A partner shall have served in the company until "M&A; or one year after the time when an IPO became a partner. Where one of its partners retires from the company arbitrarily before the end of the obligation to serve, all the shares of the company held shall be transferred at a par value to the representative director (a).

(2) If one of the partners becomes a member of the company who is not an arbitrary retirement before the end of the obligation, a certain percentage (100% for less than one year, 75% for more than one year and less than two years, 50% for less than two years, 25% for less than two years, 25% for less than three years, 25% for less than three years and less than four years, and 0% for more than four years) of the shares of the company of this case shall be sold at its face value to the representative director (Article 3).

(3) The shares acquired by the representative director as above are for the purpose of temporary delegation to grant old shares for the purpose of human being's participation, and there may be restrictions on voting rights with respect to these shares in the process of decision-making such as the prime class.

D. On September 17, 2014, the instant company held a general meeting of shareholders and resolved to dismiss the Defendants from office.

2. Whether the continuous service clause (c) of this case applies to a case where the Defendants were dismissed without any cause attributable to the Defendants (ground of appeal No. 1)

A. As long as the establishment of a disposal document is recognized as authentic, the court shall recognize the existence and content of the declaration of intent in accordance with the language and text stated in the disposal document, unless there is any clear and acceptable reflective evidence that denies the content of the statement. In a dispute over the interpretation of a juristic act between the parties concerned, where interpretation of the intent of the parties expressed in the disposal document is at issue, the court shall reasonably interpret the document in accordance with logical and empirical rules by comprehensively taking into account the content of the language and text, the motive and background leading up to the juristic act, the purpose to be achieved by the juristic act, the parties’ genuine intent, etc. (see, e.g., Supreme Court Decisions 2002Da23482, Jun. 28, 2002; 2014Da1976, Feb. 15, 2017).

B. On the following grounds, the lower court determined that this case’s continuous service clause (c) applies even where the Defendants were dismissed without any cause attributable to the Defendants.

The continuous service clause of this case provides that "a partner's arbitrary resignation" and (c) provides that "a partner's retirement is not a voluntary retirement," and that "a partner's retirement is classified as two separate resignations, and each item is composed exclusively of each other. Unlike the continuous service clause of this case, Article 7 (b) of the Agreement on the Trade of this case stipulates the violation of his duty and the existence of the cause attributable to the partner's breach of duty and the cause attributable to the partner is stipulated as the condition of termination of the agreement and waiver of his right. Therefore, in the opposite interpretation of this case, the continuous service clause of this case shall be applied to the withdrawal of the Defendants without a cause attributable to the Defendants.

C. Examining the reasoning of the lower judgment in light of the foregoing legal doctrine, the lower judgment is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine regarding the interpretation of a contract, or by exceeding

3. Whether the Plaintiff cannot assert fulfillment of conditions by leading the dismissal of the Defendants against the good faith and trust (ground of appeal No. 2)

A. Article 150(2) of the Civil Act provides, “If a party who is to receive benefit from the fulfillment of a condition has fulfilled the condition against the good faith and good faith, the other party may assert that the condition has not been fulfilled.” This provision includes the idea that the basic principles of legal order that the exercise of rights and the performance of duties shall be in good faith (see, e.g., Supreme Court Decision 2013Da2757, May 14, 2015). Any person shall not obtain benefit through an act contrary to the good faith and good faith. Any contingent circumstance that was unexpected at the time when the parties agreed on the condition was not adequately considered for the other party’s benefit, or by taking an attitude inconsistent with the preceding act reasonably trusted by the other party, thereby infringing on the good faith and good faith (see, e.g., Supreme Court Decision 2018Da23054, Jan. 14, 2021).

B. The lower court determined that the Defendants had a duty to serve in the Company until one year after the date when the instant company became “M&A” or “IPO,” and that the Defendants were dismissed before the termination of their continuous service and that 50% of the shares held by the instant company was liable to sell at par value to the Plaintiff, the representative director, at the instant continuous service clause C. The reasons are as follows.

The Defendants asserted that the Plaintiff was the party directly benefiting from the fulfillment of the condition and led the Defendants to dismiss the Defendants in violation of the good faith and good faith. However, it cannot be concluded that the Plaintiff could not arbitrarily dispose of the shares to be transferred from the Defendants, and that the Plaintiff gains profits due to the fulfillment of the condition that the Defendants would be dismissed due to the restriction on the exercise of voting rights. The dismissal of the Defendants is conducted at a general meeting of shareholders. Shareholders, including institutional investors, were the best choice for their own interests, and the Plaintiff cannot be deemed to have dismissed the Defendants unilaterally. The submitted evidence alone is insufficient to acknowledge that the Plaintiff led the Defendants to dismiss the Defendants against the good faith, and there is no other evidence to

C. Examining the reasoning of the lower judgment in light of the foregoing legal doctrine, the lower judgment is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine regarding the fulfillment of conditions contrary to the principle of trust and good faith under Article 150(2) of the Civil Act, or by misapprehending facts

4. Conclusion

The Defendants’ appeals are dismissed in entirety as it is without merit, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

The presiding Justice shall mobilization by the presiding Justice

Justices Kim Jae-sik in charge

Justices Min Min-young

Justices Noh Tae-ok