[1] In a case where both claims are specified in the “order” of the seizure and assignment order of claims, but the entry of executive titles as to certain claims is omitted in the “reason”, whether the above seizure and assignment order has the effect of the above part of the claims (affirmative)

[2] Whether the person who established the security for transfer can exercise the subrogation right based on the security right for the fire insurance claim acquired by the person who established the security for transfer due to the loss of the security object (affirmative)

[3] Whether the person who established the security for transfer has the insurable interest in the fire insurance contract concluded on the subject matter (affirmative)

[1] The judgment, decision, and order of the court is the official authority of the court, which is a state agency, and its purpose is to resolve disputes thereby to ensure the stability of the people's legal life. Thus, unless the procedure is revoked by an appeal or a lawsuit for retrial, etc., it cannot be deemed as null and void as it is in legal act between private persons on the ground that the procedure is unlawful or unreasonable. In addition, according to Article 224 of the Civil Procedure Act, the decision and order shall apply mutatis mutandis to the judgment and order, and the reasons therefor may be omitted. As long as all claims are specified in the order of the seizure and assignment order of claims, even if the entry of executive title concerning some claims are omitted in the reasons for the order, such circumstance alone does not affect the validity of the above seizure and assignment order as to some claims for which the executive title is omitted.

[2] In the event that a movable is established as a security, the obligor transfers the movable owned by the movable to the obligee for the purpose of security, but continues to possess the movable by the amendment of possession. However, if the obligor fails to perform the above obligation, the obligee would dispose of the movable which is the object of security in a private way, liquidate it by means of settlement after acquiring it by himself, and execute the above security right. The reason why the obligor transfers the ownership of the movable to the obligee is to enable the obligee to preserve the value of the security by himself/herself until the obligee executes the security right. If the obligor fails to perform his/her obligation, it would not interfere with the obligee’s preferential repayment by realizing the security that he/she was transferred, even if the obligor did not perform his/her obligation, and in light of the nature of the security right to acquire the exchange value of the security, even in cases where legal relations, such as compensation or indemnity, etc. for the exchange value between the person who established the security right and the third party arise, such security right can be exercised by the person who established the security right against the insurance claim based on fire insurance contract.

[3] Although the person establishing security for movable property transfers ownership of movable property to a creditor, it is in accordance with the purpose of securing preferential payment right of the creditor. The person establishing security for transfer is still able to pay back the full amount of the obligation and return ownership at the maturity of payment with the use of the property and the right to benefit from the property. Thus, in the event of an insured event in relation to the property, not only would the person who establishes security for transfer be deprived of the right to use and benefit from the property, but also would not be exempted from the obligation secured by the property, but also would incur economic loss that could not recover the ownership of the property even if the person who establishes security for transfer pays the property. Therefore, it cannot be said that the person establishing security for transfer has no insurable interest in

[1] Article 224(1) of the Civil Procedure Act / [2] Articles 342 and 372 of the Civil Act / [3] Article 372 of the Civil Act / [3] Article 372 of the Civil Act, Article 683 of the

[2] Supreme Court Decision 74Da2215 delivered on December 30, 1975 (Gong1976, 8893) Supreme Court Decision 2004Da52798 Delivered on December 24, 2004

Plaintiff Limited Liability Company

Intervenor Co., Ltd. (Law Firm Gyeongwon, Attorney Choi Jong-ju, Counsel for the intervenor-appellant)

Defendant (Attorney Park Sung-won et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Na53202 decided May 4, 2006

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

The grounds of appeal are examined.

1. Judgment on ground of appeal No. 1

The judgment, decision, and order of the court is the official authority of the court, which is a state agency, and its purpose is to resolve disputes thereby to ensure the stability of the people's legal life. Thus, unless the procedure is revoked by appeal or lawsuit for retrial, etc., it cannot be deemed null and void as it is in legal act between private parties because it is unlawful or unreasonable. Furthermore, according to Article 224 of the Civil Procedure Act, the provisions on judgments shall apply mutatis mutandis to rulings and orders, and the entry of reasons may be omitted. Thus, insofar as all claims seized and assigned are specified in the order of the seizure and assignment order, even if the executive title concerning some claims are omitted in the reasons for the order, such order does not affect the effect of the above seizure and assignment order as to some claims for which the executive title is omitted.

According to the reasoning of the judgment below, the court below determined that the fire insurance claim concerning the instant facilities and equipment does not have the effect of the above seizure and assignment order on the ground that it is not stated in the reasoning of the above seizure and assignment order that the fire insurance claim concerning the instant facilities and equipment not only the instant building but also the instant facilities and equipment is subject to seizure and whole in the order of the seizure and assignment order, even though it is not stated in the ground of the above seizure and assignment order that it is the exercise of the subrogation right to the instant facilities and equipment.

In light of the above legal principles and records, the above judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there is no error of law by misapprehending the legal principles on the validity of attachment and assignment order

2. Judgment on ground of appeal No. 2

In the event that a movable was created as a security, the obligor transfers the movable property owned by him/her to the obligee for the purpose of security, and continues to possess it by the amendment of possession. However, if the obligor fails to perform the above obligation, the obligee would dispose of the movable property, which is the collateral, in a private way and liquidate it by way of settling accounts after acquiring it by himself/herself, and thereby exercise the above security right. The reason why the obligor transfers the ownership of the movable to the obligee is to ensure that the obligee can preserve the value of the collateral by himself/herself until the obligee executes the security right, so even if the obligor fails to perform his/her obligation, it does not interfere with the obligee’s realization of the security he/she was transferred and preferential repayment. In light of the nature of the security right aimed at acquiring the exchange value of the security, even if the object provided as a security is destroyed or damaged, it shall be deemed that the security right has effect on the money and other things to be received by the person who established the security interest (see Supreme Court Decision 202Da2157, Dec. 30, 1975).

Therefore, it is reasonable to view that a mortgagee may exercise the subrogation right based on the security right to the above fire insurance claim, which is a modified object of security value, even if the object of security for transfer is lost and the person who establishes the security for transfer acquires the insurance claim against the insurance company under the fire insurance contract (see Supreme Court Decision 2004Da52798, Dec. 24, 2004).

According to the reasoning of the judgment below, after compiling the adopted evidence, the court below acknowledged the facts as stated in the judgment, and determined that the plaintiff successor can exercise the subrogation right on the fire insurance claim acquired by the non-party against the defendant because the facilities and equipment of this case which is the object of security for transfer

In light of the above legal principles and records, the above judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there is no error of law by misapprehending the legal principles on subrogation of the right to collateral security.

3. Judgment on the third ground for appeal

Without being asserted in the lower court, a new argument in the final appeal cannot be a legitimate ground of appeal against the lower judgment (see Supreme Court Decision 2009Da20475, 20482, Aug. 20, 2009). According to the records, the Defendant did not assert that the assignment order of this case has no validity due to the competition of the seizure of claims by the date of closing argument of the lower court. Thus, this part of the grounds of appeal cannot be a legitimate ground of appeal.

4. Judgment on the fourth ground for appeal

Although the person who has established the security for movable property transfers the ownership of the above movable property to the creditor, it would eventually result in the purpose of securing the creditor's preferential right to payment. As such, the person who has established the security for transfer may still use the property and obtain a return of the ownership after paying the full amount of the obligation at the time of payment with the right to use the property and gain profit therefrom. Thus, in the event of an insured event in respect of the property, the right to use and gain profit from the property would be lost, and even if the property is not exempted from the obligation secured by the property, and even if the property is repaid to the mortgagee, the person who has established the security for transfer will suffer economic loss that could not recover the ownership of the property. Therefore, it cannot be said that the person who established the

According to the reasoning of the judgment below, after compiling the adopted evidence, the court below acknowledged the facts as stated in the judgment, and held that the plaintiff succeeding intervenor, who is the mortgagee of the facilities and equipment of this case, can exercise the subrogation right against the non-party's claim for fire insurance money. Since the facilities and equipment of this case are owned by the plaintiff succeeding intervenor, the non-party, who is the person establishing the security for transfer, has the right to claim fire insurance money, rejected

In light of the above legal principles and records, although the judgment of the court below is somewhat insufficient, the above judgment seems to have been based on the premise that the non-party, who is the person establishing security for transfer, has insurable interest in the fire insurance contract on the facilities and equipment of this case, and thus is entitled to obtain insurance claim due to the occurrence of the insurance accident. The above judgment of the court below is acceptable, and there is no error of law by misunderstanding the legal principles on insurable interest of the person establishing security for transfer, as

5. Conclusion

Therefore, the appeal is dismissed, 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.

Justices Shin Young-chul (Presiding Justice)