Whether the effect of the mortgage by the Factory Mortgage Act on the movable property which was already provided by the method of possession alteration to a third party prior to being entered in the list of factory mortgage (negative)

Even if a movable is the object of a mortgage under Articles 4 and 5 of the Factory Mortgage Act, if it is owned by a third party who is not a mortgager, the mortgage cannot be effective. Even if the movable mentioned in the list is already provided by the method of possession revision, it belongs to the ownership of the mortgagee in relation to the third party. Thus, the mortgage cannot be effective under the Factory Mortgage Act, just as it belongs to the third party.

Articles 4, 5, 7, and 10 of the Factory Mortgage Act; Articles 505 and 507 of the Civil Procedure Act

[Plaintiff-Appellant] 92Ma576 decided August 29, 1992 (Gong1992, 2838)

Industrial Bank of Korea (Attorney Kim Tae-tae, Counsel for defendant-appellant)

Busan District Court Order 98Kao2454 dated July 14, 1998

The order of the court below is reversed and the case is remanded to Busan District Court Panel Division.

The grounds of special appeal are examined.

Even if it is a movable listed in the list as the object of mortgage under Articles 4 and 5 of the Factory Mortgage Act, if it is owned by a third party who is not a mortgager, it shall not affect the said mortgage (see Supreme Court Order 92Ma576, Aug. 29, 1992). Even in cases where the movable mentioned in the list is already offered as a security for transfer by the method of possession revision, such movable belongs to the mortgagee’s ownership in relation to the third party, and thus, it shall not affect the mortgage under the Factory Mortgage Act.

According to the records, the special appellant acquired the right to transfer to another person by the method of possession alteration of the instant machinery from the debtor's detailed liability company, but on the other hand, the above detailed liability company established a mortgage on the instant machinery and its installed land and building against Busan Bank pursuant to the Factory Mortgage Act, and continued possession of the instant machinery. Thus, the instant machinery belongs to the ownership of the special appellant, who is the mortgagee, and thus the said Busan Bank's mortgage on the instant machinery cannot be effective as to the instant machinery.

Nevertheless, the court below's dismissal of the application for the suspension of the auction procedure of this case by a special appellant on the premise that the above right to collateral security in the name of the above Busan Bank affects the machinery of this case, shall not be erroneous in the misapprehension of legal principles as to the effect of the factory mortgage as stipulated in Articles 4 and 5 of the Factory Mortgage Act, and it shall be clearly affected by the judgment. The special appeal by the special appellant pointing this out is with merit.

Therefore, the order of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Cho Cho-Un (Presiding Justice)