[1] Whether a legitimate intent or effect of custody exists in a case where the creditor continues to possess the object after the right of retention expires (negative)

[2] Whether a lien acquired prior to the effectiveness of seizure due to an auction after the establishment of the right to collateral security may oppose the successful bidder in the auction procedure (affirmative)

[3] The case holding that in a case where Gap, under a contract with Eul, performed construction work on Byung's real estate ("the first construction work"), and thereafter acquired the ownership by concluding an exchange contract with Eul, and Gap was delegated with remodeling construction work on the above real estate ("the second construction work"), and Gap exercised a lien upon Gap's claim for reimbursement of construction cost due to the increase in the value of the second construction work and the claim for reimbursement of construction cost due to the increase in value of the real estate, the court held that in a case where Gap had lawfully acquired the lien after the establishment of the first bank's mortgage but before the commencement of the auction procedure, as long as Eul had lawfully acquired the lien before the commencement of the auction procedure, the purchaser of the above real estate at the auction procedure is liable to repay to Gap the claim secured by the lien pursuant to Article 91 (5) of the Civil Execution Act, and if the real value of the real estate actually increased to the objective value of the real estate through the second construction work, which caused Gap's claim for the above lien, it cannot be seen as unlawful or unjust in progress in the auction procedure

[1] Article 320 of the Civil Act / [2] Articles 83(4), 91(5), and 92(1) of the Civil Execution Act / [3] Article 320 of the Civil Act, Articles 83(4), 91(5), and 92(1) of the Civil Execution Act

[1] Supreme Court Decision 80Da1174 delivered on July 22, 1980 (Gong1980, 13082) / [2] Supreme Court Decision 2005Da22688 delivered on August 19, 2005 (Gong2005Ha, 1503) Supreme Court Decision 2008Da70763 Delivered on January 15, 2009 (Gong2009Sang, 158)

Applicant

Respondent (Law Firm Sejong, Attorneys Jeong Jin-ho et al., Counsel for the defendant-appellant)

Incheon District Court Order 2010Ra182 dated September 14, 2010

The order of the court below shall be reversed, and the case shall be remanded to the Incheon District Court Panel Division.

The grounds of reappeal are examined.

1. On August 29, 2003, the lower court rejected the Respondent’s application for the construction work of this case to the effect that, in accordance with the construction contract concluded between the former owner and the former owner 1, up to June 18, 2004, the construction cost of KRW 634,692,298 was invested with respect to the instant real estate and the installation of facilities (hereinafter “the first construction”) was decided to transfer the instant real estate upon entering into an exchange contract with the non-applicant on December 23, 2007 that the Respondent would not have any possibility of exercising the right to demand remodeling of the instant real estate as a result of the Respondent’s request for construction work from 200 billion won to 10 billion won, on the ground that the Respondent could not be entrusted with remodeling construction works on the instant real estate, and that there was no possibility that the Respondent would have any possibility of exercising the right to demand remodeling of the instant real estate as well as new installation of facilities and appraisal and assessment works on the instant real estate as 2000 billion won.

2. First, we examine the grounds for reappeal as to the waiver of lien.

Although a right of retention is a statutory security right for creditor's interest, a special agreement to waive it is valid. If a right of retention is waived in advance, even if all other statutory requirements are met, it shall be deemed that the right of retention is terminated immediately if the right of retention is renounced later. The creditor continues to possess the object after the right of retention expires, and it shall not be recognized that there is legitimate intention or validity of custody, and it shall not be limited to an unauthorized possession unless there is any other legal title (see Supreme Court Decision 80Da1174 delivered on July 22, 1980). Accordingly, the court below decided that the respondent lost a right of retention for the first construction payment claim by submitting a letter of waiver of the right of retention to a bank other than the applicant at around August 22, 2007, and that such extinguishment of the right of retention can be asserted not only by the bank other than the applicant for the above written request, but also by the applicant for the purchase of the real estate at the auction procedure requested by him, as so argued by the Re-Appellant, is justified and there is no violation of legal principles as to waive.

3. Next, we examine the grounds for reappeal as to the fact that the respondent's claim for a right of retention based on the claim for construction price or the claim for redemption of beneficial costs cannot be permitted against the good faith principle.

In principle, the buyer in the auction procedure for real estate is liable to repay the claim secured by the lien to the lien holder pursuant to Article 91(5) of the Civil Execution Act. In case where the debtor, after the seizure became effective, after the entry of the decision to commence the auction on real estate, such as a building owned by the debtor and the registration of the entry of the decision to commence the auction, has transferred possession thereof to the creditor of the construction cost related to the above real estate, thereby having the creditor acquire the lien, such possession goes against the prohibition of disposition of seizure under Articles 92(1) and 83(4) of the Civil Execution Act, since the transfer of possession constitutes an act that is likely to reduce exchange values of the object and thus goes against the effect of prohibition of disposition of seizure under Articles 92(1) and 83(4) of the Civil Execution Act, the possessor cannot oppose the buyer in the auction procedure on the ground of the above lien. However, this legal principle does not apply to the case where the lien has been acquired before the seizure takes effect due to an auction, and there is no reason to deem it otherwise commenced from the auction procedure established (see Supreme Court Decision 268Da.

According to these legal principles, as long as the respondent has lawfully acquired the right of retention before the commencement of the auction procedure, the applicant who purchased the real estate of this case in the auction procedure is liable to repay to the respondent the claim secured by the right of retention pursuant to Article 91(5) of the Civil Execution Act. As recognized by the court below, if the respondent actually increased the objective value of the real estate of this case through the second construction, which is the cause of the right of retention, as recognized by the court below, the respondent recognizes the exercise of the right of retention, thereby impairing the interest of the mortgagee or hindering the progress of the appropriate auction procedure. Furthermore, even though the right of retention based on the right of retention on the first construction cost claim is waived around August 2007, the respondent did not give up the right of retention on the premise of consideration, such as assignment of the right of retention, which the applicant would provide, and the applicant being aware of the waiver of the right of retention is not erroneous in the misapprehension of legal principles as to the right of retention or the right of redemption without any benefit in return for the right of retention.

4. Therefore, the order of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Nung-hwan (Presiding Justice)