Viendi Co., Ltd. (Law Firm Dongin, Attorneys Oh-hin et al., Counsel for the defendant-appellant)

NANPPPP Co., Ltd. (Law Firm continental Aju, Attorneys Noh Sang-soo et al., Counsel for the defendant-appellant)

June 17, 2009

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant shall pay to the plaintiff 7.9 billion won and 2 billion won among them from November 11, 2004, from November 17, 2004 to 2.5 billion won, from November 17, 2004 to 1.09 billion won, from November 30, 2004 to 2.4 billion won, from November 30, 2004 to 2.4 billion won, 5 percent per annum from November 17, 2005 to the delivery date of a copy of each complaint of this case, and from the next day to the day of full payment to 20 billion won per annum.

1. The plaintiff's assertion

On March 25, 2005, the Plaintiff (the Plaintiff’s trade name was the “NFE”) changed to the “Eth Eth Eth Ethits”, and changed to the current trade name on February 20, 2008, and on November 11, 2004, the Defendant (the Plaintiff’s trade name was the “CFEs” but changed to its trade name as of November 6, 2004) was the Defendant (the Plaintiff’s trade name was the “CFEs” but was changed to its trade name as of November 6, 2004), the site of the factory, buildings, ancillary facilities, and machinery and equipment of the health functional food manufacturing plant (hereinafter “MFE”), which were 12.9 billion won in value-added tax (hereinafter “MFE”), and the down payment was paid by the Defendant to the Plaintiff on November 11, 2004, and the remainder of the intermediate payment was paid to the Plaintiff’s KRW 1.4 billion in the name of the intermediate payment.

According to the instant sales contract, the Plaintiff delivered the off-factory to the Defendant and completed the registration of transfer of ownership. However, the Defendant merely succeeded only to KRW 6 billion in the bank loan in the name of the Plaintiff, KRW 2 billion in the intermediate payment, KRW 2.5 billion in the intermediate payment, and KRW 2.4 billion in the defect deposit (the period of the warranty is one year, and the above KRW 2.4 billion is returned after the lapse of the warranty period) and KRW 7.9 billion in the value-added tax, including KRW 1.09 billion in the value-added tax, and KRW 1.9 billion in the Plaintiff. Accordingly, the Defendant is liable to pay the said amount and damages for delay to the Plaintiff.

2. Facts of recognition;

The following facts are not disputed between the parties, or may be acknowledged by Gap evidence Nos. 5, Eul evidence Nos. 2 through 6, and 13 through 15 (including a serial number), and the testimony of non-party No. 3 of the witness by integrating the purpose of the whole pleadings:

A. On September 30, 2004 (the representative director of the plaintiff at this time was the non-party 1), the non-party 1 transferred the management right of the plaintiff 1,65,864 shares owned by the non-party 1 and the non-party 4, and the plaintiff company's management right to the non-party 2. The non-party 1 drafted a written agreement containing the following contents (No. 2; hereinafter "the agreement dated September 30, 2004").

C. Foods

- A person designated by Nonparty 1 or Nonparty 1 shall purchase an original factory of KRW 10.5 billion and succeed to the liability of KRW 6 billion (including bills) to purchase an original factory to the extent of KRW 4.5 billion (Article 2(1)).

- Nonparty 2 shall pay KRW 12.3 billion to Nonparty 1 in return for the transfer of shares and management rights, but (i) KRW 4.5 billion shall be paid to Nonparty 1 in one notarized promissory note (Article 3(1)); (ii) the amount of KRW 900 million shall be paid at the same time as Nonparty 1 withdraws from the position of the representative director of the Plaintiff (Article 3(4)); and (iii) the remainder of KRW 6.9 billion shall be paid to the company designated by Nonparty 1 by means of investment, etc. (Article 6).

B. On November 4, 2004, Nonparty 1 received from Nonparty 2 a set of promissory notes (the serial number omitted; hereinafter “instant promissory notes”) issued as of November 3, 2004, with the issue date as of November 3, 2004, with the face value of 4.5 billion won at face value, the issuer Daesan Fisheries Co., Ltd. (the non-party 2 was the representative director; hereinafter “YY”) and the issue date as of March 30, 2005.

C. On Nov. 30, 2004, Nonparty 2 requested Nonparty 1 to increase the purchase price of an Orain factory in KRW 2.4 billion on the pretext of the purchase price of the Orain factory, contrary to the contents of the agreement entered into on Sep. 30, 2004, Nonparty 2 requested Nonparty 1 to prepare a sales contract by replacing the increased KRW 2.4 billion with a defect security deposit. The Defendant issued a written confirmation (Evidence 3) that the Plaintiff will be responsible for all legal responsibilities, such as the payment of the 2.4 billion won increased from the Plaintiff.

D. On November 11, 2004, the Plaintiff and the Defendant (the Defendant was designated as the purchaser of an off-factory by Nonparty 1) concluded the instant sales contract on the following grounds:

E. On November 15, 2004, the payment date for the intermediate payment of the Promissory Notes from Nonparty 1, the Defendant endorsed and delivered the Promissory Notes to the Plaintiff.

F. Around that time, the Defendant succeeded to 6 billion won of the Plaintiff’s bank loan.

G. However, upon Non-party 2’s non-party 2’s non-party 1’s non-party 2’s non-party 1’s non-party 2’s non-party 2’s non-party 2’s non-party 1’s non-party 2’s non-party 1’s non-party 2’s non-party 1’s non-party 2’s non-party 1’s non-party 2’s non-party 2’s non-party 2’s non-party 2’s non-party 1’s non-party 2’s non-party 2’s joint and several liability with the Defendant, the Plaintiff provided the non-party 1 as a security for transfer.

H. On March 2006, the Plaintiff and Nonparty 1 agreed to offset the claim for value-added tax refund that was offered as the above collateral against the equivalent amount of the above amount among the above amount payable. However, the account was organized as repayment on December 31, 2005.

3. Determination

A. Regarding down payment and intermediate payment:

In light of the above facts, the Defendant’s endorsement and delivery of the Promissory Notes to the Plaintiff on November 15, 2004, thereby paying the down payment and the intermediate payment of KRW 4.5 billion. Thus, the claim for this part is rejected.

The plaintiff asserted that the defendant still has the obligation to pay 4.5 billion won to the plaintiff, notwithstanding the endorsement and delivery of the Promissory Notes, although the defendant's endorsement and delivery of the Promissory Notes of this case had not yet been made until the date of the payment of the Promissory Notes of this case, the non-party 1 and the non-party 2 (or the person designated by the non-party 1: the defendant in this case) reached an agreement that the non-party 1 (or the non-party 1: the defendant in this case) would receive the Promissory Notes of this case from the non-party 2 and deliver it to the plaintiff again, and that the defendant would not accept the payment of the down payment and the intermediate payment of this case. The plaintiff's assertion that the non-party 1 and the non-party 2 had the obligation to pay the down payment of this case to the plaintiff as of November 15, 2004, which was delivered by the non-party 2, and the non-party 2, who did not actually pay the down payment and the intermediate payment of this case.

Furthermore, the Plaintiff asserts that the payment of the down payment and the intermediate payment via the instant promissory note has no validity, since Nonparty 2 and Nonparty 1 conspired with each other even though they knew that the instant promissory note would not be settled from the beginning, and thus, they committed a crime of breach of trust against the Plaintiff by paying the down payment and the intermediate payment by the said method. However, the evidence submitted by the Plaintiff alone is insufficient to recognize it (the Plaintiff filed a complaint against Nonparty 2 and Nonparty 1 on April 18, 2007 with the charge of breach of trust, etc., but the said assertion is difficult to accept.)

B. Regarding warranty bond

According to the above facts, 2.4 billion won of the defect bond of the sales contract of this case is corresponding to 2.4 billion won of the purchase price increased in form according to the agreement between the plaintiff and the defendant. Since the defendant is not obligated to pay to the plaintiff by the false agreement of the plaintiff and the defendant, the plaintiff's claim for this part is rejected on a different premise.

C. Regarding value-added tax

According to the above facts, the value-added tax of KRW 1.09 billion in the sales contract of this case shall be deemed to have been repaid and extinguished by the parties' declaration of offset between the parties. Thus, the plaintiff's claim for this part shall not be accepted.

As to this, the Plaintiff asserted that the non-party 2, at the time of the preparation of the agreement on August 1, 2005, had the Plaintiff stand as a joint and several surety, and offered the Plaintiff's property including the instant value-added tax refund claim as a security for transfer to the non-party 1 constitutes null and void as a juristic act contrary to social order, and thus, the above-off declaration based on the premise is invalid. However, the evidence submitted by the Plaintiff alone is insufficient to recognize the above act as null and void as a juristic act contrary to social order (as seen earlier, the non-party 2 and the non-party 1 are currently subject to a disposition of suspending witness)

4. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

Judges Lee Sung-chul (Presiding Judge) Kim Jong-il