2016Da259073 Compensation, etc.

The Bankruptcy Trustee of the Bankruptcy Bank A Savings Bank

1. C.

2. F;

Seoul High Court Decision 2015Na2017553 Decided September 9, 2016

March 9, 2017

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. The liability of directors and auditors for a company under Articles 399 and 414 of the Commercial Act may be exempted with the consent of all shareholders (Article 400(1) and Article 415 of the Commercial Act). The consent of all shareholders is not necessarily required to be made explicitly and actively, and may be made by implied declaration of intent (see, e.g., Supreme Court Decision 2002Da11441, Jun. 14, 2002). Furthermore, the liability of directors and auditors to the company that may be exempted with the consent of all shareholders is non-performance due to delegation relationship, and thus, even if all shareholders expressed their intent to be exempted from liability, tort liability against directors and auditors cannot be exempted (see, e.g., Supreme Court Decision 95Da56316, Apr. 9, 196).

On the other hand, the short-term statute of limitations for a claim for damages caused by a tort runs from the "date when the person becomes aware of the damage and the perpetrator," and the date when the representative becomes aware of the damage and the perpetrator in the case of a corporation. However, where the representative of a corporation commits a tort against a corporation, the short-term statute of limitations should proceed only when the representative becomes aware of the lack of damages and the fact that another representative, officer, employee, or employee who has the authority to properly preserve the profit of the corporation at least is able to exercise the right to claim damages. If an executive officer, etc. committed a joint tort with the representative, the short-term statute of limitations should be set out to exclude such executive officer, etc. and the starting point of the short-term statute of limitations should be determined (see, e.g.

2. According to the reasoning of the lower judgment and the evidence duly admitted, the following facts are revealed.

A. From December 12, 2003 to June 26, 2005, Defendant C served as the representative director of the Savings Bank Co., Ltd. (hereinafter “the Savings Bank”), and Defendant C served as the auditor from December 12, 2003 to September 29, 2005.

B. (1) On 204, 3, and 23, the savings bank of this case loans KRW 400 million to CY spouse of the major shareholder AD through the debtor's name lending (hereinafter "loan No. 39 of this case"), (1) neglected the credit investigation by neglecting the debtor's actual examination of the debtor's business performance, the debtor's debt repayment ability, income and repayment plan, etc. (2) did not take measures such as granting the right to dispose of the shares of CZ corporation for security, but did not take measures such as granting the registration of pledge against the stock transaction account. (3) Although one or more joint and several sureties should be installed at the time of credit lending, the defendant did not properly take measures to preserve the claim, such as giving up the joint and several sureties's name, and the defendants approved the loan approval. Ultimately, the savings bank of this case dealt with the bad debt of this case on June 26, 2007 because it did not recover the amount equivalent to KRW 2850,000 out of the loan No. 39.

(2) On February 19, 2004, under the joint and several guarantee of ED (the representative director of AC of a stock company), the savings bank of this case entered into a credit loan agreement with AC with 1.15 million won per annum on May 19, 2004 (hereinafter referred to as "the loan of this case") and entered into a deposit agreement with the Seoul District Court 200 million won on December 26, 2006 (hereinafter referred to as "the deposit agreement of this case"). The existing shareholders of the savings bank of this case were not entitled to 1.8 billion won per annum on December 30, 2005 (hereinafter referred to as "0 savings bank"), and were not entitled to 2.2 billion won per annum on December 30, 2005 (hereinafter referred to as "the contract of this case"), and were not entitled to 1.2 billion won per annum transfer or takeover of shares of the savings bank (hereinafter referred to as "the savings bank of this case") and 1.2 billion won per share transfer and 2.

3. The lower court, on the grounds indicated in its reasoning, determined as follows.

A. (1) In relation to the instant loan No. 39, Defendant C neglected to investigate the credit and did not take reasonable measures to recover the claims, such as the creation of adequate collateral and joint and several liability, in violation of the representative director’s duties, and thereby, caused damage to the instant savings bank by allowing the instant savings bank to carry out the loan, without any uncertainty of the ability to repay the debt to the executives, employees, or their families of the mutual savings bank prohibited from extending credit pursuant to Article 37 of the Mutual Savings Banks Act, etc.

(2) In relation to the instant loan No. 56, Defendant C neglected to conduct a credit investigation and did not take reasonable measures to collect debts, such as the creation of adequate collateral and joint and several sureties, despite having uncertainty of the borrower’s ability to repay debts in violation of his duties as representative director. Defendant F neglected his duties as auditor, thereby causing damage to the instant savings bank by causing the instant savings bank to do so.

B. Meanwhile, the Defendants asserted to the effect that they shall not be liable for the loans No. 39 and 56 under the instant exemption agreement. However, the validity of the instant stock transfer agreement is only limited to those between the shareholders (transferor) who are parties to the instant contract and the savings bank (as the trustee in bankruptcy). It cannot be asserted that the Plaintiff, the trustee in bankruptcy of the savings bank of this case, and since the instant loan No. 39 violates the Mutual Savings Banks Act, the Defendants’ responsibility cannot be deemed as exempted pursuant to the exemption agreement.

C. Therefore, the Defendants, as the representative director and auditor of the savings bank of this case, are liable for damages incurred due to the said failure to perform their duties. This liability is a default liability due to the delegation relationship, and its extinctive prescription period is ten years. Thus, the Defendants’ claim for short-term extinctive prescription regarding the claim for damages caused by the Defendants’ tort

4. However, examining the reasoning of the lower judgment and the above facts in light of the legal principles as seen earlier and the records, the lower court’s determination that recognized the Defendants’ liability for damages is difficult to accept for the following reasons.

A. If an executive officer of a financial institution conducted a loan examination under the trust and good faith for the largest interest of the company in accordance with a reasonable procedure with reasonable information in light of the circumstances, the officer’s business judgment is within the permissible scope of discretion, unless the decision-making process is considerably unreasonable (see, e.g., Supreme Court Decision 2009Da80521, Oct. 10, 13, 201). In relation to the loans of this case 56, the Defendants did not violate any Act and subordinate statutes, and there is considerable room to deem that the Defendants reviewed the loans beyond the ordinary loan procedure or that the Defendants conducted a business judgment related to the loans within the permissible scope of discretion due to the circumstance that the lower court’s decision-making process and contents of the loans are difficult to readily conclude, and therefore, even if the savings bank of this case was damaged due to the failure to recover part of loans to AC, it is insufficient to deem that the Defendants neglected the duty of due care or duty of due diligence as the representative director and auditor.

B. (1) In addition, even if the Defendants are liable for damages due to failure to perform their duties under Articles 399 and 414 of the Commercial Act with respect to the loans No. 39 of this case, with respect to the loans No. 56 of this case, they may be exempted from the consent of all shareholders. The lower court did not clearly determine the Defendants’ assertion that the Defendants were exempted from the liability of shareholders and executives with respect to loans No. 39 and No. 56 of this case with the consent of all shareholders who are assignees under the exemption agreement

(2) According to the instant exemption agreement, the Savings Bank, while entering into the instant savings bank’s stock transfer agreement, expressed its explicit intent to exempt existing stockholders and executives from liability with respect to the instant savings bank’s total issued stocks before December 30, 2005, as a transferee of the instant savings bank’s total issued stocks. Moreover, such expression of intent was maintained as it is until the Savings Bank actually acquired the total issued stocks of the instant savings bank, and then disposes of outstanding loans No. 39 and 56 until it disposes of its bad debts. Ultimately, it is reasonable to view that with respect to loans No. 39 and 56, which were made before December 30, 2005 by the savings bank that acquired the total issued stocks of the instant savings bank, the Defendants were legally exempted from liability under Articles 399 and 414 of the Commercial Act.

C. Meanwhile, the liability to be exempted with the consent of the savings bank is not a liability for nonperformance due to delegation relationship and a tort liability. Thus, if the Defendants’ tort liability is recognized with respect to loans Nos. 39 and 56, the liability for damages cannot be exempted with the exemption agreement in this case.

However, in light of the fact that the savings bank handled outstanding loans on June 26, 2007 and June 12, 2006 and 56 loans on June 26, 2006 after all the shares issued and management rights of the savings bank of this case were acquired, the savings bank of this case can be deemed to have known all of the damages and the perpetrator around June 26, 2007. However, the savings bank of this case filed the lawsuit of this case against the Defendants after the lapse of the short-term extinctive prescription period of three years thereafter.

Therefore, even if the Defendants are liable for damages due to a tort in relation to loans No. 39 and 56, the liability for damages seems to have expired by prescription, barring any special circumstance.

5. Nevertheless, without sufficiently examining the above circumstances, the lower court rejected all the Defendants’ assertion of exemption from liability and concluded that the Defendants are liable for damages with respect to loans Nos. 39 and 56, and partly accepted the Plaintiff’s claim against the Defendants.

Therefore, this judgment of the court below is erroneous in the misapprehension of legal principles as to a good manager of a financial institution, exemption from liability to directors and auditors, and failure to exhaust all necessary deliberations, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

6. Therefore, without examining the remaining grounds of appeal, we reverse the judgment of the court below, and remand the case 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 Jae-young

Justices Kim Yong-deok

Justices Kim Jae-han

Justices Lee Dong-won