In the case of endorsement made after the due date, whether it can be set up against the endorsement made after the due date or against the respondent (negative) by a personal defense (a defense that the bill was issued as a combined bill and the bill secured by it was rejected)

A bill obligor may set up against the endorser with personal defense against the endorser of the endorsement after the due date. However, barring special circumstances, barring any defense against the endorser, the endorser cannot set up against the endorser with defense against the latter. Therefore, with respect to the grounds for which the endorser could not set up against the endorser at the time of the acquisition of the bill, even though the endorser knew of such grounds at the time of the acquisition of the bill, it cannot be set up against the endorser. Thus, in case where the endorser A transferred a promissory note issued by Nonparty B to Nonparty C and presented the payment to Nonparty C at the due date, but he again re-endorseed and transferred it to Plaintiff Byung after the payment was refused, Defendant A cannot set up against the endorser C, unless he asserts and proves Byung's bad faith, and therefore, Defendant A cannot set up against the assignee C's bad faith, regardless of his succession.

Articles 17 and 20 of the Bills of Exchange and Promissory Notes Act

Attorney Cho Jong-jin et al., Counsel for the plaintiff-appellant

[Defendant-Appellant] Howon Construction Industry Co., Ltd., Counsel for defendant-appellant

Seoul Civil District Court Decision 89Na4238 delivered on June 21, 1989

The appeal application is dismissed.

With respect to the grounds for filing an appeal:

Although the proviso of Article 20 (1) of the Bills of Exchange and Promissory Notes provides that the endorsement after the completion of the protest for non-payment or after the lapse of the period for drawing up the protest for non-payment is only effective, the endorsement stipulated in the above Article 20 (1) of the Bills of Exchange and Promissory Notes Act provides that there is only the effect of transferring the rights of the endorser to the endorser as they are, and the status of the endorser is succeeded, that is, the endorsement after the due date is only effective. Therefore, the obligor may set up a defense against the endorser as to the person who has been endorsed after the due date. However, barring special circumstances, unless there are special circumstances, it cannot be set up against the endorser with defense against the endorser, and therefore, as to the grounds for which the endorser could not set up against the endorser because he was bona fide at the time of the acquisition of the bills, it shall be deemed that the endorser could not set up against the endorsee even if the endorser

However, according to the legal determination by the court below, the plaintiff issued the bill of this case from the non-party corporation Choung Bank Co., Ltd. (hereinafter the non-party corporation) on June 8, 198, and the defendant issued it to the purification engineering corporation (hereinafter the non-party company) on February 17 of the same year, and the non-party company exempted the non-party company from the duty to prepare a certificate of non-payment and transferred it by endorsement to the non-party bank, and the non-party bank is currently holding the bill of this case on May 16 of the same year with the maturity of which payment was refused. Accordingly, the non-party bank shall be its endorser after the due date. However, as alleged by the defendant, at the time of the acquisition of the bill of this case, the non-party bank received the bill of this case as the security of the non-party company's issuance of the bill of this case on the non-party company's face value and issued the bill of this case as the non-party company's bill of this case as the collateral for the non-party company's own financing.

Therefore, the decision of the court below which rejected the defendant's above assertion and accepted the plaintiff's claim for the payment of the bill of this case is correct, and there is no violation of law of omission of judgment due to the exercise of right of explanation such as the theory of lawsuit and incomplete hearing.

Therefore, an application for appeal shall be dismissed. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Yong-ju (Presiding Justice)