Standard for determining whether to specify the collateral and the scope of the object in a contract for security for the so-called floating aggregate which takes the object of security for claims by deeming movable property with an increase or decrease as a single object.

Article 372 of the Civil Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Han-sung, Attorneys Park Jae-young and 1 other, Counsel for plaintiff-appellant)

Green Damage Insurance Co., Ltd. and one other (LLC, Attorneys Lee Jong-ok et al., Counsel for the plaintiff-appellant)

National Federation of Fisheries Cooperatives (Law Firm LLC, Attorneys Lee Hong-hoon et al., Counsel for the plaintiff-appellant)

Gwangju High Court Decision 2011Na4734 decided July 27, 2012

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

In the case of the so-called mortgage contract for the so-called collective object which takes the increase or decrease of a group of objects into consideration as one object of collateral security, it is necessary to specify the object in order to protect the third party from causing unexpected damage and to clarify legal relationship in advance so that the execution procedure does not unfairly delay. Thus, the object should be identified externally and objectively by means of the type, location or quantity designation, etc. of the object so that it can be distinguished from other objects of the collateral developer (see, e.g., Supreme Court Decision 88Meu2024, Dec. 26, 190; 2000Da723855, Mar. 14, 2003). The existence and scope of the object should be determined specifically by comprehensively taking into account various circumstances such as the whole contents of the contract on the type, place, quantity, etc. of the object, the entire contents of the contract on the type and quantity of the object, the intent of the contracting party, the nature of the object itself, the management and use method, etc. (see, judgment).

After compiling the adopted evidence, the lower court acknowledged the facts as indicated in its reasoning, and determined that, as the latter part of [Attachment 1] Nos. 1 and 2 of the lower judgment (hereinafter “the latter part of this case”) acquired by the Masung Shipbuilding Co., Ltd. to build each of the instant vessels is the object of the instant transfer security agreement, the Plaintiffs acquired the right to transfer security for the latter part of this case prior to the Defendant by means of an alteration of possession.

In light of the above legal principles, the judgment of the court below is just and acceptable in its conclusion. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the interpretation of the first and second security contract for transfer of movable property, the specification of collateral in the security contract for transfer of movable property, the validity of the issuance of a bill of lading, etc., nor errors in the misapprehension of legal principles as to

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)