Whether an execution deposit under Article 248(1) of the Civil Execution Act or Article 40(2)4 of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects may be made solely on the ground that a claim is seized under the National Tax Collection Act (negative)

According to Article 41 of the National Tax Collection Act, Article 44(1)4 of the Enforcement Decree of the same Act, Article 25(1) of the Enforcement Rule of the same Act, and Articles 227 and 229 of the Civil Execution Act, the seizure of monetary claims under the National Tax Collection Act and the seizure of monetary claims under the Civil Execution Act are different in effect. According to Articles 56 and 14(1) of the National Tax Collection Act and Article 235 of the Civil Execution Act, where multiple seizures occur, the effectiveness of a case involving multiple seizures is different. This difference arises from the fact that the procedure for collecting delinquent taxes is a procedure for prompt satisfaction of tax claims by an administrative agency, compared to the judicial resolution by repayment of allocation of general claims where compulsory execution procedures compete. In light of the difference between the effect of seizure under the National Tax Collection Act and the seizure under the Civil Execution Act, and the difference between the procedure for disposition on default and the procedure for compulsory execution, the seizure of claims pursuant to Article 248(1) of the Civil Execution Act and Article 40(2)4(2)4 of the Civil Execution Act are not included.

Articles 247(1), 248(1) and (4) of the Civil Execution Act; Article 40(2)4 of the Act on Acquisition of and Compensation for Land, etc. for Public Works; Articles 342 and 370 of the Civil Act

Supreme Court Decision 97Da43253 Delivered on April 27, 1999

Plaintiff (Attorney Sung-sung et al., Counsel for plaintiff-appellant)

1. A bankrupt person, a bankruptcy trustee, and one other (Attorney Choi Jae-soo, Counsel for the plaintiff-appellant)

Korea

Seoul High Court Decision 2003Na55709 Delivered on March 23, 2004

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

The grounds of appeal are examined (to the extent of supplement for supplemental appellate briefs not timely filed).

1. According to Article 248(1) of the Civil Execution Act, a third party obligor may deposit the full amount of monetary claims related to seizure, and according to Article 40(2)4 of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (hereinafter “Public Works Compensation Act”), when the payment of compensation is prohibited by seizure or provisional seizure, a project implementer may deposit the compensation at the deposit office in the location of the land, etc. to be expropriated or used by the commencement date of expropriation or provisional seizure. As such, the above Civil Execution Act and the Compensation for Public Works Projects Act do not specifically stipulate whether the seizure under the National Tax Collection Act is included in the seizure.

According to Article 41 of the National Tax Collection Act, Article 44(1)4 of the Enforcement Decree of the same Act, and Article 25(1) of the Enforcement Rule of the same Act, when the head of a tax office attaches claims, he/she shall notify the obligor of the claims to which the seizure is to be made. The notification of the seizure of claims requires the tax official to prohibit the obligor from performing his/her obligations with respect to the claims seized and to pay them. If such notification is made, the head of a tax office shall subrogate the obligee of the claims attached to the extent of national taxes, additional dues and expenses for disposition on default. Under the National Tax Collection Act, there is no system for collection order or assignment under the Civil Execution Act. Furthermore, according to Articles 227 and 229 of the same Act, if a monetary claim is to be seized, the court shall prohibit the obligor from collecting and receiving the claims, and the obligee shall be issued an order for collection in whole or in part with respect to the claims already seized by other agencies for disposition on default under the National Tax Collection Act.

In light of the above differences between seizure under the National Tax Collection Act and the effect of seizure under the Civil Execution Act, and differences between the procedure for disposition on default and the procedure for compulsory execution, the seizure of claims under the National Tax Collection Act shall be deemed not to include the seizure of claims under the premise of deposit under Article 248(1) of the Civil Execution Act and Article 40(2)4 of the Compensation for Public Works Act.

Therefore, in case where the execution deposit is made only on the ground of seizure under the disposition on default under the National Tax Collection Act, even if the project implementer reported the reason for deposit to the court under Article 248(4) of the Civil Execution Act, the completion period to demand a distribution under Article 247(1) of the Civil Execution Act cannot be said to have arrived

2. Examining the records in light of the above legal principles, since the head of Gangnambuk-gu, the project operator of this case, was deposited for execution pursuant to Article 40(2) of the Public Works Compensation Act and Article 248(1) of the Civil Execution Act on the ground that several recommendations were attached to the claim for compensation for losses of this case for the damages of this case, the execution deposit is null and void because it does not meet the requirements. Accordingly, even if the project operator of this case reported the reason to the court on April 15, 2003 pursuant to Article 248(4) of the Civil Execution Act on April 15, 2003, this does not have the effect as the completion period to demand a distribution under Article 247(1) of the Civil Execution

Therefore, barring special circumstances, such as the fact that the Defendant, the mortgagee of the non-party’s share in the real estate of this case, has already belonged to a third party other than the non-party who is the owner of each of the above shares, or that the said deposit has already been paid out to a third party, the Defendant, who is the right to collateral security against the non-party’s share in the real estate of this case, may be entitled to preferential repayment from the said deposit by exercising the right to subrogation by exercising the right to claim payment of the non-party’s deposit after April 15, 20

Nevertheless, under the premise that the above deposit made by the head of Gangnambuk-gu constitutes a lawful execution deposit under Article 248 (1) of the Civil Execution Act or Article 40 (2) 4 of the Compensation for Public Works Act, the court below held that the defendant's right to subrogation was no longer possible to exercise the right to claim the return of deposited goods by exercising the right to subrogation. Thus, the judgment of the court below is erroneous in the misunderstanding of legal principles as to the execution deposit under Article 248 (1) of the Civil Execution Act or Article 40 (2) 4 of the Compensation for Public Works Act, which affected the conclusion of the judgment. The ground of appeal pointing this out is with merit.

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court 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 Young-ran (Presiding Justice)