Plaintiff (Attorney Noh Tae-type et al., Counsel for the plaintiff-appellant)

Tran Heavy Industries Co., Ltd and two others (Attorney Jeong-sung et al., Counsel for the plaintiff-appellant)

October 28, 2010

1. The instant lawsuit shall be dismissed.

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

As to the Plaintiff’s vessels listed in the attached list, Defendant Tran Heavy Industries Co., Ltd. will implement the registration procedure for cancellation of the registration of the establishment of a neighboring mortgage completed by receipt No. 36 of Mar. 7, 1998, Defendant 2, the registration of the establishment of a neighboring mortgage completed by receipt No. 20 of May 22, 2002 in the same court, Defendant 3 completed by receipt No. 4 of Feb. 8, 2006 in the same court.

1. Basic facts

A. As to the instant vessel indicated in the separate sheet, Nonparty 1 (the Nonparty in the judgment of the Supreme Court) completed the registration of ownership transfer on April 7, 200, and subsequently Nonparty 2 completed each registration of ownership transfer on June 4, 2008 and the Plaintiff completed each of the registration of ownership transfer on December 5, 2008.

B. As to the instant vessel, on October 13, 1997, after completing the registration of the establishment of a neighboring mortgage with the maximum debt amount of KRW 680,00,000 on October 28, 2002, the Young-si Fisheries Cooperatives completed on October 28, 2002 the registration of establishment of the said right to collateral security on the following day on the grounds of a contract transfer to the Young-si Fisheries Cooperatives. Defendant Yang Yong Heavy Industries Co., Ltd. completed the registration of establishment of a neighboring mortgage on March 7, 1998 with the maximum debt amount of KRW 38,50,000 on March 7, 1998, Defendant 2 completed the registration of establishment of a mortgage on May 22, 2002 with the maximum debt amount of KRW 70,000,000, and Defendant 3 completed the registration of establishment of a mortgage on February 8, 2006 as stated in the purport of the claim.

C. As to KRW 350,00,000 and the amount of KRW 150,000 among them, Defendant 3 filed an application for voluntary commencement of auction of the instant vessel at 2% per annum from April 1, 2005 to the date of full payment, and as to KRW 200,000,000 among them, the amount of interest at the rate of 12% per annum from March 1, 2006 to the date of full payment, Defendant 3 received an application for voluntary commencement of auction of the instant vessel at 2080, Daegu District Court racing-Support 2007, and around April 23, 2007, at the same time, received a decision on commencement of a vessel auction from the above court to the date of full payment.

In the above auction procedure, the appraisal price of the instant vessel was calculated as KRW 229,152,00 as of July 6, 2007.

D. Accordingly, Nonparty 1 filed a lawsuit against Defendant 3 on the ground that the secured obligation of Defendant 3 was extinguished, such as the claim for cancellation of the right to collateral security (2007Gahap569). However, on August 29, 2008, upon being sentenced to the judgment of dismissal from the above court, Nonparty 1’s appeal and appeal against the above judgment were all dismissed, and the above judgment became final and conclusive.

E. Meanwhile, in addition to filing the above lawsuit, Nonparty 1 submitted the deposit insurance policy of KRW 400,000,000 corresponding to the claim amount of the above ship auction application case of Defendant 3 and the deposit certificate of KRW 50,000,000, which was deposited by the Daegu District Court in 2007 as the deposit money of KRW 235,000,000, which is equivalent to the deposit amount of the above ship auction application case of Defendant 3, as security following the suspension of the above ship auction, and filed an application for a suspension of compulsory execution with the same court No. 2007Kagi143 on June 7, 207

The above non-party 1 again submitted the deposit guarantee insurance policy of KRW 215,00,00,00 corresponding to the claim and execution expenses of the YY-si Fisheries Cooperatives, which is the senior mortgagee of Defendant 3, as a collateral (hereinafter in this case, the above non-party 1 filed an application for the cancellation of the ship execution procedure with Daegu District Court racing-Support 2007tagi150, and on June 18, 2007, it was decided to revoke the ship execution procedure by the above court pursuant to Articles 269 and 181(1) of the Civil Execution Act.

F. Upon the determination of the claim for cancellation of the above right to collateral security, the distribution procedure was conducted with respect to the above case of the above case of the auction of the above vessel. On December 29, 2009, Daegu District Court and its racing branch made a distribution schedule with the content that on January 27, 2010, the above realization amount of KRW 215,00,000, the date of distribution of the above auction procedure, by converting the security from Seoul Guarantee Insurance Co., Ltd., the sale price of KRW 214,521,521, the sum of KRW 144,521,521, and the interest amount of KRW 209,29,57,471, the remainder of KRW 209,57,471, which is the actual amount to be distributed, was deducted from the execution cost.

[Ground for Recognition: Facts without dispute, Gap 2-1 through 8, Gap 3-1, 2, 3, Eul 1-2, 11, Eul 2, 3-2, Eul 3-5, 6, Eul 4-2, 3, 5, and the purport of the whole pleadings]

2. The plaintiff's assertion

A. At the auction procedure with respect to the instant vessel, the appraisal price of the vessel was approximately KRW 229,00,000,000, but Nonparty 1, who was the owner of the said vessel, filed an application for the cancellation of the enforcement procedure with respect to the instant vessel, and the said appraisal price was KRW 215,00,000, which is equivalent to the said appraisal price as security.

B. Therefore, the instant security ought to be deemed as a sale price in lieu of the subject matter of a ship’s execution, and the said deposit guaranty insurance policy became the same result as the sales price was paid in full upon realization. Therefore, each right of the Defendants’ vessel in relation to each of the instant security rights ought to be cancelled due to the full payment of the said sales price or the completion of the distribution procedure. Since the Plaintiff purchased the instant vessel and did not take over the Defendants’ mortgage, which is the burden on the instant vessel, while purchasing the instant vessel, the Defendants are liable to implement the procedure for registration of cancellation of each

3. Determination ex officio as to the legitimacy of a lawsuit

A. According to Articles 91(2) and 144(1)2 of the Civil Execution Act, which apply mutatis mutandis to the voluntary auction procedure for a ship, all mortgages on a ship sold on the ship shall be extinguished by sale, and when the sale price is paid, the junior administrative officer, etc. shall commission the purchaser to cancel the entry on the ship he/she did not take over.

B. In the case of this case, if the security of this case, as the plaintiff's assertion, is deemed to be the same as the sale price of the ship of this case, the sale price of this case was the same as the full payment of the sale price, and all the defendants' rights arising from the establishment of a neighboring mortgage and its establishment are extinguished. Each right to collateral security in the name of the defendants constitutes a description as to the share of the ship which the purchaser did not take over (see Supreme Court Decisions 88Meu6846, Jul. 25, 1989; 2007Da57459, Dec. 13, 2007; 2007Da57459, etc.).

Ultimately, even if the Plaintiff’s assertion is acknowledged as it is (it does not admit the Plaintiff’s assertion that the instant security should be the same as the proceeds from the sale of the instant vessel), each establishment of mortgage in the name of the Defendants is subject to the cancellation commission, and thus, the instant lawsuit seeking the cancellation of each of the above registrations is unlawful as there is no benefit of lawsuit (the Plaintiff, a registrar, filed an application for the ex officio request for the cancellation of the establishment of a mortgage in the name of the Defendants on the grounds of the foregoing reasons with respect to the establishment of a mortgage in the name of the Defendants, and if the application is not rejected or the request for cancellation is not made, it would be possible to obtain a judgment as to whether the Plaintiff’s assertion is legitimate, namely, whether the instant security has the same nature as the proceeds from the sale of the instant vessel, based on Article 5

4. Conclusion

Therefore, we decide to dismiss the lawsuit of this case and decide as per Disposition.

[Attachment]

Judges Transferability