[1] The contents of the obligation or responsibility to be borne by the chief director or director of the school foundation when he/she becomes aware of the unlawful diversion of the budget in the course of the resolution of the budget bill covering the expenses to be borne by the corporate accounting from the revenue belonging to the school expenses accounting and the performance of duties

[2] Where the competent agency requests the school juristic person to correct the reasons under the subparagraphs of Article 20-2 (1) of the Private School Act and grants a period exceeding 15 days under Article 20-2 (2) of the same Act, the time limit for the school juristic person to be exempted from the cancellation of the approval for taking office.

[1] According to Article 29(1), (4), and (6) of the Private School Act, Article 21(2) of the former Regulations on Finance and Accounting of Private School Institutions (amended by Ordinance of the Ministry of Education, Science and Technology No. 93, Feb. 9, 2011; hereinafter “former Accounting Rules”), accounts of school juristic persons shall be divided into accounts of schools established and operated by them, and accounts of juristic persons shall be divided into accounts of school expenses and accounts of affiliated hospitals (limited to cases where affiliated hospitals exist), and revenues belonging to school expenses shall not be transferred or lent to other accounts except where principal and interest are repaid. In addition, the budget of the school is organized and executed by the principal, but the budget of the school that belongs to the school established and submitted by the principal is also subject to resolution of the board of directors of the school juristic person (Article 16 of the former Accounting Rules). In addition, if the chief director of the school juristic person and directors of the school juristic person have to take necessary corrective measures such as income from the school juristic person’s own account and other related accounts, it shall not be subject to the foregoing budget.

[2] Where the competent agency requests a school juristic person to correct the reasons under each subparagraph of Article 20-2 (2) of the Private School Act and grants a certain period of correction, if the period of correction is less than 15 days, it shall not be effective within the extent that it conflicts with Article 20-2 (2) of the Private School Act, and it shall not be deemed a ground for revocation of approval of taking office if the correction is completed within 15 days from the date of request for correction. However, it is reasonable to view that the school juristic person should complete the correction by the expiration date of the period of correction, barring any other special circumstances, in cases where the competent agency determines that the period exceeding 15 days under Article 20-2 (2) of the Private School Act is necessary to correct the pertinent reason and grants a period exceeding 15 days as the correction period

[1] Articles 27, 29(1), (4), and (6) of the Private School Act; Article 21(2) of the former Rules on the Finance and Accounting of Private School Institutions (amended by Ordinance of the Ministry of Education, Science, and Technology No. 93, Feb. 9, 201); Article 61 of the Civil Act / [2] Article 20-2(1) and (2) of the Private School Act

Plaintiff 1 and two others (Law Firm Protection, Attorneys Lee Young-gi et al., Counsel for the plaintiff-appellant)

Seoul Special Metropolitan City Superintendent of Education (Law Firm Yang Jae, Attorneys Choi Byung-mo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2011Nu46325 decided July 4, 2012

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

The grounds of appeal are examined.

1. As to the grounds of appeal on the point of use other than the purpose of the budget of the school accounting (the grounds of disposition in the original judgment)

A. According to the reasoning of the lower judgment, the lower court recognized that the head of ○○ High School, which is a school established and operated by the non-party school foundation (hereinafter “non-party school foundation”) with which the Plaintiffs were directors, executed the fact of spending KRW 7,602,00, total sum of KRW 30,636,700, which occurred from March 30 to March 19, 2010 from June 30, 2006 to March 19, 2010 as compensation and rent 23,034,70,700, which occurred from the non-party school foundation’s non-party school foundation’s non-party school foundation (hereinafter “non-party school foundation”)’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation’s non-party school foundation.

Furthermore, the revocation of the approval of the officer of the school foundation on the ground that the officer of the school foundation violates the provisions of the Private School Act, etc. or fails to comply with the order issued under such provisions shall be limited to the case where the competent agency fails to comply with such request even after 15 days have elapsed from the date on which the competent agency requested correction (Article 20-2(2) of the Private School Act). Under the premise that it is reasonable to interpret that the approval of the officer of the school cannot be revoked if the competent agency complies with the request for correction within 15 days from the date following the expiration date of the pertinent period where the period for correction was different at the time of the request for correction, and on April 14, 2011, the Defendant requested the school foundation to take measures against the instant disposition ground 5 against the school foundation to preserve it, and to report the result along with relevant documentary evidence, and determined the correction period until May 2, 2011, the Plaintiffs’ request for correction cannot be approved as the grounds for revocation.

B. However, the lower court’s determination is difficult to accept.

According to Article 29(1), (4), and (6) of the Private School Act, and Article 21(2) of the former Accounting Rule, the accounts of school juristic persons shall be divided into accounts belonging to schools established and operated by them, and the accounts belonging to schools shall be divided into accounts of school expenses and accounts of affiliated hospitals (limited to cases where an affiliated hospital exists). Revenues belonging to school expenses shall not be transferred or lent to other accounts except where principal and interest are repaid. Furthermore, the budget belonging to a school shall be organized and executed by the principal, but the budget belonging to the school organized and submitted by the principal of the school shall also undergo a resolution of the board of directors of the school juristic person (Article 16 of the former Accounting Rule). Considering that the purport of the relevant provisions is generally followed by considering that the chief of the school juristic person and the directors of the school juristic person have the obligation to perform their duties with the care of a good manager under Article 61 of the Civil Act which applies mutatis mutandis under Article 27 of the Private School Act, the chief of the school juristic person or directors of the school shall not be obliged to take corrective measures as well as necessary in the process of budget.

Nevertheless, the lower court determined that the Defendant did not err in violating Article 29(1), (4), and (6) of the Private School Act, and Articles 16 and 21(2) of the former Accounting Rules, even if the Plaintiff, who was the president or director of the non-party educational foundation, knew that the expenses to be borne by the principal of the ○○ High School, as seen above, were illegally executed from the revenue belonging to the school expense accounts, and the Plaintiffs, who were the chief director or directors of the non-party educational foundation, knew or neglected it. In so doing, the lower court erred by misapprehending the legal doctrine on the scope of the duty of care or responsibility as a good manager

C. In addition, where the competent agency requests a school juristic person to correct the reasons under each subparagraph of paragraph (1) in accordance with Article 20-2 (2) of the Private School Act and grants a certain period of correction, if the period of correction is less than 15 days, it shall not be effective within the extent that it conflicts with Article 20-2 (2) of the Private School Act, and if the correction is completed within 15 days from the date of the request for correction, it shall not be considered as the reason for revocation of approval of taking office. However, if the competent agency determines that the correction of the relevant reason requires a period exceeding 15 days and grants a period exceeding 15 days as the period of correction, barring any other special circumstances, it shall be deemed that the school juristic person must complete the correction by the expiration date of the period of correction.

Therefore, in this case, the plaintiffs were clearly found to have not completed the correction from April 14, 201 to May 2, 201, which was 15 days after the date of the request for correction as to this part of the disposition, and it is evident that the defendant was included in the grounds for cancellation of approval of taking office by the defendant. Thus, as seen earlier, the court below held that the non-party school juristic person cannot be considered as the grounds for cancellation of approval of taking office on the ground that the non-party school juristic person completed correction as to this part of the disposition before 15 days after the expiration of the period of request for correction, which was issued by the defendant. In so doing, the court below erred by misapprehending the legal principles as to the period of request for correction under Article 20-2 (2) of

In addition, for the above reasons, the court below held that the cancellation of approval of taking office against the plaintiffs was illegal because it exceeded and abused the scope of discretion given to the defendant, on the grounds that the reasons for the above disposition were excluded from the grounds for revocation of approval of taking office, and only the remaining reasons recognized as stated in its reasoning. Thus, it is clear that the court below's error affected the judgment, and the ground for

2. As to the ground of appeal on the point of illegal compilation of budget (the ground of disposition 6 in the original judgment)

According to the reasoning of the lower judgment, the lower court determined that the Defendant’s act did not report relevant documents to the competent agency while borrowing and using the amount of ○ High School’s ○ High School’s 140 million won in 2008, and KRW 130 million in 2009 (referring to the use of the revenue in advance for the following year in cases where the revenue and revenue fall short of the expenditure) as required as the ground for disposition in this part, and did not report the relevant amount to the competent agency. The lower court determined that the Defendant’s act did not constitute a violation of Article 29(6) of the Private School Act or Articles 12, 16, and 21(2) of the former Accounting Rules, although it was found that the ○ High School incorporated KRW 130 million in the revenue and expenditure budget of 2010, and that such act did not constitute a violation of Article 29(2) of the Private School Act or Articles 12, 16, and 21(2) of the former Accounting Rules.

In light of the above provisions and records, we affirm the judgment of the court below as just, and there is no violation of law as otherwise alleged in the grounds of appeal. The argument that the above act of compromise violates other relevant Acts and subordinate statutes, such as Article 29(6) of the Private School Act or Articles 12, 16, and 21(2) of the former Accounting Rules, not Article 16(1)1 of the Private School Act, cannot be a legitimate ground of appeal as a new assertion that was not asserted by the court below.

In light of the relevant statutes and records, the court below's determination that the failure of Plaintiff 1, the chief director of the board of directors, to comply with the procedures stipulated in Article 12 of the former Accounting Rules, etc. in compiling the budget in 2009 and 2010 does not constitute grounds for cancellation of approval of taking office for the remaining plaintiffs except the above plaintiffs is justifiable. There is no violation of law as asserted in the grounds of appeal

3. As to the grounds of appeal on the point of non-registration of property or failure to submit a report on its capital increase (the grounds of disposition in the original judgment)

According to the reasoning of the judgment below, the court below acknowledged the fact that the non-party school foundation acquired buildings as indicated in the judgment of the court below and delayed the registration thereof or the report of capital increase to the competent agency based on the adopted evidence, and determined that the execution of the procedure for property acquisition under Articles 44 and 45 of the former Accounting Rules is a duty given to the president of the school foundation, so the remaining plaintiffs except the plaintiff 1 cannot be used as the reason for cancellation of approval of taking office.

In light of the relevant provisions and records, the fact-finding and judgment of the court below are justified, and there is no violation of law as alleged in the grounds of appeal.

4. As to the ground of appeal as to the improper management of fundamental property (the ground of appeal Nos. 8, 9)

According to the reasoning of the judgment below, the court below determined that the act of the non-party school foundation allowing the non-party school foundation to use its own property free of charge to a third party does not constitute a violation of Articles 44 and 45 of the former Accounting Rules as to the grounds for disposal. In light of the above provisions and the records, the judgment of the court below is justified, and there is no violation of law as asserted in the grounds for

5. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Shin (Presiding Justice)