In a case where a joint mortgagee has been apportioned part of the secured debt out of the proceeds from the sale of part of the immovable property, which is the object of the joint security, through the auction, public sale, expropriation or rehabilitation procedure, etc. conducted by another person, whether he/she may again exercise the right to preferential reimbursement as a joint mortgagee within the scope of the initial maximum debt amount regarding the remainder of the secured debt in the realization procedure for the remaining immovable property, such as an auction, etc. (negative), and the scope of the right to preferential reimbursement that may be exercised as a joint mortgagee regarding the remainder of the object of the joint security (=the remainder of the maximum debt amount minus the amount preferentially reimbursed out of the initial maximum debt amount) / Whether such legal principle likewise applies to a case where the secured debt exceeding

In the event that a number of real estate which is the object of a joint mortgage is simultaneously sold at the same time, the joint mortgagee may only satisfy the preferential right to payment regardless of the amount paid out of the auction proceeds of any real estate. However, the owners of each real estate or junior mortgagee and other creditors have a significant interest in whether the proceeds of the auction proceeds of any real estate are distributed to the joint mortgagee. In the case of so-called simultaneous dividends at the same time, Article 368(1) of the Civil Act, the purpose of Article 368(1) of the same Act is to coordinate the interests of the owners of each real estate and junior mortgagee and other creditors by distributing the responsibility of each real estate to the extent that it does not infringe upon the right to choose a joint mortgagee and the right to payment, and further, Article 368(2) of the same Act also provides for a subrogation system, thereby protecting the subordinate mortgagee who suffers disadvantage due to the exercise of the right to payment of all the real estate which is the object of a joint mortgage.

Article 368 of the Civil Act shall also apply to joint collateral mortgages, and the same shall also apply to cases where a joint mortgagee has received part of the secured debt out of the proceeds from the realization of real estate, etc. from the auction and public sale procedure, expropriation procedure, rehabilitation procedure, etc. (hereinafter “auction procedure”) that is commenced by another person as well as from the execution of the right to collateral by the joint mortgagee.

If simultaneous apportionment takes place with respect to immovable property provided with a joint collateral, the mortgagee shall divide the secured debt within the scope of the maximum debt amount and be apportioned in proportion to the proceeds from the realization of each immovable property pursuant to Article 368(1) of the Civil Act, and shall not be apportioned apportioned repeatedly equal to the maximum debt amount with respect to each immovable provided with a joint collateral security.

Therefore, even in a case where a simultaneous apportionment takes place with respect to real estate provided as joint collateral, construing that the joint mortgagee cannot be apportioned repeatedly from the proceeds from the realization of each real estate provided as joint collateral, as in the case of simultaneous apportionment, accords with the purport of Article 368(1) and (2) of the Civil Act.

Therefore, in cases where a joint mortgagee has been apportioned part of the secured debt out of the proceeds from the realization of part of the immovable property provided as joint collateral through the realization procedure, such as an auction conducted by a third party, the right to preferential reimbursement cannot be again exercised in the realization procedure for the remaining immovable property provided as joint collateral. It is reasonable to interpret that the scope of the right to preferential reimbursement, which may be exercised as joint collateral mortgagee with respect to the remaining immovable property provided as joint collateral, is limited to the remaining maximum debt amount less the amount preferentially reimbursed from the initial maximum debt amount, regardless of whether the secured debt is determined or not. This legal doctrine likewise applies to cases where the secured debt exceeding the maximum debt amount is not the principal but the interest and delay damages.

Articles 357 and 368 of the Civil Act

Supreme Court Decision 2005Da14502 Decided October 27, 2006 (Gong2006Ha, 1991) Supreme Court Decision 2008Da72318 Decided December 10, 2009 (Amended by Act No. 2011Da68012 Decided January 12, 2012) Supreme Court Decision 201Da36040 Decided April 10, 2014 (Gong2014Sang, 1030) Supreme Court Decision 2015Da50637 Decided September 21, 2017 (Gong2017Ha, 1957)

DK Newcom Co., Ltd. (Attorney Kim Young-young, Counsel for the defendant-appellant)

Busan Bank (Law Firm Democratic, Attorneys Yoon Jae-sik et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2012Na33107 decided February 1, 2013

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1 and 4

For the reasons indicated in its holding, the lower court determined that (1) the Defendant’s joint collateral security (hereinafter “instant joint collateral security”) as a rehabilitation security right within the assessed value of the instant real estate No. 1 in the rehabilitation procedure (hereinafter “the instant rehabilitation procedure”) on the Nene (hereinafter “Nlusty”) as the obligor and owner of the real estate listed in the [Attachment 1] List of the lower judgment’s judgment (hereinafter “the instant real estate No. 1”) was based on the recognition of the joint collateral security right within the assessed value of the instant real estate No. 1, and accordingly, received KRW 4,109,272,480 in total from the proceeds of business transfer, including the instant real estate No. 1 in accordance with the rehabilitation plan in the instant rehabilitation procedure, based on which the Defendant received KRW 4,109,272,480 from the proceeds of sale of business, including the instant real estate under the rehabilitation plan.

Examining the reasoning of the judgment below in light of the relevant legal principles and evidence duly admitted, the judgment of the court below is acceptable. Contrary to the allegations in the grounds of appeal, the Defendant did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules or by exceeding the bounds of the principle of free evaluation of evidence against the principle of logic and experience.

2. As to the grounds of appeal Nos. 2 and 3

A. (1) In a case where a joint mortgagee is apportioned or reimbursed part of the secured debt out of the proceeds from realizing part of the immovable property provided as joint collateral or from expropriation compensation, etc. through the auction, public sale, expropriation or rehabilitation procedure, etc. (hereinafter “auction procedure”), the issue is whether he/she may again exercise the right to preferential reimbursement as a joint mortgagee with respect to the remaining secured debt within the scope of the initial maximum debt amount in the realization procedure for the remaining immovable property provided as joint collateral, as a joint mortgagee, within the scope of the initial maximum debt amount.

(2) Article 368(1) of the Civil Act provides, “Where a mortgage has been created on several immovables as security for the same claim, if the proceeds of the auction are to be distributed at the same time, the apportionment of the claim shall be determined in proportion to the proceeds of the auction of each immovables.” Paragraph (2) of the same Article provides, “If the proceeds of the auction of part of the immovables are to be distributed first, the proceeds of the auction may be paid out of the proceeds of the auction. In this case, the mortgagee next in the auction of the immovables may exercise the mortgage by subrogation of the mortgagee to the extent of the amount which the latter would have received out of the proceeds of the auction of other immovables, in accordance with

In the event that a number of real estate which is the object of a joint mortgage is simultaneously sold at the same time, the joint mortgagee may only have the right to preferential reimbursement regardless of the amount of the auction proceeds of any real estate received from the joint mortgagee, but the owners of each real estate or junior mortgagee and other creditors have a significant interest in whether the proceeds of the auction proceeds of any real estate are distributed to the joint mortgagee. In the case of so-called simultaneous dividends distributed at the same time from the proceeds of the entire proceeds of the auction proceeds of the real estate subject to a joint mortgage, Article 368(1) of the Civil Act, the purport of Article 368(1) of the Civil Act is to coordinate the interests of the owners of each real estate and junior mortgagee and other creditors by distributing the responsibility of each real estate to the extent that it does not infringe upon the right to choose a joint mortgagee and the right to preferential reimbursement, and further, Article 368(2) of the same Act also provides for a subrogation system and to protect the subordinate mortgagee who suffered disadvantage due to the exercise of the right to choose a joint mortgagee (see, e.g.

Article 368 of the Civil Act also applies to a joint collateral security, and also applies to a case where a joint collateral mortgagee, as well as a case where he/she voluntarily executes a collateral security and is apportioned part of the secured debt out of the proceeds from the realization of an auction, etc. commenced by another person, prior to other right holders (see, e.g., Supreme Court Decisions 2005Da14502, Oct. 27, 2006; 2013Da36040, Apr. 10, 2014).

If simultaneous apportionment takes place with respect to immovable property provided with a joint collateral, the mortgagee shall divide the secured debt within the scope of the maximum debt amount and be apportioned in proportion to the proceeds from the realization of each immovable property pursuant to Article 368(1) of the Civil Act, and shall not be apportioned apportioned repeatedly equal to the maximum debt amount with respect to each immovable provided with a joint collateral security.

Therefore, even in a case where a simultaneous apportionment takes place with respect to real estate provided as joint collateral, construing that the joint mortgagee cannot be apportioned repeatedly from the proceeds from the realization of each real estate provided as joint collateral, as in the case of simultaneous apportionment, accords with the purport of Article 368(1) and (2) of the Civil Act.

(3) On the contrary, even if a joint mortgagee was apportioned part of the secured debt out of the proceeds from the realization of a part of the immovable property subject to joint collateral that was commenced by another person during the realization procedure, such as an auction, etc. regarding a part of the immovable property subject to joint collateral security, the following unreasonable results arise if it is deemed that the joint mortgagee may again exercise the right to preferential reimbursement regarding the whole amount of the initial maximum debt amount that has not been reduced in the realization procedure of other immovable property

(A) A person who seeks to acquire a subordinate mortgage on an immovable property on which a senior priority mortgage is established shall consider only the value of the collateral equivalent to the maximum debt amount of the joint collateral mortgage out of the proceeds from the sale of all the objects of the senior priority mortgage as the share of the joint collateral mortgagee, and the remaining collateral value as his/her own share shall be acquired. However, if the joint collateral mortgagee is able to repeatedly distribute the amount equivalent to the initial maximum debt amount for each object of the joint collateral mortgage, it may cause unexpected damages to the person who acquired the subordinate priority mortgage, and may reduce the scope of subrogation under Article 368(2) of the Civil Act or reduce the scope of subrogation. As such, in this case, it is contrary to the purport of Article 368(2) of the Civil Act to protect the mortgagee who suffered disadvantages due to the exercise of the joint collateral mortgagee’s right to exercise the right to exercise the right to exercise the right to exercise the right to choose a senior priority mortgage.

(B) In a case where a joint collateral security has been established on a real estate owned by a debtor and a real estate owned by a person who has joint collateral security, among others, if the joint collateral security has been distributed out of the proceeds of realizing the real estate owned by a person who has joint collateral security, the joint collateral security holder shall obtain by subrogation the joint collateral security on the real estate owned by the debtor within the extent of the value apportioned. However, even in such a case, the joint collateral security holder shall have the right to preferential reimbursement in relation to the property owned by a person who has joint collateral security (see Supreme Court Decisions 93Da25417, May 10, 1994; 2001Da2426, June 25, 2004; 201Da9013, Jun. 10, 2011). However, if some of the dividends are distributed, if the joint collateral holder is deprived of the right to preferential reimbursement on the real estate owned by a person who has joint collateral security within the scope of the initial maximum debt amount not reduced.

(C) In particular, in a case where a real estate, which is the object of the joint collateral security, is owned by the same person as the said person’s property, the said person’s property to secure another’s property belief that the responsibility to be borne by the said person does not exceed the maximum debt amount of the said joint collateral security. If the joint mortgagee, solely on the ground that the distribution was made, can be repeatedly apportioned out of the proceeds from the realization of each joint collateral security, the scope of liability for the property to secure another person’s property may be extended irrespective of his/her intent. Furthermore, in a case where the secured debt of the joint collateral security is not determined due to the joint mortgagee’s passive participation in the auction procedure for a part of the real estate, which is the object of the joint collateral security, and thus, if the joint mortgagee is able to be apportioned repeatedly equal to the maximum debt amount of the remaining real estate, the scope of liability for the property to secure another person’s property, including the secured debt that has been continuously incurred during the auction procedure for the real estate, is completely inconsistent with the expectation of the maximum debt amount.

(4) Therefore, in cases where a joint mortgagee has been apportioned a part of the secured debt out of the proceeds from the sale of part of the immovable property provided as joint collateral through the realization procedure of an auction, etc. conducted by a third party, the right to preferential reimbursement cannot be again exercised as a joint mortgagee in the realization procedure of the remaining immovable property provided as joint collateral. It is reasonable to interpret that the scope of the right to preferential reimbursement that can be exercised as a joint mortgagee with respect to the remaining immovable property provided as joint collateral is limited to the remaining maximum debt amount after deducting the amount preferentially reimbursed from the initial maximum debt amount, regardless of whether the secured debt is determined or not (see, e.g., Supreme Court Decisions 2005Da14502, Oct. 27, 2006; 2011Da68012, Jan. 12, 2012; 2015Da50637, Sept. 21, 2017).

(5) On the contrary, Supreme Court Decision 2008Da72318 Decided December 10, 2009, which held that, in a case where an auction is conducted by dividing a part of the immovable property subject to joint collateral, the joint mortgagee may again exercise the right to preferential reimbursement during the realization procedure of the auction, etc. on the remaining immovable property, even if the sum of the principal, interest, and delay damages apportioned during the preceding auction procedure exceeds the maximum debt amount, as a result, the joint mortgagee may subsequently exercise the right to preferential reimbursement within the extent inconsistent with this Opinion.

B. The lower court, based on its reasoning, determined as follows.

(1) In the instant rehabilitation procedure, which is a prior realization procedure, the Defendant recognized the joint collateral security right within the appraised value of the instant real estate No. 1, which is part of the pertinent real estate, as a part of the pertinent real estate, regarding the joint collateral security right. Based on such recognition, the Defendant was preferentially reimbursed KRW 4,109,272,480 according to the rehabilitation plan.

(2) As to the amount preferentially reimbursed as above, the Defendant cannot again exercise the right to preferential reimbursement as a joint mortgagee in the public sale procedure (hereinafter “instant public sale procedure”) conducted after the completion of the instant rehabilitation procedure with respect to the real estate listed in the [Attachment 2] List of the lower judgment, which is another purpose of the instant joint collateral security, owned by the Blue Ballast Co., Ltd. (hereinafter “instant real estate”).

(3) Therefore, the amount preferentially reimbursed during the rehabilitation procedure of the instant case according to the joint collateral security shall be deducted from the maximum debt amount of the joint collateral security of the instant case. The Defendant may, during the public sale procedure of the instant case, be apportioned to the secured debt of the instant joint collateral security only within the scope of the maximum debt amount after the deduction.

C. Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court appears to be based on the legal doctrine as seen earlier, and it did not err by misapprehending the legal doctrine regarding the scope of the maximum debt amount of the joint collateral security that can be preferentially reimbursed, contrary to the allegation in

In addition, according to the legal principles as seen earlier, the issue of whether the secured debt of the instant joint collateral on real estate No. 2 in the instant case is finalized due to the decision on commencing the rehabilitation procedure for the debtor, the debtor, is not affected by the above conclusion of the court below. Thus, the argument of the ground of appeal No. 2 as to the confirmation of the secured debt cannot be reversed without the need to determine whether the secured debt is reasonable.

3. Conclusion

Therefore, the appeal is 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.

Justices Kim Yong-soo (Presiding Justice)