[1] The purport of Article 20 of the Trust Act prohibiting a set-off of claims belonging to trust property and obligations not belonging to trust property

[2] Whether it is permissible for a trustee to offset the original return claim or profit claim against the trustee at the time of termination of the trust with the inherent claim that the trustee has against the beneficiary as the automatic claim (affirmative in principle)

[3] The meaning of the principle of independence of trust property, and whether it is prohibited under the Trust Act to offset the beneficiary against the original refund claim, etc. against the trustee at the time of termination of the trust (negative)

[1] The purport of Article 20 of the Trust Act that "no claim belonging to the trust property and any obligation not belonging to the trust property shall be offset against the other party" is that the trustee holds a claim against the other party as the trustee of the trust in the form of a set-off relationship between the opposing claim held by the trustee against the individual and the other party in the form of a law. In this case, if the set-off is allowed by the trustee, the trustee's inherent obligation becomes extinct as the trust property, thereby causing the trustee to enjoy the benefit from the trust property, and thus, the trustee will prevent the reduction of trust property and protect

[2] Offset against a beneficiary's original return claim or profit-making claim, etc., which the beneficiary has against the beneficiary upon termination of the trust with the beneficiary's own claims as automatic bonds does not fall under the type of offset prohibited by Article 20 of the Trust Act, first of all, but does not fall under the type of offset prohibited by Article 20 of the Trust Act, and there is no risk of causing or causing the reduction of trust property due to such offset, and the beneficiary has an economic benefit that discharges his/her own obligations within the scope of equal amount with the original return claim extinguished by offset. Article 42 of the Trust Act recognizes the trustee's right to receive compensation from the trust property or the beneficiary who has paid the trust expenses once the trustee's own property once he/she repaid the obligation belonging to the trust property with the trustee's own property, and it is not reasonable expectation that the trustee would offset the beneficiary's original return claim, etc. arising from transactions with the beneficiary with the beneficiary with an automatic bond. In light of the above, such offset constitutes a legitimate and effective relation between the beneficiary's opposing claim of the beneficiary and the trust property.

[3] The principle of independence of trust property means that the trustee's proprietary property and trust property should be managed separately in order to prevent the decline of trust property and protect the beneficiary, etc., and both parties should be treated as separate independent, and it does not mean that the trust property itself has a separate legal personality distinct from that of the trustee, the owner or the nominal owner. Thus, it cannot be said that set off against the trustee's original refund claim, etc. against the trustee when the trust is terminated by the trustee with its own claims against the beneficiary as automatic bonds cannot be said to be prohibited under the Trust Act solely on the ground that the principle of independence of trust property applies to the trust relation.

[1] Article 20 of the Trust Act, Article 492 of the Civil Act / [2] Articles 20 and 42 of the Trust Act, Article 2 of the Civil Act, Article 492 of the Civil Act / [3] Articles 20 and 30 of the Trust Act, Article 492 of the Civil Act

Non-party to the bankruptcy trustee of Daewoo Heavy Industries Co., Ltd. (Attorney Lee Jong-soo, Counsel for the plaintiff-appellant)

Korean Investment Trust Securities Co., Ltd. (Attorney Cho Yong-sik, Counsel for defendant-appellant)

Seoul High Court Decision 2004Na35320 decided June 30, 2005

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 in case of supplemental appellate briefs not timely filed).

Article 20 of the Trust Act provides, “The claims belonging to the trust property and those not belonging to the trust property shall not be offset against any claims belonging to the trust property.” The purport of Article 20 of the Trust Act is that the trustee, as the trustee of the trust, seems to be in conflict between the opposing claims held by the other party against the trustee and the other party in legal form, which may offset against the other party. However, if the offset is allowed by the trustee, it would result in the trustee’s loss of the trustee’s own obligations as the trust property to the benefit of the trust property by extinguishing them from the trust property. Thus,

However, a set-off against the original claim to be returned or profit-making claim, etc. (hereinafter “original claim, etc.”) against the trustee at the time of termination of the trust by an individual’s own claim against the beneficiary does not fall under the type of set-off prohibited by Article 20 of the Trust Act. In addition, such set-off does not fall under the category of set-off prohibited by Article 20 of the Trust Act, and there is no risk that the decrease in the trust property would occur or would occur, the beneficiary would enjoy economic benefits that discharge his/her own obligation within the extent of equal amount with the original claim to be extinguished by set-off. Article 42 of the Trust Act recognizes the trustee’s right to receive compensation from the trust property or the beneficiary where the trust benefits accrue after the trustee repaid his/her own obligation to the trustee as a whole with the trust property. In light of the fact that the expectation of set-off against the beneficiary’s obligation arising from transactions with the beneficiary cannot be seen as unreasonable in view of the fact that such set-off constitutes an abuse of rights under the Civil Act, even if there is no special conflict between the beneficiary’s claim and the beneficiary’s claim.

In addition, the principle of independence of trust property means that the trustee's proprietary property and trust property should be managed separately in order to prevent the decline of trust property and to protect the beneficiary, etc., and both parties should be treated separately, and it does not mean that the trust property itself has a separate legal personality distinct from that of the trustee, the owner or the nominal owner. Thus, it cannot be said that it is prohibited under the Trust Act solely on the ground that offsetting the beneficiary's own claim against the beneficiary with the original return claim against the trustee upon termination of the trust property by the trustee as the automatic bond cannot be said to be prohibited on the ground that the principle of independence of trust property applies to the trust relationship.

According to the reasoning of the judgment below, the court below determined that, between October 9, 192 and April 6, 1999, treatment Heavy Industries Co., Ltd. (hereinafter "Treatment Heavy Industries") purchased each of the beneficiary certificates of this case from the defendant several times and exercised the right to claim redemption against the defendant on October 4, 2002. The defendant purchased each of the beneficiary certificates of this case as stated in the judgment of the court below, as trust property, and then ordered Seoul Bank to transfer each of the bonds listed in the attached Table 1 of the judgment of the court below to the trust company, which belongs to the trust property of this case on January 22, 200, and that the trustee transferred the bond of this case to the trust company of this case, which belongs to the trust property of this case, to the truster company of Han Heavy Industries Co., Ltd., Ltd. (hereinafter "Treatment Heavy Industries") and that the trustee transferred the bond certificates of this case to the defendant on June 27, 2000, which belongs to the trust property of this case.

However, in light of the above legal principles, as seen above, the court below rejected the defendant's counterclaim based on the principle of set-off under Article 20 of the Trust Act or the principle of independence of trust property, in case where the defendant's claim for the acquisition money of this case against the defendant for the Daewoo Heavy Industries is a truster (trustee) and the purchase price claim against the defendant for the Daewoo Heavy Industries, which is the beneficiary, is deemed to be a trust property obligation, the defendant's offset of the acquisition money of this case by the automatic claim for the acquisition money of this case against the bonds of this case does not violate the principle of set-off under Article 20 of the Trust Act or the principle of independence of trust property. Nevertheless, the court below rejected the defendant's counterclaim based on the above legal principles as to the prohibition of set-off under Article 20 of the Trust Act and the principle of independence of trust property. The grounds of appeal pointing

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 on the bench.

Justices Jeon Soo-ahn (Presiding Justice)