2017Da225268 Demurrer, etc. against distribution

Plaintiff 1 and five others

Law Firm LLC et al., Counsel for defendant-appellant

Attorney Gangnam-ho et al., Counsel for the defendant

As shown in the attached Form;

Law Firm International Law Firm

[Defendant-Appellant]

Busan High Court Decision 2016Na55998 Decided April 6, 2017

May 27, 2021

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

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

1. Case overview

The plaintiffs are tenants who have concluded a lease agreement on the corresponding part of the Red Profit Co., Ltd. (hereinafter referred to as "red Interest") and the instant building which is an aggregate building (Provided, That each divided part is referred to as "each of the instant real estate").

The Construction Co., Ltd. (hereinafter referred to as the "Construction Co., Ltd.") contracted remodeling construction for the instant building (hereinafter referred to as "the instant construction") from red interest, and entered into a subcontract with respect to the relevant part of the instant construction (hereinafter referred to as "Buss Defendants"), other than the Construction of the Integrated Exchange System (hereinafter referred to as "Co., Ltd."), and supplied goods necessary for construction from them.

Although the construction of the instant construction was completed, the Defendants did not receive KRW 1.78 billion out of the total construction cost, and the remainder Defendants did not pay the subcontract price or the total amount of the goods. The Red Profit set up against the Defendants each of the instant real estate with each of the maximum debt amount of KRW 1.788 billion, the obligor Red Profit and the Defendants, who were the Defendants, each of the instant collateral security rights (hereinafter referred to as the “mortgage”).

After that, upon the commencement of the auction procedure with respect to each of the instant real estate, the Plaintiffs were creditors who have a preferential right to payment, provisional seizure right holder, or executory exemplification, and the Defendants were entitled to demand a distribution or participate in a distribution as a mortgagee.

The execution court distributed the corresponding amount to the plaintiff 5 and the defendants, and the remaining plaintiffs set up a distribution schedule that did not distribute to them, and the plaintiffs raised an objection against the whole amount of dividends to the defendants.

The Plaintiffs filed the instant lawsuit claiming that the establishment of the instant right to collateral security constitutes a fraudulent act and that the distribution schedule should be revised due to its original restoration. Accordingly, the Defendants asserted that the instant act of creation of collateral security was lawful in accordance with Article 666 of the Civil Act and did not constitute a fraudulent act.

2. Whether the establishment of the instant right to collateral security constitutes a fraudulent act

A. Article 66 of the Civil Act provides that “A contractor of a real estate construction may request the establishment of a mortgage on the real estate to secure a claim for remuneration.” This purpose is to enable the contractor to receive a preferential payment of the construction price from the object in fact, by granting the contractor a right to claim the creation of mortgage on the object in consideration of the fact that the ownership of the object is completed by the contractor’s material and effort. Such status of the contractor is not always strengthened compared to the status of exercising the right of retention on the object, and is not unreasonable to the general creditors of the contractor. Therefore, a contractor for a construction project does not constitute a fraudulent act unless there are special circumstances (see, e.g., Supreme Court Decision 2007Da78616, Mar. 27, 2008).

B. Examining the following circumstances revealed in the reasoning of the judgment below in light of the aforementioned legal principles, the instant right to collateral security can be deemed as having been established for the purpose of securing the obligation of construction payment upon the exercise of the right to claim creation of mortgage by Defendant Deputy Exchange Construction, which is the contractor under Article 666 of the Civil Act, and thus, does not constitute fraudulent act.

(1) The amount of the secured debt of the instant right to collateral security is the same as the amount of the claim for construction cost owed by the Construction on Red Profit, and the construction cost to be paid by the Construction on Red Profit is the money ultimately to be paid to the remainder of the Defendants, who are sewage suppliers or goods suppliers.

(2) Defendant Down Construction and the other Defendants set up a joint collateral within the scope of the claim for construction cost, not with a different order of priority in each of the instant real estate, rather than with a different order of priority in the instant real estate. Therefore, there is no additional burden on the contractor on the remainder of the Defendants, on the ground that they are in the status of the mortgagee

(3) The plaintiffs asserted that the judgment of the court below, which held that only the contractor may exercise the right to demand mortgage under Article 666 of the Civil Act and that the remaining Defendants, who are not the contractor (creditor) and the right to demand mortgage of this case, have been established in accordance with Article 666 of the Civil Act, is contradictory. However, as seen above, the parties who exercise the right to demand mortgage for the purpose of securing the obligation for the payment of the contract price, are the parties to the right to demand mortgage, but, in order to ensure that the remaining Defendants, the construction cost of Red Profit and the joint collateral is ultimately attributed to the Defendants, through an agreement, add it to the joint collateral owner. There is no reason to deny the validity of the above agreement between the parties, and there is no reason to deny the validity of the agreement among the other Defendants, and therefore, there is no conflict in the judgment of the court below.

C. In the same purport, the lower court determined that the instant act of establishing a collateral security was attributable to the exercise of a contractor’s right to demand mortgage under Article 666 of the Civil Act, and did not constitute a fraudulent act. In so doing, the lower court did not err by misapprehending the interpretation of Article 666 of the Civil Act and

3. The remaining grounds of appeal

The remaining grounds of appeal by the plaintiffs are without merit, and they are not acceptable, or they are not legitimate grounds of appeal, since they dispute the selection of evidence and fact-finding belonging to the exclusive jurisdiction of the lower court, which is a fact-finding court. Furthermore, in light of the records, the lower court did not err by failing to exhaust all necessary deliberations, and exceeding the bounds of the principle of free evaluation

4. Conclusion

The plaintiffs' appeals are dismissed in entirety as it is without merit, 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 Ansan-chul

Justices Kim Jae-hyung

Justices Noh Jeong-hee

A person shall be appointed.