[1] Whether Article 576 of the Civil Code shall apply mutatis mutandis where a purchaser of a real estate provisionally seized loses ownership of the real estate due to an application for compulsory auction by a creditor of provisional seizure (affirmative)

[2] Whether the “auction” under Article 578(1) and (2) of the Civil Act includes the “public auction” under the National Tax Collection Act (affirmative)

[3] In a case where a purchaser who purchased a provisional attachment through a public auction but became disqualified due to a compulsory execution by the creditor of the provisional attachment after the auction, preserves the ownership at his own expense, whether the purchaser can be held liable for warranty under Articles 578 and 576 of the Civil Code (affirmative)

[4] The case holding that the buyer cannot be held liable for warranty under Articles 578 and 576 of the Civil Code against the debtor, etc. even if he is at risk of losing ownership due to the application for compulsory auction by the creditor of provisional attachment, since the buyer exempted or renounced the liability for warranty under Article 576 (1) of the Civil Code by accepting the obligation of senior provisional attachment registration in the auction procedure

[1] Where a purchaser loses the ownership of the real estate as a result of the auction procedure conducted by the creditor of provisional seizure after acquiring the ownership of the real estate for the purpose of the decision of provisional seizure and its execution, it is similar to the case where the buyer loses the ownership of the real estate as a result of the exercise of mortgage or right to lease on a deposit basis established on the real estate for the purpose of sale. Thus, by applying mutatis mutandis Article 576 of the Civil Act, the buyer may pay the warranty liability under Articles 576 and 57

[2] The "auction" under Article 578 (1) and (2) of the Civil Act is excluded from the general sale. It includes not only a compulsory sale and an auction for the exercise of security rights under the Civil Execution Act, but also a sale conducted by a state agency without asking the intention of a right holder of an object under other Acts, such as the National Tax Collection Act, and also a public sale conducted by the Korea Asset Management Corporation as an agent under the National Tax Collection Act.

[3] When the real estate which was executed by provisional seizure was purchased through the public auction procedure, but later became to lose ownership due to the compulsory execution by the creditor of provisional seizure, and thus becomes to preserve ownership at his own expense, the buyer may first demand the debtor to pay the debt by applying mutatis mutandis Articles 576 and 578 of the Civil Code, and if the debtor is insolvent, he may demand the creditor who received the distribution to return all or part of the amount as a claim for the warranty liability.

[4] The case holding that the buyer cannot be held liable for warranty under Articles 578 and 576 of the Civil Code even if he is at risk of losing ownership due to the application for compulsory auction by the creditor of provisional attachment, since the buyer has taken over the obligation of senior provisional attachment registration in the auction procedure and exempted or renounced the liability for warranty under Article 576 (1) of the Civil Code

[1] Articles 576 and 578 of the Civil Act / [2] Article 578 (1) and (2) of the Civil Act / [3] Articles 576 and 578 of the Civil Act / [4] Articles 576 and 578 of the Civil Act

Plaintiff (Law Firm Sejong, Attorneys Odok-hwan et al., Counsel for plaintiff-appellant)

Korea Bank and one other (Law Firm UBS et al., Counsel for the plaintiff-appellant)

October 9, 2007

1. The plaintiff's claim against the defendants is dismissed.

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

The Plaintiff shall pay each of the above amounts to KRW 39,620,00 to the Defendant Woori Bank, KRW 394,380,000 to the Defendant New Bank, and KRW 20% per annum to the day of full payment from the day following the delivery of the copy of the instant complaint to the day of full payment.

1. Basic facts

(a) Attachment and public sale of Seoul Special Metropolitan City;

(1) As to the building of 174-1 and 930.7 square meters in Jongno-gu Seoul, which was owned by Nonparty 1 (hereinafter “each real estate of this case”), the Korea Exchange Bank (hereinafter “Korea Exchange Bank”) received a decision of provisional seizure as follows as the creditor of Nonparty 1 and completed the registration of each provisional seizure (hereinafter “each provisional seizure of the foreign Exchange Bank,” and Nos. 1 of this case’s provisional seizure (hereinafter “instant provisional seizure”).

On March 7, 1995, on March 7, 1995, 195, the table Nos. 95Ka601, March 10, 1995 (Seoul District Court 95Kadan601, March 18, 1995) the Seoul District Court 95Kadan60600 March 21, 1995, March 21, 1995, including the case number of the table No. 95Kadan60601, March 18, 1995.

Seoul District Court 95Kadan60136 Note 1)

(2) Upon the death of Nonparty 1 on January 8, 1999, the remaining inheritors except Nonparty 2 who are the wife among the inheritors reported the renunciation of inheritance on February 7, 199, and on March 12, 199, the Seoul Family Court 99Ra1276 decided to accept the declaration of renunciation of inheritance.

(3) The Seoul Special Metropolitan City completed the registration of transfer of ownership in the name of Nonparty 2 on the same day following the completion of the registration of transfer of ownership due to the inheritance on February 7, 2003, on the ground of the inheritance on January 8, 2009.

(4) The Seoul Special Metropolitan City requested the Korea Asset Management Corporation to vicariously sell each of the instant real estate pursuant to Article 61(1) of the National Tax Collection Act and Article 68-2(1)2 of the Enforcement Decree thereof on February 2003 (hereinafter “instant public sale”).

(5) On May 8, 2003, Nonparty 2 served a notice of public auction on each of the instant real estate, and paid part of the delinquent tax amount, and thus the progress of the public auction procedure was temporarily postponed. However, Nonparty 2’s failure to comply with the promise to pay the remainder of delinquent tax amount in installments was resumed on January 18, 2005.

(6) On March 31, 2005, the Plaintiff bid for the public auction procedure of this case and was decided to purchase each of the instant real estate in KRW 1,405,00,000, and completed the registration of ownership transfer on May 23, 2005.

(7) The creditors of Non-Party 2, including the Defendant Woori Bank Co., Ltd. (hereinafter “Korea Bank”), the New Bank Co., Ltd. (hereinafter “New Bank”), and the New Bank (hereinafter “New Bank”), were allocated each by demanding the distribution as follows.

Local tax 10,003,150 20,003,150 20,532,020 108,532,020,532,020 3,020 Jongno-gu 30,95,305,3024, 22,784,784, 964, 964, 986395,98, 235,356,406, 404, 2350, 304, 305, 104, 104, 305, 204, 305, 104, 104, 105, 204, 104, 205, 305, 104, 204, 205, 205, 304, 204, 205, 305, 254, 104

(b) Application for compulsory auction by a foreign exchange bank;

(1) After completing the registration of transfer of ownership with respect to each of the instant real estate, the Plaintiff filed an application for revocation of each provisional seizure order against the foreign exchange bank, on the grounds that the foreign exchange bank did not bring an action against each of the instant real estate for ten years from the time the provisional seizure order was executed as follows, and thus revoked the provisional seizure order 2 and 3. Each of the provisional seizure orders was revoked.

The Seoul Central District Court Decision 2005Kadan78138, Sept. 28, 2006, Seoul Central District Court Decision 2005Kadan78139, Sept. 28, 2006, Seoul Central District Court Decision 2005Kadan78139, Jul. 27, 2005, Seoul Central District Court Decision 2005Kadan78140, Jan. 25, 2006, Sept. 28, 2005, which rendered a ruling of acceptance on Sep. 19, 2005

(2) However, on July 26, 2005, the foreign exchange bank filed a lawsuit against Nonparty 2, who is the sole heir of Nonparty 1, for a loan claim under this Court Order 2005Da77945, which was decided on July 26, 2005, that “ Nonparty 2 shall pay to the Defendant KRW 836,657,38,” which was decided by the provisional execution declaration, and applied for a compulsory auction of each real estate of this case on August 12, 2005 by this Court Order 2005Mo28533, which was decided on August 12, 2005 (hereinafter “instant auction”).

(3) In the case of revocation of provisional seizure against the provisional seizure order of this case, the Plaintiff was sentenced to a ruling dismissing the application for revocation of provisional seizure order on September 28, 2005 on the ground that the foreign exchange bank had received the decision of commencing the provisional seizure prior to the provisional seizure as above. The Plaintiff appealed from the above judgment. At the same time, the appellate court (Seoul High Court 2005Na88642) received the payment of KRW 70 million from the foreign exchange bank by August 31, 2006, and at the same time (Seoul High Court 2005Na8642), filed an application for revocation of provisional seizure order of this case on each of the real estate, and withdrawn the application for provisional seizure of this case (hereinafter “instant conciliation decision”), which is substituted for conciliation, the Plaintiff paid KRW 70 million to the foreign exchange bank, and the foreign exchange bank withdrawn the application

(4) The Plaintiff asserted against the foreign exchange bank that the effect of the provisional attachment decision of this case was extinguished due to the completion of the realization procedure by selling each of the instant real estate in the instant public auction procedure, and filed a lawsuit with a third party on the auction procedure commenced by the foreign exchange bank, but was sentenced by the court on May 23, 2006 on the ground that the provisional attachment decision of this case still remains effective even after the completion of the public auction procedure. The Plaintiff appealed against the above judgment as Seoul High Court Decision 2006Na54974, but withdrawn the lawsuit in accordance with the instant conciliation decision.

[Reasons for Recognition] Gap evidence Nos. 1, 3 through 10, Eul evidence Nos. 1 through 6 (including numbers), the purport of the whole pleadings

2. The parties' assertion

A. The plaintiff's assertion

The Plaintiff paid KRW 700 million to the foreign exchange bank in order to prevent the loss of ownership following the instant request for auction by the foreign exchange bank, a person holding a provisional seizure right, and Nonparty 2, the debtor, is currently insolvent. Therefore, the Defendants, the creditor, who received distribution in the instant public auction procedure, bears the liability for warranty pursuant to Articles 578(2) and 576(2) of the Civil Act on “where the purchaser’s exercise of mortgage or right to lease on a deposit basis is preserved at his own request,” and the Defendants, the creditor, who received distribution in the instant public auction procedure, bears the liability for warranty pursuant to Articles 578(2) and 576(2) of the Civil Act on “where the purchaser’s exercise of mortgage or right to lease on a deposit basis, shall pay KRW 39,620,000 to the Plaintiff in proportion to the ratio of

B. The defendants' assertion

① Article 576 of the Civil Act shall not apply to the case where a provisional seizure creditor filed an application for compulsory auction upon the judgment on the merits of the case. ② Article 578 of the Civil Act shall not apply to the public auction. ③ The public auction procedure is not planned to distribute to the provisional seizure creditor. The Defendants are merely distributed to the provisional seizure creditor in the public auction procedure, and thus the Plaintiff cannot be held liable for warranty against the Defendants under Article 578 of the Civil Act. ④ Since the provisional seizure of this case was extinguished due to the sale and realization of each real estate in the public auction procedure of this case, the Plaintiff’s payment of KRW 70 million to the foreign exchange bank in accordance with the conciliation of this case cannot be deemed a legally necessary measure. Moreover, the Plaintiff exempted or waived the liability for warranty by accepting each provisional seizure of the foreign exchange bank in the public auction procedure of this case, and ⑤ The Defendants may set off the claim against Nonparty 2 even if Nonparty 2 had the right to claim the return of unjust enrichment against the Defendants.

3. Determination

A. Whether Article 576 and 578 of the Civil Act are applied

(1) Where the buyer loses his/her ownership due to the exercise of a mortgage or right to lease on a deposit basis established on the real estate subject to the sale, the buyer may demand reimbursement from the seller at his/her own expense when the buyer preserves the ownership (Article 576(1) and (2) of the Civil Act). In the case of an auction, the successful bidder may demand cancellation of the contract or reduction of the price to the debtor pursuant to the above provisions. If the debtor has no own ability, the successful bidder may demand the creditor who received the payment to return all or part of the price (Article 578(1) and (2) of the Civil Act).

(2) Article 576 of the Civil Act provides for the seller's liability for warranty in cases where ownership of real estate belongs to the seller at the time of the sales contract, so it is possible to acquire the buyer's ownership, but it becomes impossible to transfer the ownership later by exercising the security right such as the exercise of mortgage or chonsegwon.

However, the execution of the decision of provisional seizure has the effect of prohibiting the debtor from selling, selling, donating, or setting up a security right, such as pledge, or any other disposal on the object of provisional seizure. Since a disposal act by the debtor contrary to provisional seizure has the effect of prohibiting disposal by provisional seizure, it is relatively null and void in relation to the creditor of provisional seizure to the extent necessary to achieve the purpose of preserving the execution. Such a disposal act contrary to provisional seizure is null and void in relation to the creditor of provisional seizure, where the creditor of provisional seizure executes a compulsory execution on the merits after the provisional seizure, the buyer who purchased the real estate against the provisional seizure may lose ownership within the scope of the claim amount of the provisional seizure.

Therefore, if the buyer loses the ownership of the real estate as a result of the auction procedure conducted by the creditor of provisional seizure after the buyer acquired the ownership of the real estate after the decision of provisional seizure and execution of the provisional seizure, it is similar to the case where the buyer loses the ownership of the real estate due to the exercise of mortgage or right to lease on a deposit basis established for the purpose of sale. Thus, even in this case, it is reasonable to view that the buyer can be held liable for warranty under Articles 576 and 578 of the Civil Act by applying mutatis mutandis Article 576 of the

(3) Similar to an auction under the Civil Execution Act, a public auction under the National Tax Collection Act is conducted by bidding or a week 7). Article 67(1) of the Civil Act provides that Article 578(1) of the Civil Act shall apply mutatis mutandis to the sale of seized property (79-05). In addition, Article 578(1) and (2) of the Civil Act provides that where a successful bidder cannot fully acquire the property right which is the object of a successful bid due to defects in a right in a single-class auction, a sale shall be conducted by a court, which is a State agency, against the debtor’s will to have the status as the successful bidder, and the auction shall include not only the sale of the seized property but also the sale of the property by a State agency, which is a general auction under the National Tax Collection Act, as well as the sale of the property right, under the Civil Act, to protect the successful bidder.

(4) Ultimately, even if a real estate which was executed by provisional attachment was purchased through a public auction procedure, but later became disqualified by the compulsory execution by a creditor of provisional attachment, and thus is preserved for his/her ownership at his/her own expense, the buyer may first demand the debtor by applying mutatis mutandis Articles 578 and 576 of the Civil Act, and if the debtor is insolvent, the buyer may demand the creditor who received the distribution to return all or part of the purchase price as a claim for the liability

B. Whether Nonparty 2 is insolvent

If the purport of the whole argument is added to the result of the inquiry into the head of Jongno-gu Office of this court, it can be recognized that the non-party 2 as of August 26, 2007 has no property subject to acquisition tax, registration tax, property tax and comprehensive real estate holding tax, and it is reasonable to deem that the non-party 2

C. Whether the defendants are creditors liable for warranty

Article 81(1)3 of the National Tax Collection Act provides that the distributed money shall be distributed to the "claim secured by the right of lease on a deposit basis, pledge, or mortgage related to the attached property". The above provision imposes an obligation under the public law to distribute the proceeds from the sale of the attached property to the director of the tax office who takes the procedure to protect the right to preferential payment related to the attached property in the procedure for disposition on default, regardless of whether it was before or after the seizure, and it is merely an example of the claims that can be distributed with the proceeds from the sale of the attached property, and it is not limited to an example of claims that can be distributed with the proceeds from the sale of the attached property. Thus, it is reasonable to view that the proceeds from the sale of the attached property under the disposition on default of national taxes include not only the secured right under Article 81(1)3 of the National Tax Collection Act

The defendants received distribution in the public auction procedure of this case in the same order with the provisional registration right holder, etc. as the security right holder and the defendants who are the persons holding the seizure or provisional seizure right in the same order, in light of the relevant provisions and legal principles as seen above, it is reasonable to distribute the distribution money to the security right cancelled by the Korea Asset Management Corporation and the defendants who are the persons holding the seizure or provisional seizure right in the same order. Therefore, the defendants are the creditors who received the

D. Determination as to whether the Plaintiff was exempted from liability for warranty by accepting each of the registrations of provisional seizures in the foreign exchange bank

(1) Facts of recognition

The following facts are as follows: Gap evidence 1-2, 2, 3, Eul evidence Nos. 2-1, 2, 4-2, 7-1, 2, 8 through 13; 1. The Korea Asset Management Corporation shall determine that the foreign exchange bank's provisional seizure against non-party 1 as the creditor of provisional seizure on each of the real estate of this case is not a right holder to participate in distribution under the public auction procedure of this case; 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 6. 60 . 6. 20 . 80 . 6. 60 . 6. 60 . 7. 80 . 40 . 206 . 80 . 5 . 200 . 206 . 3 , 2003

(2) First, we examine whether the provisional seizure of foreign exchange banks by the Plaintiff acquiring ownership of each real estate of this case in the public sale procedure of this case is naturally extinguished due to the realization of each real estate of this case, regardless of the remaining registration.

(A) Relevant legal principles and legal provisions

Where the ownership of the object of provisional seizure is transferred to a third party after the senior provisional seizure was registered, and a creditor of the third party thereafter applied for sale, the creditor of provisional seizure may receive dividends in the sale procedure to the extent of the claim amount at the time of decision of provisional seizure out of the proceeds of sale of the object of provisional seizure. In this case, the registration of provisional seizure for which the previous owner is the debtor may be subject to a request for cancellation of provisional seizure. However, in such a case, the execution court may exclude the above creditor of provisional seizure from the distribution procedure on the premise that the purchaser takes over the burden of registration of provisional seizure whose former owner is the debtor, and proceed with the sale procedure on the premise that the buyer takes over the burden of the above provisional seizure registration, the above provisional seizure shall not become invalid. Therefore, if the buyer takes the sale procedure on the premise that the registration of provisional seizure is taken over, it cannot be concluded that the effect of the provisional seizure was extinguished merely because the previous owner was the sale procedure for the real estate on which the former owner is the debtor, and by examining the detailed sale procedure, the decision of the validity of the above provisional seizure should be made).

In addition, the National Tax Collection Act provides that "the head of a tax office shall publicly announce "the name, location, quantity, quality, and estimated sale price of the property for public sale" (Article 67 (2) 2) and "other important matters" under Article 67 (2) 2 of the Act refers to the matters that need to be known to the participants in the public sale and that "the right to lease with superficies, lease with a right to lease with a right to lease with an opposing power or provisional registration that is not extinguished by the sale of the property for public sale" (67-04). In addition, under the Civil Execution Act and the National Tax Collection Act, an auction or public sale under the same Act intervenes in the state agency's enforcement due to their nature, and its substance is a private sales contract and therefore, the above public notice by the head of a tax office, etc. is an invitation to file a request for purchase informing many and unspecified persons of the method of public sale of the attached property, and it is reasonable to deem that the bid is an offer for sale and the decision of the

In addition, the Enforcement Decree of the National Tax Collection Act provides, “When the director of a tax office or the Korea Asset Management Corporation intends to take procedures for transferring rights to a sold property, he/she shall request the buyer to submit a written request for registration of transfer, registration of transfer, or a written request for cancellation of registration of cancellation of “right to be extinguished due to sale,” along with a written request for registration submitted by the buyer, a notice of decision on sale, a certified copy thereof or a certified copy thereof, or a certified copy of a distribution statement (Article 77).” Article 79-71 of the General Rule of the National Tax Collection Act provides, “the right to be extinguished due to sale” under Article 77 of the Enforcement Decree of the National Tax Collection Act refers to ① the security right on the sold property, ② the available real right such as mortgage, registered right, and ③ other right which

(b) the sales board;

However, in light of the above legal principles and related provisions, the Korea Asset Management Corporation determines that each provisional seizure of a foreign exchange bank is a right against the Seoul Special Metropolitan City's seizure, and publicly notifies the purchaser of each provisional seizure of the foreign exchange bank as a incidental condition concerning the sale to take over the burden, etc., without cancelling the public sale of each real estate of this case. Each provisional seizure of the foreign exchange bank is conducted on the premise that the purchaser takes over it. In the public sale procedure of this case where such a burden was planned, the plaintiff cannot be viewed as having taken account of each of the provisional seizures of each of the real estate of this case with the acquisition of the foreign exchange bank's acquisition of each of the real estate of 2,097,102,00 won as of March 27, 2003, which is merely 67% of market price as of March 27, 2003, and therefore, even after the provisional seizure established prior to the decision to commence the sale of each of the real estate of this case, the Korea Asset Management Corporation will lose its acquisition decision of each of this case's.

(3) Sub-decisions

Ultimately, as long as the Plaintiff, the buyer of the instant public auction procedure, takes over each of the foreign exchange banks’ respective burdens on the instant real estate subject to the public auction, barring any special circumstance, it is reasonable to deem that the buyer exempted or waived the seller from the liability for warranty under Article 576(1) of the Civil Act. Therefore, Supreme Court Decision 2002Da1151 Decided September 4, 2002

Even if the plaintiff was at risk of losing ownership due to a compulsory auction application filed by a foreign exchange bank, which is a creditor of provisional seizure that he/she acquired at his/her own expense, the plaintiff cannot be held liable for warranty under Articles 578 and 576 of the Civil Act to the seller's debtor, etc.

Therefore, the defendant's assertion that the plaintiff exempted or waived the liability for warranty by accepting each provisional attachment of foreign exchange bank in the auction procedure of this case is reasonable, and on a different premise, the plaintiff's claim that the seller is still liable for warranty is no longer reasonable.

4. Conclusion

Therefore, all of the plaintiff's claims against the defendants are dismissed. It is so decided as per Disposition.

Judges Choi Jin-jin (Presiding Judge)

Note 1) The “decision of provisional attachment No. 95Kadan30136” recorded in the register of the above site is a clerical error.

2) The Framework Act on National Taxes and the National Tax Collection Act shall apply mutatis mutandis to the imposition and collection of local taxes, except as otherwise provided for in this Act and other Acts and subordinate statutes.

Note 3) = 70 million = 41,583,210/734,995,302

Note 4) = 70 million = (395,98,440/2,784, 964, 986 + 50,105,210/2,356,691,832 + 251,85,530/1,204,684,07 won)

Note 5) Supreme Court Order 94Ma417 Decided November 29, 1994

(6) Article 103 (Methods of Sale for Compulsory Auction) (2) Sale of immovables shall be made by three means of the quoted auction to be made on the date of sale, the date auction to be tendered and opened on the date of sale, or the period auction to be tendered within the period of bidding to be tendered and opened on the date of sale to be opened on the date of

Article 67(1) of the General Rules of the National Tax Collection Act (amended by Presidential Decree No. 1850, Feb. 19, 2004) provides that where selling the attached property, the term “tender” refers to a method by which the highest bidder is determined as the successful bidder and the purchaser is determined as the successful bidder among bidders whose bid price is more than the estimated sale price by requiring the subscriber to purchase the property to apply for the purchase with a tender price and other necessary matters (amended by Presidential Decree No. 18580, Feb. 19,

(8) The term "auction" in Article 67 (1) of the General Rules of the National Tax Collection Act (amended by Presidential Decree No. 18702, Feb. 19, 2004) refers to a method in which, in selling the attached property, the highest price among the bidders who have subscribed to purchase the property orally, etc. is determined as the successful bidder and the successful bidder is determined as the successful bidder (amended by Presidential Decree No. 18580, Feb. 19, 2004).

Note 9) Supreme Court Decision 2000Du7971 Delivered on March 26, 2002

Supreme Court Decision 2005Da8682 Decided April 13, 2007