[1] Whether Article 10-4 (1) of the former Housing Construction Promotion Act, which is a provision on the restriction on operation of the National Housing Fund, is a mandatory provision (affirmative)

[2] The validity of a set-off agreement between a financial institution’s loans and a construction company’s loans from the National Housing Fund to the financial institution (negative)

[1] Article 10-4 (1) of the former Housing Construction Promotion Act (amended by Act No. 5908 of Feb. 8, 1999) provides that "National Housing Fund shall not be operated for purposes other than the purposes of the construction of national housing and the development of housing sites for the construction of national housing." This provision provides that "The National Housing Fund shall not be operated for purposes other than the purposes of the construction of national housing and the development of housing sites for the construction of national housing." This provision aims to strictly limit and operate the National Housing Fund financed by the Government in order to secure funds necessary to efficiently implement the comprehensive plan for the construction of housing and to facilitate the

[2] A set-off agreement between a financial institution’s loans to a construction company and a construction company’s loans to a financial institution is null and void in violation of Article 10-4(1) of the former Housing Construction Promotion Act (amended by Act No. 5908 of Feb. 8, 1999).

[1] Articles 1 (see current Article 1), 10 (see current Article 60), and 10-4 (1) (see current Article 63 (1) of the Housing Act) of the former Housing Construction Promotion Act (Amended by Act No. 5908, Feb. 8, 1999); Article 105 of the Civil Act / [2] Article 10-4 (1) (see current Article 63 (1) of the Housing Construction Promotion Act); Article 105 of the Civil Act

Korea Housing and Commercial Bank Co., Ltd. (Law Firm Gyeong & Yang, Attorneys Kim Nam-nam, Counsel for the defendant-appellant)

Korea Housing Guarantee Co., Ltd. (Law Firm Geosan, Attorneys Park Gi-ro et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2003Na21768 delivered on February 5, 2004

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

We examine the grounds of appeal.

1. As to the grounds of appeal Nos. 1, 2, and 3

Article 10-4 (1) of the former Housing Construction Promotion Act (amended by Act No. 5908 of Feb. 8, 1999; hereinafter the same shall apply) provides that "National Housing Fund shall not be operated for any purpose other than that of the construction of national housing and the development of housing sites for the construction of national housing." This purpose is to stipulate matters necessary for the construction and supply of housing and the raising and operation of funds therefor in order to ensure the stability of the residential life of all residents without a house and enhance their residential standards. In accordance with the legislative purpose (Article 1) of the above Act, the legislative purpose of the above Act is to strictly limit the operation of the National Housing Fund (Article 10) financed by the Government for the purpose of the construction and comprehensive plan for housing construction in order to secure funds necessary to efficiently implement the comprehensive plan for housing construction and efficient supply of such funds, and to strictly limit the operation of the National Housing Fund (Article 10) for such purpose to meet this purpose. Therefore, the foregoing provision

In full view of the admitted evidence, the court below, on April 30, 1998, granted a loan of 16 billion won to the Korea Housing and Commercial Bank Co., Ltd. (the plaintiff was merged with the National Bank of Korea on November 1, 2001 and became the plaintiff; hereinafter referred to as "the plaintiff") for corporate general funds (hereinafter referred to as "the loan of this case"). On the same day, the Housing Business Mutual Aid Association (the organization of the defendant was changed pursuant to Articles 5 and 6 of the Addenda of the Housing Construction Promotion Act amended by Act No. 5908, Feb. 8, 1999; hereinafter referred to as "the defendant") to guarantee the defendant's obligation of the loan of this case against the plaintiff of the same-sex Construction, and it was justified in the judgment of the court below that the loan of this case would be offset by the loan of this case from the National Housing Fund's loan of this case from the National Housing Fund's stated reasoning, and that the plaintiff would have been managing the plaintiff's comprehensive loan of this case for set-off of the loan of this case.

In addition, we agree with the judgment of the court below that the above cannot be viewed differently even if a considerable portion of the loans against the same-sex comprehensive construction could not be excluded from the possibility of being spent as the price for new apartment construction for same-sex comprehensive construction.

The court below did not err in the misapprehension of legal principles as to the effect of Article 10-4 (1) of the former Housing Construction Promotion Act, or in its interpretation and application, as alleged in the grounds of appeal.

2. As to the fourth ground for appeal

If a part of a juristic act is null and void, it shall be null and void, but if it is deemed that such juristic act had been conducted even without such null and void part, the remainder shall not be null and void (Article 137 of the Civil Act)

Examining the circumstances as determined by the court below in the application of the above provisions on partial invalidation of a juristic act as seen above, the defendant is deemed to have guaranteed the loan of this case for the same-sex comprehensive construction even without the offset agreement. Therefore, the offset agreement of this case is null and void and thus cannot be deemed null and void. The court below's rejection of the defendant's assertion on the same purport is justified in its reasoning.

The court below did not err in the misapprehension of legal principles as to partial invalidation of a juristic act, which affected the conclusion of the judgment.

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 Shin Hyun-chul (Presiding Justice)