[1] Requirements for the disposal of inherited property after qualified acceptance or renunciation to constitute the legal ground for simple acceptance

[2] The meaning of "illegal consumption of inherited property" under Article 1026 subparagraph 3 of the Civil Code

[3] The case holding that if an inheritor disposes of inherited property and has reverted the entire proceeds from the disposal to a preferential right holder, such inheritor's act cannot be deemed as an illegal consumption of inherited property

[1] Article 1026 subparag. 1 of the Civil Code applies only where an inheritor disposes of the inherited property before a qualified acceptance or renunciation is made, and where an inheritor disposes of the inherited property after a qualified acceptance or renunciation is made, it shall be deemed that the inheritor simply approves the inherited property only when it constitutes an illegal consumption of the inherited property as stipulated under subparag. 3 of the same Article.

[2] "Unlawful consumption of inherited property" as stipulated in Article 1026 subparagraph 3 of the Civil Code means an act of losing its property value by via an ample, ample, and so on without any justifiable reason.

[3] The case holding that if an inheritor disposes of inherited property and has reverted the entire proceeds from the disposal to a preferential right holder, such inheritor's act cannot be deemed as an illegal consumption of inherited property

[1] Article 1026 subparagraph 1 of the Civil Code / [2] Article 1026 subparagraph 3 of the Civil Code / [3] Article 1026 subparagraph 3 of the Civil Code

United States Agricultural Cooperatives

Defendant 1 and three others (Attorney Choi Jong-soo, Counsel for the defendant-appellant)

Jeonju District Court Decision 2003Na1697 delivered on October 31, 2003

The judgment of the court below is reversed, and the case is remanded to the Jeonju District Court Panel Division.

1. The judgment of the court below

The court below, citing the reasoning of the judgment of the court of first instance, acknowledged the facts as stated in its reasoning, such as the fact that the non-party 1 who was liable to the plaintiff for the debt such as the borrowed money, died on June 29, 2001, the defendants, the inheritor, filed a report of renunciation of inheritance with the Jeonju District Court on August 3, 2001 and received the report of renunciation of inheritance on August 8, 2001, and the defendants completed the registration of transfer of ownership under the name of the defendants on April 2, 2002 on the inheritance of the farmland of this case, which is inherited property, and completed the registration of transfer of ownership on March 4, 2002 to the non-party 2 on the same day. The court below determined that the defendants are obligated to pay the plaintiff's debt to the non-party 1 as the inheritor of the non-party 1.

Then, the lower court: (a) purchased farmland from the Korea Agricultural and Rural Infrastructure Corporation on March 2, 200, which was supported by the Korea Agricultural and Rural Infrastructure Corporation under the Korea Agricultural and Rural Infrastructure Corporation Act; and (b) agreed that Nonparty 1 could not resell the farmland to another person within 8 years without the consent of the Korea Agricultural and Rural Infrastructure Corporation; (c) set up a right to collateral security at 29,862,00 won in advance to secure the payment obligation; and (d) Nonparty 1 did not pay only one minute of the purchase price to the Korea Agricultural and Rural Infrastructure Corporation, and subsequently, Nonparty 2 did not request the Defendants to sell the farmland to the Korea Agricultural and Rural Infrastructure Corporation under the name of Nonparty 1 and the Defendants’ right to preferential payment as the sale price for the said farmland. Since Nonparty 2 did not want to purchase the farmland of this case, Nonparty 2, who was the Defendants’ right to collateral security upon request on June 29, 2001, did not directly request the Defendants to use the farmland in the name of Nonparty 1 and Nonparty 2.

2. The judgment of this Court

However, we cannot accept the above judgment of the court below.

Article 1026 of the Civil Code provides that "if any of the following causes exists, a successor shall be deemed to have made a simple approval:" Item 1 provides that "if the successor conducts a disposal act on inherited property"; Item 3 provides that "if the successor conceals, consumes, or intentionally fails to enter in the inventory after having effected a qualified acceptance or a renunciation, he/she shall do so;" Item 1 of Article 1026 of the Civil Code provides that "if the inheritor disposes of inherited property after having effected a qualified acceptance or a renunciation, he/she shall apply only to the case where he/she disposes of the inherited property before he/she made a qualified acceptance or a renunciation; in addition, the case where the inheritor disposes of inherited property after having made a qualified acceptance or a renunciation, he/she shall be deemed to have made a simple approval only in cases where the inheritor falls under an illegal consumption of inherited property as provided for in Item 3, and further, the case "non-consumption consumption" of inherited property as provided for in Item 3 means an act that loses the value of property by means of an inherited property without any justifiable reason.

As legally determined by the court below, since the defendants disposed of the farmland of this case after the renunciation of inheritance, it is not applicable to Article 1026 subparagraph 1 of the Civil Code, and it is not applicable to the illegal consumption of inherited property as stipulated in subparagraph 3 of the same Article. Therefore, if the whole proceeds from the disposal of the farmland of this case is reverted to the Korea Agricultural and Rural Infrastructure Corporation, which is a preferential right holder, due to the reasons alleged by the defendants, the defendants' act cannot be viewed as an illegal consumption of inherited property unless there are other special circumstances.

Nevertheless, if an inheritor sold inherited property after the renunciation of inheritance, the court below immediately determined that the act by the Defendants constituted an illegal consumption of inherited property under Article 1026 subparag. 3 of the Civil Act, and even if factual relations as to the process of disposal of the farmland in this case and the reversion of the proceeds from disposal are contrary to the allegations by the Defendants, the act by the Defendants constitutes an illegal consumption of inherited property. The court below erred in the misapprehension of legal principles as to the illegal consumption of inherited property under Article 1026 subparag. 3 of the Civil Act, which led to the failure to exhaust all necessary deliberations. It is obvious that the

3. Conclusion

Therefore, 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 Yoon Jae-chul (Presiding Justice)