[1] The validity of an insurance contract concluded for the purpose of illegally acquiring insurance proceeds through a large number of insurance contracts (negative)

[2] In a case where a policyholder’s breach of the duty of disclosure on important matters in entering into an insurance contract constitutes fraud, whether the insurer may cancel the insurance contract in accordance with the provisions of the Commercial Act, or pursuant to the provisions of the right of cancellation stipulated in the insurance contract, or the general principles of the Civil Act (affirmative), and in a case where multiple insurance contracts were concluded for the purpose of illegitimate acquisition of insurance proceeds, whether the insurer may claim the invalidity of the insurance contract due to a violation of Article 103 of the Civil Act, and whether the termination or cancellation of the insurance contract on the ground of a breach of the duty

[1] Where a policyholder concludes an insurance contract for the purpose of unjust acquisition of insurance proceeds through multiple insurance contracts, the insurance contract is null and void in violation of good morals and other social order under Article 103 of the Civil Act. The payment of insurance proceeds under such insurance contracts is made by inducing speculative spirit to gain unjust profits by abusing the insurance contract. This is because the purpose of the insurance system is to undermine the rational diversification of risks, to impair the contingency of risks, and to cause the sacrifice of the majority of the insured, thereby harming the foundation of the insurance system. Furthermore, even if there is no evidence to directly acknowledge whether the policyholder directly concluded multiple insurance contracts for the purpose of unjust acquisition of insurance proceeds, such purpose may be ratified based on all the circumstances, such as occupation and financial status of the policyholder, the timing and background of concluding multiple insurance contracts, the scale and nature of the insurance contracts, and circumstances after concluding the

In particular, if indirect facts are found such as the fact that an insurance policyholder concluded an excessive insurance contract to pay a large amount of insurance premiums on a regular basis to the extent difficult to assume in light of economic circumstances, such as his/her own income, the circumstance that multiple insurance have been collectively subscribed for multiple insurance in a short period, even though there are no reasonable grounds to do so, unlike the circumstance of entering into an ordinary insurance contract, such as solicitation by an insurance solicitor, etc., the circumstance that actively subscribed to excessive insurance contracts by himself/herself, unlike the circumstance of entering into an insurance contract, such as having actively concluded an excessive insurance contract; the circumstance that a large number of insurance proceeds were paid as insurance premiums; the circumstance that the existence of the same type of insurance policy and the fact that he/she was notified of false facts regarding his/her occupation, income, etc. at the time of entering into an insurance contract; or that

[2] In a case where a policyholder’s breach of the duty of disclosure on important matters in entering into an insurance contract constitutes fraud, the insurer may cancel the insurance contract pursuant to the provisions of the Commercial Act, as well as the provisions on the right of cancellation stipulated in the insurance contract or the general principles of the Civil Act. Therefore, in a case where multiple insurance contracts were concluded for the purpose of unjust acquisition of insurance proceeds, the invalidation of the insurance contract due to a violation of Article 103 of the Civil Act and the termination or cancellation of the insurance contract on the ground of a breach of the duty of disclosure are different from the requirements or effects. However, in individual cases, if each of the requirements is satisfied, the above remedy concurrently recognized, and in this

[1] Article 103 of the Civil Act / [2] Articles 103 and 110 of the Civil Act, Article 651 of the Commercial Act

[1] Supreme Court Decision 2009Da12115 Decided May 28, 2009, Supreme Court Decision 2013Da69170 Decided April 30, 2014 (Gong2014Sang, 1101) Supreme Court Decision 2014Da73237 Decided February 12, 2015 / [2] Supreme Court Decision 91Da1165 Decided December 27, 191 (Gong192, 761)

ELA M&D Co., Ltd. (Law Firm O&C, Attorneys Dun-seop, Counsel for defendant-appellant)

Defendant 1 and one other (Law Firm Godo, Attorneys Lee Yong-hwan et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2014Na2013851 decided October 22, 2014

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

The grounds of appeal are examined.

1. Where a policyholder concludes an insurance contract for the purpose of unjust acquisition of insurance proceeds through multiple insurance contracts, the insurance contract is null and void in violation of the good morals and social order under Article 103 of the Civil Act. The payment of insurance proceeds under such insurance contracts is made by inducing speculative spirit to gain unjust profits through abuse of insurance contracts. This is because the purpose of the insurance system is to undermine the rational diversification of risks, to impair the contingentness of risks, and to damage the foundation of the insurance system by causing the sacrifice of many subscribers. Furthermore, even if there is no evidence to directly acknowledge whether a policyholder directly concluded multiple insurance contracts for the purpose of unjust acquisition of insurance proceeds, such purpose may be ratified based on all the circumstances such as occupation and financial status of the policyholder, the timing and background of concluding multiple insurance contracts, the scale and nature of the insurance contracts, and circumstances after concluding the insurance contract (see, e.g., Supreme Court Decision 2009Da115, May 28, 2009).

In particular, if indirect facts are found such as: (a) the fact that an insurance policyholder concluded an excessive insurance contract to pay a large amount of insurance premium on a regular basis to the extent difficult to assume in light of economic circumstances, such as his/her own income; (b) the circumstance that a large number of insurances have been concentrated even without reasonable grounds to purchase multiple insurances in a short period; (c) the circumstance that an insurance purchaser concluded an excessive insurance contract by himself/herself differently from the ordinary process of entering into an insurance contract, such as subscription by solicitation of an insurance solicitor; (d) the circumstance that a large number of insurances have actively taken out and paid a large amount of income as the relevant insurance premium; (e) the circumstance that the existence of other insurance contracts of the same type of type of insurance contract and false facts were notified at the time of the insurance contract; or (e) the circumstance that an insurance policyholder claimed and received the amount of insurance premium on account of the occurrence of an insurance accident during a long period of time after entering into a large number of insurance contracts, such indirect materials constitute material to confirm the purpose of unlawful acquisition of insurance proceeds (see, e.g.

Meanwhile, in a case where a policyholder’s breach of the duty of disclosure on important matters in entering into an insurance contract constitutes fraud, the insurer may cancel the insurance contract pursuant to the provisions of the Commercial Act, as well as the provisions on the right of cancellation stipulated in the insurance contract or the general principles of the Civil Act (see Supreme Court Decision 91Da1165, Dec. 27, 191). Therefore, in a case where multiple insurance contracts are concluded for the purpose of unjust acquisition of insurance proceeds, the invalidation of the insurance contract due to a violation of Article 103 of the Civil Act and the termination or cancellation of the insurance contract on the ground of a breach of the duty of disclosure are different from the requirements or effect. However, in individual cases, if each of the requirements is satisfied, the above remedy is recognized concurrently, and in this case, the insurer may claim

2. The lower court determined that the instant insurance contract is null and void against good morals and other social order as stipulated in Article 103 of the Civil Act, on the grounds that it may sufficiently be confirmed that it was made for the purpose of unjust acquisition of insurance proceeds in light of the following circumstances: (a) the purpose of the insurance system, such as reasonable diversification of risks, destruction of the contingent nature of risks, and harming the foundation of the insurance system by causing the sacrifice of the majority of the insured; and (b) thereby impairing the foundation of the insurance system.

A. The Defendants, at the time of the conclusion of the instant insurance contract, constituted an economic community as a de facto marital relationship. However, from around 2005 to around six years from around 2010, both married couple subscribed to the insurance contracts similar to 12 cases each of them. On December 31, 2008, the instant insurance contract concluded on December 31, 2008, KRW 14,756,880, the monthly insurance premium for the insurance that the Defendants subscribed as the insured was KRW 1,229,740, while the Defendants’ annual insurance premium to be paid was KRW 14,756,80, the annual insurance premium was KRW 16,353,155, and the amount to be paid for the income tax was KRW 0.

B. The annual average income amount from Defendant 1’s 2005 to 2010 is KRW 11,280,530, and the annual average income amount of the Defendants is KRW 18,021,391 in total. The annual average income amount of Defendant 1 during the above period is KRW 57,005 in total, and the annual average income amount of the Defendants is KRW 88,477 in total.

C. The Defendants committed an insurance premium burden of KRW 20,046,480 per annum as of the year 2010, and the amount constitutes approximately KRW 26,362,262, and KRW 762 of the Defendants’ revenue in 2010.

D. The instant insurance contract is the part guaranteed by 73.3% of the monthly insurance premium ± 47,650 won ± 65,000 won ± 100) and where there is no value as a savings, and income is less or less than a certain amount, it is likely that it will be borne in the operation of the household economy. On the other hand, each insurance contract subscribed by the Defendants is an insurance that covers both the insurance per hospitalization day (referring to the amount determined by the number of days of hospitalization) or any other similar contents, and there is no need for double insurance. In the case of Defendant 1, it did not have an occupation with a high risk of injury on December 31, 2008 when the instant insurance contract was concluded.

E. At the time of entering into the instant insurance contract, Defendant 1 notified Defendant 1 of his occupation and medical history by falsity.

F. From June 2006, Defendant 1 received insurance proceeds of KRW 53,335,860 in total on 74 occasions on account of various insurance accidents. The details of hospitalized treatment conducted after the end of 2007, which was the working period of the above Defendant’s special history company, are dependent on subjective symptoms, such as salt, tension, etc., and the need for hospitalized treatment is doubtful. There are a large number of times. The above Defendant received several hospitalized treatments in the military area irrelevant to the workplace or residence.

3. The lower court’s determination is justifiable in accordance with the foregoing legal doctrine. In so doing, it did not err by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine on Article 103

4. The Defendants’ final appeal is dismissed in entirety as it is without merit, and the costs of final appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)