Plaintiff (Attorney Park Jong-young, Counsel for the plaintiff-appellant)

Comprehensive Construction Co., Ltd. and one other

October 22, 2009

1. As to each real estate listed in the separate sheet:

A. The Defendants’ establishing a mortgage contract concluded on December 3, 2008 shall be revoked, and the contract shall be revoked.

B. Defendant 2 performed the registration procedure for cancellation of the establishment period of the right to collateral security, which was completed on December 5, 2008 by the Suwon District Court’s Ansan registry office on December 5, 2008, to the Construction Co., Ltd. (hereinafter “Defendant 2”);

C. On December 1, 2008, 2008, a comprehensive construction company dealing with the defendant performed the registration of creation of a mortgage with the plaintiff and the debtor as a creditor and the debtor as a joint construction with the maximum debt amount of KRW 300,000,000.

2. The plaintiff's remaining claims against the comprehensive construction company for defendant are dismissed.

3. Of the costs of lawsuit, 50% of the portion arising between the plaintiff and the comprehensive construction dealing with the defendant corporation shall be borne by the plaintiff, the remainder by the defendant corporation, and the part arising between the plaintiff and the defendant 2 by the defendant 2, respectively.

The main text of Paragraph 1 and Construction Co., Ltd. (hereinafter referred to as the “Defendant Co., Ltd.”) shall pay to the Plaintiff the amount of KRW 200 million with interest of 20 million per annum from the next day of the delivery of a copy of the complaint of this case to the day of full payment.

1. Basic facts

A. On October 2007, Nonparty 1 and Nonparty 2, who are the Plaintiff’s wife, lent a total of KRW 100 million to the Defendant Company, each of which was KRW 50 million.

B. Around 2007, the Defendant Company purchased the land listed in paragraph (1) of the [Attachment List (hereinafter “instant land”) from Nonparty 3 and constructed a building listed in paragraph (2) of the annexed Table (hereinafter “instant building”) on that ground. In order to secure the right to claim the registration of transfer of ownership of the instant land, the Defendant Company received the registration of establishment of a collateral security on the instant land with the maximum debt amount of KRW 600 million on September 5, 2007, Nonparty 3, the obligor, and the Defendant Company. On October 9, 2007, Nonparty 1 and 2 completed the registration of establishment of a collateral security on the said loan’s collateral against Nonparty 1 and 2.

C. On August 14, 2008 and November 12, 2008, Defendant 2, the representative director of the Defendant Company and Nonparty 5, entered into an agreement with Nonparty 3, 1, and 2 to allow the Defendants to directly receive loans equivalent to the above amount, instead of paying loans to Nonparty 1, 2, in lieu of the Defendants’ loan debt amounting to KRW 190 million after the Defendants completed the construction permit title of the instant building changed to the Defendant Company. The Defendant Company, Nonparty 1, and Nonparty 2 exempted Nonparty 3’s debt upon the establishment registration of a neighboring mortgage as indicated in the above paragraph (b) and cancelled the said establishment registration.

D. On November 21, 2008, the Defendant Company entered into a contract for construction works that the non-party company contracted to the Taena integrated Construction Co., Ltd. (hereinafter “True Construction”) and ceased due to the non-payment of the construction cost, etc., on the Jeju-do 1689-2, the remaining construction works (hereinafter “the instant construction works”) out of the construction works for the land effective hospital (hereinafter “the instant construction works”) from November 24, 2008 to May 23, 2009, with the contract price of KRW 6.3 billion, and the construction period from November 24, 2008 to May 23, 2009. The contract amount of construction works that the non-party company contracted to the Taena integrated Construction Co., Ltd. (hereinafter “True Construction”) was paid in advance to the Corporation.

E. The plaintiff introduced the defendant company to lend funds necessary for the construction of this case to the non-party company. On November 21, 2008, the interest rate of KRW 500 million between the non-party company and the non-party company shall be 3% per month, three months from the date of loan for KRW 100 million, four months from the date of loan for KRW 200 million, and five months from the date of loan for KRW 200 million. Among them, the non-party company agreed to pay advance payment that the non-party company shall pay to the defendant company instead of the non-party company. The non-party company's debt amount of KRW 500 million was jointly and severally guaranteed by the non-party company with KRW 30 million, and the plaintiff received KRW 100 million,000,000,000 from the non-party company as collateral for the above loan, KRW 500,000,000,000,000,000 won.

F. On the other hand, on November 24, 2008, between the Plaintiff and Nonparty 1 and Nonparty 2 entered into a contract with Nonparty 1’s loan claim amounting to KRW 67 million against the Defendants, and KRW 134 million against Nonparty 2’s loan claim amounting to KRW 67 million. On December 16, 2008, Nonparty 1 and Nonparty 2 sent a letter verifying the contents of the above assignment to the Defendants. On December 16, 2008, the Plaintiff reached the Defendants at that time. The Plaintiff transferred KRW 67,793,00 to the Defendant Company’s account on November 24, 2008, which is the date of the above assignment of claim. The Defendant Company prepared and issued a receipt to the Nonparty Company that received KRW 200 million as advance payment of the construction price of this case.

G. On December 1, 2008, the Defendant Company received KRW 200 million from the Plaintiff with respect to the instant construction project, and prepared and delivered a performance note stating the following (hereinafter “instant performance note”). On the same day between the Defendant Company and the Plaintiff, the Plaintiff prepared a written contract to establish a collateral security with regard to the instant land and building with the content of KRW 300 million with the obligee and the obligor, the obligor, and the maximum debt amount. The Defendant Company prepared and delivered to the Plaintiff the power of delegation to the Plaintiff to establish the collateral security agreement with the content of the above to the Plaintiff.

○ The Defendant Company is liable and repaid by the Defendant Company in the event that the instant construction is not completed and the contract is rescinded halfway.

○ The Defendant Company shall set up a right to collateral security of KRW 300 million with the maximum debt amount as a guarantee for the repayment of the said debt against the instant land and building.

H. On December 1, 2008, the non-party 1 and the non-party 2 revoked the registration of creation of a collateral security (hereinafter referred to as the "mortgage of this case") that was transferred from the defendant company on December 1, 2008, and the defendant company completed the registration of establishment of a collateral security (hereinafter referred to as the "mortgage of this case") with respect to the land of this case and buildings of this case to the deceased agricultural cooperative on the same day after the registration of preservation of ownership was completed, and the registration of establishment of a collateral security (hereinafter referred to as the "mortgage of this case") was completed on the 5th of the same month with respect to the non-party 2.

I. As of December 3, 2008, the date of the contract to establish the right to collateral security of this case, the defendant company had no property other than the land and the building of this case.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 9, 11 through 20 (including each number), Eul evidence 1, 7 through 10, 12, 14, and 18, witness non-party 8 and 9' testimony and the purport of the whole pleadings

2. Determination on this safety defense

A. Summary of the defendants' assertion

1) As to the Plaintiff’s claim for payment of KRW 200 million of the advance payment of the instant construction work paid by the Defendant Company instead of the Defendant Company, the Defendant Company asserted that the Plaintiff’s claim for payment of the advance payment of KRW 200 million against the Defendant Company instead of the Nonparty Company, who is the party to the instant construction contract, is unlawful as a lawsuit filed against the Defendant Company on February 13, 2009, Jeju District Court No. 2009Gahap415 (Seoul District Court Decision 2009Gahap546) (Seoul District Court Decision 2009Gahap5546), and thus, the Plaintiff’s claim for the return of the advance payment against the Defendant Company without any authority is unlawful as a lawsuit brought by a party without standing.

2) The instant performance rejection becomes effective when the instant construction was suspended as the Defendant Company’s responsibility and the contract was rescinded. As such, the Nonparty Company notified the Defendant Company of the rescission of the instant construction contract on February 13, 2009, even if the instant performance rejection becomes effective, the instant performance rejection becomes effective only after the date of the notification of the rescission. However, the Plaintiff filed the instant lawsuit seeking payment of KRW 200 million against the Defendant Company on January 20, 2009, which was prior to the occurrence of the instant performance rejection. As such, the Plaintiff asserts to the purport that the instant lawsuit is unlawful.

B. Determination

On the other hand, in a lawsuit for performance, the standing to be a party exists in the person who asserts that he/she has the right to demand performance, which is the subject matter of the lawsuit, and whether or not there exists the right to demand performance exists, shall be proved through the deliberation of the merits (see, e.g., Supreme Court Decision 2003Da44387, 44394, Oct. 7, 2005). If the plaintiff asserts that he/she has the right to demand the return of advance payment against the defendant company and claims the performance, the plaintiff has the standing to be a party with regard to the above part of the claim, and the issue of whether the plaintiff has the right to demand payment of KRW 200,000 against the defendant company should be proved through the deliberation of the merits. Thus, all of the above arguments

3. Judgment on the merits

A. Summary of the parties' assertion

1) Summary of the Plaintiff’s assertion

A) The Defendant Company did not commence the instant construction work and did not perform its duty to cancel the instant construction contract. As such, the Defendant Company was obligated to pay KRW 200 million advance payment that the Plaintiff paid to the Defendant Company instead of Nonparty Company in accordance with the instant performance note.

B) Although Defendant Company was liable to pay KRW 200 million to the Plaintiff in accordance with the instant performance memorandum, Defendant Company first ordered Defendant 2 to establish the instant collateral security agreement. Since the instant collateral security agreement is deemed to be a fraudulent act detrimental to the Plaintiff, a creditor, it should be revoked. Defendant 2 is obligated to implement the procedure for registration of cancellation of the instant collateral security registration to the Defendant Company by restitution to its original state.

C) The Defendant Company is obligated to implement the registration procedure for establishing a mortgage regarding the instant land and buildings with the maximum debt amount of KRW 300 million to the Plaintiff according to the mortgage-backed contract concluded based on the awareness of the instant performance statement.

2) Summary of the defendants' assertion

A) The Plaintiff’s claim against the Defendants is based on the instant performance letter and a mortgage contract based thereon, and Nonparty 5’s representative director, Nonparty 8, a certified judicial scrivener, merely affixed a seal impression for the registration of the transfer of ownership in the name of the Defendant company concerning the instant land and buildings and for the cancellation of the registration of the establishment of existing mortgage, and there was no seal affixed to each of the above documents. The Plaintiff’s claim based on each of the above forged documents is without merit.

B) The Defendant Company: (a) believed that the Plaintiff invested KRW 1 billion in the instant construction project; (b) prepared a letter of performance of this case; and (c) since the Plaintiff did not implement the said investment commitment, the instant letter of performance does not take effect due to the nonperformance of the terms and conditions; and (d) therefore, the Plaintiff’s claim based on the instant letter of performance cannot be justified.

C) Although the non-party company did not perform the construction work even after it intended to remove or move the structures, equipment, etc. owned by the building company that was relocated, it was impossible for the defendant company to start the construction work of this case because it prevented the defendant company from entering the construction site of this case by filing an application for temporary injunction against entry into the construction site of this case against the defendant company and the non-party company, etc.

D) Although the Plaintiff borrowed KRW 500 million to Nonparty Company and received joint and several suretiess from Nonparty 6, etc. with sufficient financial resources, it is unreasonable for the Defendant Company to bear the obligation to pay KRW 200 million, which is a part of the Defendant Company.

(b) Fact of recognition;

Further to the aforementioned evidence, the following facts may be acknowledged if Gap evidence Nos. 24, Eul evidence Nos. 3, 5, 6, 16, and 17, and some testimonys of non-party 4 and 9 are added.

1) Around August 2007, prior to the conclusion of the instant construction contract with the Defendant Company, the Nonparty Company entered into a construction contract with the Defendant Company with the content of KRW 7.8 billion with the contract amount. During the construction work, the construction work was not properly carried out due to the reasons such as the payment of the construction cost to the subcontractor. On September 23, 2008, the Nonparty Company was ordered from the Jeju City to suspend the construction work on the ground of the suspension of supervision report.

2) According to Article 8 of the instant construction contract (Evidence A No. 1), the non-party company decided to accept the report of commencement by November 24, 2008, which the Defendant Company decided to start the instant construction work, with the competent authority, to complete the settlement of claims and obligations of the previous contractor and subcontractor, and deliver the construction site to the Defendant Company.

2) However, at the time of the commencement of the above construction work, Tae Jong-tae demanded the payment of the construction cost to the non-party company and claimed that he had possession right to the construction site of this case, and prevented the defendant company and the non-party company from entering the construction site of this case. On December 4, 2008, the defendant company asserted that the contract for the construction work of this case was dual contract and sent to the defendant company that the defendant company may suffer disadvantage when entering the construction site of this case or the construction work of this case. This reached the defendant company around that time.

3) On December 16, 2008, Thai case filed an application for provisional disposition against the non-party company, defendant company, etc. for prohibition of entry into the construction site of this case with Jeju District Court Decision 2008Kahap565, and around December 27, 2008, the non-party company, etc. agreed to enter the exercise of lien until the subcontractor company, such as junam, etc., who participated in the construction site before the construction of this case, receives construction expenses, and occupied the construction site of this case by installing container stuff from January 2009. However, the above court dismissed the application for provisional disposition on the ground that the possession of the construction site of this case was illegal possession and the need to preserve the above provisional disposition is not recognized to preserve the claim for the payment of the non-indicted 565.

4) On the other hand, on December 16, 2008, the defendant company demanded the non-party company to settle debt obligations with the subcontractor and deliver the construction site of this case. The non-party company sent content-certified mail to the effect that the construction period should be extended on the basis of the date of delivery of the construction site of this case to the defendant company.

5) On February 13, 2009, Jeju District Court 2009Gahap415 (Transfer to Gwangju District Court, Gwangju District Court 2009Gahap5546) notified the Defendant Company of the cancellation of the instant construction contract due to the Defendant Company’s non-performance of obligation, such as delay in commencing the construction work, and filed a lawsuit seeking payment of KRW 200 million paid by the Defendant Company and KRW 200 million for damages arising from the cancellation of the contract.

C. Determination

1) Determination as to the claim for KRW 200 million against the defendant company

A) (1) In addition to the following circumstances, the Plaintiff Company did not enter into a contract for the instant construction work with the Defendant Company: (a) the Plaintiff did not enter into a loan agreement with the Defendant Company to pay KRW 500,000 to the Defendant Company KRW 100,000,000,000,000 to the Defendant Company; and (b) the Plaintiff did not enter into a contract for the instant construction work with the Defendant Company to pay KRW 300,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,00,00.

(2) On this issue, the Defendant Company asserted that the instant statement of performance was forged and void as it is, or that the Plaintiff did not perform the promise to invest KRW 1 billion in the instant construction project, and that the instant statement of performance does not take effect due to the non-performance of the terms and conditions. However, there is no evidence to acknowledge the foregoing assertion. Thus, the Defendant Company’s assertion is without merit.

(3) The defendant company asserted that it is unfair that the defendant company bears the obligation of 200 million won, which is part of the defendant company, against the plaintiff who has been jointly and severally guaranteed by 3, such as the non-party 6, etc. with sufficient means to repay the loan claim 500 million won against the non-party company, as described in the above paragraph (a) (2). However, if the contract for the construction work of this case is cancelled, the plaintiff can claim payment of KRW 200 million against the defendant company without relation to the above joint and several sureties's repayment. Thus, the above assertion by

B) Therefore, the Plaintiff is entitled to seek payment of KRW 200 million against the Defendant only if the instant construction contract was not completed and the instant construction contract was rescinded, and according to the facts found in Paragraph b above, the Defendant Company occupied the instant construction site for a considerable period after the conclusion of the instant construction contract, and the Defendant Company failed to properly implement the instant construction project, and the Nonparty Company filed a lawsuit claiming payment of advance payment KRW 200 million against the Defendant Company by asserting the cancellation of the instant construction contract, but the instant construction contract cannot be deemed to have been rescinded due to the foregoing circumstances, and the testimony of Nonparty 23 through 26 (including the serial number) and Nonparty 4 alone cannot be deemed to have been rescinded, and there is no other evidence to acknowledge that the instant construction contract was rescinded, and the Plaintiff’s claim for construction price did not appear to have been due to the Plaintiff’s non-party Company’s non-party Company and the subcontractor Company’s non-party Company’s non-party Company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company and the Plaintiff company’s non-party company’s non-party company’s non-party company’s non-party.

2) Determination on the revocation of fraudulent act and the claim for restitution

A) Determination as to whether the instant mortgage contract constitutes a fraudulent act

On December 1, 2008, the Defendant Company issued a letter of performance of the instant construction project to the Plaintiff on which the instant construction project had not been completed yet, and was liable to pay KRW 200 million to the Plaintiff when the instant construction contract was rescinded, and even if the condition of suspension was not fulfilled at the time of fraudulent act, the Defendant Company may exercise its right of revocation with the condition precedent claim against the Plaintiff. As to the instant land and building, which is the only property of the Defendant Company, concluded the instant mortgage contract with Defendant 2 on December 3, 2008, and completed the registration of establishment of the instant mortgage on May of the same month. Thus, the instant mortgage contract becomes a fraudulent act against the Plaintiff, a creditor of the Defendant Company, unless there are special circumstances.

B) Revocation and restitution of fraudulent act;

Therefore, the mortgage contract of this case should be revoked as a fraudulent act, and the defendant 2 is obligated to implement the registration procedure for cancellation of the mortgage establishment registration of this case against the defendant company due to restitution to its original state.

3) Determination on the part of the claim for the performance of the registration of the establishment of a neighboring mortgage against the Defendant Company

As seen in Paragraph (1) above, if the construction contract of this case was not completed yet against the plaintiff and the contract for the construction work of this case was rescinded, the defendant company had the obligation to pay KRW 200 million to the plaintiff. On December 1, 2008, the defendant company issued a letter of performance of this case to set up a right to collateral security of KRW 300 million to the land and building of this case in order to secure the repayment of the above obligation to the plaintiff. On the same day, the plaintiff and the plaintiff were to conclude a right to collateral security contract with a creditor who is concurrently the creditor, the debtor, the defendant company, and the maximum debt amount as stated in Paragraph (1) above. Thus, barring any special circumstance, the defendant company is obligated to perform the registration procedure for establishing the right to collateral security with the creditor, the debtor, the defendant company, and the maximum debt amount as KRW 300 million to the land and building of this case.

4. Conclusion

Therefore, the plaintiff's claim against the defendant 2 is justified, and the claim against the defendant company is accepted within the scope of the above recognition. The remaining claim is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment]

Judge Bo Young-jin (Presiding Judge)