[1] Whether "a claim held by the other party against a third party may be offset against a claim held by the other party as a passive claim (negative)

[2] The case holding that a set-off is not allowed in case where a successful bidder or an acquisitor of an apartment with a lien declared an intention of set-off by using a claim for return of unjust enrichment equivalent to the rent for the lien holder as an automatic claim and using a claim for reimbursement of beneficial expenses against the previous owner of the lien as a passive claim

[1] Where both parties have borne an obligation for the same kind of purpose, set-off shall be simultaneously extinguished by either party’s declaration of intent instead of performing the same kind of benefit, and the purport of such set-off system is to facilitate and fairly dispose of claims and obligations between the two parties opposing each other in a simple manner, so claims that can be deemed a set-off claim shall be claims held by the counter-party against the third party, and claims held by the counter-party against the third party shall not be set-off. In addition, if the counter-party can set-off a claim against the third party as a passive claim, this would infringe on the profits of the counter-party to receive benefits in accordance with the nature of the obligation between the counter-party and the third party, and thus unreasonable results arise only among creditors of the counter-party, and thus, it cannot be deemed that there is no reasonable expectation of the parties to legally protective measures in relation to the function of set-off.

[2] In a case where a successful bidder or acquisitor of an apartment with a lien declared an intention of offset by using a claim for return of unjust enrichment equivalent to the rent for the lien holder who occupies or uses part of the apartment, as a claim for reimbursement of unjust enrichment against the previous owner of the lien holder, the case holding that the court below erred in the misapprehension of legal principles in holding that the other party's claim against the previous owner against a third party cannot be offset by the passive claim, on the premise that such offset is permitted, the claim for return of unjust enrichment and the claim for reimbursement of useful expenses should be extinguished within the equal amount, on the premise that such offset is permitted.

[1] Article 492 (1) of the Civil Code / [2] Article 492 (1) of the Civil Code

Plaintiff (Attorney Kim Full-seop, Counsel for plaintiff-appellant)

Defendant 1 and one other (Attorney Park Jong-soo, Counsel for the defendant-appellant)

Jeonju District Court Decision 2009Na7130 decided November 5, 2010

The part of the lower judgment against Defendant 2 is reversed, and that part of the case is remanded to the Jeonju District Court Panel Division. Defendant 1’s appeal is dismissed. The costs of appeal against Defendant 1 are assessed against the said Defendant.

We examine the grounds of appeal.

1. Determination on Defendant 1’s grounds of appeal

The above defendant asserted that he is a lessee with opposing power since it was a lease contract between the defendant and the non-party who was the previous owner, but such assertion is merely a dispute over the selection of evidence and fact-finding, which are the whole matters of the court below's exclusive authority, and it is difficult to view it as a legitimate ground for appeal

2. Determination on Defendant 2’s grounds of appeal

The court below held that, in the event that the plaintiff becomes aware of the burden of the lien by successful bid or acquisition of the apartment of this case where the right of retention of the defendant 2 is recognized, it is reasonable in light of the principle of equity to allow the plaintiff to offset his claim for return of unjust enrichment against the defendant 2 and his claim for reimbursement of beneficial non-party 2, which is the secured claim of the right of retention, against the non-party 2. The court below held that the plaintiff's claim for restitution of unjust enrichment equivalent to the rent due to the possession and use of some of the apartment of this case against the defendant 2 as the automatic claim for reimbursement of unjust enrichment, and that the plaintiff's claim for reimbursement of unjust enrichment and the claim for reimbursement of beneficial non-performance due to the defendant 2's declaration of set-off against the previous owner

However, in a case where both parties have borne an obligation for the same kind of purpose, set-off is extinguished at the same time by either party’s declaration of intent instead of performing the same kind of benefit, and the purport of such set-off system is to facilitate and fairly dispose of claims and obligations between the two parties opposing each other in a simplified manner. As such, claims that can be deemed a set-off claim shall be claims held by the counter-party against a set-off and the claims held by the counter-party against a third party shall not be set-off. If the counter-party can set-off a claim against a third party with a claim against a set-off, this would not only infringe on the profit of the counter-party to receive benefits in accordance with the nature of the obligation from a third party in a claim and obligation between the counter-party and the third party, but also unreasonable result that may result in an exclusive satisfaction only between the creditors of the counter-party, and thus, it cannot be deemed that there is no reasonable expectation of the parties entitled to legal protection in relation to the function of set-off security.

On the contrary, the court below accepted the plaintiff's claim of set-off on the premise that the plaintiff's claim against the third party can be set-off against the above defendant's claim against the defendant 2, which affected the conclusion of the judgment. The ground of appeal pointing this out is with merit.

3. Conclusion

Therefore, the part of the lower judgment against Defendant 2 is reversed without further proceeding to decide on the remaining grounds of appeal, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. Defendant 1’s appeal is without merit, 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 on the bench.

Justices Lee Sang-hoon (Presiding Justice)