[1] Standard for determining the status of custodian in the crime of embezzlement of real estate, and whether the nominal owner of the registration of ownership transfer whose cause is invalid falls under “a person who keeps another’s property” (negative)

[2] Where, at the time of farmland title trust, a truster could not obtain a certificate of farmland purchase and sale, but later, a truster could cancel the title trust and seek the return thereof due to changes in circumstances, whether the trustee becomes “the person who keeps the above farmland” from the time of such change in circumstances (affirmative)

[3] The case affirming the judgment below which denied the establishment of embezzlement on the ground that the company manufacturing goods purchased farmland and entrusted the ownership transfer registration in the name of the defendant by completing the ownership transfer registration in the name of the defendant, but the defendant embezzled it by disposing of it to another person, since the company manufacturing goods cannot acquire farmland ownership, and the defendant is merely the nominal owner of the ownership transfer registration which is invalid

[1] The principal agent of embezzlement shall be a custodian of another’s property, and the custody here means the possession of property through a consignment relationship. Thus, in order to constitute embezzlement, there is a legally or de facto consignment relationship between the custodian of the property and the owner of the property (or other principal authority). Furthermore, in the case of real estate, the status of the custodian shall not be determined based on the possession of the real estate, but on the basis of the power to dispose of the real estate effectively to a third party. Thus, the title holder of the registration of transfer of ownership, which is void as the cause of embezzlement, shall not be deemed a person who keeps another’s property.

[2] Where a truster purchases farmland at the time of the enforcement of the former Farmland Reform Act (repealed by Article 2 of the Addenda to the Farmland Act, Act No. 4817, Dec. 22, 1994) and legally entitled to purchase farmland, such as a farming household, is held in title trust in the future. Even if, at the time of title trust, the truster was unable to purchase the said farmland because the truster was unable to obtain a certificate of farmland sale at the time of the title trust, due to changes in circumstances such as the enforcement of the Farmland Act, so long as the truster can cancel the title trust on the said farmland and seek the return thereof, the truster will be held in the position of the custodian of the said farmland for the truster.

[3] The case affirming the judgment below which held that the crime of embezzlement is established on the ground that, on the facts charged that a goods manufacturing company purchased farmland and entrusted the title of ownership by completing the registration of ownership transfer in the name of the defendant, but the defendant embezzled it by disposing of it to another person thereafter, the general corporation engaged in the manufacturing business cannot obtain ownership since it could not obtain the certificate of farmland sale under the former Farmland Reform Act (repealed by Article 2 of the Addenda to the Farmland Act, Act No. 4817, Dec. 2, 1994), which was enforced at the time when the sales contract was concluded, since the seller cannot obtain ownership, the seller's obligation to transfer ownership to the goods manufacturing company, which is the buyer, shall be deemed to be null and void as a bond contract, and since the above sales contract is not effective since the above Act was repealed and the Farmland Act was enforced, and thus the defendant is merely the title holder of the registration of ownership transfer, which is void as a cause, and thus it does not have the right to dispose the said land effectively to a third party.

[1] Article 355 (1) of the Criminal Act / [2] Article 355 (1) of the Criminal Act, Articles 2 and 19 (see current Article 8 of the Farmland Act) of the former Farmland Reform Act (repealed by Article 2 of the Addenda to the Farmland Act, Act No. 4817, Dec. 22, 1994) / [3] Article 355 (1) of the Criminal Act, Articles 2 and 19 (see current Article 8 of the Farmland Act) of the former Farmland Reform Act (repealed by Article 2 of Addenda to the Farmland Act, Act No. 4817, Dec. 22, 1994)

[1] Supreme Court Decision 2005Do2413 Decided June 24, 2005 (Gong2005Ha, 1293), Supreme Court Decision 2007Do1082 Decided May 31, 2007 (Gong2007Ha, 1012), Supreme Court Decision 2007Do6463 Decided October 23, 2008 (Gong2008Ha, 1626) / [2] Supreme Court Decision 97Do3283 Decided July 28, 1998 (Gong198Ha, 2349) (Gong207Do1029 Decided February 29, 2008)

Defendant

Prosecutor

Cheongju District Court Decision 2009No491 Decided August 20, 2009

The appeal is dismissed.

We examine the grounds of appeal.

1. A. A. Unless there are special circumstances at the time of enforcement of the former Farmland Reform Act (amended by Act No. 4817, Jan. 1, 1996; hereinafter “former Farmland Reform Act”), a corporation with the purpose of manufacturing business, etc. and a general corporation with the same purpose cannot acquire ownership of farmland even if they entered into a farmland purchase and sale contract because they cannot obtain a certificate of farmland purchase and sale under the above Act, barring any special circumstances. Thus, a seller’s obligation to transfer ownership to a general corporation with the purchaser of farmland pursuant to the purchase and sale contract is an original impossible performance. As such, a sale and sale contract for farmland with the purpose of an original impossible payment is also null and void as a bond contract, and it cannot be deemed null and void since the former Farmland Reform Act was repealed and the Farmland Act was enforced from January 1, 1996 (see, e.g., Supreme Court Decisions 94Da18232, Oct. 25, 199; 207Da46675, Apr. 26, 2007).

B. Meanwhile, the principal agent of embezzlement shall be a custodian of another’s property, and the custody here means the possession of property through a consignment relationship. Thus, in order to constitute embezzlement, there exists a statutory or de facto consignment relationship between the custodian of the property and the owner of the property (or any other principal person). Furthermore, in the case of real estate, the custodian’s status shall not be determined on the basis of the possession’s right to dispose of the real estate effectively to a third party, not on the basis of possession, but on the basis of the right to dispose of the real estate effectively. Thus, the principal agent of ownership transfer registration, which is void as the cause of embezzlement, cannot be deemed as a person who keeps another’s property (see Supreme Court Decision 2007Do1082, May 31, 2007).

2. On April 1987, the court below held that, with respect to the facts charged in this case in which the victim non-indicted 1 corporation purchased the land in this case from the non-indicted 2 and 3 and entrusted the ownership transfer registration in the future with the defendant from the seller to the seller, but the defendant embezzled the land by disposing of it to another person after 2005, the court below held that: (i) in determining whether it is farmland subject to embezzlement, the land of this case, the land category of which is "the whole land" on the registry, shall be treated as farmland regardless of its status; and (ii) in order to recognize the status of the custodian as to farmland, the title truster should be able to terminate the title trust and claim the return of the farmland ownership; and (iii) since the victim who trusted the land in this case to the defendant was a general corporation unable to acquire farmland under the Farmland Act, the defendant was not in the status of keeping the farmland for the victim from the beginning, the defendant did not constitute embezzlement even after disposing of the land in this case

3. A. (1) First of all, whether certain land is farmland prescribed by farmland-related laws and regulations must be determined according to the actual phenomenon of the pertinent land regardless of the land category in the public account book (see Supreme Court Order 98Ma2604, Feb. 23, 1999, etc.). Thus, the court below erred in holding that the pertinent land should be treated as farmland regardless of its land category.

(2) However, according to the records, the victim purchased the land of this case from Nonindicted 4 (the clerical error that stated “Nonindicted 2” in the first instance judgment) and Nonindicted 5, the owner of the land of this case, in order to secure access roads while constructing a new factory on the neighboring land of this case as a stock company engaging in the business of manufacturing industrial plastic products, and the victim purchased the land of this case from the owner of the land of this case. At the time of the sales contract, the land of this case was farmland such as land category, but

Therefore, even if the victim, who is a general corporation, engaged in the manufacturing industry, entered into a sales contract for the land of this case, as farmland, he cannot obtain ownership because he could not obtain the certification of farmland sale under the former Farmland Reform Act, which was enforced at the time. Thus, the seller's obligation to transfer ownership to the victim, who is the buyer, is the primary impossibility of performance. Therefore, the sales contract for the land of this case for the purpose of performance, which is the primary impossibility, shall also be deemed null and void as a bond contract. The above sales contract cannot be deemed null and void as it was repealed by the former Farmland Reform Act and was enforced by the Farmland Act.

(3) Meanwhile, in the case of the so-called “three-party title trust” or “intermediate omitted-type trust” that a person who purchased real estate from the owner of the real estate without completing the registration of ownership transfer under the name of the seller, and completed the registration of ownership transfer with a third party immediately from the seller, and if the third party arbitrarily disposes of the real estate trusted under his/her own name, the truster shall be held accountable for embezzlement. In addition, in the case of title trust in the future of the trustee who is entitled to lawfully purchase farmland such as a farmer at the time when the former Farmland Reform Act enters into force, even if the truster was unable to purchase the said farmland because he/she was unable to obtain the certificate of farmland sale at the time of the title trust, the truster would be held in the position of the person who stores the said farmland for the truster (see, e.g., Supreme Court Decisions 2007Do1029, Feb. 29, 2008; 2008Do328, Apr. 31, 2008).

However, in this case, the instant land sales contract between Nonindicted 4, 5 and the victim, who is the buyer, is null and void as seen above. As such, regardless of whether the Farmland Act was implemented, the victim may not seek the return of the instant land against the Defendant by terminating title trust and subrogated the seller, etc. Therefore, the Defendant is merely a title trustee under the so-called “third party title trust” but is merely the title holder of the ownership transfer registration, which is void of the cause, and thus is merely a title holder of the ownership transfer registration, and does not have the power to dispose of the instant land effectively to a third party. Furthermore, regardless of Nonindicted 4 and 5, the Defendant cannot be deemed to have established a legal or de facto consignment relationship between Nonindicted 4, 5, the real owner of the instant land, and the Defendant, who is the real owner of the instant land, based

Ultimately, the Defendant cannot be deemed to be in the position of the custodian of the instant land, and the Defendant’s selling the instant land to a third party and completing the registration of ownership transfer cannot be deemed to have embezzled the instant land against Nonindicted 4, 5, or the victim.

B. The judgment of the court below is inappropriate in its reasoning, but it is legitimate in its conclusion that the defendant's crime of embezzlement is established. Thus, the prosecutor's appeal is without merit.

4. Conclusion

Therefore, the appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Hong-hoon (Presiding Justice)