[edit] Supreme Court Decision 2000Da51797 delivered on February 9, 2001 [Registration of Title Transfer]

【Main Issues】

[1] Whether the division of the inherited property by agreement can be subject to the right of revocation because of a fraudulent act (affirmative)

[2] Where the joint-security of the general creditors is reduced as a result of the debtor's waiver of rights to the inherited property during the course of the division by agreement, the scope of revocation of the fraudulent act (=the portion that is short of the inheritor's specific share of inheritance)

【Summary of Decision】

[1] The division of the inherited property by agreement is, upon the commencement of the inheritance, to establish each inheritor's independent ownership of the whole or parts of the inherited property with regard to the temporary co-ownership of inherited property among the common inheritors, or to decide the reversion of the inherited property by executing a new relationship of co-ownership. Since its legal act aims at the property right in nature, the division of the inherited property by agreement can be subject to the right of revocation of the fraudulent act.

[2] Where the debtor with excessive debt waives his/her right to the inherited property through division by agreement and, as a consequence, the joint-security of the general creditors is reduced, the division by agreement may not be revoked as a fraudulent act unless it is deemed that the result of the division of the property is minimal and short of a substantial portion of the debtor's specific share of inheritance. Even if it is short of a substantial portion of the specific share of inheritance, the scope of the revocation of the fraudulent act should be limited to the portion of such shortage.

【Reference Provisions】 [1] Articles 406 and 1013 of the Civil Act / [2] Articles 406, 1008, 1008-2 and 1013 of the Civil Act

Article 406 of the Civil Act (Creditor's Right of Revocation) (1) If the debtor has performed any juristic act which has a property right for its subject, with the knowledge that it would prejudice the creditor, the creditor may file a suit to the court for its revocation and restitution of its original status; provided, that this shall not apply in a case where a person who has derived a benefit from such act or a subsequent purchaser was, at the time of the act or of the purchase, unaware of the fact that it would prejudice the creditor.

(2) The suit mentioned in the preceding paragraph shall be filed within one year from the time when the creditor became aware of the cause for revocation, or within five years from the time when the juristic act was done.

Article 1013 of the Civil Act (Division by Agreement) (1) Except as mentioned in Article 1012, co-inheritors may, at any time, effect the division of the inherited property by their agreement.

(2) The provisions of Article 269 shall apply mutatis mutandis to the division of the inherited property mentioned in paragraph (1).

Article 1008 of the Civil Act (Shares of Inheritance for Special Beneficiary) If any one of the co-inheritors has previously received a gift or testamentary gift of property from the inheritee, and such property received is of less value than his share of the inheritance, he shall be entitled to a share of the inheritance within the limit of the difference between the said gifts and his legal share of the inheritance.

Article 1008-2 of the Civil Act (Contributory Portion) (1) If there is a person among co-inheritors who has specially contributed to the maintenance or increase of the property of the inheritee (including a person who has specially supported the inheritee), the value, calculated by deducting his contributory portion as determined by an agreement of co-inheritors from the value of property of the inheritee at the time the inheritance is commenced, shall be considered as an inherited property. The amount calculated by adding such contributory portion to the inherited portion calculated under Articles 1009 and 1010 shall be the inherited portion of that person.

(2) If co-inheritors fail to reach an agreement under paragraph (1), or if it is impossible to reach an agreement, the Family Court shall, upon the request of the contributor under paragraph (1), determine the contributory portion, taking into consideration the time, method and degree of the contribution, the value of the inherited property and other circumstances.

(3) The contributory portion shall not exceed the amount calculated by deducting the value of testamentary gifts from that of property of the inheritee when the inheritance is commenced. The request under paragraph (2) may be made when a request is made under Article 1013 (2), or as provided in Article 1014.

【Plaintiff, Appellee】 Ha Pil-soon (Law Office Taehwa, Attorneys Kim Dong-ho and 1 other, Counsel for plaintiff and appellee)

【Defendant, Appellant】 Kim So-bun and 2 others (Law Office Dongrae, Attorneys Cho Sung-rae and 2 others, Counsel for defendant and appellant)

【Court of First Instance】 Busan District Court Judgment 99Gadan51776 delivered on December 16, 1999

【Court of Second Instance】 Busan District Court Judgment 2000Na1539 delivered on August 31, 2000

【Disposition】 The judgment of the court below shall be reversed and the case shall be remanded to the Appellate Division of Busan District Court.

【Reasoning】 The grounds for appeal are examined as follows.

1. On the first ground for appeal

The division of the inherited property by agreement is, upon the commencement of the inheritance, to establish each inheritor's independent ownership of the whole or parts of the inherited property with regard to the temporary co-ownership of inherited property among the common inheritors, or to decide the reversion of the inherited property by executing a new relationship of co-ownership. Since its legal act aims at the property right in nature, the division of the inherited property by agreement can be subject to the right of revocation of the fraudulent act.

The judgment of the court below to the same effect shall be justified and there is no reversible error in matters of law by misinterpreting the legal principle on the subject of the right of revocation as alleged in the ground for appeal. The ground for appeal pointing out this issue cannot be accepted.

2. On the second ground for appeal

The co-inheritor's share of inheritance should comply with the inheritee's will as long as it does not interfere with his/her legally reserved right of the inheritance, and in the absence of a will, it should comply with the legal share of inheritance. But since a person among co-inheritors who received a gift or testamentary gift of property is entitled to a share of inheritance within the limit that the said gifts are short of his/her legal share of property (Article 1008 of the Civil Act) and since, for a co-inheritor who has contributed to the inheritee's maintenance or increase in property or who has specially supported the inheritee, the value calculated by deducting his contributory portion as determined by an agreement of co-inheritors from the value of property of the inheritee at the time the inheritance is commenced, shall be considered as inherited property, (Paragraph 1 of Article 1008-2 of the Civil Act) the designated share of inheritance or the legal share of inheritance does not become the co-inheritor's share of inheritance and, as long as there is a special gift or contribution, the value modified by that special gift or contribution is the specific share of inheritance, which becomes the standard for dividing the property.

Therefore, where the debtor with excessive debt waives his/her right to the inherited property through division by agreement and, as a consequence, the joint-security of the general creditors is reduced, the division by agreement may not be revoked as a fraudulent act unless it is deemed that the result of the division of the property is minimal and short of a substantial portion of the debtor's specific share of inheritance. Even if it is short of a substantial portion of the specific share of inheritance, the scope of the revocation of the fraudulent act should be limited to the portion of such shortage. Here, the debtor has the burden of persuasion and proof that his/her specific share of inheritance is different from his/her legal share by showing the designated share of inheritance or the existence of contribution, special gift, etc.

According to the records, the defendants, in their brief to the court of first instance delivered on November 25, 1999, argued that the defendant Park Kyung-deok waived his right to the inherited property during the negotiation for dividing the inherited property since he completed the registration of collateral security (keun-mortgage) in the name of Busan Mutual Savings & Finance with a maximum debt amount of 97.5 million won on the underground shopping center in Jeonpo-dong, Busanjin-gu, Busan, which belonged to the inheritee Park Dong-hyuk on April 10, 1997 and, as a debtor, the defendant Park Kyung-deok borrowed and spent 80 million won and thus already received inheritance in excess of his inheritance share. As evidence, the defendants submitted a certified copy of the registration of the underground shopping center (defendant exhibit 1) and according to defendant exhibit 1, consistent with the defendants' argument, the right to collateral security (keun-mortgage) was established and cancelled after the negotiation concerning dividing the present inheritance. In this situation, unless the defendant Park Kyung-deok himself repaid the loan, it can be inferred that he received substantial value equivalent to the debts from Park Dong-hyuk. Therefore, he has a share of inheritance only to the extent that his received amount is short of his share of inheritance. The court below should have examined whether the defendant Park Kyung-deok repaid the loan. Then, if he did not repay the loan, it should have properly determined the inherited property, and, after deciding the scope of the fraudulent act by reviewing the remainder of his legal share of inheritance after the deduction of the received amount, it should have ordered the transfer of the share or the reimbursement of the equivalent value accordingly. Furthermore, while the court below did not try or decide on this issue, it determined that the fraudulent act was established with regard to the entire legal share of the inheritance of defendant Park Kyong-deok and thus, in the court below's judgment, there were reversible errors in omitting the defendants' above-mentioned argument and not fully judging the situation leading up to the division of the inherited property by agreement. The ground for appeal on this point can be accepted.

Therefore, the judgment of the court below shall be reversed and the case shall be remanded to the court below for re-trial and judgment with the assent of all Justices who reviewed the appeal as ordered per Disposition.

Justices Lee Kang-kook (Presiding Justice)

Cho Moo-jeh

Lee Yong-woo (Justice in charge)

Kang Shin-wook

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