[edit] Supreme Court Decision 98Da59682 delivered on April 25, 2000 [Promissory Note]

【Main Issue】

The validity of a promissory note payable on a fixed date, the maturity of which is specified as a date earlier than the issue date (invalid)

【Summary of Decision】

Due to the nature of the bill obligatory as a bill of formality and a bill of stipulations, the satisfaction of the requirements for bills shall be determined solely based on the statement on the bill. In the event that any of the requirements stated on a bill is unattainable in itself or each requirement for a bill is clearly in conflict with others, it is proper to determine that such a bill is invalid. On the other hand, since the issue date of a promissory note is one of the requirements for a valid bills, the rights relating to the bill cannot be legitimately established without the issue date. Thus, when the maturity date of a promissory note payable on a fixed date is specified as a date earlier than the issue date, such promissory note shall be invalid due to the conflict in the statement on the requirements for the bill.

【Reference Provisions】 Articles 75 and 76 of Bills of Exchange and Promissory Notes Act

Article 75 of the Bills of Exchange and Promissory Notes Act (Requirements) A promissory note shall contain:

1. The term "promissory note" inserted in the body of the instrument and expressed in the language employed in drawing up the instrument

2. An unconditional promise to pay a determinate sum of money

3. A statement of the time of payment

4. A statement of the place where payment is to be made

5. The name of the person to whom or to whose order payment is to be made

6. A statement of the date when and of the place where the promissory note is issued

7. The name and the seal or the signature of the person who issues the instrument

Article 76 of the Bills of Exchange and Promissory Notes Act (Defects in Requirements) (1) An instrument in which any of the requirements mentioned in the preceding Article are wanting shall be invalid as a promissory note, except in the case specified in the following paragraphs.

(2) A promissory note in which the time of payment is not specified shall be deemed to be payable at sight.

(3) In default of special mention, the place where the instrument is made shall be deemed to be the place of payment and at the same time the place of the domicile of the mention.

(4) A promissory note which does not mention the place of its issue shall be deemed to have been made in the place mentioned beside the name of the maker.

【Reference Cases】 Supreme Court Decision 94Da12098 delivered on September 9, 1994 (Gong1994Ha, 2614), Supreme Court Decision 97Da4517 delivered on May 7, 1997 (Gong1997Sang, 1713).

【Plaintiff, Appellant】 Park Chun-bok

【Defendant, Appellee】 Jung Saeng-gi

【Court of First Instance】 Haenam Branch of Gwangju District Court Judgment 96Gadan2726 delivered on May 23, 1997

【Court of Second Instance】 Gwangju District Court Judgment 97Na4100 delivered on October 30, 1998

【Disposition】 The appeal shall be dismissed. All costs of appeal shall be assessed against the plaintiff-appellant.

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

1. On the claims for the amount of promissory note

Due to the nature of the bill obligatory as a bill of formality and a bill of stipulations, the satisfaction of the requirements for bills shall be determined solely based on the statement on the bill. In the event that any of the requirements stated on a bill is unattainable in itself or each requirement for a bill is clearly in conflict with others, it is proper to determine that such a bill is invalid. On the other hand, since the issue date of a promissory note is one of the requirements for a valid bill, the rights relating to the bill cannot be legitimately established without the issue date. (See Supreme Court Decisions Nos. 94Da12098 and 94Da12104 delivered on September 9, 1994.) Thus, when the maturity date of a promissory note payable on a fixed date is specified as a date earlier than the issue date, such a promissory note shall be invalid due to the conflict in the statement on the requirements for the bill.

Pursuant to the reasoning for the judgment of the court below, the court below, based on the accepted evidence referred to in the judgment, found that the defendant issued to non-party Kim Chang-hyun a promissory note with the face amount of 30,000,000 won, the issue date of October 2, 1995, the payment date of January 17, 1995, the place of issuance and payment of Wando-gun, and the location for payment of Wando Branch of Kookmin Bank; that Kim Chang-hyun endorsed and assigned the promissory note to the plaintiff; and that the plaintiff, in the capacity as the final holder, presented the promissory note for payment at the above-mentioned bank, however, was rejected. The court below then concluded that, since the stated payment date was earlier than the issue date, the promissory note was invalid due to non-satisfaction of requirements for the bill and that the satisfaction of the requirements for the bill shall be determined, in principle, solely based on the statement on the bill and, thus, the supplementation or correction of errors in the part of the statement on the bill after examining the facts extrinsic to the promissory note shall not be permitted. The above-stated findings of facts and conclusion of the court below can be justified in light of the above legal principles and there exists no reversible error in matters of fact due to incomplete trial or misapplication of the legal principles on the formal requirements of a promissory note.

The Supreme Court Decision 80Da1295 delivered on July 28, 1981 cited by the plaintiff-appellant in the appellate brief as supporting the appeal, which ruled that a promissory note with the issue date specified as February 30, 1978 was valid as the issue date of the last day of February of the same year, is not applicable to this case.

2. On the claims for the agreed amount of payment

Pursuant to the reasoning for the judgment of the court below, in response to the plaintiff's claim to the effect that the defendant had an obligation to pay the agreed payment amount of 30,000,000 won and damages for delay since the defendant agreed with the plaintiff to pay the amount equal to the amount of promissory note on October 15, 1995, the court below rejected such claim because the presented evidence purportedly conforming thereto could not be deemed credible and there existed no other supporting evidence. Based on the records, the above judgment of the court below shall be justified and there exist no reversible errors as to the rules of evidence, the legal principles, and the omission in the Judgment, etc.

3. Accordingly, the appeal shall be dismissed and all costs of appeal shall be assessed against the plaintiff-appellant. This decision is delivered with the assent of all Justices who reviewed the appeal.

Justices Lee Im-soo (Presiding Justice)

Lee Don-hui

Song Jin-hun

Yoon Jae-sik (Justice in charge)

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