[edit] Supreme Court Decision 99Da1949 delivered on June 12, 2001 [Guarantee Obligations]
【Main Issues】
[1] Whether a claim for lease fees is subject to short-term prescription (negative)
[2] Whether a guarantor's guarantee obligation is not affected by the reorganization creditor's loss of claim, in the event that the reorganization creditor has negligently failed to file his or her claim and, as a result, has lost the claim
【Summary of Decision】
[1] In a financing lease, the payment of the lease fee is regarded as the partial repayment of the principal amount and as the payment of the interest and costs, etc., made in consideration for the lease company providing the finance for the asset for a lessee. Besides, the lease fee also functions as a consideration for the entire lease transaction including the financial convenience provided by the lease company for the lessee. Therefore, a claim for lease fees is not subject to a 3-year prescription as a creditor-debtor relationship regarding such lease fee claim occurs at one time and simultaneously becomes final and conclusive, while the payment thereof is to be made on an installment basis for a fixed period of time. In other words, a lease fee claim should not be regarded as a claim for incidentals that arises out of the underlying claim for periodic payment. Also, although each lease installment represents the combined amount of partial repayment of the acquisition cost and the interest on its remaining balance, since such installment payment method is used solely for the calculation of the lease fee payable, the interest portion of each lease installment is not independently and separately subject to a 3-year prescription.
[2] Where a corporate reorganization proceeding under the Company Reorganization Act has commenced against a lessee, even if a creditor-leasing company fails to file its claim under the lease contract with the reorganization court and as a result thereof loses its right to claim the payment of the lease fee, the right held by the leasing company to claim the lease fee against the lessee's guarantor is not affected by the creditor's loss of claim, pursuant to Paragraph 2, Article 240 of the Company Reorganization Act.
【Reference Provisions】 [1] Paragraph 1, Article 162 and Subparagraph 1, Article 163 of the Civil Code, Subparagraph 10, Article 2 of the Specialized Credit Financial Business Act / [2] Paragraph 2, Article 240 of the Company Reorganization Act
Article 2 of the Credit Financial Business Act (Definitions). The terms used in this Act are defined as follows:
(1)~(9) <omitted>
(10) "Facilities lease" means a financing method whereby goods specified by the Presidential Decree (hereinafter referred to as "specified goods") newly purchased or leased are leased to others for use for a certain period of time against payment therefor receivable periodically in installments. The disposal of the goods at the end of that period shall be decided by an agreement between the parties concerned
(11)~(16) <omitted>
Article 240 of the Company Reorganization Act (Scope of Effect of Reorganization Program) (1) <omitted>
(2) The program shall not affect the rights held by a reorganization creditor or security holder against the guarantor of the company and those who bear an obligation together with the company, nor the security offered by a person other than the company, for the reorganization creditor or security holder.
【Plaintiff-Appellee】 Busan Lease Financing Co., Ltd. (Law Office Shinjin General, Attorneys Lee Sung-jik and 1 other, counsel for plaintiff-appellee)
【Defendant-Appellant】 Kim Bong-ju (Attorney Lee Ik-woo, Counsel for defendant-appellant).
【Court of First Instance】 Seoul District Court Judgment 96Gadan356 delivered on June 16, 1998.
【Court of Second Instance】 Seoul District Court Judgment 98Na35845 delivered on December 11, 1998.
【Disposition】 The appeal shall be dismissed. All costs of appeal shall be assessed against the defendant-appellant.
【Reasoning】 1. The court below, quoting the judgment of the court of the first instance, found that: On August 21, 1989, the plaintiff and non-party Dongyang Precision Industry Co., Ltd.(hereinafter referred to as "Dongyang") entered into a Computer and Software Lease Contract (hereinafter referred to as the "Lease Contract") under the terms of which the plaintiff agreed to purchase and lease to Dongyang certain computers and software products in consideration for the lease fee to be paid by Dongyang; the lease term was for 42 months with a quarterly lease payment in advance; both parties further agreed to renew the Lease Contract upon Dongyang's request 2 months prior to the expiration of the Lease Contract(if renewed, the renewed Lease Contract was to contain a distinct lease term and a new lease fee payable while the other conditions were to remain the same as the original Lease Contract); the defendant, the then representative director of Dongyang, stood as a joint and several surety for Dongyang's entire contractual obligations under the Lease Contract vis a vis the plaintiff; the lease term commenced on August 29, 1989 when the lease object was delivered to Dongyang and Dongyang issued an acknowledgement of receipt to the plaintiff; and thereafter Dongyang made a request to renew the Lease Contract around or in December of 1992 by which the Lease Contract was effectively renewed. Based upon the facts set forth above, the court below determined that the defendant, as a joint guarantor, was liable to pay the outstanding lease fees payable by Dongyang to the plaintiff under both the original and the renewed Lease Contract.
Pursuant to the relevant court records, we hereby affirm and agree to findings of the court below and decision that the defendant acted as a joint surety rejecting the defendant's argument that such act was induced by fraud, and further that such joint suretyship was legally effective under the renewed Lease Contract as well as the original Lease Contract. We also conclude that the court below did not violate the rules of evidence or misinterpret the legal principles pertaining to the construction of the contract in rendering its judgement(issue numbers 1, 2 and 7 of the defendant-appellant's Grounds for Appeal). Further, the above Lease Contracts are not invalid or ineffective pursuant to Subparagraph 5, Article 9 of the Regulation of Standardized Contracts Act. The cases cited by the defendant-appellant in his Grounds for Appeal are all factually distinguishable from this case and cannot therefore serve as the precedents for this case.
2. At the court of the second instance, the defendant alleged that, since the defendant intended to and did undertake the joint guaranty liability for Dongyang under the Lease Contract in the capacity of Dongyang's representative director solely for Dongyang's obligations which might possibly arise during the term of his office as the representative director and resigned from the office of the representative director around December 23, 1989 when Dongyang was not in default in the payment of its lease fees under the Lease Contract, such joint guaranty liability should be regarded to have terminated upon his resignation and the defendant should not be held liable for the payment of the lease fees which became due and payable after his resignation. The the court below rejected the above argument raised by the defendant on the grounds that there was no evidence showing that the defendant had undertaken the joint guaranty liability with the above alleged intention under the above alleged circumstances and further that the joint guaranty in this case could not be deemed as the one arising out of a future indeterminate obligation due to continuing and recurring transactions while the termination of a joint guaranty liability due to the changes in circumstances occurs only when the joint guaranty liability stems from a future indeterminate obligation due to recurring transactions such as comprehensive Keun-guaranty or limited Keun-guaranty. From our examination of the records, we conclude that the decision of court below was reasonable and acceptable and that the court below did not err in interpreting the legal principles pertaining thereto(issue number 3 of the Grounds for Appeal). The cases cited by the defendant-appellant in his Groudns for Appeal are distinguishable as they involve the Keun-guaranty obligations and cannot therefore serve as the precedents for this case.
3. In a finance lease which is the main issue in this case, the payment of the lease fee is regarded as the partial repayment of the principal amount and as the payment of the interest and costs, etc. made in consideration for the lease company providing the finance for the asset for a lessee. Besides, the lease fee also functions as a consideration for the entire lease transaction including the financial convenience provided by the lease company for the lessee. Therefore, a claim for lease fees is not subject to a 3-year extinctive prescription as a creditor-debtor relationship regarding such lease fee claim occurs at one time and simultaneously becomes final and conclusive, while the payment thereof is to be made on an installment basis for a fixed period of time. In other words, a lease fee claim should not be regarded as a claim for incidentals which arises out of the underlying claim for periodic payment. Also, although each lease installment represents the combined amount of partial repayment of the acquisition cost and the interest on its remaining balance, since such installment payment method is used solely for the calculation of the lease fee payable, the interest portion of each lease installment is independently and separately subject to a 3-year prescription. We conclude that the decisions of the court below as such are reasonable and justified, and there was no reversible error in matters of law as to short-term prescription (refer to issue number 4 of the Grounds for Appeal).
4.Where a corporate reorganization proceeding under the Company Reorganization Act has commenced against a lessee, even if a creditor-leasing company fails to file its claim under the lease contract with the reorganization court and as a result thereof loses its right to claim the payment of the lease fee, the right held by the leasing company to claim the lease fee against the lessee's guarantor is not affected by the creditor's loss of claim, pursuant to Paragraph 2, Article 240 of the Company Reorganization Act. With respect to this case where the plaintiff who has been engaged in leasing business lost its claim for lease fees as it failed to timely file such claim with the reorganization court during the reorganization proceeding for Dongyang, the judgment of the court below that the plaintiff's loss of the lease fee claim or the reason therefor should not affect the defendant's guaranty obligations was reasonable and justified as such judgment was based on the legal principle stated above, and there was no reversible error in matters of law as alleged by the defendant-appellant(refer to issue number 5 of the Grounds for Appeal and the supplemental argument thereto).
5. At the court of the second instance, the defendant argued that he should be exempt from the guaranty obligation under the equitable principle of good faith since the plaintiff continued to transact with Dongyang notwithstanding the plaintiff's right to unilaterally terminate the Lease Contract pursuant to Article 21 of the Lease Contract on the ground of Dongyang's commencement of its corporate reorganization procedures, while the plaintiff failed to immediately notify the defendant, the guarantor, of such rapid changes in circumstances, causing the defendant to miss his opportunity to take appropriate actions by either expressing his intention to terminate his guaranty obligation or by replacing the guarantor. The court below rejected the above assertion of the defendant on the ground indicated in the decision of the court below, which we deem reasonable and justified based on the relevant court records and free of the errors of misunderstanding relevant legal principles or an incomplete trial as alleged by the defendant-appellant(refer to issue number 6 of the Grounds for Appeal).
6. The court below in holding that the defendant liable for his guaranty obligations on the payment of the outstanding lease fees payable under both the original and the subsequently renewed Lease Contract, found that: Dongyang was in default in the payment of part of the 13th lease installment and its default interest and the 14th lease installment and then made a full payment of such defaulted amount to the plaintiff which was appropriated for the repayment of the lease fees due and payable under the Lease Contract in the order as indicated in the original decision; Dongyang also defaulted in its payment of the 1st through the 4th lease installments following the renewal of the Lease Contract and made a full payment of such amount to the plaintiff which was also appropriated for the repayment of the lease fees due and payable under the renewed Lease Contract. From our examination of the records, we conclude that the foregoing findings and decisions of the court below are reasonable and justified. We also conclude that there was no reversible error in the judgment of the court below such as charging double default interest on the interest portion of each lease installment or as to the method and the order of the appropriation for the performance of the debt, as asserted by the defendant-appellant in issue number 8 of the Grounds for Appeal. We find that the part of judgment of the court below as to the order of the appropriation for the performance of the debt was inconsistent with the one as prescribed in the relevant statute. According to the relevant court records, however, the plaintiff notified Dongyang in around July of 1994 of the appropriation for the performance of the debt as indicated in the decision of court below and Dongyang did not raise any objection to such appropriation method for a considerable amount of time. Since Dongyang's such failure to raise its objection should be deemed as an implied consent thereto, such inconsistency as indicated in the court below's decision is irrelevant to and would not affect our assessment of the decision of the court below.
7. Accordingly, we conclude that this appeal is groundless. The appeal shall be dismissed, and all costs of appeal shall be assessed against the losing party. It is so ordered per Disposition.
Justices Yoo Ji-dam (Presiding Justice)
Suh Sung
Bae Ki-won
Park Jae-yoon (Justice in charge)
- This is a legal document in the public domain according to Korean Copyright Law.
