On Behalf of the Applicant, K&P Secures Judgment Overturning a Debt Garnishment and Collection Order
On behalf of our client Corporation X, K&P Law Firm achieved a significant victory by obtaining a judgment that overturned a debt garnishment and collection order, which had been levied against the client's rights to retrieve deposited funds.
Case Summary
1. On July 27, 2005, A and B completed a mortgage registration on a property owned by OO Temple ('the subject property'), listing C as the debtor with a maximum claim amount of 1.8 billion won.
2. Subsequently, on May 6, 2008, the subject property was transferred to OO Church through a gift, completing the ownership transfer registration.
3. A and B applied for a voluntary auction of the subject property based on the mortgage, and an auction commencement decision was made on September 9, 2009 ('the auction proceedings').
4. On September 24, 2015, B transferred their share of the mortgage to the Respondent, and a mortgage transfer registration in the Respondent's name was completed the same day.
5. While the auction proceedings were ongoing, OO Church filed a lawsuit on June 11, 2018, seeking the cancellation of the mortgage and applied for a suspension of enforcement at the Incheon District Court. The court ordered a suspension of the auction proceedings until the lawsuit's decision, subject to OO Church posting a security bond.
6. Partially dismissing OO Church's claim on November 14, 2019, the appellate court later ruled that the Respondent must perform cancellation registration for their half-share in the mortgage after receiving payment from OO Church. This decision was upheld by the Supreme Court on August 26, 2021.
7. The auction proceedings, previously suspended, resumed and the Respondent received a distribution of approximately 774 million won for their share of the mortgage claim on October 12, 2021.
8. The Respondent applied for a provisional attachment on Corporation X's right to withdraw a deposited amount of 92 million won, claiming damages against Corporation X, and obtained an order for the same on December 23, 2021.
9. The Respondent also filed a main lawsuit against OO Church and Corporation X, claiming the right to directly sue Corporation X for damages under Article 353 of the Civil Code.
10. The court, on July 13, 2022, accepted the Respondent's claim against OO Church but dismissed the claim against Corporation X, stating that the Respondent did not have the same rights as a pledgee in relation to the claim. This decision became final when the appeals were withdrawn.
11. Following this, the Respondent claimed and received 38 million won from the deposited amount.
12. The Respondent then applied for and received an order for debt attachment and collection against OO Church for the remaining deposited amount.
Law Firm K&P's Arguments
1. Corporation X, by depositing the subject amount, acted as a guarantor and is only liable within the scope of the deposited amount. The Respondent, being the beneficiary of 38 million won, has rights as a creditor to that extent, but has no rights over the remaining deposit.
2. As a guarantor for the Respondent's 38 million won, Corporation X is only liable for limited material responsibility and did not acquire any claim for damages against the Respondent.
3. The Respondent argues that the provisional attachment decision should not be canceled as they received a debt attachment and collection order. However, as OO Church, not Corporation X, is the debtor in this order, the Respondent's claim is baseless.
4. The Respondent contends that they are entitled to an additional 8 million won from the deposited amount, but Corporation X's responsibility is limited to the extent of the security provided on behalf of OO Church.
5. Therefore, Corporation X's liability to the Respondent is confined within the 38 million won range and does not extend beyond this obligation.
Court's Decision
The court accepted the arguments of Law Firm K&P and canceled the debt attachment and collection decision received by the Respondent.
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