If the chair sold a clan association's land without lawful authority, the buyer must return ownership to the clan association, the Supreme Court has ruled.
The Supreme Court's Third Division (presiding Justice Lee Heung-gu) said on the 13th that on May 20 it affirmed an appellate ruling that A must register the transfer of land ownership to the Gyeongju Kim clan Sangchongong branch clan association (hereafter "the clan association") in a lawsuit the clan association filed seeking ownership transfer registration against A.
The clan association elected B as chair at a regular general meeting in Nov. 2014. Another member, C, filed a suit claiming the meeting resolution was void, and on Oct. 16, 2015, the court in the first trial ruled the chair's election invalid. The ruling was finalized on Sept. 29, 2016.
After filing the merits suit, on Oct. 21, 2015, C applied for a provisional injunction to suspend the performance of the clan association chair's duties against A. The court granted it on the 29th of the same month.
On Oct. 27, 2015, B signed a sales contract with A to sell the clan association's land in Gwangju, Gyeonggi, for 4.185 billion won. It was two days before the application for the provisional suspension of the chair's duties was granted. B deposited the proceeds from the land sale received from A into an account under another person's name managed by B.
In addition, B sold other land owned by the clan association. The sale proceeds were spent to pay taxes imposed on B, business expense, attorney's retainer fees, and the like.
The clan association did not appoint an acting chair until July 2016. At the acting chair's request, B sent 2.527 billion won to the clan association. 1.659 billion won was not returned.
The clan association filed a suit against A, who purchased the land, seeking an ownership transfer. The clan association argued that because the general meeting resolution electing B was void, the resolution to sell the land decided by B was unlawful and the sales contract was void.
The first trial ruled that A must transfer to the clan association ownership of the land that A purchased. The first trial court said, "At the time the sales contract was signed, a ruling had already been handed down that the general meeting resolution electing B as chair was void," adding, "A registration of ownership transfer made pursuant to a void sales contract is void."
B objected, but the second instance dismissed the appeal. In the second instance, B filed a countersuit against the clan association seeking a return, arguing that if the sales contract was void, the sale money constituted unjust enrichment. The court said, "There is no evidence to recognize that the clan association obtained a benefit equivalent to the sale money."
The Supreme Court also held that A must transfer land ownership to the clan association. However, it reversed and remanded, finding that if a substantial portion of the land sale money A paid to B was paid to the acting chair of the clan association or used for the clan association, it constitutes unjust enrichment and must be returned.
Accordingly, in the remand proceedings, the Suwon High Court must examine how much of the land sale money paid by A was used for the clan association and recognize an obligation to return unjust enrichment for that amount.