Supreme Court Decision 2023Da217428, July 16, 2026 [Indemnity]

【Holding】

Where one of several joint and several sureties has paid the entire debt by subrogation and thereafter receives partial payment of the indemnity amount from the principal debtor, whether such payment first reduces the principal debtor's indemnity obligation corresponding to the share borne by the surety who made the subrogated payment (affirmative, in principle) / Where a real security had been created in favor of the creditor over property owned by the principal debtor before the subrogated payment, whether there exist special circumstances under which the amount recovered by one of the joint and several sureties through enforcing the security right transferred to him or her by operation of law after paying the principal debt by subrogation cannot be deemed to first reduce the principal debtor's indemnity obligation corresponding to that surety's share (affirmative), and the extent to which such amount reduces the indemnity obligations of the principal debtor and the other joint and several sureties

【Summary of Decision】

Where one of several joint and several sureties has paid the entire debt by subrogation and thereafter receives partial payment of the indemnity amount from the principal debtor, the following should be considered: the surety who made the subrogated payment cannot obtain indemnity from the other joint and several sureties for his or her own share and must obtain indemnity for that share solely from the principal debtor, and thus has a legitimate interest in first appropriating the principal debtor's payment to the principal debtor's indemnity obligation corresponding to his or her own share; and the right of indemnity that the paying surety holds against the other joint and several sureties, each up to the limit of his or her share, is a right recognized under Article 448(2) of the Civil Act in order to secure the realization of the right of indemnity of the surety who first made the subrogated payment while bearing the risk of the principal debtor's insolvency and to ensure equity among the joint and several sureties, so the other sureties cannot claim reduction or exemption of, or refuse performance of, their indemnity obligations toward the paying surety on the ground that, in the event of the principal debtor's insolvency, it may become difficult for them to exercise their own right of re-indemnity against the principal debtor. In light of these considerations, the principle is that, absent special circumstances, the principal debtor's partial payment of the indemnity amount first reduces the principal debtor's indemnity obligation corresponding to the share of the surety who made the subrogated payment, and until that portion of the indemnity obligation is fully extinguished, it has no effect on the scope of the indemnity obligations borne by the other joint and several sureties.

However, where a real security has been created over property owned by the principal debtor in favor of the creditor before the subrogated payment, so that the creditor has secured a right of preferential payment, the joint and several sureties cannot be regarded as bearing the risk of the principal debtor's insolvency with respect to the amount to be preferentially paid. In such a case, when one of the joint and several sureties pays the principal debt by subrogation, the creditor's rights concerning the security against the principal debtor are transferred by operation of law to the paying surety while maintaining their identity, and even if that security right is subsequently enforced and the surety's indemnity claim is partially extinguished, the paying surety can hardly be regarded as having borne the risk of the principal debtor's insolvency with respect to that portion. Nevertheless, if the amount paid through enforcement of the security right were deemed to first reduce the principal debtor's indemnity obligation corresponding to the share of the paying surety, the entire benefit relating to a portion for which no surety can be regarded as having borne the risk of the principal debtor's insolvency from the outset would be attributed to only one of the sureties, which is unjust. Therefore, where a real security had been created in favor of the creditor over property owned by the principal debtor before the subrogated payment, there exist special circumstances under which the amount recovered by the paying surety through enforcing the security right cannot be deemed to first reduce the principal debtor's indemnity obligation, and such amount should be regarded as reducing the principal debtor's indemnity obligation and, at the same time, the indemnity obligations of the other joint and several sureties in proportion to their respective shares.

【Referenced Statutes】

Articles 425(1), 441, 448(2), 481, and 482 of the Civil Act

【Referenced Precedents】

Supreme Court Decision 2009Da46873, September 30, 2010 (Gong2010Ha, 1970)

(Source: Supreme Court Decision 2023Da217428, July 16, 2026 | Judicial Information Disclosure Portal, Precedents)

2026. 10. 14. · By Attorney Dongwoo Shin