Supreme Court Decision 2011Da110685 Decided October 24, 2013 about Confirmation of Membership Qualification

Main Issues and Holdings

[1] Legal nature of a dong/ri Office organized inside the dong/ri administrative division and conditions to regard a dong/ri office as an association accepting only specific residents as its members

[2] As for the question whether “Myeongchon-ri Sang-ri Saemaeul Club” is an organization made of specific residents, the Court held that this organization is a traditional residential community organized by village residents, in light of surrounding circumstances

Summary of Decision

[1] Dong and ri offices are permanent associations organized inside the dong and ri administrative divisions. Except under unusual circumstances, all residents of the relevant area are members, and a person who moves into the division becomes a resident and member of the dongㆍri office automatically, and a resident loses the qualifications to be a member once he/she moves to another area. In order to find otherwise that a dongㆍri office is an organization for specific members, the following must to proven: that at the time the office acquired its property, it had a certain organic structure to exist as an association without legal personality together with the process or details behind the ownership of property in the office’s name.

[2] In a case where the issue was whether “Myeongchon-ri Sang-ri Saemaeul Club” is an organization made of specific residents, the court held that in light of surrounding circumstances such as the forestland’s previous ownership and use, the above association is a traditional residential community organized by village residents, and the judgment below was erroneous for misapprehending the legal principles on residential communities and unincorporated associations.

Reference Provision [1] Article 31 of the Civil Act / [2] Article 31 of the Civil Act

Article 31 of the Civil Act (Rule to Formation of Juristic Person) No juristic person can come into existence other than in accordance with the provisions of the Acts.

Reference Cases [1] Supreme Court Decision 2010Da75723, Oct. 25, 2012 (Gong2012Ha, 1907), Supreme Court Decision 2008Da71469, Jan. 30, 2009

Plaintiff-Appellant Plaintiff 1 and 5 others (Law Firm Taehwa, Counsel for plaintiff-appellant)

Defendant-Appellee Myeongchon-ri Sang-ri Saemaeul Club (Law Firm Cheong-ryul, Attorneys Chang Hee-seok, et al., Counsel for defendant-appellee)

Judgment of the court below Busan High Court Decision 2010Na12739 decided November 29, 2011

Disposition The judgment below is reversed, and the case is remanded to Busan High Court.

Reasoning The grounds of appeal are examined.

1. Dong (neighborhood) and ri (village) offices are permanent associations organized inside the administrative divisions dong and ri. All residents of the relevant districts are members, and a person who moves into the district automatically becomes a resident and member of the dongㆍri office, and a resident loses the qualifications to be a member once he/she moves to another area. In order to find that a dongㆍri office is an organization for specific members, the following must to proven:

that the office existed as an association which is not a juristic person, and the process or details behind the ownership of property in the office’s name (see Supreme Court Decisions 2008Da71469, Jan. 30, 2009; 2010Da75723, Oct. 25, 2012, etc.).

Meanwhile, the existence of de facto custom must be alleged and proven by the relevant party (see Supreme Court Decision 80Da3231, Jun. 14, 1993, etc.).

2. According to the reasoning and records of the judgment below, the following facts can be acknowledged.

A. Myeongchon-ri at Sangbuk-myeon, Ulju-gun, Ulsan has 1 village chief, but is made of two naturally occurring communities named Myeongchon village (Sang-ri) and Sagwang (Ha-ri) village.

On Jun 17, 1985, Defendant completed ownership transfer registration for the forest of this case, in accordance with the Act on Special Measures for Registration, etc. of Transfer of Real Estates Ownership. On Jun 13, 1994, the “Myeongchon-ri Saemaeul Club” completed the aforementioned registration for the 56㎡ etc. land at the village hall in Myeongchon-ri Sangbuk-myeon, Ulju-gun, Ulsan (lot No. 1 omitted). On Jul. 12, 1994, the “Sagwang Community Saemaeul Club,” organized of Sagwang village residents, completed the same registration for the 41,554㎡ forest land at Dungeok-ri, Sangbuk-myeon, Ulju-gun, Ulsan (lot No. 2 omitted).

B. On Feb. 30, 1918, the Forest Survey Project adjudicated Myeongchon village resident Nonparty 1 et al. as the owner of the forestland of this case, then later, ownership preservation and ownership transfer registration occurred under the name of Nonparty 2, another local resident. Yet during this process, none of the named owners claimed personal ownership, and the forest was used by all residents for collecting firewood and as gravesites.

C. At its general assembly meeting on Aug. 10, 1984, Defendant unanimously agreed to register the forest of this land under the Samaeul Club whose representative is village resident Nonparty 3, in order to prevent potential disputes caused by registering the forest under an individual. According to the minutes written at the meeting (hereinafter “minutes of this case”), “26 out of 35 community residents attended the meeting,” and included the name of the 26 attendees at the end.

D. On 2004, Ulju-gun announced the plan to construct a tourism complex on the forest of this case. On Defendant’s Jul. 23, 2005 general meeting, Defendant began the project of selling the forest of this case by taking measures such as selecting 7 “Steering Committee for the Selling of the Hill”including Plaintiff 6, Nonparty 4, and Nonparty 5. Accordingly, disputes over membership qualifications occurred between Myeongchon village residents due to the issue of dividing the sale proceeds.

E. To solve this problem, Defendant acquired “Articles of the Myeongchon-ri Samaeul Club”which used the same organization name with Defendants (Defendant changed its name to the present name on Jan. 21, 2006 in order to avoid confusion with “Myeongchon-ri Samaeul Club”). According to the Articles, members are those who have registered as Myeongchon-ri residents and presently live in the community (Articles 4 and 5), and one loses membership qualifications when he/she moves to another area or transfers their residency registration to another area (Article 6).

F. Based on the premise that the above Articles are Defendant’s own Articles, Defendant held a general meeting on Aug. 24, 2005 while excluding Plaintiff 6, Nonparty 4, and Nonparty 5, who were chosen as Steering Committee members but who reported address transference to another area at the time. At the meeting, Defendant agreed to amend the aforementioned Article 5 to include “a person who moved from another area has no rights over any property that belongs to the Saemaeul Club.”

G. Afterwards, Defendant held general meetings attended only by specific residents whom it considers to qualify as members. At the Jan. 21, 2006 meeting, Defendant amended the Article to include the following: full membership is limited to “a householder residing in Myeongchon village whose household lived in Myeongchon village for over 30 years including their lineal ascendant (Article 6),” remaining local householders who satisfy certain conditions such as registration for address transference are associate members (Article 7), only full members have the right to vote for an election, eligibility to run for election, and right to vote at meetings (Article 9), and associate members may have a maximum of 70% right of share over Defendant’s property (Article 19). On the Jun 18, 2009 general meeting, the following articles were enacted: “qualification for membership is acknowledged to householders residing in Myeongchon village who is recorded in the minutes of this case, and who have continuously lived in the village; the member automatically loses membership qualification upon death or transference to another area, but membership is acknowledged if his/her spouse or direct descendant moves in to Myeongchon village within 6 months following the death or transference (Articles 5 and 6).”

H. Meanwhile, Plaintiffs have moved to and lived in Myeongchon village at least before Nov. 25, 2005, but are denied membership status by Defendant.

3. The aforementioned facts are examined in light of the above legal principles.

It is sufficient to perceive that Defendant is a traditional community organized of Myeongchon village residents, in light of the following: the previous ownership and utilization of the forest of this case; the contents of the minutes of this case; in particular, when the minutes of this case was written, the number of householders who are registered residents in Myeonchon village and actually live in the village seems to be no more than 35, while Defendant alleged that Defendant is not a simple naturally occurring community, but a specific community made of householders whose membership was acknowledged in accordance with Defendant’s alleged custom (Previously, when a Myeonchon village native moves out of his/her household, he/she can acquire membership only by inviting Defendant’s members to a party and under all members’ unanimous decision. The person loses membership upon leaving the village.), yet is unable to clarify the remaining 9 members aside from the 26 members who attended the meeting; it is difficult to perceive that Defendant’s alleged custom was reflected in the association’s Article; considerable differences exist within the association articles as well; it appears another resident other than the village chief was chosen to represent Defendant, as the Myeongchon-ri village chief represents Myeongchon village and Sagwang village, while Defendant is only organized of Myeongchon village residents, and etc.

Yet the court below determined differently. Citing the circumstances in its ruling, the court below determined that Defendant is not a naturally occurring village community in which any Myeongchon village resident may be a members and whose members change due to transference, etc. of residents, but an association which existed according to the above custom, then became a specific community organized of householders from 35 households who qualify as members at the time Defendant’s ownership transfer registration of its real estate was completed. This judgment below was erroneous for affecting the judgment by misapprehending the legal principles on residential communities and unincorporated associations, and the allegation in the grounds of appeal which identify this error is with merit.

4. Conclusion

Therefore, the judgment below is reversed, and the case is remanded to the court below for further proceedings consistent with this opinion. It is decided as per Disposition at the assent of all participating Justices.

Justices  Park Byoung-dae (Presiding Justice)

Yang Chang-soo

Ko Young-han

Kim Chang-suk (Justice in charge)