Supreme Court: "Loan Using Subcontracted Vehicle as Collateral Without Owner's Consent... Subcontracting Company Operator Guilty of Breach of Trust"

"Jiip Company Operator's Status as 'Agent Managing Another's Affairs' in Relation to Jiip Vehicle Owners"

Supreme Court in Seocho-dong, Seoul. Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that if a transportation company CEO takes out a loan using leased vehicles as collateral without the consent of the vehicle owners, it constitutes a breach of trust in the course of business. Leased vehicles refer to vehicles whose actual owners are individual drivers, but are registered under the company's name.

On the 11th, the Supreme Court's 2nd Division (Presiding Justice Jo Jaeyeon) overturned the lower court's acquittal of bus company CEO A, who was charged with breach of trust, and remanded the case to the Seoul Eastern District Court.

Previously, A was prosecuted for taking out a loan of 108 million won in 2015 using vehicles as collateral without the consent of the bus drivers who owned the vehicles.

The first trial sentenced A to four months in prison, stating that A had an obligation to protect and manage the rights of the leased vehicles based on the trust relationship with the vehicle owners but violated this duty.

However, the second trial acquitted A. The court at that time stated, "When the lease contract is concluded, it is reasonable to consider that the internal and external ownership of the passenger vehicles belongs to the leasing company," and "It is difficult to immediately hold criminal responsibility just because A set a mortgage on the leased vehicles or took disposal actions."

However, the Supreme Court ordered a retrial and reconsideration of the case. The court stated, "The operator of the leasing company holds the status of 'a person handling another's affairs' in relation to the leased vehicle owners," and "The defendant committed breach of trust by arbitrarily setting mortgages on each bus without the victims' consent, causing financial damage."

It added, "The lower court erred in its understanding of the legal principles regarding the establishment of breach of trust and failed to conduct necessary investigations, which affected the judgment."

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