Viewpoint. Preservation creditors file a third-party revocation lawsuit against the effective judgment of another case, an outsider's execution of the objection, or the path choice of applying for a retrial.

Published:

2021-11-10

Question raised In September 2019, Company A applied to the court to preserve Company B's $12 million maturity claim against Company A. In January 2020, the court entered into a judgment determining that Company A has a monetary preservation claim of $10 million against Company B. In November 2019, Company B pledged $46 million of its maturing claims on Company A to Company C and registered a pledge of accounts receivable. In March 2020, the court issued a judgment in the case of Company C v. Company B and Company A's accounts receivable pledge dispute, determining that Company C has a secured monetary claim of 40 million yuan against Company B and Company A. After the accounts receivable pledge dispute case entered the enforcement procedure, Company A believed that as a creditor who preserved the monetary creditor's rights, it could not exclude the enforcement of the secured monetary creditor's rights. It was meaningless to file an enforcement objection and an enforcement objection lawsuit, nor could it file a third party's cancellation lawsuit. At the same time, Company A also believes that the judgment of the accounts receivable pledge dispute is correct, and as an outsider, it cannot apply for a retrial of the effective judgment. Therefore, Company A can only object to the court's enforcement action, the enforcement court rejected Company A's objection to stop the enforcement action, and then the higher court rejected Company A's application for reconsideration. As a preservation creditor, can Company A defend its legitimate rights and interests by opposing the effective judgment of another case through a third party's revocation, an outsider's execution of an objection, or an outsider's application for a retrial? Problem reasoning (I) the third person to withdraw the action 1. Whether the preservation creditor is the qualified plaintiff of the third party's revocation. (1) Negative views. The Interpretation and Application of the Minutes of the National Court Civil and Commercial Trial Work Conference published by the People's Court Publishing House in December 2019 on Article 120 of the Minutes of the Conference: Preservation will deprive or restrict the right of ownership, use, income and disposition of the executed person, and at the same time the applicant shall have priority in the distribution of the proceeds from the disposal of the preserved property. The creditor's right to priority payment is not a substantive right to the seized assets. The outsider cannot participate in the original trial litigation in the name of the seizure person, so he or she cannot file an avoidance action in the name of a third party. Supreme People's Court Bulletin Case (2017) Supreme Law Minzong No. 319 Civil Ruling Judgment Summary: According to Article 56 of the Civil Procedure Law, the subject who has the right to bring a lawsuit for revocation by a third party shall be strictly limited to the two categories of third parties with independent claim and without independent claim as stipulated in the first two paragraphs of this article, the subject of the right to bring a third-party revocation action cannot be extended to outsiders with ordinary claims other than the two types of third parties stipulated in Article 56 of the Civil Procedure Law. Ordinary creditors have a certain de facto relationship with the original case in terms of whether the claim can be realized, but this de facto relationship is different from the legal interest. Ordinary creditors do not belong to the third party without independent claim under Article 56, paragraph 2, of the Civil Procedure Law. It can be seen that the Supreme People's Court has strictly limited the plaintiff's qualifications for filing a third-party revocation suit, and generally does not allow ordinary creditors to file a third-party revocation suit, except for the circumstances stipulated in Article 56 of the Civil Procedure Law and Article 120 of the Minutes of the National Court's Civil and Commercial Trial Work Conference. (2) Affirmation of opinion. The article "Judgment Criteria of" Case Handling Results Have Legal Interests with Him "published in the Minutes of the Judges' Meeting of the Second Circuit Court of the Supreme People's Court (Series 2) published by the People's Court Publishing House in April 2021 holds that after the general creditor applies to the court to seize the property of the executed person, the seized property belongs to the property that cannot be disposed of according to the property law and relevant provisions of enforcement, however, due to operational reasons or internal working procedures of the institution, the executed person establishes a mortgage on the seized property and confirms through a mediation letter that others can exercise the mortgage, and the general creditor has a" legal interest "in the case of the executed person and the other person's lawsuit to confirm the mortgage". The latest view of the Supreme People's Court is that there is a conflict of civil rights between the creditor who applies for court preservation of a specific property and the right holder who has other civil rights in the specific property, and there is a legal interest. A third party without an independent claim right to file a third party revocation lawsuit. 2. The preservation creditor is the qualified plaintiff of the third party's revocation. Article 24, paragraph 1, of the Provisions of the Supreme People's Court on the Seizure, Seizure and Freezing of Property in Civil Enforcement by People's Courts [2020 Amendment] stipulates: "The transfer, burden of rights or other acts that hinder the execution of the property that has been sealed up, seized or frozen by the person subject to execution shall not be opposed to the person applying for execution." On November 4, 2004, the "Two Highs" judicial database "Understanding and Application of the Provisions of the Supreme People's Court on Seizure, Seizure and Freezing of Property in Civil Execution by People's Courts" interprets Article 26, paragraph 1 (amended to Article 24, paragraph 1, in 2020) of the Provisions: The Provisions have two meanings: First, the executed person transfers, sets mortgage, pledges, leases and other dispositions of the sealed property, the applicant for execution may still request the execution of the property on the basis of the claim contained in the execution basis, without being restricted by the above-mentioned disposition, and there is no need to consider protecting the interests of the counterpart of the disposition. Second, on the premise of not prejudicing the purpose of the seizure and protecting the interests of the executor, in order to protect the security of the transaction, maintain the order of the transaction and promote the transaction, the transfer, setting of burden or other acts that hinder the effect of the seizure by the executor are still valid. The Supreme People's Court's "Understanding and Application of Real Rights in the Civil Code" published by the People's Court Publishing House in July 2020 interprets Item (V) of Article 399 of the Civil Code (Item 5: Property sealed up, detained and supervised according to law shall not be mortgaged) and holds that the mortgage contract signed with the sealed up or detained property as the mortgaged property is still legal and valid, then when the property is movable property, in view of the adversarial registration of movable property mortgage, the mortgage is validly established from the date of the mortgage contract, at which point the question arises as to whether the mortgage takes precedence over the seizure of the claim. If the mortgage is considered to take precedence over the seizure of the claim, the function of the seizure and seizure system will be completely overhead. Therefore, even if it is considered that the mortgage has been established at this time, it cannot take precedence over the seizure and seizure of the claim. In my opinion, after taking protective measures against a particular property, the preservation creditor has a procedural distribution priority over the particular property, and any subsequent disposition of the particular property by the preserved person, even if confirmed by the effective judgment of another case, cannot be opposed to the preservation claim. When the same specific property is burdened with the preservation claim and other civil rights determined by the effective judgment of another case, the effective judgment of another case will inevitably affect the realization of the preservation claim, and there must be a legal interest between the preservation creditor and the effective judgment of another case. Company A's preservation of money claims and Company C's secured money claims are directed to Company B's accounts receivable, the two have a legal interest, Company A as the third party in the dispute over the quality of accounts receivable, is the third party to cancel the lawsuit of the appropriate plaintiff. Of course, whether Company A can finally file a third-party revocation lawsuit depends on whether it meets the relevant conditions stipulated by law and judicial interpretation. (II) Outsiders to Execute Objection 1. The effect of preservation does not mean that the creditor has a substantive right to preserve the property. According to article 24, paragraph 1, of the Provisions of the Supreme People's Court on the Seizure, Seizure and Freezing of Property in Civil Enforcement by the People's Court (2020 Amendment), the preservation creditor has priority over the preservation of property, and the priority of this distribution procedure is not a substantive right to the preserved property. The Supreme People's Court's interpretation of Article 120 of the Minutes of the National Court's Civil and Commercial Trial Work Conference also holds that the preservation of the creditor's priority right to compensation is not a substantive right to the preserved property. On July 28, 2020, the first civil court of Shandong high court answered some questions about the trial of the execution objection lawsuit. it was believed that if the outsider filed the execution objection lawsuit to exclude the execution on the grounds of having legal priority such as security right of the execution object and priority compensation right of construction project price, the legal priority only affects the order of compensation and does not belong to the reason of excluding the execution, in general, the outsider should be informed of the resolution through the implementation of the objection review procedure or the allocation scheme objection procedure. 2. The preservation creditor's objection to the execution of the preservation of property and the objection will not be supported by the court. According to Article 24 of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objection and Reconsideration Cases by People's Courts (2020 Amendment), the preservation creditor must provide evidence to prove that he has a substantive right to the preserved property and that the right can exclude enforcement. The procedural distribution priority enjoyed by the preservation creditor over the preserved property does not belong to the substantive rights stipulated in Articles 25 and 26 of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objection and Reconsideration Cases by the People's Court (2020 Amendment). The preservation creditor's objection and objection to the execution of the subject matter of the execution of the judgment in another case (preservation of property) will not be supported by the court. Company A, as a preservation creditor, does not enjoy civil substantive rights to Company B's due claims, and cannot file an execution objection and objection to the subject matter of execution, or the execution objection or objection of Company A will not be supported by law. (III) outsiders apply for retrial 1. Relativity of preservation effect. The interpretation of item (V) of article 399 of the civil code in the understanding and application of the real right compilation of the civil code, the interpretation of article 120 of the minutes of the meeting in the understanding and application of the minutes of the national court's civil and commercial trial work, and the article "the validity of the ruling on real estate seizure and the protection of bona fide third parties" in the minutes of the second court of civil trial of the supreme people's court-the court: the effect of preservation is relative, that is, any disposition of the property by the person being preserved shall not be opposed to the applicant for preservation, and shall not be entitled to disposition for the relative. Whether a counterpart who is not entitled to dispose of constitutes a bona fide acquisition under article 311 of the Civil Code (article 106 of the Property Law) depends on whether the preservation decision is publicized. The article "The Effectiveness of Real Estate Seizure Decisions and the Protection of Bona fide Third Parties" in the "Minutes of the Judges' Meeting of the Second Civil Trial Division of the Supreme People's Court-Tracing the Jurisprudence Behind the Decision" holds that the court's adoption of preservation measures on specific property does not ipso facto have the effect against bona fide third parties, unless publicity has been completed. If the preservation is not publicized, the person being preserved shall dispose of the property to be preserved, and the relative may still obtain civil rights in accordance with the system of good faith acquisition. In my opinion, if the preservation ruling has been publicized by posting a seal, public notice, registration or other means sufficient to let others know, there is no question of the good faith of the counterpart when he has no right to dispose of it, and the counterpart cannot obtain civil rights on the basis of the system of good faith acquisition. Conversely, the counterpart may acquire civil rights under the system of good faith acquisition. 2. The preservation creditor may apply for a retrial of another judgment that has not been heard in accordance with the rules of law in good faith. After the preserved person has no right to dispose of the preserved property to the counterparty, if the preserved person or the counterparty sues in another case to determine the relationship of civil rights and obligations between the preserved person and the counterparty, because the case involves the unauthorized disposition of the preserved property, the court In addition to hearing the case in accordance with the demands of the parties, it should also determine the facts and apply the law in accordance with the legal rules obtained in good faith. If the court does not hear the case in accordance with the legal rules obtained in good faith, there is a high possibility that there is an error or partial error in the effective judgment of the other case, and the preservation creditor may consider applying for a retrial of the effective judgment of the other case. Company A applied to the court to preserve Company B's 12 million yuan due creditor's rights to Company A. There was no public announcement, no seal could be posted, and no registration and publicity could be carried out. Company C could not know the fact that the accounts receivable were preserved through the public announcement. According to Article 61, paragraph 2, of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code, Company C shall verify with Company A the authenticity, legality and completeness of Company B's accounts receivable. Company C is not a bona fide third party under Article 311 of the Civil Code (Article 106 of the Property Law) if Company C fails to perform its verification obligations or is informed by Company A that the accounts receivable are preserved, and there may be problems with the dispute over the pledge of accounts receivable not being heard in accordance with the legal rules of bona fide acquisition. If there is a problem with the effective judgment of another case, Company A will have the opportunity to apply for a retrial, but it should meet other conditions stipulated by law and judicial interpretation. Questions for reference Since Company A does not enjoy civil substantive rights to the subject matter of execution, it cannot file an execution objection or objection to the subject matter of execution as an outsider, or the execution objection or objection of Company A will not be supported by law. According to Article 227 of the Civil Procedure Law and Article 423 of the Judicial Interpretation of the Civil Procedure Law, since Company A has not raised any objection to the subject matter of execution, it cannot apply for a retrial of the effective judgment of another case as an outsider. The entry into force of another judgment may be problematic if it is not tried in accordance with the rules of law obtained in good faith. Company A has the opportunity to file an action to revoke the effective judgment of another case as a third party without an independent claim. The third person's right of revocation is one of the paths of the right to relief, whether it works or not is another matter.

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