Basic facts of the case
On September 27, 2017, Company A signed a working capital loan contract with the bank to borrow 1.2 million yuan from the bank, and the two parties agreed on the loan interest rate, loan term, liability for breach of contract, and guarantee method in the contract. Company A signed a mortgage contract with the bank, voluntarily mortgaged its automatic molding machine and other machinery, equipment and instruments with the legal right of disposal for the above-mentioned creditor's rights, and went through the movable property mortgage registration with the relevant industrial and commercial administrative department. On the same day, Company B and Song Moumou signed a guarantee contract with the bank to provide joint and several liability guarantee for the above-mentioned loan, and the guarantee period was two years from the date of expiration of the debtor's performance of the debt as stipulated in the loan contract. Mr. Zhang voluntarily mortgaged his house for the creditor's rights of Company A and the bank, and went through the mortgage registration.
After the expiration of the loan contract, Company A failed to repay the principal and interest of the loan as agreed in the contract, so the bank filed a lawsuit with the court, requesting Company A to bear the repayment liability, and at the same time, the guarantors and mortgagors performed the guarantee obligations. Company B, Song and Zhang argued that the creditor's rights should be realized on the collateral provided by Company A first, and the guarantor should bear the guarantee liability for the insufficient part.
Case focus
In the same case, where there is both a security in rem and a security in person, how should the order in which the creditor realizes the creditor's claim be determined.
Adjudication Results
The loan contract between the bank and Company A, the guarantee contract between Company B and Song, and the mortgage contract between Company A and Zhang were all established in accordance with the law and were legal and valid. After the bank disburses the loan according to the contract, Company A fails to repay the principal and interest as agreed, which constitutes a breach of contract, and it should continue to repay and bear the liability for breach of contract. The bank has the right to mortgage the collateral involved in the case of Company A, and in the event of a breach of contract by Company A, it has the right to be repaid preferentially for the proceeds from the auction and sale of the collateral. After the mortgaged property is discounted, auctioned or sold, the part of the price exceeding the amount of the creditor's rights shall belong to the mortgagor, and the insufficient part shall be repaid by Company A. The mortgage contract and the guarantee contract both stipulate that "if the principal debt is secured or guaranteed by other things in addition to this contract, it shall not affect any rights of the mortgagee (creditor) under this contract and its exercise, and the mortgagee (creditor) has the right to decide the order of exercise of each security right, and the mortgagor (guarantor) shall bear the guarantee liability in accordance with the provisions of this contract, and shall not defend the creditor on the basis of the existence of other guarantees and the order of exercise." ”
According to the mortgage contract and the guarantee contract, the bank may require the guarantor to bear the guarantee liability at the same time when the bank realizes the creditor's rights on the security of the property. Company B and Song Moumou, as the guarantors of joint and several liability, shall bear joint and several liabilities in accordance with law. Each guarantor and the third party providing the mortgage guarantee shall have the right to recover from the debtor after assuming the guarantee liability. Accordingly, the court ruled as follows:
1. Defendant Company A shall repay the principal of the bank loan of 1.2 million yuan within 10 days from the effective date of this judgment and pay the interest until the date of repayment of the principal and interest;
2. Defendants Company B and Song XX are jointly and severally liable for the debts determined in item 1 of this judgment. After assuming the guarantee liability, it has the right to recover from the defendant Company A;
3. If the defendant Company A fails to perform the above-mentioned payment obligations, the bank shall have the right to give priority to the repayment of the price obtained from the auction and sale of the collateral provided by the defendant Company A;
4. If the defendant Company A fails to perform the above-mentioned payment obligations, the bank has the right to give priority to the compensation of the price obtained from the auction and sale of the real estate provided by the defendant Zhang. After assuming the mortgage guarantee liability, the defendant Zhang Moumou has the right to recover from the defendant Company A.
The judge interprets the law
Security in rem is to secure the performance of debts in kind, including mortgages, pledges, and liens; A personal guarantee is a guarantee for the performance of the debt with the credit of the person, that is, the guarantee stipulated in the Guarantee Law. In this case, there are the following types of guarantees: 1. the chattel mortgage guarantee provided by the debtor; 2. Real estate mortgage guarantee provided by a third party; 3. The guarantor's joint and several guarantee. That is, the same claim is secured by both the security in rem and the security of the person.
Article 176 of the Property Law of the People's Republic of China stipulates that if the secured creditor's right is secured by both a real and a personal security, and the debtor fails to perform the due debt or the parties agree to realize the security interest, the creditor shall realize the creditor's right in accordance with the agreement; If there is no agreement or the agreement is not clear, and the debtor provides security for the thing, the creditor shall first realize the creditor's right on the security of the thing; If a third party provides security in kind, the creditor may realize the creditor's right in respect of the security in rem, and may also require the guarantor to bear the guarantee liability.
The "agreement" in this provision has the following understanding: where the parties have an agreement on the relationship between the security in rem and the security in rem, the autonomy of the parties is fully respected, and the order of realization is chosen according to the agreement, and the "agreement" includes both the agreement on the order of liability between the personal guarantee and the security in rem, and also the agreement on the scope of the allocation of liability between the personal guarantee and the security in rem. The creditor shall, in accordance with the agreement, realize the creditor's right to choose when the "agreement" in the creditor's right is to determine or restrict the security of the object and the security of the person.
In this case, taking into account the above-mentioned legal provisions and the agreement of the parties in the contract that "the creditor has the right to decide the order of exercise of each security right", it can be determined that the agreement belongs to the clear agreement provided for in Article 176 of the Property Law, and the bank can either give priority to the repayment of the movable property mortgaged by Company A, or directly require the guarantor to bear joint and several guarantee liability. The court did not support the defense that Company B and Song Moumou should first realize their claims on the collateral provided by Company A, and then the guarantor should bear the guarantee liability for the insufficient part.
Judge reminds
The financial market is complex and changeable, and in the financial loan contract, in order to better protect the creditor's rights and recover the principal and interest of the loan to the greatest extent, the bank often requires the borrower to provide a guarantee in kind and a third party to provide a guarantee in kind or a guarantee in person. The coexistence of security in rem and in person can effectively reduce the risk of creditors and better protect the interests of creditors.
In the event that the borrower fails to perform the due debt or the parties agree to realize the security interest, the order of the realization of the creditor's rights will be different, and the scope of the guarantor's liability will be different according to the different laws and regulations and the different agreements of the parties.
Therefore, when guaranteeing others, whether it is a security in rem or a person, when signing a guarantee contract, you should carefully read whether the contract has an agreement on the sequential realization of the security interest, understand the legal risks and responsibilities you will bear, and carefully consider whether to provide security and the amount and method of providing security according to the debtor's ability to repay and your own economic situation.
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