Supreme People's Court Judgment: How to determine the act of the project department stamping on the IOU

【Main Points of the Judgment】The scope of use of the official seal of the project department is generally limited to the project report, measurement, change and final account information, excluding the purpose of external borrowing. However, from the perspective of the actual situation in the construction industry, some construction units are not standardized, and it is not uncommon to use the official seal of the project department to confirm the creditor-debtor relationship such as raw material supply and the amount of labor remuneration of workers, so the act of stamping the seal of the project department on the IOU should be comprehensively determined in combination with the position of the issuer and its daily management behavior, the flow of loans and other factors.

Supreme People's Court of the People's Republic

Civil Settlements

(2020) SPC Minshen No. 1735

Retrial Applicant (Plaintiff of First Instance, Appellant of Second Instance): Kang Zaiyong, male, born on September 28, 1978, Han ethnicity, living in Changfeng County, Anhui Province.

Entrusted litigation agent: Wang Wanhai, lawyer of Anhui Huaren (Lu'an) Law Firm.

Entrusted litigation agent: Li Biao, lawyer of Anhui Huaren (Lu'an) Law Firm.

Retrial applicant (defendant in the first instance, appellant in the second instance): Kang Zaiguo, male, born on April 24, 1963, Han ethnicity, living in Yaohai District, Hefei City, Anhui Province.

Retrial applicant (defendant in the first instance and appellee in the second instance): Haibo Construction Co., Ltd. (formerly known as Anhui Haibo Construction Engineering Co., Ltd.), domiciled on the 12th and 1st floors of the R&D building at the intersection of Changgu Road and Taishan Road in Taohua Industrial Park, Feixi County, Hefei City, Anhui Province.

Legal representative: Cao Chengwen, the general manager of the company.

Entrusted litigation agent: Liu Yufeng, deputy general manager of the company.

Entrusted litigation agent: Xia Bin, lawyer of Anhui Shibang Law Firm.

In the case of the retrial applicant Kang Zaiyong and Kang Zaiguo and the retrial applicant Haibo Construction Co., Ltd. (hereinafter referred to as Haibo Construction Company) in a private lending dispute, they were not satisfied with the Anhui Provincial Higher People's Court's (2019) Anhui Min Zhong No. 521 Civil Judgment and applied to this court for a retrial. This court formed a collegial panel in accordance with law to conduct a review, and the review has now been concluded.

Kang Zaiyong applied for a retrial, saying that he applied for a retrial in accordance with the provisions of items 2 and 6 of article 200 of the Civil Procedure Law of the People's Republic of China. Facts and reasons: (1) Although the original judgment found that Haibo Construction Company was responsible for repayment, it was obviously wrong to identify part of the repayment entity as Haibo Construction Company and part of it as Kang Zaiguo. Haibo Construction Company's Wendi West Road Road Platoon Project Department (hereinafter referred to as the Wendi West Road Project Department) and Kang Zaiguo's case involved in the "Agreement", "Reconciliation Confirmation Form" and "IOU"; On January 31, 2016, Liang Changsu, the on-site accountant of Haibo Construction Company, checked the details and total amount of haibo Construction Company's loan (advance) to Kang Zaiyong from August 2014 to January 2016, and signed and confirmed the "Wendi West Road Kang Zaiyong Loan Advance Reconciliation Confirmation Form" involved in the case. As for the "Contract for the Use of the Official Seal of the Project Department" involved in the case, it was an internal agreement between Haibo Construction Company and Kang Zaiguo, and it was not presented to Kang Zaiyong, and Haibo Construction Company did not produce evidence to prove that Kang Zaiyong was aware of the above contents, so Haibo Construction Company and Kang Zaiguo were joint borrowers and should bear the joint repayment liability. (2) The original judgment misjudged the specific amount of the loan involved in the case. The original judgment deducted a total of 996,235.5 yuan from the repayment amount of Haibo Construction Company on the grounds that it could not prove the direct connection with the construction of the construction project involved in the case on the grounds that kang Zaiyong claimed that the advance payment involved in the case involved 996,235.5 yuan involving catering, gifts, tobacco and alcohol, hospitality expenses, and Li Yawei's loans. However, the advance of the part of the 996235.5 yuan was really during the construction of the construction project involved in the case, and Kang Zaiyong not only submitted the details, but also submitted the corresponding relevant certificates in detail, whether from the performance process of the "Agreement" involved in the case, or from the perspective of the use of the use, Haibo Construction Company has confirmed or retroactively recognized. The original judgment subjectively and conclusively determined that this part of the money was deducted from the loan confirmed by Haibo Construction Company, without any basis.

Kang Zaiguo applied for a retrial, saying that he applied for a retrial in accordance with the provisions of Article 200, Item 2 of the Civil Procedure Law of the People's Republic of China. Facts and reasons: The "Songtang River Bridge Construction Plan" submitted by Kang Zaiguo confirmed in writing that Kang Zaiguo was the person in charge of the construction of the project involved in the case, and Liu Yufeng, deputy general manager of Haibo Construction Company, signed and approved as a witness. According to the agreements, IOUs, certificates, reconciliation confirmations and other evidence provided by Kang Zaiyong, the funds sued by Kang Zaiyong are all advances for the projects involved in this case, all of which are stamped with the seal of the project department of Haibo Construction Company, which is not a personal loan of Kang Zaiguo, which belongs to Kang Zaiguo's professional behavior, and Haibo Construction Company is the direct beneficiary. In addition, the "Li Yawei loan" involved in this case, Li Yawei was actually the actual contractor of Wendi West Road and Tongxiang Road, and the money lent by Kang Zaiyong was transferred to Li Yawei or the on-site accountant at the construction site, and no money was transferred to Kang Zaiguo or handled by Kang Zaiguo. In summary, Kang Zaiguo is only the person in charge of the construction management of the engineering project of Haibo Construction Company, and the economic activities that occur on behalf of the company and Kang Zaiyong and others are completely the performance of their duties, and the legal consequences should be borne by Haibo Construction Company.

Haibo Construction Company applied for a retrial, saying that it applied for a retrial in accordance with the provisions of Items 2, 6 and 12 of Article 200 of the Civil Procedure Law of the People's Republic of China. Facts and reasons: The original judgment found that the basic facts were wrong and lacked evidentiary support, and the law was applied incorrectly. (1) In this case, the relationship between Haibo Construction Company and Kang Zaiguo is sufficient to be a subcontracting or affiliation relationship, and Kang Zaiguo is the actual builder of the project involved in the case. Therefore, in this case, Kang Zaiguo's borrowing behavior should not be regarded as an "act of duty", but should be analyzed from the perspective of whether it constitutes a "representation agent". (2) Assuming that the loan involved in the case is true, Kang Zaiguo's act of issuing an agreement and an IOU to him using the seal of the project department cannot constitute an apparent agent. Haibo Construction Company and Kang Zaiguo signed the "Contract for the Use of the Seal of the Project Department", which clarified the scope of use of the seal, indicating that Haibo Construction Company has worked hard to fulfill its management responsibilities and has no fault in the management of the seal of the project department. The seal of the project department stamped in the Agreement is stamped after the fact, while the apparent act of agency can only occur when the act occurs, and the "reason to believe" afterwards cannot be used to prove that the previous act constitutes an apparent agent. Kang Zaiguo and Kang Zaiyong are related, and in the Performance Appraisal Agreement, Kang Zaiyong is also the designated project accountant, familiar with the relationship between the parties involved in the project, and it can even be said that Kang Zaiyong is aware of the project involved in Kang Zaiguo's subcontracting or affiliation. Therefore, the relative Kang Zaiyong is not only at fault, but even malicious, and does not belong to a bona fide third party. (3) The source of Kang Zaiyong's funds was not ascertained in this case. When Kang Zaiyong lent the funds, he still had a bank loan that had not been repaid, and then lent it to Kang Zaiguo with a monthly interest rate of three cents, which constituted a usurious refinancing, and the loan contract should be found to be invalid according to law.

Kang Zaiyong submitted an opinion saying that the grounds for the retrial application of Haibo Construction Company could not be established, and kang Zaiguo's identity was the person in charge of the project department involving Wendi West Road appointed by Haibo Construction Company, and was not the actual construction person; Kang Zaiguo and Kang Zaiyong were not related; the funds involved in the case lent by Kang Zaiyong were all self-owned funds and had corresponding economic strength.

Kang Zaiguo submitted an opinion saying that Kang Zaiguo's identity was the person in charge of the project department involving Wendi West Road appointed by Haibo Construction Company, and was not the actual builder, and should not be liable for repayment of the money that Kang Zaiyong sued.

Haibo Construction Company submitted an opinion saying that both it and Kang Zaiyong believed that the repayment subject and repayment amount of the loan involved in the original judgment were improper, but Kang Zaiyong should claim repayment from Kang Zaiguo. The dispute between Haibo Construction Company and Kang Zaiguo can be handled in a separate case, and Haibo Construction Company hopes that Kang Zaiguo will actively cooperate with the settlement of the project involved in the case, and if the loss is serious, Haibo Construction Company reserves the right to recover from Kang Zaiguo.

Upon review, this court held that the focus of the dispute in this case was: how to determine the subject and specific amount of the loan involved in the case.

On how to determine the subject of the loan involved in the case. The scope of use of the official seal of the project department is generally limited to the project report, measurement, change and final account information, excluding the purpose of external borrowing. However, from the perspective of the actual situation in the construction industry, some construction units are not standardized, and it is not uncommon to use the official seal of the project department to confirm the creditor-debtor relationship such as raw material supply and the amount of labor remuneration of workers, so the act of stamping the seal of the project department on the IOU should be comprehensively determined in combination with the position of the issuer and its daily management behavior, the flow of loans and other factors. In this case, on July 28, 2014, Haibo Construction Company's "Haibo Construction Division [2014] No. 010 Document" appointed Kang Zaiguo as the on-site leader of the Wendi West Road Project Department; subsequently, Haibo Construction Company agreed that the Wendi West Road Project Department of Anhui Haibo Construction Engineering Co., Ltd. Wendi West Road (Tangwang Avenue - Xiyi Avenue) Road Row Project Department seal, although Haibo Construction Company and Kang Zaiguo signed the "Project Department Seal Use Contract" to make a special agreement on the scope of use of the project department seal. However, the agreement is not directly binding on third parties. Regarding Kang Zaiguo's act of borrowing money from Kang Zaiyong in the name of Haibo Construction Company, and stamping the seal of "Anhui Haibo Construction Engineering Co., Ltd. Wendi West Road (Tangwang Avenue - Xiyi Avenue) Road Platoon Project Department" on the relevant agreements and IOUs (post-covered), the part of the advance payment related to the construction of the project was 2937505 yuan, in view of the fact that Haibo Construction Company was the beneficiary of the above-mentioned advance loan without settling the project volume with Kang Zaiguo, and the original judgment ordered Haibo Construction Company to bear the corresponding repayment liability , in line with the actual situation of this case. Haibo Construction Company claimed that Kang Zaiguo and Kang Zaiyong were relatives, and maliciously colluded to harm his interests in this case, but based on the existing evidence cited by Haibo Construction Company, it was not enough to determine its claim.

On how to determine the specific amount of the loan involved in the case. In this case, after review by the court of first instance, among the advance payments claimed by Kang Zaiyong, a total of 996,235.5 yuan involving catering expenses, gifts, tobacco and alcohol, hospitality expenses, and Li Yawei's loans, etc. Because it could not prove the direct connection with the construction and construction of the project involved in the case, the original judgment was deducted from the repayment amount of Haibo Construction Company, and Kang Zaiguo assumed the repayment responsibility himself. Kang Zaiguo and Kang Zaiyong both applied for a retrial in this regard. The Court held that under the circumstance that Kang Zaiguo and Kang Zaiyong could not prove that the above-mentioned funds were actually used for the project involved in the case, it was difficult to determine that Haibo Construction Company was the beneficiary of this part of the advance payment, so Haibo Construction Company should not bear the corresponding repayment liability.

In addition, Haibo Construction Company also claimed that Kang Zaiyong was suspected of usurious refinancing in this case, but Haibo Construction Company did not produce evidence to prove that Kang Zaiyong arbitraged credit funds, so its claim lacked basis.

In summary, the retrial applications of Kang Zaiyong, Kang Zaiguo and Haibo Construction Co., Ltd. did not comply with the provisions of items 2, 6 and 12 of Article 200 of the Civil Procedure Law of the People's Republic of China. In accordance with the provisions of paragraph 1 of article 204 of the Civil Procedure Law of the People's Republic of China and paragraph 2 of article 395 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China, the ruling is as follows:

The retrial applications of Kang Zaiyong, Kang Zaiguo and Haibo Construction Co., Ltd. were rejected.

Judge Bao Jianping

Judge Du Jun

Judge Guan Xiaohai

August 27, 2020

Legal officer assistant Liu Ping'an

Scribe Yuan Zhengming

Source: Civil Trials