Golf Club A made a payment in substitute for a construction cost in the amount of KRW 6 billion payable to the constructor with its membership. The face value of one membership is approximately KRW 150 million; however, Golf Club A and the constructor agreed to set the value at KRW 100 million per membership for payment in substitutes and completed transfer of the name to the name of the constructor. 

Afterwards, the constructor transferred its claim for return of the initiation fee on the membership which was the payment in substitutes. However, a transferee filed a suit for return of the face value of memberships against the golf club after the deposit period of the initiation fee has expired. During the lawsuit, Golf Club A received the decision on commencement of rehabilitation.

On behalf of the golf club, DR & AJU argued that the legal nature of the initiation fee of the deposit-based golf membership is bailment subject to consumption as the members deposit the initiation fee to the gold club with no interest with the promise that such amount will be returned after the elapse of a certain period. DR & AJU further pointed out that the initiation fee that the golf club is obliged to return to a transferee is any amount a member actually paid to the golf club or any amount agreed between the parties to deem as paid by a member, not the face value of membership (in case of the payment in substitutes, any actual amount acknowledged as payment of the construction cost).

The competent court accepted DR & AJU’s argument and acknowledged only KRW 100 million per membership, which is the amount Golf Club A and the constructor agreed to regard as actually paid amount, as a transferee’s rehabilitation claim against Golf Club A.

Unlike other cases where the membership status of creditors who received the payment in substitutes was the main issue of law, this case is evaluated as the first example to acknowledge a transferee’s claim for return of the initial fee, who received the membership paid in substitutes, and confirmed the amount to be returned.