The death of the debtor under the bank loan agreement does not terminate the obligations of the real surety under the pledge agreement
T. filed a lawsuit with the Joint Stock Company (hereinafter – JSC) "N", the Kyzylorda branch of JSC "B" (hereinafter – the Bank) on termination of obligations under the bank loan agreement in connection with the death of the debtor, the return of title documents for real estate and the removal of encumbrances from the collateral. T., appealing to the court related to the above claim, motivated by the fact that he is the pledgor for I.'s obligations to the Bank. The debtor under the bank loan agreement, I., has died. The Bank has not identified any legal successors under the bank loan agreement, which is why the obligations under the bank loan agreement are subject to termination and the removal of encumbrances from the collateral. By the decision of the Kyzylorda City Court of September 1, 2016, which was upheld by the decision of the judicial board for Civil Cases of the Kyzylorda Regional Court of December 26, 2016, T.'s claim was satisfied. The Court decided: - to terminate the obligations of borrower I. under the bank loan agreement dated May 21, 2008 No. 209978100020401, concluded with the Bank, in connection with the death of the borrower; - return all the legal documents for the immovable property located at the address: Kyzylorda city, Zheltoksan Street, house No. 26, apartment No. 8 (hereinafter referred to as the disputed apartment), owned by T.; – remove the encumbrances on the collateral in the form of a disputed apartment. The Judicial Board for Civil Cases of the Supreme Court overturned the judicial acts of the local courts, and a new decision was made in the case to dismiss the claims of T. The petition of the Joint-Stock Company "N" was satisfied on the following grounds. It follows from the case file that on May 21, 2008, between the Bank and I. A bank loan agreement was concluded, under the terms of which a loan in the amount of 1,750,000 tenge was issued for a period of 120 months. In order to ensure proper fulfillment by the borrower of obligations to repay the loan amount, on May 21, 2008, the Bank and T. signed a real estate pledge agreement (mortgage), under the terms of which T. provided the Bank with real estate located at the address: Kyzylorda city, Zheltoksan Street, house No. 26, apartment No. 8 (hereinafter – disputed apartment). The court of first instance, with the conclusions of which the court of appeal agreed, satisfying the claim of T., motivated by the fact that due to the death of the debtor and the absence of legal successors, the obligations under the bank loan agreement – under the main obligation - are terminated and, accordingly, the obligations under the pledge agreement are terminated. The Board considers the conclusions of the local courts to be erroneous and inconsistent with applicable substantive law.
The death of the debtor under the bank loan agreement does not terminate the obligations of the real surety under the pledge agreement
According to paragraph 1 of Article 322 of the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code), the pledge is terminated upon termination of the obligation secured by the pledge; at the request of the pledgor, if there are grounds provided for in paragraph 3 of Article 312 of the Civil Code; in the event of the death of the pledged thing or termination of the pledged right, if the pledgor has not exercised the right provided for in paragraph 2 of Article 314 of the Civil Code and in in the case of sale of mortgaged property at public auction, as well as in the case when its sale proved impossible (Article 319 of the Civil Code). By virtue of paragraph 1 of Article 367 of the Civil Code, obligations are terminated in whole or in part by execution, provision of compensation, offset, innovation, debt forgiveness, coincidence of debtor and creditor in one person, impossibility of execution, issuance of an act of a state body, death of a citizen, liquidation of a legal entity. Paragraph 1 of Article 376 of the Civil Code provides that the obligation is terminated by the death of the debtor if the execution cannot be performed without the personal participation of the debtor or the obligation is otherwise inextricably linked to the personality of the debtor. Based on the analysis of the above legal norms, the board believes that with the death of debtor I., the obligation under the bank loan agreement does not terminate, since it can be fulfilled without his personal participation and the obligation is not inextricably linked to the personality of I. The case materials established that the bank loan received against the security of the disputed apartment was not repaid, therefore, there is reason to believe that the obligations under the bank loan agreement have been terminated due to the death of the debtor, there is no. In accordance with the requirements of paragraph 26 of the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated November 25, 2016 No. 7 "On judicial practice of civil cases in disputes arising from Bank Loan Agreements", the death of the borrower does not terminate the obligations under the bank loan agreement of the guarantor, guarantor, mortgagor, whose liability is provided for by the provisions of paragraph 2 of Article 269, Articles 287, 288, 299, 329, 330 GC. According to clause 7.1. Under the bank loan agreement dated May 21, 2008, concluded between the Bank and I., in the event of the borrower's death, the rights and obligations under this agreement shall pass to his legal successor. The courts have established that to date, I.'s legal successor has not been determined and the inheritance has not been accepted. However, this circumstance is not a reason for termination of obligations under the bank loan agreement. In addition, if there is an uncontested, not cancelled or terminated pledge agreement for the disputed apartment concluded between the Bank, etc. and registered with the relevant registration authorities, the local courts returned the title documents for the disputed apartment and removed the pledge from the disputed apartment only on the grounds that the debtor had died. Moreover, the courts did not take into account that T. was not a party to the bank loan agreement and had no right to raise the issue of its termination.
Under the circumstances established in the case, the judicial acts that took place in the case cannot be recognized as legitimate and justified. According to paragraphs 1, 3 of Article 722 of the Civil Code, the borrower is obliged to repay the loan item in the manner and within the time limits stipulated by the contract. In this case, in case of non-fulfillment or improper fulfillment by the debtor of the obligation secured by the pledge in accordance with paragraph 1 of Article 317 of the Civil Code, foreclosure may be levied on the pledged property to satisfy the claims of the pledgee (creditor). When concluding the pledge agreement, the parties provided for the right of the pledgee to satisfy the claim of the value of the pledged property. The same right is regulated by paragraph 1 of Article 318 of the Civil Code. Under the terms of the real estate pledge agreement, in the event of non-fulfillment of obligations (improper fulfillment) under the loan agreement, the mortgagee has the right to satisfy his claims in full at the expense of the proceeds from the sale of the pledged item. Thus, the board agrees with the arguments of the applicant that the death of the debtor under the bank loan agreement does not terminate the obligations of the real guarantor under the pledge agreement. During the consideration of this case by the court, the norms of substantive law were violated, the conclusions set out in the judicial acts do not correspond to the actual circumstances of the case. These violations are significant because they led to an incorrect resolution of the case, which, in accordance with part 5 of Article 438 of the CPC, was the basis for the cancellation of judicial acts that had entered into force and the satisfaction of the petition.
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