Viewpoint... A brief analysis of the guarantor's right of recovery after the transfer of claims.

Article 700 After the guarantor has assumed the responsibility for the guarantee, it shall, unless otherwise agreed by the parties, have the rightWithin the scope of its responsibility for the guarantee.To recover from the debtor and enjoy the rights of the creditor against the debtor, but not to the detriment of the interests of the creditor.

Article 13 If two or more third parties provide guarantee for the same debt, the guarantors agree on mutual recovery and share, and the guarantor who has assumed the guarantee liability requests other guarantors to share according to the agreement, the people's court shall support it. If the guarantors agree to undertake joint and several joint guarantees, or agree to recover each other but do not agree to share, each guarantor shall share the part that cannot be recovered from the debtor in proportion.

If two or more third parties provide guarantee for the same debt, and the guarantors have not agreed on mutual recovery and have not agreed to undertake joint and several joint guarantee, but each guarantor signs, seals or prints on the same contract, and the guarantor who has assumed the guarantee liability requests other guarantors to share the part that cannot be recovered from the debtor in proportion, the people's court shall support it.

Except for the circumstances specified in the preceding two paragraphs, the people's court shall not support the request of the guarantor who has assumed the liability for security to request other guarantors to share the part that cannot be recovered from the debtor.

Article 14 If two or more third parties provide security for the same debt,If the guarantor is granted a claim, the people's court shall determine that the act is liable for the guarantee.If the guarantor of the transferred claim, as a creditor, requests other guarantors to assume the liability for security, the people's court shall not support it; if the guarantor requests other guarantors to share the corresponding share, it shall be dealt with in accordance with the provisions of Article 13 of this interpretation.

Article 18 If a guarantor who has assumed the liability for security or compensation recovers from the debtor within the scope of its liability, the people's court shall support it.

Article 12 Where there are two or more guarantors for the same debt, the guarantors shall bear the guarantee liability in accordance with the guarantee share agreed in the guarantee contract.If there is no agreement on the share of the guarantee, the guarantor shall bear joint and several liability,The creditor may require any guarantor to assume full responsibility for the guarantee, and the guarantor is obliged to guarantee the realization of all claims.A surety who has already assumed suretyship liability shall have the right to recover from the debtor or to require other sureties who are jointly and severally liable to pay off their share.

Comparison of legal provisions:

1. With regard to the nature of the act of the guarantor's assignment of the claim and the consequences of recovery, the Guarantee Law does not specify, while the Interpretation of the Guarantee System makes it clear that "if the guarantor assigns the claim, the people's court shall determine that the act is liable for security". Through the case search, it can be seen that before the promulgation of the Civil Code, some people's courts, in the course of the trial through the application of the Guarantee Law, have identified the nature of the guarantor's transfer of claims as the assumption of security liability, which is consistent with the provisions and spirit of the Civil Code.

2. There is a clear difference between the Guarantee Act and the Interpretation of the Guarantee System as to the right of recourse after the guarantor has assumed the responsibility for the guarantee.

Article 12 of the Guarantee Law stipulates that a guarantor who has already assumed the responsibility for the guarantee shall have the right to require other guarantors who bear joint and several liability to pay off their share. The definition of "other guarantors with joint and several liability" is broader, and if "there are more than two guarantors for the same debt" and "there is no agreed guarantee share", the guarantors are jointly and severally liable.

Article 13 of the Interpretation of the Guarantee System stipulates that if two or more third parties provide guarantees for the same debt, if the guarantors have not agreed on mutual recovery and have not agreed to undertake joint and several guarantees, nor have they signed, sealed or fingerprinted the same contract, the guarantor who has already assumed the guarantee liability has no right to recover from other guarantors.

It can be seen that there are obvious differences before and after the implementation of the Civil Code as to whether guarantors can recover from each other. Compared with the Guarantee Law, the Interpretation of the Guarantee System has significantly tightened the caliber of recovery between guarantors.

On January 14, 2014 and October 15 of the same year, the defendant Zibo Duoshan Building Materials Co., Ltd. (hereinafter referred to as "Duoshan Building Materials") and Industrial and Commercial Bank of China Co., Ltd. Zibo Linzi Sub-branch (hereinafter referred to as ICBC Linzi Sub-branch) signed two "Working Capital Loan Contracts", borrowing 5 million yuan and 9.25 million yuan from ICBC Linzi Sub-branch respectively. On January 15 and October 16 of the same year, 5 million yuan and 9.25 million yuan were transferred to the defendant's Duoshan building materials account respectively. Defendant Zibo Oneth Plastic Co., Ltd. (hereinafter referred to as "Oneth Company") signed the "Maximum Guarantee Contract" with the contract number of 2013 Linzi (Bao) Zi No. 0529 with ICBC Linzi Sub-branch on September 27, 2013, promising to undertake joint and several liability guarantee for the loan contract of Defendant Duoshan Building Materials to ICBC Linzi Sub-branch with the maximum balance of RMB 20 million from September 27, 2013 to September 26, 2016, the guarantee period is two years from the day following the expiration of the term of the loan under the autonomous contract. Defendant Sun Duoshan and Defendant Yang Honglian issued a guarantee letter to ICBC Linzi Sub-branch on October 8, 2014, promising to provide joint and several liability guarantee for the credit business of Defendant Duoshan Building Materials in ICBC Linzi Sub-branch with their existing and future legal property. The guarantee period is two years from the day following the expiration of the credit business period under the independent contract.On October 15, 2014, the plaintiff Shandong Longyang Chemical Co., Ltd. (hereinafter referred to as "Longyang Company") and Linzi Sub-branch of ICBC signed a "Guarantee Contract" with the contract number of 2014 Linzi (Bao) Zi 0522, assuming the guarantee responsibility for the loan of 9.25 million yuan on October 15, 2014,The guarantee period is two years from the day following the expiration of the credit term under the autonomous contract. The defendant refused to repay the principal and interest and stopped paying the interest on the second loan after the first loan was due. Later, ICBC Shandong Branch transferred the claims of the above two loans to Great Wall Company, and on July 3, 2015, ICBC Shandong Branch and Great Wall Company issued a joint announcement on the transfer of claims and debt collection through Shandong Legal News. On September 10, 2015, Great Wall Company and Gaoyang Company issued a joint announcement on the transfer of creditor's rights and debt collection through Shandong legal newspaper. Great Wall transferred the two claims to Gaoyang. Longyang Company, as the joint and several liability guarantor of the two loans mentioned above, signed a "creditor's rights transfer agreement" with Gaoyang Company on October 8, 2015 to obtain the creditor's rights of the two loans. Entrusted by Gaoyang Company, Longyang Company has notified the defendant in writing of the fact of the transfer of creditor's rights on October 12, 2015. The actual controller of the defendant Duoshan Building Materials, Sun Hongchao (son of the defendant Sun Duoshan and Yang Honglian), signed it and delivered it to Wang Zheng, the legal representative of the defendant Oneth Plastic. After the creditor's right expired, the defendant did not repay the principal of 14234377.12 yuan and interest after the plaintiff claimed the right. Longyang Company paid 230000.00 yuan for the lawyer's fees for the lawsuit. ICBC Shandong Branch transferred the creditor's rights of the above two loans to Great Wall Company on the transfer date (April 30, 2015) with a principal of 14234377.12 yuan, an interest of 189979.82 yuan and a total principal and interest of 14424356.94 yuan. Both Liquidity Borrowing Contracts expressly stipulate that the Borrower shall bear the costs incurred by the Lender in realizing the claims under this Contract, including but not limited to attorney's fees, appraisal fees, auction fees, etc. All three assignments of claims agree that the principal claim and all rights under the security contract are enjoyed by the transferee.

(2019) The court of first instance in case No. 286 of Lu 03 Min Zhong held that the plaintiff Longyang Company obtained the creditor's right of 14234377.12 yuan through legal creditor's right transfer, and the creditor's right transfer had legal effect on the four defendants. It was decided that the defendant Zibo Duoshan Building Materials Co., Ltd. paid the plaintiff Shandong Longyang Chemical Co., Ltd. the loan principal of 14234377.12 yuan, and the defendant Zibo Oneth Plastic Co., Ltd., the defendant Sun Duoshan and the defendant Yang Honglian were jointly and severally liable for repayment.

The Intermediate People's Court of Zibo City, Shandong Province (hereinafter referred to as "Zibo Intermediate People's Court"), as the court of second instance of (2019) Lu 03 Min Zhong No. 286, held that Longyang Company had different identities in the two loans involved and should be distinguished: (1) On the issue of 9.25 million yuan loan. In this loan relationship, the appellee is one of the guarantors. Therefore, the appellee from Gaoyang company "transfer claims" behavior, in fact, should be the guarantor to bear the responsibility of the guarantee. According to Article 31 of the the People's Republic of China Guarantee Law, "After the guarantor assumes the responsibility for the guarantee, he has the right to recover from the debtor" and the Supreme People's Court on the application of<中华人民共和国担保法>Article 38, paragraph 1, of the Interpretation of Certain Issues "Where the same claim has both a guarantee and a security provided by a third party, the creditor may request the guarantor or the guarantor of the goods to assume the liability for security. If the parties have no agreement on the scope of the guarantee or the scope of the guarantee in rem or the agreement is unclear, the guarantor who has assumed the guarantee liability may recover from the debtor or require other guarantors to pay off their share." The appellee has the right to recover from the debtor the amount actually paid off, or to require other guarantors to pay off their share. The appellee brought an action as "assignee of claims,However, the 9.25 million yuan loan does not belong to the "creditor's rights" transferred by it in essence. The two are of different nature, and the appellee has not submitted valid evidence to prove the actual repayment amount of the 9.25 million yuan loan. Therefore, the issue of the 9.25 million yuan loan will not be dealt with in this case, and the appellee may claim other rights.(II) about the 5 million yuan loan. The appellee's assigned creditor's rights are legal and valid. The principal of the loan he claims shall be calculated according to 4984377.12 yuan. The appellant shall bear the principal, interest and economic losses of the loan. The defendants in the original trial, Oneth Company, Sun Duoshan and Yang Honglian shall bear joint and several liability for the above debts. In addition, combined with the fact that the maturity date of 5 million yuan is earlier than 9.25 million yuan, it is believed that part of the loan principal of 15622.88 yuan (14250000-14234377.12) repaid by the defendant should belong to the 5 million yuan, so the balance of the loan principal of 5 million yuan should be 4984377.12 yuan. To sum up, Zibo Intermediate People's Court ruled that the defendant Zibo Duoshan Building Materials Co., Ltd. paid the plaintiff Shandong Longyang Chemical Co., Ltd. the loan principal of 4984377.12 yuan and interest, and the defendant Zibo Oneast Plastic Co., Ltd., the defendant Sun Duoshan and the defendant Yang Honglian were jointly and severally liable for repayment.

Since then, all parties concerned have filed a separate lawsuit and appealed against the 9.25 million yuan loan. Zibo Intermediate People's Court held in (2020) Lu 03 Min Zhong No. 3135 that the plaintiff's act of transferring creditor's rights as a guarantor belongs to the way the guarantor assumes the guarantee responsibility, and the guarantor can recover from the debtor after assuming the guarantee responsibility. This case is a lawsuit filed by the plaintiff to realize the right of recovery. Because the plaintiff's agreement with Gaoyang Company specified that the consideration was 9.5 million yuan and the interest on the commercial loan since October 8, 2015, and the share of the two claims was not specified in the previous transfer of claims, the plaintiff's agreement with Gaoyang Company did not specify the share of the consideration for the debt and the transfer of claims, the compensation for the debt recovered by the plaintiff can be calculated according to the proportion of the debt in the total amount of the agreement (I .e. the compensation actually paid by the plaintiff for the loan of 9.25 million yuan = 9.5 million yuan * 9.25 million yuan/14234377.12 yuan = 6173434.87 yuan). Judgment: The appellant Duoshan Building Materials returned the appellee Longyang Company's compensation of 6173435 yuan. The part that the plaintiff Longyang Company could not recover from the debtor Duoshan Building Materials shall be shared equally by all joint guarantors, namely the plaintiffs Longyang Company, Oneth Company, Sun Duoshan and Yang Honglian.

An analysis of the two relevant cases and their respective two-level trial proceedings shows that:

1. Although the Civil Code and the Interpretation of the Guarantee System had not been enacted at the time of the judgment of this case, and there were some differences among the courts on the nature of the guarantor's assignment of claims and the consequences of recovery, the people's court that made the judgment in force of this case was consistent with the spirit of the Civil Code and the Interpretation of the Guarantee System, that is, the nature of the guarantor's assignment of claims should be identified as the responsibility for security, its recovery is not based on the status of the new creditor, but can only be recovered within the scope of liability.

2. As mentioned earlier, there are significant differences in the applicable law and the outcome of the judgement before and after the enactment of the Civil Code as to whether the guarantor can recover from other guarantors after assuming the liability for the guarantee. In this case, there is no agreement between the guarantors on mutual recovery or joint guarantee, or sign, seal or fingerprint on the same contract. However, according to the provisions of the Guarantee Law, the court identified other guarantors as joint guarantors in (2020) Lu 03 Min Zhong No. 3135 and ruled that the guarantor who bears the guarantee liability cannot recover from the debtor, shared equally by the joint guarantors.

On January 19, 2017, Zhongheng Company borrowed 2 million yuan from Zhongyuan Bank. On the same day, Lu Guangbin, as a mortgagor, signed a "Mortgage Contract" with Zhongyuan Bank to provide mortgage guarantee for the above loan with commercial houses under his name. Lu Guangbin, Jiao Xiaoshu and Zhang Lifeng respectively issued "Personal Guarantees" to Zhongyuan Bank.

From May 26 to June 11, 2021, Lu Guangbin transferred 200000 yuan, 300000 yuan, 300000 yuan, 200000 yuan, 300000 yuan, 300000 yuan, and 70000 yuan to Juliyuan Company, totaling 1.67 million yuan.

On May 27, 2021, the company delisted the above-mentioned claims at a transaction price of 1.65 million yuan by participating in the auction of the non-performing debt project of Zhongheng Company Limited by Tianjin Financial Assets Exchange.

Since then, the company to the Weidu District People's Court of Xuchang City, the debtor in Heng Company and the guarantors to pay the amount of 1.65 million yuan and transaction fees, assessment fees, announcement fees, insurance company guarantee fees and other certain, the guarantors of the above-mentioned costs to bear joint and several liability for repayment.

In this case, Juli Yuan Company obtained the creditor's rights involved in this case through auction, but its participation in the auction and the money paid came from Lv Guangbin. Although Lv Guangbin claimed that Juli Yuan Company borrowed the money through it, there are obvious differences between this claim and the transfer of creditor's rights in general sense as follows: 1. After the transfer of creditor's rights in general sense, the creditor's rights claimed by the transferee are still all the creditor's rights, however, the creditor's rights claimed by Juli Yuan Company in this case are only the money spent on its transferred creditor's rights. 2. The creditor's rights claimed by the transferee to all guarantors and mortgagors after the transfer of general creditor's rights. In this case, Juli Yuan Company abandoned Lu Guangbin, who was both a mortgagor and a guarantor, and in this case Lu Guangbin represented Juli Yuan Company as an employee and litigation agent. According to Article 14 of the Interpretation of the Supreme People's Court on the Guarantee System in the Application of the the People's Republic of China Civil Code, "If two or more third parties provide guarantee for the same debt and the guarantor transfers the creditor's rights, the people's court shall determine that the act is to assume the guarantee responsibility", and in combination with the above circumstances, the transfer of creditor's rights in this case is essentially Lu Guangbin's act of assuming the guarantee responsibility in the name of Juyuan company or Juyuan on behalf of Lu Guangbin. Article 700 of the the People's Republic of China Civil Code stipulates: "After the guarantor has assumed the liability for security, it shall, unless otherwise agreed by the parties, have the right to recover from the debtor within the scope of its liability for security and enjoy the rights of the creditor against the debtor, but not to the detriment of the interests of the creditor". After Juli Yuan Company assumed the guarantee responsibility on behalf of Lu Guangbin, it enjoyed the right to recover from the creditor Zhongheng Company. Therefore, Juli Yuan Company claimed that Zhongheng Company's request to repay the principal and interest of the loan of 1650000 yuan was legal and well-founded, and the Court supported it. As for the plaintiff's claim that the defendant should pay a transaction fee of 1320 yuan, an evaluation fee of 4000 yuan, an announcement fee of 700 yuan and a guarantee fee of 1700 yuan from an insurance company, the relevant fees are not necessary to bear the guarantee liability. Therefore, the plaintiff's Juliyuan Company's claim is not accepted by the court. Article 14 of the Interpretation of the Supreme People's Court on the Guarantee System under the Application of the the People's Republic of China Civil Code stipulates that "if the guarantor of the transferred claim, as a creditor, requests other guarantors to assume the liability for security, the people's court shall not support it". The loan involved in this case was guaranteed by Lu Guangbin's mortgage of the house located in Xuchang City under his name, and Lu Guangbin and the defendants Xing Hong, Jiao Xiaoshu, Zhang Lifeng and Zhu Jiang provided joint and several liability guarantees. In combination with the actual situation of this case, according to the above legal provisions, the plaintiff Juli Yuan Company's request to claim that the defendants Xing Hong, Jiao Xiaoshu, Zhang Lifeng and Zhu Jiang bear joint and joint and joint and several guarantee liability for the money for the money in this case is unfounded.

As a result of the judgment in this case, when there is evidence that the guarantor has transferred the claim through a third party, there is a risk that the third party can only exercise the right of recovery against the debtor and the guarantor in accordance with the relevant provisions of Article 14 of the Interpretation of the Guarantee System, and the amount of the right of recovery and the scope of the guarantor that can be recovered will be subject to certain restrictions.

On the basis of the guarantor's exercise of the right of recovery, there are two views in the theoretical circle, the main difference between the two is that the former is essentially the legal transfer of the claim, while the latter is essentially the new right derived from the elimination (or partial elimination) of the original claim. After the promulgation and implementation of the Civil Code and the Interpretation of the Guarantee System, it is not difficult to conclude that the guarantor's right of recovery is not a right of subrogation, which is essentially a new right derived from the elimination of the original claim, and the right of recovery of the guarantor of the assigned claim has the following characteristics:

The nature of the act of the guarantor's assignment of the claim is to assume the liability for security, which can be recovered from the debtor within the scope of the liability, and the ability to recover from other guarantors depends on whether the relevant provisions of Article 13 of the Interpretation of the Guarantee System are met.

According to the relevant jurisprudence, in judicial practice, the limit on the amount of recovery of claims "within the scope of liability" as stipulated in Article 18 of the Interpretation of the Guarantee System should be understood as the amount of compensation actually paid by the guarantor for the assigned claim, rather than as the amount of the original claim.