Po Yeng Cheo vs Lim Ka Yam

GR No. L-18707 December 9, 1922

Street

Facts:

Plaintiff is the sole heir of Po Gui Yao, who inherited the interest in a business
named Kwong Cheong Tay, which is a mercantile partnership. After the death
of Gui, seven persons, including defendant were interested therein as
partners. In 1910, the business ceased and plaintiff demanded his part
amounting to 60,000 which was his share in the partnership, against Lim the
heir of one of the deceased partners, however, failed to obtain such amount.
The trial court ruled in favor of plaintiff and held that he is entitled to recover
his part amounting to sixty thousand pesos from Lim.

Issue: Whether or not plaintiff is entitled to his 60,000 pesos part.

Ruling: The court ruled in the negative.

It is a basic rule that one partner, suing alone, cannot recover of the managing
partner the value of such partner's individual interest; and a liquidation of the
business is an essential prerequisite.

In the present case, the shares constituting the assets of Kwong Cheong Tay
have not yet liquidated and doubtless still remain in the name of Kwong
Cheong Tay as owner. It is unjust and impossible to sustain a judgment since
it is tantamount to allowing one of several coowners to recover from another,
without process of division, a part of an undivided property.

It is well settled that when a member of a partnership dies, the duty of

liquidating its affairs devolves upon the surviving members of the partnership
and not upon the legal representative of the deceased partner. Upon the
death of Lim, it therefore became the duty of the surviving associates to take
proper steps to settle the affairs of the firm.

Upon the death of Lim Ka Yam it therefore became the duty of his surviving
associates to take the proper steps to settle the affairs of the firm, and any
claim against him, or his estate, for a sum of money due to the partnership by
reason of any misappropriation of its funds by him, or for damages resulting
from his wrongful acts as manager, should be prosecuted against his estate in
administration and not against his heirs.