[No. 30286.

September 12, 1929]

M. TEAGUE, plaintiff and appellant, vs. H. MARTIN, J. T.
MADDY and L. H. GOLUCKE, defendants and appellees.
1. WHEN PARTNER MUST ACCOUNT.Where one party
to a partnership, without any authority, takes and uses
the money of the firm in the purchase of property which
he acquired and had registered in his own name, in a suit
for the dissolution of the partnership, he will be required
to account to his partners for the money which he used in
such purchase.
2. WHEN PARTNERSHIP SHOULD ACCOUNT.Where it
appears that such partnership had the use and benefit of
such property, it will be required to account to the owner
for the reasonable value of its use.

APPEAL from a judgment of the Court of First Instance of

Manila. Mapa, J.
The facts are stated in the opinion of the court.
Abad Santos, Camus & Delgado for appellant.
J. W, Ferrier for appellees.
STATEMENT
Plaintiff alleges that about December 23, 1926, he and the
defendants formed a partnership for the operation of a fish
business and similar commercial transactions, which
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Teague vs. Martin

by mutual consent was called, "Malangpaya Fish Co.," with

a capital of P35,000, of which plaintiff paid P25,000, the
defendant Martin P5,000, Maddy P2,500, and Golucke
P2,500. That as such partnership, they agreed to share in
the profits and losses of the business in proportion to the
amount of capital which each contributed. That the

plaintiff was named the general manager to take charge of

the business, with full power to do and perform all acts
necessary to carry out the purposes of the partnership.
That there was no agreement as to the duration of the
partnership. That plaintiff wants to dissolve it, but that the
defendants refused to do so. A statement, marked Exhibit
A, which purports to be a cash book, is made a part of the
complaint. That the partnership purchased and now owns a
lighter called LapuLapu, and a motorship called
Barracuda, and other properties. That the lighter and the
motorship are in the possession of the defendants who are
making use of them, to the damage and prejudice of the
plaintiff, and that the defendants have no visible means to
answer for any damage which plaintiff may sustain. That it
is for the best interest of the parties to have a receiver
appointed pending this litigation, to take possession of the
properties, and he prays that the Philippine Trust
Company be appointed receiver, and for judgment
dissolving the partnership, with costs.
Each of the defendants filed a separate answer, but of
the same nature, in which they admit that about December
10, 1926, the plaintiff and the defendants formed a
partnership for the purchase of the equipment of the
Manila Fish Co., Inc., and the conduct of a fish business.
That the terms of the partnership were never evidenced by
a written document signed by each of the members. Yet in
truth and in fact, the partnership was formed under a
written plan, of which each member received a copy and to
which all agreed. That by its terms the amount of the
capital was P45,000, of which the plaintiff agreed to
contribute P35,000. That P20,000 of the capital was to be
used for the purchase of the equipment of the Manila Fish
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Teague vs. Martin

Co., Inc., and the balance placed to the checking account of

the new company,
It is then alleged that "the new owners agree to duties
as follows:
"Capt. Maddy will have charge of the Barracuda and the
navigating of the same. Salary P300 per month.
"Mr. Martin will have charge of the southern station, cold
stores, commissary and procuring fish. Salary P300 per month.

"Mr. Teague will have charge of selling fish in Manila and

purchasing supplies. No salary until business is on paying basis,
then the same as Maddy or Martin.
"The principal office shall be in Manila, each party doing any
business shall keep books showing plainly all transactions, these
books shall be available at all time for inspection of any member
of the partnership.
"If Mr. Martin or Mr. Maddy wishes at some future time to
purchase a larger share in the business Teague agrees to sell part
of his shares to each on the basis double the amount originally
invested by each or ten thousand to Martin and five thousand to
Maddy.
"This offer will expire after two years.
"That no change was ever made in the terms of said agreement
of copartnership as set forth above except that it was later agreed
among the partners that the business of the copartnership should
be conducted under the trade name 'Malangpaya Fish Company.'
"That as shown by the foregoing quoted agreement the agreed
capital of the copartnership was P45,000 and not P35,000 as
stated in the third paragraph of plaintiff's amended complaint,
and the plaintiff herein, M. Teague, bound himself and agreed to
contribute to the said copartnership the sum of P35,000 and not
the sum of P25,000 as stated in the third paragraph of his said
amended complaint."

Defendant Martin specifically denies that "plaintiff was

named general manager of the partnership," and alleges
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Teague vs. Martin

"that all the duties and powers of the said plaintiff were
specifically set forth in the above quoted written agreement
and that no further or additional powers were ever given
the said plaintiff." But he admits the purchase of the
motorship Barracuda, by the partnership. He denies that
Exhibit A is a true or correct statement of the cash received
and paid out by or on behalf of the partnership, or that the
partnership ever purchased or that it now owns the lighter
LapuLapu, "and / or any 'other properties' as mentioned in
said ninth paragraph, except such motorship and a smoke
house," or that the defendants are making use of any of the
properties of the partnership, to the damage and prejudice
of the plaintiff, or that they do not have any visible means
to answer for any damages, and alleges that at the time of
the filing of the complaint, plaintiff was in possession of

about 7 tons of fish of the partnership in cold storage, of the

value of P6,000, for which he has never accounted on the
books of the partnership or mentioned in the complaint,
and defendant prays that plaintiff's complaint be
dismissed, and that he be ordered and required to render
an accounting, and to pay to partnership the balance of his
unpaid subscription amounting to P10,000.
In his answer the def endant Maddy claimed and
asserted that there is due and owing him from the plaintiff
P1,385.53, with legal interest, and in his amended answer,
the defendant Martin prays for judgment for P615.49.
To all of which the plaintiff made a general and specific
denial.
Upon such issues the lower court on April 30, 1928,
rendered the following judgment:
"In view of the foregoing considerations, the court decrees:
"That the partnership, existing among the parties in this suit,
is hereby declared dissolved that all the existing properties of the
said partnership are ordered to be sold at public auction and that
all proceeds and other unexpended
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Teague vs. Martin

funds of the partnership be used, first, to pay the P529.48 tax to

the Government of the Philippine Islands second, to pay debts
owing to third persons third, to reimburse the partners for their
advances and salaries due and lastly, to return to the partners
the amounts they contributed to the capital of the association and
any other remaining sum to be distributed proportionately among
them as profits
"That the plaintiff immediately render a true and proper
account of all the money due to and received by him for the
partnership
"That the barge LapuLapu as well as the Ford truck No. T
3019 and adding machine belong exclusively to the plaintiff, M.
Teague, but the said plaintiff must return to and reimburse the
partnership the sum of P14,032.26 taken from its funds for the
purchase and equipment of the said barge LapuLapu and also to
return the sum of P1,230 and P228 used for buying the Ford truck
and adding machine, respectively
"That the sum of P1,512.03 be paid to the defendant, J. T.
Maddy, and the sum of P615.49 be paid to defendant, H. Martin,
for their advances and their unpaid salaries, with legal interest f

rom October 27, 1927, until paid that the plaintiff pay the costs of
this action.
"So ordered."

May 16, 1928, plaintiff filed a motion praying for an order

"directing the court's stenographers concerned to transcribe
the stenographic notes taken by them of the evidence
presented in the present case, as soon as possible." This
motion was denied on May 19th, and on May 16th, the
court denied plaintiff's motion for reconsideration. To all of
which exceptions were duly taken.
June 7, 1928, plaintiff filed a petition praying, for the
reasons therein stated, that the decision of the court in the
case be set aside, and that the parties be permitted to
again present their testimony and to have the case decided
upon its merits. To which objections were duly made,
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Teague vs. Martin

and on June 28, 1928, the court denied plaintiff's motion

for a new trial. To which exceptions were duly taken, and
on July 10, 1928, the plaintiff filed a motion in which he
prayed that the period for the appeal interposed by the
plaintiff be suspended, and that the order of June 28, 1928,
be set aside, "and that another be entered ordering the re
taking of the evidence in this case." To which objections
were also filed and later overruled, from all of which the
plaintiff appealed and assigns the following errors:
"I. The trial court erred in not having confined itself,
in the determination of this case, to the question as
to whether or not it is proper to dissolve the
partnership and to liquidate its assets, f or all other
issues raised by appellees are incidental with the
process of liquidation provided for by law.
"II. The trial court erred in not resolving the primary
and most important question at issue in his case,
namely, whether or not the appellant M. Teague
was the manager of the unregistered partnership
Malangpaya Fish Company.
"III. The trial court erred in holding that the appellant
had no authority to buy the LapuLapu, the Ford
truck and the adding machine without the consent
of his copartners, for in accordance with article 131
of the Code of Commerce the managing partner of a

partnership can make purchases for the

partnership without the knowledge and / or consent
of his copartners.
"IV. The trial court erred in holding that the Lapu
Lapu, the Ford truck and the adding machine
purchased by appellant, as manager of the
Malangpaya Fish Company, for and with f unds of
the partnership, do not f orm part of the assets of
the partnership,
"V. The trial court erred in requiring the appellant to
pay to the partnership the sum of P14,032.26,
purchase price, cost of repairs and equipment of the
barge LapuLapu P1,230 purchase price of the
Ford truck and P228 purchase price of the adding
machine, for these properties were purchased for
and they form part of the assets of the partnership.
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Teague vs. Martin

"VI. The trial court erred in disapproving appellant's

claim for salary and expenses incurred by him for
and in connection with the partnership's business.
"VII. The trial court erred in approving the claims of
appellees J. T. Maddy and H. Martin and in
requiring the appellant to pay them the sum of
P1,512.03 and P615.49 respectively.
"VIII. The trial court erred in giving any credit to the bias
and f alse testimonies of the appellees and the
framedup evidence presented by them and in
rendering judgment against the appellant.
"IX. The trial court erred in not taking cognizance of
appellant's claim for reimbursement for advances
made by him for the partnership, as shown in the
statement attached to the complaint marked
Exhibit A, in which there is a balance in his favor
and against the partnership amounting to over
P16,000.
"X. Lastly, considering the irregularities committed,
the disappearance of the stenographic notes for a
considerable length of time, during which time
changes in the testimonies of the witnesses could
have been made and the impossibility of having an
accurate and complete transcript of the

stenographic notes, the trial court erred in denying

appellant's petition for the retaking of the evidence
in this case."
JOHNS, J.:
By their respective pleadings, all parties agreed that there
was a partnership between them, which appears at one
time to have done a good business. In legal effect, plaintiff
asked for its dissolution and the appointment of a receiver
pendente lite. The defendants did not object to the
dissolution of the partnership, but prayed for an accounting
with the plaintiff. It was upon such issues that the
evidence was .taken and the case tried. Hence, there is no
merit in the first assignment of error. Complaint is made
that the lower court did not specifically decide as to
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Teague vs. Martin

whether or not the plaintiff was the manager of the

unregistered partnership. But upon that question the lower
court, in legal effect, followed and approved the contention
of the def endants that the duties of each partner were
specified and defined in the "plans for formation of a
limited partnership," in which it is stated that Captain
Maddy would have charge of the Barracuda and its
navigation, with a salary of P300 per month, and that
Martin would have charge of the southern station, cold
stores, commissary and procuring fish, with a salary of
P300 per month, and that the plaintiff would have charge
of selling fish in Manila and purchasing supplies, without
salary until such time as the business is placed on a paying
basis, when his salary would be the same as that of Maddy
and Martin, and that the principal office of the partnership
shall be in Manila, and that each party doing business with
the partnership "shall keep books showing plainly all
transactions," which shall be available at all time for
inspection of any of the members.
It will thus be noted that the powers and duties of
Maddy, Martin, and the plaintiff are specifically defined,
and that each of them was more or less the general
manager in his particular part of the business. That is to
say, that Maddy's power and duties are confined and
limited to the charge of the Barracuda and its navigation,
and Martin's to the southern station, cold stores,

commissary and procuring fish, and that plaintiff's powers

and duties are confined and limited to selling fish in
Manila and the purchase of supplies. Under this
agreement, plaintiff's powers and duties were confined and
limited to "selling fish in Manila and the purchase of
supplies." In the selling of fish, plaintiff received a
substantial amount of money which he deposited to the
credit of the company and paid out by checks of the
company signed by him as manager, but it appears that
was a requirement which the bank made in the ordinary
course of business, as to who was authorized to sign checks
for the partnership otherwise, it would not cash the
checks.
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Teague vs. Martin

In the final analysis, the important question in this case is

the ownership of the LapuLapu, the Ford truck, and the
adding machine. The proof is conclusive that they were
purchased by the plaintiff and paid for by him from and out
of the money of the partnership. That at the time of their
purchase, the LapuLapu was purchased in the name of the
plaintiff, and that he personally had it registered in the
customs house in his own name, for which he made an
affidavit that he was its owner. After the purchase, he also
had the Ford truck registered in his own name. His
contention that this was done as a matter of convenience is
not tenable. The record shows that when the partnership
purchased the Barracuda, it was registered in the customs
house in the name of the partnership, and that it was a
very simple process to have it so registered.
Without making a detailed analysis of the evidence, we
agree with the trial court that the LapuLapu, the Ford
truck, and the adding machine were purchased by the
plaintiff and paid for out of the funds of the partnership,
and that by his own actions and conduct, and the taking of
the title in his own name, he is now estopped to claim or
assert that they are not his property or that they are the
property of the company. Again, under his powers and
duties as specified in the tentative, unsigned written
agreement, his authority was confined and Iimited to the
"selling of fish in Manila and the purchase of supplies." It
must be conceded that, standing alone, the power to sell
fish and purchase supplies does not carry with it or imply
the authority to purchase the LapuLapu, or the Ford

truck, or the adding machine. From which it must follow

that he had no authority to purchase the lighter Lapu
Lapu, the Ford truck, or the adding machine, as neither of
them can be construed as supplies for the partnership
business. While it is true that the tentative agreement was
never personally signed by any member of the firm, the
trial court found as a fact, and that finding is sustained by
the evidence, that this unsigned agreement was acted upon
and accepted by all
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Teague vs. Martin

parties as the basis of the partnership. It was upon that

theory that the lower court allowed the defendants Maddy
and Martin a salary of P300 per month and the money
which each of them paid out and advanced in the discharge
of their respective duties, and denied any salary to the
plaintiff, for the simple reason that the business was never
on a paying basis.
Much could be said about this division of powers, and
that Maddy and Martin's duties were confined and limited
to the catching and procuring of fish, which were then
shipped to the plaintiff who sold them on the Manila
market and received the proceeds of the sales. In other
words, Maddy and Martin were supplying the fish to
plaintiff who sold them under an agreement that he would
account for the money.
Upon the question of accounting, his testimony as to the
entries which he made and how he kept the books of the
partnership is very interesting:
"Q. Then this salary does not take into consideration the fact that
you claim the company is very badly in debt?
A. Well, I put the salary in there.
"Q. I am asking you if that is true?A. I do not think I will
decide that, I think it will be decided by the court.
"Q. I will ask you to answer the question?A. You asked me
my opinion and I said that I am entitled to it.
* * * * * *
*
"I am not on trial as a bookkeeper if my lawyers won't object to
the question I will object myself I am not on trial as a
bookkeeper I keep my books any way I want to, put in what I
want to, and I leave out anything I don't choose to put in,

* * * * * *
*
"Q. You have your own bookkeeping?A. Well, I run my
business to suit myself, I put in the books what I want to, and I
leave out what I want to, and I have a quarter of a million pesos
to show for it,
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Teague vs. Martin

"Q. Did you not say that you paid yourself a salary in August
because you made a profit?A. Yes. This profit was made
counting the stock on hand and equipment on hand, but as f ar as
cash to pay this balance, I did not have it. When I wanted a salary
I just took it. I ran things to suit myself.
* * * * * *
*
"Q. In other words in going against these partners you are
going to tax them for the services of your attorney?
A. You are mistaken I am not against them. I paid this out for
filing this complaint and if the honorable court strikes it out, all
right. I think it was a just charge. When I want to sue them the
company can pay for my suit.
"Q. Would you have any objection to their asking for their
attorney's fees from the company as partners also in the business?
A. Yes.
"Q. You would object to your partners having their attorney's
fees here paid out of the copartnership like you have had yours
paid?A. Yes, that is the way I do my business."

To say the least, this kind of evidence does not appeal to

the court. This case has been bitterly contested, and there
is much f eeling between the parties and even their
respective attorneys. Be that as it may, we are clearly of
the opinion that the findings of the lower court upon
questions of fact are well sustained by the evidence.
Plaintiff's case was tried on the theory that the partnership
was the owner of the property in question, and no claim
was made for the use of the LapuLapu, and it appears that
P14,032.26 of the partnership money was used in its
purchase, overhauling, expenses and repairs. That in truth
and in fact the partnership had the use and benefit of the
LapuLapu in its business from sometime in May until the
receiver was appointed on November 11, 1927, or a period

of about six months, and that the partnership has never

paid anything for its use. It is true that there is no
testimony as to the value of such use, but the cost of the
LapuLapu and the
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City of Manila vs. Rizal Park Co.

time of its use and the purpose for which it was used, all
appear in the record. For such reasons, in the interest of
justice, plaintiff should be compensated for the reasonable
value of the time which the partnership made use of the
LapuLapu.
All things considered, we are of the opinion that P2,000
is a reasonable. amount which the plaintiff should receive
for its use.
In all things and respects, the judgment of the lower
court as to the merits is affirmed, with the modification
only that P2,000 shall be deducted from the amount of the
judgment which was awarded against the plaintiff, such
deduction to be made for and on account of such use of the
LapuLapu by the partnership, with costs against the
appellant. So ordered.
Avancea, C. J., Street, Villamor, Romualdez, and
VillaReal, JJ., concur.
Johnson, J., reserves his vote.
Judgment modified.
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