Walter Jackson v. Paul Blum et al.

J. Cooper | August 24, 1901

Obligations of the Partners among Themselves

DOCTRINE:
Any partner may transfer his interest and his assignee may demand an accounting from the
remaining partners and a third person into whose hands the partnership property has passed
in satisfaction of the firm’s debt.

SUMMARY:
Evans & Jackson were the initial partners. The establishment where they conducted business
(Alhambra) was solely owned by Evans. Later, Evans became partners with Whaley (forming
Evans & Whaley). Evans & Whaley contracted a loan with Paul Blum. But Evans also owed
Jackson money. As payment, Evans gave Jackson his (Evans’) rights in the Evans & Whaley
partnership. When it was time for Blum to demand the payment from the Evans & Whaley
partnership, Blum contested the substitution of Jackson in the place of Evans. CFI said
substitution was valid. SC affirmed this.

FACTS:

1. August 1898 – Senor Roca took a lease from the owner of the Alhambra (business
property situated in Escolta, Manila).
2. Senor Roca transferred the same to Evans, Jackson, and Williams. (END OF
PARTICIPATION OF ROCA – IGNORE HIM)
3. Williams conveyed his interest to Evans and Jackson, so the establishment was
conducted by the latter two. (END OF PARTICIPATION OF WILLIAMS – IGNORE HIM)
4. Later, the firm of Evans & Jackson was transferred to Evans. In this transfer, it was agreed
that when the establishment was free from all incumbrances there should be a settlement
between Jackson and Evans, and that Jackson should remain the owner of his interest in
the property.
5. Evans, being then the apparent sole owner of the establishment, obtained a loan of
P32,443 from Paul Blum.
6. In carrying out the transaction, a partnership was formed between Evans and Whaley, and
an absolute was then made by Evans & Whaley to Paul Blum, transferring to him the
establishment.
a. It was stipulated that Whaley was to be the managing partner of the firm, but Evans
can still enter the premises at any time and to inspect the books of account. (Blum
perhaps required that Whaley should become the managing partner of the firm of
Evans & Whaley for the protection of his interests in advancing the money to them.)
b. Each was to receive P300 per month.
c. Evans & Whaley will purchase from the American Commercial Company (where
Blum was then a member) all supplies which they needed for the establishment.
d. The loan made by Blum to Evans & Whaley was to be paid off from the net
proceeds of each day’s business, to be deposited with the ACC to the credit of the
Alhambra account, or to be paid from any other funds, with interest at 8% per
annum.
e. Whaley was mentioned in the instrument as representative of Blum.
f. It does not say that Blum was to be considered a partner or in any way interested
in the business.
 g. No term for the duration of the partnership between Evans and Whaley was fixed,
nor can any particular term be inferred from the nature of the business to be carried
on by them.
7. November 13, 1899 – A partnership settlement of the firm of Evans & Jackson was made
and it was found that Evans owed Jackson $5,000 (yes, dollars). An agreement was then
entered into between Evans and Jackson:
a. P20,000 was the estimated amount due on the mortgage of the property to Blum
b. The equity of redemption was P40,000, which belonged to each of the partners in
equal parts.
8. To pay the P5,000 (yes, pesos. not sure which is true between P or $), Evans transferred
all of his interest in the Alhambra property to Jackson.
9. On the following day Evans applied to Blum to ascertain the amount due him on the
mortgage, offering to pay the same. Blum refused to recognize Jackson as having any
rights in the establishment.
10. Afterwards Blum demanded of Evans & Whaley the payment of P28,000 as due upon the
mortgage. Whaley, being then in exclusive possession of the property, turned over the
same to Blum.
11. CFI
a. The judgment was in favor of Jackson and an accounting was decreed.
12. Current appeal (contentions of Blum et al):
a. By the sale from Evans and Whaley to Blum, the property passed absolutely to
Blum
b. Evans could not substitute Jackson as debtor to Blum without the consent of the
latter
c. Partnership between Evans and Whaley was based upon confidence, and that
Jackson could not be substituted as a member of the firm
d. The juridical relation does not exist between Jackson and Blum et al.

(No real issue was explicitly stated, just the ratio. I just inferred the issue from the given ratio.)
ISSUE/HELD: Can Jackson substitute Evans in the partnership of Evans & Whaley? – YES.

RATIO:

- A partnership may be terminated by the will or renunciation of one of the partners, provided
no term has been fixed for its duration or when a term is not fixed by the nature of the
business.
- Personal or real property which each partner possesses at the time of the execution of the
contract continues to be his private property, the usufruct only passing to the partnership.
- Each coowner has the absolute ownership of his part and of the fruits and benefits
belonging thereto, and he therefore may sell, assign, or mortgage the same or substitute
another in its enjoyment unless personal rights are involved. The effect of the sale or
mortgage, however, so far as affects the coowners, shall be limited to that portion which
may be allotted to him in the distribution at the termination of the community.
- No co-owner is obliged to remain in the community.

DISPOSITIVE:
- CFI judgment affirmed.