Supreme Court Decisions

Interesting Article
In this case, the Revenue Department filed a lawsuit claiming payment from a limited partnership and three partners who were partners with limited liability.The facts appeared that although Defendant No. 3 was merely a partner with limited liability, Defendant No. 3 consented to the use of their name as part of the partnership’s name and did not object to such use. In addition, Defendant No. 3 contributed capital in an amount equal to that of the managing partner and fully had interests and benefits in the business.The Supreme Court ruled that the actions of Defendant No. 3 fell within the scope of Section 1082 Paragraph One of the Civil and Commercial Code, which provides that if a partner with limited liability consents to the use of their name as the partnership’s name, such person shall be liable as if they were a partner with unlimited liability. This is because such action would cause third parties to place trust and confidence in the person whose name is used and to enter into various legal transactions accordingly. Therefore, when any damage occurs, such person must bear unlimited liability. Consequently, Defendant No. 3 was required to be fully liable in the same manner as a partner with unlimited liability.

Interesting Article
The Revenue Department filed a lawsuit against Coffee de Central Limited Partnership and a total of three partners, requesting the Court to issue an absolute receivership order and adjudge all three defendants bankrupt. Defendant No. 2 submitted a statement of defence stating that they had resigned from being the managing partner since 1985, and the plaintiff brought the case to court in 1987, which was beyond the two-year period prescribed by law.The Supreme Court ruled that although Defendant No. 2 was liable for debts incurred by the partnership prior to the resignation pursuant to Section 1051, such right must be exercised within two years from the date of withdrawal from the partnership pursuant to Section 1068. Since the plaintiff did not directly notify Defendant No. 2 of the tax assessment within the prescribed period, the sending of a general warning letter was not considered a notification of tax assessment under tax law, but was merely a demand letter requesting the debtor to make payment in the ordinary manner, as with general debts.After the two-year period had expired, Defendant No. 2 was therefore no longer liable, and the plaintiff had no right to bring a lawsuit requesting bankruptcy adjudication.The Supreme Court therefore amended the judgment and dismissed the case against Defendant No. 2.

Interesting Article
The plaintiff and the defendant jointly established a limited partnership. The plaintiff was an unlimited liability partner and the managing partner, while the defendant was a limited liability partner. The plaintiff alleged that the defendant had “interfered in the management of the partnership business” and therefore sued the defendant, seeking to hold him jointly liable for the partnership’s debts to creditors without limitation pursuant to Section 1088, paragraph one of the Civil and Commercial Code.The defendant admitted his status as a limited partner but denied having participated in the management of the business. The Court of First Instance framed the issue as the extent to which the partnership debts claimed in the action were binding upon the defendant. The court held that even if the defendant had interfered in the management of the partnership business, he was still not liable without limitation because Section 1088, paragraph one of the Civil and Commercial Code applies to situations in which a limited partner is liable to third parties. This case, however, was not one in which a third party sought to hold the defendant liable; rather, it was a dispute between partners themselves.The Court of Appeal and the Supreme Court affirmed. The ruling was not beyond the scope of the pleadings, but was based on the “partnership agreement,” which was the plaintiff’s first principal ground of claim. A partner who consented to acts exceeding authority within the partnership cannot later invoke Section 1088 as though he were a third party in order to impose a greater burden on the other partner.The defendant was therefore not liable without limitation to the plaintiff in his capacity as a fellow partner.

Interesting Article
The 2nd Defendant, who was the managing director of the 1st Defendant company, entered into an agreement to sell the transportation business and all shares of the company to the Plaintiff, claiming that he had obtained a resolution from the shareholders’ meeting. However, the facts did not show that the meeting had actually granted approval. Therefore, the act of the 2nd Defendant exceeded the scope of his authority and was outside the objectives of the company.The Supreme Court ruled that the said agreement did not bind the 1st Defendant company because it lacked a resolution of the shareholders’ meeting as required under the company’s regulations (Civil and Commercial Code, Sections 75 and 1144). The 2nd Defendant, in his capacity as the company’s representative, therefore had no authority to act on behalf of the company. Since the company did not ratify the act, and the contracting party (the Plaintiff) did not know with certainty that the 2nd Defendant had no authority, the 2nd Defendant must be personally liable to compensate the Plaintiff for damages pursuant to Sections 823 and 1167. The Plaintiff was entitled to receive damages even though the exact amount could not be clearly specified, and the Defendant was required to return the money together with interest at the rate of 7.5% per annum from the date of breach of contract.