MACDONALD vs. NATIONAL CITY BANK OF NEW YORK

MACDONALD vs. NATIONAL CITY BANK OF NEW YORK [G.R. No. L-7991. May 21, 1956.]

 

 

 

Facts:

 

Stasikinocey is a partnership formed by da Costa, Gorcey, Kusik and Gavino. It was denied registration by the SEC due to a confusion between the partnership and Cardinal Rattan. Cardinal Rattan is the business name or style used by Stasikinocey. Da Costa and Gorcey are the general partners of Cardinal Rattan. Moreover, Da Costa is the managing partner of Cardinal Rattan. Stasikinocey had an overdaft account with Nationa City Bank, which was later converted into an ordinary loan due the partnership’s failure in paying its obligation. The ordinary loan was secured by a chattel mortgage over 3 vehicles. During the subsistence of the loan, the vehicles were sold to MacDonald and later on, MacDonald sold 2 of the 3 vehicles to Gonzales. The bank brought an action for recovery of its credit and foreclosure of the chattel mortgage upon learning of these transactions. Held: While an unregistered commercial partnership has no juridical personality, nevertheless, where two or more persons attempt to create a partnership failing to comply with all the legal formalities, the law considers them as partners and the association is a partnership in so far as it is a favorable to third persons, by reason of the equitable principle of estoppel. Where a partnership not duly organized has been recognized as such in its dealings with certain persons, it shall be considered as “partnership by estoppel” and the persons dealing with it are estopped from denying its partnership existence.

 

Issue: WON the partnership, Stasikinocey is estopped from asserting that it does not have juridical personality since it is an unregistered commercial partnership

 

Ratio: [YES] While an unregistered commercial partnership has no juridical personality, nevertheless, where two or more persons attempt to create a partnership failing to comply with all the legal formalities, the law considers them as partners and the association is a partnership in so far as it is a favorable to third persons, by reason of the equitable principle of estoppel. Da Costa and Gorcey cannot deny that they are partners of the partnership Stasikinocey, because in all their transactions with the National City Bank they represented themselves as such. McDonald cannot disclaim knowledge of the partnership Stasikinocey because he dealt with said entity in purchasing two of the vehicles in question through Gorcey and Da Costa. The sale of the vehicles to MacDonald being void, the sale to Gonzales is also void since a buyer cannot have a better right than the seller. As was held in Behn Meyer & Co. vs. Rosatzin, where a partnership not duly organized has been recognized as such in its dealings with certain persons, it shall be considered as “partnership by estoppel” and the persons dealing with it are estopped from denying its partnership existence. If the law recognizes a defectively organized partnership as de facto as far as third persons are concerned, for purposes of its de facto existence it should have such attribute of a partnership as domicile.