2019.12.24

2018 (Ju) 1551

Minshu Vol. 73, No. 5

Judgment concerning the case in which a member with unlimited liability of a limited partnership company is liable to pay money to the company upon withdrawal from it

Case seeking reduction based on a statutory reserved share

Judgment of the Third Petty Bench, quashed and remanded

Nagoya High Court, Judgment of April 17, 2018

When a member with unlimited liability withdraws from a limited partnership company, and if, as a result of the accounting effected as between the member and the company in accordance with the status of the assets of the company as of the time of the withdrawal, the amount of loss to be borne by the member exceeds the value of the contribution made by the member, the member is liable to pay the excess amount to the company unless under special circumstances such as that the articles of incorporation of the company provide otherwise.

Article 611, paragraph (2) of the Companies Act

Companies Act
(Refund of Equity Interest in Conjunction with Withdrawal)
Article 611 (2)
Accounting as between a member that has withdrawn and the Membership Company must be effected in accordance with the status of the assets of the Membership Company as at the time of the withdrawal.

1. The following parts of the judgment in prior instance are quashed:
(1) the part that upheld the claim filed by the appellee of final appeal; and
(2) the part that accepted the defense of set-off argued by the appellant of final appeal and dismissed the claims filed by the appellee against the appellant for the return of 1,724,773 yen as unjust enrichment and the payment of delay damages accrued thereon.
2. This case is remanded to the Nagoya High Court with respect to the aforementioned parts.

Concerning Reason I for a petition for acceptance of final appeal stated by the counsel for final appeal, YAMADA Katsumi

1. In this case, the appellee, who is the first daughter of late P, alleges that her statutory reserved share in P's estate has been infringed due to P's will to the effect that the appellant, who is the first son of P, shall succeed to the entire property held by P, and the appellee files against the appellant the claims by exercising the right to demand the reduction based on her statutory reserved share, including the claim to seek performance of the procedure for registration of transfer of interest with regard to the pieces of real property indicated in the list of real property attached to the judgment in first instance by reason of the reduction based on her statutory reserved share, and the claim for the return, as unjust enrichment, of some parts of the property acquired by the appellant due to that will, namely the money withdrawn from the closed deposit and savings accounts, the cash at hand, and the rent that the appellant has received after P's death for some of the abovementioned pieces of real property. The issue in dispute is whether or not P, who was a member with unlimited liability of a limited partnership company, Company Q (hereinafter referred to as the "Company"), is liable to pay money to the Company upon his/her withdrawal from it.

2. The outline of facts determined by the court of prior instance is as follows.

(1) P was a member with unlimited liability of the Company. In November 2011, P withdrew from the Company due to receiving a ruling for commencement of guardianship.

(2) At the time of P's withdrawal mentioned above, the Company was insolvent.

3. The court of prior instance determined that even when a limited partnership company is insolvent, its member with unlimited liability is not liable to pay money to the company upon withdrawal from it, and accordingly, the court partially upheld the appellee's claim by calculating the amount of her infringed statutory reserved share without taking into consideration P's liability to pay money to the Company, and dismissed the other claims of the appellee by accepting the appellant's argument of the defense of set-off.

4. However, the abovementioned determination of the court of prior instance cannot be upheld for the following reasons.

(1) When a member with unlimited liability withdraws from a limited partnership company, accounting as between the member and the company is effected in accordance with the status of the assets of the company as of the time of the withdrawal (Article 611, paragraph (2) of the Companies Act), and if, as a result of the accounting, the amount of loss to be borne by the member falls short of the value of the contribution made by the member, the member may receive the refund of his/her equity interest (paragraph (1) of the same Article). On the other hand, if, as a result of the abovementioned accounting, the amount of loss to be borne by the member exceeds the value of the contribution made by the member, it is appropriate to consider that the member is liable to pay the excess amount to the company unless under special circumstances such as that the articles of incorporation of the company provide otherwise. Consideration made in this manner is in line with the design of the limited partnership company system, under which the existence of members with unlimited liability is required for the incorporation of a limited partnership company and its continued existence (Article 576, paragraph (3), Article 638, paragraph (2), item (ii), and Article 639, paragraph (2) of the same Act) and profits and losses are distributed to the members in proportion to the value of each member's contribution (Article 622 of the same Act), and it also promotes equity among members of a limited partnership company.

(2) According to the facts mentioned above, at the time when P withdrew from the Company as its member with unlimited liability, the Company was insolvent. Therefore, if, as a result of the accounting at the time of P's withdrawal, the amount of loss to be borne by P exceeds the value of the contribution made by P, P is liable to pay the excess amount to the Company, unless under special circumstances mentioned above.

5. For the reasons stated above, the determination of the court of prior instance contains the violation of laws and regulations that obviously affects the judgment. The appeal counsel's arguments on this point are well-grounded, and therefore the judgment in prior instance should inevitably be quashed with respect to the part that upheld the appellee's claim and the part that accepted the appellant's argument of the defense of set-off and dismissed the appellee's claims against the appellant for the return of 1,724,773 yen as unjust enrichment and the payment of delay damages accrued thereon. The Court remands this case to the court of prior instance with respect to these parts in order to have it further examine whether or not P is liable to pay money to the Company upon withdrawal and the amount of the appellee's infringed statutory reserved share as calculated while taking into consideration whether P has such liability.

Accordingly, the Court unanimously decides as set forth in the main text of the judgment.

Justice HAYASHI Keiichi

Justice TOKURA Saburo

Justice MIYAZAKI Yuko

Justice UGA Katsuya