A managing partner collected money owed to him personally from someone who also owes the partnership, how is that payment applied?

The proportional split

Article 1792 addresses the conflict of interest squarely. Where a partner authorised to manage collects a demandable sum owed to him in his own name, from a person who also owes the partnership another demandable sum, the sum thus collected shall be applied to the two credits in proportion to their amounts, even though he may have given a receipt for his own credit only. So the managing partner cannot funnel the whole payment into his personal claim and leave the partnership empty-handed; the law divides it pro rata.

When the whole payment goes to the partnership

The article adds one variation: but should he have given it for the account of the partnership credit, the amount shall be fully applied to the latter. If the receipt was issued in the partnership's name, the entire payment goes to the partnership credit. The rule leans against self-dealing by the person who manages the firm's affairs, ensuring his fiduciary position is not used to prefer himself over the partnership he serves.

The debtor's own right is preserved

The proportional rule is without prejudice to the right granted to the other debtor by article 1252 — the debtor's right to choose which of several debts his payment answers — but only if the personal credit of the partner should be more onerous to him. Article 1252 lets a debtor with several debts to the same creditor declare, at the time of payment, which one is being paid. So the split protects the partnership, yet still respects a debtor who validly applied his payment to the more burdensome debt. Where these interests collide, the specific facts and the wording of any receipt matter.

When the split rule does not apply

The proportional split is triggered only in a specific setting: the partner must be the one charged with managing, both credits must be due and demandable, and both must be owed by the same debtor. Take away any of those and the article does not reach the situation — an ordinary partner collecting his own debt, or a credit that is not yet demandable, falls outside it. Where a managing partner ignores the rule and pockets the whole sum for his personal credit, the partnership's proportionate share is treated as still owing to it, and he answers to the firm for having diverted what the law had already assigned to it.

Related provisions

• Civil Code, Article 1792 — Application of a Collected Sum
• Civil Code, Article 1252 — Application of Payments