Cantra
He wasn't, technically. It was Younger Toguro who was defeated, with Elder Toguro morphed into a sword at that time. When his brother was defeated, Elder Toguro simply remained inert in his sword form. He could have switched back to continue the fight, but didn't.
It was only shortly after that, it was revealed that the brothers were not fighting at their full strength in order to help bankrupt their current boss, so to all intents both brothers were just playing dead and hadn't been defeated in any way.