Promissory Note for a Loan
Clinton William executed a promissory note as general partner on behalf of Monica West Office Condos, Ltd. (the partnership). He also executed a guarantee written by the Bank which limited his liability to 25% of the indebtedness. This note was for a loan issued by Congress Bank. The loan was also secured by a deed of trust for the partnership’s real property.
The partnership defaulted on the note. After the property was sold, a deficiency of $920,000 was left.
These events took place in Texas. Under Texas law general partners of a limited partnership are personally liable to creditors for the limited partnership’s debts the same as a partner in a general partnership.
Clinton argues that because the guarantee limits his liability to 25% of the indebtedness, his liability as general partner is similarly limited. How do you think the court should rule?