Ferguson v. Williams
Texas Court of Appeals
670 S.W.2d 327 (1984)
In early 1979, John Ferguson and Robert Welborn (defendants) launched a partnership to undertake a real estate development project. In May 1979, needing funds, they contacted Paul Williams (plaintiff) and sold him a 25 percent interest in the venture for $15,000. Williams kept up with progress on the project, speaking to Ferguson roughly twice a week for the rest of 1979. He also offered the services of one of his employees to clean up the building site. When the business needed additional financing, he advanced the firm $5,000 and signed on behalf of the firm for a separate loan. The business ultimately failed because it was unable to obtain construction financing. Williams sued Ferguson and Welborn, arguing that they had been negligent in managing the business, among other charges. The trial court found in his favor. It held that Williams was not a partner but was an investor and a holder of a security interest in the company. The court further ruled that Ferguson and Welborn had been negligent with regard to several specific business decisions. Williams was awarded over $35,000 in damages. Ferguson and Welborn appealed, arguing that Williams was a partner and that he could not hold the other partners liable for negligence.
Rule of Law
Holding and Reasoning (Brady, J.)