Ferguson v. Williams

Ferguson and Welborn (defendants) formed a partnership for a real estate project and later sold Williams (plaintiff) a 25% stake for $15,000. Williams stayed actively engaged — talking with Ferguson roughly twice weekly, offering an employee's labor, advancing an additional $5,000, and personally signing for a separate loan on the firm's behalf. When the project failed for lack of construction financing, Williams sued Ferguson and Welborn for negligent management. The trial court found Williams was not a true partner but merely an investor holding a security interest, found Ferguson and Welborn negligent in specific business decisions, and awarded Williams over $35,000.