Evans v. Galardi (1979) 93 Cal. App. 3d 291 El Dorado is a limited partnership formed...

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Evans v. Galardi (1979) 93 Cal. App. 3d 291 El Dorado is a limited partnership formed for the purpose of owning and managing certain real property in the City of South Lake Tahoe, California, and of constructing, owning and managing a motel on the premises. Eventually, a motel known as the Rodeway Inn was built. When the partnership was formed in June 1969, plaintiff Lewis W. Evans and defendants John N. Galardi and Richard E. Hodge were the limited partners and entitled to receive all of the partnership net profits. The general partner at all times material herein was a California corporation known as El Dorado Improvement Corporation which operated the motel and whose stock initially was owned entirely by plaintiff and defendants. About September 15, 1970, plaintiff, defendants and El Dorado Improvement Corporation entered into a written contract whereby plaintiff agreed to sell and defendants agreed to purchase for the sum of $50,000 all of plaintiff's right, title and interest in the limited partnership and all of plaintiff's stock in the corporate general partner. Defendants executed and delivered to plaintiff their promissory note for the full amount of the purchase price. The respective obligations were undertaken by the parties as individuals, and not in their status as limited partners or shareholders of the corporate general partner. El Dorado was not a party to the agreement of purchase and sale and did not sign either the agreement or the promissory note. As a result of this transaction, defendants as limited partners in El Dorado each became entitled to 50 percent of its net profits, if any, and became the owners of all of the stock of the corporate general partner. Defendants defaulted on the promissory note and about April 2, 1971, plaintiff brought an action against them in their individual capacity to recover on it. Ultimately judgment was entered in favor of plaintiff and against defendants individually in the sum of $60,008.15. Will the Plaintiff be successful in collecting a judgment against limited partner Defendants from the general partner El Dorado Improvement Corporation? Issue: Rule: Evans v. Galardi (1979) 93 Cal. App. 3d 291 El Dorado is a limited partnership formed for the purpose of owning and managing certain real property in the City of South Lake Tahoe, California, and of constructing, owning and managing a motel on the premises. Eventually, a motel known as the Rodeway Inn was built. When the partnership was formed in June 1969, plaintiff Lewis W. Evans and defendants John N. Galardi and Richard E. Hodge were the limited partners and entitled to receive all of the partnership net profits. The general partner at all times material herein was a California corporation known as El Dorado Improvement Corporation which operated the motel and whose stock initially was owned entirely by plaintiff and defendants. About September 15, 1970, plaintiff, defendants and El Dorado Improvement Corporation entered into a written contract whereby plaintiff agreed to sell and defendants agreed to purchase for the sum of $50,000 all of plaintiff's right, title and interest in the limited partnership and all of plaintiff's stock in the corporate general partner. Defendants executed and delivered to plaintiff their promissory note for the full amount of the purchase price. The respective obligations were undertaken by the parties as individuals, and not in their status as limited partners or shareholders of the corporate general partner. El Dorado was not a party to the agreement of purchase and sale and did not sign either the agreement or the promissory note. As a result of this transaction, defendants as limited partners in El Dorado each became entitled to 50 percent of its net profits, if any, and became the owners of all of the stock of the corporate general partner. Defendants defaulted on the promissory note and about April 2, 1971, plaintiff brought an action against them in their individual capacity to recover on it. Ultimately judgment was entered in favor of plaintiff and against defendants individually in the sum of $60,008.15. Will the Plaintiff be successful in collecting a judgment against limited partner Defendants from the general partner El Dorado Improvement Corporation? Issue: Rule: