When you lend someone $193,000, you probably should know who the borrower is, right?
When you sign something in return for a receipt of a $193,000 loan, you should probably know whether you may be personally responsible for the debt, right?
Believe it or not, as obvious as these two questions are, people find themselves in situations where the lender and the borrower cannot agree on who the borrower was — that is, who assumed the obligation to repay the loan. This becomes rather important information when the borrower defaults on the loan…
In the case of Jennifer Peters and Juniper Ventures v. Nathaniel “Nate” Armstrong, there is uncertainty as to whether Nate borrowed money or merely signed two promissory notes on behalf of two limited liability companies, who are responsible for repaying the notes.
We hope that no lawyers were involved in these transactions because, if they were, they missed a pretty big detail. Mr. Armstrong signed the notes: “Borrower: Nate Armstrong…for [each respective LLC].” Thus, as Sr. U.S. District Court Judge Donovan W. Frank (D. Minn.) recently held, Mr. Armstrong’s personal liability is quite ambiguous on the face of the promissory notes.
Complicating the matter a bit more, on one of the two promissory notes, Mr. Armstrong appears to be identified as a “partner” of Black Box Equities LLC. Lawyers, if not other people, should know that limited liability companies (LLC’s) are comprised of “members” not “partners.” They are not partnerships.
We speculate that these litigants are now paying dearly for having saved nickles and dimes when they entered into these transactions. Perhaps they pulled a generic “promissory note” off of the internet, foregoing lawyers when they entered into these contracts. Either that or they hired someone who did not have much experience documenting financial transactions because this issue is pretty important and pretty basic…