Question: At his accountant's suggestion, Billy Huff invested in a limited partnership, Willow Creek Group, Ltd., as a tax shelter. Willow bought an apartment complex for $3.6 million by means of a $2.7 million mortgage and a $890,000 note. Willow then borrowed $1.05 million from Security Federal Savings & Loan. Security required all the partners to sign an agreement to pay the note and all future obligations of Willow if it defaulted. Willow defaulted, and Security asked the partners to pay under the agreement.
Huff refused to pay, claiming he had been fraudulently induced to sign it. The other partners formed a new partnership called Guarantor Partners. Guarantor bought the note and agreement from Security and sued Huff. He could raise the defense of fraudulent inducement if the agreement was not a negotiable instrument. Was it a negotiable instrument?