4. John Madera signed a promissory note payable to A Duda &Sons;, Inc., in the a

Question

4. John Madera signed a promissory note payable to A Duda &Sons;, Inc., in the amount of $47,872. The note began "for value received, we promise to pay A. Duda & Sons, Inc. ..."Madera signed the note beneath the name and address of Tomatoes, Inc., as follows: TOMATOES, INC 3118 Produce Row Houston, Texas 77023 /s/ John Madera When the note was not paid, Duda & Sons filed suit against Tomatoes and against Madera individually, alleg- ing that the two defendants were jointly and severally liable for the balance due on the note. Is Madera liable on the note in an individual capacity? Explain

Explanation / Answer

For companies separate legal entity concept will apply. That means company is different from owners. Company is a artificial person. It can sue and can be sued in it's own name.

Here Madera is not liable in individual capacity. He only signed in representative capacity on bond. So the creditor can not sue Madera for not paying debt. Madera is not liable in individual capacity.

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