Charles R. Bowden and Sue I. Bowden - Page 11

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            result of the satisfaction, petitioners retained possession and                            
            title to the equipment.                                                                    
                  3.  Bank of Whittier                                                                 
                  On August 20, 1985, the Bank of Whittier loaned petitioners                          
            $250,000.  On January 15, 1986, petitioners gave the Bank of                               
            Whittier a security interest in 16 vending machines to secure the                          
            loan.  The Bank of Whittier caused notice of the security                                  
            interest to be filed under provisions of the California Uniform                            
            Commercial Code.  According to the security interest documents,                            
            petitioners’ corporations owned the vending machines.  The loan                            
            was guaranteed by the corporations and, ultimately, was                                    
            defaulted.                                                                                 
                  On February 24, 1986, petitioners and the Bank of Whittier                           
            agreed that the $241,066.01 unpaid principal loan balance would                            
            be satisfied from a new loan to be issued to Mrs. Bowden and                               
            guaranteed by Mr. Bowden.  In turn, the Bank of Whittier released                          
            all corporate guaranties and assigned its security interest in                             
            the 16 vending machines to Mrs. Bowden.  Also pursuant to the                              
            same agreement, Mrs. Bowden assigned her one-third interest in                             
            LBJ Properties to the Bank of Whittier.6  The settlement                                   
            agreement is silent as to the ownership of the vending machines.                           
            Payments on this loan were made by petitioners individually and                            


                  6 The record does not otherwise divulge further information                          
            about LBJ Properties.                                                                      




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