Charles R. Bowden and Sue I. Bowden - Page 15

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            that were being made by the lessees on the equipment.  It was Mr.                          
            Forman’s understanding that Southern Pacific’s purchase of the                             
            vending machine leases was the same as obtaining a titled lien                             
            interest on a motor vehicle through the certificate of ownership.                          
            In other words, Southern Pacific would be seen as the lienholder                           
            on the equipment.  Any rights Southern Pacific had in the                                  
            purchased leases would come into play only if there was a default                          
            by the individual lessee on the lease payments.                                            
                  On July 16, 1987, Prudential Bancorp, as an assignee of                              
            Southern Pacific, sued petitioners, alleging that petitioners                              
            were liable for an amount in excess of $550,000 on personal                                
            guaranties furnished to Southern Pacific.  On June 30, 1989,                               
            petitioners offered the Crestwood property to Prudential Bancorp                           
            in exchange for extinguishment of liens, unpaid taxes, and                                 
            satisfaction of Prudential Bancorp’s claims.  On September 15,                             
            1989, petitioners conveyed the Crestwood property to Prudential                            
            Bancorp.  Under the settlement stipulation, Prudential Bancorp                             
            was entitled to the proceeds from the sale of the Crestwood                                
            property, which it sold to unrelated third parties for                                     
            $2,525,000.  Prudential Bancorp used the proceeds to satisfy the                           
            Southern Pacific loan, the NBSC loan, a $1.4 million loan from                             
            Concordia Bank, the debt owed to Hollis Bowden, and all                                    
            mechanic's liens.                                                                          







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