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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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