Charles R. Bowden and Sue I. Bowden - Page 26

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            because Mr. Handel’s clients consisted of petitioners and their                            
            corporations.  Our conclusion is also supported by the October                             
            25, 1994, letter written by MDFC to respondent’s agents that                               
            contains the statement that the judgment against AIC and                                   
            petitioners was satisfied on September 6, 1989.  We believe that                           
            the essence of these letters is that the financial institutions                            
            regarded petitioners as the officers and shareholders of their                             
            wholly owned corporations.                                                                 
                  We found Mr. Forman’s (the acting president of Southern                              
            Pacific) testimony to be both credible and consistent with                                 
            California law and the record.  He characterized Southern                                  
            Pacific’s rights or interest in the vending machines as those of                           
            the holder of a security interest that could develop into a                                
            possessory or other property interest upon default on the lease                            
            payments.  See generally Cal. Com. Code sec. 1201(37)(a).  On the                          
            other hand, Mr. Smith (a senior commercial lending officer for                             
            NBSC) testified that NBSC became the owner of certain leases that                          
            were assigned to it through transactions with petitioners’                                 
            corporations.  Mr. Smith misconstrued the effect and character of                          
            the transactions between NBSC and petitioners’ corporation.  NBSC                          
            possessed nothing more than any other security holder involved as                          
            a lender with petitioners’ corporations.  The assignment of the                            
            leases was to provide a source of repayment of outstanding loans.                          







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