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selling automobiles. Prior to 1988, Motion, Inc., had a
line of credit with Colonial National Bank (Colonial Bank)
located in Fort Worth, Texas, which Motion, Inc., used to
finance its purchase of automobiles. During the 1980's,
Colonial Bank's lending limit was approximately $300,000.
When, as sometimes happened, the balance of the amount
borrowed by Motion, Inc., under the line of credit exceeded
that limit, Colonial Savings & Loan, a related corporation,
funded the excess borrowing. Prior to 1988, the amount
borrowed under the line of credit reached a high of
approximately $750,000.
As collateral to secure the repayment of amounts
borrowed under the line of credit, petitioner executed a
security agreement on March 18, 1987, as "PRESIDENT/OWNER"
of Motion, Inc. The security agreement gave Colonial Bank
a security interest in all of the inventory, accounts, and
other rights to payment owned by Motion, Inc. As further
collateral, the bank maintained possession of the titles to
the automobiles that Motion, Inc., financed under the line
of credit. Petitioner was not personally liable for
repayment of the loans extended to Motion, Inc., under the
line of credit, and he did not personally guarantee their
repayment.
Sometime during 1988, the officers of both Colonial
Bank and Colonial Savings & Loan became uncomfortable with
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