M.S. Food Stores, Inc. - Page 12

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          Fred Sutton were deposited into the corporate account other than            
          as part of the store deposits.                                              
          Personal Resources                                                          
               Mr. Sutton claimed that he obtained personal loans from                
          Charles W. Palmer, an elderly man who has known Mr. Sutton for              
          the latter's entire life.  Mr. Palmer did not charge Mr. Sutton             
          interest on these alleged loans, although Mr. Palmer did charge             
          interest to others to whom he made loans.  These loans were                 
          allegedly made in cash by Mr. Palmer and repaid in cash by Mr.              
          Sutton.                                                                     
               Mr. Sutton testified that he would write a check to Mr.                
          Palmer for the amount of the loan, that Mr. Palmer would hold               
          that check until the loan was repaid, that on the back of that              
          check, the dates and amounts of Mr. Sutton's payments would be              
          recorded,4 and that, usually, the payments were weekly and in               
          amounts of $500, but sometimes they would be $1,000.  Neither Mr.           
          Palmer nor Mr. Sutton had any contemporaneous records of these              
          alleged loans.  Once a loan was repaid, Mr. Palmer allegedly                
          would return the check to Mr. Sutton, and Mr. Sutton would tear             


          4  Mr. Sutton testified that Mr. Palmer recorded the                        
          payments on the back of the check.  Mr. Palmer testified that he            
          never wrote anything, and that Mr. Sutton kept the checks and               
          made the payment notations.  The Court did not believe the                  
          testimony of either Mr. Palmer or Mr. Sutton in regard to these             
          alleged loans.  Mr. Palmer testified that he kept up to $100,000            
          in a metal box and that he lent out money from that box over and            
          over again without any interest.  The Court found his testimony             
          to be inherently incredible.                                                




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