Robert S. McDaniel, Jr. and W. Jane McDaniel - Page 26




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          nership obligations.  Petitioners contend, however, that an                 
          agreement in 1993 among Mr. McDaniel, the Bank, and Mr. Palermo             
          to release Mr. McDaniel from his guaranty "can be inferred from             
          the course of dealing between the bank and Palermo having knowl-            
          edge that McDaniels [sic] was no longer a partner."  Petitioners            
          point to, inter alia, the following in an effort to support that            
          contention:  The Bank did not notify Mr. McDaniel that the                  
          partnership had not timely made the balloon payment that was due            
          on April 12, 1993, under the 1989 note; the Bank did not notify             
          Mr. McDaniel or Second Street that the 1989 note was in default             
          during 1993; the Bank materially changed the terms of the 1989              
          note and relinquished its right to receive the balloon payment;             
          the topic of Mr. McDaniel's liability with respect to the 1989              
          note did not arise in discussions during 1993 between Mr. Palermo           
          and personnel of the Bank; and the written internal reports of              
          the Bank that were prepared during 1993 show that the Bank                  
          understood that Mr. McDaniel was discharged from his liability as           
          a guarantor of the Second Street loan.                                      
               On the record before us, we reject petitioners' position               
          that an agreement in 1993 among Mr. McDaniel, the Bank, and Mr.             
          Palermo to release Mr. McDaniel from his liability as a guarantor           
          of the 1989 note may be inferred within the meaning of section              
          620.735(2) from the course of dealing during that year between              
          Mr. Palermo and the Bank.  The foregoing points on which pe-                





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