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alternative financing for Second Street from Northern Trust. On
October 18, 1994, Northern Trust acquired the 1989 note from
NationsBank/Amresco for $595,252.65, which amount was the sum of
(1) the outstanding principal balance of $590,850 and (2) the
accrued, unpaid interest of $4,402.65, which were due under that
note. On the same date, a replacement note payable to Northern
Trust in the amount of $590,850 was executed on behalf of Second
Street by Mr. Palermo as a general partner and by Mr. Palermo as
president of George Palermo Architects, Inc., the other general
partner of Second Street. The replacement note replaced the 1989
note of Second Street to the Bank. The collateral for the
replacement note was the Second Street real property, Mr.
Palermo's unconditional guaranty, and Mr. Palermo's pledge of
certificates of deposit in the amount of $230,000. Northern
Trust did not solicit or obtain from Mr. McDaniel any guaranty or
other agreement by him to be liable, contingently or otherwise,
with respect to the replacement note issued by Second Street to
Northern Trust.
Based on our examination of the entire record in this case,
we find that petitioners have failed to show that Mr. McDaniel
was discharged in 1993 from his guaranty of the Second Street
loan. We further find on that record that petitioners have
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