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came from those units in the form of rent, * * * et cetera, we
were entitled to.”
Although Guerino testified that AMI “would not have loaned
to * * * [Towers Development] on the strength of that company’s
assets”, we are not persuaded that AMI looked primarily to
petitioners as the primary obligors. “It is not surprising that
a lender of a loan to a small, closely held corporation
* * * would seek the personal guaranty of the corporation’s
shareholders” or require them to pledge collateral. Spencer v.
Commissioner, 110 T.C. 62, 86 (1998), affd. without published
opinion 194 F.3d 1324 (11th Cir. 1999). As Guerino’s testimony
also makes clear, AMI looked to the operating assets of Towers
Development, particularly the cash-flow from the Gulf Highlands
project, for repayment of cash disbursements under the line of
credit. In light of these circumstances, it seems most likely
that the cross-collateralization of AMI’s loan to Towers
Development and to Briggs and Daniell was meant to enhance AMI’s
security interest in the loan to Briggs and Daniell, rather than
the other way around. This conclusion is bolstered by the fact
that AMI was subordinated to Mariners Cove in its security
interest in the 40 acres that was the primary security for the
loan to Briggs and Daniell.
Unlike Selfe v. United States, supra at 769, this is not a
case where the lender made loans to the corporation as renewals
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