Frederick H. Jackson III and Pamela S. Jackson - Page 7

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          also on the basis of the guaranty.  The bank made the loan                  
          evidenced by the note for substantially the same reasons.                   
               The net worth of the guarantors was not a sufficient                   
          condition for the bank to deviate from its loan policy and make             
          the loans.  To deviate from its loan policy and make the loans,             
          it was also necessary that it appear to the bank that the                   
          enterprise of the corporation was going to be successful.  At the           
          time the loans were made, the bank believed that the corporation            
          had the potential to make repayment.                                        
               The bank normally asks principals to guaranty corporate                
               For repayment of the loans, the bank would look, first, to             
          the corporation, and, second, to the guarantors.  If the                    
          corporation defaulted on the loans, the bank would immediately              
          attempt to establish an interest in the inventory and other                 
          nonreal property assets of the corporation.  It would then pursue           
          its rights under the mortgage, and, finally, it would look to the           
               The bank (located in Michigan) does not normally make loans            
          to Florida corporations or loans secured by Florida real estate.            
          The fact that petitioner’s father was chief financial officer for           
          a company that was both a large employer in the bank’s home area            
          and a large customer played a role in the bank’s decision to make           
          the loans.                                                                  

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