Stephen Crane, III v. Curtis B. Danning, Trustee, in the Matter of Western Growth Corporation, Bankrupt

SOLOMON, District Judge:

In 1959, 31 persons loaned $210,000 (70 loans in units of $3,000) to James A. Bowers and Melba L. Bowers (Bowers) to purchase and develop a tract of land known as Escondido No. 3 (ESC#3). In return for the loan, the Bowers gave their note for $210,000 secured by a trust deed covering ESC#3.

On June 11, 1960, the Bowers sold ESC#3 to Western Growth Corporation (the bankrupt) subject to all encumbrances. In August, 1960, 16 of the 31 persons who participated in the $210,000 loan assigned their interest in the note and trust deed to Western Growth Cor poration in return…