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an attorney, executed the purchase agreement on behalf of
petitioner; petitioner signed the purchase agreement on behalf of
Balmac.
The purchase agreement provided that Balmac would make a $2
million cash down payment; the balance of the purchase price was to
be deferred and evidenced by a 5-year, interest-bearing note.
Closing was to take place by December 31, 1984.
Sometime in early November 1984, Balmac entered into an
agreement with Palomar Systems and Machines, Inc. (Palomar), to
develop and sell to the latter a 10-acre lot in Wine Ridge
Industrial Park.
Closing under the purchase agreement did not occur by December
31, 1984. Rather, on February 6, 1985, Halling and petitioner
executed escrow instructions (escrow No. 10425-04) with WTC with
respect to the contemplated purchase of the Escondido property by
Balmac.
In June 1985, Balmac applied for a loan from First Commercial
Bank of San Diego (the bank) with respect to the development of the
Escondido property. The borrowing was to occur in two stages. The
first of the two stages was to be with respect to the acquisition
of the property; this loan was to be in the amount of $1.1 million.
The second was to be a $3 million development loan. With respect
to the land acquisition loan, the loan application request stated:
The land purchase calls for $2,000,000 cash
down. We will be putting up $950,00, and
would like First Commercial Bank to loan the
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