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The collapse of the gold-dredging venture and the transfer
of the Theratech stock to petitioner in 1982 placed Estes in
financial trouble. Expecting Estes to repay his debt to
petitioner by selling the Theratech stock, petitioner placed the
stock in a joint account that he opened with Estes at a local
securities brokerage. Petitioner and Estes sold the shares in
small amounts to maximize its sale value.
Although petitioner knew that Estes was experiencing
financial difficulty, petitioner believed that once the Theratech
device became a financial success, Estes would be able to repay
the amount petitioner had lent him. Accordingly, rather than
attempting to collect the outstanding loan amounts, petitioner
advanced Estes additional sums, for which Estes signed promissory
notes. Estes signed promissory notes for $52,381 on December 8,
1982; $12,534 on August 10, 1983; $5,000 on July 13, 1984; $4,000
on August 2, 1984; $2,000 on October 18, 1984; $3,135 on April 2,
1985; $300 on April 26, 1985; and $3,000 on June 28, 1985.
Whenever petitioner advanced sums to Estes, petitioner or his
secretary made a photocopy of the check for his records.
Petitioner provided these additional amounts because he thought
he needed Estes to promote the Theratech device. Estes used the
money for living expenses.
Although these additional advances were evidenced by
promissory notes signed by Estes and were payable on demand, only
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