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the partnerships promoted by Mr. Hoyt (“Hoyt partnership” or
“Hoyt investment”). In connection with the investment,
petitioners signed a form on December 17, 1986, titled
“Instructions to Hoyt and Sons Ranches--Acknowledgment of
Appointment of Power of Attorney”. This form provided:
I have given Walter J. Hoyt III the irrevocable
authority to sign my name to a Certificate of
Assumption of Primary Liability Form as part of a
transfer on a full recourse Promissory Note in the
amount of $190,000, that will become part of a transfer
of debt agreement between me, the partnership known as
Shorthorn Genetic Engineering 1986 Ltd., and HOYT &
SONS RANCHES, said note having been delivered to HOYT &
SONS RANCHES to pay for breeding cattle purchased from
HOYT & SONS RANCHES, an Oregon Partnership, in Burns,
Oregon, which are to be held as breeding cattle by the
above named Partnership. This authorizes Mr. Hoyt to
sign my name on the notes that were made for the
purchase of Registered Shorthorn Breeding cattle from
HOYT & SONS RANCHES, and no other purpose. I
understand I will owe this amount directly to HOYT &
SONS RANCHES, and not to my partnership.
* * * * * * *
My goal is that the value of my share of the cattle
owned by the Partnership, in which you have a secured
party interest, must never fall below the amount for
which I am personally liable. If the value of my
cattle does fall below the amount of my loan, and you
become aware of that, you must so notify me within
thirty days in order that I may make a damage claim to
W.J. Hoyt Sons Management Company for possible default
on the Share-Crop Operating Agreement, and/or the
cattle fertility warranties.
Upon making the investment, petitioners were told that they would
“get some money back when we retired.” Petitioners, however,
were uncertain how the investment was to provide income or
profits. Petitioners did not consult with anyone outside Mr.
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