Powell

Appeal from summary judgment declaring respondents’ deed of trust to have priority over appellants’. We affirm.

In May 1980 respondents sold their condominium unit to RCR Corporation, doing business as Rancho Conejo Realty (RCR), a California corporation wholly owned by John F. Mclnerney (Mclnerney). RCR opened an escrow for the sale at Rancho Conejo Realty Escrow (RCR Escrow), another entity wholly owned by Mclnerney. The respondents were to receive $25,000 cash plus a $26,500 promissory note secured by a second deed of trust on the property for the sale.

In order to raise cash to use in the transaction, RCR acting through Mclnerney borrowed $42,000 from Pyramid Home Loan Corporation (Pyramid). Pyramid had obtained these funds from appellants for the purpose of making investments in promissory notes secured by second deeds of trust. Appellants relied on Pyramid to make safe and lucrative investments for them. Respondents were not aware of Mclnerney’s dealings with Pyramid.

On June 24, 1980, before the close of escrow in the sale from respondents to RCR, RCR executed a promissory note and deed of trust on respondents’ property for $42,000 to secure the loan to it by…