Smiley

January 24, 1911, plaintiffs negotiated from defendant Watson a loan of one thousand one hundred dollars with which to erect a dwelling-house upon a lot owned by them,- it being orally agreed that the money so borrowed should be paid and advanced by Watson as the work progressed upon the building,—namely: one-fourth thereof when the dwelling was boarded in; one-fourth when plastered; one-fourth at the time when notice of completion was filed, and the balance thirty-five days after the filing of said notice of completion. Thereupon, on said twenty-fourth day of January, 1911, plaintiffs made and delivered to Watson their promissory note as follows:

And at the same time they made and delivered to defendant corporation a deed of trust conveying to said corporation as trustee the real estate therein described, as security for the payment of said promissory note, as well as to secure the performance of other conditions contained in said deed of trust. On January 27th following, Watson sold and transferred the note to defendant Ella W. Baker, who took the same for value and without notice of the fact that plaintiffs had not received any part of the amount of money specified in said…