Harry Bechtel and Cathleen Bechtel, Husband and Wife v. Liberty National Bank, a National Banking Association

In March, 1971, appellee (Bechtel), the buyer of a 6,460-acre farm in Cochise County, Arizona, instituted this suit for fraud in the Arizona Superior Court for Maricopa County against Liberty National Bank (now Lovington National Bank), a New Mexico Corporation, Roy Jones, et ux. and Winford Carlile, et ux. Bechtel claimed that those defendants, appellants here, had made material and false representations concerning the production capacity and lift of three irrigation water wells on the property. The bank, which had acquired ownership of the farm in early 1967 by means of a “deed in lieu of foreclosure” executed by the former owner, had entered into a contract of sale in November, 1967, with Bechtel and two partners, Donald Davidson and George Wake, in which the buyers agreed to a purchase price of $245,000, including a down payment of $25,000.

In the fall of 1968, after a crop failure attributed to lack of sufficient water, Bechtel took over all the obligations and assets of the farm from his two partners. Lacking funds to plant a 1969 crop, he leased the farm to one Bookwalter for three years at $35,000 per year. At the same time, one year after Bechtel and his…