Craig

March 24, 1919; W. J. Murphy held an option to purchase the capital stoek of the Gila Water Company, an Arizona corporation, and its other property and assets, consisting of land, canals, ditches, and water rights; also an option to purchase 72,000 acres of land from the Santa Fé Pacific Railway Company for the sum of $210,000, of which amount the sum of $100,000 had already been paid. On that date Murphy transferred his options to one Gillespie for the sum of $300,000, out of which was to be paid the balance due the railway company on the purchase price of the land and the amounts necessary to discharge and satisfy the indebtedness of the water company. The indebtedness of the water company was later ascertained to be the sum of $86,681.23, and this indebtedness was paid by Murphy. Thereupon C. F. Ainsworth, president of the water company, in consideration of this payment, executed and delivered to Murphy his promissory note for the amount of the indebtedness, payable one day after date, and secured by 5,000 shares of the capital stoek of the water company. June 1,1921, Ainsworth renewed the above note by executing four new promissory notes in its stead, three for the sum of…