For dozens of young families the setting seemed ideal: two-family houses within commuting distance of Washington yet situated, it seemed, in the country. And to ensure that "Stone Gate" would be all they wanted it to be, some of the families say they paid premiums of up to $1,000 to live next to woodland they were told would never be destroyed.

Then one day last year, without warning, came the bulldozers. The pastoral view gave way to 162 apartments, and part of their dream was lost along with the trees.

"At night in the summertime, the lightning bugs would light up the whole area," recalls Joan Cangemi, a refugee from Silver Spring whose new home was next to the woods where the apartments now sit. "Now we have floodlights, right in my windows."

So the residents of Stone Gate, nestled at the foot of Catoctin Mountain at the west end of Frederick city, are suing the Ryland Group, Inc., the developer, accusing it of fraud, and on their lawns have sprouted signs such as "$500 Extra For This View? No Way!" and "Ryland Lied. . . Our Dreams Died."

In a sense, however, their enemy is not just one builder but the same attractions that drew them to Frederick and that now are responsible for the area's explosive growth.

Once almost exclusively a county of small towns and farms, Frederick is now a part of Washington's western frontier. While census figures show stagnation or decline around the metropolitan area, Frederick County's population rose 34.5 percent, from 84,927 to 114,263 during the 1970's. And while suburban school systems were recording dropping enrollments and closing schools, Frederick's rolls rose 2 percent a year and new facilities constructed could not keep up.

The suburbanization of the county began in the Green Valley section closet to Montgomery, then swept west and north to include Middletown, Walkersville and New Market. Since a 1978 county ordinance sharply curtailed the further carving up of agricultural land, the forces of growth have largely shifted to Frederick City, population 27,557, and its outskirts. h

The increasing congestion is most evident in the booming west end of this county seat. Of 5,657 units of housing recently built, under construction or proposed in the city, 3,703 are in the city's west end. Along with the housing has come strip development that makes U.S. 40 on this side of town look like Rockville Pike.

With jobs in Gaithersburg, Bethesda or Washington easily reached on I-270, the orientation of the newcomers is clear. On Fridays, the Frederick paper runs half a page of carpool classifieds. A sign at Frederick Heights, a town house development, tells why. "Cut your cost of living.Move to Affordable Frederick Where Utilities, Goods and Services Cost Less. A two-person carpool from Frederick Heights to Gaithersburg cost $25 per person. Spend $25 and save more."

Another sign spells it out: Living in a town house here will cost the buyer $236 a month less than in Montgomery County -- $28 less for utilities, $48 for nursery school, $28 for food, among other supposed savings.

So the first-time homeowners, young families who grew up close in where they still work but can't afford to live, flock here. "We looked at Montgomery but everything was so expensive and crowded, town houses back to back," said Shannon Campbell.

Today, Stone Gate looks a lot like what she was trying to avoid, but city officials say she should not be surprised.

"the zoning's been there all along," said Mayor Ronald Young, who worked for the annexation of the west end, formerly outside the city limits, to better channel development and provide services. Young thinks growth is inevitable but wants to limit it to land inside the city limits he keeps trying to expand.

"I don't know what the developer did or did not tell them," he said. "I knew what that land was slated for. I'm surprised anybody had a different impression. There are still some green spaces left in that section. It's all gonna be developed."

Frederick city planner Thomas C. Pauls is also less than sympathetic. "It would be terrible nice if we could all have our castles in the fields and our beautiful view of the countryside," he said, "but there has to be some understanding when you buy, you've purchased your land, not the skyline or the horizon."

The horizon here is still mountainous but the view from developments like Stone Gate is also a sea of buildings and building. At this end of the city of Frederick, thousands of acres of rolling farmland and woods have been developed in just the last few years.

The first wave of newcomers in the mid-1970s filled single-family houses built on land rising gently up the slope of Catoctin Mountain, a perfect setting for the urbanites escaping the crowds. Then, just west of the homes came the Stone Gate duplexes, which angered the residents who preceded them but pleased the new wave who had come from the city in search of the country. The apartments were next, an utter shock to those who had bought homes in Stone Gate in the fall of 1979 and spring of 1980.

The woods were owned by the city school department that supposedly had no plans to develop them, or so the residents of Stone Gate claim they were told. For years, it turned out, the land had been privately owned, and public records show the apartment builders began filing plans as early as August 1979, and received final approval two months later. Construction began the following June.

Joan Cangemi cried the day the forest was cleared. "They took down a mulberry tree that covered a whole corner of my back yard," she recalled. As she spoke, bulldozers moved the earth just beyond the apartments, digging the foundations of 160 condominiums units for the next generation of newcomers.

"I was hysterical," said Pat Hindes, who moved into her house up the block just three days before the bulldozers appeared. "We stood there on our back deck with our mouths open, with the feeling we'd been taken," her husband, Wally, said.

"They were naive," said Betty Mainhart, resident manager of Woodlawn Apartments, "a small, exclusive community" down the street from Stone Gate and also filled with Washington area commuters. "My God, who in the world would buy property and not go to City Hall or the courthouse and see who owned the [adjacent] land and what it was zoned for?"

It was almost as if they wanted to believe what they were allegedly told, that they had in fact found the perfect blend of city and country and the claim went virtually unchecked. Nobody asked the school board, for example, if indeed it owned the woodland, and only one person looked at land records, and he didn't believe what he saw.

Even Matthew Campbell, a Montgomery County assistant state's attorney who has investigated and tried fraud cases, took the sales pitch on faith. "It's a little embarrassing, a good old professional attorney didn't look beyond his nose," he says now.

Nancy Burkheimer, the sales agent with whom several duplex owners dealt, declined to comment on their charges she misled them.

Phyllis Grish, former receptionist for Ryland, said sales representatives told her it was school property, and she passed that information along to any prospective buyer who asked. "I was told that, and believe me I was real upset" when she learned it was untrue, she said.

Joel Abramson, Ryland's attorney, said the firm "emphatically denies any misdeeds or wrongdoing. I think these people are being unfair to a very fine homebuilder." The suit against Ryland, filed in Montgomery County Circuit Court last month, appears to be a long way from settlement.

Those who have something to do with the offending apartments -- a development known as Hickory Hill -- have a slightly different perspective on the controversy.

The rental brochure describes it as "Nestled in the foothills of the Catoctim Mountains . . . new garden apartments with the look, spaciourness and style you demand . . . a rare blend of natural beauty, luxury and convenience . . . where the best of the country and city meet."

"A lot of people moved here from Montgomery County seeking peace and quiet, and they're moving Montgomery County right up with them," said Sandra Ewing, the assistant manager, who bemoaned what she regarded as overdevelopment elsewhere in Frederick."But we've put a good deal of thought and effort into Hickory Hill," she hastened to add. "There's a place in any community for controlled growth."