Background
The incident involved a Beech 95, registered as N4421W, and a Piper PA-28R, registered as N36574. The Beech was turning on the crosswind leg while the Piper was on the 45-degree angle entering the traffic pattern. Prior to takeoff, pilots in the Beech had heard the Piper pilot radio that they were flying over the airport and would re-enter the pattern on a left 45-degree entry to the active runway. The instructor in the Beech stated that he visually verified the other airplane crossing over the runway.
Collision
After takeoff, the pilot of the Beech requested a position report from the Piper. The Piper pilot responded that they were on the 45 for the downwind. The Beech pilot radioed intentions to turn to the crosswind but had not located the other airplane. Both instructors saw each other at the same time. The instructor for the Beech took the controls, while the student in the Piper retained control of the aircraft as both initiated evasive actions to maneuver away from each other. The left wing tips of both aircraft collided with each other.
Aftermath
Both aircraft landed without further incident at the accident airport.