Vermont phÅ“nix. [volume] (Brattleboro, Vt.) 1834-1955, 1897-06-18

system undoubtedly led to acts he at first
would not have contemplated, but if his
books may be taken as indication of his
purposes even to the very hour of the col
! lapse he thought he was honest in what he
was doing. Every item he received is in
| dicated on his accounts. Had he been out
| for loot, had he embezzled for personal
eXtravagances or excess, had he gambled,
this would hardly have been 50. Where he
! fell into error was in his disposition of
money after it had come to him, its use to
| pay other accounts than the one it should
! have satisfied, his failure to remit to his
| clients and his attempts to play even on
! one loan by contsCatng anOther-these
and kindred practices were Legitimate re-
suits of his bette noire, his system
1t has developed in cases tried in the
courts since the failure that Mr.. Kelley
! kept no letter book and his failure TO Oh
serve an ordinary everyday business pre-
caution in this respect has added greatly
to some Of the complications resulting
! from the assignment. He employed a
stenographer but only for matters of
routine. The important correspondence
was all done in his own hand.
The filed schedule of assets and liabili-
! ties footed up about three-quarters of a
million of the former with the latter
slightly less. Real estate, however, was
| listed in the assets for practically half
million and this will have to bear a reduc-
| ton of from 80 to 80 per cent, 50 that a
serious loss will be involved. 1t is a loss,
! too, which will be seriously felt, for the
! fight over property concerned in the ma
! iority of instances will be between credit
ors. On one side will be the mortgage in
many Of the cases and on the other the
Il. 4. h.,
| ty for his loan, and the other seeking
protection of his home on the ground that
| he had actually satisfied the mortgage
though Kelley had never transmitted the
amount to the mortgage. Today there is
scarcely an attorney of any practice before
the local bar who has not one or more of
these cases, while in some instances we'll
! known firms have been entrusted with
more than a score of claims. The assign
ment, it is prophesied, will result in more
! litigation than any failure which has ever
before occurred in the state.
When his troubles began, half a dozen
methods of exiting" loans seems to have
been favortes with Kelleys.
Scheme No. In case Of a defaulted
payment it was natural that Kelley under
his system didn't want to let his client
know of the true condition of affairs. He
would, therefore, foreclose on the property,
bid it in, sell to an innocent purchaser and
then negotiate a loan on it for some other
! Eastern party, in the meantime keeping up
the interest in the first case. The suppo-
sition with the first mortgage would be
that the loan was extended or renewed.
The property would be thus carrying two
loans without the knowledge of either
mortgage, the interest being kept up in
both cases. \ good deal of litigation is in
sight from property involved under Just
| such circumstances.
Scheme No. when loan was due
and the party could not meet it new
mortgage would be made from the same
party to the mortgage for the amount
which could not be paid. Kelley would
then fail to use the money from the new
mortgage to pay the old obligation and
would himself keep advancing interest,
thus sustaining the belief on the part of
the holder of the first mortgage that his
investment was gilt edge and the mort
gagor paying prompt interest There are
numerous cases of this sort where there
has been more than one mortgage placed
on the land and in each the legal PROPOSE
tions presented as to the true title are very
abstruse.
Scheme No. 3.-Where mortgages were
sent on to him for collection and the full
payment of the money was made, Kelley
in many instances forgot to remit, the
mortgagor often getting but a receipt to
show for his satisfaction of the debt The
law does not hold a mere receipt as an
actual satisfaction of mortgage and there
is at least one Kelley case adjudicated
where the mortgagor was ordered to pay
the money over again.
Scheme No. 4.-Kelley assumed to have
authority to receive payments on mort
cages when the mortgage in the East was
still holding the original note and mort
gage and had not directed its collection.
Holders of mortgages in this connection
have charged Kelley with forgery, and
they have claimed satisfactions of mort
cages on record in their names which they
never signed. Where he foreclosed mort
gage without the knowledge or direction of
the mortgage, Kelley frequently advanced
the expenses, adding this item to the heavy
disbursements of interest from his general
fund
Scheme No. 5-Remittances were held
up in cases when he claimed author
ity to collect the mortgages. One such
case was tried in the local court, Kelley
never having turned over the amount col
lected though he testified that he had Of
fered to do so. This is probably the
largest class of cases.
, Still another scheme. it seems, was to
use straw man to get mortgage on
property of his own. The land was
decided to a third party, the mortgage made
out and the loan secured, and then the
obedient capper decided back the land.
,
Lewis Cronne, II, of Colrain, was before
~. I.1l