The Billings gazette. [volume] (Billings, Mont.) 1896-1919, 1903-06-09
REFEREE's RULING IN ERICKSON
BANKRUPTCY MATTER.
EQUITY RATHER THAN LAW
New Point Raised Relative to Renewal
Of Mortgage Given by
Bankrupt.

Seemingly a new question was rails
In the bankruptcy proceedings
AGAINST Olof s. Erickson, decision in
which was rendered several days ago
~ Referee Firth. Mr.. Frith's opinion
~ not accepted as final by at least
one Of the creditors OF the estate
and an appeal has been taken 7
Judge Knowles of the federal district
court. The papers were forwarded to
him last Saturday and until he can be
heard from matters will remain in
abeyance.
March %, 1903, Erickson, who was
engaged in the sheep business at
Bowler, Carbon county, tiled a volun-
tary petition in bankruptcy. Among
the claims against the estate, which
amounts TO about $4,000, we're a note
and mortgage on a flock OF sheep.
One was for $8,439.33 and the other
for 81, 900, both being filed as secured
claims.
ON a hearing of the matter before
Mr.. Firth the $1,000 mortgage claim
was declared to be without considera-
tion, in that it appeared to be a mort
gage upon some hay and merely given
tor the purpose OF securing the hay
against possible attachment by other
creditors. The claim was therefore
not allowed. t
The remaining mortgage, for $S,-
1888, was given in security OF a
claim and was executed within four
months prior to the institution OF the
bankruptcy proceedings, ar act for
hidden by law. In examining into
the matter the referee became salts
fed that the mortgage to the amount
Of $7,81O.6O was in effect a renewal
of a prior mortgage, given a year be
fore on the same property. He &C
eordingly rendered a decision favora-
ble to the mortgage, W. Hansard,
holding that while the state law in
reference to renewals was not com
Piled, with, the intent and purpose
were manifest and that nc fraud was
attempted. In other words, he holds
that the mode OF renewal adopted did
not change the relative conditions OF
the secured and unsecured creditors;
that all the elements required by the
statutes to be established by aftida
Wit are incorporated in the new mort
rage, despite the failure to proceed
after the manner described by law
Furthermore, Mr.. Firth holds that thu
new mortgage was g.ven in good
faith and at a time when the bank
fupt's struggle to continue his bust
ness was an honest ones and tina
execution OF it was not for the frau
aulent purpose OF diminishing tn
b%ankrupt's assets; on the contrary
the referee holds it to have been
c~ommendable move and not forbidde
by law.
On this ruling allowance is mad
by the referee of the amount OF tn
prior mortgage incorporated in tn
new one as a secured claim, Will
the residue .of Hansard's CLAIM
$628.73, is allowed as an insecure
claim.
Under the ruling the whole esta1
goes to Hansard, while the other ere
itOrs get nothing. The first Nation
bank of this city is n OF the latt'
creditors and at it's instance the a
peal to the district court has bee
taken. If Judge Knowles grants tt
appeal and reverses the referee tn
amount of the sS,439.33 claim whit
Mr.. Firth holds to be secured W
be disallawed as a preference a.
Hansard must stand with the 9th
creditors in the final distribution
the estate.