The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1923-11-02
REFEREE ORDER
TURNED TURTLE
JudgeW.F. BoothReverses
Bankruptcy Court
ROCK COUNTY CASE
Also S. B. Wilson, the New
High Tribunal Head, Is
Interested

In an order received at Luverne
this week, Judge Wilbur F. Booth,
of the United States district court
reyerses the decision of Referee IN
bankruptcy J. A. Flittie in his find
ings that chattel mortgages held by
the Beaver Creek State bank OF
Beaver Creek and A. NJ. Sayre OF
Luverne against pro erty possessed
by Elmer Newberg, were not valid.
Validity Of the mortgages was
questioned by the First National
bank of Beaver Creek, also debtor
of Mr.. Newberg's, on the grounds
that the mortgages had permitted
the mortgagor to dispose OF some OF
the property so incumbered from
time to time without applying the
proceeds on the indebtedness. TINS
contention was sustained by the
referee in bankruptcy IN June OF
this year.
Judge Booths ruling is on an ap-
peal taken from the referees find
ings, and. according to his dec sion,
in order to rerder such NOR cages
void, it must be shown that there
was an agreement made between
the mortgages and mortgagor at
the time the mortgage was executed
that permitted the mortgagCr to
dispose of portions of the chattel
without applying the proceeds on
the mortgage.
Claim Agreement Not Made
This condition would invalidate
the mortgage under the Minnesota
statute, Judge Booth finds. but IN
the Newberg case it is claimed that
such an agreement was not madH
until some time after the mortgage
was given, and that the practice o.
permitting the, mortgagor to sci,
some of the chattels was INDUCED
in only to the extent Of enabling the
mortgagor to sell off sufficient pro-
perty to purchase every day neces-
stiles in the operation of the farm.
The Newberg case came to head
last February, when an effort was
made to dispose of Newberg's live
stock ard farm implements at pub
lie auction to satisfy first mort
rage for SIS. 900 held by the Beaver
Creek State Bank, and a second
mortgage for approximately $4,000
held by Mr.. Sayre as rent for sew
eral years, . period on the three
quarter section farm which MT
Newherg had operated.
Bank Had Secured Judgment
Sore time before the date Of sale
the First National Bant of Beaver
Creek had secrred q Judgment for
approximately SIS 900 against Mr..
Newberg, and a dav or two before
the sale, levied against the property
to be auctioned Off on the grounds
that the action of the Bower Creek
State bank and Mr.. Sayre in per.
mittirg Mr.. Newberg to sell some of
the mortgaued pronerty from time
to time without aDnlyipg the money
received from this Fourca on the
mort cages. had re" dered the mort
cages void. Prior to this Mr.. New
berg had started rrocer dir gs to en-
able HIM to go through voluntary
bankruptcy.
s-Ie Was stopped
The action Of the First National
Bank of Beaver Greet in leyving o.
the property stonped the sale, ard
the prorertv ives held in escrow for
some months and then disrcsed Of
the proceeds heirg denosited in q
hank srhiect 10 the final decision Of
the courts. The sum realized from
the "Hle of the property amounted TO
&c 500.
In reversing the deci"ion Of the
referee in harkruntcv. Judge Root"
ordered that the matter he referred
hack to the referee for further find
ings as indicated - the memorar-
dunn attached. and the ta'-'~e of
further evidence. if it shall be
deon,ed recassorv or advisable.
Carfield E. Mic"ael are the attor-
news for the Beaver Crook Stat"
nnrk: porliman &. Parli-oan.. Of
c'o"x Falls. for the First NHtiora'
bank. and 8, r Vril~on of N"nkato
new chief 'uetica of the svrren,e
court, for Mr.. Sayre, in this litiga-