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(Neb., 189 N. W. 383.)

invalid simply because it may affect incidentally the exercise of some right guaranteed by the Constitution. In all matters within the police power some compromise between the exigencies of public health and safety and the free exercise of their rights by individuals must be reached. The test in such cases is whether the regulation in question is a bona fide exercise of the police power or an arbitrary and unreasonable interference with the rights of individuals under the guise of police regulation." Re Anderson, 69 Neb. 686, 96 N. W. 149, 5 Ann. Cas. 421.

Constitutional law-presumption of knowledge of legislature.

It is shown that water or moisture, subject to evaporation, is an element of weight in bread at every stage from wheat in the field to the manufactured product in the market. This was no mystery to the legislature, and a margin or tolerance of 2 ounces to the pound for evaporation in twenty-four hours after baking was allowed. The presumption is that the legislature acted with full knowledge of all facts and conditions essential to valid legislation of this kind. That department of the government was without limit in sources of knowledge and in the means of obtaining information. The burden of proving unreasonableness was on plaintiffs. If they are entitled to equitable relief, their tests and proofs must establish their plea without omitting any facts or circumstances essential to the determination of the issue in their favor.

Evidence-burden of proofunreasonable legislation.

or tolerance being 2 ounces to the
pound, can bakers, for example,
make a loaf 18 ounces in weight that
will weigh less than 16 ounces
twenty-four hours after it is baked?
The tests and proofs on behalf of
the state tend to show that the regu-
lation is reasonable and can be ob-
served at all times. It is fairly in-
ferable from the evidence adduced
by plaintiffs that compliance with
the regulation is practicable most of
the time, but that, tested by their
experiments as made, there are peri-
ods when the operation of natural
laws will prevent compliance with
legislative requirements. There are
a number of reasons, however, why
the tests made to prove unreason-
ableness should not be accepted as
conclusive. If correctly understood,
these tests were made with bread
manufactured in the regular course
of business, without any attempt to
change ingredients or processes, or
to retard evaporation of moisture in
loaves by the use of wax paper or
other means. There is testimony,
however, that the changing of ingre-
dients to prevent evaporation would
impair the quality of the bread and
make it unsalable. It is a well-
known commercial custom to wrap
loaves of bread in paper adapted to
that purpose, and the proofs show
that evaporation and absorption are
thus retarded. Containers to pro-
tect commodities from atmospheric
changes are familiar articles in
trade and commerce. The act of
the legislature does not fix prices,
but leaves bakers free to make rea-
sonable charges for bread wrapped
in expensive wax paper for its
preservation in transportation and
in the markets. Perishable fruits,
composed principally of water, grow
in the humid tropics, uniting mois-
ture, light, heat, air, and other ele-
ments of nature in processes more
wonderful than the baker's art.
Such fruits are transported to the
arid North and there distributed to
consumers in good condition during
hot seasons.
This result is accom-
plished by retarding the natural
agencies of decay and by the care

Of course the legislature cannot require bakers to manufacture a product which will retain exactly the same amount of moisture for twenty-four hours in spite of the evaporation caused by natural processes, operating in varying degrees of intensity outside of human power, owing to changing conditions in climate, altitude, atmosphere, and temperature. The statutory margin

required in the channels of trade and commerce. Precautions to retard evaporation of moisture in bread for the purpose of keeping it in a good state of preservation for

Constitutional law-wrapping of bread.

twenty-four hours may be required as an incidental result of a police regulation establishing standards of maximum weights for loaves of bread. Palatableness, a quality demanded by the public, is affected by excessive evaporation, if food value is not. The exercise of

-police power

police power for the

effect on rights public welfare may of individuals. inconvenience individuals, increase their labor, and decrease the value of their property. The liberty of a citizen to consult his own tastes in selecting a lawful vocation and in conducting a legitimate business is limited by the obligation which his citizenship imposes upon him to respect the right of the public to be protected by the police power of the government. The evidence does bread-reason- not prove that, if reasonable means or precautions are taken by plaintiffs and other bakers to retard evaporation, they cannot comply with the act of the legislature, or that the regulation is unreasonable.

Food-weight of

ableness of requirement.

It is further argued that the legislation is not uniform in its opera

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This argument is based on provisions that bread of resident bakers shall be weighed where manufactured, while bread shipped into the state shall be weighed where sold, and that tests shall be made by averaging the weight of not less than twenty-five loaves of a unit. In this connection plaintiffs insist that they manufacture bread on a large scale where twenty-five loaves of a unit are available at their bakeries for tests, while nonresident bakers, shipping into the state bread in quantities less than twenty-five loaves of a unit, and local bakers making less than twenty-five loaves of a unit at a time, are not disturbed by tests. It does not appear that the legislation goes beyond reasonable classifications for the purpose of exercising the police power. The law operates uniformly on all of a class, and in these respects is valid under familiar principles of constitutional law.

Affirmed.

Writ of error dismissed by the Supreme Court of the United States February 19, 1923, U. S., 67 L. ed., Adv. Ops. p. 416, 43 Sup. Ct. Rep. 520.

ANNOTATION.

Validity of statute or ordinance requiring commodities to be sold in a specified quantity or weight.

The earlier cases on this question are discussed in the note in 6 A.L.R. 429.

A provision in a statute fixing a standard berry basket of the dry pint and the dry one-half pint, that the standard basket for strawberries should be the dry pint, thus making no provision for a half pint in case of strawberries, was sustained in Ex parte Fujii (1922) Cal., 207 Pac. 537. The objection in this case was as to the discrimination between

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strawberries and other berries. The court holds, however, that there is a sufficient difference between strawberries and other berries to furnish a basis for the classification and justify the discrimination. And see the reported case (JAY BURNS BAKING CO. v. MCKELVIE, ante, 24).

The validity of statutes and ordinances relating to containers is discussed in the note appended to Stegmann v. Weeke, 5 A.L.R. 1060.

W. A. E.

(Nielsen v. Heald, 151 Minn. 181, 186 N. W. 299.).

CHRISTIAN NIELSON, Respt.,

V.

MARY J. HEALD et al.

and

GEORGE FORSYTHE, Appt.

Minnesota Supreme Court — January 20, 1922.

(Nielsen v. Heald, 151 Minn. 181, 186 N. W. 299.)

Receiver showing necessary to appointment.

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1. To obtain the appointment of a receiver, the mortgagee must prove by clear and convincing evidence that his debtor is insolvent and his security inadequate, and also that the security is becoming impaired by waste caused or permitted by the mortgagor. But an order appointing a receiver is, in effect, a finding that all the facts necessary to authorize the appointment have been proven.

[See note on this question beginning on page 33.]

Mortgage
and profits.
2. Ordinarily the mortgagor is en-
titled to the possession of the mort-
gaged property and to the rents and
profits therefrom until the expiration
of the period of redemption.

who entitled to rents

[See 19 R. C. L. 319; 3 R. C. L. Supp. 930; see also note in 14 A.L.R. 640.] Receiver for mortgaged property when granted.

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3. If he permits waste, and the security is inadequate and the debtor insolvent, the court may take control of the property through a receiver, and apply the rents and profits in protecting and preserving it. But rents and profits are no part of the security, and the mortgagee has no right to have them applied for his benefit, except in so far as may be necessary to preserve to him the security which he acquired when he took his mortgage.

[See 19 R. C. L. 560 et seq.; 3 R. C. L. Supp. 956.]

Headnotes by TAYLOR, C.

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4. Failure to pay claims which were not liens on the property when the mortgage was taken, but which, if not paid, will become liens thereon superior to the mortgage, is deemed waste. Failure to pay taxes or interest on prior mortgages is waste within this rule.

existing mechanics' liens.

5. Failure to pay claims which were liens on the property when the mortgage was taken does not constitute waste. And mechanics' liens which are prior and superior to the mortgage must be deemed to have been existing liens when it was taken; at least, in the absence of evidence that they accrued thereafter.

Evidence sufficiency.

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6. The evidence is sufficient to sustain the order appointing a receiver. [See 19 R. C. L. 563.]

(Dibell and Hallam, JJ., dissent.)

APPEAL by defendant Forsythe from an order of the District Court for Hennepin County (Leary, J.) appointing a receiver in an action brought to foreclose a second mortgage. Affirmed.

The facts are stated in the Commissioner's opinion.

Mr. Einar Hoidale for appellant.
Mr. John N. Berg, for respondent:
Plaintiff in an action to foreclose a
second mortgage has a right to have

a receiver appointed, upon proper showing, to collect the rents.

Lowell v. Doe, 44 Minn. 144, 46 N. W. 297; Haugan v. Netland, 51 Minn.

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552, 53 N. W. 873; Farmers' Nat. Bank
v. Backus, 64 Minn. 43, 66 N. W. 5, 67
Minn. 43, 69 N. W. 638; Marshall & I.
Bank v. Cady, 76 Minn. 112, 78 N. W.
978; Donnelly v. Butts, 137 Minn. 1,
62 N. W. 674; Justus v. Fagerstrom,
141 Minn. 323, 170 N. W. 201.

Taylor, C., filed the following
opinion:

Plaintiff brought this action to foreclose a second mortgage on an apartment building in the city of Minneapolis, and procured the appointment of a receiver to collect the rents and profits during the pendency of the action. Defendant Forsythe appeals from the order appointing the receiver. So far as the record discloses, the other defendants have not appeared or taken any part in the proceedings.

The title to the property was held by defendant Mary Heald until conveyed to defendant Forsythe, as hereinafter stated. Defendant Anderson, a contractor and builder, constructed the apartment building, and completed it in July, 1920. On February 5, 1920, the Healds executed a mortgage on the property to David P. Jones & Company, for $27,500, payable in instalments, and bearing interest at the rate of 6 per centum per annum, payable semiannually on the 5th day of January and July of each year. On April 15,

1920, the Healds executed a second mortgage on the property to defendant Anderson, for $17,000, payable in monthly instalments of $250 each, and bearing interest at the rate of 6 per centum per annum. On June 15, 1920, Anderson sold and transferred this second mortgage to plaintiff, for the sum of $14,000. On August 12, 1920, the Healds sold the property to defendant Forsythe, and conveyed it to him by warranty deed subject to the two mortgages, which he assumed and agreed to pay as a part of the purchase price. For the remainder of the purchase price, he conveyed to the Healds a farm in Renville county of the value of $28,800, subject to a mortgage of $4,000, which farm the Healds sold and conveyed to third parties shortly thereafter. When Forsythe, who was a

retired farmer living in Renville county, made his purchase, the Healds and Anderson stated and represented to him that all claims incurred in the construction of the building had been paid and satisfied, and that no lienable claims of any kind were outstanding, and he relied thereon in making the purchase. These representations, were not true, however, and between September 22 and December 29, 1920, liens were filed against the property, amounting in the aggregate to the sum of $28,225. If valid, they are prior and superior to plaintiff's mortgage. Their validity is not admitted by Forsythe, and has not yet been determined in proceedings to enforce them, but plaintiff asserts that they are valid in the amount of, at least, $20,000. The value of the property is placed at $55,000, several thousand dollars less than the aggregate amount of the two mortgages and the liens. Both Anderson and the Healds are insolvent. Forsythe took possession of the property under his deed, and thereafter maintained and operated it, and collected the rentals of $855 per month. He paid plaintiff seven instalments of the second making a total of $2,410. He also mortgage, and $660 as interest, paid the first instalment_of_interest on the first mortgage. In January, 1921, $500 of principal and $825 of interest became due on the first mortgage, and $250 of principal and $76.25 of interest became due on the second mortgage, and these amounts still remain unpaid. Plaintiff's application for the appointment of a receiver is dated February 8, 1921. Plaintiff's mortgage contains a provision authorizing him to declare the entire amount due in case of default in any payment, and he has declared the entire amount to be due, and asks judgment therefor, and that the property be sold to satisfy the same, and that he have a personal judgment against defendants for any deficiency in the amount realized from such sale.

(Nielsen v. Heald, 151 Minn. 181, 186 N. W. 299.) The question before this court is whether the trial court overstepped the bounds of its judicial discretion in appointing a receiver to collect the rents and profits and care for the property during the pendency of the action. Ordinarily, under our

Mortgage-who

Receiver-for

granted.

law, the mortgagor

entitled to rents or his successor in
and profits. interest is entitled
to the possession of the property
and to the rents and profits there-
from during foreclosure proceedings
and until the expiration of the peri-
od of redemption (Marshall & I.
Bank v. Cady, 76 Minn. 112, 78 N.
W. 978); but, if he permits waste
of a character to impair the security,
and the security
mortgaged prop- is inadequate and
erty-when those personally lia-
ble for the debt are
insolvent, a receiver may be ap-
pointed to take charge of the prop-
erty and to apply the rents and
profits, or so much thereof as may
be necessary for that purpose, in
protecting it from preventable
waste. 19 R. C. L. 560, 563; Lowell
v. Doe, 44 Minn. 144, 46 N. W. 297;
Haugan v. Netland, 51 Minn. 552,
53 N. W. 873; Marshall & I. Bank
v. Cady, supra; Donnelly v. Butts,
137 Minn. 1, 162 N. W. 674; Justus
v. Fagerstrom, 141 Minn. 323, 170
N. W. 201.

Mortgagewaste-permitting liens.

Cullen v. Minnesota Loan & T. Co. 60 Minn. 6, 61 N. W. 818; Farmers' Nat. Bank v. Backus, 64 Minn. 43, 66 N. W. 5; Marshall & I. Bank v. Cady, 75 Minn. 241, 77 N. W. 831; Donnelly v. Butts, 137 Minn. 1, 162 N. W. 674.

Plaintiff, having applied for the appointment of a receiver, had the burden of proving, by clear and convincing evidence, that his security had become impaired by waste caused or permitted by the defendants. Northland Pine Co. v. Melin Bros. 136 Minn. 236, 1 A.L.R. 1463, 161 N. W. 407. But the order appointing the receiver was, in effect, a finding that all the facts necessary to authorize such appointment had been established. The finding that plaintiff's security was inadequate must stand, for the court could find that plaintiff's mortgage, together with the valid prior encumbrances, exceeded the value of the property by a substantial amount. It is conceded that Anderson and the Healds are wholly insolvent, but plaintiff's assertion that Forsythe is also insolvent is emphatically denied by the latter, and plaintiff adduced no evidence to prove it. Although Forsythe asserts that he is solvent, he does not concede that he is personally liable for the payment of the mortgages. On the contrary, he sets forth facts, seemingly undisputed, which are sufficient to constitute a complete defense, on the ground of fraud, to any action brought to enforce such liability. On this state of the record we think the court was justified in finding that plaintiff must look solely to his security for the payment of his mortgage.

Speaking in general terms, it may be said that a mortgagor is chargeable with waste within the meaning of the rule, whenever, through the fault of the mortgagor, the mortgagee loses some part of the security which he had when he took his mortgage. Failure to pay claims or charges which were not liens on the property when the mortgage was taken, but which, if not paid, will become liens thereon superior to the mortgage, is deemed waste within the rule. Failure to pay interest on prior mortgages, or to pay taxes, falls within this species of waste. Lowell v. Doe, 44 Minn. 144, 46 N. W. 297; Haugan v. Netland, 51 Minn. 552, 53 N. W. 873;

The inadequacy of the security and the insolvency of those personally liable for the debt are not of themselves sufficient grounds for the appointment of a receiver, for the rents and profits are no part of the security, and the mortgagee is not entitled to them. To obtain the appointment of a receiver, the mortgagee must show not only that the security is inadequate and the debt

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