Agriculture Secretary John R. Block's closest farming-business partner, in an effort to stave off financial problems for himself and possibly Block as well, is asking a federal court here to take over his 1984 crop income and decide how to pay off his creditors.
The partner is John W. Curry of Galesburg, Ill., whose ties with Block and splashy methods of buying up land and farming it hard have made him a controversial figure in several Farm Belt states.
Court papers in the unusual "interpleader" suit filed by Curry in U.S. District Court here last month indicate that he has 37 farming operations in Iowa and Missouri alone with a likely income of $1.6 million, not enough to cover his planting and harvesting debts.
The controversy around Curry sharpened earlier this year when he was awarded a $400,000 low-interest loan by the Farmers Home Administration (FmHA), a lender-of-last-resort agency under Block's supervision at the Agriculture Department.
Block said at the time that he had no role in granting the loan and would not benefit from it.
But there are signs that the secretary still has a financial interest in Curry's prosperity.
The most important of these involves a mortgage loan from the First National Bank of Minneapolis. Under the complicated terms of the loan, the bank could seize some of Block's property if some of Curry's farming operations involved in the interpleader suit should fail.
Another sign of possible continuing connection has to do with a trust. To insulate himself against conflict-of-interest criticism earlier this year, Block put some of his holdings in a trust. It is called the Rolland E. Main trust after the trustee, who is another of Block's longtime partners.
Some of the Curry properties involved in the interpleader suit are also listed in official records as being owned by a Rolland E. Main trust.
But Block's lawyer says that there are two trusts and that Block's properties and Curry's are not the same.
Curry could not be reached in Galesburg for comment on the suit. Main did not return telephone calls. Block's Galesburg attorney refused to answer a reporter's questions, and the secretary was unavailable for questioning last week.
Curry's suit indicated that without protection from the court, creditors could begin foreclosure actions against him that could prevent him from repaying his FmHA loan and could trigger action against him, Block and the other partners by First National Bank of Minneapolis.
Curry asked the court to decide which of a dozen creditors -- including the FmHA and the Minneapolis bank -- should get highest priority for repayment of their loans and then to oversee distribution of the money from the sale of his crop.The suit said that crop income would be about $1.6 million but that he owed more than $1.8 million to lenders and suppliers.
The FmHA loan drew heavy criticism in the Farm Belt at a time when other hard-pressed farmers could not get FmHA help or were required to post large amounts of collateral. Curry was required only to pledge his 1984 crop income to secure the $400,000 loan.
Block, Curry, Main and another partner are connected to First National of Minneapolis through a "cross-default" mortgage arrangement. As one condition of the arrangement, failure of any of several Curry operations in Iowa could trigger foreclosure action by the Minnesota bank on other holdings of the partnership in Illinois.
The cross-default arrangement with the Minneapolis bank was made this year after the partners were required to post collateral for an earlier, unsecured farm-purchase loan in Minnesota. While Block has insisted that he had no interest in Iowa lands, the bank arrangement appeared to tie his finances to the success or failure of his partners' operations in Iowa's Davis and Appanoose counties.
Curry, acting for himself and others, has purchased about 11,000 acres in southeast Iowa and adjoining Missouri since the late 1970s.
The 37 farms listed in Curry's suit include six in Iowa that he described as part of the Rolland E. Main trust, although there is no record in Knox County or Davis County, Iowa, of their transfer to trustee Main. Block's lawyer, John Hattery, said through a Block press aide that the Iowa properties are in a trust that does not involve the secretary, even though the trustee is the same man.
Curry said in his suit that two of his Iowa creditors "have threatened to seize a portion of the 1984 crop to satisfy their claims." He said these moves would "irreparably injure" him and other creditors unless stopped by the court.
In a suggested assignment of priorities, Curry asked that two companies he controls -- one that does his farming and another that handles grain -- be paid first from the 1984 crop income. He also assigned first priority to his lawyers and other suppliers.
His second suggested priority for payment were landlords to whom he owed rent or crop shares. The FmHA and a Burlington, Iowa bank that financed part of his 1984 planting were assigned third category; 10 other lenders and supply firms were assigned last priority.
FmHA officials in Illinois and Washington argued that Curry's pledge of his 1984 crop as collateral was sufficient to secure the $400,000 loan. But figures provided by Curry to the court suggest that the harvest on the Missouri and Iowa farms where he used FmHA money was somewhat less than the projections on which the loan was based.
The government has until early January to answer the Curry suit.
A number of other creditors, however, in response to the Curry action, have asked the court to dismiss his petition. Dismissal, according to attorneys here, most likely would clear the way for lenders to move quickly against Curry in an attempt to collect on their loans -- and thus conceivably reach Block.