Your Name, pro per

12345 N. Street
Scottsdale, Arizona 85262
Phone # 6!2" 123#456$
%email&aol.com'
IN THE SUPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA
Y()* NA+,,
Plainti--,
.s.
/0,1* NA+,S, AN2 3(0N 2(,S
1n4estors" 1#1!,!!!,

2e-endant.
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5ase no6777777777777777777
COMPLAINT
PETITION FOR TEMPORARY
RESTRAINING ORDER FOR;
1. DEFENDANTS FRAUD; AND
2. DEFENDANTS USE OF VOID
CONTRACT PURSUANT TO
AMERICAN JURISPRUDENCE
SECOND EDITION 46 20 AND
ARIZONA REVISED STATUTES;
AND
PLAINTIFF STATES THE CLAIM FOR
!HICH RELIEF CAN "E
GRANTED PURSUANT TO#
F.R.C$.P. RULE 12%&'%6'
Assi8ned to the 0onora9le :::::::::::

COMES NO!, Your Name, Plainti--, on Petition -or 2ismissal o- the ;orci9le
2etainer -or 2e-endant<s numerous acts o- -raud u=on this court, includin8 >ithout
limitations, 2e-endant<s =ur=ose-ul -raud in attem=tin8 to a==ear as CREDITOR to this
honora9le court, >hen in -act 2e-endants are >ell a>are the? are not the CREDITOR and
there-ore NOT ()* R*+, P+-(. /0 /0(*-*1( in this instant matter.
1t is no> incum9ent on this court to @uer? 2e-endants as to 2e-endants< la>-ul
=osition in this instant matter. 1- 2e-endants re-use to sti=ulate in o=en court that
2e-endants are the CREDITOR in this instant matter, this court must remo4e 2e-endants
-rom this hearin8 -orth>ith, as this court is here to settle a matter 9et>een a CREDITOR
and a DE"TOR.

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Accordin8l?, i- 2e-endants are not the CREDITOR in this +atter, then 2e-endants
ha4e thus sti=ulated that Plainti-- +)S/ 9e the CREDITOR in this matter.
2e-endants cannot 9e the CREDITOR in this instant matter as 2e-endants N,.,*
risBed an? assets, nor are 2e-endants holdin8 an? assets.
A CREDITOR cannot 9e a CREDITOR i- the? don<t hold the asset in @uestion,
Ci.e.: the NOTE and/or the propertyD and M2-(3+3* P+114()-253) T-51(1, i.e. R.E.M.I.C.,
as defined in TITLE 26, Sutit!e ", C#"$TER %, Su&hapter M, $"RT II, '' ()*+(62,
cannot hold assets -or i- the? do their taE eEem=t status is 4iolated and the /rust itsel- is
4oid a initio.
2e-endant +)S/ N(F in-orm this court, the 1.*.S. and the S.,.5. o- their status
o- either 9ein8 a CREDITOR andGor not 9ein8 a CREDITOR.
2e-endant<s o>n acts o- -raud u=on this court, Plainti--, and the =u9lic in 8eneral
are the sin8le cause o- this =aradoE and a9sent 2e-endants statin8 the claim as
CREDITOR6 this court cannot hear -rom 2e-endants.
H? Ia> and =recedent and in accordance >ith the Su=reme 5ourt o- the )nited
States pro se Pleadin8s +AY N(/ 9e held to the same standard as a la>?er<s andGor
attorne?<sD and >hose motions, =leadin8s and all =a=ers ma? (NIY 9e Jud8ed 9? their
-unction and ne4er their -orm. See: 0aines 4. KernerD PlatsB? 4. 51AD Anastaso-- 4. )nited
StatesD Iiti8ants are to 9e held to less strin8ent =leadin8 standardsD
See: 0aines 4. Kerner, 4!4 ).S. 51A#421D 1n re 0aines6 =ro se liti8ants are held to
less strin8ent =leadin8 standards than admitted or licensed 9ar attorne?s.
*e8ardless o- the de-iciencies in their =leadin8s, =ro se liti8ants are entitled to the
o==ortunit? to su9mit e4idence in su==ort o- their claims.
See also: PlatsB? 4. 5.1.A., A53 -.2d. 25D 1n re PlatsB?6 court errs i- court dismisses
the =ro se liti8ant >ithout instruction o- ho> =leadin8s are de-icient and ho> to
re=air =leadin8s.
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See also: Anastaso-- 4. )nited States, 223 ;.3d 8A8 8th 5ir. 2!!!"D 1n re
Anastaso--6 liti8antsL constitutional 8uaranteed" ri8hts are 4iolated >hen courts
de=art -rom =recedent >here =arties are similarl? situated.
;or this matter, 2e-endant is andGor ma? 9e the listed 2e-endant, an? and all =arties
2e-endant re-uses to re4eal to Plainti-- andGor this 5ourt, irres=ecti4e o- >hether or not
said =art? andGor =arties are Bno>n to this 5ourt andGor Plainti-- andGor 2e-endant, the
5or=orate ens !e-is entit? 2e-endant is em=lo?ed 9? andGor is an o--icer thereo-, andGor
an? other =arit? andGor =arties, indis=ensi9le or not, an? and all other =art? andGor =arties
recei4in8 an? =ecuniar? 8ain -rom, throu8h, andGor 9? 2e-endant<s -raudulent acts".
Plainti-- here9? @uestions the authenticit? o- AII dates andGor AII si8natures 9?
AII =arties on AII documents, includin8 >ithout limitations, notarized documents,
McontractsN, MdeedsN, MtitlesN, a--ida4its, andGor the liBe, includin8 >ithout limitations the
dates andGor si8natures 9? notar? =u9lics, o--icers, em=lo?ees, and an? and AII =arties
attestin8 to an? and AII claims, -acts, accountin8, trans-ers, recordin8s, =u9lications,
andGor the liBe, etc.
Plainti-- disa4o>s an? and AII im=lied andGor con-erred andGor in-erred
Munderstandin8N o- M!e-a!eseN terms no> and at the time o- the Msi8nin8N o- an? and AII
o- the documents =ertainin8 to this action.
Plainti-- disa4o>s an? and AII =resum=tions made 9? this 5ourt, 2e-endant, and
an? and AII other =arties >hen said =resum=tion ma? 9e detrimental to Plainti--<s interest
andGor case.
Plainti-- here9? demands AII o- Plainti--<s *i8hts 9e =rotected 9? this 5ourt,
includin8 >ithout limitations, State and -ederal constitutionall? =rotected *i8hts, Ood
8i4en *i8hts, 5i4il *i8hts, 0uman *i8hts, *i8hts =rotected 9? /reat?s", andGor AII
=ri4ile8es andGor immunities, andGor the liBe.
Plainti-- here9? demands this 5ourt re-use to commit, and act to =re4ent 2e-endant
-rom committin8, an? and AII acts 9arratrous in nature.
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Plainti-- here9? demands AII a==lica9le *ules o- 5ourt, *ules o- Procedures,
Ia>s, andGor Statutes 9e adhered to >ithout =re-erence -or an? =art?.
1. Plainti-- here9? alle8es andGor states the claim -or >hich relie- can 9e 8ranted as
-ollo>s6

PLAINTIFFS ALLEGATIONS +0782- CLAIMS#
1. Plainti-- is the 5*,21/(* in this matter.
2. 2e-endant is the 2,H/(* in this matter.
. 2e-endant is not the CREDITOR6 or an ASSIGNEE 29 ()*
CREDITOR6 in this instant matter.
4. Plainti-- is the 2,H/(* in this matter.

:. 2e-endant is not ()* R*+, P+-(. /0 I0(*-*1( in this instant matter.
6. 2e-endant did N(/ =ut 2e-endants< assets at risB in this instant
matter.
;. 2e-endant ma? ha4e onl? Mlent creditN in this instant matter.
<. 2e-endants =ur=osel? destro?ed the O,N)1N, (*1O1NAI
P*(+1SS(*Y N(/, to MsecuritizeN the N(/,.
=. 2e-endant<s use o- M!e-a!eseN in the mort8a8e documents as a means
o- con4ertin8 *eal Pro=ert? -rom its true o>ner to 2e-endant is a criminal
act o- Mcon4ersion throu8h -raudulent meansN and there-ore the mort8a8e
documents are e4idence o- a criminal act and cannot 9e used 9? this 5ourt in
this instant matter. .See: /!a&01s Si2th3 45nderstand67
10. /he )nited States has a =rimar? mort8a8e *i8ht andGor status on the
real =ro=ert? in @uestion and such 5ANN(/ 9e circum4ented 9?
2e-endant<s -raudulent and unla>-ul mort8a8e.
11. 2e-endant has 9een =aid in -ull -or the McontractN in @uestion.
12. 2e-endant >ill -ail to Join Mall indis=ensi9le =artiesN as such Joinder
>ould 9e =rima -acie e4idence o- 2e-endant<s -raudulent act o- securitizin8
the MP*(+1SS(*Y N(/,.N
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1. All Min4estorsN in4ol4ed in the securitization o- the MPromissor?
NoteN are indis=ensi9le =arties to this action and +)S/ 9e Joined 9?
2e-endant in an? re9uttal, res=onse, re=l?, ans>er, andGor the liBe 9?
2e-endant.
14. 2e-endant is usin8 a cor=orate entit? andGor /*)S/ in -urtherance o-
-raudulent acts.
1:. 2e-endant has no immunit? -or 2e-endant<s -raudulent acts.
16. 2e-endant is Jointl? and se4erall? res=onsi9le -or AII o- Plainti--<s
losses, cost -ees, andGor dama8esD in&!udin- 8ithout !i9itations, emotional
dama8es, =uniti4e dama8es, inclusi4e o- 9ut not limited to6 alienation o-
a--ection -rom6 s=ouse, 9o? andGor 8irl M-riendN, -riends, children, =ets, co#
>orBers", clients", customers", and an? and all other =arties e--ected
directl? and or indirectl? andGor collaterall? e4en i- caused 9? Plainti--<s
ina9ilit? to deal emotionall? >ith the -inancial issuesD as said issues are and
ha4e 9een caused 9? 2e-endant<s -raudulent acts.
2e-endant +)S/ re9ut ANY and AII AII,OA/1(NS andGor 5IA1+S >ith
s=eci-icit?, @uotin8 -acts and la>sD or 2e-endant there9? sti=ulates 2e-endants a8ree >ith
Plainti--<s AII,OA/1(NS andGor 5IA1+SD and 2e-endants -ore4er -orsaBe ar8uin8
a8ainst Plainti--<s alle8ations andGor claims in an? court. +erel? den?in8 Plainti--<s
alle8ations andGor claims are not su--icient to sur4i4e a +otion -or Summar? Jud8ment
a8ainst 2e-endant.
Pursuant to A.*.54.P. *ule 8d" :.R.C;.$. Ru!e (.7.67 andGor all alle8ations andGor
claims made 9? Plainti-- +)S/ 9e acce=ted as true 9? this 5ourt unless said alle8ations
andGor claims are re9utted >ith a =re=onderance o- the e4idence 9? 2e-endant. An? and all
such a4o>ries andGor a4erments =resented 9? 2e-endant must 9e et ho& paratus est
;erifi&are and done under =enalt? o- =erJur?.

RELIEF#
1. 2e-endant return the GENUINE ORIGINAL PROMISSORY
NOTE and AII +(N,Y PA12 Cy $!aintiff to <efendants, 8ith a fu!!
dis&!osure of a&&ountin- of su&hP to Plainti-- -orth>ithD

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2. 1- 2e-endant is not a9le to return the GENUINE ORIGINAL
PROMISSORY NOTE to Plainti-- -orth>ith then 2e-endant is there-ore
admittin8 to 2e-endant<s unla>-ul attem=t to con4ert real =ro=ert? >ithout
cause andGor ri8ht.
. 2e-endant =resent to Plainti-- and this 5ourt and A--ida4it sti=ulatin8
that 2e-endant has N( *1O0/S to the real =ro=ert? in @uestion.
4. 2e-endant returns 2,,2 and all other documents =ertainin8 to
o>nershi= o- real =ro=ert? in @uestion to Plainti--.

:. 1- 2e-endant 72*1 02( S/A/, /0, 5IA1+ )N2,* P,NAI/Y (;
P,*3)*Y that 2e-endant is the CREDITOR in this instant matter,
2e-endant a8rees to acce=t 3ud8ment 9? 2e-ault in -a4or o- Plainti--.

6. 1- 2e-endant 72*1 S/A/, /0, 5IA1+ )N2,* P,NAI/Y (;
P,*3)*Y that 2e-endant is the CREDITOR in this instant matter,
2e-endant a8rees to deli4er acBno>led8ement o- such -orth>ith to the
S.,.5. and the 1.*.S.
II. P,+/0(/99 )+1 ()* D5* P-2>*11 R/3)( +1 ?-2(*>(*7 &.6 inter alia, ()* F25-(**0()
A@*07@*0( 29 ()* 9*7*-+, C201(/(5(/20 (2 -*,. 20 ()* >25-( +7)*-/03 (26 inter alia6
A.R.C$.P.6 inter alia6 +07 ()* 9*7*-+, +07 1(+(* C201(/(5(/201#
A.*.54.P. *ule 1
/hese rules 8o4ern the =rocedure in the su=erior courts o- Arizona in all suits
o- a ci4il nature >hether co8niza9le as cases at la> or in e@uit?. /he? shall 9e
construed to secure the Just, s=eed?, and ineE=ensi4e determination o- e4er?
action.
III. P,+/0(/99 A5*1(/201 ()* B5-/17/>(/20 29 +0. +07 ALL 0204B57/>/+,
?-2>**7/031 C02D0 20,. (2 P,+/0(/99 +1 +0 +7@/0/1(-+(/$* ?-2>*75-* 9-+575,*0(,.
&+1*7 20 +0 /0$+,/7 +07 50*092->*+&,* >209*11/20 29 B573@*0( ?-*15@?(/20 /0 ()*
@2-(3+3* 72>5@*0(1.
(nce Jurisdiction is @uestioned the court +)S/ dismiss the action. Plainti-- here9?
@uestions the Jurisdiction o- an? and all non#Judicial =roceedin8s insti8ated 9? 2e-endant
in 2e-endant<s unla>-ul attem=t to con-iscate Plainti--<s real =ro=ert?.
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A.*.54.P. *ule 12h"3". Fai4er or =reser4ation o- certain de-enses
A =art? >ai4es all de-enses and o9Jections >hich that =art? does not =resent either
9? motion as herein9e-ore =ro4ided, or, i- that =art? has made no motion, in that
=art?Ls ans>er or re=l?, *E>*?(;
%' !)*0*$*- /( +??*+-1 &. 1533*1(/20 29 ()* ?+-(/*1 2- 2()*-D/1* ()+( ()*
>25-( ,+>C1 B5-/17/>(/20 29 ()* 15&B*>( @+((*-6 ()* >25-( 1)+,, 7/1@/11 ()* +>(/20.
E9phasis added"
See: M&Cor0!e ;. :irst $ennsy!;ania /an0in- and Trust Co. .=th Cir. %>?27 =)>
:.2d 2=@, 2==. MAt an? sta8e o- a liti8ation, includin8 the a==ellate, su9Ject matter
Jurisdiction ma? 9e @uestioned. H? -ailin8 to do so, the =arties cannot con-er
Jurisdiction 9? consent. 1- the court =ercei4es the de-ect, it is o9li8ated to raise the
issue sua s=onte.Q
See a!so: M&Cready ;. Ahite, =%? :.@d Case %:*)+&;+*=?=@3 M,nsurin8 the
eEistence o- su9Ject#matter Jurisdiction is the court<s -irst dut? in e4er? la>suit.N
Su9Ject#matter Jurisdiction is an issue that must 9e considered at an? sta8e o- the
liti8ation. See 28 ).S.5. R 144$c" M1- at an? time 9e-ore -inal Jud8ment it a==ears that
the district court lacBs su9Ject matter Jurisdiction, the case shall 9e remanded.N"D 5nited
$hosphorus, Ltd. ;. "n-us Che9. Co., @22 :.@d >=2, >=6 .?th Cir. 2**@73 /EM I, L.L.C. ;.
"nthropo!o-ie, In&., @*% :.@d )=(, ))% .?th Cir. 2**27 MCSPu9Ject#matter Jurisdiction . . .
ma? 9e @uestioned at an? time until the liti8ation 9ecomes -inal, and sometimes e4en
later.N". ,4en i- the de-ense o- lacB o- su9Ject#matter Jurisdiction is o4erruled, stricBen, or
eEcluded 9? the district court, it ma? 9e reasserted at an? time in the action. See: )/
Char!es "!an Ari-ht B "rthur R. Mi!!er, :edera! $ra&ti&e and $ro&edure ' %@)*, at %@2
.@d ed. 2**=7 .&itin- :ahnesto&0 ;. Reeder, 22@ :. Supp. 2d 6%(, 62% .E.<. $a. 2**277.
(nce @uestioned, the 2e-endant andGor the court +)S/ =ro4e Jurisdiction
H,;(*, =roceedin8 >ith a case. /his re@uirement has not 9een a9ro8ated nor does it
eEclude non#Judicial =roceedin8s.
/he non#Judicial -oreclosure =rocedure re@uires Jurisdiction as does an? matter,
Judicial, administrati4e or other>ise. 2e-endant has attem=ted to circum4ent Jurisdiction
re@uirements 9? -alsel? claimin8 2e-endant has met -or the court the re@uisite elements o-
Jurisdiction, =rimaril? that 2e-endant is the *eal Part? in 1nterest.
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2e-endant<s claim to 9e the *eal Part? in 1nterest is -alse, -raudulent and unla>-ul.
Pursuant to, inter a!ia, *ule 1$a", 2e-endant must =ro4e 2e-endant is the *eal Part? in
1nterest, not Just claim such.
1t is a -unctional im=ossi9ilit? -or 2e-endant to 9e the *eal Part? in 1nterest >ithout
the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/,. ,r8o, it is a -unctional im=ossi9ilit?
-or 2e-endant to =ro4e 2e-endant is the *eal Part? in 1nterest >ithout =resentin8 to this
court the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/,.
1t is an incontro4erti9le -act that 2e-endant is not in =ossession o- the O,N)1N,
(*1O1NAI P*(+1SS(*Y N(/,, and accordin8l?, it is an incontro4erti9le -act that
2e-endant is committin8 -raud u=on the court 9? -alsel? andGor -raudulentl? claimin8
2e-endant is in =ossession o- the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/,.
Pursuant to la> and in accordance >ith Plainti--<s claimsD 2e-endants +)S/
=resent to this court the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/, and =ro4e to 9e
the CREDITOR in this a8reement or a8ree to Plainti--<s demand -or 3ud8ment 9? 2e-ault
in -a4or o- Plainti--.
/his =leadin8 is su==orted 9? the la> o- the case herein, the =rior rulin8s o- this
5ourt herein, the docBet o- this case, all documents in4ol4in8 Plainti-- and 2e-endants,
each o- >hich are incor=orated 9? this re-erence as i- -ull? set -orth, and -or each o- >hich
Plainti-- re@uests this 5ourt to taBe 3udicial Notice thereo-. /his =leadin8 is -urther
su==orted 9? the accom=an?in8 +emorandum o- Points and Authorities.
*,SP,5/;)IIY S)H+1//,2 this 7777
th
da? o- 77777, in the ?ear o- (ur Iord, 2!1!.

7777777777777777777777777777
Your name, pro per
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MEMORANDUM OF POINTS AND AUTHORITIES
2i4ersit? o- Jurisdiction is =resent in this matter as the real =ro=ert? in @uestion is
in Arizona and 2e-endant andGor other entities in4ol4ed are in other states andGor
countries. /here-ore, Plainti-- here9? in4oBes ,rie doctrine and >ill accordin8l? use
Arizona la> andGor ma? use -ederal la>s accordin8l?.
2e-endants are committin8 HA**A/*Y 9? -raudulentl? -ilin8 documents onl? a
CREDTIOR and the R*+, P+-(. /0 I0(*-*1( ma? -ile, >hen in -act 2e-endants are NOT
the CREDTIOR and NOT the R*+, P+-(. /0 I0(*-*1( in this instant matter.
1t is a -unctional im=ossi9ilit? -or Plainti-- to M507*-1(+07N the mort8a8e
documents 2e-endants used in their unla>-ul attem=t to con4ert Plainti--<s *eal Pro=ert?
to 2e-endants< =ossession. Plainti--<s ina9ilit? to MunderstandN the M!e-a!eseN used 9? the
attorne?s >ho >rote the mort8a8e documents =rohi9its 2e-endants -rom usin8 said
documents as e4idence a8ainst Plainti--.
1n -act, 2e-endants< 9a!u9 in se act o- usin8 M!e-a!eseN in a document to
unla>-ull? con4ert real =ro=ert? is de-ined in la> as Mthe-t throu8h unla>-ul con4ersion.N
2e-endants cannot no> use said documents to con4ert said =ro=ert? >ithout said
documents 9ein8 used as =rima -acie e4idence o- 2e-endants< -elonious act.
T)/1 >25-( >+002( 51* *$/7*0>* 29 + 9*,20/251 +>( (2 +11/1( + >-/@/0+, /0
95-()*-+0>* 29 + 9*,20/251 +>(.
See: HlacB<s Ia> SiEth ,dition6
U07*-1(+07. /o Bno>D to a==rehend the meanin8D to a==reciateD as, to understand
the nature and e--ect o- an act. 1nternational#Oreat Northern *. 5o. 4. Pence, /eE.
5i4.A==., 113 S.F.2d 2!6, 21!. /o ha4e a -ull and clear Bno>led8e o-D to
com=rehend. /hus, to in4alidate a deed on the 8round that the 8rantor did not
understand the nature o- the act, the 8rantor must 9e inca=a9le o- com=rehendin8
that the e--ect o- the act >ould di4est him o- the title to the land set -orth in the
deed. As used in connection >ith the eEecution o- >ills and other instruments, the
term includes the realization o- the =ractical e--ects and conse@uences o- the
=ro=osed act. See 5a=acit?.
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2e-initions -rom Hou4iers Ia> 2ictionar? 1856 ,dition6
"ARRATRY6 crimes. 1n old la> ;rench 9arat, 9araterie, si8ni-?in8 ro99er?,
deceit, -raud. 1n modern usa8e it ma? 9e de-ined as the ha9itual mo4in8, eEcitin8,
and maintainin8 suits and @uarrels, either at la> or other>ise. 1 1nst. 368D 1 0a>B.
243.
2. A man cannot 9e indicted as a common 9arrator in res=ect o- an? num9er o- -alse
and 8roundless actions 9rou8ht in his o>n ri8ht, nor -or a sin8le act in ri8ht o-
anotherD -or that >ould not maBe him a common 9arrator.
3. Harratr?, in this sense, is di--erent -rom maintenance @. 4." and cham=ert?. @.
4."
CHAMPERTY6 crimes. A 9ar8ain >ith a =lainti-- or de-endant, &a9pu9 partire,
to di4ide the land or other matter sued -or 9et>een them, i- the? =re4ail at la>, the
cham=ertor undertaBin8 to carr? on the suit at his o>n eE=ense. 1 PicB. 416D 1 0am.
132D 5 +onr. 416D 4 Iitt. 11$D 5 3ohn. 5h. *. 44D $ Port. *. 488.
2. /his o--ence di--ers -rom maintenance, in this, that in the latter the =erson
assistin8 the suitor recei4es no 9ene-it, >hile in the -ormer he recei4es one hal-, or
other =ortion, o- the thin8 sued -or. See PunishmentD ;ineD 1m=risonmentD 4 Hl.
5om. 135.
3. /his >as an o--ence in the ci4il la>. Poth. Pand. li9. 3, t. 1D A==. n. 1, tom. 3, =.
1!4D 15 .es. 13AD $ Hli8hLs *. 36AD S. 5. 2! ,. 5. I. *. 165D 5 +oore S P. 1A3D 6
5arr. S P. $4AD S.5. 25 ,. 5. I. *. 631D 1#*uss. 5r. 1$A 0a>B.P. 5. 9.1 c.84, s.5.
4. /o maintan a de-endant ma? 9e cham=ert?. 0a>B. P. 5. 9. 1, c. 84, s. 8 3 0am.
541D 6 +onr. 3A2D 8 Yer8. 484D 8 3ohn. 4$AD 1 3ohn. 5h. *. 444D, $ Fend. 152D 3
5o>en, 624D 6 5o&4en, A!
I. D*9*07+0(1 +-* N2( ()* R*+, P+-(. /0 I0(*-*1( /0 ()/1 +07 ()* 0204B57/>/+,
?-2>**7/03 +1 >5--*0( ?211*11/20 29 ()* GENUINE ORIGINAL
PROMISSORY NOTE /1 + -*A5/-*@*0( 92- + ?+-(. (2 &* ()* R*+, P+-(. /0
I0(*-*1( /0 +,, ?-2>**7/031 ?5-15+0( (2 ()* U.C.C.
2e-endant is not and cannot 9e the *eal Part? in 1nterest and is committin8 -raud
9? unla>-ull? attem=tin8 to -oreclose on real =ro=ert? o>ned 9? Plainti--. A9sent
=ossession o- the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/, sin8ed 9? Plainti--,
2e-endant cannot la>-ull? mo4e -or>ard >ith the non#Judicial =rocess as the non#Judicial
court authorities do N(/ ha4e su9Ject matter Jurisdiction.
II. A&1*0( ?-/@+ 9+>/* *$/7*0>* ()+( D*9*07+0( /1 ()* R*+, P+-(. /0 I0(*-*1( /0
()/1 +07 ()* 0204B57/>/+, ?-2>**7/036 D*9*07+0( >+002( &* >201/7*-*7 ()*
R*+, P+-(. /0 I0(*-*1( /0 ()/1 +0782- ()* 0204B57/>/+, ?-2>**7/03
1!
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2$
28
/he (NIY acce=ta9le e4idence that 2e-endant ma? 9e the *eal Part? in 1nterest is
the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/,. 2e-endant did N(/ =resent the
O,N)1N, (*1O1NAI P*(+1SS(*Y N(/, to the o--icers actin8 in the non#Judicial
=rocedure and there-ore the non#Judicial =rocedures claims to Jurisdiction are and >ere
-raudulent claims and are thus 4oid.
III. A&1*0( ?-/@+ 9+>/* *$/7*0>* ()+( D*9*07+0( /1 ()* CREDITOR /0 ()/1 +07 ()*
0204B57/>/+, ?-2>**7/036 D*9*07+0( >+002( &* >201/7*-*7 ()* CREDITOR /0
()/1 +0782- ()* 0204B57/>/+, ?-2>**7/03
/he (NIY acce=ta9le e4idence that 2e-endant is the CREDITOR in this instant
matter is the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/, and the accountin8 sho>in8
the 2e-endant loanin8 the Plainti-- the 2e-endants< assets. 2e-endant did N(/ =ut assets
at risB in this matter. 2e-endant did N(/ =resent the O,N)1N, (*1O1NAI
P*(+1SS(*Y N(/, and the accountin8 records to the o--icers actin8 in the non#Judicial
=rocedure and there-ore the non#Judicial =rocedure Mclaims to JurisdictionN are and >ere
-raudulent claims and are thus 4oid.
IV. S/0>* D*9*07+0( /1 02( ()* R*+, P+-(. /0 I0(*-*1( /0 ()/1 +0782- ()* 0204
B57/>/+, ?-2>**7/036 ()* 92-*>,215-* /1 +0 50,+D95, ?-2>*75-*
2e-endant has and is committin8 -raud 9? attem=tin8 to -oreclose on real =ro=ert?
2e-endant is not the la>-ul lien holder o-. 2e-endant is N(/ the CREDITOR and N(/
the O,N)1N, 0(I2,* 1N 2), 5()*S, o- the O,N)1N, (*1O1NAI
P*(+1SS(*Y N(/, and there-ore 5ANN(/ =roceed non#Judiciall? in an? matter.
V. D*9*07+0( -*>*/$*7 + COPY 29 ()* PROMISSORY NOTE AFTER ()*
PROMISSORY NOTE D+1 7*(*-@/0*7 (2 &* /0 7*9+5,(
2e-endant >as -ull? in-ormed the N(/, andGor mort8a8e >as delin@uent and in
dishonor 9e-ore 2e-endant acce=ted a co=? o- the N(/, andGor 9ecame the 0(I2,* o-
a 5(PY o- the N(/,.
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,4en i- 2e-endant did recei4e the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/,,
>hich is im=ossi9le, 2e-endant<s claims are still in4alid as 2e-endant has =re4iousl?
admitted Bno>led8e the N(/, andGor mort8a8e >as in de-ault.
A.*.S. R 4$#33!2 25". 0older in due course
A. Su9Ject to su9section 5 o- this section and section 4$#31!6, su9section 2,
Qholder in due courseQ means the holder o- an instrument i-6
2. /he holder tooB the instrument6
%>' !/()25( 02(/>* ()+( ()* /01(-5@*0( /1 2$*-75* 2- )+1 &**0 7/1)202-*7 2-
()+( ()*-* /1 +0 50>5-*7 7*9+5,( D/() -*1?*>( (2 ?+.@*0( 29 +02()*- /01(-5@*0(
/115*7 +1 ?+-( 29 ()* 1+@* 1*-/*1;
A.*.S. R 4$#33!5. 2e-enses and claims in recou=ment
A. ,Ece=t as stated in su9section H o- this section, the ri8ht to en-orce the
o9li8ation o- a =art? to =a? an instrument is su9Ject to the -ollo>in86
1. A de-ense o- the o9li8or 9ased on6
a" 1n-anc? o- the o9li8or to the eEtent it is a de-ense to a sim=le contractD
9" 2uress, lacB o- le8al ca=acit? or ille8alit? o- the transaction >hich, under
other la>, nulli-ies the o9li8ation o- the o9li8orD
c" ;raud that induced the o9li8or to si8n the instrument >ith neither
Bno>led8e nor reasona9le o==ortunit? to learn o- its character or its essential
termsD or
d" 2ischar8e o- the o9li8or in insol4enc? =roceedin8s.
VI. D*9*07+0( )+1 C02D/03,.6 D/() @+,/>* +92-*()253)(6 $/2,+(*7 05@*-2516
inter alia6 A-/F20+ R*$/1*7 S(+(5(*1 (2 >20$*0* ()* 0204B57/>/+, ?-2>**7/03
+0782- +((*@?( (2 50,+D95,,. 92-*>,21* 20 P,+/0(/991 -*+, ?-2?*-(.
Plainti-- here9? su9mits the -ollo>in8 A.*.S. sections as an o--er o- =roo- o- an
a9rid8ed list o- the crimes =er=etrated 9? 2e-endant in 2e-endant<s -raudulent attem=t to
unla>-ull? con4ert Plainti--<s real =ro=ert? into 2e-endant<s asset. Ke? >ords are in &2,7
-or the court<s con4enience.
2e-endant<s unla>-ul use o- the non#Judicial =roceedin8 to -raudulentl? esta9lish
Mstandin8N >ithout the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/, is =rima -acie
e4idence o- 2e-endant<s 8uilt, and e4idence o- 2e-endant<s 4iolations o- the statues.
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1n -act, 2e-endant could not ha4e con4ened the non#Judicial =rocedure >ithout
ha4in8 4iolated one and =ossi9le all o- the listed statutes, and =ossi9l? other state and
-ederal la>s.
Plainti-- =resents the -ollo>in8 list (NIY as e4idence o- the non#Judicial
=rocedure<s lacB o- Jurisdiction and not as e4idence o- criminal acti4it? on the =art o-
2e-endant. Accordin8l?, 2e-endant cannot disa4o> said claims -or Plainti--<s use o-
criminal 4iolations in ci4il liti8ation.
=4161. Presentment o- -alse instrument -or -ilin8D classi-ication
A =erson >ho acBno>led8es, certi-ies, notarizes, =rocures or o--ers to 9e -iled,
re8istered or recorded in a =u9lic o--ice in this state an instrument he Bno>s to 9e
-alse or -or8ed, >hich, i- 8enuine, could 9e -iled, re8istered or recorded under an?
la> o- this state or the )nited States, or in com=liance >ith esta9lished =rocedure is
8uilt? o- a class 6 -elon?. As used in this section QinstrumentQ includes a >ritten
instrument as de-ined in section 13#2!!1.
142004. 5riminal simulationD classi-ication
A. A =erson commits criminal simulation i-, >ith intent to de-raud, such =erson
maBes, alters, or =resents or o--ers, >hether acce=ted or not, an? o9Ject so that it
a==ears to ha4e an anti@uit?, rarit?, 125->*, authorshi= or 4alue that it does not in
-act =ossess.
H. 5riminal simulation is a class 6 -elon?.
14200:. (9tainin8 a si8nature 9? dece=tionD classi-ication
A. A =erson commits o9tainin8 a si8nature 9? dece=tion i-, >ith intent to de-raud,
such =erson o9tains the si8nature o- another =erson to a >ritten instrument 9?
Bno>in8l? misre=resentin8 or omittin8 an? -act material to the instrument or
(-+01+>(/20.
142006. 5riminal im=ersonationD classi-ication
A. A =erson commits criminal im=ersonation 9?6
2. Pretendin8 to 9e a re=resentati4e o- some =erson or or8anization >ith the intent
to de-raudD or
3. P-*(*07/03 (2 &*6 2- +115@/03 + 9+,1* /7*0(/(. 29, an em=lo?ee or a
re=resentati4e o- some =erson 2- 2-3+0/F+(/20 >ith the intent to induce another
=erson to =ro4ide or allo> access to =ro=ert?.
142010. /ra--icBin8 in the identit? o- another =erson or entit?D classi-ication
A. A =erson commits (-+99/>C/03 /0 ()* /7*0(/(. o- another =erson or *0(/(. i- the
=erson Bno>in8l? 1*,,16 (-+019*-1 2- (-+01@/ts an? =ersonal identi-?in8
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in-ormation or entit? identi-?in8 in-ormation o- another =erson or entit?, includin8
a real or -ictitious =erson or entit?, >ithout the consent o- the other =erson or entit?
-or +0. 50,+D95, ?5-?21* 2- (2 >+51* ,211 to the =erson or entit? D)*()*- 2- 02(
()* 2()*- ?*-120 2- *0(/(. +>(5+,,. 1599*-1 +0. *>202@/> ,211, or allo>in8
another =erson to o9tain or continue em=lo?ment.
142204. 2e-raudin8 secured creditorsD de-initionD classi-ication
A. A =erson commits de-raudin8 secured creditors i- the =erson Bno>in8l?
7*1(-2.16 remo4es, >20>*+,16 *0>5@&*-16 >20$*-(16 1*,,16 2&(+/016 (-+019*-16
>20(-2,1 2- 2()*-D/1* 7*+,1 >ith =ro=ert? su9Ject to a securit? interest >ith the
intent to hinder or =re4ent the en-orcement o- that interest.
14220:. 2e-raudin8 Jud8ment creditorsD classi-ication
A. A =erson commits de-raudin8 Jud8ment creditors i- such =erson secretes,
+11/3016 >20$*.1 2- 2()*-D/1* 7/1?21*1 o- his =ro=ert? >ith the intent to de-raud a
Jud8ment creditor or to =re4ent that =ro=ert? -rom 9ein8 su9Jected to =a?ment o- a
Jud8ment.
142206. ;raud in insol4enc?D classi-ication
A. A =erson commits -raud in insol4enc? i-, >hen =roceedin8s ha4e 9een or are
a9out to 9e instituted -or the a==ointment o- a trustee, recei4er or other =erson
entitled to administer =ro=ert? -or the 9ene-it o- CREDITOR1 or >hen an? other
assi8nment, com=osition or li@uidation -or the 9ene-it o- CREDITOR1 has 9een or
is a9out to 9e made, such =erson6
2. G02D/03,. 9+,1/9/*1 +0. D-/(/03 2- -*>2-7 -*,+(/03 (2 ()* ?-2?*-(.D or
3. Kno>in8l? misre=resents or re-uses to disclose to a recei4er or other =erson
entitled to administer =ro=ert? -or the 9ene-it o- CREDITOR1 the eEistence,
amount or location o- the =ro=ert? or an? other in-ormation >hich he could 9e
le8all? re@uired to -urnish to such administrationD or
4. O&(+/01 +0. 15&1(+0(/+, ?+-( 29 2- /0(*-*1( /0 ()* 7*&(2-H1 *1(+(* D/() /0(*0(
(2 7*9-+57 +0. CREDITOR.
14206. Possession o- altered =ro=ert?D classi-ication
A. A =erson >ho is a dealer in =ro=ert? and recBlessl? =ossesses =ro=ert? the
=ermanent identi-?in8 -eatures o- >hich, includin8 serial num9ers or la9els, ha4e
9een remo4ed or in +0. 9+1)/20 +,(*-*7 is 8uilt? o- a class 6 -elon?.
1420<. Partici=atin8 in or assistin8 a criminal s?ndicateD classi-ication
A. A =erson commits =artici=atin8 in a criminal s?ndicate 9?6
1. 1ntentionall? or8anizin8, mana8in8, directin8, su=er4isin8 or -inancin8 a
criminal s?ndicate >ith the intent to =romote or -urther the criminal o9Jecti4es o-
the s?ndicateD or
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2$
28
3. ;urnishin8 ad4ice or direction in the conduct, -inancin8 or mana8ement o- a
criminal s?ndicateLs a--airs >ith the intent to =romote or -urther the criminal
o9Jecti4es o- a criminal s?ndicateD or
4. 1ntentionall? =romotin8 or -urtherin8 the criminal o9Jecti4es o- a criminal
s?ndicate 9? inducin8 or committin8 an? act or omission 9? a =u9lic ser4ant in
4iolation o- his o--icial dut?D or
14210. ;raudulent schemes and arti-icesD classi-icationD de-inition
A. An? =erson >ho, =ursuant to a scheme or arti-ice to de-raud, Bno>in8l? o9tains
an? 9ene-it 9? means o- -alse or -raudulent =retenses, re=resentations, =romises or
material omissions is 8uilt? o- a class 2 -elon?.
H. *eliance on the =art o- an? =erson shall not 9e a necessar? element o- the
o--ense descri9ed in su9section A o- this section.
14211. ;raudulent schemes and =racticesD >ill-ul concealmentD classi-ication
A. Not>ithstandin8 an? =ro4ision o- the la> to the contrar?, in an? matter related
to the 9usiness conducted 9? an? de=artment or a8enc? o- this state or an? =olitical
su9di4ision thereo-, an? =erson >ho, =ursuant to a scheme or arti-ice to de-raud or
decei4e, Bno>in8l? -alsi-ies, conceals or co4ers u= a material -act 9? an? tricB,
scheme or de4ice or maBes or uses an? 9+,1* D-/(/03 2- 72>5@*0( Bno>in8 such
>ritin8 or document contains an? -alse, -ictitious or -raudulent statement or entr? is
8uilt? o- a class 5 -elon?.
H. ;or the =ur=oses o- this section, Qa8enc?Q includes a =u9lic a8enc? as de-ined
9? section 38#5!2, =ara8ra=h 6.
1421;. +one? launderin8D classi-icationD de-initions
A. A =erson is 8uilt? o- mone? launderin8 in the -irst de8ree i- the =erson does an?
o- the -ollo>in86
1. Kno>in8l? initiates, or8anizes, =lans, -inances, directs, mana8es, su=er4ises or
is in the 9usiness o- mone? launderin8 in 4iolation o- su9section H o- this section.
H. A =erson is 8uilt? o- mone? launderin8 in the second de8ree i- the =erson does
an? o- the -ollo>in86
1. Ac@uires or maintains an interest in, transacts, trans-ers, trans=orts, recei4es or
conceals the eEistence or nature o- racBeteerin8 =roceeds Bno>in8 or ha4in8 reason
to Bno> that the? are the =roceeds o- an o--ense.
2. +aBes =ro=ert? a4aila9le to another 9? transaction, trans=ortation or other>ise
Bno>in8 that it is intended to 9e used to -acilitate racBeteerin8.
3. 5onducts a transaction Bno>in8 or ha4in8 reason to Bno> that the =ro=ert?
in4ol4ed is the =roceeds o- an o--ense and >ith the intent to >20>*+, 2- 7/135/1* the
nature, location, 125->*6 2D0*-1)/? 2- >20(-2, 29 ()* ?-2?*-(. or the intent to
-acilitate racBeteerin8.
4. 1ntentionall? or Bno>in8l? maBes a -alse statement, misre=resentation or -alse
certi-ication or maBes a -alse entr? or omits a material entr? in an? a==lication,
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28
-inancial statement, account record, customer recei=t, re=ort or other document that
is -iled or re@uired to 9e maintained or -iled under title 6, cha=ter 12.
5. 1ntentionall? or Bno>in8l? e4ades or attem=ts to e4ade an? re=ortin8
re@uirement under section 6#1241, >hether 9? structurin8 transactions as descri9ed
in 31 5ode o- ;ederal *e8ulations =art 1!3, 9? causin8 an? -inancial institution,
mone? transmitter, trade or 9usiness to -ail to -ile the re=ort, 9? -ailin8 to -ile a
re@uired re=ort or record or 9? an? other means.
6. 1ntentionall? or Bno>in8l? =ro4ides an? -alse in-ormation or -ails to disclose
in-ormation that causes an? licensee, authorized dele8ate, mone? transmitter, trade
or 9usiness to either6
a" ;ail to -ile an? re=ort or record that is re@uired under section 6#1241.
9" ;ile such a re=ort or record that contains a material omission or misstatement o-
-act.
$. 1ntentionall? or Bno>in8l? -alsi-ies, conceals, co4ers u= or misre=resents or
attem=ts to -alsi-?, conceal, co4er u= or misre=resent the identit? o- an? =erson in
connection >ith an? transaction >ith a -inancial institution or mone? transmitter.
8. 1n connection >ith a transaction >ith a -inancial institution or mone?
transmitter, intentionall? or Bno>in8l? maBes, uses, o--ers or =resents or attem=ts to
maBe, use, o--er or =resent, >hether acce=ted or not, a -or8ed instrument, a
-alsel? altered or com=leted >ritten instrument or a >ritten instrument that contains
an? materiall? -alse =ersonal identi-?in8 in-ormation.
A. 1- the =erson is a mone? transmitter, a =erson en8a8ed in a trade or 9usiness or
an? em=lo?ee o- a mone? transmitter or a =erson en8a8ed in a trade or 9usiness,
intentionall? or Bno>in8l? acce=ts -alse =ersonal identi-?in8 in-ormation -rom an?
=erson or other>ise Bno>in8l? incor=orates -alse =ersonal identi-?in8 in-ormation
into an? re=ort or record that is re@uired 9? section 6#1241.
1!. 1ntentionall? conducts, controls, mana8es, su=er4ises, directs or o>ns all or
=art o- a mone? transmittin8 9usiness -or >hich a license is re@uired 9? title 6,
cha=ter 12 unless the 9usiness is licensed =ursuant to title 6, cha=ter 12 and
com=lies >ith the mone? transmittin8 9usiness re8istration re@uirements under 31
)nited States 5ode section 533!.
5. A =erson is 8uilt? o- mone? launderin8 in the third de8ree i- the =erson
intentionall? or Bno>in8l? does an? o- the -ollo>in86
1. 1n the course o- an? transaction transmittin8 mone?, con-ers or a8rees to con-er
an?thin8 o- 4alue on a mone? transmitter or an? em=lo?ee o- a mone? transmitter
that is intended to in-luence or re>ard an? =erson -or -ailin8 to com=l? >ith an?
re@uirement under title 6, cha=ter 12.
2. ,n8a8es in the 9usiness o- recei4in8 mone? -or transmission or transmittin8
mone?, as an em=lo?ee or other>ise, and recei4es an?thin8 o- 4alue u=on an
a8reement or understandin8 that it is intended to in-luence or 9ene-it the =erson -or
-ailin8 to com=l? >ith an? re@uirement under title 6, cha=ter 12.
2. 1n addition to an? other criminal or ci4il remed?, i- a =erson 4iolates su9section
A or H o- this section as =art o- a =attern o- 4iolations that in4ol4e a total o- one
hundred thousand dollars or more in an? t>el4e month =eriod, the =erson is su9Ject
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to -or-eiture o- su9stitute assets in an amount that is three times the amount that >as
in4ol4ed in the =attern, includin8 conduct that occurred 9e-ore and a-ter the t>el4e
month =eriod.
,. +one? launderin8 in the third de8ree is a class 6 -elon?. +one? launderin8 in
the second de8ree is a class 3 -elon?. +one? launderin8 in the -irst de8ree is a class
2 -elon?.
14220. *esidential mort8a8e -raudD classi-icationD de-initions
A. A =erson commits residential mort8a8e -raud i-, >ith the intent to de-raud, the
=erson does an? o- the -ollo>in86
1. Kno>in8l? maBes an? deli9erate @/11(+(*@*0(6 @/1-*?-*1*0(+(/20 or material
omission durin8 the mort8a8e lendin8 =rocess that is relied on 9? a mort8a8e
lender, &2--2D*- or other =art? to the mort8a8e lendin8 =rocess.
2. Kno>in8l? 51*1 or -acilitates the use o- an? deli9erate @/11(+(*@*0(6
@/1-*?-*1*0(+(/20 or material omission durin8 the mort8a8e lendin8 =rocess that
is relied on 9? a mort8a8e lender, &2--2D*- or other =art? to the mort8a8e lendin8
=rocess.
3. *ecei4es an? =roceeds or other monies in connection >ith a residential
mort8a8e loan that the =erson Bno>s resulted -rom a 4iolation o- =ara8ra=h 1 or 2
o- this su9section.
4. F/,*1 2- >+51*1 (2 &* 9/,*7 D/() ()* 299/>* 29 ()* >250(. -*>2-7*- 29 +0.
>250(. 29 ()/1 1(+(* +0. -*1/7*0(/+, @2-(3+3* ,2+0 72>5@*0( ()+( ()* ?*-120
C02D1 (2 >20(+/0 + 7*,/&*-+(* @/11(+(*@*0(6 @/1-*?-*1*0(+(/20 2- @+(*-/+,
2@/11/20.
H. An o--ense in4ol4in8 residential mort8a8e -raud shall not 9e 9ased solel? on
in-ormation that is la>-ull? disclosed under -ederal disclosure la>s, re8ulations and
inter=retations related to the mort8a8e lendin8 =rocess.
VII. D*9*07+0( CANNOT 51* ()* >209*11/20 29 B573@*0( +1 D-/((*0 /0 ()*
@2-(3+3* 92- +0. ?-2>**7/036 B57/>/+,6 0204B57/>/+,6 +0782- 2()*-D/1*
Arizona la> re@uires the =o>er o- attorne? -or the con-ession o- Jud8ment to 9e
si8ned A;/,* the inde9tedness 9ecame due and =a?a9le. /here-ore, an? clause in the
mort8a8e =ertainin8 to such is 4oid and does not 8i4e *i8ht andGor cause -or 2e-endant to
claim con-ession o- Jud8ment authorit? andGor ri8ht.
A.*.S. R 44#143
3ud8ment 9? con-ession 1)+,, 02( &* *0(*-*7 5?20 + 02(*, 9ond or other
/01(-5@*0( in >ritin8 -or the =a?ment o- mone? under the authorit? o- a =o>er o-
attorne? to con-ess Jud8ment thereon, unless such authorit? is eEecuted and
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acBno>led8ed on a da? su9se@uent to the date on >hich the inde9tedness to 9e
con-essed 9ecame due and =a?a9le.
VIII. D*9*07+0( >+002( >,+/@ res judicata 92- 1(+07/03 9-2@ +0. 7*>/1/20 /0 ()*
0204B57/>/+, ?-2>**7/03 +1 B5-/17/>(/20 29 ()* 0204B57/>/+, ?-2>**7/03 /1 +07
D+1 /0 A5*1(/206 +07 ()*-*92-* D*9*07+0(1 1(+07/03 -*@+/01 /0 A5*1(/20.
Fhereas the non#Judicial =roceedin8 ma? onl? claim Jurisdiction in accordance
>ith a 4alid con-ession o- Jud8ment andGor attorne?<s >arrant, the -act neither the
con-ession o- Jud8ment nor the attorne?<s >arrant >ere 4alid causes the non#Judicial
=roceedin8 to not ha4e Jurisdiction. 2ecision made in an? =roceedin8 that lacB
Jurisdiction are 4oid.
;raudulent statements in an a--ida4it in4alidate said a--ida4it.
;ailure o- a con-ession o- Jud8ment to meet all -i4e 5" elements re@uired
in4alidates said con-ession o- Jud8ment.
II. D*9*07+0(1 51* 29 + N2(+-. P5&,/> D)2 )+1 + J&*0*9/>/+, /0(*-*1(K /0 ()*
?-2>*11 92- ()* 0204B57/>/+, ?-2>**7/03 /1 /0$+,/7
/he Notar? Pu9lic used 9? 2e-endant andGor 2e-endant<s attorne?s has a -inancial
andGor 9usiness interest >ith the 2e-endant andGor 2e-endant<s attorne?s and there-ore
said Notar? Pu9lic<s actions are in 4iolation o- the, inter a!ia, Notar?<s 5ode o- ,thics and
the , inter a!ia, Arizona *e4ised Statutes R 41#328, and accordin8l? the Notar?<s
4eri-ication is -raudulent and thus 4oid.
A*1T(NA N(/A*Y P)HI15 *,;,*,N5, +AN)AI, =a8e 2
Second =ara8ra=h6
/his means, a notar? =u9lic cannot 9e a M=art? to the transactionN or a M=art?
to the instrumentN and the notar? =u9lic cannot ha4e an? -inancial or 9ene-icial
interest in the transaction, no matter ho> small A.*.S. R 41#328H"". A notar?
=u9lic has a -inancial interest in a transaction i- he or she >ill 8ain or lose"
somethin8 o- 4alue in the transaction. A notar? =u9lic has 9ene-icial interest in
a transaction i- the document >ill 9ene-it the notar? in some >a?.
Iast =ara8ra=h6
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M1- a Jurat is =er-ormed, the document si8ner is also re@uired to 4ouch -or the
truth-ulness o- the document.N
A.*.S. R 41#328. Prohi9ited conductD incom=lete documentsD si8natures o-
relati4es
H. A notar? =u9lic is an im=artial >itness and shall not notarize the notar?Ls
o>n si8nature or the si8natures o- an? =erson >ho is related 9? marria8e or
ado=tion.
I. P,+/0(/99 7/1?5(*1 ALL 1/30+(5-*1 &. ALL 2()*- ?+-(/*1 +07 7*@+071
$*-/9/>+(/20 &. ?-/@+ 9+>/* *$/7*0>*6 +99/7+$/(6 +07 0204)*+-1+. (*1(/@20. (2
$+,/7+(* ALL 1/30+(5-*1
/here are numerous instances o- 2e-endants Notar? Pu9lic notarizin8 documents
>ithD incorrect datesD -raudulent si8naturesD attestations done a9sent =arties 9ein8 =resentD
=erJurous statements o- claims o- 9ein8 s>ornD dates that do not correlate to e4entsD etc.
AII documents notarized +)S/ 9e correct or the >hole =rocess itsel- is 4oid and
2e-endant is re@uired 9? la> to =ro4e the =rocess is 4alid once @uestioned.
II. P,+/0(/99 7/1?5(*1 ALL >,+/@1 29 1*-$/>* 29 ?-2>*11 &. D*9*07+0(1 /0 ALL
@+((*-1 >20>*-0/03 ()* 0204B57/>/+, 92-*>,215-* ?-2>*11
/o contest a co8no4it clause on -ederal due#=rocess 8rounds, a Jud8ment de9tor
must =lead s=eci-ic -acts su--icient to su==ort a claim that he or she did not 4oluntaril?,
intelli8entl?, and Bno>in8l? >ai4e the ri8ht to =reJud8ment notice and hearin8. See:
:.<.I.C. ;. "aronian, >@ :.@d 6@6 .>th Cir. %>>67.
1n some states, the =ractice o- eE =arte entr? o- Jud8ment 9? con-ession is in
disre=ute, and notice must 9e 8i4en to the de9tor 9e-ore entr? o- Jud8ment. See: :irst
Mut. Corp. ;. Cra99er&y B Maine, In&., %?6 N.D. Super. =2(, =2@ ".2d 6(* .La8
<i;.%>(*7.
A state statute ma? =ro4ide that a Jud8ment 9? con-ession ma? not 9e entered as a
-inal Jud8ment, e--ecti4e in all res=ects as a Jud8ment a-ter trial, until the =rothonotar?
8i4es >ritten notice to the o9li8or 9? certi-ied mail, return recei=t re@uested, o- an
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o==ortunit? -or Judicial determination as to >hether the o9li8or understandin8l? >ai4ed
the ri8ht to notice and an o==ortunit? to 9e heard =rior to the entr? o- -inal Jud8ment.
See: Cheide9 Corp. ;. :ar9er, ==> ".2d %*6% .<e!. Super. Ct. %>(27.
An? errors in the ser4ice o- =rocess is considered 9? la> a M-atal errorN and the
>hole =rocess is then considered 4oid. A9sent -ull? correct =rocess o- ser4ice 2e-endant
has no authorit? to =roceed >ith a -oreclosure on an? =art? andGor =ro=ert?.
2e-endant is then re@uired 9? la> to cease and desist >ith said -oreclosure =rocess
and ma? onl? 9e8in a8ain once i- and onl? i- Plainti--<s claims are =ro4ed in4alid.
III. P,+/0(/99 7/1?5(*1 ALL >,+/@1 &. D*9*07+0( ()+( ()*-* /1 ANY +@250( 75*
20 ()* @2-(3+3* /0 A5*1(/20 +1 1+/7 @2-(3+3* )+1 &**0 ?+/7 /0 95,,6 7/-*>(,.
+0782- /07/-*>(,.6 &. 20* 2- @2-* 29 ()* 92,,2D/03# C-*7/( D*9+5,( SD+?16
J&+/,25( 95071K6 @2-(3+3* /015-+0>*6 32$*-0@*0( +3*0>/*16 1/30+(5-* 29 ?+-(.6
*(>.
2e-endant did recei4e M9ail outN andGor M/A*PN -unds -rom the 8o4ernment andGor
=ri4ate @uasi#8o4ernment institutions that did in -act M=a?#o--N some or all o- 2e-endants
Mmort8a8esN andGor other -inancial deals.
1t is incum9ent on 2e-endant to =ro4e the mort8a8e in @uestion FAS N(/ =aid#o--
andGor 2e-endant >as enumerated directl? andGor indirectl? -or the mort8a8e in @uestion.
1n -act, a9sent =rima -acie e4idence contro4ertin8 Plainti--<s claim that 2e-endant
>as reim9ursed in some >a? 9? some entit? -or the mort8a8e in @uestion, 2e-endant is
a8reein8 that said mort8a8e is =aid in -ull.
2e-endant +)S/ there-ore =resent -or ins=ection to the Plainti-- a com=lete list
>ith accountin8 o- AII -unds recei4ed correlated to AII mort8a8es =aid and not =aid
9e-ore continuin8 >ith an? -oreclosure attem=t on the =ro=ert? andGor mort8a8e in
@uestion.
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2e-endant<s -ailure to =roduce -or ins=ection said accountin8 documents is
2e-endant<s a8reement that the mort8a8e in @uestion is =aid in -ull. /here is no la>
dictatin8 >ho is re@uired to =a? -or a mort8a8e -or it to 9e considered =aid in -ull.
1n -act, Plainti-- 9elie4es the mort8a8e >as and is =aid in -ull and 2e-endant is
attem=tin8 to -raudulentl? con4ert real =ro=ert? throu8h a cons=irac? in4ol4in8 numerous
=arties unBno>n to Plainti--.
IIII. P,+/0(/99 7/1?5(*1 +07 )*-*&. -*&5(1 +0. +07 +,, 1(+(*@*0(1 /0 +0. +07 +,,
A99/7+$/(1 15&@/((*7 &. D*9*07+0( +0782- D*9*07+0(1 +3*0(1
22#21A. 5on-ession o- Jud8ment >ithout issuance or ser4ice o- =rocess
A. A =art? ma? a==ear in =erson or 9? an a8ent or attorne? 9e-ore a Justice
o- the =eace >ithout issuance or ser4ice o- =rocess and con-ess Jud8ment
-or an amount >ithin the Jurisdiction o- the Justice o- the =eace, and such
Jud8ment shall 9e entered thereon u=on the -ilin8 9? Plainti--, his a8ent or
attorne? o- an a--ida4it o- the Justness o- Plainti--Ls claim.
H. Fhere the Jud8ment is con-essed 9? an a8ent or attorne?, the >arrant o-
a8ent or attorne? authorizin8 the con-ession shall 9e -iled >ith the Justice
and noted in the docBet.
IIV. L*3+, 7*9/0/(/201 ,+.@*0 @+. 02( &* ?-*15@*7 (2 C02D +0782- 507*-1(+07
2e-initions a Mla?menN >ould not liBel? understand and >ould re@uire a HA*
licensed attorne? to de-ine and eE=lain 9e-ore a Mla?menN ma? 9e considered MBno>in8l?,
understandin8, and >ill-ull?N a8reein8 to numerous le8al de-initions that (NIY com=etent
counsel >ould 9e -amiliar >ith. A9sent 2e-endant =ro4in8 Plainti-- had Bno>led8e o- the
-ollo>in8 terms, 2e-endant cannot la>-ull? claim Plainti-- Bno>in8l?, intelli8entl?, and
>ill-ull? a8reed to an? mort8a8e containin8 said terms andGor conce=ts.
",+>C1 L+D D/>(/20+-. 6
()
E7/(/20#
Cognovit judgment. See 5o8no4it Jud8mentD a!so, Confession Of Eud-9ent, e!o8.
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Confession of judgment. At common la>, Jud8ment entered >here 2e-endant, instead o-
enterin8 =lea, con-essed action, or >ithdre> =lea and con-essed action.
3ud8ment >here a 2e-endant 8i4es the Plainti-- a co8no4it or >ritten con-ession o- the
action 9? 4irtue o- >hich the Plainti-- enters Jud8ment. /he act o- a de9tor in =ermittin8
Jud8ment to 9e entered a8ainst him 9? his creditor, -or a sti=ulated sum, 9? a >ritten
statement to that e--ect or 9? >arrant o- attorne?, >ithout the institution o- le8al
=roceedin8s o- an? BindD 4oluntar? su9mission to courtLs Jurisdiction. (L0ara 4. +anle?,
14! Pa.Su=er. 3A, 12 A.2d 82!, 822. Such a8reements -or con-ession o- Jud8ment are 4oid
in man? statesD e.-. +ass.O.I. c. 231, R 13A.
/he ne8otia9ilit? o- an instrument is not a--ected 9? a term authorizin8 a con-ession o-
Jud8ment i- the instrument is not =aid >hen due. ).5.5. R 3#112. See a!so 5o8no4it
Jud8ment.
Cognovit judgment. 5on-ession o- Jud8ment 9? de9tor. Fritten authorit? o- de9tor and
his direction -or entr? o- Jud8ment a8ainst him in the e4ent he shall de-ault in =a?ment.
Such =ro4ision in a de9t instrument or a8reement =ermits the creditor or his attorne? on
de-ault to a==ear in court and con-ers Jud8ment a8ainst the de9tor. Such a8reements are
=rohi9ited, or 8reatl? restricted, in man? statesD thou8h, >here =ermitted, the
constitutionalit? o- such has 9een u=held. 2. 0. (4erm?er 5o., 1nc. 4. ;ricB 5o., 4!5 ).S.
1$4, A2 S.5t. $$5, 31 I.,d.2d 124. See 5o8no4it noteD 3ud8ment .Confession of
Eud-9ent7.
Cognovit note. An eEtraordinar? note >hich authorizes an attorne? to con-ess Jud8ment
a8ainst =erson or =ersons si8nin8 it. 1t is >ritten authorit? o- a de9tor and a direction 9?
him -or entr? o- a Jud8ment a8ainst him i- o9li8ation set -orth in note is not =aid >hen
due. Such Jud8ment ma? 9e taBen 9? an? =erson holdin8 the note, >hich cuts o-- e4er?
de-ense >hich maBer o- note ma? other>ise ha4e and it liBe>ise cuts o-- all ri8hts o-
a==eal -rom an? Jud8ment taBen on it. 3ones 4. 3ohn 0ancocB +ut. Ii-e 1ns. 5o.,
2.5.+ich., 28A ;.Su==. A3!, >@). See 5o8no4it Jud8mentD 3ud8ment .Confession of
Eud-9ent7.
Warrant of attorney. An instrument in >ritin8, addressed to one or more attorne?s therein
named, authorizin8 them, 8enerall?, to a==ear in an? court, or in some s=eci-ied court, on
9ehal- o- the =erson 8i4in8 it, and to con-ess Jud8ment in -a4or o- some =articular =erson
therein named, in an action o- de9t. 1t usuall? contains a sti=ulation not to 9rin8 an?
action, or an? >rit o- error, or -ile a 9ill in e@uit?, so as to dela? himD such >ritin8 usuall?
9ein8 8i4en as securit? -or o9li8ation on >hich Jud8ment >as authorized, and in such
=rocedure ser4ice o- =rocess is not essential. See 3ud8ment .Confession of Dud-9ent7.
Seisin. Possession o- real =ro=ert? under claim o- -reehold estate. /he com=letion o- the
-eudal in4estiture, 9? >hich the tenant >as admitted into the -eud, and =er-ormed the
ri8hts o- homa8e and -ealt?. Possession >ith an intent on the =art o- him >ho holds it to
claim a -reehold interest. *i8ht to immediate =ossession accordin8 to the nature o- the
estate. Filliams 4. S>an8o, 365 1lI 54A, $ N.,.2d 3!6, 3!A.
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Actual seisin. Possession o- the -reehold 9? the =edis =ositio o- oneLs sel- or oneLs tenant
or a8ent, or 9? construction o- la>, as in the case o- a state 8rant or a con4e?ance under the
statutes o- uses, or =ro9a9l?" o- 8rant or de4ise >here there is no actual ad4erse
=ossessionD it means actual =ossession as distin8uished -rom constructi4e =ossession or
=ossession in la>.
Constructive seisin. Seisin in la> >here there is no seisin in -actD as >here the state issues
a =atent to a =erson >ho ne4er taBes an? sort o- =ossession o- the lands 8ranted, he has
constructi4e seisin o- all the land in his 8rant, thou8h another =erson is at the time in actual
=ossession.
Equitable seisin. A seisin >hich is analo8ous to le8al seisinD that is, seisin o- an e@uita9le
estate in land. /hus a mort8a8or is said to ha4e e@uita9le seisin o- the land 9? recei=t o-
the rents.
Seisin in deed. Actual =ossession o- the -reeholdD the same as actual seisin or seisin in
-act. *oetzel 4. Heal, 1A6 ArB. 5, 116 S.F.2d 5A1, 5A3.
Seisin in law. A ri8ht o- immediate =ossession accordin8 to the nature o- the estate. As
the old doctrine o- cor=oreal in4estiture is no lon8er in -orce, the deli4er? o- a deed 8i4es
seisin in la>.
Seized. A =erson is QseizedQ >ithin ;ourth Amendment >hen =olice o--icer restrains
=ersonLs -reedom to >alB a>a?. State 4. (choa, 112 Ariz. 582, 544 P.2d 1!A$, 1!AA. 1t
eEists >hen reasona9le =erson >ould -eel that he >as not -ree to lea4e. ).S. 4. Al9ert,
5.A.N.5., 816 ;.2d A58, A6!. See Seizure. /he status o- le8all? o>nin8 and =ossessin8
real estate. See Seisin.
Seizure. /he act o- taBin8 =ossession o- =ro=ert?, e.8., -or a 4iolation o- la> or 9? 4irtue
o- an eEecution o- a Jud8ment. /erm im=lies a taBin8 or remo4al o- somethin8 -rom the
=ossession, actual or constructi4e, o- another =erson or =ersons. +olina4. State, 53 Fis.2d
662, 1A3 N.F.2d 8$4, 8$$.
A QseizureQ o- =ro=ert? under ;ourth Amendment" occurs >hen there is some meanin8-ul
inter-erence >ith an indi4idualLs =ossessor? interest in that =ro=ert?. ).S. 4. 3aco9sen,
).S.+inn., 466 ).S. 1!A, 1!4 S.5t. 1652, 1656, 8! I.,d.2d 85.
arol. A >ordD s=eechD hence, oral or 4er9al. ,E=ressed or e4idenced 9? s=eech onl?D as
o==osed to 9e >ritin8 or 9? sealed instrument.
arol contract. An oral contract as distin8uished -rom a >ritten or -ormal contract.
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!nderstand. /o Bno>D to a==rehend the meanin8D to a==reciateD as, to understand the
nature and e--ect o- an act. 1nternational#Oreat Northern *. 5o. 4. Pence, /eE. 5i4.A==.,
113 S.F.2d 2!6, 21!. /o ha4e a -ull and clear Bno>led8e o-D to com=rehend. /hus, to
in4alidate a deed on the 8round that the 8rantor did not understand the nature o- the act,
the 8rantor must 9e inca=a9le o- com=rehendin8 that the e--ect o- the act >ould di4est him
o- the title to the land set -orth in the deed. As used in connection >ith the eEecution o-
>ills and other instruments, the term includes the realization o- the =ractical e--ects and
conse@uences o- the =ro=osed act. See 5a=acit?.
Ca"able. Susce=ti9leD com=etentD @uali-iedD -ittin8D =ossessin8 le8al =o>er or ca=acit?.
A9le, -it or ada=ted -or. See 5a=acit?.
Ca"acity. Ie8al @uali-ication .i.e. le8al a8e", com=etenc?, =o>er or -itness. +ental a9ilit?
to understand the nature and e--ects o- oneLs a&ts.
IV. D/1>511/20 29 >209*11/20 29 B573@*0( >,+51* +1 /( ?*-(+/01 (2 ()* @2-(3+3* /0
A5*1(/20 +07 ()* 51* 29 15>) /0 ()* 0204B57/>/+, 92-*>,215-* 29 P,+/0(/991 R*+,
P-2?*-(.
2e-endant is attem=tin8 to non#Judiciall? -oreclose on real =ro=ert? in accordance
>ith the =resum=tion the Mcon-ession o- Jud8mentN conce=t herea-ter co8no4it clause" in
the mort8a8eGdeed o- trust herea-ter mort8a8e" is and >as 4alid. 1t is a -unctional
im=ossi9ilit? -or a co8no4it clause to 9e 4alid in the State o- Arizona =ursuant to stare
de&isis a==lica9le to mort8a8e document si8nin8 unless an attorne? re=resented Plainti--
throu8hout the ne8otiations o- the mort8a8e.
2e-endant is -ull? a>are Plainti-- >as N(/ re=resented 9? a HA* licensed attorne?
at an? =oint durin8 the mort8a8e andGor =urchase =rocess that lead to the mort8a8e 9ein8
a8reed u=on 9? either =art?. As such, the mort8a8e is 4oid a initio, not Just 4oida9le, 9ut
4oid and in -act did ne4er la>-ull? eEist =ursuant to Arizona la>.
1t is no> incum9ent on 2e-endant andGor 2e-endant<s attorne? to claim as their
de-ense in this matter 9e-ore =roceedin8 >ith an? other de-ense, that Plainti-- >as not
re@uired nor entitled to com=etent counsel durin8 the mort8a8e ne8otiations and si8nin8,
in contradiction to the stare de&isis =ertainin8 to co8no4it clauses in an? and all contracts
andGor mort8a8es.
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24
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2$
28
Accordin8l?, 2e-endant must there-ore esta9lish an ar8ument a8ainst la> and set
ne> =recedent in 4iolation o-, inter a!ia, A.*.54.P. *ule 11a"6
MUU.it is >ell 8rounded in -act and is >arranted 9? eEistin8 la> or a 8ood
-aith ar8ument -or the eEtension, modi-ication, or -*$*-1+, 29 *E/1(/03 ,+DD
and that it is not inter=osed -or an? im=ro=er =ur=ose, such as to harass or to
>+51* 500*>*11+-. 7*,+. 2- 0**7,*11 /0>-*+1* /0 ()* >21( 29 ,/(/3+(/20.N
E9phasis added"
American 3uris=rudence, Second ,dition, 3ud8ments
1.. Particular Kinds o- 3ud8ments, 2. 3ud8ment 9? 5on-ession, 6. Practice and
Procedure /o=ic Summar? 5orrelation /a9le *e-erences
R 23!. Notice and hearin8, FestLs Ke? Num9er 2i8est, ;ederal 5i4il Procedure
23A6, FestLs Ke? Num9er 2i8est, 3ud8ment 2A to $!
See: 2. 0. (4erm?er 5o. 1nc., o- (hio 4. ;ricB 5o., 4!5 ).S. 1$4, A2 S. 5t. $$5, 31
I. ,d. 2d 124
MA maBer o- a con-ession o- Jud8ment 4oluntaril?, intelli8entl?, and Bno>in8l?
>ai4es due#=rocess ri8hts it other>ise =ossesses to =reJud8ment notice and hearin8,
and does so >ith -ull a>areness o- the le8al conse@uences, >hen6
1" the co8no4it does not in4ol4e une@ual 9ar8ainin8 =o>er or o4erreachin8D
2" the a8reement is not a contract o- adhesionD
3" the co8no4it =ro4ision is o9tained -or ade@uate considerationD
4" the co8no4it is a =roduct o- ne8otiations carried on 9? =arties >ith the ad4ice o-
com=etent counselD and
5" the maBer, des=ite co8no4it, is not de-enseless under state la>.N
Plainti-- here9? claims all -i4e 5" elements re@uired -or a co8no4it clause to 9e
4alid in Arizona ha4e 9een =ur=osel? 4iolated 9? 2e-endant to de=ri4e Plainti-- o-
Plainti--<s 5i4il *i8hts under color o- state la>.
V*-/9/*7 *E?,+0+(/20 29 ()* 9/$* %:' *,*@*0(1 29 >2302$/(6
+1 ()*. ?*-(+/0 (2 ()/1 /01(+0( @+((*-6 +07 +1 15>)6
?-/@+ 9+>/* *$/7*0>* ()* 9/$* %:' *,*@*0(1 29 >2302$/( )+$* 02( &**0 @*(
1" 2e-endant had an une@ual 9ar8ainin8 =o>er and 2e-endant >as o4erreachin8 9?6
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1$
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2$
28
i" Plainti-- is a la?men and as such did not ha4e the re@uisite Bno>led8e to
disco4er 2e-endant<s numerous acts o- concealment andGor -raud concernin8 the Mle8al
de-initionsN o- >ords andGor lan8ua8e used in the mort8a8e documentD
ii" 2e-endant is -amiliar >ith the Mle8al de-initionsN o- the >ords andGor lan8ua8e
o- the mort8a8e and =ur=osel?, >ith malicious intent, con-used Plainti-- and mis#
re=resented the meanin8s o- numerous >ords andGor the -unctionalit? o- the lan8ua8e in
the mort8a8e documents"D
iii" 2e-endant >as o4erreachin8 the =otential o- Plainti-- o- understandin8 the
mort8a8e and the >ords andGor lan8ua8e used in the mort8a8e as said >as mort8a8e >as
o94iousl? desi8ned and >ritten in such a >a? to =ur=osel? con-use la?menD
2" /he mort8a8e is >ithout contro4ers? an adhesion contract as 2e-endant o=enl? re-uses
to allo> ANY chan8e to the mort8a8e documents.
See: 5u9ic 5or=. 4. +art?, 4 2ist. 185., 5.A.3d. 438, 22A 5al. *=tr 828, 833D
Standard (il 5o. o- 5ali-. 4. PerBins, 5.A.(r., 34$, ;.2d 3$A, 383 M2istincti4e
-eature o- adhesion contract is that >eaBer =art? has no realistic choice as to its
terms.N
3" /here can 9e no ade@uate consideration >hen nothin8 is 8i4en -or somethin8.
2e-endant re@uired Plainti-- to unBno>in8l? 8i4e u= Plainti--<s *i8ht to 2ue Process ?et
2e-endant 8a4e a9solutel? nothin8 in return -or Plainti--<s *i8ht.
HlacB<s SiEth ,dition, =a8e 3A6 Such as is e@ual, or reasona9l? =ro=ortioned, to the
4alue -or that >hich it is 8i4en.
See: Nissen 4. +iller, 44 N.+. 48$, 1!5 P.2d. 324, 326 M,@ual to some 8i4en
occasion or >orB.N
See a!so6 /o>n o- Finchester 4. 5oE, 12A 5onn. 1!6, 26 A2.d 5A2, 5A$ MSuch onl?
as =uts inJured =art? in as 8ood condition as he >ould ha4e 9een i- inJur? i- inJur?
had not 9een in-licted.N
4" M5om=etent counselN as used >hen re-errin8 to contract ne8otiations in Arizona
5AN (NIY mean a HA* licensed attorne?. A.*.5i4.P., inter a!ia, *ule 6 deals >ith
Mduties o- counselN and accordin8l? (NIY re-erences and a==lies to HA* licensed
attorne?s. 2e-endant has no 9ases and no 8rounds to claim Mcom=etent counselN can mean
an?thin8 other than a HA* licensed attorne?. 1-, in -act and on the record, 2e-endant<s
26
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2$
28
attorne? e4en attem=ts to claim in this matter that Mcom=etent counselN can mean
somethin8 other than a HA* licensed attorne? then this court shall immediatel? re=ort
2e-endant to the A*1T(NA HA* -or his -raudulent e--ort and 4iolation o- his contract
>ith the A*1T(NA HA*.
/he courts in Arizona ha4e made numerous decisions relatin8 to Mcom=etent
counselN >hen re-errin8 to contracts and all o- such state une@ui4ocall? that said counsel
+)S/ 9e, and ma? (NIY 9e, a licensed attorne?.
T)* 92,,2D/03 /115* /1 +&12,5(*,. /0>20(-2$*-(/&,* 507*- A-/F20+ L+D#
ANY MORTGAGE THAT IS NOT A PRODUCT OF NEGOTIATIONS
CONDUCTED "Y A COMPETENT "AR LICENSED ATTORNEYS IS
VOID A# $%$&$' AND CANNOT "E ENFORCED IN ANY JUDICIAL
AND8OR NON4JUDICIAL PROCEEDING IN ARIZONA.
I0 9+>(6 /9 D*9*07+0( /1 02( D/,,/03 (2 >,+/@ 92- ()* -*>2-7 ()+( P,+/0(/99 D+1 02(
-*A5/-*7 (2 )+$* +7$/>* 29 >2501*, 92- ()* @2-(3+3* /0 A5*1(/20 (2 &* $+,/76 ()*0
D*9*07+0( )+1 +3-**7 ()+( ()* @2-(3+3* /0 A5*1(/20 /1 $2/7.
A,126 /0 9+>(6 /9 D*9*07+0( 72*1 +3-** ()+( P,+/0(/99 D+1 -*A5/-*7 (2 )+$* +7$/>*
29 >2501*, 92- ()* @2-(3+3* (2 &* $+,/76 .*( D*9*07+0( /1 D*,, +D+-* ()+( P,+/0(/99 7/7
02( )+$* +7$/>* 29 >2501*,6 ()*0 D*9*07+0( /1 ()*-*&. >209*11/03 (2 ()* >-/@* 29
&+--+(-. /9 D*9*07+0( 72*1 02( +3-** (2 + 15@@+-. B573@*0( /0 9+$2- 29 P,+/0(/99.
5" 2e-endant<s attem=t at non#Judicial -oreclosure, and there-ore his de-ense, is 9ased
solel? u=on the claim that Plainti-- is de-enseless under state la> due to the Mcon-ession o-
Jud8mentN clause in the mort8a8e.
1t is >ell esta9lished that court is ad4ersarial in nature, ?et contracts are a8reements
9et>een =arties to =re4ent dis=utes. Accordin8l?, rules -or s=eci-ic contractual a8reements
such as mort8a8es ha4e 9een decided 9? =recedent to =re4ent =arties -rom usin8 the court
to taBe ad4anta8e o- >eaBer =arties. /he le8alit? o- a non#Judicial -oreclosure is not the
issue 9e-ore this court. +ore correctl? stated the re@uirement o- con-ession o- Jud8mentN
2$
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$
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1$
18
1A
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21
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25
26
2$
28
is the =rimar? contro4ers? this court must determine. /he determination o- the 4alidit? o-
Mcon-ession o- Jud8mentN must rel? on the stare de&isis as =re4iousl? stated.
Plainti-- here9? states and claims as an o--er o- =roo- in this matter, it is not
la>-ull? =ossi9le -or this court to determine the mort8a8e in @uestion is 4alid unless this
court determines that6
1. 2e-endant and Plainti-- had e@ual 9ar8ainin8 =o>er and 2e-endant re@uest in the
mort8a8e >ere not o4erreachin8D
2. Plainti-- could ha4e altered the terms and conditions o- the mort8a8e and the 2e-endant
>ould ha4e still consummated the dealD
3. Plainti-- >as ade@uatel? com=ensated -or his loss and that Plainti-- understood he >as
4oluntaril?, Bno>in8l?, and intelli8entl? a8reein8 to said lossD
4. Plainti-- >as ad4ised 9? a HA* licensed throu8h out the mort8a8e =rocessD
5. Plainti-- has a de-ense a8ainst the co8no4it clause 9ased in la> irres=ecti4e o-
2e-endant<s claims.
A9sent a conclusion 9ased in -act and Arizona la> that all -i4e 5" elements o- a
co8no4it clause ha4e 9een met, then this court ma? onl? determine that the mort8a8e in
@uestion is .(12 a initio and that Plainti-- is the true la>-ul o>ner o- the real =ro=ert? in
@uestion.
IVI. VERIFIED STATEMENTS OF FACTS AND
ALLEGATIONS "ASED ON VERIFIED FACTS
Plainti--, a4ers that, =rior to, durin8 and u= to recent e4ent, Plainti-- had no
Bno>led8e >hatsoe4er as to =articular terms contained >ithin the 2eed o- /rust, >hich,
Plainti-- learned much later, contained, inter a!ia, a small and some>hat hidden andGor
dis8uised =ro4ision, Bno>n as a Po>er o- Sale 5lause that, Plainti-- no> -inds 2e-endant
>anton to, indi4iduall? and se4erall? in4oBe, in order to literall? con-iscate Plainti--<s
=ro=ert? >ithout due =rocess.
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2$
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Fhereas, normall?, at minimum, each =a8e o- an im=ortant li-e#alterin8"
document, such as a 2eed o- /rust, >ould re@uire initialin8 o- the =art? eEecutin8 it, as to
si8ni-? the o9li8or<s acBno>led8ement thereo-". 2e-endants -urthered their concealment
9? not onl? directin8 Plainti-- a>a? -rom certain termsGclauses and aliBe, 9ut are >holl?
>ithout e4idence 4ia initialin8 o- these termsGclauses, that >ould ha4e other>ise alerted
Plainti-- to the eEtent o- >hat ri8hts >ere trul? 9ein8 a9ro8ated.
Plainti-- 9elie4es and there-ore a4ers, that 2e-endants >ill-ull? and intentionall?
concealed the a-oresaid 5lauses, and an? irre4oca9ilit? therea-ter im=arted to the sole
detriment o- Plainti--, includin8, 9ut not limited to, the =reclusion to commence an? action
in de-ense o- Plainti--<s ri8hts, -or the eE=ressed =ur=ose o- de=ri4in8 an other>ise
unBno>in8 Plainti-- o- -undamental ri8hts to 2ue Process, 9? nothin8 less than des=ica9le
and clearl? unconsciona9le means.
;ederal @uestions o- constitutionalit? arise -rom the conduct and nature o-
2e-endants< actions, 9oth indi4iduall? and collecti4el?, inso-ar as to the inherent ri8hts
that ma? 9e other>ise enJo?ed 9? Plainti--, as insured under the ;i-th and ;ourteenth
Amendments to the )nited States 5onstitutionD and, as to certain statutoril? clothed
tetherin8s u=on ones ri8htsD =articularl?, a Po>er o- Sale clause, and the irre4oca9le means
9? >hich it attaches, in de-iance o- the Su=remac? 5lause o- the )nited States
5onstitution.
/he ;ourteenth Amendment to the )nited States 5onstitution reads, in =ertinent
=art MAll =ersons 9orn or naturalized in the )nited States, and su9Ject to the Jurisdiction
thereo-, are citizens o- the )nited States and o- the State >herein the? reside. No State
shall maBe or en-orce an? la> >hich shall a9rid8e the =ri4ile8es or immunities o- citizens
o- the )nited StatesD nor shall an? State de=ri4e an? =erson o- li-e, li9ert?, or =ro=ert?,
>ithout due =rocess o- la>D nor den? to an? =erson >ithin its Jurisdiction the e@ual
=rotection o- the la>s.N
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Plainti-- states that Amendment . o- the 5onstitution o- the )nited States =ro4ides the
same ans>er 9ein8 raised 9? the Plainti-- that6 LN2 ?*-120 1)+,, &* 7*?-/$*7 29 ,/9*6
,/&*-(.6 2- ?-2?*-(. D/()25( 75* ?-2>*11 29 ,+D.K A 1/@/,+- ?-2$/1/20 *E/1(1 /0 +,, ()*
1(+(* >201(/(5(/20; ()* ?)-+1*1 LD5* C25-1* 29 L+DL6 +07 ()* LL+D 29 ()* L+07L +-*
12@*(/@*1 51*7; &5( +,, ()-** 29 ()*1* ?)-+1*1 )+$* ()* 1+@* @*+0/03 +07 ()+(
+??,/*1 >2092-@/(. D/() ()* +0>/*0( +07 >51(2@+-. ,+D1 29 ()* E03,/1) ?*2?,* 2- ,+D1
/07/>+(*7 &. ?+-,/+@*0(. <a;idson ;. Ne8 Or!eans >6 5.S. >?, 2=, L Ed 6%6.
/he Su=remac? 5lause o- the )nited States 5onstitution, Article .1, =ara8ra=h 2,
mandates that State Jud8es, re8ardless o- state constitutional considerations, and la>s
enacted to the contrar?, 9? e--ectuatin8 the united States 5onstitution and its amendments
as 9ein8 the Msu=reme la> o- the landN.
/he Su=remac? 5lause reads in =ertinent =art, M /his 5onstitution and the Ia>s o-
the )nited States in Pursuance thereo-D and all treaties made or >hich shall 9e made, under
the Authorit? o- the )nited States, shall 9e the su=reme Ia> o- the IandD and the 3ud8es
in e4er? state shall 9e 9ound there9?, an? /hin8 in the 5onstitution or the Ia>s o- an?
State to the contrar? not>ithstandin8.N
/he 2ue Process 5lause o- the )nited States 5onstitution re@uires Mtimel?
indi4idual noticeU, 9e-ore their =ro=ert? can 9e ad4ersel? a--ectedN. See Fo!0s8a-en8er0
"0tien-esa!!s&haft ;. S&h!un0, =(6 5.S. 6>=,?*? .%>((7
Plainti-- >as unBno>in8l?" de=ri4ed o- 2ue Process and other" ri8hts, as
8uaranteed under the ;ourteenth Amendment o- the )nited States 5onstitution and, the
Arizona State 5onstitutionD as, 2e-endants<, in the -irst instance, throu8h unconsciona9le
means, caused to 9e eEecuted a certain 2eed o- /rust, >hich, unBno>n, nor other>ise
eE=lained to Plainti--, lacBed the =ro=er MNoticeN, ha4in8 su9stituted in lieu o-, an o9scure
andGor as ?et detected =ro4ision -or the un-ettered =o>er o- sale o- Plainti--<s =ro=ert?.
Notice is a 2ue Process issue, that in the a9sence thereo-, constitutes the a9ro8ation
o- Plainti--<s su9stanti4e and =rocedural due =rocess ri8hts as a--orded under the F/9()
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2$
28
%:
()
' and F25-(**0() %14
()
' A@*07@*0(1, 8uaranteed Plainti-- 9? the U0/(*7 S(+(*1
C201(/(5(/20.
Mu!!ane ;. Centra! #ano;er /an0 B Trust Co., @@> 5.S. @*6 .%>)*7 Q"n e!e9enta!
and funda9enta! reGuire9ent of due pro&ess in any pro&eedin- 8hi&h is to e a&&orded
fina!ity is noti&e reasona!y &a!&u!ated, under a!! the &ir&u9stan&es, to apprise interested
parties of the penden&y of the a&tion and to afford the9 an opportunity to present their
oEe&tions.Q"
/he 5onstitution o- the )nited States and Arizona maBes it ille8al -or an? one to
taBe =ro=ert? >ithout Just com=ensation and 9? this amendment 5
th
" there can 9e no
=roceedin8 a8ainst li-e, li9ert?, or =ro=ert? >hich ma? result in the o9ser4ance o- those
8eneral rules esta9lished in our s?stem o- 3uris=rudence -or the securit? o- =ri4ate ri8hts
>hich 8uarantees to each citizen the e@ual =rotection o- the la>s and =rohi9its a denial
thereo- 9? an? ;ederal o--icial.Q .See ri-hts7 /o!!in- ;. Sharpe, @2? 5.S. =>?. 5.S. ;s
Hu8II;a .<C+C"L7 )6: Supp. ?%6.
/he terms Qdue =rocess o- la>Q and Mnatural ri8htsN as used in the ;ederal
5onstitution andGor the 2eclaration o- 1nde=endence, ha4e 9een re=eatedl? declared to 9e
the eEact e@ui4alent o- the =hrase Qla> o- the landQ as used in the Ma-na Charta. %6 "9.
Dur. 2d )=?3
Plainti-- here9? incor=orates =ara8ra=hs one 1" throu8h thirt?#nine 3A" as i- the?
are set -orth at len8th herein.
)=on in-ormation and 9elie- o- Plainti--, a =o>er o- sale clause, >hether e4idenced
or not, >ithin a 2eed o- /rust, is aBin in =er-ormance to a co8no4it note andGor con-ession
o- Jud8ment, ho>e4er, it o=erates -ar more insidiousl?D as, it s=eci-icall? ro9s the
unBno>in8" maBer o- certain or other>ise assured ri8hts and remedies, includin8, 9ut not
limited to 2ue Process, and redress 9? a==eal, >hile >holl? e4adin8 the re@uisite -orm
and manner o-" noticin8 as encum9erin8 co8no4its or con-essions.
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)=on in-ormation and 9elie- o- Plainti--, the hidden =o>er o- sale clause, >hich in
e--ect, creates a co8no4it noteGcon-ession o- Jud8ment, as irre4oca9l? 8ranted in a 2eed o-
/rust, does Just thatD it creates conditions that are in 4iolation o- the Arizona 5onstitution.
F0A/ 1S A 5(ON(.1/ N(/,: A co8no4it note is not an ordinar? note. 1t is
indeed an eEtraordinar? note, >hich, authorizes an attorne? to con-ess Jud8ment a8ainst
the =erson or =ersons si8nin8 it. 1t is >ritten authorit? o- the de9tor and a direction 9?
them -or the entr? o- a Jud8ment a8ainst de9tor, i- the o9li8ation set -orth in the note is not
=aid >hen due.
Such a Jud8ment o- con-ession" ma? 9e taBen 9? an? =erson or an? com=an?
holdin8 the note, onl? i- s=eci-icall? and dili8entl? =ointed out and discussed as to the
le8al rami-ications in so doin8, -or it cuts o-- e4er? de-ense >hich the maBer o- the note
mi8ht other>ise =ossess. 1t liBe>ise cuts o-- all ri8hts o- a==eal -rom an? Jud8ment taBen
on it.
Accordin8 to /he )nited States Su=reme 5ourt, Ma co8no4it note is the ancient
le8al de4ice 9? >hich the de9tor consents in ad4ance to the holder<s o9tainin8 a Jud8ment
>ithout notice or hearin8, and =ossi9l? e4en >ith the a==earance, on the de9tor<s 9ehal-,
o- an attorne? desi8nated 9? the de9torN.
3ustice HlacBmun, eE=ressin8 the unanimous 4ie> o- the court in O;er9yer ;.
:ri&0, =*) 5.S. %?=, >2 S.Ct. ??), L.Ed.2d %2= .%>?27, stated the criteria -or esta9lishin8
constitutionalit? o- a 5o8no4it Note is not determine u=on the theor? o- the note &5( ()*
@*()27 51*7 &. &2() ?+-(/*1 (2 +992-7 *+>) 2()*- 75* ?-2>*11 =rotection a--orded 9?
the ;ourteenth Amendment. .E9phasis added7
3ustice HlacBmun stated, MUCiPt >as held that 1" a co8no4it clause >as not, =er
se, 4iolati4e o- the ;ourteenth Amendment due =rocess re@uirements as to =reJud8ment
notice and hearin8, and 2" under the -acts in the instant case, O;er9ye-" due =rocess >as
not 4iolated 9? the entr? o- the con-essed Jud8ment, since the record esta9lished that ()*
7*&(2- )+7 C02D/03,. +07 $2,50(+-/,. D+/$*7 /(1 -/3)(1 (2 02(/>* +07 )*+-/036 D/()
32
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$
8
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11
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1$
18
1A
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21
22
23
24
25
26
2$
28
95,, +D+-*0*11 29 ()* ,*3+, >201*A5*0>*1, 9? eEecutin8 the co8no4it note, >hich >as
15??2-(*7 &. >201/7*-+(/20 -rom the creditor, and >hich had resulted 9-2@ 0*32(/+(/201
&*(D**0 ()* ?+-(/*1 29 *A5+, &+-3+/0/03 ?2D*-,UN $d .E9phasis added7
3ustice 2ou8las, Joined 9? 3ustice +arshall concurrin8, stated, in e--ect that, 1"
()* -*>2-7 @51( *1(+&,/1) ()+( + >,*+- +07 50@/1(+C+&,*6 $2,50(+-/,. +07 /0(*,,/3*0(,.
$+,/7 D+/$*- 29 ()* 7*&(2-1 >201(/(5(/20+, -/3)(1, 2"U a trial Jud8e >as re@uired to
4acate a Jud8ment o9tained throu8h a co8no4it clause >hen =resented su--icient e4idence
o- an a--irmati4e de-ense to =ose a Jur? @uestion, a =re=onderance o- e4idence 9urden not
9ein8 im=osed, and 3" the =re=onderance o- the e4idence in the =resent" case does not
su==ort e4en a conclusionar? -indin8 that Plainti-- >as e4en a>are o- the eEistence o- an?
co8no4it note, let alone intentionall?, deli9eratel?, Bno>in8l? and intelli8entl? >ai4e due
=rocess ri8hts.
3ustice 2ou8las, -urther o9ser4ed, M2e9tors recei4e the 9ene-it o- credit at a lo>er
rate o- interest than the? >ould recei4e i- the? did not 8i4e the creditor the ri8ht to con-ess
Jud8ment a8ainst them. Ne4ertheless, ()* -/3)( (2 &* )*+-7 /0 >25-( /1 >*0(-+, (2 25-
1.1(*@ 29 B51(/>*6 +076 +1 D/() 2()*- >201(/(5(/20+, -/3)(16 ()*-* /1 02 ?-*15@?(/20 29
D+/$*-.N O;er9yer, =*), 5.S. %?=, @% L. 2d %2=, >2S.Ct. ??) .%>?27 and its &o9panion
&ase, S8ar ;. Lenno2, =*) 5.S. %>%, @% L. ed.2d %@(, >2 S.Ct. ?6? .%>?27 and at %(6,
%((. .E9phasis added7
Hased u=on the 2e-endants< lacB o- credi9le e4idence andGor =roo- that Plainti--
e4er >ai4ed or >as e4er ad4ised o- le8al detriment u=on the si8nin8 o- >hat must 9e
characterized, at 9est, as a hidden co8no4it clause, is Just =re=osterous and is su--icient to
>arrant =resentation to a Jur?.
1n order to hel= determine the 4alidit? o- the co8no4it note andGor con-ession o-
Jud8ment 9e-ore this 5ourt, one must concede that the mentioned contract containin8 the
hidden clause, >as ne4er eE=lained to the Plainti--, so Plainti-- >as ne4er a>are o-
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>ai4in8 ;ourteenth Amendment ri8hts throu8h a contract o- adhesion ille8al andGor 4oid
contract" or the =roduct o- dis=arit? in the =arties< 9ar8ainin8 =o>er.
+ost contracts o- adhesion are either =rocedural andGor su9stanti4el?
unconsciona9le and, the unconsciona9ilit? alone should 4oid the co8no4it clause o- this
adhesion contract.
Plainti-- is a>are that in a ci4il =roceedin8, ac@uiescence in the loss o-
-undamental ri8hts >ill not 9e =resumed, and, that the ri8hts to due =rocess in a ci4il
Jud8ment are su9Ject to >ai4er. Plainti-- em=haticall? states that the contract o- adhesion
>as a taBe it or lea4e it o--er and the co8no4it clause >as ne4er an issue raised >ith
em=hasis, or e4en raised at all, 9? the 2e-endants durin8 the si8nin8 ceremonies.
Hased u=on the Plainti--<s recent eEtensi4e stud? o- co8no4it notes -or this matterD
1" this contract >as ne4er o=en to an? ne8otiations, -or it >as a contract o- adhesion, as
the =arties >ere not =arties o- e@ual 9ar8ainin8 =o>erD 2" the 2e-endants ne4er 8a4e the
Plainti-- an? eEtra consideration in order to o9tain an? con-ession o- Jud8ment co8no4it
note" clause, nor >as the co8no4it issued under an? other su9stantial 9ene-it andGor
consideration includin8 and not limited to a reduction in installment =a?ments or reduction
in interest ratesD 3" there >as no contention or acBno>led8ment that the Plainti-- >as
a>are o- the le8al detrimental" conse@uences o- the co8no4it =ro4isionD 4" this 5ourt
should 4acate this =reJud8ment con-ession o- Jud8ment or co8no4it note" as a matter o-
la> -or sho>in8 that Plainti--<s natural *i8hts to due =rocess >ere 4iolated.
/he clear lacB o- e4idence that Plainti-- e4er intentionall?, deli9eratel?, andGor
Bno>in8l? >ai4ed due =rocess ri8hts is -urther su==orted 9? this 4er? 5om=laint.
N+(5-+, -/3)(1 >+002( &* D+/$*7 *$*0 /9 ()+( /1 ()* /0(*0( 29 ()* P,+/0(/99.
At all times material to this 5om=laint Plainti-- ne4er >ai4ed 5onstitutional ri8hts
to a trial 9? Jur? under an? circumstances, much less >illin8l?, Bno>in8l?, or intentionall?.
/he )nited States Su=reme 5ourt and the 8reat maJorit? o- State Su=reme 5ourts
ha4e all ado=ted the conce=t asD State<s that use co8no4it =rocedure >as -ound
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unconstitutional, unless, the de9tor Bno>in8l? and understandin8l? consented to the
authorization to con-ess Jud8ment.
In Nationa! EGuip9ent Renta!, Ltd. ;. SIu0ent, @?), 5.S. @%% .%>627, the 5ourt
o9ser4ed6 M1t is settled Uthat =arties to a contract ma? a8ree in ad4ance to su9mit to the
Jurisdiction o- a 8i4en court, to =ermit notice to 9e ser4ed 9? the o==osin8 =art?, or e4en to
>ai4e notice alto8ether.N Id., at @%)+@%6.
And, in /oddie ;. Conne&ti&ut6 su=ra, the 5ourt acBno>led8es that Mthe hearin8
re@uired 9? due =rocess is su9Ject to >ai4er.N =*% 5.S., at @?(+@?>. 1n another case on
=oint is -rom Ne> 3erse? >hen the 5hie- 3ustice descri9ed in a rather condescendin8 tone,
Ma co8no4it note is the loosest >a? o- 9indin8 a man<s =ro=ert? that >as de4ised in an?
ci4ilized countr?.N "!der9an ;. <ia9ent, ? N.D. L. %>?, %>(.
/he Su=reme 5ourt clari-ied another =art o- co8no4it note >hen the 5ourt stated,
M>e do not =resume ac@uiescence in the loss o- -undamental ri8hts, Ohio /e!! Te!., Co. ;.
$u!i& 5ti!ities Co991n, @*% 5.S. 2>2, @*? .%>@?7, that standard >as -ull? satis-ied here.N
/he )nited States Su=reme 5ourt maBes it 4er? clear that an? one ma? >ai4e their
due =rocess ri8hts andGor an? other ri8ht 9ut in order to do so, one must intentionall?,
Bno>in8l?, deli9eratel?, and 4oluntaril? do so.
/he conse@uences or le8al detriment to >ai4in8 one<s *i8hts must 9e 9ased onl?
u=on an intelli8ent decision ha4in8 9een =resented >ith the conse@uences o- enterin8 into
an a8reement ha4in8 a co8no4it clause, note andGor con-ession o- Jud8ment clause".
Hecause a co8no4it note de=ri4es the de9tor Bno>led8e and o- notice that their
=ro=ert? is 9ein8 seized, >ithout recourse, or, >ithout 9ene-it o- hearin8 or a==eal, courts
demand M>,*+- +07 >20$/0>/03 *$/7*0>*N that the >ritten >ai4er is M$2,50(+-.6
C02D/036 +07 /0(*,,/3*0(,. @+7*.N /he @uestion o- >ai4er is -actual not =resum=ti4e.
/his, a Jur? must decide.
/he Plainti-- is no> schooled in the con-ession o- Jud8ment theor? throu8h
2e-endants< a==lication o- a hidden >ithin, co8no4it note, and, a8rees that the Bno>in8
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and 4oluntar? >ai4er o- one<s due =rocess *i8hts >ould 9e =ertinent, i-, it >as trul?
e4ident in the =resent case. Plainti-- a8rees that the due =rocess ri8hts to notice and
hearin8 =rior to a ci4il Jud8ment are su9Ject to >ai4er.
Hecause the co8no4it note de=ri4es the de9tor o- notice that their =ro=ert? is
a9out to 9e seized, >ithout 9ene-it o- hearin8, or ri8ht to a==eal,, courts demand Mclear and
con4incin8 e4idenceN that the >ritten >ai4er >as M4oluntar?, Bno>in8, and intelli8entl?
made.N
1n order -or the 2e-endants to su9stantiall? su==ort their =osition that Plainti-- did
4oluntaril? >ai4e due =rocess ri8hts, Plainti-- states that there >as ne4er an? >arnin8
=ara8ra=h, 9old letters, 9old sentences andGor no >arnin8 statement to merit an? concern
on 9ehal- o- the Plainti--. (ne >ould thinB to 8uarantee this 9asic constitutional @uestion,
>hich is no> 9e-ore this court, the 2e-endants should ha4e a >arnin8 as the -ollo>in8
>arnin8 to ser4e as an eEam=le6
M!ARNING M". 1/30/03 ()/1 ?+?*- .25 3/$* 5? .25- -/3)(
(2 02(/>* +07 >25-( (-/+,. I9 .25 72 02( ?+. 20 (/@* + >25-(
B573@*0( @+. &* (+C*0 +3+/01( .25 D/()25( .25- C02D,*73*
+07 ()* ?2D*-1 29 + >25-( >+0 &* 51*7 (2 >2,,*>( 9-2@ .25 2-
.25- *@?,2.*- -*3+-7,*11 29 +0. >,+/@1 .25 @+. )+$* +3+/01(
()* >-*7/(2- D)*()*- 92- -*(5-0*7 322716 9+5,(. 322716 9+/,5-*
20 ()*/- ?+-( (2 >2@?,. D/() ()* +3-**@*0(6 2- +0. 2()*- >+51*.K
Plainti-- once a8ain reiterates that Plainti-- >as ne4er made a>are o- an? co8no4it
note andGor con-ession o- Jud8ment at the time o- their enterin8 into the contract >ith the
2e-endants, or that, Plainti-- e4er Bno>in8l? >ai4ed an? 5onstitutionall? 8uaranteed
ri8hts. 2e-endants ne4er s=ent an? time on this su9Ject >ith Plainti--.
A-ter care-ull? eEaminin8 the eEecuted documents Plainti-- still cannot -ind an?
s=eci-ic re-erences that Plainti-- has, in an? >a?, >ai4ed an? 5onstitutionall? 8uaranteed
ri8hts u=on eEecution o- 2e-endants< documents.
Hased u=on -urther re4ie>, the Plainti-- ne4er >itnessed andGor >as ne4er 4er9all?
instructed, concernin8 the loss o- due =rocess ri8hts. An? one ma? 8i4e u= their ri8hts, 9ut,
onl? those s=eci-icall? 9ar8ained -or.
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;urther, Plainti-- ne4er Bno>in8l?, and 4oluntaril? >ai4ed ri8hts to notice and
hearin8, and, >as >holl? una>are o- the le8al conse@uences a==ertainin8 thereto.
(ther -actors that this 5ourt must taBe into consideration, 9esides the
unconstitutionalit? o- the =ur=ose-ull? dis8uised con-ession o- Jud8ment, andGor the
co8no4it note, inco8nito, 9ut also must consider contracts o- adhesions are =rocedurall?
and su9stanti4el? unconsciona9le contracts, and contract -oundations 9uilt u=on mistaBes,
inad4ertence, eEcusa9le ne8li8ence, ne>l? disco4ered in-ormation, -raudulent
con4e?ance, misre=resentation and -raud in the inducement in 4iolation o- ;ederal and
Arizona State la>.
/he 4er? eEistence o- a contract is the 4er? heart o- our commercial s?stem as 9oth
=arties o=erate in 8ood -aith and an? M/,,*3+, ?-2$/1/201 29 ()* >20(-+>( +-* J$2/76K +07
()51 ()21* ?-2$/1/201 D*-* 0*$*- ?+-( 29 + $+,/7,. 92-@*7 >20(-+>(.N Three Fa!!eys
Mun. Aater <ist. ;. E.:. #utton B Co., >2) :.2d %%@6, %%=* .>th Cir. %>>%7, and
M4oidnessN challen8es 8o to the 4er? eEistence o- a contract =ro4ision, and are not merel?
a de-ense to a le8all? -ormed contract.N And one 4alid de-ense that the 2e-endants are
raisin8 is M50>201>/20+&/,/(. /1 02( @*-*,. + 7*9*01/$* 72>(-/0* &5( -+()*- /( 32*1 (2
()* ?-*7/>+(* 29 D)*()*- + >20(-+>( D+1 $+,/7,. 92-@*7 /0 ()* 9/-1( ?,+>*.N Ca!ifornia
Cro&ers "ss1n, In&. ;. /an0 of "9eri&a, 22 Ca!."pp.=th 2*), 2%? %>>=7: and the M2octrine
o- )nconsciona9ilit?,N =rocedural andGor su9stanti4el? are the tools to determine the
4alidit? o- an? contract thus i8norin8 -or no> the -our main elements o- a contract.
Plainti-- is raisin8 the unconsciona9ilit? "RS =?+2@*2 5n&ons&iona!e &ontra&t or
&!ause' as re-erenced in M/!a0e ;. E&0er, >@ Ca!."pp.=th ?2(, ?=2 .2**%76 ()*
15&1(+0(/$* *,*@*0( 29 50>201>/20+&/,/(. J(-+7/(/20+,,. /0$2,$*1 >20(-+>( (*-@1 ()+(
+-* 12 20*41/7*7 +1 (2 N1)2>C ()* >201>/*0>* 2- ()+( /@?21* )+-1) 2- 2??-*11/$*
(*-@1.N" E9phasis added" .&itin- "r9endariI, 2= Ca!.=th at %%=7. An? one >ho >ould
Bno>in8l? a8ree to a non#Judicial -oreclosure, >here the ille8al 9anB a==ointed trustee has
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the =o>er to -oreclose on ?our home at his andGor her >him, is ludicrous and >ould ha4e
to 9e totall? incom=etent.
/he contract is =rocedurall? unconsciona9le i- Mthe contract is a standard#-orm
contract, dra-ted 9? the =art? >ith su=erior 9ar8ainin8 =o>er, >hich rele8ates to the other
=art? the o=tion o- adherin8 to its terms >ithout @27/9/>+(/20 2- -*B*>(/03 ()* >20(-+>(
*0(/-*,..ND :!ores ;. Transa9eri&a #o9e:irst, In&., A3 5al.A==.4th 846, 853 2!!1"
same"D Mer&uro ;. Superior Court, A6 5al.A==.4th 16$, 1$4 2!!2", re;. denied.
Plainti-- states em=haticall? that this 5ourt should 8rant the tem=orar? inJunction to
allo> 2e-endants su--icient time to dis=ro4e that the 2eed o- /rust is, in -act, a contract
4oid a9 initio, and, to dis=ute Plainti--<s a4erment to the contrar?, that the creation o- the
contract is su==orted 9? a clear and con4incin8 intent o- the Plainti--, -or eEistence o-
@5(5+, 2- -*>/?-2>+, +11*0(. Sanford ;. "ra9s .%(((7 2= :!a %(%, 2 So @?@3 Ross ;.
Sa;a-e .%>%@7 66 :!a %*6, 6@ So %=(3 M&Cay ;. Se;er .%>2>7 >( :!a ?%*, %2= So ==3
5nited State Ruer $rodu&ts, In&. ;. C!ar0 .%>=%7 %=) :!a 6@%, 2** So @()3 Mann ;.
Tho9pson .%>)(, :!a "pp <%7 %** So 2d 6@=.
/he Plainti-- here9? states that -or a 4alid contract to eEist >ith the 2e-endants
andGor an? creditor, the contract must ha4e +11*0( &* (2 + >*-(+/0 +07 7*9/0/(*
?-2?21/(/20. ;or eEam=le, this 5ourt, o=eratin8 under cold neutralit?, should demand that
9oth sides =roduce all the su9stantial records, includin8 and not limited to the accountin8
records -or a determination as -ar as consideration. :in&her ;. /e!0+Sa8yer Co. .%>6%, :!a
"pp <@7 %2? So 2d %@*3 Coff ;. Indian La0e Estates, In;. .%>6), :!a "pp <27 %?( So 2d
>%*3 #e8itt ;. $ri&e .%>6>, :!a "pp <@7 222 So 2d 2=?.
/he Plainti-- contends that >ithout + @**(/03 29 ()* @/071 29 ()* ?+-(/*1 20 +0
*11*0(/+, *,*@*0( %>201/7*-+(/20'6 ()*-* >+0 &* 02 *092->*+&,* >20(-+>(. #ettenau-h
;. Heyes+OIon+:in&her Ins., In&. .%>62, :!a "pp <@7 %=? So 2d @2(3 Coff ;. Indian La0e
Estates, In&. .%>6), :!a "pp <27 %?( So 2d >%*.
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/he Plainti-- has esta9lished enou8h dou9t as to the 4alidit? o- an en-orcea9le
contract that this court is re@uired to determine the en-orcea9ilit? o- the contract and
determined >hat =art? 9reached the terms and conditions o- the contract and in order to
-orm a 4alid contract, ()* ?+-(/*1 @51( )+$* + 7/1(/0>( 507*-1(+07/03, common to 9oth,
+07 D/()25( 725&( 2- 7/99*-*0>*. U0,*11 +,, 507*-1(+07 +,/C*6 ()*-* >+0 &* 02 +11*0(6
+07 ()*-*92-* 02 >20(-+>(. Aester Lu9er Co. ;. Lin&o!n .%>2?7 >= :!a %*>?, %%) So
=>(3 Mins0yJs :o!!ies of :!orida, In& ;. Sennes .%>)@ 2*6 :2d %3 OJnei!! ;. Corporate
Trustees, In&. .%>6?7 @?6 :2d (%(.
/he Plainti-- here9? declares that the 2e-endants ha4e 8reatl? inJured the Plainti--
throu8h and not limited to misre=resentation, truth in lendin8, )2AP and unJust
enrichment as a result o- the 2e-endant<s deli9erate, cons=ired, intentional, and malicious
-raud. ;urther, 2e-endants< andGor their counsel ha4e 4iolated, inter alia, the Pro-essional
5ode o- 5onduct and =rocured this ille8al andGor 4oida9le contract >hich lacBs the
essential elements o- real assent and o9tained the Plainti--<s Si8nature as -*15,( 29 ()*
*E*->/1* 29 75-*11 2- 5075* /09,5*0>* &. ()* 2()*- ?+-(.6 2- ?-2>5-*7 &. ()* 9-+57 29
20* 29 ()* ?+-(/*16 ,+>C1 ()* *11*0(/+, *,*@*0( 29 -*+, +11*0( +07 @+. &* +$2/7*7 &.
()* /0B5-*7 ?+-(.. Aa!! ;. /ureau of Lathin- and $!asterin- .%>6*, :!a "pp <@7 %%? So
2d ?6?.
Hein8 that the Plainti-- is asBin8 -or this court to =rotect Plainti--<s due =rocess
ri8hts and sta? the sale and =ro4ide the Plainti-- >ith their ri8ht to a /rial 9? 3ur? -or the
Plainti-- ne4er a8reed to a non#Judicial -oreclosure and an? creditor must =ro4e
com=liance >ith all the terms and conditions and s=eci-icall? consideration and
su9stantiate +>(5+, +11*0( &. ()* ?+-(/*1 5?20 *E+>(,. ()* 1+@* @+((*-1 /1
/07/1?*01+&,* (2 ()* 92-@+(/20 29 + >20(-+>(. /u!!o&0 ;. #ard8i&0 .%>=?7 %)( :!a (@=,
@* So 2d )@>: #ettenau-h ;. Heyes+ OIon + :in&her Ins. , In& .%>62, :!a "pp <@7 %=? So
2d @2(: Cenera! :inan&e Corp. F. Stratton .%>6@ :!a "pp <%7 %)6 So 2d 66=.
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)nconsciona9ilit? is deemed to eEist >hen a t>o#=ron8 test is met, that is >hen it is
esta9lished that 9oth =rocedural and su9stanti4e unconsciona9ilit? eEist. /!a0e ;. E&0er, >@
Ca! "pp =th ?2( .2**%7. "&&ordin- to Restate9ent of Contra&ts .2nd Ed. %>>*7
&o99entary a&&o9panyin- se&tion 2*(.
+ost state unconsciona9ilit? Juris=rudence is su9#di4ided into t>o 9ranches6
su9stanti4e and =rocedural. Su9stanti4e unconsciona9ilit? re-ers to o==ressi4el? one#sided
and harsh terms o- a contract, >hile =rocedural unconsciona9ilit? in4ol4es the manner and
=rocess 9? >hich the terms 9ecome =art o- the contract includin8 une@ual 9ar8ainin8
=o>er and hidden contract terms. Co9 ;. $ay$a! In&., Case No. C+*2+%22? and C+*2+
2??? 5S<C C" No. <ist. San Dose <i; .>th Cir. 2**273 /!a0e, supra3 H!oss ;. Ed8ard <.
Dones B Co., 2**2 MT %2>3 @%* Mont. %2@3 )= $@d %3 2**2 Mont. LEKIS 22@ .MT Sup Ct
2**27.
/he =rocess 9? >hich a contract comes into eEistence is at the heart o- =rocedural
unconsciona9ilit? such that the contract in @uestion is t?=icall? one o- adhesion. :!ores ;.
Transa9eri&a #o9e:irst, In&., >@ Ca! "pp =th (=6 .2**%7.
Anal?sis o- unconsciona9ilit? 9e8ins >ith an in@uir? into >hether the contract
2eed o- /rust" >as a contract o- adhesion i.e., a standardized contract, im=osed u=on the
su9scri9in8 =art? >ithout an o==ortunit? to ne8otiate the terms and the conditions is an
o==ressi4e, MtaBe it or lea4e it o--er, an ine@ualit? o- 9ar8ainin8 =osition >hen under
scrutin? are so one sided that the terms and conditions are so su==orti4e o- the su=erior
9ar8ainin8 =o>er and actuall? detrimental or no real ne8otiations and an a9sence o-
meanin8-ul choice throu8h an une@ual 9ar8ainin8 =osition o- the >eaBer =art?.
"r9endariI ;. :oundation #ea!th $sy&h&are Ser;i&es, In&., 2= Ca!.=th (@, %%@, >> Ca!.
Rptr. 2d ?=), 6 $.@d 66> .2***7. Craha9 ;. S&issor+Tai!, In&., 2( Ca!.@d (*?, (%>, %?%
Ca!. Rptr. 6*=, 62@ $.2d %6) B n.%6 .%>(%7.
Plainti-- ne4er a8reed to =lace their =ro=ert? in an irre4oca9le trust, nor, did
Plainti-- e4er Bno>in8l? a8ree to ha4e their home su9Ject to a =o>er o- sale clause. As a
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matter o- -act, Plainti-- here9? declares that the? ha4e ne4er heard o- that term =o>er o-
sale, and, >hat that term meant, until recentl?.
Plainti-- liBe>ise, did not Bno> that the term MseisedN im=arted a >holl? di--erent
connotation than MseizedN, >here9?, u=on recent understandin8 o- Plainti--, MseisedN
indicates that Plainti-- actuall? o>ned their =ro=ert? -ree and clear, >ithout encum9rance,
=rior to si8nin8 a 2eed o- /rust, >ithout 9ene-it o- consideration.
/he conce=t o- seisin8, dates 9acB to the middle a8es >hen the ser-s, >ho >ere
made to consider themsel4es not >orth? o- o>nin8 land, >ould actuall? 8i4e their
=ro=erties throu8h seisin8 8a4e it a>a? a9solutel? -ree" to their masters. /oda? this
unconsciona9le =ractice is still 9ein8 utilized 9? 9anBers, constitutin8 an unJust
enrichment, throu8h concealment and dece=tion and outri8ht stu=idit? on this Plainti--,
>ho su--ers -rom the least susce=ti9le andGor susce=ti9le consumer s?ndrome.
Plainti-- no> challen8es this =ractice as 9ein8 =rocedural and su9stanti4el?
unconsciona9le 5lauses contained in this re-erenced contract 2eed o- /rust" these should
9e challen8ed 9? this court as the 2eed o- /rust, did not and does not re=resent the true
intentions o- the Plainti--.
Plainti-- >ould not Bno>in8l? a8ree to the =lacin8 o- an irre4oca9le trust a8ainst
thier home 9? an? mort8a8e com=an? andGor 9anBer and >ould not ha4e 8i4en their
=ro=ert? to an?one throu8h the middle a8es =olic? o- seisin8. At trial, it >ould 9ecome
a==arent that the trier o- -acts could not -ind an o9Jecti4el? clear and unam9i8uous
eE=ression o- mutual intent o- these o9Jectiona9le and su9stanti4el? unconsciona9le
shocBin8 terms.
1n the a9sence o- con-lictin8 =arol e4idence, the inter=retation o- a >ritten contract
is essentiall? a Judicial -unction su9Ject to inde=endent re4ie> 9? this 5ourt or on a==eal.
A trial courtLs threshold determination as to >hether there is an am9i8uit? =ermittin8 the
admission o- =arol e4idence is also a @uestion o- la> su9Ject to inde=endent re4ie>.
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1- =arol e4idence is admissi9le, and the com=etent =arol e4idence is in con-lict, the
construction o- the contract 9ecomes a @uestion o- -act. 0o>e4er, i- the =arol e4idence is
not con-lictin8, the a==ellate court >ill inde=endentl? construe the >ritin8.
/he dut? o- this 5ourt is to schedule a hearin8 and =ermit the 2e-endants to
actuall? =roduce documented e4idence that Plainti--, understood that Plainti-- >as alread?
la>-ull? seised o- =ro=ert?, =rior to si8nin8 the 2eed o- /rust, and therea-ter, Bno>in8l?,
intentionall?, and, deli9eratel? a8reed to a unseen" =o>er o- sale clause, and, irre4oca9le
8rant, eEecuted, >ithout consideration, to the sole 9ene-it o- 2e-endants.
0o>e4er, this 5ourt should also reco8nize the risB that such =ro4isions ma? 9e
included in a trust deed or mort8a8e >ithout the de9torLs Bno>led8e or understandin8.
5lauses such as this are o-ten termed Qdra8netQ or Qanaconda,Q as 9? their 9road and
8eneral terms the? en>ra= the unsus=ectin8 de9tor in the -olds o- inde9tedness and
dece=ti4e =ractices concealin8 dece=ti4el?, the =o>er o- sale clause in >hich Plainti--
ne4er >as told andGor Bne> that it >as actuall? =art o- the alle8ed contract".
/he =ro=onent o- a dra8net clause 9ears the 9urden o- esta9lishin8 that the =arties
intended all eEistin8 or contem=oraneous clauses to 9e included >ithin its sco=e. A trust
deed containin8 a dra8net clause that is =rinted on a standard 9anB -orm is considered a
>20(-+>( 29 +7)*1/20 under Arizona la>.
Althou8h >20(-+>(1 29 +7)*1/20 are 8enerall? en-orcea9le accordin8 to their terms,
a =ro4ision contained in such a contract cannot 9e en-orced i- it does not -all >ithin the
reasona9le eE=ectations o- the >eaBer or adherin8 =art?.
/his 5ourt should eEamine a num9er o- -actors in determinin8 >hether 9roadl?
>orded dra8net clauses Seised and irre4oca9le trust" >as mutuall? intended 9? the =arties
to 9e included in the terms and conditions6 1" the lan8ua8e and s=eci-icit? o- the dra8net
clauseD 2" >hether the =arties >ere a>are o- the dra8net clause and a==reciated its
si8ni-icance and >ould ha4e 9ene-ited 9? their eEistenceD 3" >ere the clauses
=rocedurall? andGor su9stanti4el? unconsciona9le and 9ene-ited the one =art? at the
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eE=ense o- the other =art? taBin8 into account the de8ree o- ne8otia9ilit? 9ein8 eEerted
u=on the smaller =art? >ith in-erior 9ar8ainin8 =osition a8ainst the lar8er =art? >ith
su=erior 9ar8ainin8 =o>er.
/he 2e-endant<s intentional concealment o- the Po>er o- Sale 5lause in the 2eed
o- /rust -urther insures Plainti--<s alle8ations o- dece=ti4e intentions o- the 2e-endants.
Plainti-- here9? a4ers that -or this 5ourt to =recede >ith this sale, this 5ourt must
-ind an o9Jecti4e and clear unam9i8uous eE=ression o- mutual intent to >here the Plainti--
intentionall?, deli9eratel?, Bno>in8l? desired to =lace the home into a non#re4oca9le trust,
to allo> the 2e-endant<s to ha4e the home seised, =o>er o- sale and Bno>in8l? >ai4ed
due =rocess ri8hts includin8 and not limited to trial 9? Jur?. /his 5ourt has in its inherent
authorit?, the dut? to sto= this M2eed o- /rust SaleN u=on the unsus=ectin8 mort8a8or in
the -olds o- inde9tedness em9raced and secured in the mort8a8e >hich Plainti-- did not
contem=late or understand their =resence or im=lications.
0o>e4er, QCtPhere are t>o Judiciall? im=osed limitations on the en-orcement o-
adhesion contracts or =ro4isions thereo-. /he -irst is that such a contract or =ro4ision
>hich does not -all >ithin the reasona9le eE=ectations o- the >eaBer or Ladherin8L =art?
>ill not 9e en-orced a8ainst him . . . /he second # a =rinci=le o- e@uit? a==lica9le to all
contracts 8enerall? # is that a contract or =ro4ision, e4en i- consistent >ith the reasona9le
eE=ectations o- the =arties, >ill 9e denied en-orcement i-, considered in its conteEt, it is
undul? o==ressi4e or Lunconsciona9le.
/he irre4oca9le trust, the hidden =o>er o- sale clause, due =rocess 4iolations and
the seisin8 clauses are -our eEam=les o- Plainti-- 9ein8 i4ol4ed >ith =rocedurall? and
su9stanti4el? 4iolations o- unconsciona9ilit?, thus 4oidin8 this contract -rom its
inci=ience.
A contract o- adhesion is Qa standardized contract, >hich, im=osed and dra-ted 9?
the =art? o- su=erior 9ar8ainin8 stren8th, rele8ates to the su9scri9in8 =art? onl? the
o==ortunit? to adhere to the contract or reJect itQ ."r9endariI ;. :oundation #ea!th
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2$
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$sy&h&are Ser;., 2= Ca! =th (@ at %%@ .2***73 ref!e&ted in MartineI ;. Master $rote&tion
Corp., %%( Ca!. "pp. =th %*?3 2**= Ca!. "pp. LEKIS 6@( .2**=7 ## is not unconsciona9le
merel? 9ecause o- dis=arit? o- the =arties< 9ar8ainin8 =osition Ci!9er ;.
Interstate/Dohnson Lane Corp., )** 5S 2*3 %%= L. Ed. 2d 26, %%% St. Ct. %6=? .%>>%7.
*ather, the =rocedural unconsciona9ilit? must co#eEist >ith su9stanti4e com=onents that
include harsh or one#sided results that MshocB the conscienceN. So!tani ;. Aest. B So. Life
Ins. Co., 2)( :.@d %*@( .>th Cir. 2**%73 :er-uson ;. Country8ide Credit Industries, In&.,
2>( :.@d ??(3 2**2 5.S. "pp. LEKIS %=?@> .>th Cir. 2**273 Cir&uit City Stores, In&. ;.
Mantor, @@) :.@d %%*%3 2**@ 5.S. "pp. LEKIS %=6*? .>th Cir. 2**@7.
Fhen a =art? to a contract =ossesses -ar 8reater 9ar8ainin8 =o>er 2e-endants
andGor an? creditor" than another =art? Plainti--", or >hen the stron8er =art? =ressures,
harasses, or com=els another =art? into enterin8 into a contract, QLo==ression and,
there-ore, =rocedural unconsciona9ilit?, are =resent.Q In-!e ;. Cir&uit City Stores, In&., @2(
:.@d %%6), at %%?2 .>th Cir. 2**@7 .Guotin- :er-uson ;. Country8ide Credit Indus., In&.,
2>( :.@d ??( .>th Cir. 2**273 Hinney ; 5nited #ea!thCare Ser;i&es, In&., ?* Ca! "pp =th
%@22 .%>>>7.
Su9stanti4e unconsciona9ilit? addresses the -airness o- the term in dis=ute. 1t
traditionall? in4ol4es contract terms that are so one#sided as to MshocB the conscience,N or
im=ose harsh or o==ressi4e terms. 0istoricall?, courts looBed to the common la> -or
discernin8 the eEistence o- su9stanti4e unconsciona9ilit? as in Ra0off, Contra&ts of
"dhesion: "n Essay in Re&onstru&tion, >6 #ar;. L. Re;. %%?@, %%?>+%%(* .%>(@73 S!a8son,
Mass Contra&ts: La8fu! :raud in Ca!ifornia, =( S. Ca!. L. Re;. %, %2+%@ .%>?=73 H.
L!e8e!!yn, The Co99on La8 Tradition @?*+@?% .%>6*7.
M/he common la>, reco8nizin8 that standardized -orm contracts account -or a
si8ni-icant =ortion o- all commercial a8reementsUsu9Jects terms in contracts o- adhesion
to scrutin? -or reasona9leness.N 3ud8e 3. SBell? Fri8ht set out the state o- the la>
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succinctl? in Ai!!ia9s ;. Aa!0er+Tho9as :urniture Co., %2% 5. S. "pp. <. C. @%), @%>+
@2*, @)* :. 2d ==), ==>+=)* .%>6)7 -ootnotes omitted"6
Q(rdinaril?, one >ho si8ns an a8reement >ithout -ull Bno>led8e o- its terms mi8ht
9e held to assume the risB that he has entered a one#sided 9ar8ain. Hut >hen a =art? o-
little 9ar8ainin8 =o>er, and hence little real choice, si8ns a commerciall? unreasona9le
contract >ith little or no Bno>led8e o- its terms, it is hardl? liBel? that Plainti--<s consent,
or e4en an o9Jecti4e mani-estation o- Plainti--<s consent, >as e4er 8i4en to all o- the terms.
1n such a case the usual rule that the terms o- the a8reement are not to 9e @uestioned
should 9e a9andoned and the court should consider >hether the terms o- the contract are
so un-air that en-orcement should 9e >ithheld.Q
Pursuant to the 2eclarator? 3ud8ment Act, this 0onora9le 5ourt ma? enter a declarator?
Jud8ment to determine the ri8hts o- the Plainti--, re8ardin8 the a-oresaid claims and
contro4ersies arisin8 there-rom.
TEMPORARY RESTRAINING ORDER
/he =rimar? =ur=ose o- a tem=orar? restrainin8 order is to =re4ent irre=ara9le
inJur? and harm caused >ithout ri8ht to the Plainti--, and, to allo> time -or determinin8
the le8al ri8hts, status and relations o- the Plainti-- and the 2e-endants.
A tem=orar? restrainin8 order is a9solutel? necessar? in the =resent instance to
s=eedil? e--ectuate the ri8hts and status o- Plainti-- in relation to the 2e-endants as >ell as
delineate the authorit? o- each o- the 2e-endants in their actions as taBen a8ainst the
Plainti--.
2ela? in 8rantin8 Plainti--<s re@uest -or a tem=orar? restrainin8 order >ill result in
irre=ara9le harm and inJur? to Plainti--, >ithout a9ilit? to other>ise address Plainti--<s
8rie4ances to the de8ree and means that >ould 9e other>ise a4ailed.
/em=orar? restrainin8 order is =ro=er >hen 1" a reasona9le liBelihood o- successD
2" irre=ara9le harmD 3" the 9alance o- harms is in the mo4ant<s -a4orD and 4" the =u9lic
interest is -a4ora9l? im=acted.
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2$
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An actual contro4ers? eEists 9et>een Plainti-- and 2e-endants, 9oth indi4iduall?
and collecti4el?, as 2e-endants continue to usur= Plainti--<s ri8hts, una9ated, in the
>holesale de=ri4ation o- Plainti--<s ri8hts and, a9ro8ation o- Plainti--<s =ro=ert?.
Additional liti8ation is imminent and ine4ita9le, =endin8 this court<s determination
o- the contro4ers?, that in the a9sence thereo-, Plainti-- >ill 9e -orced to =roceed in
securin8 their ri8hts, as o==osed to 2e-endants meritless andGor unla>-ul actions
undertaBen a8ainst Plainti--.
Plainti-- clearl? has a direct, su9stantial and =resent interest in the contro4ers?.
A tem=orar? restrainin8 order >ill aid in endin8 the contro4ers?, or in the
alternati4e, clearl? esta9lish the ri8hts o- Plainti-- and the authorit? andGor lacB thereo-, o-
2e-endants".
As to element 1", Plainti-- is hi8hl? liBel? to 9e success-ul in liti8ation as
2e-endant ha4e no e4idence to su9stantiate their -raud.
As to element 2", a9sent the tem=orar? restrainin8 order, 2e-endant >ill steal
Plainti--<s =ro=ert? and con4ert said =ro=ert?, in >hich case a third =art? ma? 9e harmed
9? 2e-endant<s criminal acti4it?.
As to element 3", 2e-endant<s -raud >ill 8reatl? harm Plainti--.
As to element 4", it is in the =u9lic interest to =re4ent criminal enter=rises -rom
committin8 -raud a8ainst the =eo=le.
DECLARATORY RELIEF
Pursuant to the 2eclarator? 3ud8ment Act, this 0onora9le 5ourt ma? enter a
declarator? Jud8ment to determine the ri8hts o- the Plainti--, re8ardin8 the a-oresaid claims
and contro4ersies arisin8 there-rom.
/he =rimar? =ur=ose o- a declarator? Jud8ment is to @uicBl? determine issues, i-
le-t other>ise dela?ed, >ill cause irre=ara9le inJur? and harm to the Plainti--, and, to
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a--ord certain relie- -rom uncertaint? and insecurit? 9? e--ecti4el? determinin8 the le8al
ri8hts, status and relations o- the Plainti-- and the 2e-endants.
A declarator? Jud8ment is a9solutel? necessar? in the =resent instance to s=eedil?
e--ectuate the ri8hts and status o- Plainti-- in relation to the 2e-endants as >ell as delineate
the authorit? o- each o- the 2e-endants in their actions as taBen a8ainst the Plainti--.
2ela? in 8rantin8 Plainti--<s re@uest -or a declarator? Jud8ment >ill result in
irre=ara9le harm and inJur? to Plainti--, >ithout a9ilit? to other>ise address Plainti--<s
8rie4ances to the de8ree and means that >ould 9e other>ise a4ailed.
2eclarator? Jud8ments are =ro=er >hen 1" an actual contro4ers? eEists, 2"
liti8ation a==ears imminent and ine4ita9le, 3" the Plainti-- has a direct, su9stantial and
=resent interest, and 4" the declaration sou8ht >ill 9e o- =ractical hel= in endin8 the
contro4ers?.
An actual contro4ers? eEists 9et>een Plainti-- and 2e-endants, 9oth indi4iduall?
and collecti4el?, as 2e-endants continue to usur= Plainti--<s ri8hts, una9ated, in the
>holesale de=ri4ation o- Plainti--<s ri8hts and, a9ro8ation o- Plainti--<s =ro=ert?.
Additional liti8ation is imminent and ine4ita9le, =endin8 this court<s determination
o- the contro4ers?, that in the a9sence thereo-, Plainti-- >ill 9e -orced to =roceed in
securin8 their ri8hts, as o==osed to 2e-endants meritless andGor unla>-ul actions
undertaBen a8ainst Plainti--.
Plainti-- clearl? has a direct, su9stantial and =resent interest in the contro4ers?.
A declarator? Jud8ment >ill aid in endin8 the contro4ers?, or in the alternati4e,
clearl? esta9lish the ri8hts o- Plainti-- and the authorit? andGor lacB thereo-, o-
2e-endants".
INJUNCTIVE RELIEF
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Plainti--<s ri8ht to inJuncti4e relie- seems clear6 An inJunction is a9solutel?
necessar? to a4oid a -urther and ?et 8reater inJur?, as result o- 2e-endants continued and
un9ridled actions.
1t is a9undantl? clear -rom the -ore8oin8 causes" as stated herein, that, su--icient
8rounds to >arrant an inJunction ha4e 9een esta9lished, until, all -acts are -ull? and
=ro=erl? clari-ied, as, to 9e accom=lished -ollo>in8 the com=letion o- disco4er?.
1t is a4erred that 2e-endants, 9oth indi4iduall? and collecti4el?, ha4e acted in 9ad
-aith, in their attem=ts to unla>-ull? >restle Plainti--<s =ro=ert?.
1t is a4erred that 2e-endants, >hether indi4iduall? andGor collecti4el?, ha4e entered
certain documents into the =u9lic record, -or the =ur=ose o- reliance thereu=on, >hich,
Plainti-- 9elie4es are not su==orted 9? the -acts, should this 5ourt allo> them to 9e
9rou8ht to li8ht.
Plainti-- >ill 9e irre=ara9l? harmed, >ithout e--ecti4e recourse, should this 5ourt
den? Plainti--<s =lea -or inJuncti4e relie-D >hereas, 2e-endants >ill not 9e so harmed,
should this court 8rant Plainti--<s relie-, =endin8 the -ull and com=lete adJudication o-
salient issues as raised in this com=laint.
Hecause o- the intentional dece=ti4e nature o- the 2e-endants, this 5ourt should
8rant the tem=orar? inJunction in the name o- Justice and a matter o- 8ood la>. J!)*-*
+7@/0/1(-+(/$* +>(/20 @+. -*15,( /0 ()* ,211 29 ?-2?*-(. +0782- ,/9*6 2- 29 +,, ()+(
@+C*1 ,/9* D2-() ,/$/036 +07 725&( +1 (2 ()* *E(*0( 29 ?2D*- 7*,*3+(*7 (2
+7@/0/1(-+(/$* 299/>/+,1 /1 (2 &* -*12,$*7 /0 >/(/F*01 9+$2- +07 >25-( @51( &*
*1?*>/+,,. 1*01/(/$* (2 ()* >/(/F*01 -/3)(1 D)*-* ?-2>**7/03 /1 0204B57/>/+,.6 5nited
States ;. Min0er, @)* 5.S. %?>3 ?6 S. Ct. 2(% .%>)67.
MEMORANDUM OF LA! IN SUPPORT OF PLAINTIFFHS PETITION
HO! AND !HY THE "ANG MUST S!ITCH CURRENCY
1. N(/ ;)I;1II /0, I(AN AO*,,+,N/
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2. (H/A1N Y()* +(*/OAO, N(/, F1/0()/ 1N.,S/1NO (N, 5,N/
3. ;(*51NO Y() /( IAH(* /( PAY 1N/,*,S/ (N /0, 5(N/*A5/
4. /0, HANK *,;)S,S /( ;)I;1II /0, 5(N/*A5/
5. +AK,S Y() A 2,P(S1/(* N(/ A H(**(F,*
/he oldest scheme throu8hout 0istor? is the chan8in8 o- currenc?. *emem9er the
mone?chan8ers in the tem=le: /he? chan8ed currenc? as a 9usiness. You >ould ha4e to
con4ert to /em=le currenc? in order to 9u? an animal -or sacri-ice. /he /em=le +erchants
made mone? 9? the eEchan8e. /he Hi9le calls it unJust >ei8hts and measures, and Jud8es
it to 9e an a9omination. 3esus cleared the /em=le o- these a9ominations. (ur 5hristian
;oundin8 ;athers did the same. Hen ;ranBlin said in his auto9io8ra=h?, QUthe ina9ilit? o-
the colonists to 8et the =o>er to issue their o>n mone? =ermanentl? out o- the hands o-
Kin8 Oeor8e 111 and the international 9anBers >as the =rime reason -or the re4olutionar?
>ar.N /he ?ear 1A13 >as the third attem=t 9? the ,uro=ean 9anBers to 8et their s?stem
9acB in =lace >ithin the )nited States o- America. President Andre> 3acBson ended the
second attem=t in 1836. Fhat the? could not >in militaril? in the *e4olutionar? Far the?
attem=ted to accom=lish 9? a 9anBin8 mone? scheme >hich allo>ed the ,uro=ean HanBs
to o>n the mort8a8es on nearl? e4er? home, car, -arm, ranch, and 9usiness +( 02 >21( (2
()* &+0C. *e@uirin8 MFe the Peo=leN to =a? interest on the e@uit? >e lost and the 9anB
8ot -ree.
/oda? =eo=le 9elie4e that cash and coins 9acB u= the all checBs. 1- ?ou de=osit
V1!! o- cash, the 9anB records the cash as a 9anB asset de9it" and credits a 2emand
2e=osit Account 22A", sa?in8 that the 9anB o>es ?ou V1!!. ;or the V1!! lia9ilit? the
4A
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1$
18
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2$
28
9anB o>es ?ou, ?ou ma? recei4e cash or >rite a checB. 1- ?ou >rite a V1!! checB, the
V1!! lia9ilit? ?our 9anB o>es ?ou is trans-erred to another 9anB and that 9anB o>es V1!!
to the =erson ?ou >rote the checB to. /hat =erson can >rite a V1!! checB or recei4e cash.
So -ar there is no =ro9lem.
*emem9er one thin8 ho>e4er, -or the checB to 9e 4alid there must -irst 9e a de=osit
o- mone? to the 9anB<s ASSETS, to maBe the checB lia9ilit?" 8ood. /he lia9ilit? is liBe a
HOLDING ACCOUNT claimin8 that mone? >as de=osited to maBe the checB 8ood.
0ere then, is ho> the s>itch in currenc? taBes =lace.
/he 9anB ad4ertises it loans< mone?. /he 9anB sa?s, QSi8n hereQ. 0o>e4er the 9anB
ne4er si8ns 9ecause the? Bno> the? are not 8oin8 to lend ?ou theirs, or other de=ositorLs
mone?. )nder the la> o- 9anBru=tc? o- a nation, the mort8a8e note acts liBe mone?. /he
9anB maBes it looB liBe a loan 9ut it is not. I( /1 +0 *E>)+03*.
T)* &+0C -*>*/$*1 ()* *A5/(. /0 ()* )2@* .25 +-* &5./036 92- 9-**6 /0 *E>)+03*
92- +0 50?+/7 &+0C ,/+&/,/(. ()+( ()* &+0C >+002( ?+.6 D/()25( -*(5-0/03 ()*
@2-(3+3* 02(*. I9 ()* &+0C )+7 95,9/,,*7 /(1 *07 29 ()* >20(-+>(6 ()* &+0C >25,7 02(
)+$* -*>*/$*7 ()* *A5/(. /0 .25- )2@* 92- 9-**.
T)* &+0C -*>*/$*1 .25- @2-(3+3* 02(* D/()25( /0$*1(/03 2- -/1C/03 20*4>*0(.
T)* &+0C 1*,,1 ()* @2-(3+3* 02(*6 -*>*/$*1 >+1) 2- +0 +11*( ()+( >+0 ()*0 &*
>20$*-(*7 (2 >+1) +07 1(/,, -*951*1 (2 ,2+0 .25 ()*/- 2- 2()*- 7*?21/(2-1H @20*. 2- ?+.
()* ,/+&/,/(. /( 2D*1 .25. (n a V1!!,!!! loan the 9anB does not 8i4e u= V1!!,!!!. /he
9anB recei4es V1!!,!!! in cash or an asset and issues a V1!!,!!! lia9ilit? checB" the 9anB
has no intention o- =a?in8. /he V1!!,!!! the 9anB recei4ed in the alle8ed loan is the
5!
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
e@uit? lien on =ro=ert?" the 9anB recei4ed >ithout in4estment, and it is the V1!!,!!! the
indi4idual lost in e@uit? to the 9anB. /he V1!!,!!! e@uit? the indi4idual lost to the 9anB,
>hich demands heGshe re=a? =lus interest.
/he loan a8reement the 9anB told ?ou to si8n said I(AN. /he 9anB 9roBe that
a8reement. /he 9anB no> o>ns the mort8a8e note >ithout loanin8 an?thin8. /he 9anB
then de=osited the mort8a8e note in an account the? o=ened under ?our name >ithout ?our
authorization or Bno>led8e. /he 9anB >ithdre> the mone? >ithout ?our authorization or
Bno>led8e usin8 a -or8ed si8nature. /he 9anB then claimed the mone? >as the 9anBs<
=ro=ert?, >hich is a -raudulent con4ersion.
/he mort8a8e note >as de=osited or de9ited asset" and credited to a 2irect 2e=osit
Account, 22A" lia9ilit?". /he credit to 22A lia9ilit?" >as used -rom >hich to issue the
checB. /he 9anB Just s>itched the currenc?. /he 9anB demands that ?ou cannot use the
same currenc?, >hich the 9anB de=osited =romissor? notes or mort8a8e notes" to
dischar8e ?our mort8a8e note. /he 9anB re-uses to loan ?ou other de=ositorsL mone?, or
=a? the lia9ilit? it o>es ?ou -or ha4in8 de=osited ?our mort8a8e note.
/o =a? this lia9ilit? the 9anB must return the mort8a8e note to ?ou. 0o>e4er
instead o- the 9anB =a?in8 the lia9ilit? it o>es ?ou, the 9anB demands ?ou use these
un=aid 9anB lia9ilities, created in the alle8ed loan =rocess, as the ne> currenc?. No> ?ou
must la9or to earn the 9anB currenc? un=aid lia9ilities created in the alle8ed loan =rocess"
to =a? 9acB the 9anB. Fhat the 9anB recei4ed -or -ree, the indi4idual lost in e@uit?.
1- ?ou tried to re=a? the 9anB in liBe Bind currenc?, >hich the 9anB de=osited >ithout
?our authorization to create the checB the? issued ?ou", then the 9anB claims the
51
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
=romissor? note is not mone?. /he? >ant =a?ment to 9e in le8al tender checB 9ooB
mone?".
/he mort8a8e note is the mone? the 9anB uses to 9u? ?our =ro=ert? in the
-oreclosure. /he? 8et ?our real =ro=ert? at no cost. 1- the? acce=t ?our =romissor? note to
dischar8e the mort8a8e note, the 9anB can use the =romissor? note to 9u? ?our home i-
?ou sell it. /heir =ro9lem is, the =romissor? note sto=s the interest and there is no lien on
the =ro=ert?. 1- ?ou sell the home 9e-ore the 9anB can -ind out and use the =romissor? note
to 9u? the home, the 9anB lost. /he 9anB claims the? ha4e not 9ou8ht the home at no cost.
Wuestion is, >hat ri8ht does the 9anB ha4e to recei4e the mort8a8e note at no cost in direct
4iolation o- the contract the? >rote and re-used to si8n or -ul-ill.
H? demandin8 that the 9anB -ul-ill the contract and not chan8e the currenc?, the
9anB must de=osit ?our second =romissor? note to create checB 9ooB mone? to end the
-raud, =uttin8 e4er?one 9acB in the same =osition the? >here, =rior to the -raud, in the -irst
=lace. /hen all the homes, -arms, ranches, cars and 9usinesses in this countr? >ould 9e
redeemed and the e@uit? returned to the ri8ht-ul o>ners the =eo=le". 1- not, e4er? time the
homes are re-inanced the 9anBs 8et the e@uit? -or -ree. You and 1 must la9or 2! to 3! ?ears
-ull time as the 9anBers sit 9ehind their desBs, lau8hin8 at us 9ecause >e are too stu=id to
-i8ure it out or to -orce them to -ul-ill their contract.
/he V1!!,!!! created in-lation and this increases the e@uit? 4alue o- the homes. (n
an a4era8e homes are re-inanced e4er? $ X ?ears. Fhen the home is re-inanced the 9anB
a8ain recei4es the e@uit? -or -ree. Fhat the 9anB recei4es -or -ree the alle8ed 9orro>er
loses to the 9anB.
52
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
Accordin8 to the ;ederal *eser4e HanBs< o>n 9ooB o- *ichmond, .a. titled
MY()* +(N,YN =a8e se4en, JO7*@+07 7*?21/( +>>250(1 +-* 02( ,*3+, (*07*-OK 1-
a =romissor? note is le8al tender, the 9anB must acce=t it to dischar8e the mort8a8e note.
/he 9anB chan8ed the currenc? -rom the mone? de=osited, mort8a8e note" to checB 9ooB
mone? lia9ilit? the 9anB o>es -or the mort8a8e note de=osited" -orcin8 us to la9or to =a?
interest on the e@uit?, in real =ro=ert? real estate" the 9anB recei4ed -or -ree. /his cost >as
not disclosed in NOTICE TO CUSTOMER REPUIRED "Y FEDERAL LA!6
F*7*-+, R*1*-$* R*35,+(/20 Z.
Fhen a 9anB sa?s the? 8a4e ?ou credit, the? mean the? credited ?our transaction
account, lea4in8 ?ou >ith the =resum=tion that the? de=osited other de=ositors mone? in
the account. /he -act is the? de=osited ?our mone? mort8a8e note". /he 9anB cannot
claim the? o>n the mort8a8e note until the? loan ?ou their mone?. 1- 9anB de=osits ?our
mone?, the? are to credit a 2emand 2e=osit Account under ?our name, so ?ou can >rite
checBs and s=end ?our mone?. 1n this case the? claim ?our mone? is their mone?. AsB a
criminal attorne? >hat ha==ens in a -raudulent con4ersion o- ?our -unds to the 9anBLs use
and 9ene-it, >ithout ?our si8nature or authorization.
Fhat the 9anBs could not >in 4oluntaril?, throu8h dece=tion the? recei4ed -or -ree.
Se4eral =residents, 3ohn Adams, /homas 3e--erson, and A9raham Iincoln 9elie4ed that
9anBer ca=italism >as more dan8erous to our li9erties than standin8 armies. ).S. President
3ames A. Oar-ield said, MFhoe4er controls the mone? in an? countr? is a9solute master o-
industr? and commerce.Q
53
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
/he 5hica8o ;ederal *eser4e HanBLs 9ooB,N+odern +one? +echanicsN, eE=lains
eEactl? ho> the 9anBs eE=and and contract the checB9ooB mone? su==l? -orcin8 =eo=le
into -oreclosure. /his could ne4er ha==en i- contracts >ere not 4iolated and i- >e recei4ed
e@ual =rotection under the la> o- 5ontract.
HO! THE "ANG S!ITCHES THE CURRENCY
/his is a re=eat >orded di--erentl? to 9e sure ?ou understand it.
(ou must understand t)e currency switc).
/he 9anB does not loan mone?. /he 9anB merel? s>itches the currenc?. /he alle8ed
9orro>er created mone? or currenc? 9? sim=l? si8nin8 the mort8a8e note. /he 9anB does
not si8n the mort8a8e note 9ecause the? Bno> the? >ill not loan ?ou their mone?. /he
mort8a8e note acts liBe mone?. /o maBe it looB liBe the 9anB loaned ?ou mone? the 9anB
de=osits ?our mort8a8e note lien on =ro=ert?" as mone? -rom >hich to issue a checB. No
mone? >as loaned to le8all? -ul-ill the contract -or the 9anB to o>n the mort8a8e note. H?
doin8 this, the 9anB recei4ed the lien on the =ro=ert? >ithout risBin8 or usin8 one cent.
/he =eo=le lost the e@uit? in their homes and -arms to the 9anB and no> the? must la9or to
=a? interest on the =ro=ert?, >hich the 9anB 8ot -or -ree and the? lost.
/he checB is not mone?, the checB merel? trans-ers mone? and 9? trans-errin8 mone? the
checB acts I1K, mone?. /he mone? de=osited is the mort8a8e note. If the an0 ne;er
fu!fi!!s the &ontra&t to !oan 9oney, then the an0 does not o8n the 9ort-a-e note. /he
de=osited mort8a8e note is still ?our mone? and the checBin8 account the? set u= in ?our
name, >hich the? credited, -rom >hich to issue the checB, is still ?our mone?. /he? onl?
returned ?our mone? in the -orm o- a checB. Fh? do ?ou ha4e to -ul-ill ?our end o- the
54
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
a8reement i- the 9anB re-uses to -ul-ill their end o- the a8reement: 1- the 9anB does not
loan ?ou their mone? the? ha4e not -ul-illed the a8reement, the contract is 4oid.
Y25 >-*+(*7 >5--*0>. &. 1/@?,. 1/30/03 ()* @2-(3+3* 02(*. /he mort8a8e note
has 4alue 9ecause o- the lien on the =ro=ert? and 9ecause o- the -act that ?ou are to re=a?
the loan. /he 9anB de=osits the mort8a8e note currenc?, +N" to create a checB currenc?,
H+" 9anB mone?". Hoth currencies cost nothin8 to create. H? la> the 9anB cannot create
currenc? H+ a checB" >ithout -irst de=ositin8 currenc?, +N" or le8al tender. ;or the
checB to 9e 4alid there must 9e +N or H+ +1 ,*3+, (*07*-, 9ut the 9anB acce=ted
currenc? +N" as a de=osit >ithout tellin8 ?ou and >ithout ?our authorization.
/he 9anB >ithdre> ?our mone?, >hich the? de=osited >ithout tellin8 ?ou and
>ithdre> it >ithout ?our si8nature, in a -raudulent con4ersion scheme, >hich can land the
9anBers in Jail 9ut is =la?ed out in e4er? 5it? and /o>n in this nation on a dail? 9asis.
!/()25( ,2+0/03 .25 @20*.6 ()* &+0C 7*?21/(1 .25- @20*. %MN'6 D/()7-+D1 /(
+07 >,+/@1 /( /1 ()* &+0CH1 @20*. +07 ()+( /( /1 ()*/- @20*. ()*. ,2+0*7 .25.
1t is not a loan, it is merel? an eEchan8e o- one currenc? -or another, the?Lll o>e
?ou the mone?, >hich the? claimed the? >ere to loan ?ou. 1- the? do not loan the mone?
and merel? eEchan8e one currenc? -or another, the 9anB recei4es the lien on ?our =ro=ert?
-or -ree. Fhat the? 8et -or -ree ?ou lost and must la9or to =a? 9acB at interest.
1- the 9anBs loaned ?ou le8al tender, the? could not recei4e the liens on nearl?
e4er? home, car, -arm, and 9usiness -or -ree. /he =eo=le >ould still o>n the 4alue o- their
homes. /he 9anB must sell ?our currenc? +N" -or le8al tender so i- ?ou use the 9anBLs
currenc? H+", and >ant to con4ert currenc? H+" to le8al tender the? >ill 9e a9le to
55
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
maBe it a==ear that the currenc? H+" is 9acBed 9? le8al tender. /he 9anBLs currenc?
H+" has no 4alue >ithout ?our currenc? +N". /he 9anB cannot sell ?our currenc? +N"
>ithout -ul-illin8 the contract 9? loanin8 ?ou their mone?. /he? ne4er loaned mone?, the?
merel? eEchan8ed one currenc? -or another. /he 9anB recei4ed ?our currenc? -or -ree,
>ithout maBin8 an? loan or -ul-illin8 the contract, chan8in8 the cost and the risB o- the
contract >herein the? re-used to si8n, Bno>in8 that it is a chan8e o- currenc? and not a
loan.
1- ?ou use currenc? +N", the same currenc? the 9anB de=osited to create currenc?
H+", to =a? the loan, the 9anB reJects it and sa?s ?ou must use currenc? H+" or le8al
tender. /he 9anB recei4ed ?our currenc? +N" and the 9anBLs currenc? H+" -or -ree
>ithout usin8 le8al tender and >ithout loanin8 mone? there9? re-usin8 to -ul-ill the
contract. No> the 9anB s>itches the currenc? >ithout loanin8 mone? and demands to
recei4e ?our la9or to =a? >hat >as not loaned or the 9anB >ill use ?our currenc? +N"
mort8a8e note" to 9u? ?our home in -oreclosure, /he *e4olutionar? >ar >as -ou8ht to
sto= these 9anB schemes. /he 9anB has a >ritten =olic? to eE=and and contract the
currenc? H+", creatin8 recessions, -orcin8 =eo=le out o- >orB, allo>in8 the 9anBs to
o9tain ?our =ro=ert? -or -ree.
1- the 9anBs loaned le8al tender, this >ould ne4er ha==en and the home >ould cost
much less. 1- ?ou allo> someone to o9tain liens -or -ree and create a ne> currenc?, >hich
is not le8al tender and ?ou must use le8al tender to re=a?. /his chan8es the cost and the
risB.
56
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
)nder this 9anB scheme, e4en i- e4er?one in the nation o>ned their homes and
-arms de9t -ree, the 9anBs >ould soon recei4e the liens on the =ro=ert? in the loan =rocess.
/he liens the 9anBs recei4e -or -ree, are >hat the =eo=le lost in =ro=ert?, and no> must
la9or to =a? interest on. /he interest >ould not 9e =aid i- the 9anBs -ul-illed the contract
the? >rote. 1- there is e@ual =rotection under the la> and contract, ?ou could 8et the
mort8a8e note 9acB >ithout -urther la9or. Fh? should the 9anB 8et ?our mort8a8e note
and ?our la9or -or -ree >hen the? re-use to -ul-ill the contract the? >rote and told ?ou to
si8n:
Sorr? -or the redundanc?, 9ut it is im=ortant -or ?ou to Bno> 9? heart their Mshell
8ameN, 1 >ill continue in that redundanc? as it is im=erati4e that ?ou understand the
=rinci=le. /he -ollo>in8 material is case la> on the su9Ject and other related le8al issues
as >ell as a summar?.
LOGIC AS EVIDENCE
/he checB >as >ritten >ithout deductin8 -unds -rom SA or 52 allo>in8 the +N to
9ecome the ne>, =ool o- mone? o>ed to 22A, SA, 52 >ith 22A, SA, 52 increasin8 9?
the amount o- the +N. 1n this case the 9anBers sell the +N -or ;*HNLs or other assets
>hile still o>in8 the lia9ilit? -or the +N sold and >ithout the 9anB 8i4in8 u= an?#
;*HNLS.
1- the 9anB had to =art >ith ;*HNLS, and >ithout the 9ene-it o- checBs to hide the
-raudulent con4ersion o- the +N -rom >hich it issues the checB, the 9anB -raud >ould 9e
eE=osed.
5$
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
;*HNLs are the onl? mone? called le8al tender. 1- onl? ;*HNLs are de=osited -or
the credit to 22A# SA52, and i- the 9anB >rote a checB -or the +N, the checB then
trans-ers ;*HNLs and the 9anB 8i4es the 9orro>er a 9anB asset. /here is no increase in the
checB 9ooB mone? su==l? that eEists in the loan =rocess.
/he 9anB =olic? is to increase 9anB lia9ilitiesD 22A, SK, 52, 9? the +N. 1- the
+N is mone?, then the 9anB ne4er 8a4e u= a 9anB asset. /he 9anB sim=l? used -raudulent
con4ersion o- o>nershi= o- the +N. /he 9anB cannot o>n the +N until the 9anB -ul-ills
the contract.
/he checB is not the mone?D the mone? is the de=osit that maBes the checB 8ood. 1n
this case, the mort8a8e note is the mone? -rom >hich the checB is issued. Fho o>ns the
+N >hen the +N is de=osited: /he 9orro>er o>ns the +N 9ecause the 9anB ne4er =aid
mone? -or the +N and ne4er loaned mone? 9anB asset". /he 9anB sim=l? claimed the
9anB o>ned the +N >ithout =a?in8 -or it and de=osited the +N -rom >hich the checB
>as issued. /his is -raudulent con4ersion. /he 9anB risBed nothin8Y Not e4en one =enn?
>as in4ested. /he? ne4er tooB mone? out o- an? account, in order to o>n the +N, as
=ro4en 9? the 9ooBBee=in8 entries, -inancial ratios, the 9alance sheet, and o- course the
9anBLs literature. /he 9anB sim=l? ne4er com=lied >ith the contract.
1- the +N is not mone?, then the checB is checB Bitin8 and the 9anB is insol4ent and
the 9anB still ne4er =aid. 1- the +N is mone?, the 9anB tooB our mone? >ithout sho>in8
the de=osit, and >ithout =a?in8 -or it, >hich is -raudulent con4ersion. /he 9anB claimed it
o>ned the +N >ithout =a?in8 -or it, then sold the +N, tooB the cash and ne4er used the
cash to =a? the lia9ilit? it o>ed -or the checB the 9anB issued. /he lia9ilit? means that the
58
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
9anB still o>es the mone?. /he 9anB must return the +N or the cash it recei4ed in the sale,
in order to =a? the lia9ilit?. ,4en i- the 9anB did this, the 9anB still ne4er loaned us the
9anBLs mone?, >hich is >hat LloanL means. /he checB is not mone? 9ut merel? an order to
=a? mone?. 1- the mort8a8e note is mone? then the 9anB must =a? the checB 9? returnin8
the +N.
/he onl? >a? the 9anB can =a? ;*HNLs -or the checB issued is to sell the +N -or
;*HNLs. ;*HNLs are non#redeema9le in 4iolation o- the )55. /he 9anB -orces us to trade
in non#redeema9le =ri4ate 9anB notes o- >hich the 9anB re-uses to =a? the lia9ilit? o>ed.
Fhen >e =resent the ;*HNLs -or =a?ment the 9anB Just 8i4es us 9acB another ;*HN
>hich the 9anB =aid 2 X cents -or =er 9ill re8ardless o- denomination.
Fhat a =ro-it -or the 9anBY
/he checB issued can onl? 9e redeemed in ;*HNLs, >hich the 9anB o9tained 9?
sellin8 the +N that the? =aid nothin8 -or.
/he 9anB -orces us to trade in 9anB lia9ilities, >hich the? ne4er redeem in an asset.
Fe the =eo=le are -orced to 8i4e u= our assets to the 9anB -or -ree, and >ithout cost to the
9anB.
/his is -raudulent con4ersion maBin8 the contract, >hich the 9anB created >ith
their =olic? o- 9ooBBee=in8 entries, ille8al and the alle8ed contract null and 4oid.
/he 9anB has no ri8ht to the +N or to a lien on the =ro=ert?, until the 9anB =er-orms under
the contract.
/he 9anB had less than ten =ercent o- ;*HNLs to 9acB u= the 9anB lia9ilities in
22A, SA, or 52Ls. A 9anB lia9ilit? to =a? mone? is not mone?. Fhen >e tr? and re=a?
5A
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
the 9anB in liBe -unds such as is the 9anB<s =olic? to de=osit -rom >hich to issue checBs"
the? claim it is not mone?. /he 9anBLs con-usin8 and dece=ti4e trade =ractices and their
alle8ed contracts are unconsciona9le.
SUMMARY OF DAMAGES
/he 9anB made the alle8ed 9orro>er a de=ositor 9? de=ositin8 a V1!!,!!!
ne8otia9le instrument, >hich the 9anB sold or had a4aila9le to sell -or a==roEimatel?
V1!!,!!! in le8al tender. /he 9anB did not credit the 9orro>erLs transaction account
sho>in8 that the 9anB o>ed the 9orro>er the V1!!,!!!. *ather the 9anB claimed that the
alle8ed 9orro>er o>ed the 9anB the V1!!,!!!, then =laced a lien on the 9orro>erLs real
=ro=ert? -or V1!!,!!! and demanded loan =a?ments or the 9anB >ould -oreclose.
/he 9anB de=osited a non#le8al tender ne8otia9le instrument and eEchan8ed it -or
another non#le8al tender checB, >hich traded liBe mone?, usin8 the de=osited ne8otia9le
instrument as the mone? de=osited. /he 9anB chan8ed the currenc? >ithout the 9orro>erLs
authorization. ;irst 9? de=ositin8 non le8al tender -rom >hich to issue a checB >hich is
non#le8al tender" and usin8 the ne8otia9le instrument ?our mort8a8e note", to eEchan8e
-or le8al tender, the 9anB needed to maBe the checB a==ear to 9e 9acBed 9? le8al tender.
No loan e4er tooB =lace. !)/>) 1)*,, )/7*1 ()* ,/((,* ?*+Q
/he transaction that tooB =lace >as merel? a chan8e o- currenc? >ithout
authorization", a ne8otia9le instrument -or a checB. /he ne8otia9le instrument is the
mone?, >hich can 9e eEchan8ed -or le8al tender to maBe the checB 8ood. An eEchan8e is
not a loan. /he 9anB eEchan8ed V1!!,!!! -or V1!!,!!!. /here >as no need to 8o to the
9anB -or an? mone?. /he customer alle8ed 9orro>er" did not recei4e a loan, the alle8ed
6!
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
9orro>er lost V1!!,!!! in 4alue to the 9anB, >hich the 9anB Be=t and recorded as a 9anB
asset and ne4er loaned an? o- the 9anBLs mone?.
1n this eEam=le, the dama8es are V1!!,!!! =lus interest =a?ments, >hich the 9anB
demanded 9? mail. /he 9anB ille8all? =laced a lien on the =ro=ert? and then threatened to
-oreclose, -urther dama8in8 the alle8ed 9orro>er, i- the =a?ments >ere not made.
A de=ositor is o>ed mone? -or the de=osit and the alle8ed 9orro>er is o>ed mone? -or the
loan the 9anB ne4er made and ?et =laced a lien on the real =ro=ert? demandin8 =a?ment.
D+@+3*1 *E/1( /0 ()+( ()* &+0C -*951*1 (2 ,2+0 ()*/- @20*.. /he 9anB denies the
alle8ed 9orro>er e@ual =rotection under the la> and contract, 9? merel? eEchan8in8 one
currenc? -or another and re-usin8 re=a?ment in the same t?=e o- currenc? de=osited. /he
9anB re-used to -ul-ill the contract 9? not loanin8 the mone?, and 9? the 9anB re-usin8 to
9e re=aid in the same currenc?, >hich the? de=osited as an eEchan8e -or another currenc?.
A de9t tender o--ered and re-used is a de9t =aid to the eEtent o- the o--er. /he 9anB has no
authorization to alter the alle8ed contract and to re-use to =er-orm 9? not loanin8 mone?,
9? chan8in8 the currenc? and then re-usin8 re=a?ment in >hat the 9anB has a >ritten
=olic? to de=osit.
/he seller o- the home recei4ed a checB. /he mone? de=osited -or the checB issued
came -rom the 9orro>er not the 9anB. /he 9anB has no ri8ht to the mort8a8e note until the
9anB =er-orms 9? loanin8 the mone?.
1n the transaction the 9anB >as to loan le8al tender to the 9orro>er, in order -or the
9anB to secure a lien. /he 9anB ne4er made the loan, 9ut Be=t the mort8a8e note the
alle8ed 9orro>er si8ned. /his allo>ed the 9anB to o9tain the e@uit? in the =ro=ert? 9? a
61
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
lien" and trans-er the >ealth o- the =ro=ert? to the 9anB >ithout the 9anBLs in4estment,
loan, or risB o- mone?. /hen the 9anB recei4es the alle8ed 9orro>erLs la9or to =a? =rinci=al
and )sur? interest. Fhat the =eo=le o>ned or should ha4e o>ned de9t -ree, the 9anB
o9tained o>nershi= in, and -or -ree, in eEchan8e -or the =eo=le recei4in8 a de9t, =a?in8
interest to the 9anB, all 9ecause the 9anB re-used to loan mone? and merel? eEchan8ed one
currenc? -or another. /his =laces ?ou in =er=etual sla4er? to the 9anB 9ecause the 9anB
re-uses to =er-orm under the contract. /he lien -orces =a?ment 9? threat o- -oreclosure.
/he mail is used to eEtort =a?ment on a contract the 9anB ne4er -ul-illed.
1- the 9anB re-uses to =er-orm, then the? must return the mort8a8e note. 1- the 9anB >ishes
to =er-orm, then the? must maBe the loan. /he =ast =a?ments must 9e returned 9ecause the
9anB had no ri8ht to lien the =ro=ert? and eEtort interest =a?ments. /he 9anB has no ri8ht
to sell a mort8a8e note -or t>o reasons. /he mort8a8e note >as de=osited and the mone?
>ithdra>n >ithout authorization 9? usin8 a -or8ed si8nature andD t>o, the contract >as
ne4er -ul-illed. /he 9anB acted >ithout authorization and is in4ol4ed in a -raud there9?
dama8in8 the alle8ed 9orro>er.
EE>*-?(1 9-2@ JM27*@ M20*. M*>)+0/>1K P+3*1 R 6
Fhat +aBes +one? .alua9le: 1n the )nited States neither =a=er currenc? nor de=osits
ha4e 4alue as commodities. 1ntrinsicall?, a dollar 9ill is Just a =iece o- =a=er, de=osits
merel? 9ooB entries. 5oins do ha4e some intrinsic 4alue as metal, 9ut 8enerall? -ar less
than -ace 4alue.
/hen, 9anBers disco4ered that the? could maBe loans merel? 9? 8i4in8 their =romises to
=a?, or 9anB notes, to 9orro>ers, in this >a?, 9anBs 9e8an to create mone?. +ore notes
could 9e issued than the 8old and coin on hand 9ecause onl? a =ortion o- the notes
outstandin8 >ould 9e =resented -or =a?ment at an? one time. ,nou8h metallic mone? had
to 9e Be=t on hand, o- course, to redeem >hate4er 4olume o- notes >as =resented -or
=a?ment.
/ransaction de=osits are the modem counter=art o- 9anB notes. 1t >as a small ste= -rom
=rintin8 notes to maBin8 9ooB entries creditin8 de=osits o- 9orro>ers, >hich the 9orro>ers
in turn could Qs=endQ 9? >ritin8 checBs, there9? Q=rintin8Q their o>n mone?.
N2(*16 *E>)+03* B51( ,/C* >)*>C1.
0o> do o=en marBet =urchases add to 9anB reser4es and de=osits: Su==ose the ;ederal
*eser4e S?stem, throu8h its tradin8 desB at the ;ederal *eser4e HanB o- Ne> YorB, 9u?s
62
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
V1!,!!! o- /reasur? 9ills -rom a dealer in ).S. 8o4ernment securities. 1n toda?Ls >orld o-
5om=uter -inancial transactions, the ;ederal *eser4e HanB =a?s -or the securities >ith an
QelectronicQ checB dra>n on itsel-. .ia its Q;ed>ireQ trans-er net>orB, the ;ederal *eser4e
noti-ies the dealerLs desi8nated 9anB HanB A" that =a?ment -or the securities should 9e
credited to de=osited in" the dealerLs account at HanB A. At the same time, HanB ALs
reser4e account at the ;ederal *eser4e is credited -or the amount o- the securities
=urchased. /he ;ederal *eser4e S?stem has added V1!,!!! o- securities to its assets,
>hich it has =aid -or, in e--ect, 9? creatin8 a lia9ilit? on itsel- in the -orm o- 9anB reser4e
9alances. /hese reser4es on HanB ALs 9ooBs are matched 9? V1!,!!! o- the dealerLs
de=osits that did not eEist 9e-ore.
1- 9usiness is acti4e, the 9anBs >ith eEcess reser4es =ro9a9l? >ill ha4e o==ortunities to
loan the VA,!!!. (- course, the? do not reall? =a? out loans -rom mone? the? recei4e as
de=osits. 1- the? did this, no additional mone? >ould 9e created. Fhat the? do >hen the?
maBe loans is to acce=t =romissor? notes in eEchan8e -or credits to tile 9orro>erLs
transaction accounts. Ioans assets" and de=osits lia9ilities" 9oth rise 9? VA,!!!. *eser4es
are unchan8ed 9? the loan transactions. Hut the de=osit credits constitute ne> additions to
the total de=osits o- the 9anBin8 s?stem.
P*((; HANKS 2,P(S1/ N(/,S AN2 1SS), HANK 50,5KS. /0, 50,5KS A*,
(NIY AS O((2 AS /0, P*(+1SS(*Y N(/,. N,A*IY AII HANK 50,5KS A*,
5*,A/,2 ;*(+ P*1.A/, N(/,S. ;,2,*AI *,S,*., HANK N(/,S A*, A
P*1.A/, 5(*P(*A/, N(/, 03* 1A2" F, )S, N(/,S /( 21S50A*O, N(/,S.
,Ecer=t -rom 9ooBlet Your +one?, =a8e $6
(ther +1 +one?
Fhile demand de=osits, tra4eler<s checBs, and interest#9earin8 accounts >ith unlimited
checBin8 authorit? are not le8al tender, the? are usuall? acce=ta9le in =a?ment -or
=urchases o- 8oods and ser4ices.
/he 9ooBlet, MYour +one?N, is distri9uted -ree o- char8e. Additional co=ies ma? 9e
o9tained 9? >ritin8 to6 F*7*-+, R*1*-$* "+0C 29 R/>)@207 P5&,/> S*-$/>*1
D*?+-(@*0( P.O. "2E 2;622 R/>)@2076 V/-3/0/+ 2261
CREDIT LOANS AND VOID CONTRACTS# CASE LA!
1. M1n the -ederal courts, it is >ell esta9lished that a national 9anB has not =o>er to
lend its credit to another 9? 9ecomin8 suret?, endorser, or 8uarantor -or him.NL
;armers and +iners HanB 4. Hlue-ield Nat Ll HanB, 11 ; 2d 83, 2$1 ).S. 66A.
2. QA national 9anB has no =o>er to lend its credit to an? =erson or cor=oration . . .
Ho>en 4. Needles Nat. HanB, A4 ; A25 36 55A 553, certiorari denied in 2! S.5t
1!24, 1$6 )S 682, 44 I,2 63$.
3. M/he doctrine o- ultra 4ires is a most =o>er-ul >ea=on to Bee= =ri4ate cor=orations
>ithin their le8itimate s=heres and to =unish them -or 4iolations o- their cor=orate
charters, and it =ro9a9l? is not in4oBed too o-ten ... Tinc 5ar9onate 5o. 4. ;irst
National HanB, 1!3 Fis 125, $A NF 22A. American ,E=ress 5o. 4. 5itizens State
HanB, 1A4 NF 43!.
4. MA 9anB ma? not lend its credit to another e4en thou8h such a transaction turns out
to ha4e 9een o- 9ene-it to the 9anB, and in su==ort o- this a list o- cases mi8ht 9e
cited, >hich#>ould !oo0 !i0e a &ata!o- of ships.N C,m=hasis addedP Norton Orocer?
5o. 4. Peo=les Nat. HanB, 144 S, 5!5. 151 .a 1A5.
5. Q1t has 9een settled 9e?ond contro4ers? that a national 9anB, under -ederal Ia>
9ein8 limited in its =o>ers and ca=acit?, cannot lend its credit 9? 8uaranteein8 the
63
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
de9ts o- another. All such contracts entered into 9? its o--icers are ultra 4ires . . .Q
0o>ard S ;oster 5o. 4. 5itizens NatLl HanB o- )nion, 133 S5 2!2, 13! S,
$5A1A26".
6. M. . . checBs, dra-ts, mone? orders, and 9anB notes are not la>-ul mone? o- the
)nited States ...N State 4. Neilon, $3 Pac 324, 43 (re 168.
$. QNeither, as included in its =o>ers not incidental to them, is it a =art o- a 9anBLs
9usiness to lend its credit. 1- a 9anB could lend its credit as >ell as its mone?, it
mi8ht, i- it recei4ed com=ensation and >as care-ul to =ut its name onl? to solid
=a=er, maBe a 8reat deal more than an? la>-ul interest on its mone? >ould amount
to. 1- not care-ul, the =o>er >ould 9e the mother o- =anics, . . . 1ndeedD lendin8
credit is the eEact o==osite o- lendin8 mone?, >hich is the real 9usiness o- a 9anB,
-or >hile the latter creates a lia9ilit? in -a4or o- the 9anB, the -ormer 8i4es rise to a
lia9ilit? o- the 9anB to another. I Morse. /an0s and /an0in- 5th ,d. Sec 65D Ma-ee,
/an0s and /an0in-, 3rd ,d. Sec 248.Q American ,E=ress 5o. 4. 5itizens State
HanB, 1A4 NF 42A.
8. Q1t is not >ithin those statutor? =o>ers -or a national 9anB, e4en thou8h sol4ent, to
lend its credit to another in an? o- the 4arious >a?s in >hich that mi8ht 9e done.Q
;ederal 1ntermediate 5redit HanB 4. I L0errison, 33 ; 2d 841, 842 1A2A".
A. Q/here is no dou9t 9ut >hat the la> is that a national 9anB cannot lend its credit or
9ecome an accommodation endorser.Q National HanB o- 5ommerce 4. AtBinson, 55
, 4$1.
1!. QA 9anB can lend its mone?, 9ut not its credit.Q ;irst NatLl HanB o- /alla=oosa 4.
+onroe . 135 Oa 614, 6A S, 1124, 32 I*A NS" 55!.
11. Q.. . /he 9anB is allo>ed to hold mone? u=on =ersonal securit?D 9ut it must 9e
mone? that it loans, not its credit.Q Seli8man 4. 5harlottes4ille Nat. HanB, 3 0u8hes
64$, ;ed 5ase No.12, 642, 1!3A.
12. QA loan ma? 9e de-ined as the deli4er? 9? one =art? to and the recei=t 9? another
=art? o-, a sum o- mone? u=on an a8reement, eE=ress or im=lied, to re=a? the sum
>ith or >ithout interest.Q Parsons 4. ;oE 1$A Oa 6!5, 1$6 S, 644. Also see
KirBland 4. Haile?, 155 S, 2d $!1 and )nited States 4. Nei-ert Fhite 5o., 24$ ;ed
Su== 8$8, 8$A.
13. Q/he >ord Lmone?L in its usual and ordinar? acce=tation means 8old, sil4er, or =a=er
mone? used as a circulatin8 medium o- eEchan8e . . .Q Iane 4. *aile? 28! K? 31A,
133 SF 2d $5.
14. QA =romise to =a? cannot, 9? ar8ument, ho>e4er in8enious, 9e made the e@ui4alent
o- actual =a?ment ...Q 5hristensen 4. Hee9e, A1 P 133, 32 )tah 4!6.
15. MA 9anB is not the holder in due course u=on merel? creditin8 the de=ositors
account.N HanBers /rust 4. Na8ler, 22A NYS 2d 142, 143.
16. QA checB is merel? an order on a 9anB to =a? mone?.Q Youn8 4. 0em9ree, $3 P2d
3A3.
1$. QAn? -alse re=resentation o- material -acts made >ith Bno>led8e o- -alsit? and >ith
intent that it shall 9e acted on 9? another in enterin8 into contract, and >hich is so
64
1
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3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
acted u=on, constitutes L-raud,L and entitles =art? decei4ed to a4oid contract or
reco4er dama8es.Q Harnsdall *e-inin8 5orn. 4. Hirnam Food (il 5o... A2 ; 26 81$.
18. QAn? conduct ca=a9le o- 9ein8 turned into a statement o- -act is re=resentation.
/here is no distinction 9et>een misre=resentations e--ected 9? >ords and
misre=resentations e--ected 9? other acts.Q Ieonard 4. S=rin8er 1A$ 1ll 532. 64 N,
3!1.
1A. M1- an? =art o- the consideration -or a =romise 9e ille8al, or i- there are se4eral
considerations -or an unse4era9le =romise one o- >hich is ille8al, the =romise,
>hether >ritten or oral, is >holl? 4oid, as it is im=ossi9le to sa? >hat =art or >hich
one o- the considerations induced the =romise.N +enominee *i4er 5o. 4. Au8ustus
S=ies I S 5 5o., 14$ Fis 55A. 5$2D 132 NF 1122.
2!. M/he contract is 4oid i- it is onl? in =art connected >ith the ille8al transaction and
the =romise sin8le or entire.N Ouardian A8enc? 4. Ouardian +ut. Sa4in8s HanB,
22$ Fis 55!, 2$A NF 83.
21. M1t is not necessar? -or rescission o- a contract that the =art? maBin8 the
misre=resentation should ha4e Bno>n that it >as -alse, 9ut reco4er? is allo>ed e4en
thou8h misre=resentation is innocentl? made, 9ecause it >ould 9e unJust to allo>
one >ho made -alse re=resentations, e4en innocentl?, to retain the -ruits o- a
9ar8ain induced 9? such re=resentations.N Fhi== 4. 14erson, 43 Fis 2d 166.
22. Q,ach ;ederal *eser4e HanB is a se=arate cor=oration o>ned 9? commercial 9anBs
in its re8ion ...Q Ie>is 4. )nited States, 68! ; 2! 123A 1A82".
23. 1n a 2e9torLs *15( action a8ainst its creditor, alle8in8 that the creditor had
collected an unla>-ul de9t, an interest rate >here all loan char8es >ere added
to8ether" that eEceeded, in the lan8ua8e o- the *15( Statute, Qt>ice the en-orcea9le
rate.Q /he 5ourt -ound no reason to im=ose a re@uirement that the Plainti-- sho>
that the 2e-endant had 9een con4icted o- collectin8 an unla>-ul de9t, runnin8 a
Qloan sharBin8Q o=eration. /he de9t included the -act that eEaction o- a usurious
interest rate rendered the de9t unla>-ul and that is all that is necessar? to su==ort
the 5i4il *15( action. 2urante Hros. S Sons, 1nc. 4. ;lushin8 Nat Ll HanB. $55 ;2d
23A, 5ert. denied, 4$3 )S A!6 1A85".
24. /he Su=reme 5ourt -ound that the Plainti-- in a ci4il *15( action need esta9lish
onl? a criminal Q4iolationQ and not a criminal con4iction. ;urther, the 5ourt held
that the 2e-endant need onl? ha4e caused harm to the Plainti-- 9? the commission
o- a =redicate o--ense in such a >a? as to constitute a Q=attern o- *acBeteerin8
acti4it?.Q /hat is, the Plainti-- need not demonstrate that the 2e-endant is an
or8anized crime -i8ure, a mo9ster in the =o=ular sense, or that the Plainti-- has
su--ered some t?=e o- s=ecial *acBeteerin8 inJur?D all that the Plainti-- must sho> is
>hat the Statute s=eci-icall? re@uires. /he *15( Statute and the ci4il remedies -or
its 4iolation are to 9e li9erall? construed to a--ect the con8ressional =ur=ose as
9roadl? -ormulated in the Statute. Sedima, SP*I 4. 1mreE 5o., 4$3 )S 4$A 1A85".
DEFINITIONS TO GNO! !HEN EIAMINING A "ANG CONTRACT
1. "ANG ACCOUNT# A sum o- mone? =laced >ith a 9anB or 9anBer, on de=osit, 9?
a customer, and su9Ject to 9e dra>n out on the latterLs checB.
65
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
2. "ANG6 >hose 9usiness it is to recei4e mone? on de=osit, cash checBs or dra-ts,
discount commercial =a=er, maBe loans and issue =romissor? notes =a?a9le to
9earer, Bno>n as 9anB notes.
3. "ANG CREDIT6 A credit >ith a 9anB 9? >hich, on =ro=er credit ratin8 or =ro=er
securit? 8i4en to the 9anB, a =erson recei4es li9ert? to dra> to a certain eEtent
a8reed u=on.
4. "ANG DEPOSIT# 5ash, checBs or dra-ts =laced >ith the 9anB -or credit to
de=ositorLs account. Placement o- mone? in 9anB, there9?, creatin8 contract
9et>een 9anB and de=ositors.
5. DEMAND DEPOSIT6 /he ri8ht to >ithdra> de=osit at an? time.
6. "ANG DEPOSITOR6 (ne >ho deli4ers to, or lea4es >ith a 9anB a sum o- mone?
su9Ject to his order.
$. "ANG DRAFT6 A checB, dra-t or other -orm o- =a?ment.
8. "ANG OF ISSUE4 HanB >ith the authorit? to issue notes >hich are intended to
circulate as currenc?.
A. LOAN6 2eli4er? 9? one =art? to, and recei=t 9? another =art?, a sum o- mone?
u=on a8reement, eE=ress or im=lied, to re=a? it >ith or >ithout interest.
1!. CONSIDERATION6 /he inducement to a contract. /he cause, moti4e, =rice or
im=ellin8 in-luences, >hich induce a contractin8, =art? to enter into a contract. /he
reason or material cause o- a contract. See ille8al consideration and im=ossi9le
consideration."
11. >)*>C# A dra-t dra>n u=on a 9anB and =a?a9le on demand, si8ned 9? the maBer or
dra>er, containin8 an unconditional =romise to =a? a certain sum in mone? to the
order o- the =a?ee. /he ;ederal *eser4e Hoard de-ines a checB as, LMa draft or
order upon a an0 or an0in- house purportin- to e dra8n upon a deposit of
funds for the pay9ent at a!! e;ents of, a &ertain su9 of 9oney to a &ertain person
therein na9ed, or to hi9 or his order, or to earer and paya!e instant!y on de9and
of.L
PUESTIONS ONE MIGHT ASG THE "ANG IN AN INTERROGATORY
1. 2id the 9anB loan 8old or sil4er to the alle8ed 9orro>er:
2. 2id the 9anB loan credit to the alle8ed 9orro>er:
3. 2id the 9orro>er si8n an? a8reement >ith the 9anB, >hich =re4ents the 9orro>er
-rom re=a?in8 the 9anB in credit:
4. 1s it true that ?our 9anB creates checB 9ooB mone? >hen the 9anB 8rants loans,
sim=l? 9? addin8 de=osit dollars to accounts on the 9anBLs 9ooBs, in eEchan8e, -or
the 9orro>erLs mort8a8e note:
5. 0as ?our 9anB, at an? time, used the 9orro>erLs mort8a8e note, Q=romise to =a?Q, as
a de=osit on the 9anBLs 9ooBs -rom >hich to issue 9anB checBs to the 9orro>er:
66
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
6. At the time o- the loan to the alle8ed 9orro>er, >as there one dollar o- ;ederal
*eser4e HanB Notes in the 9anBLs =ossession -or e4er? dollar o>ed in Sa4in8s
Accounts, 5erti-icates o- 2e=osits and checB Accounts 2emand 2e=osit Accounts"
-or e4er? dollar o- the loan:
$. Accordin8 to the 9anBLs =olic?, is a =romise to =a? mone? the e@ui4alent o- mone?:

8. 2oes the 9anB ha4e a =olic? to =re4ent the 9orro>er -rom dischar8in8 the mort8a8e
note in QliBe Bind -undsQ >hich the 9anB de=osited -rom >hich to issue the checB:
A. 2oes the 9anB ha4e a =olic? o- 4iolatin8 the 2ece=ti4e /rade Practices Act:
1!. Fhen the 9anB loan o--icer talBs to the 9orro>er, does the 9anB in-orm the
9orro>er that the 9anB uses the 9orro>ers mort8a8e note to create the 4er? mone?
the 9anB loans out to the 9orro>er:
11. 2oes the 9anB ha4e a =olic? to sho> the same mone? in t>o se=arate =laces at the
same time:
12. 2oes the 9anB claim to loan out mone? or credit -rom sa4in8s and certi-icates o-
de=osits >hile ne4er reducin8 the amount o- mone? or credit -rom sa4in8s accounts
or certi-icates o- de=osits, >hich customers can >ithdra> -rom:
13. )sin8 the 9anBin8 =ractice in =lace at the time the loan >as made, is it theoreticall?
=ossi9le -or the 9anB to ha4e loaned out a =ercenta8e o- the Sa4in8s Accounts and
5erti-icates o- 2e=osits:
14. 1- the ans>er is QnoQ to @uestion #13, eE=lain >h? the ans>er is no.
15. 1n re8ards to @uestion #13, at the time the loan >as made, >ere there enou8h
;ederal *eser4e HanB Notes on hand at the 9anB to match the -i8ures re=resented
9? e4er? Sa4in8s Account and 5erti-icate o- 2e=osit and checBin8 Account
2emand 2e=osit Account":
16. 2oes the 9anB ha4e to o9e?, the la>s concernin8, 5ommercial Pa=erD 5ommercial
/ransactions, 5ommercial 1nstruments, and Ne8otia9le 1nstruments:
1$. 2id the 9anB lend the 9orro>er the 9anBLs assets, or the 9anBLs lia9ilities:
18. Fhat is the com=lete name o- the 9anBin8 entit?, >hich em=lo?s ?ou, and in >hat
Jurisdiction is the 9anB chartered:
1A. Fhat is the 9anBLs de-inition o- QIoan 5reditQ:
2!. 2id the 9anB use the 9orro>ers assumed mort8a8e note to create ne> 9anB mone?,
>hich did not eEist 9e-ore the assumed mort8a8e note >as si8ned:
21. 2id the 9anB taBe mone? -rom an? 2emand 2e=osit Account 22A", Sa4in8s
Account SA", or a 5erti-icate o- 2e=osit 52", or an? com9ination o- an? 22A,
SA or 52, and loan this mone? to the 9orro>er:
22. 2id the 9anB re=lace the mone? or credit, >hich it loaned to the 9orro>er >ith the
9orro>erLs assumed mort8a8e note:
6$
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
23. 2id the 9anB taBe a 9anB asset called mone?, or the credit used as collateral -or
customersL 9anB de=osits, to loan this mone? to the 9orro>er, andGor did the 9anB
use the 9orro>erLs note to re=lace the asset it loaned to the 9orro>er:
24. 2id the mone? or credit, >hich the 9anB claims to ha4e loaned to the 9orro>er,
come -rom de=osits o- mone? or credit made 9? the 9anBLs customers, eEcludin8 the
9orro>erLs assumed mort8a8e note:
25. 5onsiderin8 the 9alance sheet entries o- the 9anBLs loan o- mone? or credit to the
9orro>er, did the 9anB directl? decrease the customer de=osit accounts i.e. 22A,
SA, and 52" -or the amount o- the loan:
26. 2escri9e the 9ooBBee=in8 entries re-erred to in @uestion #13.
2$. 2id the 9anBLs 9ooBBee=in8 entries to record the loan and the 9orro>erLs assumed
mort8a8e note e4er, at an? time, directl? decrease the amount o- mone? or credit
-rom an? s=eci-ic 9anB customerLs de=osit account:
28. 2oes the 9anB ha4e a =olic? or =ractice to >orB in coo=eration >ith other 9anBs or
-inancial institutions use 9orro>erLs mort8a8e note as collateral to create an
o--settin8 amount o- ne> 9anB mone? or credit or checB 9ooB mone? or 22A
8enerall? to e@ual the amount o- the alle8ed loan:
2A. *e8ardin8 the 9orro>ers assumed mort8a8e loan, 8i4e the name o- the account
>hich >as de9ited to record the mort8a8e.
3!. *e8ardin8 the 9ooBBee=in8 entr? re-erred to in 1nterro8ator? #1$ states the name
and =ur=ose o- the account, >hich >as credited.
31. Fhen the 9orro>erLs assumed mort8a8e note >as de9ited as a 9ooBBee=in8 entr?,
>as the o--settin8 entr? a credit account:
32. *e8ardin8 the initial 9ooBBee=in8 entr? to record the 9orro>erLs assumed mort8a8e
note and the assumed loan to the 9orro>er, >as the 9ooBBee=in8 entr? credited -or
the mone? loaned to the 9orro>er, and >as this credit o--set 9? a de9it to record the
9orro>erLs assumed mort8a8e note:
33. 2oes the 9anB currentl? or has it e4er at an?time used the 9orro>erLs assumed
mort8a8e note as mone? to co4er the 9anBLs lia9ilities re-erred to a9o4e, i.e. 22A,
SA and 52:
34. Fhen the assumed loan >as made to the 9orro>er, did the 9anB ha4e e4er? 22A,
SA, and 52 9acBed u= 9? ;ederal *eser4e HanB Notes on hand at the 9anB:
35. 2oes the 9anB ha4e an esta9lished =olic? and =ractice to emit 9ills o- credit >hich
it creates u=on its 9ooBs at the time o- maBin8 a loan a8reement and issuin8 mone?
or so#called mone? o- credit, to its 9orro>ers:
SUMMARY OF THIS SECTION
/he 9anB ad4ertised it >ould loan mone?, >hich is 9acBed 9? le8al tender. 1s not
that >hat the s?m9ol V means: 1s that not >hat the contract said: 2o ?ou not Bno> there is
68
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
no a8reement or contract in the a9sence o- mutual consent: /he 9anB ma? sa? that the?
8a4e ?ou a checB, ?ou o>e the 9anB mone?. /his in-ormation sho>s ?ou that the checB
came -rom the mone? the alle8ed 9orro>er =ro4ided and the 9anB ne4er loaned an?
mone? -rom other de=ositors.
I$* 1)2D0 .25 ()* ,+D +07 ()* &+0C1 2D0 ,/(*-+(5-* (2 ?-2$* @. >+1*. All the
9anB did >as tricB ?ou. /he? 8et ?our mort8a8e note >ithout in4estin8 one cent, 9?
maBin8 ?ou a de=ositor and not a 9orro>er. T)* C*. (2 ()* ?5FF,* /16 ()* &+0C 7/7 02(
1/30 ()* >20(-+>(. I9 ()*. 7/7 ()*. @51( ,2+0 .25 ()* @20*.. I9 ()*. 7/7 02( 1/30 /(6
>)+0>*1 +-*6 ()*. 7*?21/(*7 ()* @2-(3+3* 02(* /0 + >)*>C/03 +>>250( +07 51*7 /( (2
/115* + >)*>C D/()25( *$*- ,2+0/03 .25 @20*. 2- ()* &+0C /0$*1(/03 20* >*0(.
(ur Nation, alon8 >ith e4er? State o- the )nion, entered into HanBru=tc?, in 1A33.
/his chan8es the la> -rom Q8old and sil4erN le8al mone? andNcommon la>Q to the la> o-
9anBru=tc?. )nder HanBru=tc? la> the mort8a8e note acts liBe mone?. (nce ?ou si8n the
mort8a8e note it acts liBe mone?. /he 9anBers no> tricB ?ou into thinBin8 the? loaned ?ou
le8al tender, >hen the? ne4er loaned ?ou an? o- their mone?.
/he tricB is the? made ?ou a de=ositor instead o- a 9orro>er. /he? de=osited ?our
mort8a8e note and issued a 9anB checB. N*/()*- ()* @2-(3+3* 02(* 02- ()* >)*>C /1
,*3+, (*07*-. /he mort8a8e note and the checB are no> mone? created that ne4er eEisted,
=rior. /he 9anB 8ot ?our mort8a8e note -or -ree >ithout loanin8 ?ou mone?, and sold the
mort8a8e note to maBe the 9anB checB a==ear le8al. /he 9orro>er =ro4ided the le8al
tender, >hich the 9anB 8a4e 9acB in the -orm o- a checB. 1- the 9anB loaned le8al tender, +1
()* >20(-+>( 1+.16 -or the 9anB to le8all? o>n the mort8a8e note, then the =eo=le >ould
6A
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
still o>n the homes, -arms, 9usinesses and cars, nearl? de9t -ree and =a? little, i- an?
interest. ". ()* &+0C1 02( 95,9/,,/03 ()* >20(-+>( &. ,2+0/03 ,*3+, (*07*-6 ()*. @+C* ()*
+,,*3*7 &2--2D*-6 + 7*?21/(2-. T)/1 /1 + 9-+575,*0( >20$*-1/20 29 ()* @2-(3+3* 02(*. A
F-+57 /1 + 9*,20..
/he 9anB had no intent to loan, maBin8 it =romissor? -raud, mail -raud, >ire -raud,
and a list o- other crimes a mile lon8. 0o> can the? maBe a -elon?, le8al: /he? cannotY
;raud is -raudY
/he 9anBs de=osit ?our mort8a8e note in a checBin8 account. /he de=osit 9ecomes
the 9anB<s =ro=ert?. /he? >ithdra> mone? >ithout ?our si8nature, and call the mone?, the
9anBs mone? that the? loaned to ?ou. /he 9anB -or8ot one thin8. 1- the 9anB de=osits ?our
mort8a8e note, then the 9anB must credit ?our checBin8 account claimin8 the 9anB o>es
?ou V1!!,!!! -or the V1!!,!!! mort8a8e note de=osited. /he credit o- V1!!,!!! the 9anB
o>es ?ou -or the de=osit allo>s ?ou to >rite a checB or recei4e cash. /he? did not tell ?ou
the? de=osited the mone?, and the? -or8et to tell ?ou that the V1!!,!!! is mone? the 9anBs
o>e ?ou, not >hat ?ou o>e the 9anB. You lost V1!!,!!! and the 9anB 8ained V1!!,!!!.
;or the V1!!,!!! the 9anB 8ained, the 9anB recei4ed 8o4ernment 9onds or cash o-
V1!!,!!! 9? sellin8 the mort8a8e note. ;or the loan, the 9anB recei4ed V1!!,!!! cash, the
9anB did not 8i4e u= V1!!,!!!.
An?time the 9anB recei4es a de=osit, the 9anB o>es ?ou the mone?. You do not o>e
the 9anB the mone?.
1- ?ou or 1 de=osit an?oneLs ne8otia9le instrument >ithout a contract authorizin8 it,
and >ithdra> the mone? claimin8 it is our mone?, >e >ould 8o to Jail. 1- it >as our =olic?
$!
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
to 4iolate a contract, >e could 8o to Jail -or a 4er? lon8 time. You a8reed to recei4e a loan,
not to 9e a de=ositor and ha4e the 9anB recei4e the de=osit -or -ree. Fhat the 9anB 8ot -or
-ree lien on real =ro=ert?" ?ou lost and no> must =a? >ith interest.
1- the 9anB loaned us le8al tender other de=ositors< mone?" to o9tain the mort8a8e
note the 9anB could ne4er o9tain the lien on the =ro=ert? -or -ree. H? not loanin8 their
mone?, 9ut instead de=ositin8 the mort8a8e note the 9anB creates in-lation, >hich costs the
consumer mone?. Plus the economic loss o- the asset, >hich the 9anB recei4ed -or -ree, in
direct 4iolation o- an? si8ned a8reement.
Fe >ant e@ual =rotection under the la> and contract, and to ha4e the 9anB -ul-ill
the contract or return the mort8a8e note. !* D+0( ()* B573*16 1)*-/9916 +07 ,+D@+C*-1
(2 5?)2,7 ()*/- 2+() 29 299/>* +07 (2 )202- +07 5?)2,7 ()* 92507/03 9+()*-1 U.S.
C201(/(5(/20. I1 ()/1 (22 @5>) (2 +1CQ
Fhat is the mort8a8e note: /he mort8a8e note re=resents ?our -uture loan
=a?ments. A =romise to =a? the mone? the 9anB loaned ?ou. Fhat is a lien: /he lien is a
securit? on the =ro=ert? -or the mone? loaned.
0o> can the 9anB =romise to =a? mone? and then not =a?: 0o> can the? taBe a
=romise to =a? and call it mone? and then use it as mone? to =urchase the -uture =a?ments
o- mone? at interest: 1nterest is the com=ensation allo>ed 9? la> or -iEed 9? the =arties
-or the use or -or9earance o- 9orro>ed mone?. /he 9anB 0*$*- /0$*1(*7 +0. @20*. to
recei4e .25- mort8a8e note. Fhat is it the? are char8in8 interest on:
/he 9anB recei4ed an asset. /he? ne4er 8a4e u= an asset. 2id the? =a? interest on
the mone? the? recei4ed as a de=osit: A checB issued on a de=osit recei4ed -rom the
$1
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
9orro>er cost the 9anB nothin8: Fhere did the mone? come -rom that the 9anB in4ested to
char8e interest on:
/he 9anB ma? sa? >e recei4ed a 9ene-it. Fhat 9ene-it: Fithout their 9ene-it >e
>ould recei4e e@ual =rotection under the la>, >hich >ould mean >e did not need to 8i4e
u= an asset or =a? interest on our o>n mone?Y Fithout their 9ene-it >e >ould 9e -ree and
not ensla4ed. Fe >ould ha4e little de9t and interest instead o- 9ein8 ensla4ed in de9t and
interest. /he 9anBs 9roBe the contract, >hich the? ne4er intended to -ul-ill in the -irst
=lace. Fe 8ot a checB and a house, >hile the? recei4ed a lien and interest -or -ree, throu8h
a 9roBen contract, >hile >e 8ot a de9t and lost our assets and our countr?. /he 9ene-it is
the 9anBs, >ho ha4e =laced liens on nearl? e4er? asset in the nation, >ithout costin8 the
9anB one cent. 1n-lation and >orBin8 to =a? the 9anB interest on our o>n mone? is the
9ene-it. Some 9ene-itY !)+( + S)*,, G+@*. T)* F2,,2D/03 >+1* %0*E( ?+3*1 &*(D**0
J1(+-(K 4 J*07K )/3),/3)(*7 /0 .*,,2D' D+1 +0 +>(5+, (-/+, >20>*-0/03 ()* /115*1 D*
)+$* >2$*-*7. T)* J573* D+1 *E(-+2-7/0+-. /04()+( )* )+7 + 3-+1? 29 ()*
C201(/(5(/20 ()+( I )+$*0( 1**0 29(*0 *0253) /0 25- >25-(1. T)/1 /1 ()* -*+, ()/036
+&12,5(*,. (-5*. T)/1 >+1* D+1 -*$/*D*7 &. ()* M/00*12(+ S5?-*@* C25-( 20 ()*/-
2D0 @2(/20. T)* ,+1( ()/03 /0 ()* D2-,7 ()+( ()* "+0C*-1 +07 ()* J573*1 D+0(*7 D+1
>+1* ,+D /0 9+$2- +3+/01( ()* "+0C*-1. H2D*$*-6 ()/1 >+1* ,+D /1 -*+,.
STATE OF MINNESOTA IN JUSTICE COURT COUNTY OF SCOTT TO!NSHIP
OF CREDIT RIVER CASE NO# 1=144
MARTIN V. MAHONEY6 JUSTICE
FIRST "ANG OF MONTGOMERY6 P,+/0(/996 V1. J*-2@* D+,.6 D*9*07+0(.
JUDGMENT AND DECREE
/he a9o4e entitled action came on 9e-ore the court and a Jur? o- 12 on 2ecem9er $, 1A68
at 1!6!! a.m. Plainti-- a==eared 9? its President Ia>rence .. +or8an and >as re=resented
9? its 5ounsel /heodore *. +ell9?, 2e-endant a==eared on his o>n 9ehal-
$2
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
A Jur? o- /alesmen >ere called, im=aneled and s>orn to tr? the issues in this case.
Ia>rence .. +or8an >as the onl? >itness called -or =lainti-- and de-endant testi-ied as the
onl? >itness in his o>n 9ehal-
Plainti-- 9rou8ht this as a 5ommon Ia> action -or the reco4er? o- the =ossession o- lot 1A,
;air4ie> Heach, Scott 5ount?, +inn. Plainti-- claimed titled to the *eal Pro=ert? in
@uestion 9? -oreclosure o- a Note and +ort8a8e 2eed dated +a? 8, 1A64 >hich =lainti--
claimed >as in de-ault at the time -oreclosure =roceedin8s >ere started. 2e-endant
a==eared and ans>ered that the =lainti-- created the mone? and credit u=on its o>n 9ooBs
9? 9ooBBee=in8 entr? as the le8al -ailure o- consideration -or the +ort8a8e 2eed and
alle8ed that the Sheri--<s sale =assed no title to =lainti--. /he issues tried to the Jur? >ere
>hether there >as a la>-ul consideration and >hether 2e-endant had >ai4ed his ri8hts to
com=lain a9out the consideration ha4in8 =aid on the note -or almost 3 ?ears. +r. +or8an
admitted that all o- the mone? or credit >hich >as used as a consideration >as created
u=on their 9ooBs that this >as standard 9anBin8 =ractice eEercised 9? their 9anB in
com9ination >ith the ;ederal *eser4e HanB o- +innea=olis, another =ri4ate 9anB, -urther
that he Bne> o- no )nited States Statute o- Ia> that 8a4e the Plainti-- the authorit? to do
this. Plainti-- -urther claimed that 2e-endant 9? usin8 the led8er 9ooB created credit and
9? =a?in8 on the Note and +ort8a8e >ai4ed an? ri8ht to com=lain a9out the consideration
and that 2e-endant >as esto==ed -rom doin8 so. At 12615 on 2ecem9er $, 1A68 the 3ur?
returned a unanimous 4erdict -or the 2e-endant. No> there-ore 9? 4irtue o- the authorit?
4ested in me =ursuant to the 2eclaration o- 1nde=endence, the North>est (rdinance o-
1$8$, the 5onstitution o- the )nited States and the 5onstitution and la>s o- the State
+innesota not inconsistent there>ith.
IT IS HERE"Y ORDERED6 ADJUDGED AND DECREED
1. /hat Plainti-- is not entitled to reco4er the =ossession o- lot 1A, ;air4ie> Heach,
Scott 5ount?, +innesota accordin8 to the =lat thereo- on -ile in the *e8ister o-
2eeds o--ice. /hat 9ecause o- -ailure o- a la>-ul consideration the note and
+ort8a8e dated +a? 8, 1A64 is null and 4oid.
$3
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
2. /hat the Sheri--s sale o- the a9o4e descri9ed =remises held on 3une 26, 1A6$ is null
and 4oid, o- no e--ect.
3. /hat Plainti-- has no ri8ht, title or interest in said =remises or lien thereon, as is
a9o4e descri9ed.
4. /hat an? =ro4ision in the +innesota 5onstitution and an? +innesota Statute
limitin8 the 3urisdiction o- this 5ourt is re=u8nant to the 5onstitution o- the )nited
States and to the Hill o- *i8hts o- the +innesota 5onstitution and is null and 4oid
and that this 5ourt has 3urisdiction to render com=lete 3ustice in this cause.
5. /hat 2e-endant is a>arded costs in the sum o- V$5.!! and eEecution is here9?
issued there-ore.
6. A 1! da? sta? is 8ranted.
/he -ollo>in8 memorandum and an? su==lemental memorandum made and -iled 9? this
5ourt in su==ort o- this Jud8ment is here9? made a =art hereo- 9? re-erence.
HY /0, 5()*/
2ated 2ecem9er A, 1A6A
+A*/1N .. +A0(N,Y
3ustice o- the Peace 5redit *i4er /o>nshi= Scott 5ount?, +innesota
MEMORANDUM
/he issues in this case >ere sim=le. /here >as no material dis=ute on the -acts -or the Jur?
to resol4e. Plainti-- admitted that it, in com9ination >ith the ;ederal *eser4e HanB o-
+innea=olis, >hich are -or all =ractical =ur=oses 9ecause o- their interlocBin8 acti4it? and
=ractices, and 9oth 9ein8 HanBin8 1nstitutions 1ncor=orated under the la>s o- the )nited
States, are in the Ia> to 9e treated as one and the same HanB, did create the entire
V14,!!!.!! in mone? or credit u=on its o>n 9ooBs 9? 9ooBBee=in8 entr?. /hat this >as the
5onsideration used to su==ort the Note dated +a? 8, 1A64 and the +ort8a8e o- the same
date. /he +one? and credit -irst came into eEistence >hen the? credited it. +r. +or8an
admitted that no )nited States Ia> o- Statute eEisted >hich 8a4e him the ri8ht to do this.
A la>-ul consideration must eEist and 9e tendered to su==ort the note. See Anheuser
Husch Hre>in8 5o. 4. ,mma +ason, 44 +inn. 318. 46 NF 558." /he 3ur? -ound there
$4
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
>as no la>-ul consideration and 1 a8ree (nl? Ood can create somethin8 o- 4alue out o-
nothin8. ,4en i- de-endant could 9e char8ed >ith >ai4er or esto==el as a matter o- la> this
is no de-ense to the =lainti--. /he la> lea4es >ron8doers >here it -inds them. See
sections 5!, 5 1, and 52 o- Am 3ur 2d QActionsQ on =a8e 584.Q" No action >ill lie to
reco4er on a claim 9ased u=on, or in an? manner de=endin8 u=on, a -raudulent, ille8al, or
immoral transaction or contract to >hich =lainti-- >as a =art?. Plainti--s act o- creatin8 is
not authorized 9? the 5onstitution and Ia>s o- the )nited States, is unconstitutional and
4oid, and is not la>-ul consideration in the e?es o- the la> to su==ort an?thin8 or u=on
>hich an? la>-ul ri8hts can 9e 9uilt. Nothin8 in the 5onstitution o- the )nited States
limits the Jurisdiction o- this 5ourt, >hich is one o- ori8inal Jurisdiction >ith ri8ht o- trial
9? Jur? 8uaranteed. /his is a 5ommon Ia> Action. +innesota cannot limit or im=air the
=o>er o- this 5ourt to render com=lete Justice 9et>een the =arties. An? =ro4isions in the
5onstitution and la>s o- +innesota >hich attem=t to do so is re=u8nant to the
5onstitution o- the )nited States and 4oid. No @uestion as to the 3urisdiction o- this 5ourt
>as raised 9? either =art? at the trial. Hoth =arties >ere 8i4en com=lete li9ert? to su9mit
an? and all -acts and la> to the Jur?, at least in so -ar as the? sa> it. No com=laint >as
made 9? Plainti-- that Plainti-- did not recei4e a -air trial. ;rom the admissions made 9?
+r. +or8an the =ath o- dut? >as made direct and clear -or the Jur?. /heir 4erdict could not
reasona9l? ha4e 9een other>ise. 3ustice >as rendered com=letel? and >ithout =urchase,
con-orma9le to the la> in this 5ourt on 2ecem9er $, 1A68.
"Y THE COURT
MARTIN V. MAHONEY
J51(/>* 29 ()* P*+>* C-*7/( R/$*- T2D01)/? S>2(( C250(.6 M/00*12(+
N2(*# 1t has ne4er 9een dou9ted that a note 8i4en on a consideration, >hich is =rohi9ited
9? la> is 4oid. 1t has 9een determined inde=endent o- Acts o- 5on8ress, that sailin8 under
the license o- an enem? is ille8al. /he emission o- Hills o- 5redit u=on the 9ooBs o- these
=ri4ate 5or=orations -or the =ur=oses o- =ri4ate 8ain is not >arranted 9? the 5onstitution
o- the )nited States and is unla>-ul. See 5rai8 4. & 4 =eters re=orts A12, /his 5ourt can
tread onl? that =ath >hich is marBed out 9? dut?. +...+.
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JUDGE MARTIN MAHONEY DECISION !AS AS FOLLO!S
Q;or the 3usticeLs -ees, the ;irst National HanB de=osited & the 5lerB o- the 2istrict 5ourt
the t>o ;ederal *eser4e HanB Notes. /he 5lerB tendered the Notes to me the 3ud8e". As
3ud8e m? s>orn dut? com=elled me to re-use the tender. /his is contrar? to the
5onstitution o- the )nited States. /he States ha4e no =o>er to maBe 9anB notes a le8al
tender. (nl? 8old and sil4er coin is a la>-ul tender.Q See American 3urist on +one? 36
sec. 13."
MHanB Notes are a 8ood tender as mone? unless s=eci-icall? o9Jected to. /heir consent and
usa8e is 9ased u=on the con4erti9ilit? o- such notes to coin at the =leasure o- the holder
u=on =resentation to the 9anB -or redem=tion. Fhen the ina9ilit? o- a 9anB to redeem its
notes is o=enl? a4o>ed the? instantl? lose their character as mone? and their circulation as
currenc? ceases.Q See American 3urist 36#section A". Q/here is no la>-ul consideration -or
these ;ederal *eser4e HanB Notes to circulate as mone?. /he 9anBs actuall? o9tained
these notes -or cost o- =rintin8 # A la>-ul consideration must eEist -or a Note. As a matter
o- -act, the QNotesQ are not Notes at all, as the? contain no =romise to =a?.Q See 1$
American 3urist section 85, 215" Q/he acti4it? o- the ;ederal *eser4e HanBs o- +innesota,
San ;rancisco and the ;irst National HanB o- +ont8omer? is contrar? to =u9lic =olic? and
contrar? to the 5onstitution o- the )nited States, and constitutes an unla>-ul creation o-
mone?, credit and the o9tainin8 o- mone? and credit -or no 4alua9le consideration.
Acti4it? o- said 9anBs in creatin8 mone? and credit is not >arranted 9? the 5onstitution o-
the )nited States.Q Q/he ;ederal *eser4e HanBs and National HanBs eEercise an eEclusi4e
mono=ol? and =ri4ile8e o- creatin8 credit and issuin8 Notes at the eE=ense o- the =u9lic
>hich does not recei4e a -air e@ui4alent. /his scheme is o9li@uel? desi8ned -or the 9ene-it
o- an idle mono=ol? to ro9, 9lacBmail, and o==ress the =roducers o- >ealth. Q/he ;ederal
*eser4e Act and the National HanB Act are, in their o=eration and e--ect, contrar? to the
>hole letter and s=irit o- the 5onstitution o- the )nited States, -or the? con-er an unla>-ul
and unnecessar? =o>er on =ri4ate =artiesD the? hold all o- our -ello> citizens in
de=endenceD the? are su94ersi4e to the ri8hts and li9eration o- the =eo=le.N Q/hese Acts
ha4e de-iled the la>-ull? constituted Oo4ernment o- the )nited States. /he ;ederal
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*eser4e Act and the National HanBin8 Act are not necessar? and =ro=er -or carr?in8 into
eEecution the le8islati4e =o>ers 8ranted to 5on8ress or an? other =o>ers 4ested in the
Oo4ernment o- the )nited States, 9ut on the contrar?, are su94ersi4e to the ri8hts o- the
Peo=le in their ri8hts to li-e, li9ert?, and =ro=ert?.Q See Section 462 o- /itle 31 ). S.
5ode".
Q/he meanin8 o- the 5onstitutional =ro4ision, LN( S/A/, S0AII maBe an?thin8 9ut
Oold and Sil4er 5oin a le8al tender L =a?ment o- de9tsL is direct, clear, unam9i8uous and
>ithout an? @uali-ication. /his 5ourt is >ithout authorit? to inter=olate an? eEce=tion. +?
dut? is sim=l? to eEecute it, as and to =ronounce the le8al result. ;rom an eEamination o-
the case o- ,d>ards 4. Kearse?, ;ederal *eser4e HanB Notes -iat mone?" >hich are
attem=ted to 9e made a le8al tender, are eEactl? >hat the authors o- the 5onstitution o- the
)nited States intend to =rohi9it. No State can maBe these Notes a le8al tender. 5on8ress is
incom=etent to authorize a State to maBe the Notes a le8al tender. ;or the e--ect o- 9indin8
5onstitution =ro4isions see 5ooBe 4. 14erson. /his -raudulent ;ederal *eser4e S?stem and
National HanBin8 S?stem has im=aired the o9li8ation o- 5ontract =romoted disres=ect -or
the 5onstitution and Ia> and has shaBen societ? to its -oundation.Q See A6 ).S. 5ode 5A5
and 1!8 + 388 and 63 + 14$"
Q/itle 31, ).S. 5ode, Section 432, is in direct con-lict >ith the 5onstitution inso-ar, at
least, that it attem=ts to maBe ;ederal *eser4e HanB Notes a le8al tender. /he 5onstitution
is the Su=reme Ia> o- the Iand. Section 462 o- /itle 31 is not a la>, >hich is made in
=ursuance o- the 5onstitution. 1t is unconstitutional and 4oid, and 1 so hold. /here-ore, the
t>o ;ederal *eser4e HanB Notes are Null and .oid -or an? la>-ul =ur=ose in so -ar as this
case is concerned and are not a 4alid de=osit o- V2.!! >ith the 5lerB o- the 2istrict 5ourt
-or the =ur=ose o- e--ectin8 an A==eal -rom this 5ourt to the 2istrict 5ourt.Q Q0o>e4er, o-
these ;ederal *eser4e HanB Notes, =re4iousl? discussed, and that is that the Notes are
in4alid, 9ecause o- a theor? that the? are 9ased u=on a 4alid, ade@uate or la>-ul
consideration. At the hearin8 scheduled -or 3anuar? 22, 1A6A, at $6!! P.+., +r. +or8an
a==eared at the trialD he a==eared as a >itness to 9e candid, o=en, direct, eE=erienced and
truth-ul. 0e testi-ied to ?ears o- eE=erience >ith the HanB o- America in Ios An8eles, the
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+ar@uette National HanB o- +innesota and the ;irst National HanB o- +innesota. 0e
seemed to 9e -amiliar >ith the o=eration o- the ;ederal *eser4e S?stem. 0e -reel?
admitted that his HanB created all o- the mone? and credit u=on its 9ooBs >ith >hich it
ac@uired the Note and +ort8a8e o- +a? 8, 1A64. /he credit -irst came into eEistence >hen
the HanB created it u=on its 9ooBs. ;urther, he -reel? admitted that no )nited States Ia>
8a4e the HanB the authorit? to do this. /his >as o94iousl? no la>-ul consideration -or the
Note.
/he HanB =arted >ith a9solutel? nothin8 eEce=t a little inB. 1n this case, the e4idence >as
on 3anuar? 22, 1A6A that the ;ederal *eser4e HanB o9tained the Notes -or this seems to 9e
con-erred 9? /itle 12 )S5 Section 42!. /he cost is a9out AG1!th o- a cent =er Note
re8ardless o- the amount o- the Note. /he ;ederal *eser4e HanBs create all o- the mone?
and credit u=on their 9ooBs 9? 9ooBBee=in8 entries 9? >hich the? ac@uire )nited States
Securities. /he collateral re@uired to o9tain the Note is, 9? section 412 )S5, /itle 12, a
de=osit o- a liBe amount o- 9onds. Honds >hich the HanBs ac@uire 9? creatin8 mone? and
credit 9? 9ooBBee=in8 entr?.Q
QNo ri8hts can 9e ac@uired 9? -raud. /he ;ederal *eser4e HanB Notes are ac@uired
throu8h the use o- unconstitutional statutes and -raud.Q Q/he 5ommon Ia> re@uires a
la>-ul consideration -or an? contract or Note. /hese Notes are 4oid -or -ailure at a la>-ul
consideration at 5ommon Ia>, entirel? a=art -rom an? 5onstitutional consideration. )=on
this 8round, the Notes are ine--ectual -or an? =ur=ose. /his seems to 9e the =rinci=al
o9Jection to =a=er -iat mone? and the cause o- its de=reciation and -ailure do>n throu8h
the a8es. 1- allo>ed to continue, ;ederal *eser4e HanB Notes >ill meet the same -ate.
;rom the e4idence introduced on 3anuar? 22, 1A6A, this 5ourt -inds that as o- +arch 18,
1A6A, all Oold and Sil4er 9acBin8 is remo4ed -rom ;ederal *eser4e HanB Notes.Q Q/he
la> lea4es >ron8doers >here it -inds them. See 1 +er. 3ur 2nd on Actions Section
55!".QSla4er? and all its incidents, includin8 Peona8e, thralldom, and de9t created 9?
-raud is uni4ersall? =rohi9ited in the )nited States. /his case re=resents 9ut another
re-ined -orm o- Sla4er? 9? the HanBers. /heir =osition is not su==orted 9? the 5onstitution
o- the )nited States. /he Peo=le ha4e s=oBen their >ill in terms, >hich cannot 9e
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misunderstood. 1t is indis=ensa9le to the =reser4ation o- the )nion and inde=endence and
li9erties o- the =eo=le that this 5ourt, adhere onl? to the mandate o- the 5onstitution and
administer it as it is >ritten. 1, there-ore, hold these Notes in @uestion 4oid and not
e--ectual -or an? =ur=ose.Q 4" 3anuar? 3!, 1A6A
3ud8e +artin .. +ahone?
3ustice o- the Peace 5redit *i4er /o>nshi=
8
88
CREDIT LOANS AND VOID CONTRACTS PERFECT
O"LIGATION AS TO A HUMAN "EING AS TO A "ANG
;urthermore, Plainti--, is o--erin8 this +emorandum o- la> in order -or the 5ourt to
ad4ance it<s understandin8 o- the com=leE le8al issues, =resent and em9odied in the
5ommon Ia>, >ith authorities, la> and cases in su==ort o-, >hich >ill constitute the
-ollo>in8 -acts6
2e-endant and other =ri4atel? o>ned 9anBs are maBin8 loans o- QcreditQ >ith the intended
=ur=ose o- circulatin8 QcreditQ as Qmone?Q. (ther -inancial institutions and indi4iduals
ma? QlaunderQ 9anB credit that the? recei4e directl? or indirectl? -rom =ri4atel? o>ned
9anBs. /his collecti4e acti4it? is unconstitutional, unla>-ul, in 4iolation o- 5ommon Ia>,
).S. 5ode and the =rinci=les o- e@uit?. Such acti4it? and underl?in8 contracts ha4e lon8
9een held 4oid, 9? State 5ourts, ;ederal 5ourts and the ).S. Su=reme 5ourt. /his
+emorandum >ill demonstrate throu8h authorities and esta9lished common la>, that
credit Qmone? creationQ 9? =ri4atel? o>ned 9anB cor=orations is not reall? Qmone?
creationQ at all. 1t is the trade s=ecialt? and art-ul illusion o- la> merchants, >hich use old#
time trade secrets o- the Ooldsmiths, to entra= the 9orro>er and unJustl? enrich the lender
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throu8h usur? and other unla>-ul techni@ues. 1ssues 9ased on la> and the =rinci=les o-
e@uit?, >hich are >ithin the Jurisdiction o- this 5ourt, >ill 9e addressed.
THE GOLDSMITHS
1n his 9ooB, Money and /an0in- 8th ,dition, 1A84", Pro-essor 2a4id *.
Kamerschen >rites on =a8es 56 #636 Q/he -irst 9anBers in the modern sense >ere the
8oldsmiths, >ho -re@uentl? acce=ted 9ullion and coins -or stora8e ... (ne result >as that
the 8oldsmiths tem=oraril? could lend =art o- the 8old le-t >ith them . . . /hese loans o-
their customersL 8old >ere soon re=laced 9? a re4olutionar? techni@ue. Fhen =eo=le
9rou8ht in 8old, the 8oldsmiths 8a4e them notes =romisin8 to =a? that amount o- 8old on
demand. /he notes, -irst made =a?a9le to the order o- the indi4idual, >ere later chan8ed to
9earer o9li8ations. 1n the =re4ious -orm, a note =a?a9le to the order o- 3e9idiah 3ohnson
>ould 9e =aid to no one else unless 3ohnson had -irst endorsed the note ... Hut notes >ere
soon 9ein8 used in an un-oreseen >a?. /he note holders -ound that, >hen the? >anted to
9u? somethin8, the? could use the note itsel- in =a?ment more con4enientl? and let the
other =erson 8o a-ter the 8old, >hich the =erson rarel? did .../he s=ecie, then tended to
remain in the 8oldsmithsL 4aults. . . . /he 8oldsmiths 9e8an to realize that the? mi8ht =ro-it
handsomel? 9? issuin8 some>hat more notes than the amount o- s=ecie the? held. . .
/hese additional notes >ould cost the 8oldsmiths nothin8 eEce=t the ne8li8i9le cost o-
=rintin8 them, ?et the notes =ro4ided the 8oldsmiths >ith -unds to lend at interest . . . .And
the? >ere to -ind that the =ro-ita9ilit? o- their lendin8 o=erations >ould eEceed the =ro-it
-rom their ori8inal trade. /he 8oldsmiths 9ecame 9anBers as their interest in manu-acture
o- 8old items to sell >as re=laced 9? their concern >ith credit =olicies and lendin8
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acti4ities . . . /he? disco4ered earl? that, althou8h an unlimited note issue >ould 9e
un>ise, the? could issue notes u= to se4eral times the amount o- s=ecie the? held. /he Be?
to the >hole o=eration la? in the =u9licLs >illin8ness to lea4e 8old and sil4er in the 9anBLs
4aults and use the 9anBLs notes. /his disco4er? is the 9asis o- modern 9anBin86 (n =a8e
$4, Pro-essor Kamerschen -urther eE=lains the e4olution o- the credit s?stem6 QIater the
8oldsmiths learned a more e--icient >a? to =ut their credit mone? into circulation. /he?
lent 9? issuin8 additional notes, rather than 9? =a?in8 out in 8old. 1n eEchan8e -or the
interest#9earin8 note recei4ed -rom their customer in e--ect, the loan contract", the? 8a4e
their o>n non#interest 9earin8 note. ,ach >as actuall? 9orro>in8 -rom the other ... /he
ad4anta8e o- the later =rocedure o-L lendin8 notes rather than 8old >as that . . . more notes
could 9e issued i- the 8old remained in the 4aults ... /hus, throu8h the =rinci=le o- 9anB
note issuance, an0s !earned to &reate 9oney in the for9 of their o8n !iai!ity.Q C,m=hasis
AddedP
MODERN MONEY MECHANICS
Another =u9lication >hich eE=lains modern 9anBin8 as learned -rom the
Ooldsmiths is Modern Money Me&hani&s 5th edition 1AA2", =u9lished 9? the ;ederal
*eser4e HanB o- 5hica8o >hich states 9e8innin8 on =a8e 36 Q1t started >ith the 8oldsmiths
...Q At one time, 9anBers >ere merel? middlemen. /he? made a =ro-it 9? acce=tin8 8old
and coins 9rou8ht to them -or sa-eBee=in8 and lendin8 the 8old and coins to 9orro>ers.
Hut the 8oldsmiths soon -ound that the recei=ts the? issued to de=ositors >ere 9ein8 used
as a means o- =a?ment. L/hen, 9anBers disco4ered that the? could maBe loans merel? 9?
8i4in8 9orro>ers their =romises to =a?, or 9anB notesU 1n this >a?, 9anBs 9e8an to create
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mone? ... 2emand de=osits are the modern counter=art o- 9anB notes . . . 1t >as a small
ste= -rom =rintin8 notes to maBin8 9ooB entries to the credit o- 9orro>ers >hich the
9orro>ers, in turn, could Ls=endL 9? >ritin8 checBs, there9? =rintin8 their o8n mone?.Q
C,m=hasis addedP
HO! "ANGS CREATE MONEY
1n the modern sense, 9anBs create mone? 9? creatin8 Qdemand de=osits.Q 2emand
de=osits are merel? Q9ooB entriesQ that re-lect ho> much la>-ul mone? the 9anB o>es its
customers. /hus, all de=osits are called demand de=osits and are the 9anBLs lia9ilities. /he
9anBLs assets are the 4ault cash =lus all the Q1()sQ or =romissor? notes that the 9orro>er
si8ns >hen the? 9orro> either mone? or credit. Fhen a 9anB lends its cash le8al mone?",
it loans its assets, 9ut >hen a 9anB lends its McreditN it lends its lia9ilities. /he lendin8 o-
credit is, there-ore, the eEact o==osite o- the lendin8 o- cash le8al mone?".
At this =oint, >e need to de-ine the meanin8 o- certain >ords liBe Qla>-ul mone?N,
Mle8al tenderN, Mother mone?N and MdollarsN. /he terms Q+one?Q and Q/enderQ had their
ori8ins in Article 1, Sec. 8 and Article 1, Sec. 1! o- the Constitution of the 5nited States.
12 ).S.5. R152 re-ers to Q8old and sil4er coin as la>-ul mone? o- the )nited StatesQ and
>as unconstitutionall? re=ealed in 1AA4 in#that 5on8ress >+0 02( 7*,*3+(* an? =ortion o-
their constitutional res=onsi9ilit? >ithout Amendment. /he term Qle8al tenderQ >as
ori8inall? cited in 31 ).S.5.A. R3A2 and is no> re#codi-ied in 31 ).S.5.A. R51!3 >hich
states6 Q)nited States coins and currenc? . . . are le8al tender -or all de9ts, =u9lic char8es,
taEes, and dues.Q /he common denominator in 9oth Qla>-ul mone?Q and Qle8al tender
mone?Q is that the )nited States Oo4ernment issues 9oth.
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2$
28
Fith HanBers, ho>e4er, >e -ind that there are t>o -orms o- mone? # one is
8o4ernment#issued, and =ri4atel? o>ned 9anBs such as 2e-endant, Name o- HanB" HanB,
issue the other. As >e ha4e alread? discussed 8o4ernment issued -orms o- mone?, >e must
no> scrutinize =ri4atel? issued -orms o- mone?.
All =ri4atel? issued -orms o- mone? toda? are 9ased u=on the lia9ilities o- the
issuer. /here are three common terms used to descri9e this =ri4atel? created mone?. /he?
are McreditN, Mdemand de=ositsN and MchecB9ooB mone?N. 1n the SiEth edition o- HlacBs
Ia> 2ictionar?, =.36$ under the term M5reditN the term MHanB creditN is descri9ed as6
M+one? 9anB o>es or >ill lend a indi4idual or =ersonN. 1t is clear -rom this de-inition that
MHanB creditN >hich is the Mmone? 9anB o>esN is the 9anBLs lia9ilit?. /he term
MchecB9ooB mone?N is descri9ed in the 9ooB MI /et Nou Thou-ht6, =u9lished 9? the
=ri4atel? o>ned ;ederal *eser4e HanB o- Ne> YorB, as -ollo>s6 Q5ommercial 9anBs
create checB9ooB mone? >hene4er the? 8rant a loan, sim=l? 9? addin8 de=osit dollars to
accounts on their 9ooBs to eEchan8e -or the 9orro>ers 1() . . . .Q /he >ord Qde=ositQ and
Qdemand de=ositQ 9oth mean the same thin8 in 9anB terminolo8? and re-er to the 9anBLs
lia9ilities. ;or eEam=le, the 5hica8o ;ederal *eser4es =u9lication, MModern Money
Me&hani&s6 states6 Q2e=osits are merel? 9ooB entries ... HanBs can 9uild u= de=osits 9?
increasin8 loans U 2emand de=osits are the modern counter=art o- 9anB notes. 1t >as a
small ste= -rom =rintin8 notes to maBin8 9ooB entries to the credit o- 9orro>ers >hich the
9orro>ers, in turn, could Ls=endL 9? >ritin8 checBs. /hus, it is demonstrated in M+odern
+one? +echanicsN ho>, under the =ractice o- -ractional reser4e 9anBin8, a de=osit o-
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18
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V5,!!! in cash could result in a loan o- creditGchecB9ooB mone?Gdemand de=osits o-.
V1!!,!!! i- reser4e ratios set 9? the ;ederal *eser4e are 5Z instead o- 1!Z".
1n a =ractical a==lication, here is ho> it >orBs. 1- a 9anB has ten =eo=le >ho each
de=osit V5,!!! totalin8 V5!,!!!" in cash le8al mone?" and the 9anBLs reser4e ratio is 5Z,
then the 9anB >ill lend t>ent? times this amount, or V1,!!!,!!! in QcreditQ mone?. Fhat
the 9anB has actuall? done, ho>e4er, is to >rite a checB or loan its credit >ith the intended
=ur=ose o- circulatin8 credit as Qmone?.Q HanBs Bno> that i- all the =eo=le >ho recei4e a
checB or credit loan come to the 9anB and demand cash, the 9anB >ill ha4e to close its
doors 9ecause it doesnLt ha4e the cash to 9acB u= its checB or loan. /he 9anBLs checB or
loan >ill, ho>e4er, =ass as mone? as lon8 as =eo=le ha4e con-idence in the illusion and
donLt demand cash. Panics are created >hen =eo=le line u= at the 9anB and demand cash
le8al mone?", causin8 9anBs to -old as histor? records in se4eral time =eriods, the most
recent in this countr? >as the =anic o- 1A33.
THE PROCESS OF PASSING CHECGS OR
CREDIT AS MONEY IS DONE PUITE SIMPLY
A de=osit o- V5,!!! in cash 9? one =erson results in a loan o- V1!!,!!! to another
=erson at 5Z reser4es. /he =erson recei4in8 the checB or loan o- credit -or V1!!,!!!
usuall? de=osits it in the same 9anB or another 9anB in the ;ederal *eser4e S?stem. /he
checB or loan is sent to the 9ooBBee=in8 de=artment o- the lendin8 9anB >here a 9ooB
entr? o- V1!!,!!! is credited to the 9orro>erLs account. /he lendin8 9anBLs checB that
created the 9orro>erLs loan is then stam=ed QPaidQ >hen the account o- the 9orro>er is
credited a QdollarQ amount. /he 9orro>er ma? then Qs=endQ these 9ooB entries demand
de=osits" 9? >ritin8 checBs to others, >ho in turn de=osit their checBs and ha4e 9ooB
84
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18
1A
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21
22
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24
25
26
2$
28
entries trans-erred to their account -rom the 9orro>erLs checBin8 account. 0o>e4er, t>o
hi8hl? @uestiona9le and unla>-ul acts ha4e no> occurred. /he -irst >as >hen the 9anB
>rote the checB or made the loan >ith insu--icient -unds to 9acB them u=. /he second is
>hen the 9anB stam=s its o>n MNot Su--icient ;undsN checB Q=aidQ or =osts a loan 9?
merel? creditin8 the 9orro>erLs account >ith 9ooB entries the 9anB calls Qdollars.Q
1ronicall?, the checB or loan seems 8ood and =asses as mone? ## unless an emer8enc?
occurs 4ia demands -or cash # or a 5ourt challen8e ## and the art-ul, illusion 9u99le, 9ursts.
DIFFERENT GINDS OF MONEY
/he 9ooB, MI /et Nou Thou-ht6, =u9lished 9? the ;ederal *eser4e HanB o- Ne>
YorB, states6 Q+one? is an? 8enerall? acce=ted medium o- eEchan8e, not sim=l? coin and
currenc?. +one? doesnJt ha4e to 9e intrinsicall? 4alua9le, e issued y a -o;ern9ent or 9e
in an? s=ecial -orm.Q C,m=hasis addedP /hus >e see that =ri4atel? issued -orms o- mone?
onl? re@uire =u9lic con-idence in order to =ass as mone?. 5ounter-eit mone? also =asses as
mone? as lon8 as no9od? disco4ers itLs counter-eit. IiBe >ise, Q9adQ checBs and QcreditQ
loans =ass as mone? so lon8 as no one -inds out the? are unla>-ul. Yet, once the -raud is
disco4ered, the 4alues o- such M9anB mone?N liBe 9ad checB<s ceases to eEist. /here are,
there-ore, t>o Binds o- mone? ## 8o4ernment issued le8al mone? and =ri4atel? issued
unla>-ul mone?.
DIFFERENT GINDS OF DOLLARS
/he dollar once re=resented somethin8 intrinsicall? 4alua9le made -rom 8old or
sil4er. ;or eEam=le, in 1$A2, 5on8ress de-ined the sil4er dollar as a sil4er coin containin8
3$1.25 8rains o- =ure sil4er. /he le8al dollar is no> Bno>n as Q)nited States coins and
85
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2
3
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6
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8
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14
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16
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18
1A
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22
23
24
25
26
2$
28
currenc?.Q 0o>e4er, the HanBerLs dollar has 9ecome a unit o- measure o- a di--erent Bind
o- mone?. /here-ore, >ith HanBers there is a QdollarQ o- coins and a dollar o- cash le8al
mone?", a QdollarQ o- de9t, a QdollarQ o- credit, a QdollarQ o- checB9ooB mone? or a
QdollarQ o- checBs. Fhen one re-ers to a dollar s=ent or a dollar loaned, he should no>
indicate >hat Bind o- QdollarQ he is talBin8 a9out, since HanBers ha4e created so man?
di--erent Binds.
A dollar o- 9anB Qcredit mone?Q is the eEact o==osite o- a dollar o- Qle8al mone?Q.
/he -ormer is a lia9ilit? >hile the latter is an asset. /hus, it can 9e seen -rom the earlier
statement @uoted -rom I /et Nou Thou-ht, that mone? can 9e =ri4atel? issued as6 Q+one?
doesnLt ha4e to ... 9e issued 9? a 8o4ernment or 9e in an? s=ecial -orm.Q 1t should 9e
care-ull? noted that 9anBs that issue and lend =ri4atel? created mone? demand to 9e =aid
>ith 8o4ernment issued mone?. 0o>e4er, =a?ment in liBe Bind under natural e@uit? >ould
seem to indicate that a de9t created 9? a loan o- =ri4atel? created mone? can 9e =aid >ith
other =ri4atel? created mone?, >ithout re8ard -or Man? s=ecial -ormN as there are no
statutor? la>s to dictate ho> either =ri4ate citizens or 9anBs ma? create mone?.
"Y !HAT AUTHORITYQ
H? >hat authorit? do state and national 9anBs, as =ri4atel? o>ned cor=orations,
create mone? 9? lendin8 their credit ##or more sim=l? =ut # 9? >ritin8 and =assin8 Q9adQ
checBs and QcreditQ loans as Qmone?Q: No>here can a la> 9e -ound that 8i4es 9anBs the
authorit? to create mone? 9? lendin8 their lia9ilities.
/here-ore, the neEt @uestion is, i- 9anBs are creatin8 mone? 9? =assin8 9ad checBs
and lendin8 their credit, >here is their authorit? to do so: ;rom their literature, 9anBs
86
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4
5
6
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8
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12
13
14
15
16
1$
18
1A
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21
22
23
24
25
26
2$
28
claim these techni@ues >ere learned -rom the trade secrets o- the Ooldsmiths. 1t is e4identD
ho>e4er, that mone? creation 9? =ri4ate 9anBs is not the result o- =o>ers con-erred u=on
them 9? 8o4ernment, 9ut rather the art-ul use o- lon8 held Qtrade secrets.Q /hus, unla>-ul
mone? creation is not 9ein8 done 9? 9anBs as cor=orations, 9ut unla>-ull? 9? 9anBers.
A-(/>,* I6 S*>(/20 106 ?+-+. 1 29 ()* Constitution of t)e !nited States of America
1?*>/9/>+,,. 1(+(*1 ()+( 02 1(+(* 1)+,, L... >2/0 @20*.6 *@/( &/,,1 29 >-*7/(6 @+C* +0.
()/03 &5( 32,7 +07 1/,$*- >2/0 + T*07*- /0 P+.@*0( 29 D*&(1, =ass an? Hill o- Attainder,
eE =ost -acto Ia>, or Ia> im=airin8 the (9li8ations o- 5ontracts . . .Q
C,m=hasis addedP
T)* 1(+(*16 D)/>) 3-+0( ()* C)+-(*-1 29 1(+(* &+0C1 +,126 ?-2)/&/( ()* *@/((/03
29 "/,,1 29 >-*7/( &. 02( 3-+0(/03 15>) +5()2-/(. /0 &+0C >)+-(*-1. 1t is o94ious that
QFe the =eo=leQ ne4er dele8ated to 5on8ress, state 8o4ernment, or a8encies o- the state,
the =o>er to create and issue mone? in the -orm o- checBs, credit, or other Q9ills o- credit.Q
/he ;ederal Oo4ernment toda? does not authorize 9anBs to emit, >rite, create, issue and
=ass checBs and credit as mone?. Hut 9anBs do, and 8et a>a? >ith itY HanBs call their
=ri4atel? created mone? nice soundin8 names, liBe McreditN, Mdemand de=ositsN, or
MchecB9ooB mone?N. 0o>e4er, the true nature o- Qcredit mone?Q and QchecBsQ does not
chan8e re8ardless o- the =oetic terminolo8? used to descri9e them. Such mone? in
common use 9? =ri4atel? o>ned 9anBs is ille8al under Art. 1, Sec. 1!, =ara. 1 o- the
5onstitution o- the )nited States o- America, as >ell as unla>-ul under the la>s o- the
)nited States and o- this State.
VOID LULTRA VIRESL CONTRACTS
/he courts ha4e lon8 held that >hen a cor=oration eEecutes a contract 9e?ond the sco=e o-
its charter or 8ranted cor=orate =o>ers, the contract is 4oid or Qultra 4iresQ.
1. 1n Centra! Transp. Co. ;. $u!!9an, 13A ).S. 6!, 11 S. 5t. 4$8, 35 I. ,d. 55, the
court said6 QA contract u!tra ;ires 9ein8 unla>-ul and 4oid, not 9ecause it is in itsel-
8$
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24
25
26
2$
28
immoral, 9ut 9ecause the cor=oration, 9? the la> o- its creation, is inca=a9le o-
maBin8 it, the courts, >hile re-usin8 to maintain an? action u=on the unla>-ul
contract, ha4e al>a?s stri4en to do Justice 9et>een the =arties, so -ar as could 9e
done consistentl? >ith adherence to la>, 9? =ermittin8 =ro=ert? or mone?, =arted
>ith on the -aith o- the unla>-ul contract, to 9e reco4ered 9acB, or com=ensation to
9e made -or it. 1n such case, ho>e4er, the action is not maintained u=on the
unla>-ul contract, nor accordin8 to its termsD 9ut on an im=lied contract o- the
de-endant to return, or, -ailin8 to do that, to maBe com=ensation -or, =ro=ert? or
mone? >hich it has no ri8ht to retain. /o maintain such an action is not to a--irm,
9ut to disa--irm, the unla>-ul contract.Q
2. QFhen a contract is once declared ultra 4ires, the -act that it is eEecuted [ does not
4alidate it, nor can it 9e rati-ied, so as to maBe it the 9asis o- suitor action, nor does
the doctrine o- esto==el a==l?.Q :B $R ;. Ri&h9ond, 133 S, 8A8D 151 .a 1A5.
3. QA national 9anB ... cannot lend its credit to another 9? 9ecomin8 suret?, indorser,
or 8uarantor -or him, such an act D is ultra 4ires . . .Q Mer&hantsJ /an0 ;. /aird 16! ;
642. Additional cases are cited as -ootnotes at the end o- this +emorandum."
THE PUESTION OF LA!FUL CONSIDERATION
/he issue o- >hether the lender >ho >rites and =asses a Q9adQ checB or maBes a
QcreditQ loan has a claim -or relie- a8ainst the 9orro>er is eas? to ans>er, =ro4idin8 the
lender can =ro4e that he 8a4e a la>-ul consideration, 9ased u=on la>-ul acts. Hut did the
lender 8i4e a la>-ul consideration: T2 3/$* + ,+D95, >201/7*-+(/206 ()* ,*07*- @51(
?-2$* ()+( )* 3+$* ()* &2--2D*- ,+D95, @20*. 15>) +1 >2/01 2- >5--*0>.. F+/,/03 ()+(6
)* >+0 )+$* 02 >,+/@ 92- -*,/*9 /0 + >25-( +( ,+D +3+/01( ()* &2--2D*- +1 ()* ,*07*-H1
+>(/201 D*-* 5,(-+ $/-*1 2- $2/7 9-2@ ()* &*3/00/03 29 ()* (-+01+>(/20.
1t can 9e ar8ued that M9adN checBs or McreditN loans that =ass as mone? are
4alua9leD 9ut so are counter-eit coins and currenc? that =ass as mone?. 1t seems
unconsciona9le that a 9anB >ould asB homeo>ners to =ut u= a homestead as collateral -or
a Qcredit loanQ that the 9anB created out o- thin air. Fould this court o- la> or e@uit? allo>
a counter-eiter to -oreclose a8ainst a =ersonLs home 9ecause the 9orro>er >as late in
=a?ments on an unla>-ul loan o- counter-eit mone?: Fere the court to do so, it >ould 9e
contrar? to all =rinci=les o- la>.
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/he @uestion o- 4alua9le consideration in the case at 9ar, does not de=end on an?
4alue im=arted 9? the lender, 9ut the -alse con-idence instilled in the Q9adQ checB or
QcreditQ loan 9? the lender. 1n a court at la> or e@uit?, the lender has no claim -or relie-.
/he ar8ument that 9ecause the 9orro>er recei4ed =ro=ert? -or the lenderLs Q9adQ checB or
QcreditQ loan 8i4es the lender a claim -or relie- is not 4alid, unless the lender can =ro4e that
he 8a4e la>-ul 4alue. /he seller in some cases >ho ma? 9e holdin8 the M9adN checB or
M5reditN loan has a claim -or relie- a8ainst the lender or the 9orro>er or 9oth, 9ut the
lender has no such claim.
"ORRO!ER RELIEF
Since >e ha4e esta9lished that the lender o- unla>-ul or counter-eit mone? has no
claim -or relie- under a 4oid contract, the last @uestion should 9e, does the 9orro>er ha4e a
claim -or relie- a8ainst the lender: ;irst, i- it is esta9lished that the 9orro>er has made no
=a?ments to the lender, then the 9orro>er has no claim -or relie- \a8ainst the lender -or
mone? dama8es. Hut the 9orro>er has a claim -or relie- to 4oid the de9t he o>es the
lender -or notes or o9li8ations unla>-ull? created 9? an ultra 4ires contract -or lendin8
QcreditQ mone?.
T)* &2--2D*-6 ()* C25-(1 )+$* ,203 )*,76 )+1 + >,+/@ 92- -*,/*9 +3+/01( ()*
,*07*- (2 )+$* ()* 02(*6 1*>5-/(. +3-**@*0(6 2- @2-(3+3* 02(* ()* &2--2D*- 1/30*7
7*>,+-*7 05,, +07 $2/7.
/he 9orro>er ma? also ha4e claims -or relie- -or 9reach o- contract 9? the lender
-or not lendin8 Qla>-ul mone?Q and -or Musur?N -or char8in8 an interest rate se4eral times
8reater than the amount a8reed to in the contract -or an? la>-ul mone? actuall? risBed 9?
8A
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26
2$
28
the lender. ;or eEam=le, i- on a V1!!,!!! loan it can 9e esta9lished that the lender actuall?
risBed onl? V5,!!! 5Z ;ederal *eser4e ratio" >ith a contract interest rate o- 1!Z, the
lender has then loaned VA5,!!! o- QcreditQ and V5,!!! o- Qla>-ul mone?Q. 0o>e4er, >hile
char8in8 1!Z interest V1!,!!!" on the entire V1!!,!!!. /he true interest rate on the
V5,!!! o- Qla>-ul mone?Q actuall? risBed 9? the lender is 2!!Z >hich $/2,+(*1 U15-.
,+D1 29 ()/1 1(+(*.
I9 02 L,+D95, @20*.L D+1 ,2+0*76 ()*0 ()* /0(*-*1( -+(* /1 +0 /09/0/(*
?*->*0(+3*. S5>) (*>)0/A5*1 ()* &+0C*-1 1+. D*-* ,*+-0*7 9-2@ ()* (-+7* 1*>-*(1 29
()* G2,71@/()1. T)* C25-(1 )+$* -*?*+(*7,. -5,*7 ()+( 15>) >20(-+>(1 D/()
&2--2D*-1 +-* D)2,,. $2/7 9-2@ ()* &*3/00/03 29 ()* (-+01+>(/206 &*>+51* &+0C1 +-*
02( 3-+0(*7 ?2D*-1 (2 *0(*- /0(2 15>) >20(-+>(1 &. */()*- 1(+(* 2- 0+(/20+, >)+-(*-1.
ADDITIONAL "ORRO!ER RELIEF
1n ;ederal 2istrict 5ourt the 9orro>er ma? ha4e additional claims -or relie- under
Q5i4il *15(Q ;ederal *acBeteerin8 la>s 18 ).S.5. R1A64". /he lender ma? ha4e
esta9lished a Q=attern o- racBeteerin8 acti4it?Q 9? usin8 the ).S. +ail more than t>ice to
collect an unla>-ul de9t and the lender ma? 9e in 4iolation o- 18 ).S.5. RRRR1341, 1343,
1A61 and 1A62.
/he 9orro>er has other claims -or relie- i- he can =ro4e there >as or is a cons=irac?
to de=ri4e him o- =ro=ert? >ithout due =rocess o- la> under. 42 ).S.5.RRR1A83
5onstitutional 1nJur?", 1A855ons=irac?" and 1A86 QKno>led8eQ and QNe8lect to
Pre4entQ a ).S. 5onstitutional Fron8", )nder 18 ).S.5.A.R 241 5ons=irac?" 4iolators,
Qshall 9e -ined not more than V1!,!!! or im=risoned not more than ten 1!" ?ears or 9oth.Q
A!
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1n a 2e9torLs *15( action a8ainst its creditor, alle8in8 that the creditor had collected an
unla>-ul de9t, an interest rate >here all loan char8es >ere added to8ether" that eEceeded,
in the lan8ua8e o- the *15( Statute, Qt>ice the en-orcea9le rate.Q /he 5ourt -ound no
reason to im=ose a re@uirement that the Plainti-- sho> that the 2e-endant had 9een
con4icted o- collectin8 an unla>-ul de9t, runnin8 a Qloan sharBin8Q o=eration. /he de9t
included the -act that eEaction o- a usurious interest rate rendered the de9t unla>-ul and
that is all that is necessar? to su==ort the 5i4il *15( action. 2urante Hros. S Sons, 1nc. 4.
;lushin8 Nat Ll HanB. $55 ;2d 23A, 5ert. denied, 4$3 )S A!6 1A85".
/he Su=reme 5ourt -ound that the Plainti-- in a ci4il *15( action, need esta9lish
onl? a criminal Q4iolationQ and not a criminal con4iction. ;urther, the 5ourt held that the
2e-endant need onl? ha4e caused harm to the Plainti-- 9? the commission o- a =redicate
o--ense in such a >a? as to constitute a Q=attern o- *acBeteerin8 acti4it?.Q /hat is, the
Plainti-- need not demonstrate that the 2e-endant is an or8anized crime -i8ure, a mo9ster
in the =o=ular sense, or that the Plainti-- has su--ered some t?=e o- s=ecial *acBeteerin8
inJur?D all that the Plainti-- must sho> is >hat the Statute s=eci-icall? re@uires. /he *15(
Statute and the ci4il remedies -or its 4iolation are to 9e li9erall? construed to e--ect the
con8ressional =ur=ose as 9roadl? -ormulated in the Statute. Sedima, SP*I 4. 1mreE 5o.,
4$3 )S 4$A 1A85".
Aside -rom an? le8al o9li8ation, there eEists a societal and moral o9li8ation enure
to 9oth the Plainti-- and the 2e-endant in that i- ?ou >ere to de-use a Hom9, and ?ou
com=leted the tasB AAZ correct, ?ou are still dead. Plainti-- 9elie4es that his =osition on
the la> is sound, 9ut -ears 8rie4ous re=ercussions throu8hout the -inancial communit? i-
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he should =re4ail. /he credit -or mone? scheme is endemic throu8hout our societ? and
could ha4e de4astatin8 e--ects on the national econom?.
Plainti-- 9elie4es that another a==roach ma? 9e eE=lored as -ollo>s6
PERFECT O"LIGATION AS TO A HUMAN "EING
/hat >hich is 9orro>ed is >ealth. Ia9or created that >ealth, so it is mone?
not>ithstandin8 its -orm. 5onsideration is =romised in ad4ance 9? the Promissor o- the
Note, in the nature o- =rinci=al and interest =a?ments -or the consideration =ro4ided 9? the
lender, >hich is his =ersonal >ealth created 9? his la9or.
A +ort8a8e Note or Promissor? Note secures the =osition o- the lender and i- there
is de-ault on the =romise to =a? then the 9orro>er has a8reed to acce=t the strict
-oreclosure remed? =ro4ided 9? state statutes.
/hen the 9orro>er o9li8ated themsel4es to =a? 9acB the =rinci=al and =a? -or the
use o- it, in the -orm o- interest -or the ?ears o4er >hich the =rinci=al is to 9e =aid 9acB.
!)*0 ?+.@*0(1 1(2? ()*-* /1 + ?-/@+ 9+>/* /0B5-. (2 ()* ,*07*-. Fhen =a?ments sto=
the lender has strict -oreclosure =rocedure in state court to remed? the =a? 9acB o- the
9alance o- the =rinci=al.
3ud8ment to -oreclose on the =ro=ert? is 8ranted u=on the mere =roo- that =a?ments
ha4e ceased as =romised. /he =ro=ert? is sold to co4er the un=aid 9alanceD de-icienc?
Jud8ment ma? 9e needed. All is ri8ht >ith the >orld. 0ere the lender >ould 9e =reJudiced
i- com=lete and s>i-t remed? >ere not a4aila9le. A9sent such remed? the 8o4ernment
>ould 9e =art? to =lacin8 the lender into a condition o- in4oluntar? ser4itude to the
9orro>er.
A2
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6
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18
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25
26
2$
28
PERFECT O"LIGATION AS TO A "ANG
1n ?ears =ast 9anBs and sa4in8s and loans institutions enJo?ed the remed? outlined
a9o4e. /he reason >as the? >ere lendin8 out mone? 9elon8in8 to their de=ositors and
there >as =rima -acie inJur? to the de=ositors u=on the mere =roo- that =a?ments had
ceased. /here9? the 9anB as >ell as the 8o4ernment >ould 9e =art? to creatin8 a condition
o- in4oluntar? ser4itude u=on the de=ositors i- strict -oreclosure remed? >ere not
a4aila9le. /oda? de=ositors are not in Jeo=ard? o- 9ein8 inJured >hen a =erson 9orro>s
mone? -rom a 9anB. /he 9anB does not lead their mone?, onl? their credit in the amount o-
the loan =a=er accountin8". 0ence no =rima -acie inJur? eEists to either the de=ositors or
the 9anB u=on the mere =roo- that =a?ments cease. 1nJur? is 9ased u=on the =a?ments
made as to the credit line.
PERFECT OR IMPERFECT O"LIGATION
A =er-ect o9li8ation is one reco8nized and sanctioned 9? =ositi4e la>D one o- >hich
the -ul-illment can 9e en-orced 9? the aid o- the la>. Hut i- the dut? created 9? the
o9li8ation o=erates onl? on the moral sense, >ithout 9ein8 en-orced 9? an? =ositi4e la>, it
is called an Qim=er-ect o9li8ation,Q and creates no ri8ht o- action, nor has it an? le8al
o=eration. /he dut? o- eEercisin8 8ratitude, charit?, and the other merel? moral duties are
eEam=les o- this Bind o- o9li8ation. ,d>ards 4. Keane?, A6 ).S. 5A5, 6!!, 24 I.,d. $A3.
Oo4ernment a==ro4ed the ;ederal *eser4e HanB, 1nc., as the 5entral HanBin8 s?stem -or
the )nited States, and it<s =olic? is re4ie>ed 9? 5on8ress al9eit, in a ha=hazard manner.
/he ;ederal *eser4e authorizes it<s M=ri4ate mone?N M;ederal *eser4e HanB NotesN to 9e
used 9? lendin8 institutions such as mem9er 9anBs, to o=erate u=on a s?stem o-
A3
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
-ractionalizin8. /he nature o- >hich is that the? do not lend either their mone? or the
mone? o- the de=ositors, the mone? is created out o- thin air, 9? the mere stroBe o- a =en.
Fhen there is no consideration in Jeo=ard? o- 9ein8 returned, then the o9li8ation is to
maBe the 9anB inJur? =roo-, to the eEtent o- the o9li8ation, >hich >ould 9e to maBe them
>hole.
/he onl? le8al o9li8ation is 9ased u=on the moral issue, >hich under the la> is an
1m=er-ect (9li8ation, to return to them their =ro=ert?, >hich isn<t >ealth, 9ut credit. A
Promissor? Note is si8ned under Qeconomic com=ulsionQ >hen, the QloanQ >ill not 9e
consummated unless and until the 9orro>er si8ns it. /hus, =er-ormin8 the act o- si8nin8 a
Promissor? Note cannot 9e considered 4oluntar?.
/he dischar8in8 o- the credit is 9ased u=on social, economic, and moral standards
to maBe the 9anB >hole, i- inJur? is claimed, in an? court action >here de-ault on the
Promissor? Note is on record and >here the 9anB -ails to 4eri-? an inJur?, the 9anB cannot
en-orce a =romise to =a? consideration >here the? =ro4ided no consideration. ;or the 9anB
to 9e a9le to -orce u=on the de-endant an amount o4er and a9o4e the credit, is to -orce
u=on the de-endants a de9t that 8oes to the control o- their la9or a8ainst their >ill. /his
condition >ould 9e Peona8e, >hich has 9e en a9olished in this countr?.
42 ).S.5. R 1AA4, and 18 ).S.5. R1581."
/he @uestion then arises as to >hen is the o9li8ation dischar8ed, to =ut the 9anB in a
=osition, >here there is no record o- inJur? to it:
"ANG CREDIT LOAN EIAMPLE
A4
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
Fhen a =erson 9orro>s V1!!,!!!.!! at 1! Z interest amortized o4er 3! ?ears at a
cost o- 4 =oints, is not the V4,!!!.!! -or =oints the =ro-it to the 9anB: 1n the =a=er>orB the
9orro>er is char8ed the V4,!!!.!! -or =oints. 1n essence the 9anB onl? =ro4ides
VA6,!!!.!! -or a V1!!,!!!.!! loan, there9? causin8 the cost o- the loan to 9e more than
V1!!,!!!.!!. ,Eam=le6 the 9orro>erLs cost o- the Note is 1! Z o- V1!!,!!!.!!, or
V1!,!!!.!! -or the 9anBLs in4estment o- VA6,!!!.!!. V1!,!!!.!! di4ided 9? VA6,!!!.!! ]
1!.42 annual =ercenta8e rate AP*". 1n this =rocess the =ro-it to the 9anB is recei4ed at the
closin8 ta9le. T)/1 -+/1*1 ()* A5*1(/20 +( D)+( ?2/0( /0 @+C/03 ?+.@*0(1 >+0 ()*
)2,7*- 29 ()* N2(* 02 ,203*- 151(+/0 /0B5-.Q
+onthl? =a?ments should 9e V8$8.!! -or a V1!!,!!!.!! loan at 1! Z interest
amortized o4er 3! ?ears CV8.$8 =er V1,!!!.!! ] V8.$8 E 1!! ] V8$8.!!GmonthP. /he
V1!!,!!!.!! loan di4ided 9? V8$8.!!Gmonthl? =a?ments ] 113.4 =a?mentsD or a-ter
maBin8 114 =a?ments E V8$8.!! a total o- V1!!,!A2.!! has 9een =aid.
A-ter 114 =a?ments the credit lined =ro4ided 9? the loan has 9een dischar8ed. 2oes
inJur? eEist to the 9anB a-ter the 114
th
=a?ment: /he ans>er is N(. Fhere the credit line
o- V1!!,!!!.!! is dischar8ed, >here is the inJur?: /here is onl? inJur? to the 9anB >here
=a?ments ha4e not 9een made -or A X ?ears 114 =a?ments".
1- =a?ments sto= 9e-ore the 114th =a?ment then >hate4er inJur? eEists must 9e
9ased u=on a 4eri-ied com=laint o- inJur?D e.8, that >hich remains to dischar8e the credit
line a-ter 5$ =a?ments is a==roEimatel? V5!,!!!.!! C5$ E V8$8.!! ] V5!,!46.!!P.
!HAT HAPPENS !HEN PAYMENTS STOP AFTER THE 114TH PAYMENTQ
A5
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
/he =lan is -or the 9orro>er to =a? V8$8.!! E 36! =a?mentsD or V316,!8!.!! o4er
3! ?ears" -or a credit line o- V1!!.!!!.!!.
/he -irst =a?ment o- V8$8.!! includes =rinci=al o- V55.!! and interests V833.!!.
Fhen =a?ments sto= =rematurel? the 9anB uses the stateLs strict -oreclosure la>s color
a9l? as i- the 9anBLs >ealth or the >ealth o- the de=ositors is in Jeo=ard? o- 9ein8 returned.
Q5olora9le transaction, one =resentin8 an a==earance >hich does not corres=ond >ith the
realit?, and, ordinaril?, an a==earance intended to conceal or to decei4e. HlacBLs Ia>
2ictionar? 6
th
,dition."
1s, or is not, a transaction >ith the 9anB colora9le:
Plainti-- 9elie4es i- the 9orro>er sto=s the =a?ments 9e-ore the credit line is
eEhausted then it can 9e char8ed that the 9orro>er intended to inJure the 9anBD 9ut that the
9anB intends to inJure the 9orro>er i- the 9orro>er has made 114 =a?ments and the 9anB
-orecloses intendin8 -or the court to rule in their -a4or. Plainti-- 9elie4es that -orced
collection o- an?thin8 o4er the Vl!!,!!!.!! is inJur? to the 9orro>er and is a de9t that 8oes
to control their la9or a8ainst their >ill. ,n-orcement o- this ser4ice is a =rohi9ited
condition o- =eona8e.
1t is taBen that the =lainti-- =ermits the HanB to use the courtLs =rocess and the
stateLs strict -oreclosure =rocedures as i- the 9anB arran8ed -or consideration to 9e =art o-
the transaction >hen the Plainti-- does not re-use to acce=t the en-orcement o- this ser4ice
-or the reason that the? can onl? maBe a de-ense 9ased u=on a 4eri-ied com=laint o- inJur?
to the 9anB since the 9anB =ro4ided no consideration in the transaction. Plainti-- has ?et to
see a 4eri-ied com=laint o- inJur? -iled in these =roceedin8s.
A6
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
1n the eEam=le >here 114 =a?ments had 9een made, and then =a?ments sto=, the
credit line is dischar8ed. /he 9anB ho>e4er, 9ased u=on the -ormer =ractice =olic?" >ill
claim throu8h a third =art?, their attorne?, usin8 the records color a9l? in a non 4eri-ied
com=laint, that an outstandin8 9alance o- a==roEimatel? VA!,!!!.!! eEists on the 3! ?ear
amortized Promissor? Note as i- the 9anB =ro4ided consideration.
U07*- 15>) >/->5@1(+0>*1 ()* 92-*>,215-* ?-2>*75-* 51*7 /0(*071 (2 /0B5-* ()*
P,+/0(/991 D)*-* ()*-* /1 02 $*-/9/*7 >2@?,+/0( 29 /0B5-. (2 7*9*07 +3+/01(.
D5* ?-2>*11 /1 $/2,+(*7 D)*0 ()* >25-( @+C*1 B573@*0( /0 9+$2- 29 ()* &+0C
5?20 ()* @*-* ?-229 ()+( ()* &2--2D*- 1(2??*7 @+C/03 ?+.@*0(1. T)*-* /1 02
$*-/9/*7 >2@?,+/0( 29 /0B5-. (2 ()* &+0C; ()*-*&. ()* 1(-/>( 92-*>,215-* ?-2>*75-* )+1
()* -*15,( 29 ()* >25-(6 /@?21/03 /0B5-. (2 ()* P,+/0(/99 /0 +0 +@250( >*-(+/0.
Plainti--s 9elie4e the en-orcement o- this ser4ice is =eona8e. Plainti--s ar8ue that i-
the 9orro>er does not re-use to acce=t -or cause, >ithout dishonor, the re9utta9le
=resum=tions in the non#4eri-ied com=laint then the? acce=t 9ein8 controlled 9? the courtLs
=rocess and the =roceedin8s is to the non#4eri-ied claims. 1- the Plainti--s maBe a =ro=er
record 9? a--ida4it" o- re-usin8 to acce=t the non#4eri-ied com=laint and =roceedin8s and
their reasons are not contro4erted >ith e4idence 9? a--ida4it" then a record is made that
the claims in the non#4eri-ied com=laint are irre-uta9le =resum=tions. Haile? 4. Ala9ama,
21A ).S. 21A3.
A&1*0( + $*-/9/*7 >2@?,+/0( 29 + 7+@+3*7 ?+-(.6 ()* P,+/0(/99 )+$/03
-*?+/7 ()* ?-/0>/?,* 29 ()* 2-/3/0+, ,2+06 >+0 02( &* )*,7 (2 ?*20+3* 92- ()*
1+(/19+>(/20 29 +0 /@?*-9*>( 2&,/3+(/20.
A$
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
CONTINUATION OF CASE CITES IN SUPPORT
THE FOLLO!ING CASE CITES ALSO SUPPORT THIS MEMORANDUM
1. MA 9anB ma? not lend its credit to another e4en thou8h such a transaction turns out
to ha4e 9een o- 9ene-it to the 9anB, and in su==ort o- this a list o- cases mi8ht 9e
cited, >hich#>ould !oo0 !i0e a &ata!o- of ships.N C,m=hasis addedP Norton Orocer?
5o. 4. Peo=les Nat. HanB, 144 S, 5!5. 151 .a 1A5.
2. M1n the -ederal courts, it is >ell esta9lished that a national 9anB has not =o>er to
lend its credit to another 9? 9ecomin8 suret?, indorser, or 8uarantor -or him.NL
;armers and +iners HanB 4. Hlue-ield Nat Ll HanB, 11 ; 2d 83, 2$1 ).S. 66A.
3. QA national 9anB has no =o>er to lend its credit to an? =erson or cor=oration . . .
Ho>en 4. Needles Nat. HanB, A4 ; A25 36 55A 553, certiorari denied in 2! S.5t
1!24, 1$6 )S 682, 44 I,2 63$.
4. M/he doctrine o- ultra 4ires is a most =o>er-ul >ea=on to Bee= =ri4ate cor=orations
>ithin their le8itimate s=heres and to =unish them -or 4iolations o- their cor=orate
charters, and it =ro9a9l? is not in4oBed too o-ten .. . Tinc 5ar9onate 5o. 4. ;irst
National HanB, 1!3 Fis 125, $A NF 22A. American ,E=ress 5o. 4. 5itizens State
HanB, 1A4 NF 43!.
5. Q1t has 9een settled 9e?ond contro4ers? that a national 9anB, under -ederal Ia>
9ein8 limited in its =o>ers and ca=acit?, cannot lend its credit 9? 8uaranteein8 the
de9ts o- another. All such contracts entered into 9? its o--icers are ultra 4ires . . .Q
0o>ard S ;oster 5o. 4. 5itizens NatLl HanB o- )nion, 133 S5 2!2, 13! S,
$5A1A26".
6. M. . . checBs, dra-ts, mone? orders, and 9anB notes are not la>-ul mone? o- the
)nited States ...N State 4. Neilon, $3 Pac 324, 43 (re 168.
$. QNeither, as included in its =o>ers not incidental to them, is it a =art o- a 9anBLs
9usiness to lend its credit. 1- a 9anB could lend its credit as >ell as its mone?, it
mi8ht, i- it recei4ed com=ensation and >as care-ul to =ut its name onl? to solid
=a=er, maBe a 8reat deal more than an? la>-ul interest on its mone? >ould amount
to. 1- not care-ul, the =o>er >ould 9e the mother o- =anics, . . . 1ndeed, lendin8
credit is the eEact o==osite o- lendin8 mone?, >hich is the real 9usiness o- a 9anB,
-or >hile the latter creates a lia9ilit? in -a4or o- the 9anB, the -ormer 8i4es rise to a
lia9ilit? o- the 9anB to another. I Morse. /an0s and /an0in- 5th ,d. Sec 65D Ma-ee,
/an0s and /an0in-, 3rd ,d. Sec 248.Q American ,E=ress 5o. 4. 5itizens State
HanB, 1A4 NF 42A.
8. Q1t is not >ithin those statutor? =o>ers -or a national 9anB, e4en thou8h sol4ent, to
lend its credit to another in an? o- the 4arious >a?s in >hich that mi8ht 9e done.Q
;ederal 1ntermediate 5redit HanB 4. I L0errison, 33 ; 2d 841, 842 1A2A".
A. Q/here is no dou9t 9ut >hat the la> is that a national 9anB cannot lend its credit or
9ecome an accommodation endorser.Q National HanB o- 5ommerce 4. AtBinson, 55
, 4$1.
1!. QA 9anB can lend its mone?, 9ut not its credit.Q ;irst NatLl HanB o- /alla=oosa 4.
+onroe . 135 Oa 614, 6A S, 1124, 32 I*A NS" 55!.
A8
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
11. Q.. . the 9anB is allo>ed to hold mone? u=on =ersonal securit?D 9ut it must 9e
mone? that it loans, not its credit.Q Seli8man 4. 5harlottes4ille Nat. HanB, 3 0u8hes
64$, ;ed 5ase No.12, 642, 1!3A.
12. QA loan ma? 9e de-ined as the deli4er? 9? one =art? to, and the recei=t 9? another
=art? o-, a sum o- mone? u=on an a8reement, eE=ress or im=lied, to re=a? the sum
>ith or >ithout interest.Q Parsons 4. ;oE 1$A Oa 6!5, 1$6 S, 644. Also see
KirBland 4. Haile?, 155 S, 2d $!1 and )nited States 4. Nei-ert Fhite 5o., 24$ ;ed
Su== 8$8, 8$A.
13. Q/he >ord Lmone?L in its usual and ordinar? acce=tation means 8old, sil4er, or =a=er
mone? used as a circulatin8 medium o- eEchan8e . . .Q Iane 4. *aile? 28! K? 31A,
133 SF 2d $5.
14. QA =romise to =a? cannot, 9? ar8ument, ho>e4er in8enious, 9e made the e@ui4alent
o- actual =a?ment ...Q 5hristensen 4. Hee9e, A1 P 133, 32 )tah 4!6.
15. MA 9anB is not the holder in due course u=on merel? creditin8 the de=ositors
account.N HanBers /rust 4. Na8ler, 22A NYS 2d 142, 143.
16. QA checB is merel? an order on a 9anB to =a? mone?.Q Youn8 4. 0em9ree, $3 P2d
3A3.
1$. QAn? -alse re=resentation o- material -acts made >ith Bno>led8e o- -alsit? and >ith
intent that it shall 9e acted on 9? another in enterin8 into contract, and >hich is so
acted u=on, constitutes L-raud,L and entitles =art? decei4ed to a4oid contract or
reco4er dama8es.Q Harnsdall *e-inin8 5orn. 4. Hirnam Food (il 5o. A2 ; 26 81$.
18. QAn? conduct ca=a9le o- 9ein8 turned into a statement o- -act is re=resentation.
/here is no distinction 9et>een misre=resentations e--ected 9? >ords and
misre=resentations e--ected 9? other acts.Q Ieonard 4. S=rin8er 1A$ 1ll 532. 64 N,
3!1.
1A. M1- an? =art o- the consideration -or a =romise 9e ille8al, or i- there are se4eral
considerations -or an unse4era9le =romise one o- >hich is ille8al, the =romise,
>hether >ritten or oral, is >holl? 4oid, as it is im=ossi9le to sa? >hat =art or >hich
one o- the considerations induced the =romise.N +enominee *i4er 5o. 4. Au8ustus
S=ies I S 5 5o., 14$ Fis 55A#5$2D 132 NF 1122.
2!. M/he contract is 4oid i- it is onl? in =art connected >ith the ille8al transaction and
the =romise sin8le or entire.N Ouardian A8enc? 4. Ouardian +ut. Sa4in8s HanB,
22$ Fis 55!, 2$A NF 83.
21. M1t is not necessar? -or rescission o- a contract that the =art? maBin8 the
misre=resentation should ha4e Bno>n that it >as -alse, 9ut reco4er? is allo>ed e4en
thou8h misre=resentation is innocentl? made, 9ecause it >ould 9e unJust to allo>
one >ho made -alse re=resentations, e4en innocentl?, to retain the -ruits o- a
9ar8ain induced 9? such re=resentations.N Fhi== 4. 14erson, 43 Fis 2d 166.
22. Q,ach ;ederal *eser4e 9anB is a se=arate cor=oration o>ned 9? commercial 9anBs
in its re8ion ...Q Ie>is 4. )nited States, 68! ; 2! 123A 1A82".
LA! OF THE CASE
AA
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
/he la> o- the case is decreed as -ollo>s6
1t is the =u9lic =olic? o- this state that =u9lic a8encies eEist to aid in the conduct o- the
=eo=leLs 9usiness..../he =eo=le o- this state do not ?ield their so4erei8nt? to the a8encies
>hich ser4e them.
1n enactin8 this cha=ter, the Ie8islature -inds and declares that the =u9lic commissions,
9oards and councils and the other =u9lic a8encies in this State eEist to aid in the conduct
o- the =eo=leLs 9usiness..../he =eo=le o- this State do not ?ield their so4erei8nt? to the
a8encies >hich ser4e them.
Ia>s, >hether or8anic or ordinar?, are either >ritten or un>ritten.
A >ritten la> is that >hich is =romul8ated in >ritin8, and o- >hich a record is in
eEistence.
/he or8anic la> is the 5onstitution o- Oo4ernment, and is alto8ether >ritten. (ther >ritten
la>s are denominated statutes. /he >ritten la> o- this State is there-ore contained in its
5onstitution and statutes, and in the 5onstitution and statutes o- the )nited States.
An? Judicial record ma? 9e im=eached 9? e4idence o- a >ant o- Jurisdiction in the 5ourt
or Judicial o--icer, o- collusion 9et>een the =arties, or o- -raud in the =art? o--erin8 the
record, in res=ect to the =roceedin8s.
...at the *e4olution, the so4erei8nt? de4ol4ed on the =eo=leD and the? are trul? the
so4erei8ns o- the countr?, 9ut the? are so4erei8ns >ithout su9Jects...>ith none to 8o4ern
9ut themsel4es..... C501S0(I+ 4. O,(*O1A )S" 2 2all 41A, 454, 1 I ,d 44!, 455
2AII 1$A3" ==4$1#4$2.P
/he 4er? meanin8 o- Lso4erei8nt?L is that the decree o- the so4erei8n maBes la>.
CAmerican Hanana 5o. 4. )nited ;ruit 5o., 2A S.5t. 511, 513, 213 ).S. 34$, 53 I.,d. 826,
1A Ann.5as. 1!4$.P
/he =eo=le o- this State, as the successors o- its -ormer so4erei8n, are entitled to all the
ri8hts >hich -ormerl? 9elon8ed to the Kin8 9? his =rero8ati4e. CIansin8 4. Smith, 4 Fend.
A N.Y." 182A", 21 Am.2ec. 8A 1!5 5onst. Ia> Sec. 2A8D 18 5 ,m.2om. Sec. 3, 228D 3$
5 Na4.Fat. Sec. 21AD Nuls Sec. 16$D 48 5 Fhar4es Sec. 3, $.P
A conse@uence o- this =rero8ati4e is the le8al uiGuity o- the Bin8. 0is maJest? in the e?e
o- the la> is al>a?s =resent in all his courts, thou8h he cannot =ersonall? distri9ute Justice.
;ortesc.c.8. 21nst.186" 0is Jud8es are the mirror 9? >hich the Bin8Ls ima8e is re-lected. 1
HlacBstoneLs 5ommentaries, 2$!, 5ha=ter $, Section 3$A.
..../his declaration o- ri8hts ma? not 9e construed to im=air or den? others retained 9? the
=eo=le.Q
/he state cannot diminish ri8hts o- the =eo=le. C0ertado 4. 5ali-ornia, 1!! )S 516.P
/he assertion o- -ederal ri8hts, >hen =lainl? and reasona9l? made, is not to 9e de-eated
under the name o- local =ractice. C2a4is 4. Fechsler, 263 )S 22, 24.P
Fhere ri8hts secured 9? the 5onstitution are in4ol4ed, there can 9e no rule maBin8 or
le8islation >hich >ould a9ro8ate them. C+iranda 4. Arizona, 384 )S 436, 4A1.P
/here can 9e no sanction or =enalt? im=osed u=on one 9ecause o- this eEercise o-
1!!
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
constitutional ri8hts. CSherer 4. 5ullen, 481 ; A46.P
Fhereas, the =eo=le o- Arizona ha4e =resented a constitution....and >hich, on due
eEamination, is -ound to 9e re=u9lican in its -orm o- 8o4ernment....
*e=u9lican 8o4ernment. (ne in >hich the =o>ers o- so4erei8nt? are 4ested in the =eo=le
and are eEercised 9? the =eo=le, either directl?, or throu8h re=resentati4es chosen 9? the
=eo=le, to >hom those =o>ers are s=eciall? dele8ated. C1n re 2uncan, 13A ).S. 44A, 11
S.5t. 5$3, 35 I.,d. 21AD +inor 4. 0a==ersett, 88 ).S. 21 Fall." 162, 22 I.,d. 62$.Q
HlacBLs Ia> 2ictionar?, ;i-th ,dition, =. 626.P
/he State o- Arizona is an inse=ara9le =art o- the )nited States o- America, and the )nited
States 5onstitution is the su=reme la> o- the land.
/his 5onstitution, and the Ia>s o- the )nited States >hich shall 9e made in Pursuance
thereo-D and all /reaties made, or >hich shall 9e made, under the Authorit? o- the )nited
States, shall 9e the su=reme Ia> o- the IandD and the 3ud8es in e4er? State shall 9e 9ound
there9?D an? /hin8 in the 5onstitution or Ia>s o- an? State to the 5ontrar?
not>ithstandin8. C5onstitution -or the )nited States o- America, Article .1, 5lause 2.P
5ons=irac? a8ainst ri8hts6 1- t>o or more =ersons cons=ire to inJure, o==ress, threaten, or
intimidate an? =erson in an? State, /erritor?, 5ommon>ealth, Possession, or 2istrict in the
-ree eEercise or enJo?ment o- an? ri8ht or =ri4ile8e secured to him 9? the 5onstitution or
la>s o- the )nited States, or 9ecause o- his ha4in8 so eEercised the sameD or 1- t>o or
more =ersons 8o in dis8uise on the hi8h>a?, or on the =remises o- another, >ith intent to
=re4ent or hinder his -ree eEercise or enJo?ment o- an? ri8ht or =ri4ile8e so secured # /he?
shall 9e -ined under this title or im=risoned not more than ten ?ears, or 9othD and i- death
results -rom the acts committed in 4iolation o- this section or i- such acts include
Bidna==in8 or an attem=t to Bidna=, a88ra4ated seEual a9use or an attem=t to commit
a88ra4ated seEual a9use, or an attem=t to Bill, the? shall 9e -ined under this title or
im=risoned -or an? term o- ?ears or -or li-e, or 9oth, or ma? 9e sentenced to death. C18,
)S5 241P
2e=ri4ation o- ri8hts under color o- la>6 Fhoe4er, under color o- an? la>, statute,
ordinance, re8ulation, or custom, >ill-ull? su9Jects an? =erson in an? State, /erritor?,
5ommon>ealth, Possession, or 2istrict to the de=ri4ation o- an? ri8hts, =ri4ile8es, or
immunities secured or =rotected 9? the 5onstitution or la>s o- the )nited States, or to
di--erent =unishments, =ains, or =enalties, on account o- such =erson 9ein8 an alien, or 9?
reason o- his color, or race, than are =rescri9ed -or the =unishment o- citizens, shall 9e
-ined under this title or im=risoned not more than one ?ear, or 9othD and i- 9odil? inJur?
results -rom the acts committed in 4iolation o- this section or i- such acts include the use,
attem=ted use, or threatened use o- a dan8erous >ea=on, eE=losi4es, or -ire, shall 9e -ined
under this title or im=risoned not more than ten ?ears, or 9othD and i- death results -rom the
acts committed in 4iolation o- this section or i- such acts include Bidna==in8 or an attem=t
to Bidna=, a88ra4ated seEual a9use, or an attem=t to commit a88ra4ated seEual a9use, or
an attem=t to Bill, shall 9e -ined under this title, or im=risoned -or an? term o- ?ears or -or
li-e, or 9oth, or ma? 9e sentenced to death. C18, )S5 242P
Pro=ert? ri8hts o- citizens6 All citizens o- the )nited States shall ha4e the same ri8ht, in
e4er? State and /erritor?, as is enJo?ed 9? >hite citizens thereo- to inherit, =urchase, lease,
sell, hold, and con4e? real and =ersonal =ro=ert?. C42 )S5 1A82P
5i4il action -or de=ri4ation o- ri8hts6 ,4er? =erson >ho, under color o- an? statute,
ordinance, re8ulation, custom, or usa8e, o- an? State or /erritor? or the 2istrict o-
5olum9ia, su9Jects, or causes to 9e su9Jected, an? citizen o- the )nited States or other
=erson >ithin the Jurisdiction thereo- to the de=ri4ation o- an? ri8hts, =ri4ile8es, or
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immunities secured 9? the 5onstitution and la>s, shall 9e lia9le to the =art? inJured in an
action at la>, suit in e@uit?, or other =ro=er =roceedin8 -or redress, eEce=t that in an?
action 9rou8ht a8ainst a Judicial o--icer -or an act or omission taBen in such o--icerLs
Judicial ca=acit?, inJuncti4e relie- shall not 9e 8ranted unless a declarator? decree >as
4iolated or declarator? relie- >as una4aila9le. ;or the =ur=oses o- this section, an? Act o-
5on8ress a==lica9le eEclusi4el? to the 2istrict o- 5olum9ia shall 9e considered to 9e a
statute o- the 2istrict o- 5olum9ia. C42 )S5 1A83P
5ons=irac? to inter-ere >ith ci4il ri8hts6 2e=ri4in8 =ersons o- ri8hts or =ri4ile8es6 1- t>o
or more =ersons in an? State or /erritor? cons=ire or 8o in dis8uise on the hi8h>a? or on
the =remises o- another, -or the =ur=ose o- de=ri4in8, either directl? or indirectl?, an?
=erson or class o- =ersons o- the e@ual =rotection o- the la>s, or o- e@ual =ri4ile8es and
immunities under the la>sD or -or the =ur=ose o- =re4entin8 or hinderin8 the constituted
authorities o- an? State or /erritor? -rom 8i4in8 or securin8 to all =ersons >ithin such
State or /erritor? the e@ual =rotection o- the la>sD or i- t>o or more =ersons cons=ire to
=re4ent 9? -orce, intimidation, or threat, an? citizen >ho is la>-ull? entitled to 4ote, -rom
8i4in8 his su==ort or ad4ocac? in a le8al manner, to>ard or in -a4or o- the election o- an?
la>-ull? @uali-ied =erson as an elector -or President or .ice President, or as a +em9er o-
5on8ress o- the )nited StatesD or to inJure an? citizen in =erson or =ro=ert? on account o-
such su==ort or ad4ocac?D in an? case o- cons=irac? set -orth in this section, i- one or more
=ersons en8a8ed therein do, or cause to 9e done, an? act in -urtherance o- the o9Ject o-
such cons=irac?, >here9? another is inJured in his =erson or =ro=ert?, or de=ri4ed o-
ha4in8 and eEercisin8 an? ri8ht or =ri4ile8e o- a citizen o- the )nited States, the =art? so
inJured or de=ri4ed ma? ha4e an action -or the reco4er? o- dama8es occasioned 9? such
inJur? or de=ri4ation, a8ainst an? one or more o- the cons=irators. C42 )S5 1A853"P
Action -or ne8lect to =re4ent6 ,4er? =erson >ho, ha4in8 Bno>led8e that an? o- the >ron8s
cons=ired to 9e done, and mentioned in section 1A85 o- this title, are a9out to 9e
committed, and ha4in8 =o>er to =re4ent or aid in =re4entin8 the commission o- the same,
ne8lects or re-uses so to do, i- such >ron8-ul act 9e committed, shall 9e lia9le to the =art?
inJured, or his le8al re=resentati4es, -or all dama8es caused 9? such >ron8-ul act, >hich
such =erson 9? reasona9le dili8ence could ha4e =re4entedD and such dama8es ma? 9e
reco4ered in an action on the caseD and an? num9er o- =ersons 8uilt? o- such >ron8-ul
ne8lect or re-usal ma? 9e Joined as de-endants in the actionD and i- the death o- an? =art?
9e caused 9? an? such >ron8-ul act and ne8lect, the le8al re=resentati4es o- the deceased
shall ha4e such action there-or, and ma? reco4er not eEceedin8 V5,!!! dama8es therein,
-or the 9ene-it o- the >ido> o- the deceased, i- there 9e one, and i- there 9e no >ido>,
then -or the 9ene-it o- the neEt o- Bin o- the deceased. Hut no action under the =ro4isions
o- this section shall 9e sustained >hich is not commenced >ithin one ?ear a-ter the cause
o- action has accrued. C42 )S5 1A86P
5()*/. /he =erson and suit o- the so4erei8nD the =lace >here the so4erei8n soJourns >ith
his re8al retinue, >here4er that ma? 9e. CHlacBLs Ia> 2ictionar?, 5th ,dition, =a8e 318.P
5()*/. An a8enc? o- the so4erei8n created 9? it directl? or indirectl? under its authorit?,
consistin8 o- one or more o--icers, esta9lished and maintained -or the =ur=ose o- hearin8
and determinin8 issues o- la> and -act re8ardin8 le8al ri8hts and alle8ed 4iolations
thereo-, and o- a==l?in8 the sanctions o- the la>, authorized to eEercise its =o>ers in the
course o- la> at times and =laces =re4iousl? determined 9? la>-ul authorit?. C1s9ill 4.
Sto4all, /eE.5i4.A==., A2 S.F.2d 1!6$, 1!$!D HlacBLs Ia> 2ictionar?, 4th ,dition, =a8e
425P
5()*/ (; *,5(*2. /o 9e a court o- record a court must ha4e -our characteristics, and
ma? ha4e a -i-th. /he? are6
A. A Judicial tri9unal ha4in8 attri9utes and eEercisin8 -unctions inde=endentl? o- the
=erson o- the ma8istrate desi8nated 8enerall? to hold it C3ones 4. 3ones, 188 +o.A==. 22!,
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1$5 S.F. 22$, 22AD ,E =arte Oladhill, 8 +etc. +ass., 1$1, =er Sha>, 5.3. See, also,
Ied>ith 4. *osalsB?, 244 N.Y. 4!6, 155 N.,. 688, 68APCHlacBLs Ia> 2ictionar?, 4th ,d.,
425, 426P
H. Proceedin8 accordin8 to the course o- common la> C3ones 4. 3ones, 188 +o.A==. 22!,
1$5 S.F. 22$, 22AD ,E =arte Oladhill, 8 +etc. +ass., 1$1, =er Sha>, 5.3. See, also,
Ied>ith 4. *osalsB?, 244 N.Y. 4!6, 155 N.,. 688, 68APCHlacBLs Ia> 2ictionar?, 4th ,d.,
425, 426P
5. 1ts acts and Judicial =roceedin8s are enrolled, or recorded, -or a =er=etual memor? and
testimon?. C3 Hl. 5omm. 24D 3 Ste=h. 5omm. 383D /he /homas ;letcher, 5.5.Oa., 24 ;.
481D ,E =arte /histleton, 52 5al 225D ,r>in 4. ).S., 2.5.Oa., 3$ ;. 488, 2 I.*.A. 22AD
0einin8er 4. 2a4is, A6 (hio St. 2!5, 11$ N.,. 22A, 231P
2. 0as =o>er to -ine or im=rison -or contem=t. C3 Hl. 5omm. 24D 3 Ste=h. 5omm. 383D
/he /homas ;letcher, 5.5.Oa., 24 ;. 481D ,E =arte /histleton, 52 5al 225D ,r>in 4. ).S.,
2.5.Oa., 3$ ;. 488, 2 I.*.A. 22AD 0einin8er 4. 2a4is, A6 (hio St. 2!5, 11$ N.,. 22A,
231.PCHlacBLs Ia> 2ictionar?, 4th ,d., 425, 426P
,. Oenerall? =ossesses a seal. C3 Hl. 5omm. 24D 3 Ste=h. 5omm. 383D /he /homas
;letcher, 5.5.Oa., 24 ;. 481D ,E =arte /histleton, 52 5al 225D ,r>in 4. ).S., 2.5.Oa., 3$
;. 488, 2 I.*.A. 22AD 0einin8er 4. 2a4is, A6 (hio St. 2!5, 11$ N.,. 22A, 231.PCHlacBLs
Ia> 2ictionar?, 4th ,d., 425, 426P
/he -ollo>in8 =ersons are ma8istrates6 .../he Jud8es o- the su=erior courts.... C5ali-ornia
Penal 5ode, Sec. 8!8.P
...our Justices, sheri--s, ma?ors, and other ministers, >hich under us ha4e the la>s o- our
land to 8uide, shall allo> the said charters =leaded 9e-ore them in Jud8ement in all their
=oints, that is to >it, the Oreat 5harter as the common la>.... C5on-irmatio 5artarum,
No4em9er 5, 12A$, Sour&es of Our Lierties ,dited 9? *ichard I. Perr?, American Har
;oundationP
0ence-orth the >rit >hich is called Praeci=e shall not 9e ser4ed on an? one -or an?
holdin8 so as to cause a -ree man to lose his court. C+a8na 5arta, Article 34P.
1- an? claim, statement, -act, or =ortion in this action is held ina==lica9le or not 4alid, such
decision does not a--ect the 4alidit? o- an? other =ortion o- this action.
/he sin8ular includes the =lural and the =lural the sin8ular.
/he =resent tense includes the =ast and -uture tensesD and the -uture, the =resent.
/he masculine 8ender includes the -eminine and neuter.
*es=ect-ull? su9mitted,
2ate6 24
th
2a? o- 3anuar? 2!!A
A--iant, 9?6 77 7777777777777777777777777777777777777777
Si8ned reser4in8 all m? ri8hts at )55 1#2!$
^EEEEEEEE ^EEEEEEEEE
5Go 12345 F Scre>em St
HanBershell, Az C85123P
111"222#3333
VERIFICATION OF %NAME OF PARTY'
1, ^EEEEEEEE ^EEEEEEEEE, declare as -ollo>s6
1. 1 am named as the Plainti-- in the a9o4e#entitled matter.
2. 1 ha4e read the -ore8oin8 .,*1;1,2 5(+PIA1N/, and attached A--ida4it, and
Bno> the -acts therein stated to 9e true and correct.
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3. 1 declare, under =enalt? o- =erJur? =ursuant to the la>s o- the )nited States o-
America, that the -ore8oin8 is true and correct to the 9est o- m? Bno>led8e and
9elie-.
NA/1(NAI 5)**,N5Y A5/
later called QNA/1(NAI HANK A5/Q"
3une 3, 1864
1865, ch. $8, RR 6, $.
Post, =. 484.
50AP. 5.1. _ An Act to "rovide a %ational Currency, secured by a
ledge of !nited States #onds, and to "rovide for t)e Circulation and
*edem"tion t)ereof.
5urrenc? 9ureau
esta9lished.
/e it ena&ted y the Senate and #ouse of Representati;es of the 5nited
States of "9eri&a in Con-ress asse9!ed, /hat there shall 9e esta9lished in
the treasur? de=artment a se=arate 9ureau, >hich shall 9e char8ed >ith the
eEecution o- this and all other la>s that ma? 9e =assed 9? con8ress
res=ectin8 the issue and re8ulation o- a national currenc? secured 9? )nited
States 9onds. /he chie- o--icer o- the said 9ureau shall 9e denominated the
com=troller o- the currenc?, and shall 9e under the 8eneral direction o- the
Secretar? o- the /reasur?. 0e shall 9e a==ointed 9? the President, on the
recommendation o- the Secretar? o- the /reasur?, 9? and >ith the ad4ice and
consent o- the Senate, and shall hold his o--ice -or the term o- -i4e ?ears
unless sooner remo4ed 9? the President, u=on reasons to 9e communicated
9? him to the SenateD he shall recei4e an annual salar? o- -i4e thousand
dollarsD he shall ha4e a com=etent de=ut?, a==ointed 9? the secretar?, >hose
salar? shall 9e t>o thousand -i4e hundred dollars, and >ho shall =ossess the
=o>er and =er-orm the duties attached 9? la> to the o--ice o- com=troller
durin8 a 4acanc? in such o--ice and durin8 his a9sence or ina9ilit?D he shall
em=lo?, -rom time to time, the necessar? clerBs to dischar8e such duties as
he shall direct, >hich clerBs shall 9e a==ointed and classi-ied 9? the
Secretar? o- the /reasur? in the manner no> =ro4ided 9? la>. Fithin -i-teen
da?s -rom the time o- notice o- his a==ointment the com=troller shall taBe
and su9scri9e the oath o- o--ice =rescri9ed 9? the constitution and la>s o- the
)nited StatesD and he shall 8i4e to the )nited States a 9ond in the =enalt? o-
one hundred thousand dollars, >ith not less than t>o res=onsi9le sureties, to
9e a==ro4ed 9? the Secretar? o- the /reasur?, conditioned -or the -aith-ul
dischar8e o- the duties o- his o--ice. /he de=ut?#com=troller so a==ointed
shall also taBe the oath o- o--ice =rescri9ed 9? the constitution and la>s o-
the )nited States, and shall 8i4e a liBe 9ond in the =enalt? o- -i-t? thousand
dollars. /he com=troller and de=ut?#com=troller shall not, either directl? or
indirectl?, 9e interested in an? association issuin8 national currenc? under
the =ro4isions o- this act.
5om=troller o- the
currenc?.
A==ointment.
/erm o- o--ice.
Salar?.
2e=ut? com=troller.
5lerBs.
5om=troller to taBe
oath >ithin >hat time.
Hond.
(ath and 9ond o-
de=ut? com=troller.
Not to 9e interested in
an? 9anBin8
association.
Seal o- currenc?
9ureau,
and >here to 9e Be=t.
S,5. 2. "nd e it further ena&ted, /hat the com=troller o- the currenc?, >ith
the a==ro4al o- the Secretar? o- the /reasur?, shall de4ise a seal, >ith
suita9le inscri=tions, -or his o--ice, a descri=tion o- >hich, >ith a certi-icate
o- a==ro4al 9? the Secretar? o- the /reasur?, shall 9e -iled in the o--ice o- the
Secretar? o- State >ith an im=ression thereo-, >hich shall thereu=on 9ecome
the seal o- o--ice o- the com=troller o- the currenc?, and the same ma? 9e
rene>ed >hen necessar?. ,4er? certi-icate, assi8nment, and con4e?ance
5ertain =a=ers under
such seal to 9e
e4idence.
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eEecuted 9? the com=troller, in =ursuance o- an? authorit? con-erred on him
9? la>, and sealed >ith his seal o- o--ice, shall 9e recei4ed in e4idence in all
=laces and courts >hatsoe4erD and all co=ies o- =a=ers in the o--ice o- the
com=troller, certi-ied 9? him and authenticated 9? the said seal, shall in all
1m=ression ma? 9e
u=on =a=er.
*ooms -or currenc?
9ureau.
S,5. 3. "nd e it further ena&ted, /hat there shall 9e assi8ned to the
com=troller o- the currenc? 9? the Secretar? o- the /reasur? suita9le rooms
in the treasur? 9uildin8 -or conductin8 the 9usiness o- the currenc? 9ureau,
in >hich shall 9e sa-e and secure -ire#=roo- 4aults, in >hich it shall 9e the
dut? o- the com=troller to de=osit and sa-el? Bee= all the =lates not
necessaril? in the =ossession o- en8ra4ers or =rinters, and other 4alua9le
thin8s 9elon8in8 to his de=artmentD and the com=troller shall -rom time to
time -urnish necessar? -urniture, stationer?, -uel, li8hts, and other =ro=er
con4eniences -or the transaction o- the said 9usiness.
;ire#=roo- 4aults.
;urniture, Sc.
/erm Q)nited States
HondsQ to include
>hat.
S,5. 4. "nd e it further ena&ted, /hat the term Q)nited States Honds,Q as
used in this act, shall 9e construed to mean all re8istered 9onds no> issued,
or that ma? herea-ter 9e issued, on the -aith o- the )nited States 9? the
Secretar? o- the /reasur? in =ursuance o- la>.
HanBin8 associations,
ho> ma? 9e -ormed.
S,5. 5. "nd e it further ena&ted, /hat associations -or carr?in8 on the
9usiness o- 9anBin8 ma? 9e -ormed 9? an? num9er o- =ersons, not less in
an? case than -i4e, >ho shall enter into articles o- association, >hich shall
s=eci-? in 8eneral terms the o9Ject -or >hich the association is -ormed, and
ma? contain an? other =ro4isions, not inconsistent >ith =ro4isions o- this act,
>hich the association ma? see -it to ado=t -or the re8ulation o- the 9usiness
o- the association and the conduct o- its a--airs, >hich said articles shall 9e
si8ned 9? the =ersons unitin8 to -orm the association, and a co=? o- them
-or>arded to the com=troller o- the currenc?, to 9e -iled and =reser4ed in his
o--ice.
(r8anization certi-icate
to s=eci-?,
S,5. 6. "nd e it further ena&ted, /hat the =ersons unitin8 to -orm such an
association shall, under their hands, maBe an or8anization certi-icate, >hich
shall s=eci-?_
name,
;irst. /he name assumed 9? such association, >hich name shall 9e su9Ject to
the a==ro4al o- the com=troller.
=lace o- 9usiness,
Second. /he =lace >here its o=erations o- discount and de=osit are to 9e
carried on, desi8natin8 the state, territor?, or district, and also the =articular
count? and cit?, to>n, or 4illa8e.
ca=ital and shares,
/hird. /he amount o- its ca=ital stocB, and the num9er o- shares into >hich
the same shall 9e di4ided.
names Sc., o-
shareholders,
;ourth. /he names and =laces o- residence o- the shareholders, and the
num9er o- shares held 9? each o- them.
=ur=ose o- certi-icate. ;i-th. A declaration that said certi-icate is made to ena9le such =ersons to
a4ail themsel4es o- the ad4anta8es o- this act.
/he said certi-icate shall 9e acBno>led8ed 9e-ore a Jud8e o- some court
o- record or a notar? =u9lic, and such certi-icate, >ith the acBno>led8ement
thereo- authenticated 9? the seal o- such court or notar?, shall 9e transmitted
to the com=troller o- the currenc?, >ho shall record and care-ull? =reser4e
the same in his o--ice. 5o=ies o- such certi-icate, dul? certi-ied 9? the
com=troller, and authenticated 9? his seal o- o--ice, shall 9e le8al and
su--icient e4idence in all courts and =laces >ithin the )nited States, or the
Jurisdiction o- the 8o4ernment thereo-, o- the eEistence o- such association,
and o- e4er? other matter or thin8 >hich could 9e =ro4ed 9? the =roduction
o- the ori8inal certi-icate.
5erti-icate to 9e
acBno>led8ed.
5o=ies under seal to 9e
e4idence.
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Amount o- ca=ital to 9e
not less than, Sc.
S,5. $. "nd e it further ena&ted, /hat no association shall 9e or8anized
under this act, >ith a less ca=ital than one hundred thousand dollars, nor in a
cit? >hose =o=ulation eEceeds -i-t? thousand =ersons, >ith a less ca=ital than
t>o hundred thousand dollars6 $ro;ided, /hat 9anBs >ith a ca=ital o- not less
than -i-t? thousand dollars ma?, >ith the a==ro4al o- the Secretar? o- the
/reasur?, 9e or8anized in an? =lace the =o=ulation o- >hich does not eEceed
siE thousand inha9itants.
Pro4iso.
Associations >hen to
9e cor=orations and
>hen to commence
9usiness.
S,5. 8. "nd e it further ena&ted, /hat e4er? association -ormed =ursuant to
the =ro4isions o- this act shall, -rom the date o- the eEecution o- its
or8anization certi-icate, 9e a 9od? cor=orate, 9ut shall transact no 9usiness
eEce=t such as ma? 9e incidental to its or8anizatin and necessaril?
=reliminar?, until authorized 9? the com=troller o- the currenc? to commence
the 9usiness o- 9anBin8. Such association shall ha4e =o>er to ado=t a
cor=orate seal, and shall ha4e succession 9? the name desi8nated in its
or8anizatin certi-icate, -or the =eriod o- t>ent? ?ears -rom its or8anization,
unless sooner dissol4ed accordin8 to the =ro4isions o- its articles o-
association, or 9? the act o- its shareholders o>nin8 t>o thirds o- its stocB, or
unless the -ranchise shall 9e -or-eited 9? a 4iolation o- this actD 9? such name
it ma? maBe contracts, sue and 9e sued, com=lain and de-end, in an? court o-
la> and e@uit? as -ull? as natural =ersonsD it ma? elect or a==oint directors,
and 9? its 9oard o- directors a==oint a =resident, 4ice#=resident, cashier, and
other o--icers, de-ine their duties, re@uire 9onds o- them and -iE the =enalt?
thereo-, dismiss said o--icers or an? o- them at =leasure, and a==oint others
to -ill their =laces, and eEercise under this act all such incidental =o>ers as
shall 9e necessar? to carr? on the 9usiness o- 9anBin8 9? discountin8 and
ne8otiatin8 =romissor? notes, dra-ts, 9ills o- eEchan8e, and other e4idences
o- de9tD 9? recei4in8 de=ositsD 9? 9u?in8 and sellin8 eEchan8e, coin, and
9ullionD 9? loanin8 mone? on =ersonal securit?D 9? o9tainin8, issuin8, and
circulatin8 notes accordin8 to the =ro4isions o- this actD and its 9oard o-
directors shall also ha4e =o>er to de-ine and re8ulate 9? 9?#la>s, not
inconsistent >ith the =ro4isions o- this act, the manner in >hich its stocB
shall 9e trans-erred, its directors elected or a==ointed, its o--icers a==ointed,
its =ro=ert? trans-erred, its 8eneral 9usiness conducted, and all the =ri4ile8es
8ranted 9? this act to associations or8anized under it shall 9e eEercised and
enJo?edD and its usual 9usiness shall 9e transacted at an o--ice or 9anBin8
house located in the =lace s=eci-ied in its or8anization certi-icate.
Seal.
+a? continue t>ent?
?ears, unless, Sc.
Oeneral =o>ers.
2irectors and o--icers.
H?#la>s.
2irectorsD
@uali-icationsD
one to 9e =resident.
S,5. A. "nd e it further ena&ted, /hat the a--airs o- e4er? association shall
9e mana8ed 9? not less than -i4e directors, one o- >hom shall 9e the
=resident. ,4er? director shall, durin8 his >hole term o- ser4ice, 9e a citizen
o- the )nited StatesD and at least three -ourths o- the directors shall ha4e
resided in the state, territor?, or district in >hich such association is located
one ?ear neEt =recedin8 their election as directors, and 9e residents o- the
same durin8 their continuance in o--ice. ,ach director shall o>n, in his o>n
ri8ht, at least ten shares o- the ca=ital stocB o- the association o- >hich he is
a director. ,ach director, >hen a==ointed or elected, shall taBe an oath that he
>ill, so -ar as the dut? de4ol4es on him, dili8entl? and honestl? administer
the a--airs o- such association, and >ill not Bno>in8l? 4iolate, or >illin8l?
=ermit to 9e 4iolated, an? o- the =ro4isions o- this act, and that he is the 9ona
-ide o>ner, in his o>n ri8ht, o- the num9er o- shares o- stocB re@uired 9? this
act, su9scri9ed 9? him, or standin8 in his name on the 9ooBs o- the
association, and that the same is not h?=othecated, or in an? >a? =led8ed, as
securit? -or an? loan or de9tD >hich oath, su9scri9ed 9? himsel-, and
certi-ied 9? the o--icer 9e-ore >hom it is taBen, shall 9e immediatel?
transmitted to the com=troller o- the currenc?, and 9? him -iled and
(ath.
1!6
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
=reser4ed in his o--ice.
/erm o- o--ice o-
directors.
S,5. 1!. "nd e it further ena&ted, /hat the directors o- an? asscociation
-irst elected or a==ointed shall hold their =laces until their successors shall 9e
elected and @uali-ied. All su9se@uent elections shall 9e held annuall? on such
da? in the month o- 3anuar? as ma? 9e s=eci-ied in the articles o- associationD
and the directors so elected shall hold their =laces -or one ?ear, and until their
successors are elected and @uali-ied. Hut an? director ceasin8 to 9e the o>ner
o- the re@uisite amount o- stocB, or ha4in8 in an? other manner 9ecome
dis@uali-ied, shall there9? 4acate his =lace. An? 4acanc? in the 9oard shall 9e
-illed 9? a==ointment 9? the remainin8 directors, and an? director so
a==ointed shall hold his =lace until the neEt election. 1- -rom an? cause an
election o- directors shall not 9e made at the time a==ointed, the association
shall not -or that cause 9e dissol4ed, 9ut an election ma? 9e held on an?
su9se@uent da?, thirt? da?sL notice thereo- in all cases ha4in8 9een 8i4en in a
ne>s=a=er =u9lished in the cit?, to>n, or count? in >hich the association is
locatedD and i- no ne>s=a=er is =u9lished in such cit?, to>n, or count?, such
notice shall 9e =u9lished in a ne>s=a=er =u9lished nearest thereto. 1- the
articles o- association do not -iE the da? on >hich the election shall 9e held,
or i- the election should not 9e held on the da? -iEed, the da? -or the election
shall 9e desi8nated 9? the 9oard o- directors in their 9?#la>s, or other>ise6
$ro;ided, /hat i- the directors -ail to -iE the da?, as a-oresaid, shareholders
re=resentin8 t>o thirds o- the shares ma?.
,lections.
.acancies, ho> -illed.
.otin8 and =roEies.
S,5. 11. "nd e it further ena&ted, /hat in all elections o- directors, and in
decidin8 all @uestions at meetin8s o- shareholders, each shareholder shall 9e
entitled to one 4ote on each share o- stocB held 9? him. Shareholders ma?
4ote 9? =roEies dul? authorized in >ritin8D 9ut no o--icer, clerB, teller, or
9ooB#Bee=er o- such association shall act as =roE?D and no shareholder >hose
lia9ilit? is =ast due and un=aid shall 9e allo>ed to 4ote.
5a=ital stocB to 9e
di4ided into shares.
S,5. 12. "nd e it further ena&ted, /hat the ca=ital stocB o- an? association
-ormed under this act shall 9e di4ided into shares o- one hundred dollars
each, and 9e deemed =ersonal =ro=ert? and trans-era9le on the 9ooBs o- the
association in such manner as ma? 9e =rescri9ed in the 9?#la>s or articles o-
associationD and e4er? =erson 9ecomin8 a shareholder 9? such trans-er shall,
in =ro=ortion to his shares, succeed to all the ri8hts and lia9ilities o- the =rior
holder o- such shares, and no chan8e shall 9e made in the articles o-
association 9? >hich the ri8hts, remedies, or securit? o- the eEistin8 creditors
o- the association shall 9e im=aired. /he shareholders o- each association
-ormed under the =ro4isions o- this act, and o- each eEistin8 9anB or 9anBin8
association that ma? acce=t the =ro4isions o- this act, shall 9e held
indi4iduall? res=onsi9le, e@uall? and rata9l?, and not one -or another, -or all
contracts, de9ts, and en8a8ements o- such association to the eEtent o- the
amount o- their stocB therein at the =ar 4alue thereo-, in addition to the
amount in4ested in such sharesD eEce=t that shareholders o- an? 9anBin8
association no> eEistin8 under state la>s, ha4in8 not less than -i4e millions
o- dollars o- ca=ital actuall? =aid in, and a sur=lus o- t>ent? =er centum on
hand, 9oth to 9e determined 9? the com=troller o- the currenc?, shall 9e
lia9le onl? to the amount in4ested in their sharesD and such sur=lus o- t>ent?
=er centum shall 9e Be=t undiminished, and 9e in addition to the sur=lus
=ro4ided -or in this actD and i- at an? time there shall 9e a de-icienc? in said
sur=lus o- t>ent? =er centum, the said 9anBin8 association shall not =a? an?
di4idends to its shareholders until such de-icienc? shall 9e made 8oodD and in
case o- such de-icienc?, the com=troller o- the currenc? ma? com=el said
9anBin8 association to close its 9usiness and >ind u= its a--airs under the
=ro4isions o- this act. And the com=troller shall ha4e authorit? to >ithhold
/rans-er.
*i8hts o- eEistin8
creditors not to 9e
im=aired.
1ndi4idual lia9ilit?.
Fhen com=troller ma?
>ithhold certi-icate.
1!$
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
-rom an association his certi-icate authorizin8 the commencement o-
9usiness, >hene4er he shall ha4e reason to su==ose that the shareholders
1ncrease o- ca=ital
stocB.
S,5. 13. "nd e it further ena&ted, /hat it shall 9e la>-ul -or an? association
-ormed under this act, 9? its articles o- association , to =ro4ide -or an
increase o- its ca=ital -rom time to time, as ma? 9e deemed eE=edient,
su9Ject to the limitations o- this act6 $ro;ided, /hat the maEimum o- such
increase in the articles o- association shall 9e determined 9? the com=troller
o- the currenc?D and no increase o- ca=ital shall 9e 4alid until the >hole
amount o- such increase shall 9e =aid in, and notice thereo- shall ha4e 9een
transmitted to the com=troller o- the currenc?, and his certi-icate o9tained
s=eci-?in8 the amount o- such increase o- ca=ital stocB, >ith his a==ro4al
thereo-, and that it has 9een dul? =aid in as =art o- the ca=ital o- such
association. And e4er? association shall ha4e =o>er, 9? the 4ote o-
shareholders o>nin8 t>o thirds o- its ca=ital stocB, to reduce the ca=ital o-
such association to an? sum not 9elo> the amount re@uired 9? this act, in the
-ormation o- associations6 $ro;ided, /hat 9? no such reduction shall its
ca=ital 9e 9rou8ht 9elo> the amount re@uired 9? this act -or its outstandin8
circulation, nor shall an? such reduction 9e made until the amount o- the
=ro=osed reduction has 9een re=orted to the com=troller o- the currenc? and
his a==ro4al thereo- o9tained.
+aEimum.
+inimum.
Amount to 9e =aid in
9e-ore commencin8
9usiness.
*emainder, >hen to 9e
=aid.
S,5. 14. "nd e it further ena&ted, /hat at least -i-t? =er centum o- the
ca=ital stocB o- e4er? association shall 9e =aid in 9e-ore it shall 9e authorized
to commence 9usinessD and the remainder o- the ca=ital stocB o- such
association shall 9e =aid in instalments o- at least ten =er centum each on the
>hole amount o- the ca=ital as -re@uentl? as one instalment at the end o-
each succeedin8 month -rom the time it shall 9e authorized 9? the
com=troller to commence 9usinessD and the =a?ment o- each instalment shall
9e certi-ied to the com=troller, under oath, 9? the =resident or cashier o- the
association.
Proceedin8s, i-
shareholder -ails to =a?
instalments.
S,5. 15. "nd e it further ena&ted, /hat i- an? shareholder, or his assi8nee,
shall -ail to =a? an? instalment on the stocB >hen the same is re@uired 9? the
-ore8oin8 section to 9e =aid, the directors o- such association ma? sell the
stocB o- such delin@uent shareholder at =u9lic auction, ha4in8 8i4en three
>eeBsL =re4ious notice thereo- in a ne>s=a=er =u9lished and o- 8eneral
circulation in the cit? or count? >here the association is located, and i- no
ne>s=a=er is =u9lished in said cit? or count?, then in a ne>s=a=er =u9lished
nearest thereto, to an? =erson >ho >ill =a? the hi8hest =rice there-or, and not
less than the amount due thereon, >ith the eE=enses o- ad4ertisement and
saleD and the eEcess, i- an?, shall 9e =aid to the delin@uent shareholder. 1- no
9idder can 9e -ound >ho >ill =a? -or such stocB the amount due thereon to
the association, and the cost o- ad4ertisement and sale, the amount
=re4iousl? =aid shall 9e -or-eited to the association, and such stocB shall 9e
sold as the directors ma? order, >ithin siE months -rom the time o- such
-or-eiture, and i- not sold it shall 9e cancelled and deducted -rom the ca=ital
stocB o- the associationD and i- such cancellation and reduction shall reduce
the ca=ital o- the association 9elo> the minimum o- ca=ital re@uired 9? this
act, the ca=ital stocB shall, >ithin thirt? da?s -rom the date o- such
cancellation, 9e increased to the re@uirements o- the act, in de-ault o- >hich a
recei4er ma? 9e a==ointed to close u= the 9usiness o- the association
accordin8 to the =ro4isions o- the -i-tieth section o- this act.
StocB o- delin@uent
shareholders to 9e sold.
)nited States re8istered
9onds to 9e de=osited
S,5. 16. "nd e it further ena&ted, /hat e4er? association, a-ter ha4in8
com=lied >ith the =ro4isions o- this act, =reliminar? to the commencement
1!8
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
>ith treasurer to an
amount e@ual to one
third o- the ca=ital
stocB.
o- 9anBin8 9usiness under its =ro4isions, and 9e-ore it shall 9e authorized to
commence 9usiness, shall trans-er and deli4er to the treasurer o- the )nited
States an? )nited States re8istered 9onds 9earin8 interest to an amount not
less than thirt? thousand dollars nor less than one third o- the ca=ital stocB
=aid in, >hich 9onds shall 9e de=osited >ith the treasurer o- the )nited
States and 9? him sa-el? Be=t in his o--ice until the same shall 9e other>ise
dis=osed o-, in =ursuance o- the =ro4isions o- this actD and the Secretar? o-
the /reasur? is here9? authorized to recei4e and cancel an? )nited States
cou=on 9onds, and to issue in lieu thereo- re8istered 9onds o- liBe amount,
9earin8 a liBe rate o- interest, and ha4in8 the same time to runD and the
de=osit o- 9onds shall 9e, 9? e4er? association, increased as its ca=ital ma?
9e =aid u= or increased, so that e4er? association shall at all times ha4e on
de=osit >ith the treasurer re8istered )nited States 9onds to the amount o- at
least one third o- its ca=ital stocB actuall? =aid in6 $ro;ided, /hat nothin8 in
this section shall =re4ent an association that ma? desire to reduce its ca=ital
or to close u= its 9usiness and dissol4e its or8anization -rom taBin8 u= its
9onds u=on returnin8 to the com=troller its circulation notes in the =ro=ortion
hereina-ter named in this act, nor -rom taBin8 u= an? eEcess o- 9onds 9e?ond
one third o- its ca=ital stocB and u=on >hich no circulatin8 notes ha4e 9een
deli4ered.
2e=osit to 9e
increasedD
ma? 9e diminished.
5om=troller to eEamine
and determine i-
association can
commence 9usiness.
S,5. 1$. "nd e it further ena&ted, /hat >hene4er a certi-icate shall ha4e
9een transmitted to the com=troller o- the currenc?, as =ro4ided in this act,
and the association transmittin8 the same shall noti-? the com=troller that at
least -i-t? =er centum o- its ca=ital stocB has 9een =aid in as a-oresaid, and
that such association has com=lied >ith all the =ro4isions o- this act as
re@uired to 9e com=lied >ith 9e-ore such association shall 9e authorized to
commence the 9usiness o- 9anBin8, the com=troller shall eEamine into the
condition o- such association, ascertain es=eciall? the amount o- mone? =aid
in on account o- its ca=ital, the name and =lace o- residence o- each o- the
directors o- such association, and the amount o- the ca=ital stocB o- >hich
each is the 9ona -ide o>ner, and 8enerall? >hether such association has
com=lied >ith all the re@uirements o- this act to entitle it to en8a8e in the
9usiness o- 9anBin8D and shall cause to 9e made and attested 9? the oaths o- a
maJorit? o- the directors and 9? the =resident or cashier o- such association, a
statement o- all the -acts necessar? to ena9le the com=troller to determine
>hether such association is la>-ull? entitled to commence the 9usiness o-
9anBin8 under this act.
Fhen association is
-ound entitled to
commence 9usiness,
com=troller to 8i4e
certi-icate.
S,5. 18. "nd e it further ena&ted, /hat i-, u=on a care-ul eEamination o- the
-acts so re=orted, and o- an? other -acts >hich ma? come to the Bno>led8e
o- the com=troller, >hether 9? means o- s=ecial commission a==ointed 9?
him -or the =ur=ose o- in@uirin8 into the condition o- such association, or
other>ise, it shall a==ear that such association is la>-ull? entitled to
commence the 9usiness o- 9anBin8, the com=troller shall 8i4e to such
association a certi-icate, under his hand and o--icial seal, that such
association has com=lied >ith all the =ro4isions o- this act re@uired to 9e
com=lied >ith 9e-ore 9ein8 entitled to commence the 9usiness o- 9anBin8
under it, and that such association is authorized to commence said 9usiness
accordin8l?D and it shall 9e the dut? o- the association to cause said
certi-icate to 9e =u9lished in some ne>s=a=er =u9lished in the cit? or count?
>here the association is located -or at least siEt? da?s neEt a-ter the issuin8
thereo-6 $ro;ided, /hat i- no ne>s=a=er is =u9lished in such cit? or count?
the certi-icate shall 9e =u9lished in a ne>s=a=er =u9lished nearest thereto.
5erti-icate to 9e
=u9lished.
/rans-ers o- 9onds 9?
association, to 9e made
S,5. 1A. "nd e it further ena&ted, /hat all trans-ers o- )nited States 9onds
>hich shall 9e made 9? an? association under the =ro4isions o- this act shall
1!A
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
to the treasurer in trust. 9e made to the treasurer o- the )nited States in trust -or the association, >ith
a memorandum >ritten or =rinted on each 9ond, and si8ned 9? the cashier or
some other o--icer o- the association maBin8 the de=osit, a recei=t there-or to
9e 8i4en to said association, or 9? the com=troller o- the currenc?, or 9? a
clerB a==ointed 9? him -or that =ur=ose, statin8 that it is held in trust -or the
association on >hose 9ehal- such trans-er is made, and as securit? -or the
redem=tion and =a?ment o- an? circulatin8 notes that ha4e 9een or ma? 9e
deli4ered to such association. No assi8nment or trans-er o- an? such 9onds
9? the treasurer shall 9e deemed 4alid or o- 9indin8 -orce and e--ect unless
countersi8ned 9? the com=troller or the currenc?. 1t shall 9e the dut? o- the
com=troller o- the currenc? to Bee= in his o--ice a 9ooB in >hich shall 9e
entered the name o- e4er? association -rom >hose accounts such trans-er o-
9onds is made 9? the treasurer, and the name o- the =art? to >hom such
trans-er is madeD and the =ar 4alue o- the 9onds so trans-erred shall 9e
entered thereinD and it shall 9e the dut? o- the com=troller, immediatel? u=on
countersi8nin8 and enterin8 the same, to ad4ise 9? mail the association -rom
>hose account such trans-er >as made o- the Bind and numerical desi8nation
o- the 9onds and the amount thereo- so trans-erred.
0o> eEecuted.
5om=troller to Bee=
trans-er 9ooB, Sc.
/rans-ers to 9e
countersi8ned and
entered.
S,5. 2!. "nd e it further ena&ted, /hat it shall 9e the dut? o- the
com=troller o- the currenc? to countersi8n and enter in the 9ooB, in the
manner a-oresaid, e4er? trans-er or assi8nment o- an? 9onds held 9? the
treasurer =resented -or his si8natureD and the com=troller shall ha4e at all
times durin8 o--ice hours access to the 9ooBs o- the treasurer, -or the =ur=ose
o- ascertainin8 the correctness o- the trans-er or assi8nment =resented to him
to countersi8nD and the treasurer shall ha4e the liBe access to the 9ooB a9o4e
mentioned, Be=t 9? the com=troller, durin8 o--ice hours, to ascertain the
correctness o- the entries in the sameD and the com=troller shall also at all
times ha4e access to the 9onds on de=osit >ith the treasurer, to ascertain their
amount and condition.
HooBs to 9e accessi9le.
Associations, a-ter
trans-er, ma? recei4e
circulatin8 notes.
S,5. 21. "nd e it further ena&ted, /hat u=on the trans-er and deli4er? o-
9onds to the treasurer, as =ro4ided in the -ore8oin8 section, the association
maBin8 the same shall 9e entitled to recei4e -rom the com=troller o- the
currenc? circulatin8 notes o- di--erent denominations, in 9lanB, re8istered
and countersi8ned as hereina-ter =ro4ided, e@ual in amount to ninet? =er
centum o- the current marBet 4alue o- the )nited States 9onds so trans-erred
and deli4ered, 9ut not eEceedin8 ninet? =er centum o- the amount o- said
9onds at the =ar 4alue thereo-, i- 9earin8 interest at a rate not less than -i4e
=er centum =er annumD and at no time shall the total amount o- such notes,
issued to an? such association, eEceed the amount at such time actuall? =aid
in o- its ca=ital stocB.
1865, ch. 82.
$ost, =. 4A8.
Iimit o- amount.
,ntire circulation not to
eEceed V3!!,!!!,!!!.
S,5. 22. "nd e it further ena&ted, /hat the entire amount o- notes -or
circulation to 9e issued under this act shall not eEceed three hundred millions
o- dollars. 1n order to -urnish suita9le notes -or circulation, the com=troller o-
the currenc? is here9? authorized and re@uired, under the direction o- the
Secretar? o- the /reasur?, to cause =lates and dies to 9e en8ra4ed, in the 9est
manner to 8uard a8ainst counter-eitin8 and -raudulent alterations, and to
ha4e =rinted there-rom, and num9ered, such @uantit? o- circulatin8 notes, in
9lanB, o- the denominations o- one dollar, t>o dollars, three dollars, -i4e
dollars, ten dollars, t>ent? dollars, -i-t? dollars, one hundred dollars, -i4e
hundred dollars, and one thousand dollars, as ma? 9e re@uired to su==l?,
under this act, the associations entitled to recei4e the sameD >hich notes shall
eE=ress u=on their -ace that the? are secured 9? )nited States 9onds,
de=osited >ith the treasurer o- the )nited States 9? the >ritten or en8ra4ed
si8natures o- the treasurer and re8ister, and 9? the im=rint o- the seal o- the
5om=troller to =re=are
the notes.
2enominations.
Notes to eE=ress >hat.
2e4ices.
Notes under V5.
11!
1
2
3
4
5
6
$
8
A
1!
11
12
13
14
15
16
1$
18
1A
2!
21
22
23
24
25
26
2$
28
treasur?D and shall also eE=ress u=on their -ace the =romise o- the association
recei4in8 the same to =a? on demand, attested 9? the si8natures o- the
=resident or 4ice#=resident and cashier. And the said notes shall 9ear such
de4ices and such other statements, and shall 9e in such -orm, as the Secretar?
o- the /reasur? shall, 9? re8ulation, direct6 $ro;ided, /hat not more than one
Fhen notes ma? 9e
circulated as mone?D
S,5. 23. "nd e it further ena&ted, /hat a-ter an? such association shall ha4e
caused its =romise to =a? such notes on demand to 9e si8ned 9? the =resident
or 4ice#=resident and cashier thereo-, in such manner as to maBe them
o9li8ator? =romissor? notes, =a?a9le on demand, at its =lace o- 9usiness,
such association is here9? authorized to issue and circulate the same as
mone?D and the same shall 9e recei4ed at =ar in all =arts o- the )nited States
in =a?ment o- taEes, eEcises, =u9lic lands, and all other dues to the )nited
States, eEce=t -or duties on im=ortsD and also -or all salaries and other de9ts
and demands o>in8 9? the )nited States to indi4iduals, cor=orations, and
associations >ithin the )nited States, eEce=t interest on the =u9lic de9t, and
in redem=tion o- the national currenc?. And no such association shall issue
=ost notes or an? other notes to circulate as mone? than such as are
authorized 9? the -ore8oin8 =ro4isions o- this act.
to 9e recei4ed -or all
dues, eEce=t, Sc.
Post notes, ScD, not to
9e issued.
Forn#out and mutilated
notes.
S,5. 24. "nd e it further ena&ted, /hat it shall 9e the dut? o- the
com=troller o- the currenc? to recei4e >orn#out or mutilated circulatin8
notes issued 9? an? such 9anBin8 association, and also, on due =roo- o- the
destruction o- an? such circulatin8 notes, to deli4er in =lace thereo- to such
association other 9lanB circulatin8 notes to an e@ual amount. And such >orn#
out or mutilated notes, a-ter a memorandum shall ha4e 9een entered in the
=ro=er 9ooBs, in accordance >ith such re8ulations as ma? 9e esta9lished 9?
the com=troller, as >ell as all circulatin8 notes >hich shall ha4e 9een =aid or
surrendered to 9e cancelled, shall 9e 9urned to ashes in =resence o- -our
=ersons, one to 9e a==ointed 9? the Secretar? o- the /reasur?, one 9? the
com=troller o- the currenc?, one 9? the treasurer o- the )nited States, and
one 9? the association, under such re8ulations as the Secretar? o- the
/reasur? ma? =resci9e. And a certi-icate o- such 9urnin8, si8ned 9? the
=arties so a==ointed, shall 9e made in the 9ooBs o- the com=troller, and a
du=licate thereo- -or>arded to the association >hose notes are thus
cancelled.
Associations to
eEamine annuall? its
9onds de=osited, and
maBe certi-icate.
S,5. 25"nd e it further ena&ted, /hat it shall 9e the dut? o- e4er? 9anBin8
association ha4in8 9onds de=osited in the o--ice o- the treasurer o- the )nited
States, once or o-tener in each -iscal ?ear, and at such time or times durin8
the ordinar? 9usiness hours as said o--icer or o--icers ma? select, to eEamine
and com=are the 9onds so =led8ed >ith the 9ooBs o- the com=troller and the
accounts o- the association, and, i- -ound correct, to eEecute to the said
treasurer a certi-icate settin8 -orth the di--erent Binds and the amounts
thereo-, and that the same are in the =ossession and custod? o- the treasurer
at the date o- such certi-icate. Such eEamination ma? 9e made 9? an o--icer
or a8ent o- such association, dul? a==ointed in >ritin8 -or that =ur=ose,
>hose certi-icate 9e-ore mentioned shall 9e o- liBe -orce and 4alidit? as i-
eEecuted 9? such =resident or cashierD and a du=licate si8ned 9? the treasurer
shall 9e retained 9? the association.
,Eamination o-
associations.
2e=osited 9onds to 9e
held eEclusi4el? to
secure circulation.
S,5. 26. "nd e it further ena&ted, /hat the 9onds trans-erred to and
de=osited >ith the treasurer o- the )nited States, as herein9e-ore =ro4ided,
9? an? 9anBin8 association -or the securit? o- its circulatin8 notes, shall 9e
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held eEclusi4el? -or that =ur=ose, until such notes shall 9e redeemed, eEce=t
as =ro4ided in this actD 9ut the com=troller o- the currenc? shall 8i4e to an?
such 9anBin8 association =o>ers o- attorne? to recei4e and a==ro=riate to its
o>n use the interest on the 9onds >hich it shall ha4e trans-erred to the
treasurerD 9ut such =o>ers shall 9ecome ino=erati4e >hene4er such 9anBin8
association shall -ail to redeem its circulatin8 notes as a-oresaid. Fhene4er
the marBet or cash 4alue o- an? 9onds de=osited >ith the treasurer o- the
)nited States, as a-oresaid, shall 9e reduced 9elo> the amount o- the
circulation issued -or the same, the com=troller o- the currenc? is here9?
authorized to demand and recei4e the amount o- such de=reciation in other
)nited States 9onds at cash 4alue, or in mone?, -rom the association
recei4in8 said 9ills, to 9e de=osited >ith the treasurer o- the )nited States as
lon8 as such de=reciation continues. And said com=troller, u=on the terms
=rescri9ed 9? the Secretar? o- the /reasur?, ma? =ermit an eEchan8e to 9e
made o- an? o- the 9onds de=osited >ith the treasurer 9? an association -or
other 9onds o- the )nited States authorized 9? this act to 9e recei4ed as
securit? -or circulatin8 notes, i- he shall 9e o- o=inion that such an eEchan8e
can 9e made >ithout =reJudice to the )nited States, and he ma? direct the
return o- an? o- said 9onds to the 9anBin8 association >hich trans-erred the
same, in sums o- not less than one thousand dollars, u=on the surrender to
him and the cancellation o- a =ro=ortionate amount o- such circulatin8 notes6
$ro;ided, /hat the remainin8 9onds >hich shall ha4e 9een trans-erred 9? the
9anBin8 association o--erin8 to surrender circulatin8 notes shall 9e e@ual to
the amount re@uired -or the circulatin8 notes not surrendered 9? such
9anBin8 association, and that the amount o- 9onds in the hands o- the
treasurer shall not 9e diminished 9elo> the amount re@uired to 9e Be=t on
de=osit >ith him 9? this act6 "nd pro;ided, /hat there shall ha4e 9een no
-ailure 9? such association to redeem its circulatin8 notes, and no other
4iolations 9? such association o- the =ro4isions o- this act, and that the
marBet or cash 4alue o- the remainin8 9onds shall not 9e 9elo> the amount
re@uired -or the circulation issued -or the same.
Pro4ision as to interest.
1- 9onds de=reciate,
securit? to 9e made
8ood.
Honds ma? 9e
eEchan8ed, i-, Sc.D
ma? 9e returned u=on
cancellation o-
circulatin8 notes.
Pro4iso.
/he countersi8nin8 and
deli4er? o- circulatin8
notes, eEce=t as
=ermitted 9? this act,
made unla>-ul.
Penalt?.
S,5. 2$. "nd e it further ena&ted, /hat it shall 9e unla>-ul -or an? o--icer
actin8 under the =ro4isions o- this act to countersi8n or deli4er to an?
association, or to an? other com=an? or =erson, an? circulatin8 notes
contem=lated 9? this act, eEce=t as herein9e-ore =ro4ided, and in accordance
>ith the true intent and meanin8 o- this act. And an? o--icer >ho shall 4iolate
the =ro4isions o- this section shall 9e deemed 8uilt? o- a hi8h misdemeanor,
and on con4iction thereo- shall 9e =unished 9? -ine not eEceedin8 dou9le the
amount so countersi8ned and deli4ered, and im=risonment not less than one
?ear and not eEceedin8 -i-teen ?ears, at the discretion o- the court in >hich
he shall 9e tried.
Associations ma? hold,
Sc., certain real estate.
S,5. 28. "nd e it further ena&ted, /hat it shall 9e la>-ul -or an? such
association to =urchase, hold, and con4e? real estate as -ollo>s6 _
;irst. Such as shall 9e necessar? -or its immediate accommodation in the
transaction o- its 9usiness.
*eal estate.
Second. Such as shall 9e mort8a8ed to it in 8ood -aith 9? >a? o- securit? -or
de9ts =re4iousl? contracted.
/hird. Such as shall 9e con4e?ed to it in satis-action o- de9ts =re4iousl?
contracted in the course o- its dealin8s.
;ourth. Such as it shall =urchase at sales under Jud8ments, decrees, or
mort8a8es held 9? such association, or shall =urchase to secure de9ts due to
said association.
Such associations shall not =urchase or hold real estate in an? other case
or -or an? other =ur=ose than as s=eci-ied in this section. Nor shall it hold
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=ossession o- an? real estate under mort8a8e, or hold the title and =ossession
o- an? real estate =urchased to secure an? de9ts due to it -or a lon8er =eriod
than -i4e ?ears.
No =erson, Sc., to 9e
lia9le to association -or
more than, Sc.
S,5. 2A. "nd e it further ena&ted, /hat the total lia9ilities to an?
association, o- an? =erson, or o- an? com=an?, cor=oration, or -irm -or
mone? 9orro>ed, includin8 in the lia9ilities o- a com=an? or -irm the
lia9ilities o- the se4eral mem9ers thereo-, shall at no time eEceed one tenth
=art o- the amount o- the ca=ital stocB o- such association actuall? =aid in6
$ro;ided, /hat the discount o- 9ona -ide 9ills o- eEchan8e dra>n a8ainst
actuall? eEistin8 4alues, and the discount o- commercial or 9usiness =a=er
actuall? o>ned 9? the =erson or =ersons, cor=oration, or -irm ne8otiatin8 the
same shall not 9e considered as mone? 9orro>ed.
5ertain discounts not to
9e included.
*ate o- interest. S,5. 3!. "nd e it further ena&ted, /hat e4er? association ma? taBe, recei4e,
reser4e, and char8e on an? loan or discount made, or u=on an? note, 9ill o-
eEchan8e, or other e4idences o- de9t, interest at the rate allo>ed 9? the la>s
o- the state or territor? >here the 9anB is located, and no more, eEce=t that
>here 9? the la>s o- an? state a di--erent rate is limited -or 9anBs o- issue
or8anized under state la>s, the rate so limited shall 9e allo>ed -or
associations or8anized in an? such state under this act. And >hen no rate is
-iEed 9? the la>s o- the state or territor?, the 9anB ma? taBe, recei4e, reser4e,
or char8e a rate not eEceedin8 se4en =er centum, and such interest ma? 9e
taBen in ad4ance, recBonin8 the da?s -or >hich the note, 9ill, or other
e4idence o- de9t has to run. And the Bno>in8l? taBin8, recei4in8, reser4in8,
or char8in8 a rate o- interest 8reater than a-oresaid shall 9e held and
adJud8ed a -or-eiture o- the entire interest >hich the note, 9ill, or other
e4idence o- de9t carries >ith it, or >hich has 9een a8reed to 9e =aid thereon.
And in case a 8reater rate o- interest has 9een =aid, the =erson or =ersons
=a?in8 the same, or their le8al re=resentati4es, ma? reco4er 9acB, in an?
action o- de9t, t>ice the amount o- interest thus =aid -rom the association
taBin8 or recei4in8 the same6 $ro;ided, /hat such action is commenced
>ithin t>o ?ears -rom the time the usurious transaction occurred. Hut the
=urchase, discount, or sale o- 9ona -ide 9ill o- eEchan8e, =a?a9le at another
=lace than the =lace o- =urchase, discount, or sale, at not more than the
current rate o- eEchan8e -or si8ht dra-ts in addition to the interest, shall not
9e considered as taBin8 or recei4in8 a 8reater rate o- interest.
Penalt? -or taBin8
8reater interest.
Action to 9e
commenced in t>o
?ears.
Amount o- mone? to 9e
Be=t on hand.
S,5. 31. "nd e it further ena&ted, /hat e4er? association in the cities
hereina-ter named shall, at all times, ha4e on hand, in la>-ul mone? o- the
)nited States, an amount e@ual to at least t>ent?#-i4e =er centum o- the
a88re8ate amount o- its notes in circulation and its de=ositsD and e4er? other
association shall, at all times, ha4e on hand, in la>-ul mone? o- the )nited
States, an amount e@ual to at least -i-teen =er centum o- the a88re8ate
amount o- its notes in circulation, and o- its de=osits. And >hene4er the
la>-ul mone? o- an? association in an? o- the cities hereina-ter named shall
9e 9elo> the amount o- t>ent?#-i4e =er centum o- its circulation and
de=osits, and >hene4er the la>-ul mone? o- an? other association shall 9e
9elo> -i-teen =er centum o- its circulation and de=osits, such associations
shall not increase its lia9ilities 9? maBin8 an? ne> loans or discounts
other>ise than 9? discountin8 or =urchasin8 9ills o- eEchan8e =a?a9le at
si8ht, nor maBe an? di4idend o- its =ro-its until the re@uired =ro=ortion
9et>een the a88re8ate amount o- its outstandin8 notes o- circulation and
de=osits and its la>-ul mone? o- the )nited States shall 9e restored6
$ro;ided, /hat three -i-ths o- said -i-teen =er centum ma? consist o- 9alances
due to an association a4aila9le -or the redem=tion o- its circulatin8 notes
-rom associations a==ro4ed 9? the com=troller o- the currenc?, or8anized
Iia9ilities not to 9e
increased until reser4e
is made 8ood.
+one? de=osited -or
redem=tion o-
circulation in certain
cities to 9e included.
5learin8#house
certi-icates to 9e
deemed la>-ul mone?
-or this =ur=ose.
5harleston and
*ichmond.
1- association -ails,
a-ter notice, to maBe
8ood its reser4e.
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under this act, in the cities o- Saint Iouis, Iouis4ille, 5hica8o, 2etroit,
+il>auBie, Ne> (rleans, 5incinnati, 5le4eland, Pitts9ur8, Haltimore,
Philadel=hia, Hoston, Ne> YorB, Al9an?, Iea4en>orth, San ;rancisco, and
Fashin8ton 5it?6 $ro;ided, a!so, /hat clearin8#house certi-icates,
re=resentin8 s=ecie or la>-ul mone? s=eciall? de=osited -or the =ur=ose o-
an? clearin8#house association, shall 9e deemed to 9e la>-ul mone? in the
=ossession o- an? association 9elon8in8 to such clearin8#house holdin8 and
o>nin8 such certi-icate, and shall 9e considered to 9e a =art o- the la>-ul
mone? >hich such association is re@uired to ha4e under the -ore8oin8
=ro4isions o- this section6 $ro;ided, /hat the cities o- 5harleston and
*ichmond ma? 9e added to the list o- cities in the national associations o-
5irculation to 9e
redeemed in Ne> YorB
at =ar.
S,5. 32. "nd e it further ena&ted, /hat each association or8anized in an? o-
the cities named in the -or8oin8 section shall select, su9Ject to the a==ro4al
o- the com=troller o- the currenc?, an association in the cit? o- Ne> YorB, at
>hich it >ill redeem its circulatin8 notes at =ar. And each o- such
associations ma? Bee= one hal- o- its la>-ul mone? reser4e in cash de=osits
in the cit? o- Ne> YorB. And each association not or8anized >ithin the cities
named in the =receedin8 section shall select, su9Ject to the a==ro4al o- the
com=troller o- the currenc?, an association in either o- the cities named in the
=recedin8 section at >hich it >ill redeem its circulatin8 notes at =ar, and the
com=troller shall 8i4e =u9lic notice o- the names o- the associations so
selected at >hich redem=tions are to 9e made 9? the res=ecti4e associations,
and o- an? chan8e that ma? 9e made o- the association at >hich the notes o-
an? association are redeemed. 1- an? association shall -ail either to maBe the
selection or to redeem its notes as a-oresaid, the com=troller o- the currenc?
ma?, u=on recei4in8 satis-actor? e4idence thereo-, a==oint a recei4er, in the
manner =ro4ided -or in this act, to >ind u= its a--airs6 $ro;ided, /hat nothin8
in this section shall relie4e an? association -rom its lia9ilit? to redeem its
circulatin8 notes at its o>n counter, at =ar, in la>-ul mone?, on demand6 "nd
pro;ided, further, /hat e4er? association -ormed or eEistin8 under the
=ro4isions o- this act shall taBe and recei4e at =ar, -or an? de9t or lia9ilit? to
said association, an? and all notes or 9ills issued 9? an? association eEistin8
under and 9? 4irtue o- this act.
5ertain associations to
select =lace -or
redem=tion o-
circulation.
Proceedin8s in case o-
-ailure.
,ach association to
taBe notes o- other
associations.
2i4idends. S,5. 33. "nd e it further ena&ted, /hat the directors o- an? association ma?,
semi#annuall?, each ?ear, declare a di4idend o- so much o- the nett =ro-its o-
the association as the? shall Jud8e eE=edientD 9ut each association shall,
9e-ore the declaration o- a di4idend, carr? one tenth =art o- its nett =ro-its o-
the =recedin8 hal- ?ear to its sur=lus -und until the same shall amount to
t>ent? =er centum o- its ca=ital stocB.
Sur=lus -unds.
Associations to re=ort
to com=troller
@uarterl?.
5ontents o- re=ort.
S,5. 34. "nd e it further ena&ted, /hat e4er? association shall maBe to the
com=troller o- the currenc? a re=ort, accordin8 to the -orm >hich ma? 9e
=rescri9ed 9? him, 4eri-ied 9? the oath or a--irmation o- the =resident or
cashier o- such associationD >hich re=ort shall eEhi9it in detail, and under
a==ro=riate heads, the resources and lia9ilities o- the association 9e-ore the
Penalt? -or -ailin8 to
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re=ort.
commencement o- 9usiness on the mornin8 o- the -irst +onda? o- the month
o- 3anuar?, A=ril, 3ul?, and (cto9er o- each ?ear, and shall transmit the same
to the com=troller >ithin -i4e da?s therea-ter. And an? 9anB -ailin8 to maBe
and transmit such re=ort shall 9e su9Ject to a =enalt? o- one hundred dollars
-or each da? a-ter -i4e da?s that such re=ort is dela?ed 9e?ond that time. And
the com=troller shall =u9lish a9stracts o- said re=orts in a ne>s=a=er to 9e
desi8nated 9? him -or that =ur=ose in the cit? o- Fashin8ton, and the
se=arate re=ort o- each association shall 9e =u9lished in a ne>s=a=er in the
=lace >here such association is esta9lished, or i- there 9e no ne>s=a=er at
such =lace, then in a ne>s=a=er =u9lished at the nearest =lace thereto, at the
eE=ense o- the association maBin8 such re=ort. 1n addition to the @uarterl?
5om=troller to =u9lish
a9stracts.
+onthl? statements.
Associations not to
maBe loans, Sc., on the
securit? o- their o>n
stocB, Sc.
S,5. 35. "nd e it further ena&ted, /hat no association shall maBe an? loan
or discount on the securit? o- the shares o- its o>n ca=ital stocB, nor 9e the
=urchaser or holder o- an? such shares, unless such securit? or =urchases
shall 9e necessar? to =re4ent loss u=on a de9t =re4iousl? contracted in 8ood
-aithD and stocB so =urchased or ac@uired shall, >ithin siE months -rom the
time o- its =urchase, 9e sold or dis=osed o- at =u9lic or =ri4ate sale, in
de-ault o- >hich a recei4er ma? 9e a==ointed to close u= the 9usiness o- the
association, accordin8 to the =ro4isions o- this act.
1nde9tedness not to
eEceed ca=ital stocB,
Sc.
S,5. 36. "nd e it further ena&ted, /hat no association shall at an? time 9e
inde9ted, or in an? >a? lia9le, to an amount eEceedin8 the amount o- its
ca=ital stocB at such times actuall? =aid in and remainin8 undiminished 9?
losses or other>ise, eEce=t on the -ollo>in8 accounts, that is to sa?6 _
;irst. (n account o- its notes in circulation.
Second. (n account o- mone?s de=osited >ith, or collected 9?, such
association.
/hird. (n account o- 9ills o- eEchan8e or dra-ts dra>n a8ainst mone?
actuall? on de=osit to the credit o- such association, or due thereto.
;ourth. (n account o- lia9ilities to its stocBholders -or di4idends and
reser4ed =ro-its.
Associations not to
h?=othecate circulatin8
notes, -or, Sc.D
S,5. 3$. "nd e it further ena&ted, /hat no association shall, either directl?
or indirectl?, =led8e or h?=othecate an? o- its notes o- circulation, -or the
=ur=ose o- =rocurin8 mone? to 9e =aid in on its ca=ital stocB, or to 9e used in
its 9anBin8 o=erations, or other>iseD nor shall an? association use its
circulatin8 notes, or an? =art thereo-, in an? manner or -orm, to create or
increase its ca=ital stocB.
not to >ithdra> an?
=ortion o- their ca=ital.
S,5. 38. "nd e it further ena&ted, /hat no association, or an? mem9er
thereo-, shall, durin8 the time it shall continue its 9anBin8 o=erations,
>ithdra>, or =ermit to 9e >ithdra>n, either in -orm o- di4idends or
other>ise, an? =ortion o- its ca=ital. And i- losses shall at an? time ha4e 9een
sustained 9? an? such association e@ual to or eEceedin8 its undi4ided =ro-its
then on hand, no di4idend shall 9e madeD and no di4idend shall e4er 9e made
9? an? association, >hile it shall continue its 9anBin8 o=erations, to an
amount 8reater than its nett =ro-its then on hand, deductin8 there-rom its
Iosses.
Had de9ts.
Fhat to 9e deemed 9ad
de9ts.
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losses and 9ad de9ts. And all de9ts due to an? association, on >hich interest
is =ast due and un=aid -or a =eriod o- siE months, unless the same shall 9e
>ell secured, and shall 9e in =rocess o- collection, shall 9e considered 9ad
Association not to =a?
out certain notes.
S,5. 3A. "nd e it further ena&ted, /hat no associaiton shall at an? time =a?
out on loans or discounts, or in =urchasin8 dra-ts or 9ills o- eEchan8e, or in
=a?ment o- de=osits, or in an? other mode =a? or =ut in circulation the notes
o- an? 9anB or 9anBin8 association >hich shall not, at an? such time, 9e
recei4a9le, at =ar, on de=osit and in =a?ment o- de9ts 9? the association so
=a?in8 out or circulatin8 such notesD nor shall it Bno>in8l? =a? out or =ut in
circulation an? notes issued 9? an? 9anB or 9anBin8 association >hich at the
time o- such =a?in8 out or =uttin8 in circulation is not redeemin8 its
circulatin8 notes in la>-ul mone? o- the )nited States.
Iist o- names o-
shareholders and
residences to 9e Be=tD
S,5. 4!. "nd e it further ena&ted, /hat the =resident and cashier o- e4er?
such association shall cause to 9e Be=t at all times a -ull and correct list o-
the names and residences o- all the shareholders, in the association, and the
num9er o- shares held 9? each, in the o--ice >here its 9usiness is transactedD
and such list shall 9e su9Ject to the ins=ection o- all the shareholders and
creditors o- the association, and the o--icers authorized to assess taEes under
state authorit?, durin8 9usiness hours o- each da? in >hich 9usiness ma? 9e
le8all? transactedD and a co=? o- such list, on the -irst +onda? o- 3ul? in
each ?ear, 4eri-ied 9? the oath o- such =resident or cashier, shall 9e
transmitted to the com=troller o- the currenc?.
to 9e su9Ject to
ins=ectionD
to 9e sent to
com=troller.
5om=troller to Bee=
control o- =lates and
s=ecial dies.
S,5. 41. "nd e it further ena&ted, /hat the =lates and s=ecial dies to 9e
=rocured 9? the com=troller o- the currenc? -or the =rintin8 o- such
circulatin8 notes shall remain under his control and direction, and the
eE=enses necessaril? incurred in eEecutin8 the =ro4isions o- this act
res=ectin8 the =rocurin8 o- such notes, and all other eE=enses o- the 9ureau,
shall 9e =aid out o- the =roceeds o- the taEes or duties no> or herea-ter to 9e
assessed on the circulation, and collected -rom associations or8anized under
this act. And in lieu o- all eEistin8 taEes, e4er? association shall =a? to the
treasurer o- the )nited States, in the months o- 3anuar? and 3ul?, a dut? o-
one hal- o- one =er centum each hal- ?ear -rom and a-ter the -irst da? o-
3anuar?, ei8hteen hundred and siEt?#-our, u=on the a4era8e amount o- its
notes in circulation, and a dut? o- one @uarter o- one =er centum each hal-
?ear u=on the a4era8e amount o- its de=osits, and a dut? o- one @uarter o-
one =er centum each hal- ?ear, as a-oresaid, on the a4era8e amount o- its
ca=ital stocB 9e?ond the amount in4ested in )nited States 9ondsD and in case
o- de-ault in the =a?ment thereo- 9? an? association, the duties a-oresaid ma?
9e collected in the manner =ro4ided -or the collection o- )nited States duties
o- other cor=orations, or the treasurer ma? reser4e the amount o- said duties
out o- the interest, as it ma? 9ecome due, on the 9onds de=osited >ith him 9?
such de-aultin8 association. And it shall 9e the dut? o- each association,
>ithin ten da?s -rom the -irst da?s o- 3anuar? and 3ul? o- each ?ear, to maBe
a return, under the oath o- its =resident or cashier, to the treasurer o- the
)nited States, in such -orm as he ma? =rescri9e, o- the a4era8e amount o- its
notes in circulation,and o- the a4era8e amount o- its de=osits, and o- the
a4era8e amount o- its ca=ital stocB, 9e?ond the amount in4ested in )nited
States 9onds, -or the siE months neEt =recedin8 said -irst da?s o- 3anuar? and
3ul? as a-oresaid, and in de-ault o- such return, and -or each de-ault thereo-,
each de-aultin8 association shall -or-eit and =a? to the )nited States the sum
o- t>o hundred dollars, to 9e collected either out o- the interest as it ma?
,E=enses to 9e 9orne
9? associations.
2ut? u=on circulation,
de=osits, and ca=ital
stocB to 9e =aid semi#
annuall?.
0o> collected i- not
=aid in time.
*eturn o- circulation,
Sc., to 9e made.
Penalt? -or de-ault.
Shares not here9?
eEem=ted -rom taEation
9? state authorit?.
Iimit o- state taE.
*eal estate to 9e taEed.
116
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9ecome due such association on the 9onds de=osited >ith the treasurer, or, at
his o=tion, in the manner in >hich =enalties are to 9e collected o- other
cor=orations under the la>s o- the )nited StatesD and in case o- such de-ault
the amount o- the duties to 9e =aid 9? such association shall 9e assessed
u=on the amount o- notes deli4ered to such association 9? the com=troller o-
the currenc?, and u=on the hi8hest amont o- its de=osits and ca=ital stocB, to
9e ascertained in such other manner as the treasurer ma? deem 9est6
$ro;ided, /hat nothin8 in this act shall 9e construed to =re4ent all the shares
in an? o- the said associations, held 9? an? =erson or 9od? cor=orate, -rom
9ein8 included in the 4aluation o- the =ersonal =ro=ert? o- such =erson or
0o> associations ma?
9e closed.
S,5. 42. "nd e it further ena&ted, /hat an? association ma? 8o into
li@uidation and 9e closed 9? the 4ote o- its shareholders o>nin8 t>o thirds o-
its stocB. And >hene4er such 4ote shall 9e taBen it shall 9e the dut? o- the
9oard o- directors to cause notice o- this -act to 9e certi-ied, under the seal o-
the association, 9? it =resident or cashier, to the com=troller o- the currenc?,
and =u9lication thereo- to 9e made -or a =eriod o- t>o months in a
ne>s=a=er =u9lished in the cit? o- Ne> YorB, and also in a ne>s=a=er
=u9lished in a cit? or to>n in >hich the association is located, and i- no
ne>s=a=er 9e there =u9lished, then in the ne>s=a=er =u9lished nearest
thereto, that said association is closin8 u= its a--airs, and noti-?in8 the
holders o- its notes and other creditors to =resent the notes and other claims
a8ainst the association -or =a?ment. And at an? time a-ter the eE=iration o-
one ?ear -rom the time o- the =u9lication o- such notice as a-oresaid, the said
association ma? =a? o4er to the treasurer o- the )nited States the amount o-
its outstandin8 notes in the la>-ul mone? o- the )nited States, and taBe u=
the 9onds >hich said association has on de=osit >ith the treasurer -or the
securit? o- its circulatin8 notesD >hich 9onds shall 9e assi8ned to the 9anB in
the manner s=eci-ied in the nineteenth section o- this act, and -rom that time
the outstandin8 notes o- said association shall 9e redeemed at the treasur? o-
the )nited States, and the said association and the shareholders thereo- shall
9e dischar8ed -rom all lia9ilities there-or.
Proceedin8s.
/reasurer to eEecute
du=licate recei=ts.
S,5. 43. "nd e it further ena&ted, /hat the treasurer, on recei4in8 -rom an
association la>-ul mone? -or the =a?ment and redem=tion o- its outstandin8
notes, as =ro4ided -or in the =recedin8 section o- this act, shall eEecute
du=licate recei=ts there-or, one to the association and the other to the
com=troller o- the currenc?, statin8 the amount recei4ed 9? him, and the
=ur=ose -or >hich it has 9een recei4ed, >hich amount shall 9e =aid into the
treasur? o- the )nited States, and =laced to the credit o- such association
u=on redem=tion account. And it shall 9e the dut? o- the treasurer, >hene4er
he shall redeem an? o- the notes o- said association, to cause the same to 9e
mutilated, and char8ed to the redem=tion account o- said associationD and all
notes so redeemed 9? the treasurer shall, e4er? three months, 9e certi-ied to
and 9urned in the manner =rescri9ed in the t>ent?#-ourth section o- this act.
*edeemed notes to 9e
mutilated, Sc.
State 9anBs ma? S,5. 44. "nd e it further ena&ted, /hat an? 9anB incor=orated 9? s=ecial
11$
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9ecome national
associations.
la>, or an? 9anBin8 institution or8anized under a 8eneral la> o- an? state,
ma?, 9? authorit? o- this act, 9ecome a national association under its
=ro4isions, 9? the name =rescri9ed in its or8anization certi-icateD and in such
case the articles o- association and or8anization certi-icate re@uired 9? this
act ma? 9e eEecuted 9? a maJorit? o- the directors o- the 9anB or 9anBin8
institutionD and said certi-icate shall declare that the o>ners o- t>o thirds o-
the ca=ital stocB ha4e authorized the directors to maBe such certi-icate and to
chan8e and con4ert the said 9anB or 9anBin8 institution into a national
association under this act. And a maJorit? o- the directors, a-ter eEecutin8
said articles o- association and or8anization certi-icate, shall ha4e =o>er to
eEecute all other =a=ers, and to do >hate4er ma? 9e re@uired to maBe its
or8anization =er-ect and com=lete as a national association. /he shares o-
an? such 9anB ma? continue to 9e -or the same amount each as the? >ere
9e-ore said con4ersion, and the directors a-oresaid ma? 9e the directors o-
the association until others are elected or a==ointed in accordance >ith the
=ro4isions o- this actD and an? state 9anB >hich is a stocBholder in an? other
9anB, 9? authorit? o- state la>s, ma? continue to hold its stocB, althou8h
either 9anB, or 9oth, ma? 9e or8anized under and ha4e acce=ted the
=ro4isions o- this act. Fhen the com=troller shall 8i4e to such association a
certi-icate, under his hand and o--icial seal, that the =ro4isions o- this act
ha4e 9een com=lied >ith, and that it is authorized to commence the 9usiness
o- 9anBin8 under it, the association shall ha4e the same =o>ers and
=ri4ile8es, and shall 9e su9Ject to the same duties, res=onsi9ilities, and rules,
in all res=ects as are =rescri9ed in this act -or other associations or8anized
under it, and shall 9e held and re8arded as an association under this act6
$ro;ided, ho8e;er, /hat no such association shall ha4e a less ca=ital than the
amount =rescri9ed -or 9anBin8 associations under this act.
+ode o- =rocedure.
Associations, >hen so
desi8nated, ma? 9e
de=ositaries o- =u9lic
mone?s, eEce=t, Sc.D
S,5. 45. "nd e it further ena&ted, /hat all associations under this act, >hen
desi8nated -or that =ur=ose 9? the Secretar? o- the /reasur?, shall 9e
de=ositaries o- =u9lic mone?, eEce=t recei=ts -rom customs, under such
re8ulations as ma? 9e =rescri9ed 9? the Secretar?D and the? ma? also 9e
em=lo?ed as -inancial a8ents o- the 8o4ernmentD and the? shall =er-orm all
such reasona9le duties, as de=ositaries o- =u9lic mone?s and -inancial a8ents
o- the 8o4ernment, as ma? 9e re@uired o- them. And the Secretar? o- the
/reasur? shall re@uire o- the associations thus desi8nated satis-actor?
securit?, 9? the de=osit o- )nited States 9onds and other>ise, -or the sa-e#
Bee=in8 and =rom=t =a?ment o- the =u9lic mone? de=osited >ith them, and
-or the -aith-ul =er-ormance o- their duties as -inancial a8ents o- the
8o4ernment6 $ro;ided, /hat e4er? association >hich shall 9e selected and
desi8nated as recei4er or de=ositar? o- the =u9lic mone? shall taBe and
recei4e at =ar all o- the national currenc? 9ills, 9? >hate4er association
issued, >hich ha4e 9een =aid in to the 8o4ernment -or internal re4enue, or
-or loans or stocBs.
ma? 9e -inancial
a8ents.
2esi8nated de=ositaries
to =a? =rom=tl?D
to recei4e national
currenc? 9ills at =ar.
1- associations -ail to
redeem their
circulation, the notes
ma? 9e =rotested,
unless, Sc.
S,5. 46. "nd e it further ena&ted, /hat i- an? such association shall at an?
time -ail to redeem, in the la>-ul mone? o- the )nited States, an? o- its
circulatin8 notes, >hen =a?ment thereo- shall 9e la>-ull? demanded, durin8
the usual hours o- 9usiness, at the o--ice o- such association, or at its =lace o-
redem=tion a-oresaid, the holder ma? cause the same to 9e =rotested, in one
=acBa8e, 9? a notar?#=u9lic, unless the =resident or cashier o- the association
>hose notes are =resented -or =a?ment, or the =resident or cashier o- the
association at the =lace at >hich the? are redeema9le, shall o--er to >ai4e
demand and notice o- the =rotest, and shall, in =ursuance o- such o--er, maBe,
si8n, and deli4er to the =art? maBin8 such demand an admission in >ritin8,
statin8 the time o- the demand, the amount demanded, and the -act o- non#
Notices o- =rotest, Sc.,
to 9e -or>arded to
com=troller.
Association not to do
9usiness -urther,
eEce=t, Sc.
118
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=a?ment thereo-D and such notar?#=u9lic, on maBin8 such =rotest, or u=on
recei4in8 such admission, shall -orth>ith -or>ard such admission or notice
o- =rotest to the com=troller o- the currenc?, retainin8 a co=? thereo-. And
a-ter such de-ault, on eEamination o- the -acts 9? the com=troller, and notice
9? him to the association, it shall not 9e la>-ul -or the association su--erin8
the same to =a? out an? o- its notes, discount an? notes or 9ills, or other>ise
=rosecute the 9usiness o- 9anBin8, eEce=t to recei4e and sa-el? Bee= mone?
Notes not to 9e
=rotested in certain
cases.
;ees o- notar?.
)=on notice o- -ailure
to redeem circulation,
com=troller to send
s=ecial a8ent to
ascertain -acts,
S,5. 4$. "nd e it further ena&ted, /hat on recei4in8 notice that an? such
association has -ailed to redeem an? o- its circulatin8 notes, as s=eci-ied in
the neEt =recedin8 section, the com=troller o- the currenc?, >ith the
concurrence o- the Secretar? o- the /reasur?, ma? a==oint a s=ecial a8ent o-
>hose a==ointment immediate notice shall 9e 8i4en to such association" >ho
shall immediatel? =roceed to ascertain >hether such association has re-used
to =a? its circulatin8 notes in the la>-ul mone? o- the )nited States, >hen
demanded as a-oresaid, and re=ort to the com=troller the -act so ascertainedD
and i-, -rom such =rotest or the re=ort so made, the com=troller shall 9e
satis-ied that such association has re-used to =a? its circulatin8 notes as
a-oresaid and is in de-ault, he shall, >ithin thirt? da?s a-ter he shall ha4e
recei4ed notice o- such -ailure, declare the )nited States 9onds and securities
=led8ed 9? such association -or-eited to the )nited States, and the same shall
thereu=on 9e -or-eited accordin8l?. And thereu=on the com=troller shall
immediatel? 8i4e notice in such manner as the Secretar? o- the /reasur?
shall, 9? 8eneral rules or other>ise, direct, to the holders o- the circulatin8
notes o- such association to =resent them -or =a?ment at the treasur? o- the
)nited States, and the same shall 9e =aid as =resented in la>-ul mone? o- the
)nited StatesD >hereu=on said com=troller ma?, in his discretion, cancel an
amount o- 9onds =led8ed 9? such association e@ual at current marBet rates,
not eEceedin8 =ar, to the notes =aid. And it shall 9e la>-ul -or the Secretar?
o- the /reasur?, -rom time to time, to maBe such re8ulations res=ectin8 the
dis=osition to 9e made o- such circulatin8 notes a-ter =resentation thereo- -or
=a?ment as a-oresaid, and res=ectin8 the =er=etuation o- the e4idence o- the
=a?ment thereo- as ma? seem to him =ro=erD 9ut all such notes, on 9ein8
=aid, shall 9e cancelled. And -or an? de-icienc? in the =roceeds o- the 9onds
=led8ed 9? such association, >hen dis=osed o- as hereina-ter s=eci-ied, to
reim9urse to the )nited States the amount so eE=ended in =a?in8 the
circulatin8 notes o- such association, the )nited States shall ha4e a -irst and
=aramount lien u=on all the assets o- such associationD and such de-icienc?
shall 9e made 8ood out o- such assets in =re-erence to an? and all other
claims >hatsoe4er, eEce=t the necessar? costs and eE=enses o- administerin8
the same.
>hen to declare
securities -or-eited,
to noti-? holders o-
notes to =resent them
-or =a?ment,
to =a? notes and cancel
9onds.
/he )nited States to
ha4e =riorit? o- lien
u=on assets -or an?
de-icienc? in
redem=tion o-
circulation.
Honds =led8ed as
securit? ma? 9e sold at
auctionD
S,5. 48. "nd e it further ena&ted, /hat >hene4er the com=troller shall
9ecome satis-ied, as in the last =recedin8 section s=eci-ied, that an?
association has re-used to =a? its circulatin8 notes as therein mentioned, he
ma?, instead o- cancellin8 the )nited States 9onds =led8ed 9? such
association, as =ro4ided in the neEt =recedin8 section, cause so much o- them
as necessar? to redeem the outstandin8 circulatin8 notes o- such association
to 9e sold at =u9lic auction in the cit? o- Ne> YorB, a-ter 8i4in8 thirt? da?sL
notice o- such sale to such association.
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or at =ri4ate sale. S,5. 4A. "nd e it further ena&ted, /hat the com=troller o- the currenc? ma?,
i- he shall 9e o- o=inion that the interests o- the )nited States >ill 9e 9est
=romoted there9?, sell at =ri4ate sale an? o- the 9onds =led8ed 9? such
association, and recei4e there-or either mone? or the circulatin8 notes o-
such -ailin8 association6 $ro;ided, /hat no such 9onds shall 9e sold 9?
=ri4ate sale -or less than =ar, nor less than the marBet 4alue thereo- at the
time o- sale6 "nd pro;ided, further, /hat no sales o- an? such 9onds, either
=u9lic or =ri4ate, shall 9e com=lete until the trans-er thereo- shall ha4e 9een
made >ith the -ormalities =rescri9ed in this act.
Pro4iso.
5om=troller ma?
a==oint a recei4er to
close a--airs o-
de-aultin8 association.
S,5. 5!. "nd e it further ena&ted, /hat on 9ecomin8 satis-ied, as s=eci-ied
in this act, that an? association has re-used to =a? its circulatin8 notes as
therein mentioned, and is in de-ault, the com=troller o- the currenc? ma?
-orth>ith a==oint a recei4er, and re@uire o- him such 9ond and securit? as he
shall deem =ro=er, >ho, under the direction o- the com=troller, shall taBe
=ossession o- the 9ooBs, records, and assets o- e4er? descri=tion o- such
association, collect all de9ts, dues, and claims 9elon8in8 to such association,
and, u=on the order o- a court o- record o- com=etent Jurisdiction, ma? sell or
com=ound all 9ad or dou9t-ul de9ts, and, on a liBe order, sell all the real and
=ersonal =ro=ert? o- such association, on such terms as the court shall directD
and ma?, i- necessar? to =a? the de9ts o- such association, en-orce the
indi4idual lia9ilit? o- the stocBholders =ro4ided -or 9? the t>el-th section o-
this actD and such recei4er shall =a? o4er all mone? so made to the treasurer
o- the )nited States, su9Ject to the order o- the com=troller o- the currenc?,
and also maBe re=ort to the com=troller o- the currenc? o- all his acts and
=roceedin8s. /he com=troller shall thereu=on cause notice to 9e 8i4en, 9?
ad4ertisement in such ne>s=a=ers as he ma? direct, -or three consecuti4e
months, callin8 on all =ersons >ho ma? ha4e claims a8ainst such association
to =resent the same, and to maBe le8al =roo- thereo-. And -rom time to time
the com=troller, a-ter -ull =ro4ision shall ha4e 9een -irst made -or re-undin8
to the )nited States an? such de-icienc? in redeemin8 the notes o- such
association as is mentioned in this act, shall maBe a rata9le di4idend o- the
mone? so =aid o4er to him 9? such recei4er on all such claims as ma? ha4e
9een =ro4ed to his satis-action or adJudicated in a court o- com=etent
JurisdictionD and -rom time to time, as the =roceeds o- the assets o- such
association shall 9e =aid o4er to him, he shall maBe -urther di4idends, as
a-oresaid, on all claims =re4iousl? =ro4ed or adJudicatedD and the remainder
o- such =roceeds, i- an?, shall 9e =aid o4er to the shareholders o- such
association, or their le8al re=resentati4es, in =ro=ortion to the stocB 9? them
res=ecti4el? held6 $ro;ided, ho8e;er, /hat i- such association a8ainst >hich
=roceedin8s ha4e 9een so instituted, on account o- an? alle8ed re-usal to
redeem its circulatin8 notes as a-oresaid, shall den? ha4in8 -ailed to do so,
such association ma?, at an? time >ithin ten da?s a-ter such association shall
ha4e 9een noti-ied o- the a==ointment o- an a8ent, as =ro4ided in this act,
a==l? to the nearest circuit, or district, or territorial court o- the )nited
States, to enJoin -urther =roceedin8s in the =remisesD and such court, a-ter
citin8 the com=troller o- the currenc? to sho> cause >h? -urther =roceedin8s
should not 9e enJoined, and a-ter the decision o- the court or -indin8 o- a Jur?
that such association has not re-used to redeem its circulatin8 notes, >hen
le8all? =resented, in the la>-ul mone? o- the )nited States, shall maBe an
order enJoinin8 the com=troller, and an? recei4er actin8 under his direction,
-rom all -urther =roceedin8s on account o- such alle8ed re-usal.
Hond and duties o-
recei4er, Sc.
1- association denies
that it has -ailed to
redeem its notes, it ma?
a==l? to the courts -or
an inJunction.
Proceedin8s.
;ees -or =rotest and
other eE=enses, ho> to
9e =aid.
S,5. 51. "nd e it further ena&ted, /hat all -ees -or =rotestin8 the notes
issued 9? an? such 9anBin8 association shall 9e =aid 9? the =erson =rocurin8
the =rotest to 9e made, and such 9anBin8 association shall 9e lia9le there-orD
12!
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28
9ut no =art o- the 9onds =led8ed 9? such 9anBin8 association, as a-oresaid,
shall 9e a==lied to the =a?ment o- such -ees. And all eE=enses o- an?
=reliminar? or other eEaminations into the condition o- an? association shall
9e =aid 9? such associationD and all eE=enses o- an? recei4ershi= shall 9e
=aid out o- the assets o- such association 9e-ore distri9ution o- the =roceeds
thereo-.
/rans-ers, assi8nments,
Sc., in contem=lation
o- insol4enc?, Sc., to
9e 4oid.
S,5. 52. "nd e it further ena&ted, /hat all trans-er o- the notes, 9onds, 9ills
o- eEchan8e, and other e4idences o- de9t o>in8 to an? association, or o-
de=osits to its creditD all assi8nments o- mort8a8es, sureties on real estate, or
o- Jud8ments or decrees in its -a4orD all de=osits o- mone?, 9ullion, or other
4alua9le thin8 -or its use, or -or the use o- an? o- its shareholders or
creditorsD and all =a?ments o- mone? to either, made a-ter the commission o-
an act o- insol4enc?, or in contem=lation thereo-, >ith a 4ie> to =re4ent the
a==lication o- its assets in the manner =rescri9ed 9? this act, or >ith a 4ie>
to the =re-erence o- one creditor to another, eEce=t in =a?ment o- its
circulatin8 notes, shall 9e utterl? null and 4oid.
Penalt? u=on directors
-or 4iolations o- this
act.
SEC. :. And be it furt)er enacted6 T)+( /9 ()* 7/-*>(2-1 29 +0.
+112>/+(/20 1)+,, C02D/03,. $/2,+(*6 2- C02D/03,. ?*-@/( +0. 29 ()*
299/>*-16 +3*0(16 2- 1*-$+0(1 29 ()* +112>/+(/20 (2 $/2,+(* +0. 29 ()*
?-2$/1/201 29 ()/1 +>(6 +,, ()* -/3)(16 ?-/$/,*3*16 +07 9-+0>)/1*1 29 ()*
+112>/+(/20 7*-/$*7 9-2@ ()/1 +>( 1)+,, &* ()*-*&. 92-9*/(*7. S5>)
$/2,+(/20 1)+,,6 )2D*$*-6 &* 7*(*-@/0*7 +07 +7B573*7 &. + ?-2?*-
>/->5/(6 7/1(-/>(6 2- (*--/(2-/+, >25-( 29 ()* U0/(*7 S(+(*16 /0 + 15/( &-253)(
92- ()+( ?5-?21* &. ()* >2@?(-2,,*- 29 ()* >5--*0>.6 /0 )/1 2D0 0+@*6
&*92-* ()* +112>/+(/20 1)+,, &* 7*>,+-*7 7/112,$*7. A07 /0 >+1*1 29 15>)
$/2,+(/206 *$*-. 7/-*>(2- D)2 ?+-(/>/?+(*7 /0 2- +11*0(*7 (2 ()* 1+@*
1)+,, &* )*,7 ,/+&,* /0 )/1 ?*-120+, +07 /07/$/75+, >+?+>/(. 92- +,,
7+@+3*1 D)/>) ()* +112>/+(/206 /(1 1)+-*)2,7*-16 2- +0. 2()*- ?*-1206
1)+,, )+$* 151(+/0*7 /0 >201*A5*0>*1 29 15>) $/2,+(/20.
.iolation, ho> to 9e
determined.
Personal lia9ilit?.
5om=troller ma?
a==oint =erson to
eEamine the a--airs o-
an? association.
S,5. 54. "nd e it further ena&ted, /hat the com=troller o- the currenc?,
>ith the a==ro9ation o- the Secretar? o- the /reasur?, as o-ten as shall 9e
deemed necessar? or =ro=er, shall a==oint a suita9le =erson or =ersons to
maBe an eEamination o- the a--airs o- e4er? 9anBin8 association, >hich
=erson shall not 9e a director or other o--icer in an? association >hose a--airs
he shall 9e a==ointed to eEamine, and >ho shall ha4e =o>er to maBe a
thorou8h eEamination into all the a--airs o- the association, and, in doin8 so,
to eEamine an? o- the o--icers and a8ents thereo- on oathD and shall maBe a
-ull and detailed re=ort o- the condition o- the association to the com=troller.
And the association shall not 9e su9Ject to an? other 4isitorial =o>ers than
such as are authorized 9? this act, eEce=t such as are 4ested in the se4eral
courts o- la> and chancer?. And e4er? =erson a==ointed to maBe such
eEaminatin shall recei4e -or his ser4ices at the rate o- -i4e dollars -or each
da? 9? him em=lo?ed in such eEamination, and t>o dollars -or e4er? t>ent?#
-i4e miles he shall necessaril? tra4el in the =er-ormance o- his dut?, >hich
shall 9e =aid 9? the association 9? him eEamined.
2ut? o- such eEaminer.
Pa?.
Penalt? u=on o--icers,
Sc., o- association -or
em9ezzlement, Sc., o-
-unds.
S,5. 55. "nd e it further ena&ted, /hat e4er? =resident, director, cashier,
teller, clerB, or a8ent o- an? association, >ho shall em9ezzle, a9stract, or
>il-ull? misa==l? an? o- the mone?s, -unds, or credits o- the association, or
shall, >ithout authorit? -rom the directors, issue or =ut in circulation an? o-
the notes o- the association, or shall, >ithout such authorit?, issue or =ut -orth
an? certi-icate o- de=osit, dra> an? order or 9ill o- eEchan8e, maBe an?
acce=tance, assi8n an? note, 9ond, dra-t, 9ill o- eEchan8e, mort8a8e,
Jud8ment, or decree, or shall maBe an? -alse entr? in an? 9ooB, re=ort, or
statement o- the association, >ith intent, in either case, to inJure or de-raud
121
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28
the association or an? other com=an?, 9od? =olitic or cor=orate, or an?
indi4idual =erson, or to decei4e an? o--icer o- the association, or an? a8ent
a==ointed to eEamine the a--airs o- an? such association, shall 9e deemed
8uilt? o- a misdemeanor, and u=on con4iction thereo- shall 9e =unished 9?
im=risonment not less than -i4e nor more than ten ?ears.
2istrict attorne?s to
conduct certain suits.
S,5. 56. "nd e it further ena&ted, /hat all suits and =roceedin8s arisin8 out
o- the =ro4isions o- this act, in >hich the )nited States or its o--icers or
a8ents shall 9e =arties, shall 9e conducted 9? the district attorne?s o- the
se4eral districts, under the direction and su=er4ision o- the solicitor o- the
treasur?.
1n >hat courts, suits,
Sc., under this act ma?
9e =rosecuted.
S,5. 5$. "nd e it further ena&ted, /hat suits, actions, and =roceedin8s,
a8ainst an? association under this act, ma? 9e had in an? circuit, district, or
territorial court o- the )nited States held >ithin the district in >hich such
association ma? 9e esta9lishedD or in an? state, count?, or munici=al court in
the count? or cit? in >hich said association is located, ha4in8 Jurisdiction in
similar cases6 $ro;ided, ho8e;er, /hat all =roceedin8s to enJoin the
com=toller under this act shall 9e had in a circuit, district, or territorial court
o- the )nited States, held in the district in >hich the association is located.
Proceedin8s -or
inJunctions to 9e in
>hat courts.
Penalt? -or mutilatin8
notes to maBe them
un-it -or reissue.
S,5. 58. "nd e it further ena&ted, /hat e4er? =erson >ho shall mutilate,
cut, de-ace, dis-i8ure, or =er-orate >ith holes, or shall unite or cement
to8ether, or do an? other thin8 to an? 9anB 9ill, dra-t, note, or other e4idence
o- de9t, issued 9? an? such association, or shall cause or =rocure the same to
9e done, >ith intent to render such 9anB 9ill, dra-t, note, or other e4idence o-
de9t un-it to 9e reissued 9? said association, shall, u=on con4iction, -or-eit
-i-t? dollars to the association >ho shall 9e inJured there9?, to 9e reco4ered
9? action in an? court ha4in8 Jurisdiction.
Penalt? -or
counter-eitin8 notes,
S,5. 5A. "nd e it further ena&ted, /hat i- an? =erson shall -alsel? maBe,
-or8e, or counter-eit, or cause or =rocure to 9e made, -or8ed, or counter-eited,
or >illin8l? aid or assist in -alsel? maBin8, -or8in8, or counter-eitin8, an?
note in imitation o-, or =ur=ortin8 to 9e in imitation o-, the circulatin8 notes
issued under the =ro4isions o- this act, or shall =ass, utter, or =u9lish, or
attem=t to =ass, utter, or =u9lish, an? -alse, -or8ed, or counter-eited note,
=ur=ortin8 to 9e issued 9? an? association doin8 a 9anBin8 9usiness under
the =ro4isions o- this act, Bno>in8 the same to 9e -alsel? made, -or8ed, or
counter-eited, or shall -alsel? alter, or cause or =rocure to 9e -alsel? altered,
or >illin8l? aid or assist in -alsel? alterin8, an? such circulatin8 notes, issued
as a-oresaid, or shall =ass, utter, or =u9lish, or attem=t to =ass, utter, or
=u9lish, as true, an? -alsel? altered or s=urious circulatin8 note issued, or
=ur=ortin8 to ha4e 9een issued, as a-oresaid, Bno>in8 the same to 9e -alsel?
altered or s=urious, e4er? such =erson shall 9e deemed and adJud8ed 8uilt o-
-elon?, and 9ein8 thereo- con4icted 9? due course o- la> shall 9e sentenced
to 9e im=risoned and Be=t at hard la9or -or a =eriod o- not less than -i4e
?ears, nor more than -i-teen ?ears, and -ined in a sum not eEceedin8 one
thousand dollars.
-or Bno>in8l? utterin8,
Sc.,
-or en8ra4in8, Sc.,
=lates -or -or8in8 notes,
Sc.,
S,5. 6!. "nd e it further ena&ted, /hat i- an? =erson shall maBe or en8ra4e,
or cause or =rocure to 9e made or en8ra4ed, or shall ha4e in his custod? or
=ossession an? =late, die, or 9locB a-ter the similitude o- an? =late, die, or
9locB -rom >hich an? circulatin8 notes issued as a-oresaid shall ha4e 9een
=re=ared or =rinted, >ith intent to use such =late, die, or 9locB, or cause or
su--er the same to 9e used, in -or8in8 or counter-eitin8 an? o- the notes
issued as a-oresaid, or shall ha4e in his custod? or =ossession an? 9lanB note
or notes en8ra4ed and =rinted a-ter the similitude o- an? notes issued as
a-oresaid, >ith intent to use such 9lanBs, or cause or su--er the same to 9e
used, in -or8in8 or counter-eitin8 an? o- the notes issued as a-oresaid, or
-or ha4in8 9lanB notes,
Sc., >ith intent,
-or ha4in8 =a=er, Sc.
122
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shall ha4e in his custod? or =ossession an? =a=er ada=ted to the maBin8 o-
such notes, and similar to the =a=er u=on >hich an? such notes shall ha4e
9een issued, >ith intent to use such =a=er, or cause or su--er the same to 9e
used, or -or8in8 or counter-eitin8 an? o- the notes issued as a-oresaid, e4er?
5om=troller to re=ort
annuall? to con8ress.
S,5. 61. "nd e it further ena&ted, /hat it shall 9e the dut? o- the
com=troller o- the currenc? to re=ort annuall? to con8ress at the
commencement o- its session _
5ontents o- re=ort. ;irst. A summar? o- the state and condition o- e4er? association -rom
>hom re=orts ha4e 9een recei4ed the =recedin8 ?ear, at se4eral dates to
>hich such re=orts re-er, >ith an a9stract o- the >hole amount o- 9anBin8
ca=ital returned 9? them, o- the >hole amount o- their de9ts and lia9ilities,
the amount o- circulatin8 notes outstandin8, and the total amount o- means
and resources, s=eci-?in8 the amount o- la>-ul mone? held 9? them at the
times o- their se4eral returns, and such other in-ormation in relation to said
associations as, in his Jud8ment, ma? 9e use-ul.
5ontents o-
com=trollerLs re=ort to
con8ress.
Second. A statement o- the associations >hose 9usiness has 9een closed
durin8 the ?ear, >ith the amount o- their circulation redeemed and the
amount outstandin8.
/hird. An? amendment to the la>s relati4e to 9anBin8 9? >hich the
s?stem ma? 9e im=ro4ed, and the securit? o- the holders o- its notes and
other creditors ma? 9e increased.
;ourth. /he names and com=ensation o- the clerBs em=lo?ed 9? him, and
the >hole amount o- the eE=enses o- the 9anBin8 de=artment durin8 the ?ear.
And such re=ort shall 9e made 9? or 9e-ore the -irst da? o- 2ecem9er in each
?ear, and the usual num9er o- co=ies -or the use o- the senate and house, and
one thousand co=ies -or the use o- the de=artment, shall 9e =rinted 9? the
=u9lic =rinter and in readiness -or distri9ution at the -irst meetin8 o-
con8ress.
*e=eal o- act o- 1863,
ch.58.
.ol. Eii. =. 665.
S,5. 62. "nd e it further ena&ted, /hat the act entitled QAn act to =ro4ide a
national currenc?, secured 9? a =led8e o- )nited States stocBs, and to =ro4ide
-or the circulation and redem=tion thereo-,Q a==ro4ed ;e9ruar? t>ent?#-i-th,
ei8hteen hundred and siEt?#three, is here9? re=ealed6 $ro;ided, /hat such
re=eal shall not e--ect an? a==ointments made, acts done, or =roceedin8s had,
or the or8anization, acts, or =roceedin8s o- an? association or8anized or in
the =rocess o- or8anization under the act a-oresaid6 "nd pro;ided, a!so, /hat
all such associations so or8anized or in =rocess o- or8anization shall enJo? all
the ri8hts and =ri4ile8es 8ranted, and 9e su9Ject to all the duties, lia9ilities,
and restrictions im=osed 9? this act, and >ith the a==ro4al o- the com=troller
o- the currenc?, in lieu o- the name s=eci-ied in their res=ecti4e or8anization
certi-icates, ma? taBe an? other name =re-erred 9? them and dul? certi-ied to
the com=troller, >ithout =reJudice to an? ri8ht ac@uired under this act, or
under the act here9? re=ealedD 9ut no such chan8e shall 9e made a-ter siE
months -rom the =assa8e o- this act6 $ro;ided, a!so, /hat the circulation
issued or to 9e issued 9? such association shall 9e considered as a =art o- the
circulation =ro4ided -or in this act.
Sa4in8 clauses.
,Eecutors, trustees,
Sc., holdin8 stocB, not
to 9e =ersonall? lia9le.
S,5. 63. "nd e it further ena&ted, /hat =ersons holdin8 stocB as eEecutors,
administrators, 8uardians, and trustees, shall not 9e =ersonall? su9Ject to an?
lia9ilities as stocBholdersD 9ut the estates and -unds in their hands shall 9e
lia9le in liBe manner and to the same eEtent as the testator, intestate, >ard, or
=erson interested in said trust#-unds >ould 9e i- the? >ere res=ecti4el? li4in8
and com=etent to act and hold the stocB in their o>n names.
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Act ma? 9e altered or
re=ealed.
S,5. 64. "nd e it further ena&ted, /hat con8ress ma? at an? time amend,
alter, or re=eal this act.
A==ro4ed, 3une 3, 1864.
/(P (; PAO, *,/)*N /( I,OAI *,/)*N /( 0(+,PAO,
CONCLUSION
Plainti-- res=ect-ull? seeBs this 5ourt to do their constitutional dut? (ath" that this
5ourt is re@uired to under their 5onstitutional oath to =rotect and de-end the 5onstitutional
ri8hts o- the indi4idual a8ainst this cor=orate 8iant and asB this 5ourt to =rotect the
Plainti--s ri8hts accordin8 to the LL+D 29 ()* ,+076L L75* ?-2>*11 29 ,+D6L +07 L75*
>25-1* 29 ,+DL are s?non?mous. $eop!e ;. S0inner, Ca!., %%* $.2d =%, =)3 State ;. Rossi,
?%, R.I. 2(=, 2d @2@, @263 <ire&t $!u9in- Supp!y Co9pany ;. City of <ayton, %@( Ohio
St. )=*, @( N.E. 2d ?*, ?2, %@? ".L.R. %*)(3 Stoner ;. #i--inson, @%6 $a. =(%, %?) ". )2?,
)@%.
All liti8ants ha4e a 5onstitutional ri8ht to ha4e their claims adJudicated accordin8
to the rule o- =recedent. See: "nastasoff ;. 5nited States, 22@ :.@d (>( .(
th
Cir. 2***7.
/he Plainti-- ne4er Bne> that Plainti-- >as enterin8 into a non#Judicial -oreclosure contract
and >as ne4er ad4ised a9out unBno>in8l? >a4in8 ;ederal and State 5onstitutional ri8hts
to ha4e a trial 9? 3ur?. M!* +-* &2507 (2 /0(*-?-*( ()* C201(/(5(/20 /0 ()* ,/3)( 29 ()*
,+D +1 /( *E/1(*7 +( ()* (/@* /( D+1 +72?(*7.N Matto2 ;. 5.S., (6 S.Ct. 2@? .%>@(7.
QN2()/03 >+0 &* @2-* @+(*-/+, (2 ()* 2&,/3+(/20 ()+0 ()* @*+01 29
*092->*@*0(. Fithout the remed? the contract ma?, indeed, in the sense o- the la>, 9e said
not to eEist, and its o9li8ation to -all >ithin the class o- those moral and social duties
D)/>) 7*?*07 92- ()*/- 95,9/,,@*0( D)2,,. 5?20 ()* D/,, 29 ()* /07/$/75+,. T)* /7*+1 29
$+,/7/(. +07 -*@*7. +-* /01*?+-+&,*6 +07 &2() +-* ?+-(1 29 ()* 2&,/3+(/206 D)/>) /1
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35+-+0(**7 &. ()* C201(/(5(/20 +3+/01( /0$+1/20. T)* 2&,/3+(/20 29 + >20(-+>( H/1 ()*
,+D D)/>) &/071 ()* ?+-(/*1 (2 ?*-92-@ ()*/- +3-**@*0(.N RE< CROSS LINE ;s.
"TL"NTIC :R5IT COM$"NN. 26= 5.S. %*>, 6( L. Ed. )(2, == S. Ct. 2?= :eruary %(,
%>2= <e&ided.
;or >ant o- all o- the a9o4e, Plainti-- no> seeBs this honora9le 5ourt<s immediate
inter4ention -or the re#esta9lishment andGor =rotection o- Plainti--<s ri8hts. Plainti--
9elie4es, in consideration o- all o- the -ore8oin8, that Plainti-- has esta9lished Just and
=ro=er cause -or this 5ourt to immediatel? inter4ene, 9? enJoinin8 2e-endants -rom an?
-urther action, lest -urther, irre=ara9le harm and inJur?, and loss o- =ro=ert? 9e-all Plainti--D
and, to -urther issue declarator? relie- consistent here>ith.
!HEREAS; Plainti-- states the claims, and as an o--er o- =roo-, here9? accuses
2e-endant o- committin8 acts o- =erJur? 9?D 2e-endant claimin8 to 9e in =ossession o- the
O,N)1N, (*1O1NAI P*(+1SS(*Y N(/,D and 2e-endant claimin8 to 9e the
O,N)1N, 0(I2,* 1N 2), 5()*S,D and the 2e-endant claimin8 to 9e the
CREDITOR.
THEREFORE; 2e-endants +)S/ =resent -or ins=ection to Plainti-- and this court
the O,N)1N, (*1O1NAI P*(+1SS(*Y N(/, 2- 2e-endants +)S/ a8ree to
3ud8ment 9? 2e-ault in -a4or o- Plainti--.
FURTHERMORE; Plainti-- states the claim6 Mthe O,N)1N, (*1O1NAI
P*(+1SS(*Y N(/, does not eEist,N accordin8l? there is NO O,N)1N, 0(I2,* 1N
2), 5()*S,, 2e-endant is N(/ the O,N)1N, 0(I2,* 1N 2), 5()*S, and
2e-endant is N(/ the CREDITOR in this instant matterD and there-ore no entit? has the
ri8ht to -oreclose on the Plainti--<s real =ro=ert? in @uestion in this instant matter.
ALSO FURTHERMORE; Plainti-- states the claim the O,N)1N, (*1O1NAI
P*(+1SS(*Y N(/, >as M=ur=osel? destro?edN 9? 2e-endant in -urtherance o-
2e-endants< -raudulent and unla>-ul acts to MsecuritizeN the N(/,.
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2$
28
ALSO FURTHERMORE; Plainti-- states the claim 2e-endant has committed
-raud and is committin8 -raud u=on the court 9? claimin8 a 5(PY (; A P*(+1SS(*Y
N(/, as a O,N)1N, (*1O1NAI P*(+1SS(*Y N(/,, and claimin8 to 9e the
5*,21/(* re8ardin8 this issue.
ALSO FURTHERMORE; Plainti-- res=ect-ull? =ra?s this court to 8rant Plainti--
declarator? and inJuncti4e relie-, consistent >ith the -indin8s o- the a-oresaid, includin8,
9ut not limited to, enJoinin8 the a9o4e#named 2e-endants, as >ell as an? =art?, ?et
unnamed 2e-endants", -rom Sellin8, 5on4ertin8, or, 9? an? means >hatsoe4er,
2is=ossessin8 Plainti-- o- Pro=ert?, until all ;acts, are 5lari-ied, as to 9e determined
-ollo>in8 the com=letion o- disco4er?, >hich is no> =endin8, and, to =ro4ide Plainti--,
therea-ter, (ral Ar8ument, andGor an? other relie- this court deems Just and =ro=er.
Your Name, =ro =er
5(PY*1O0/ N(/15,6 /he a9o4e#mentioned entit? is @uotin8 citations \as
=ur=orted in< conteEt to co=?ri8hted case la>, statutes, rules o- court and court
decision material as -ound in 9ooBs =u9lished >ith ;ederal or state -undin8
su==lied 9? the 5itizens o- the united States o- America and intended -or use 9?
attorne?s, and does so under the =ro4isions o- the ;air use clause o- the co=?ri8ht
la>s o- the )nited States.
(*1O1NAI o- the -ore8oin8 -iled >ith
the 5lerB o- the 5ourt, and 5(PY hand#
deli4ered in court this 777777th da? o-
Se=tem9er, 2!!A.
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2$
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