Sent: Wednesday, October 28, 2009 12:45 PM
Subject: [Lawmen: 3236] National Bank Act
I have dredged up a little info on the National Bank Act and associated laws, including mortgage insurance code. Why? Well, most mortgagor home owners have only a vague idea how they managed to get a mortgage loan. No contract appears to exist between the mortgagor and the mortgagee. The mortgagor signs a loan application, the mortgage company gets a bank to agree to fund it, and a title company closer gets the borrower to sign a mortgage security agreement and promissory note, and a deed or deed of trust, and the closer distributes checks to the seller, mortgage company, and other entities. No one bothers to ask whether the bank lent its own money or someone else’s, whether the appraiser overvalued the property at the urging of the realtor and mortgage company, and so on.
You might therefore think it wise to review the laws relating to the Office of Comptroller of Currency, the National Bank Act, and the Federal Reserve Act. You might like having a little history on national banking and what problems it solved.
I do not provide this information to complain or criticize, merely to inform. Take some time and go over this information.
National Bank Act of 1864 Overview
About the OCC: The Changing World of Banking
Email your questions to our historian.
Banking has changed in many ways through the years. Banks today offer a wider range of products and services than ever before, and deliver them faster and more efficiently. But banking's central function remains as it has always been. Banks put a community's surplus funds (deposits and investments) to work by lending to people to buy homes and cars, to start and expand businesses, to put their children through college, and for countless other purposes. Banks are vital to the health of our nation's economy. For tens of millions of Americans, banks are the first choice for saving, borrowing, and investing.
The history of the interaction between American banking and American government is the subject of this web-based exhibit. It focuses on the rise of the national banking system and the Office of the Comptroller of the Currency, which was established to supervise it.
National Banking System Created (1832-1864)
In less settled parts of the country, lending standards tended to be more liberal. There farmers could frequently obtain bank loans to buy land and equipment and finance the shipment of farm products to market. Because of the unpredictability of weather and market conditions, loan losses tended to be higher too.
When the second Bank of the United States went out of business in 1832, state governments took over the job of supervising banks. This supervision often proved inadequate. In those days banks made loans by issuing their own currency. These bank notes were supposed to be convertible, on demand, to cash -- that is, to gold or silver. It was the job of the bank examiner to visit the bank and certify that it had enough cash on hand to redeem its outstanding currency. Because this was not always done, many bank note holders found themselves stuck with worthless paper. It was sometimes difficult or impossible to detect which notes were sound and which were not, because of their staggering variety.
By 1860 more than 10,000 different bank notes circulated throughout the country. Commerce suffered as a result. Counterfeiting was epidemic. Hundreds of banks failed. Throughout the country there was an insistent demand for a uniform national currency acceptable anywhere without risk.
In response, passed the National Currency Act in 1863. In 1864, President Lincoln signed a revision of that law, the National Bank Act. These laws established a new system of national banks and a new government agency headed by a Comptroller of the Currency. The Comptroller's job was to organize and supervise the new banking system through regulations and periodic examinations.
National Bank Notes: A Uniform Currency (1865-1914)
The new system worked well. National banks bought U.S. government securities, deposited them with the Comptroller, and received national bank notes in return. By being lent to borrowers, the notes gradually entered circulation. On the rare occasion that a national bank failed, the government sold the securities held on deposit and reimbursed the note holders. No owner of a national bank note ever lost his or her money.
National bank notes were produced and distributed through an involved process. Once the basic engraving and printing were done (at first by private printers, later by the U.S. Bureau of Engraving and Printing), the notes were entered on the books of the Office of the Comptroller of the Currency, then returned to the printer where the seal of the Treasury Department was stamped on each.
Next, the notes were shipped to the bank whose name appeared on them, where they were signed by two senior bank officers. The notes were then ready for circulation. National bank notes were the mainstay of the nation's money supply until Federal Reserve notes appeared in 1914.
National bank notes featured elaborate scenes and portraits drawn from American history. The complexity of their design was intended to foil counterfeiters. Today, collectors prize national bank notes as outstanding examples of the engraver's art.
The Road to Deposit Insurance (1929-1970)
The onset of the worldwide depression in 1929 was a disaster for the banking system. In the last quarter of 1931 alone, more than 1,000 U.S. banks failed, as borrowers defaulted and bank assets declined in value. This led to scenes of panic throughout the country, with long lines of customers queuing up before dawn in hopes of withdrawing cash before the bank had no more to pay out.
The banking crisis was the first order of business for President Franklin D. Roosevelt. The day after taking office, on March 5, 1933, he declared a bank holiday, closing all the country's banks until they could be examined and either be allowed to reopen or be subjected to orderly liquidation. The bulk of this work fell to the Office of the Comptroller of the Currency.
In June 1933, Congress enacted federal deposit insurance. Accounts were covered up to $2,500 per depositor (now $100,000). Other laws were passed regulating bank activities and competition, with the objective of limiting risks to banks and reassuring the public that banks were, and would remain, safe and sound.
The Rise of Modern Banking (1970-Today)
During the last quarter century, banking has undergone a revolution. Technology has transformed the way Americans obtain financial services. Telephone banking, debit and credit cards, and automatic teller machines are commonplace, and electronic money and banking are evolving. The techniques of bank examination have changed, too. Today OCC examiners use computers and technology to help ensure that the banks they supervise understand and control the risks of the complex new world of financial services.
The OCC supervises national banks and enforces federal banking laws. It rules on new charter and merger applications for national banks, and conducts basic research on banking and the economy. The tools have changed, but for the OCC, the basic mission remains the same as in the days of Lincoln: to ensure a safe, sound, and competitive national banking system that supports the citizens, communities, and economy of the United States.
Banking units like these interactive video systems -- which can be placed in a shopping mall, supermarket or banking branch lobby -- connect bank customers to bank product specialists who can execute transactions from a central office.
The Bank Act of 1864 in the Statutes at large
National Bank Act
June 3, 1864, ch. 106, 13 Stat. 99
Short title, see 12 U.S.C. 38
TITLE 12—BANKS AND BANKING
· CHAPTER 1—THE COMPTROLLER OF THE CURRENCY
· CHAPTER 2—NATIONAL BANKS
· § 21. Formation of national banking associations; incorporators; articles of association
· § 21a. Amendment of articles of association
· § 22. Organization certificate
· § 23. Acknowledgment and filing of certificate
· § 24. Corporate powers of associations
· § 24a. Financial subsidiaries of national banks
· § 25. Omitted
· § 25a. Participation by national banks in lotteries and related activities
· § 26. Comptroller to determine if association can commence business
· § 27. Certificate of authority to commence banking
· § 28. Repealed.]
· § 29. Power to hold real property
· § 30. Change of name or location
· § 31. Rights and liabilities as affected by change of name
· § 32. Liabilities and suits as affected by change of name or location
· §§ 33 to 34c. Transferred
· § 35. Organization of State banks as national banking associations
· § 36. Branch banks
· § 37. Associations governed by chapter
· § 38. The National Bank Act
· § 39. Reservation of rights of associations organized under Act of 1863
· § 40. Virgin Islands; extension of National Bank Act
· § 41. Guam; extension of National Bank Act
· § 42. Territorial application
· § 43. Interpretations concerning preemption of certain State laws
· CHAPTER 3—FEDERAL RESERVE SYSTEM
Mortgage Insurance Code (12 USC 1707 et seq)
Federal Reserve Act Overview
Bob Hurt2460 Persian Drive #70Clearwater, FL 33763+1 (727) 669-5511Donate to my Law Scholarship fundLearn civil litigation with Jurisdictionary Subscribe to Lawmen Newsletter FREEDownload Files FREE from the Lawmen ArchiveImprove your financial fortunes with GetZooks!Save Fuel
Foreclosure Requires the Original Note
Where the complaining party can not prove the existence of the note, then there is no note. To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note. See In Re: SMS Financial LLc. v. Abco Homes, Inc. No.98-50117 February 18, 1999 (167 F. 3d. 235; 5th Circuit Court of Appeals.) Volume 29 of the New Jersey Practice Series, Chapter 10 Section 123, page 566, emphatically states, “...; and no part payments should be made on the bond or note unless the person to whom payment is made is able to produce the bond or note and the part payments are endorsed thereon. It would seem that the mortgagor would normally have a Common law right to demand production or surrender of the bond or note and mortgage, as the case may be. See Restatement, Contracts S 170(3), (4) (1932); C.J.S. Mortgages S 469 in Carnegie Bank v Shalleck 256 N.J. Super 23 (App. Div 1992),606 A2d 389, the Appellate Division held, “When the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set forth in N.J.S. 12A:3-104, the holder of the instrument shall be afforded all the rights and protections provided a holder in due course pursuant to N.J.S. 12A:3-302" Since no one is able to produce the “instrument” there is no competent evidence before the Court that any party is the holder of the alleged note or the true holder in due course. New Jersey common law dictates that the plaintiff prove the existence of the alleged note in question, prove that the party sued signed the alleged note, prove that the plaintiff is the owner and holder of the alleged note, and prove that certain balance is due and owing on any alleged note. Federal Circuit Courts have ruled that the only way to prove the perfection of any security is by actual possession of the security. See Matter of Staff Mortg. & Inv. Corp., 550 F.2d 1228 (9th Cir 1977), “Under the Uniform Commercial Code, the only notice sufficient to inform all interested parties that a security interest in instruments has been perfected is actual possession by the secured party, his agent or bailee.” Bankruptcy Courts have followed the Uniform Commercial Code. In Re Investors & Lenders, Ltd. 165 B.R. 389 (Bkrtcy.D.N.J.1994), “Under the New Jersey Uniform Commercial Code (NJUCC), promissory note is “instrument,” security interest in which must be perfected by possession...” Unequivocally the Court’s rule is that in order to prove the “instrument”, possession is mandatory. In addition to the note, another element of proof is necessary – an accounting that is signed and dated by the person responsible for the account. Claim of damages, to be admissible as evidence, must incorporate records such as a general ledger and accounting of an alleged unpaid promissory note, the person responsible for preparing and maintaining the account general ledger must provide a complete accounting which must be sworn to and dated by the person who maintained the ledger. See Pacific Concrete F.C.U. V. Kauanoe, 62 Haw. 334, 614 P.2d 936 (1980), GE Capital Hawaii, Inc. v. Yonenaka 25 P.3d 807, 96 Hawaii 32, ( Hawaii App 2001), Fooks v. Norwich Housing Authority 28 Conn. L. Rptr. 371, ( Conn. Super.2000), and Town of Brookfield v. Candlewood Shores Estates, Inc. 513 A.2d 1218, 201 Conn.1 (1986).
CREDIT RIVER DECISION
NaturalNews) Jerome Daly is one of the few men to take on the might of the Federal Reserve in the courts and win. 40 years ago, a Minnesota bank attempted to foreclose on Daly`s mortgage but he humiliated them, thanks to his profound knowledge of Fractional Reserve Banking and a courageous, scrupulously honest judge. The judge delivered a dynamite decision that blasted the Federal Reserve and National Banks as unconstitutional and fraudulent. Understandably, the bankers have tried to bury this case and keep the controversial decree from public knowledge.
Those of you who may be facing the grim prospect of foreclosure on your mortgage, or if you know someone who is facing foreclosure, then the incredible story of Jerome Daly will delight and amaze you.
Jerome Daly was an attorney in Minnesota in the 1960s. In May, 1964, he took out a mortgage for $14,000 with The First National Bank of Montgomery, Minnesota, on a property described as Lot 19, Fairview Beach, Scott County, Minnesota.
Somehow, three years later, Mr. Daly fell behind on his mortgage payments and the bank initiated proceedings to foreclose. The case was heard before a jury in Credit River Township, Scott County, Minnesota, at 10 a.m. on December 7th, 1968. The trial justice was Martin V. Mahoney, a remarkable, no-nonsense man of great integrity and fair-play.
Jerome Daly, being a lawyer, defended himself. The main witness for the prosecution was a Lawrence V. Morgan, President of The First National Bank of Montgomery.
The main issues were whether or not the loan transaction constituted a legal `consideration` and whether or not Mr. Daly waived his rights to complain by having paid his loan for three years.
For any loan transaction to be legal and binding a lawful `consideration` must be brought to the table by both parties. Mr. Daly said that as a consideration he put up his property of Lot 19, Fairview Beach. Mr. Daly further asserted that the bank provided no consideration but merely created the money out of thin air!
Under cross examination by Jerome Daly, Mr. Morgan the bank president spoke candidly and truthfully. Nevertheless, his evidence astonished the judge and jury.
Mr. Morgan admitted that by making a book-keeping entry the bank created the money out of nothing but that this was standard practice exercised by his bank in conjunction with the Federal Reserve Bank of Minneapolis, another private bank. When questioned by Daly he also conceded that he knew of no United States Law or Statute that gave the bank authority to create money out of nothing.
The court was gobsmacked. Justice Mahoney was heard to say, "That sounds like fraud to me."
The bank went on to claim that the Defendant, Daly, accepted the ledger book credit and by paying his mortgage for almost three years he waived his right to complain about the consideration and was legally estopped from doing so.
At 12.15 p.m. the jury returned a verdict. They unanimously found for the Defendant, Jerome Daly.
Justice Mahoney`s Judgment and Decree makes for fascinating reading. Here are some of his major points.
1. The Plaintiff (the bank) was not entitled to recover the possession of Lot 19, Fairview Beach
2. Because there was no lawful consideration the Mortgage was Null and Void
3. The Bank parted with absolutely nothing except a little ink
4. The Plaintiff had no right, title, interest, or lien on the property
5. Defendant is awarded costs in the amount of $75
In his Memorandum Justice Mahoney went on to say, "The jury found there was no lawful consideration and I agree. Only God can create something of value out of nothing."
He also said, "Even if the Defendant could be charged with waiver or estoppel as a matter of Law this is no defense [sic] to the Plaintiff. The Law leaves wrongdoers where it finds them."
And incredibly... "Plaintiff`s act of creating credit is not authorized by the Constitution and Laws of the United States, is unconstitutional and void, and is not a lawful consideration in the eyes of the Law to support any thing [sic] or upon which any lawful rights can be built."
Amazing! A properly accredited U.S. judge actually said this in a properly convened U.S. court!
"...It has never been doubted that a Note given on a Consideration which is prohibited by law is void. It has been determined, independent of Acts of Congress, that sailing under the license of an enemy is illegal. The emmission [sic] of Bills of Credit upon the books of these private Corporations, for the purposes of private gain is not warranted by the Constitution of the United States and is unlawful..."
Then the case took another incredible turn.
The bank appealed, as was their right to do so; but a lawful appeal must be made within 10 days and accompanied by fee of $2. If the Clerk of the Court does not receive the appeal and the appropriate $2 fee within 10 days, as is required by the strict Appeals Statutes, then the District Court does not acquire Jurisdiction upon Appeal.
When the Notice of Appeal and the $2 fee arrived on Justice Mahoney`s desk for him to make his return to the District Court the judge made a second landmark decision. After examining the two $1 bills he saw that they were Federal Reserve notes. Justice Mahoney refused the notes and refused to allow the Appeal upon the grounds that the notes were without any lawful consideration and void for any purpose.
Justice Mahoney would not accept the Federal Reserve notes to pay for the Appeal process because they were not true money but represented instruments of debt. If the bank had paid in silver dollars, half-dollars, quarters, dimes, nickels, or even pennies, their appeal would have been legitimate and would have been heard.
Justice Mahoney offered the bank a hearing on the issue but they failed to request one. Then the District Court ordered Mahoney to show cause as to why the Appeal should not be allowed. Mahoney then ordered a hearing on January 22nd, 1969, for the purposes of making Findings of Fact and Conclusions of Law.
But no representative of the First National Bank of Montgomery turned up in court, nor was there any continuance requested by the bank or its attorney.
In his Findings of Fact and Conclusions of Law Justice Mahoney made some extraordinary observations. The following 12 points are quoted directly from his report (http://www.lawlibrary.state.mn.us/C...)...
1. The Federal Reserve Banks and National Banks create money and credit upon their books and exercise the ultimate prerogative of expanding and reducing the supply of money or credit in the United States. The creation of this money or credit constitutes the creation of fiat money upon the books of these banks.
2. When the Federal Reserve Banks and National Banks acquire United States Bonds and Securities, State Bonds and Securities, State Subdivision Bonds and Securities, mortgages on private Real property and mortgages on private personal property, the said banks create the money and credit upon their books by bookkeeping entry. The first time that the money comes into existance [sic] is when they create it on their bank books by bookkeeping entry. The banks create it out of nothing. No substantial fund of gold or silver is back of it, or any fund at all.
3. The Federal Reserve Bank obtains Federal Reserve Notes [no matter what denomination] for the cost of printing of each note which is less than one cent. The net effect of the entire transaction is that the Federal Reserve Bank obtains Federal Reserve Notes comparable to the ones they placed on file with the Clerk of the District Court...for the cost of printing only.
4. From 1913 down to date, the Federal Reserve Banks and the National Banks are privately owned. As of March 18, all gold backing is removed from the said Federal Reserve Notes. No gold or silver backs up these notes.
5. The Federal Reserve Notes in question in this case are unlawful and void...being contrary to Article 1, Section 10, of the Constitution of the United States...are not lawful money of the United States; are in violation of the Constitution of the United States and are not valid for any purpose.
6. Said Notes are fiat money, not redeemable in gold or silver coin upon their face, not backed by gold or silver, and the notes are in want of some real or substantial fund being provided for their payment in redemption.
7. The sole consideration paid for the One Dollar Federal Reserve Notes is in the neighborhood of nine-tenths of one cent, and therefore, there is no lawful consideration behind said Notes...As a matter of fact, the "Notes" are not Notes at all, as they contain no promise to pay.
8. The activity of the Federal Reserve Banks...and the First National Bank of Montgomery is contrary to public policy and the Constitution of the United States and constitutes an unlawful creation of money and credit and the obtaining of money and credit for no valuable consideration. The activity of said banks in creating money and credit is not warranted by the Constitution of the United States.
9. The Federal Reserve and National Banks exercise an exclusive monopoly and privilege of creating credit and issuing their Notes at the expense of the public, which does not receive a fair equivalent. This scheme is for the benefit of an idle monopoly and is used to rob, blackmail and oppress the producers of wealth.
10. The Federal Reserve Act and the National Bank Act is in its operation and effect contrary to the whole letter and spirit of the Constitution of the United States; confers an unlawful and unnecessary power on private parties; holds all of our fellow citizens in dependence; is subversive to the rights and liberties of the people. It has defied the lawfully constituted Government of the United States. The two banking Acts and Sec. 462 of Title 31, U.S.C. pages 41 and 42, are therefore unconstitutional and void.
11. This fraudulent Federal Reserve System and National Banking System has impaired the obligation of Contract, promoted disrespect for the Constitution and Law and has shaken society to its foundations.
12. No rights can be acquired by fraud. The Federal Reserve Notes are acquired thru [sic] the use of unconstitutional statutes and fraud.
This is a thoroughly amazing legal decision, unprecedented in the history of the United States. Justice Mahoney was not a man to mince his words. He was courageous in the extreme, perhaps even reckless, to deliver such a decree against the Federal Reserve.
But the great fortitude of this remarkable judge may have cost him his life.
Less than 6 months later, in June, 1969, Justice Martin V. Mahoney died in a mysterious boating accident. Those close to him say his body was heavily poisoned.
Justice Mahoney`s decree still stands and has not been challenged or overturned to this very day.
We owe it to the memory of this brave man to get his audacious milestone judgment out into mainstream public awareness.
Some citizens, facing foreclosure, have quoted this case as a precedent but ended up losing their cases. Not every judge in America possesses the integrity and decency of Judge Mahoney. Isn`t it time to stamp out this fraud and corruption that is so endemic in the legal, business, and political institutions of our world today?
Those interested in examining the original documents of this monumental legal decision will find scores of documents at:
Minnesota State Law Library DOCKET SERIES
Law on the Edge: the Credit River Case Files
Documents from the court's files in First National Bank of Montgomery vs. Jerome Daly, Scott County, Minnesota
1968-12-09 Judgment and Decree
1968-12-10 Notice of Appeal
1968-12-11 letter TRM to HPH
1968-12-18 letter TRM to HPH
1968-12-18 Notice of Appeal
1968-12-19 Affidavit of Surety EM
1968-12-19 Affidavit of Surety FD
1968-12-20 Affidavit of TRM
1968-12-27 letter JD to PF (first page only)
1969-01-06 Notice of Refusal to Allow Appeal
1969-01-07 Affidavit of Theo R Mellby
1969-01-07 Application for an Order
1969-01-08 Order to Show Cause
1969-01-15 Affidavit of Prejudice
1969-01-16 letter HEF to LEL
1969-01-16 letter HPH to AEH
1969-01-16 Order Transferring File
1969-01-17 letter TRM to LEL
1969-01-17 letter TRM to MVM
1969-01-17 Notice of Motion
1969-01-20 letter LEL to JD
1969-01-20 letter LEL to MVM
1969-01-23 Findings of Fact Conclusions of Law and Judgment
1969-01-24 Return to Order to Show Cause
1969-01-30 Order to make Return on Appeal
1969-02-07 The Daly Eagle
1969-02-10 letter TRM to AEH
1969-02-25 Notice of Appeal
1969-03-28 letter HPH to clerk of the SCt
1969-04-15 Order Dismissing Appeal
1969-06-11 Affidavit of Theo R Mellby
1969-06-23 Application for an Order
1969-06-23 letter JCJ to district judge
1969-06-23 Order to Show Cause
1969-06-26 Affidavit of Jerome Daly
1969-06-26 Return to Order to Show Cause
1969-06-30 letter HEF to AEH
1969-06-30 letter HEF to JCJ
1969-07-01 letter TRM to AEH
1969-07-17 Affidavit for Attachment
1969-07-18 Affidavits of sureties
1969-07-18 Surety Bond
1969-07-22 Order to Sheriff of Ramsey County
1969-07-22 Order to Sheriff of Scott County
1969-07-31 letter TRM to HPH
1969-08-01 Motion to Dismiss Appeal
1969-08-04 letter HPH to AEH
1969-08-28 Counter-affidavit of Theo R Mellby
1969-08-29 Supplemental Return to Writ of Attachment
1969-08-29 letter TRM to HPH
1969-09-03 letter TRM to AEH
1969-09-03 letter TRM to HPH
1969-09-05 slip opinion In re Jerome Daly
1969-10-09 Affidavit of Theo R Mellby
1969-10-09 Order to Show Cause
1969-10-17 Motion for Contempt
1969-11-04 Affidavit of Theo R Mellby
1969-11-04 Order Directing Return of File
1969-11-05 letter TRM to AEH
1969-11-10 Affidavit of John Mahoney
1969-11-17 letter JFC to HPH, with copy of foreclosure papers
1969-12-01 Affidavit of Theo R Mellby
1969-12-04 letter TRM to HPH
1969-12-08 letter HPH to AEH
1969-12-12 Motion to Advance Action to Trial
1969-12-19 Order Setting Action for Trial
1969-12-24 letter AEH to HPH
1970-05-15 letter TRM to JMF
1970-05-20 letter JFD to TRM
1970-06-19 Stipulation of Dismissal
1971-12-30 letter TRM to HPH
Undated handwritten notes