(1) sign the promissory note as settlor · web viewrespondents provided no notice of dishonor to...

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<STRAWMAN><mail-street><mail-city-st-zip>Applicant

[NAME OF COURT]

To the Honorable Judge of this Court:

INTRODUCTION

In 19___, Applicant responded to a solicitation by Lender, accepting Lender’s offer to

loan money for the purpose of financing a home purchase. Lender did not disclose the

method by which the money that was being loaned would be created, and by which the

resulting Account could be settled. The following titles will be used throughout this

memorandum:

Applicant/Borrower: JOHN H DOESettlor/Original jurisdiction lender: John Henry DoeRespondent One: [NAME OF BENEFICIARY IN DD PROCESS]Respondent Two: [NAME OF TRUSTEE IN DD PROCESS]Lender: [NAME OF LENDER] and its successorsAccount/Loan: Account # _______ Note: Note dated ______ signed by BorrowerContract: Note and associated Deed of Trust

including the settlement termsCollateral: legal description that was the collateral for

Loan # ________

Emphasis has been added in the sites presented in this memorandum.The indented single-spaced portions used here are direct quotations from the given source.

Memorandum of the Law in Support of Complaint for Judicial Review

In re the Matter of:<STRAWMAN>,

Applicant,vs.

<NAME OF RESPONDENT 1> and<NAME OF RESPONDENT 2>,

Respondents. .

)))))))))))

Case No. _

MEMORANDUM IN SUPPORT OFVERIFIED COMPLAINT FOR

JUDICIAL REVIEW OF BILL IN EQUITY

This memorandum is for deed of trust states.

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This Memorandum is presented with authorities, law, and cases in support of Applicant’s

Verified Complaint, and will establish the following facts:

Part One – Source and Settlement through Compensation

1) Applicant provided the signed Note as the source of the Loan that was made to the

Borrower;

2) Lender converted the signed Note into a draft to deposit in a demand deposit account, or

Lender sold the signed Note who completed the deposit process;

3) Lender has a reciprocal and equal liability owing to Borrower and had a duty to

respond during the self-help nonjudicial remedy that resulted in the record being

reviewed;

4) The Account was settled through the principle of compensation simultaneously when

the Loan was made to Borrower;

Part Two – Judicial Review

5) Judicial review is the appropriate means by which Applicant can achieve issue

preclusion as against Respondents;

6) Respondents liquidated the Account and accepted the account stated;

7) Witnesses confirm the administrative record being reviewed;

8) Respondents provided no notice of dishonor to excuse its failure to release its interest

in the Collateral;

9) Claim preclusion bars Respondents from pursuing a claim against Applicant;

10) The use of self-help is a nonjudicial remedy available to settle the Account.

PART ONE -- Source and Settlement through Compensation

Creation of Money1. The Federal Reserve Corporation has been very instrumental in assisting with the

understanding of how the money for the Loan was created by Lender. The following

passage is taken from a publication from the Federal Reserve Bank of Chicago called

Modern Money Mechanics: Page 3, Second Column, Paragraph 1:

Who Creates Money? . . . The actual process of money creation takes place primarily in banks . . . checkable liabilities of banks are money. These liabilities are customers’ accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers’ accounts . . . Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way,


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banks began to create money. Transaction deposits are the modern counterpart of bank notes.

MONEY – Since 1983, when the monetary aggregates were last revised, the components of the money supply have been the following:M1: currency held by the public, plus travelers’ checks, demand deposits, Negotiable Order of Withdrawal (NOW) accounts, Super NOW accounts, Automatic Transfer Service (ATS) accounts, and credit union share drafts.M2 …, and M3 …

Dictionary of Banking Terms, Second Edition, by Thomas Fitch

2. Lender received a signed Note from the Borrower and converted that Note to a

draft so it could be deposited at Lender’s affiliate bank. Production of the original Note

with all allonges , including without limitation the associated deposit slip, would confirm

the conversion, as the note will now imply conversion to a draft, or it will now have

wording on it similar to --- “Without Recourse, Pay to the Order of [Lender’s Name]”,

and the Note/draft will display an endorsement by one of Lender’s officers or employees.

Arizona Revised Statutes (ARS) explain that an instrument is a note if it is a promise, and

is a draft if it is an order:

ARS 47-3104(e): An instrument is a “note” if it is a promise and is a “draft” if it is an order. If an instrument falls within the definition of both “note” and “draft,” a person entitled to enforce the instrument may treat it as either.

3. Applicant accepts the conversion of the signed Note to a draft. It is a necessary

step in the creation of the money that was subsequently loaned to the Borrower. The

Borrower did not have a license to create money in this manner, but the Federal Reserve

publications confirm that Lender with the cooperation of its affiliate bank did have

authority to do so. The expansion of money or credit in the United States cannot happen

without this conversion. Modern Money Mechanics continues on Page 7, Example 3,

Expansion-

Stage 1: “Expansion takes place only if the banks that hold these excess reserves increase their loans or investments. Loans are made by crediting the borrower’s deposit account, i.e., by creating additional deposit money.

Stage 7: Expansion continues as the banks that have excess reserves increase their loans by that amount, crediting borrowers’ deposit accounts in the process, thus creating still more money.

4. This expansion process is further explained in another publication published by

the Federal Reserve Bank of Chicago, called Points of Interest on Pages 6-7, Paragraphs

7-10:


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Banks and Deposit Creation.- Depository institutions, which for simplicity we will call banks, are different from other financial institutions because they offer checking accounts and make loans by lending checkbook deposits. The deposit creation activity, essentially creating money, affects interest rates because these deposits are part of savings, the source of the supply of credit. Banks create deposits by making loans . Rather than handing cash to borrowers, banks simply increase balances in borrowers’ checking accounts. Borrowers can then draw checks to pay for goods and services. This creation of checking accounts through loans is just as much a deposit as one we might make by pushing a ten-dollar bill through the teller’s window. With all of the nation’s banks able to increase the supply of credit in this fashion, credit could conceivably expand without limit. … When banks create checkbook deposits, they create money as well as credit since these deposits are part of the money supply.

5. Lender’s affiliate bank “created additional deposit money” with no risk or sacrifice,

by accepting and depositing the signed Note the Borrower provided, into a demand deposit

account. Production of the pertinent bank bookkeeping records will confirm this point.

Applicant is prepared to subpoena these pertinent records, if Respondents object in any

way to the requested judicial review and execution on the Contract. Another publication of

the Federal Reserve Bank of Chicago explains this process in even more detail. This

publication is called Two Faces of Debt. Please reference Page 19, Paragraphs 3-5:

But a depositor’s balance also rises when the depository institution extends credit-either by granting a loan to or buying securities from the depositor. In exchange for the note or security, the lending or investing institution credits the depositor’s account or gives a check that can be deposited at yet another depository institution. In this case, no one else loses a deposit. The total of currency and checkable deposits-the money supply-is increased. New money has been brought into existence by expansion of depository institution credit. Such newly created funds are in addition to funds that all financial institutions provide in their operations as intermediaries between savers and users of savings.

6. Since the signed Note was deposited, not in the Borrower’s account at Lender’s

bank, but in Lender’s account, the increased balance appeared in Lender’s account, as it

was the party that deposited the Note/draft. New money was created. A check was then

written to give to the seller of the property. This new money passed as money, because

the seller of the property being purchased had confidence in it. Had the seller rejected the

new money, the deposit bookkeeping entry would have been reversed, and the signed

Note returned to the Borrower. The check was not rejected, and the Note is still in the

possession of Lender’s bank. There is no issue of material fact in dispute regarding the

source of the credit extended to the Borrower. A publication called I Bet You Thought,

published by the Federal Reserve Bank of New York further explains:


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Money is any generally accepted medium of exchange, not simply coin and currency. Money doesn’t have to be intrinsically valuable, be issued by a government or be in any special form. Thus, we see that privately issued forms of money only require public confidence to pass as money. Counterfeit money also passes as money as long as nobody discovers it is counterfeit. Likewise, “bad” checks and “credit” loans pass as money as long as no one objects. Yet, once the truth is discovered, the value of such “bank money”, like bad checks, ceases to exist. There are, therefore, two kinds of money – government-issued legal money and privately-issued money, by agreement of the parties.

Lending Credit7. Applicant is in agreement that the money that was being loaned in 19___ had to

be new money created in this manner, because of the change in public policy that was

introduced to the public in 1933. The money for the Loan was created by agreement of

the parties, not by the government, as the pertinent bank bookkeeping records would

confirm. It is well-known and accepted that Lender’s affiliate bank could not lend its

credit to the Borrower, and it is understood that Lender did not loan its credit to the

Borrower, so the source of the credit was the signed Note that was converted to a draft

and deposited in Lender’s account. US Courts have consistently stated that a bank cannot

lend its credit as confirmed in the opinion from Norton Grocery Company (Inc.), v.

Peoples National Bank of Abingdon, 151 Va. 195, 144 SE 501, 503 (1928):

In First National Bank of Tallapoosa v. Monroe, 135 Ga. 614, 69 S.E. 1123, 32 L.R.A.(N.S.) 550, the court, after citing the statute heretofore quoted, said: ‘The provisions referred to do not give power to a national bank to guarantee the payment of the obligations of others solely for their benefit, nor is such power incidental to the transaction of the business of banking. A bank can lend its money, but not its credit.’

Banks are not eleemosynary institutions. They may lend their money but not their credit.

The underlying principle in the cases relied upon is this: A bank may not lend its credit to another, even though such a transaction turns out to have been of benefit to the bank, and in support of this a list of cases might be cited which would look like a catalogue of ships . . .

8. The Wisconsin court agreed in its opinion in American Express Co. v. Citizens’

State Bank, 181 Wis. 172, 194 NW 427, 429 (1923).


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Neither, as included in its powers nor incidental to them, is it a part of a bank’s business to lend its credit. If a bank could lend its credit as well as its money, it might, if it received compensation and was careful to put its name only to solid paper, make a great deal more than any lawful interest on its money would amount to. If not careful, the power would be the mother of panics , and if no compensation was received, there is the additional reason, if any is needed, that such a power is in derogation of the rights and interests of stockholders , and at all events could only be exercised with the consent of all.

Indeed, lending credit is the exact opposite of lending money, which is the real business of a bank, for while the latter creates a liability in favor of the bank, the former gives rise to a liability of the bank to another.” See 1 Morse, Banks and Banking (5th Ed.) § 65; Magee, Banks and Banking (3rd Ed.), § 248; 1 Michie, Banks and Banking, § 99.

9. Lender, as agent of the Borrower and as the depositor of the signed Note in its

affiliate bank, has a liability to Applicant, as does the bank that now holds the signed

Note.

A banking corporation occupies a different relation to the public in that it invites individuals to submit to it the possession and care of their money and property. All banking institutions occupy a fiduciary position. Gause v. Commonwealth T. Co., 196 N.Y. 134, 153, 89 N.E. 476, 482 (24 L.R.A. [N.S.] 967), American Express Co. v. Citizens’ State Bank

10. The United States Supreme Court has been consistent in its opinions about banks

loaning their credit, a principle of law that is expressed in the following:

In the federal courts, it is well established that a national bank has no power to lend its credit to another by becoming surety, endorser, or guarantor for him. Farmers and Miners Bank v. Bluefield Nat’l Bank, 11 F.2d 83, 271 U.S. 669.

A national bank has no power to lend its credit to any person or corporation. Bowen v. Needles Nat. Bank, 94 F. 925; 36 CCA 553, certiorari denied In 20 S.Ct. 1024, 176 US 682, 44 L.Ed 637.

It is not within those statutory powers for a national bank, even though solvent, to lend its credit to another in any of the various ways in which that might be done. Federal Intermediate Credit Bank v. L. Herrison, 33 F.2d 841, 842 (1929).

There is no doubt but what the law is that a national bank cannot lend its credit or become an accommodation endorser. National Bank of Commerce v. Atkinson, 56 F. 471.

A bank can lend its money, but not its credit. First Nat’l Bank of Tallapoosa v. Monroe, 135 Ga 614, 69 F. 1124, 32 LRA (NS) 550.


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Borrowers and Lenders

11. Applicant provided property (the signed Note), which was converted to a draft to

be deposited. That action puts Lender and its affiliate bank in the position of being a

borrower with an offsetting liability and obligation to return that property or its

equivalent to Applicant. Black’s Law Dictionary 6th Edition defines the word “borrow”

as follows:

Borrow. To solicit and receive from another any article of property, money or thing of value with the intention and promise to repay or return it or its equivalent. If the item borrowed is money, there normally exists an agreement to pay interest for its use. In a broad sense the term means a contract for the use of money. The term may be used to express the idea of receiving something from another for one’s own use. The word “loan” is correlative of “borrow”.

12. Applicant is a party to a Contract with Lender in which Applicant has an obligation

to Lender, but there is a reciprocal contract. This contract is implied in fact between

Applicant and Lender and its affiliate bank, as the signed Note Applicant provided was

accepted by Lender, endorsed, converted to a draft, and deposited as an asset. Applicant

has a right to expect that the property that is now in the possession of Lender’s affiliate

bank constitutes a bank liability owed to Applicant. Such a Contract, sometimes

constructive, does not need to be expressed as it necessarily results from the actions of the

parties. Black’s Law Dictionary 7th Edition defines the word “contract” (implied) and the

term “constructive contract” as follows:

CONTRACT. Implied. An implied contract is one not created or evidenced by the explicit agreement of the parties, but inferred by the law, as a matter of reason and justice from their acts or conduct, the circumstances surrounding the transaction making it a reasonable, or even a necessary, assumption that a contract existed between them by tacit understanding.

CONSTRUCTIVE CONTRACT. A species of contracts which arise, not from the intent of the parties, but from the operation of law to avoid an injustice. These are sometimes referred to as quasi contracts or contracts implied in law as contrasted with contacts implied in fact which are real contracts expressing the intent of the parties by conduct rather than by words. An obligation created by law for reasons of justice without regard to expressions of assent by either words or acts.


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13. Lender’s participation in a Contract establishing its liability to Applicant creates a

duty for it to respond when Applicant exercises rights that are expressed in the Note and

deed of trust, as well as those that are implied through the actions of the parties.

Compensation/Remedy

14. Lender’s acceptance and conversion of the signed Note resulted in two persons

being equally indebted to each other. The full scope of the principal of “compensation” is

not addressed in Black’s Law Dictionary as well as it is in A Law Dictionary, adapted to

the Constitution and Laws of the United States of America, and of the Several States of the

American Union (1859) by Bouvier, which defines and explains the word “compensation”

as follows:

COMPENSATION, contracts, civil law. When two persons are equally indebted to each other, there takes place a compensation between them, which extinguishes both debts. Compensation is, therefore, a reciprocal liberation between two persons who are creditors and debtors to each other, which liberation takes place instead of payment, and prevents a circuity *[unnecessary litigation]. 2. Compensation takes places, of course, by the mere operation of law, even unknown to the debtors the two debts are reciprocally extinguished, as soon as they exist simultaneously, to the amount of their respective sums. Compensation takes place only between two debts, having equally for their object a sum of money, or a certain quantity of consumable things of one and the same kind, and which are equally liquidated and demandable. ... Compensation is of three kinds: 1. legal or by operation of law; 2. compensation by way of exception; and, 3. by reconvention.

15. Compensation applies to the instant action in that operation of law and equity

require that all parties to a transaction receive their due. The reciprocal extinguishment

of the two debts could have easily settled the Account without this judicial review, had

Lender taken cognizance of the option being exercised by Applicant in the self-help

nonjudicial remedy to prevent circuity. As debtors must always acknowledge their

obligations to creditors, the principle of set-off applies. Bouvier’s Institutes of American

Law (1859), Anderson, A Dictionary of Law (1893), and Black’s 7th Edition further

clarify this principal:

3. Compensation very nearly resembles the set-off of the common law. The principal difference is this, that a set-off, to have any effect, must be pleaded; whereas compensation is effectual without any such plea, only the balance is a debt. .2 Bouv. Inst. n. 1407. Bouvier 1859

OPERATION OF LAW – This term is applied to those rights which are cast upon a party by the law, without any act of his own. Bouvier 1859


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OPERATION OF LAW – The application of legal rules to a given set of facts. Anderson, A Dictionary of Law, 1893

OPERATION OF LAW – The means by which a right or a liability is created for a party regardless of the party’s actual intent.

Black’s 7th EditionCOMPENSATIO – Roman Law – A defendant’s claim to have the plaintiff’s demand reduced by the amount that the plaintiff owes the defendant.

Black’s 7th Edition

16. Applicant chose a remedy through compensation or set-off, which was

accomplished through a tacit agreement and consent without a tribunal, as a self-help

process through operation of law, anticipatory of settling the Account in a manner not

within the limited methods of payment desired by the Respondents.

EXTRAJUDICAL REMEDY. A remedy not obtained from a court, such as repossession. – Also termed self-help remedy. Black’s 7th Edition

REMEDY. Any remedial right to which an aggrieved party is entitled with or without resort to a tribunal. UCC 1-201(34).

Ballentine’s Law Dictionary 3rd Edition TACIT. Existing, inferred, or understood without being openly expressed or stated; implied by silence or silent acquiescence, as a tacit agreement or a tacit understanding. …47 P2d 232, 234. Black’s 6th Edition

SILENCE. The state of a person who does not speak, or of one who refrains from speaking. 2. Pure and simple silence cannot be considered as a consent to a contract, except in cases when the silent person is bound in good faith to explain himself, in which case, silence gives consent. Bouvier 1859

SILENCE. The state of a person who does not speak, or of one who refrains from speaking. In the law of estoppel, “silence” implies knowledge and an opportunity to act upon it. Black’s 6th Edition

SILENCE, ESTOPPEL BY – Such estoppel arises where person is under duty to another to speak or failure to speak is inconsistent with honest dealings. Silence, to work “estoppel”, must amount to bad faith, and, elements or essentials of such estoppel include: change of position to prejudice of person claiming estoppel; damages if the estoppel is denied; duty and opportunity to speak: inducing person claiming estoppel to alter his position; knowledge of facts and of rights by person estopped: misleading of party claiming estoppel; reliance upon silence of party sought to be estopped. Black’s 6th Edition

CONSENT. Verb: To agree or to give assent to something proposed or requested. Noun: Agreement; approval; acquiescence. Unity of opinion – accord of minds – to thinking alike – being of one mind.


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CONSENTIRE VIDETUR QUI TACET – Those who are silent are deemed to have consented. Silence gives consent. Ballentine’s 3rd EditionCONSENSUS TOLLIT ERROREM – A person cannot object to that to which he has consented. Fuller v. State, 57 So. 806. Ballentine’s 3rd Edition

ARS 47-2609 Right to Adequate Assurance of Performance. (1) A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party, the other may in writing demand adequate assurance of due performance and until he receives such assurance may, if commercially reasonable, suspend any performance for which he has not already received the agreed return.(2) Between merchants, the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards. (3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance. (4) After receipt of a justified demand, failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.

17. Respondents have provided no case law, statutes, rules, nor regulations that

negate the effect of compensation. Although its specific application may have lain

dormant for decades, its effect in law and equity has not changed. Those persons who

claim the right to practice law in this State know or should know the remedies that are

available to the parties, in addition to the penalties and enforcement provisions that are

available to the same parties. Applicant is doing no more than claiming a right. The

principle of “compensation” was explained in Sliman v. Mahtook, 136 So. 749, 750, 751

(1931), as follows:

Compensation is a form of payment which takes place by mere operation of law, without the knowledge of the debtor, and “the two debts are reciprocally extinguished, as soon as they exist simultaneously, to the amount of their respective sums.” Civil code…, Caldwell v. Davis, 2 Mart. (N.S.) 135.

Civil Code … further provides that it takes place “whatever be the causes of either of the debts.” The law makes no distinction between the different forms of debt; the principal requirement being that they be “equally liquidated and demandable.”


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In Caldwell .. it was their judgment creditor’s note which the debtor had purchased and was pleading in compensation. In Pattison v. Edmonston, 4 La. Ann. 157, it was their judgment creditor’s own judgment which the judgment debtors had bought and successfully pleaded in compensation.

In the very recent case of Hart v. Polizzotto, 171 La. 493, 131 So. 574, the Supreme Court held that a person, although only secondarily liable on a note which he had paid, could plead the same in compensation against a judgment rendered against him for costs of court. If the forms of obligations relied on in the cases referred to constituted debts equally liquidated and demandable with a judgment, it would seem that a bank check, which is an unconditional order to pay money and constitutes an assignment of the funds it is drawn against the moment the bank is notified of the drawing, creates a debt which is fully liquidated and demandable and is of equal dignity with the others.Compensation may be pleaded at every stage of the proceedings, provided it be specially pleaded, and it may be pleaded either in answer to the principal demand or claimed in a separate and distinct demand. …

… The judgment sustaining the plea of compensation and perpetuating the injunction which had issued was correct, and is therefore affirmed.

18. The effect of compensation is also explained in Buck’s Run Enterprises, Inc. v.

Mapp Construction, Inc., 808 So. 2d 428 (2001), as follows:

An affirmative defense raises new matter which, assuming the allegations in the petition to be true, constitutes a defense to the action and will have the effect of defeating the plaintiff’s demand on its merits. Hanks v. Wilson, 93-0554 (La.App. 1st Cir. 3/11/94), 633 So.2d 1345,1348.

Compensation takes place by operation of law when two persons owe to each other sums of money or quantities of fungible things, identical in kind, and these sums or quantities are liquidated and presently due. In such a case, compensation extinguishes both obligations to the extent of the lesser amount. LSA-C.C. art. 1893 A claim is liquidated when the debt is for an amount capable of ascertainment by mere calculation in accordance with accepted legal standards. Independent Living Cts., Inc. v. State, Dept. of Soc. Services, 93-0776 (La.App. 1st

Cir. 6/24/96), 638 So.2d 1202, 1205.

Compensation of obligations may take place also by agreement of the parties, even though the requirements for compensation by operation of law are not met. LSA-C.C. art. 1901; Echo, Inc. v. Power Equip, Distributors, Inc., 96-1771, 96-1772 (La.App. 1st Cir. 8/7/98), 719 So.2d 78, 87.

Judicial compensation takes place when a court decides two parties are mutually indebted to each other and adjusts the amount owed in fixing the judgment. Contracts have the effect of law for the parties. LSA-C.C. art.1902; Fidelity & Deposit Co. of Maryland v. Cloy Cost. Co., Inc., 463 So.2d 1365. (La.App. 1st Cir. 1984), 465 So.2d 723 (La. 1985).


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19. Conclusion of PART ONE

It appears Respondents have two choices. They can proceed based upon a claim that:

1) the Lender loaned money to Borrower in 19___ or

2) the Lender loaned credit to Borrower in 19___.

If Lender loaned money, there will be bookkeeping entries in its records that show

the exact source of the money that was loaned.

If Lender loaned credit, it either loaned its credit or someone else’s credit, and

there will also be bookkeeping entries in its records that show the exact source of the

credit that was loaned. If Respondents claim that they are the only creditors with a right

to enforce the instrument, Applicant will require full disclosure of all bookkeeping entries

to clarify the actual events.

Lender has an off-setting obligation to Applicant based upon the liability created

when the subject Note was accepted, endorsed, and deposited by Lender as an asset. The

record being reviewed confirms Respondents are in agreement that Applicant has rights

as a creditor and Lender has obligations as a borrower.

PART TWO – Judicial Review

Judicial Review in General20. Applicant has contracted with this Court for judicial review of the private

administrative record that resulted from the system of correspondence used to establish

an agreement of the parties regarding the Collateral. For clarification purposes, the

following definitions apply:

JUDICIAL REVIEW – Power of courts to review decisions of another department or level of government. Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177, 2 L.Ed. 60.

21. History is clear on the issue of levels of government, starting with the people in the

states, and following on through the states to the writing of the very document that created

the scheme and machinery of government(s). To suggest that the people are not a level of

government, with the authority to agree on the terms governing their own contracts, would

be a travesty against those who labored to develop the creation document itself.


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There can be no limitation on the power of the people of the United States. By their authority the State Constitutions were made, and by their authority the Constitution of the United States was established; and they had the power to change or abolish the State Constitutions or to make them yield to the general government and to treaties made by their authority. Hauenstein vs Lynham, 100 US 483

GOVERNMENT – Signifies the instrument, the helm, whereby the ship to which the state was compared, was guided on its course by the “gubernator” or helmsman, and in that view, the government is but an agency of the state, distinguished as it must be in accurate thought from its scheme and machinery of government. Black’s 6th Edition

JUDICIAL REVIEW – Form of appeal from an administrative body to the courts for review of either the findings of fact or of law or of both. Black’s 6th Edition

ADMINISTER – To manage or conduct...to take charge of business; to manage affairs. Black’s 6th Edition

RECORD – A memorandum public or private, of what has been done. … A computer printout qualifies as a “record” within business records exception to hearsay rule. … Black’s 6th Edition

RECORDS – The term “records” means accounts, correspondence, memorandum, tapes, discs, papers, books, and other documents or transcribed information of any type, whether expressed in ordinary or machine language. Securities Exchange Act of 1934 §3 Black’s 6th Edition

22. Although Applicant has presented to this Court every conceivable proof of good

faith and full disclosure regarding the administrative record being reviewed here, it may

require disclosure from Respondents, if Respondents refuse to acquiesce to their estoppel.

The Federal Rules of Civil Procedure recognize the role of the judiciary in reviewing

administrative records in Rule 26. The Federal Rule expresses the scope of discovery in

more particularity than most state rules, when it excludes such a review from the burdens of

discovery:

Rule 26. General Provisions Governing Discovery; Duty of Disclosure(a) Required Disclosures; Methods to Discover Additional Matter.(1) Initial Disclosures.Except in categories of proceedings specified in Rule 26(a)(1)(E), or to the extent otherwise stipulated or directed by order, a party must, without awaiting a discovery request, provide to other parties:(E) The following categories of proceedings are exempt from initial disclosure under Rule 26(a)(1):(i) an action for review on an administrative record;


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23. The record being reviewed here is a private memorandum of what has been done

in the remedial process that was administered by Applicant and [John Henry Doe].

Respondents provided no statutes, regulations, or law that would preclude the

establishment of an administrative record to be reviewed by this Court. Respondents

elected not to rebut any statement made during the administrative process, resulting in

estoppel in pais as against Respondents. Such records are admissible under Federal

Evidence Rule 803(6) and its correlating rule of evidence used in this County and this

State:

The following are not excluded by the hearsay rule, even though the declarant is available as a witness: (6) Records of Regularly Conducted Activity. A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term “business” as used in this paragraph includes business, institution, association, professional occupation, and calling of every kind, whether or not conducted for profit.

24. Respondents provided no statutes, regulations, or law that precluded Applicant’s

calling to settle its financial affairs privately. It is Applicant’s calling to settle its

financial affairs through registration, notice, grace, good faith, honor, respect,

negotiation, and set-off and compromise when possible, using both the law and the

statutes as the basis for an honorable liquidation and closure of the outstanding Account.

CALLING – a strong impulse or inclination Random House Dictionary of the English Language

25. No administrative discretion was used during the creation of the administrative

record being reviewed. Such discretion was not necessary and would complicate this

judicial review.

ADMINISTRATIVE DISCRETION – Term means that the doing of acts or things required to be done may rest, in part at least, upon considerations not entirely susceptible of proof or disproof and at times which considering the circumstances and subject-matter cannot be supplied by the Legislature, and a statute confers such discretion when it refers a commission of office to beliefs, expectations, or tendencies instead of facts for the exercise of the powers conferred. Black’s 6th Edition


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26. Respondents provided no evidence that the commercial code as it has been

adopted by the Legislature of the State of [Arizona], is an inappropriate guide for

conducting the private administrative process. The record reflects the principles of law

and equity, law merchant, contract, principal and agent, estoppel, mistake, and

bankruptcy, and resulted in the administrative record being reviewed here. The

applicability of commercial law to the settlement of the Accounts between Applicant and

Lender is:

ARS 47-1103: Supplementary General Principles of Law Applicable. Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract; principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.

Statement of Account / Account Stated

27. Once the liquidation of the Account was accomplished and the sum certain was

ascertained, the settlement proceeded.

LIQUIDATED – Ascertained; determined; fixed; settled, made clear or manifest.

LIQUIDATED ACCOUNT – An account whereof the amount is certain and fixed, either by the act and agreement of the parties or by operation of law.

LIQUIDATED CLAIM – claim, amount of which has been agreed on by parties to action or is fixed by operation of law.

LIQUIDATED DEBT – A debt is liquidated when it is certain what is due and how much is due. That which has been made certain as to amount due by agreement of parties or by operation of law. All from Black’s Law 6th Edition

28. Lender liquidated the Account and supplied the sum certain in the form of a payoff

statement or other form of statement, which was accepted without further negotiations by

Applicant, and is not an issue of material fact that can be disputed. Respondents had the

right to substantially rebut all statements made in the self-help remedial process.

Respondents elected to remain silent and to admit all statements in the now concluded

administration record that has been presented to this Court for judicial review. Applicant

relies on the fact that the self-help process is supported by State statutes, court rules, and

general maxims of law.


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ARS 47-9210(b): [Duty to respond to requests.] Subject to subsections (c), (d), (e), and (f), a secured party, other than a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor, shall comply with a request within 14 days after receipt: (2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to a debtor an approval or correction.

Arizona Rules of Civil Procedure Rule 8(d): Effect of Failure to Deny. Averments in a pleading to which a responsive pleading is required, other than those as to the amount of damage, are admitted when not denied in the responsive pleading.

ARS 47-1103: Supplementary General Principles of Law Applicable. Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract; principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.

SILENCE. The state of a person who does not speak, or of one who refrains from speaking. 2. Pure and simple silence cannot be considered as a consent to a contract, except in cases when the silent person is bound in good faith to explain himself, in which case, silence gives consent. Bouvier 1859

SILENCE. The state of a person who does not speak, or of one who refrains from speaking. In the law of estoppel, “silence” implies knowledge and an opportunity to act upon it. Black’s 6th Edition

SILENCE, ESTOPPEL BY – Such estoppel arises where person is under duty to another to speak or failure to speak is inconsistent with honest dealings. Silence, to work “estoppel”, must amount to bad faith, and, elements or essentials of such estoppel include: - change of position to prejudice of person claiming estoppel; - damages if the estoppel is denied; - duty and opportunity to speak;- inducing person claiming estoppel to alter his position; - knowledge of facts and of rights by person estopped;- misleading of party claiming estoppel; - reliance upon silence of party sought to be estopped.

Black’s 6th Edition

ACCOUNT STATED – an agreed balance between parties to a settlement. Black’s 6th Edition

29. Applicant presented a statement of account to Respondents on or about [date],

which Respondents approved by not forwarding a documented correction of facts contrary

to that statement. The result was an account stated with the Account having a zero (0)

balance. Respondents’ time for correcting that statement of account has passed and is not

an issue of material fact to be disputed. Memorandum of the Law in Support of Complaint for Judicial Review

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Effect of Certificates of Witnesses30. The services of a notary pubic were requested to oversee the mailing process, to

mail all correspondence to Respondents, and to receive all rebutting correspondence from

Respondents. As State law and evidence rules would require certification that all

communications between the parties were verified, State statutes were the source of

authority for using an independent inspector, a notary public, to authenticate the

administrative record being reviewed:

ARS 47-1202: Prima Facie Evidence by Third Party Documents. A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher’s or inspector’s certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party shall be prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party.

31. Respondents provided no statutes, regulations, or law that would preclude a

notary public from acting in the position of an inspector and subsequent custodian of

portions of the administrative records being reviewed here. In addition to a notary public,

the county recorder, the post office, and the Postal Service were used a witnesses and

custodians of portions of said administrative record.

Notice of Dishonor32. On or about [date], Respondents received and accepted the Notice of Redemption

and Statement of Account, as evidenced by Certificate of Service and return receipt from

the certified mail delivery.

ARS 47-2304: Price Payable in Money, Goods, Realty, or Otherwise. (1) The price can be made payable in money or otherwise. If it is payable in whole or in party in goods each party is a seller of the goods which he is to transfer.

33. Respondents provided no statutes, regulations, law, or special circumstances that

would authorize Respondents to hold a secured interest after receipt of redemption notice

and statement of account. Respondents’ time for providing such statutes, regulations, law,

or special circumstances has passed and this subject is not an issue of material fact to be

disputed.


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34. Respondents provided no notice of dishonor from one authorized to dishonor

Applicant’s form of payment and settlement of the Account. Respondents provided no

statutes, regulations, or law that negate the change in public policy that was introduced to

the United States in 1933. House Joint Resolution 192 states:

(a) every provision contained in or made with respect to any obligation which purports to qive the obliqee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against Public Policy;

35. Respondents’ time for providing such a notice has passed and is not an issue of

material fact to be disputed. Respondents provided no evidence that the Loan to Borrower

was from any source other than a demand deposit account created with the deposit of the

Note Borrower provided for the Loan.

Law governing the disposition of this action36. Applicant used a compromise to settle the Account. Respondents consented to

the following as the law governing the disposition of this action:

- [John Henry Doe], as Settlor, is the original jurisdiction lender on the Account.

- On [date] [John Henry Doe] provided the consideration for the Account by signing a Note, for the Borrower.

- [John Henry Doe’s] Note was delivered to the Lender and was accepted by the Lender to convert to a draft for deposit in an account to be the source of the US funds to be loaned, as credit to the Borrower.

- The Lender, or its assigns, acting as agent for Settlor, held the position of secured party on the resulting security instrument, as long as the Truth in Lending Act requirements were met, in which an accurate disclosure of the risk and cost of the loan was made.

- The Borrower, as Trustor, designated the legal title to be the security for the Loan, until the associated debt was discharged, as stated on the security instrument recorded in the official records of the county recorder.

- The Borrower had a lease, terms of which were specified in the Note.

- The Lender or its assign was designated as the Landlord to collect and hold the rents for [John Henry Doe], who requested the return of the original Note and all rents collected to date.

- [John Henry Doe] never waived ultimate rights to said rents.

-


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- The original Note was accepted, endorsed, and deposited by the Lender without a signature for the Settlor.

- The signed Note, when so accepted, endorsed, and deposited, became the source of the credit loaned to the Borrower.

- Settlor inadvertently failed to register his Note as his security interest in the subject Premises.

- The County Recorder as public fiduciary registered and delivered the redeemed security to Respondent as evidence that the debt, a copy of which was attached thereto, had been redeemed and the public beneficiary/lender has been satisfied through compensation.

- The debt was discharged in [year] by acceptance of the payoff statement presented by or on behalf of beneficiary.

- The Account was settled under the principles of compensation.

- [John Henry Doe] gave notice that he had given notice to John Snow, as trustee on the bankruptcy case of the Untied States, of pertinent information regarding the preauthorized use of his credit through FedWire communication.

- Respondent had ten (10) days to cause a full release of interest in the subject premises to be recorded in the public records.

- In the event the terms of the security instrument were breached, Respondent acknowledged that [John Henry Doe] had the authority to record the Deed of Release and/or take such other action authorized by said security instrument that Redemptor deems necessary, including but not limited to binding arbitration through Arbitration Alliance International in St. George, Utah, or other arbitration forum of Redemptor’s choosing.

- If Respondent was are not the current trustee or beneficiary on the subject deed of trust, it had the opportunity to notify the Notary immediately.- If Respondent chose to accept and retain the notice sent by [John Henry Doe], it would be presumed that Respondent have accepted this notice of redemption, have sufficient authority to act, and have accepted responsibility as an agent for the current trustee or beneficiary.

- Retention of the notice constituted acceptance and intent to perform pursuant to the defeasance clause of said deed of trust.

37. Respondents have provided no special circumstances or legislation that precludes

the enforcement of the supplemental terms of the Contract between the parties.


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Res judicata38. Applicant negotiated with Respondents to settle the Account through the self-help

nonjudicial remedy. The results are in the nature of a set-off creating claim preclusion

against Respondents. Applicant does not yet claim the right of issue preclusion, which is

the reason Applicant has brought the Verified Complaint to this Court for execution.

Respondents provided no statutes, regulations, or law during the administrative process

that would preclude the enforcement of the Contract through compensation and

compromise.

RES JUDICATA – "Res judicata" is the term traditionally used to describe two discrete effects: (1) what we now call claim preclusion (a valid final adjudication of a claim

precludes a second action on that claim or any part of it), see Restatement (Second) of Judgments §§17-19 (1982); and

(2) issue preclusion, long called "collateral estoppel" (an issue of fact or law, actually litigated and resolved by a valid final judgment, binds the parties in a subsequent action, whether on the same or a different claim), see id ., §27. On use of the plain English terms claim and issue preclusion in lieu of res judicata and collateral estoppel, see Migra v. Warren City School Dist. Bd. of Ed., .., n. 1 (1984). Bakeret Al. v. General Motors Corp. (1998)

CLAIM PRECLUSION – See Res Judicata.The principle distinction between claim preclusion and issue preclusion is …

that the former forecloses litigation of matters that have never been litigated. This makes it important to know the dimensions of the ‘claim’ that is foreclosed by bringing the first action, but unfortunately no precise definition is possible. Wright, The Law of Federal Courts (1994) Black’s 7th Edition

COMPROMISE, contracts. An agreement between two or more persons, who, to avoid a lawsuit, amicably settle their differences, on such terms as they can agree upon. 2. It will be proper to consider,

1. by whom the compromise must be made; 2. its form; 3. the subject of the compromise; 4. its effects.

3. It must be made by a person having a right and capacity to enter into the contract, and carry out his part of it, or by one having lawful authority from such person. 4. The compromise may be by parol or in writing, and the writing may be under seal or not: though as a general rule a partner cannot bind his copartner by deed, unless expressly authorized, yet it would seem that a compromise with the principal is an act which a partner may do in behalf of his copartners, and that, though under seal, it would conclude the firm.


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5. The compromise may relate to a civil claim, either as a matter of contract, or for a tort, but it must be of something uncertain; for if the debt be certain and undisputed, a payment of a part will not, of itself, discharge the whole. A claim connected with a criminal charge cannot be compromised. 6. The compromise puts an end to the suit, if it be proceeding, and bars any suit which may afterwards be instituted. It has the effect of res judicata. 7. In the civil law, a compromise is an agreement between two or more persons, who, wishing to settle their disputes, refer the matter, in controversy to arbitrators, who are so called because those who choose them give them full powers to arbitrate and decide what shall appear just and reasonable, to put an end to the differences of which they are made the judges. Bouvier 1859

Self-help

39. Respondents received notice of the election to use self-help, as a remedy, to effect

settlement of the Account.

SELF-HELP – Taking an action in person or by a representative outside of the normal legal process with legal consequences. Black’s 6th Edition

ARS 47-9609: Secured Party’s Right to Take Possession After Default.(a) After default, a secured party:

(1) may take possession of the collateral;(b) [Judicial and nonjudicial process.] A secured party may proceed under subsection (a):

(1) pursuant to judicial process; or(3) without judicial process , if it proceeds without breach of the peace.

40. Respondents provided no statutes, regulations, or law that would preclude Applicant

from settling the Account privately. As the administrative record was a continuation of the

original contract, and Respondents held the position of secured party on the original

contract, Respondents waived their rights as grantees and secured parties by their election to

stand silent through the self-help remedy, and Applicant reclaimed the interest in the

Collateral that was previously granted to Lender and Trustee in exchange for the Loan.

Lender represented its risk and costs as though it were loaning money, which has been

shown not to be the case by Respondents’ acquiescence to the statements made in the Notice

of Redemption and subsequent mailings.

41. Respondents received ample notice of the intent to settle the Account privately, as

well as sufficient information for them to make inquiry into the legal consequences of their

election to stand silent or to refuse to settle without production of facts to the contrary of the

statements made in the administrative process.


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Respondents’ election to stand silent after notice and opportunity resulted in Respondents’

estoppel in pais and claim preclusion as against Respondents.

NOTICE – Actual notice has been defined as notice expressly and actually given, and brought home to the party directly. Jordan v. Pollock, 14 Ga. 145

ACTUAL NOTICE – The term “actual notice”, however, is generally given a wider meaning as embracing two classes, express and implied: the former includes all knowledge of a degree above that which depends upon collateral inference, or which imposes upon the party the further duty of inquiry; the later imputes knowledge to the party because it is shown to be conscious of having the means of knowledge. In this sense actual notice is such notice as is positively proved to have been given to a party directly and personally, or such as he is presumed to have received personally because the evidence within his knowledge was sufficient to put him upon inquiry.

Pickleslmer v. Smith, 164 Ga. 600

ESTOPPEL IN PAIS –. The intentional or voluntary relinquishment of a known right, or such conduct as warrants an inference of the relinquishment of such right, or when one dispenses with the performance of something he is entitled to exact or when one in possession of any right, whether conferred by law or by contract, with full knowledge of the material facts, does or forbears to do something the doing of which or the failure of forbearance to do which is inconsistent with the right, or his intention to rely upon it. … An express or implied relinquishment of a legal right. A doctrine resting upon an equitable principle, which courts of law will recognize. Atlas Life Ins. Co. v. Schrimsher, 179 Okl. 643, 66 P.2d 944, 948. The doctrine by which a person may be precluded by his act or conduct, or silence when it is his duty to speak, from asserting a right which he otherwise would have had. Mitchell v. McIntee, 15 Or.App 85, 514 P.2d 1357, 1359. Black’s 6th Edition

42. Lender is in the “money” business and is expected to know and understand all

ramifications of the extension of credit, not just those that are most frequently used.

Respondents had access to legal advisors if they did not understand the legal consequences

of their actions during the private administrative process and the resulting administrative

record. It was not Applicant’s duty to give legal advice to Respondents in the notices

Respondents received and accepted.

On or about [date], Respondents received the first notice, statement of account, and

request for release of interest.

On or about [date], Respondents received the second notice.

On or about [date], Respondents received notice that their interest had been

terminated, with opportunity to document any defect in the process that lead to the

termination of their interest in the Collateral.


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On or about [date], Respondents received confirmation letters acknowledging

Respondents’ agreement that there was no defect in the process that lead to the termination

of their interest.

43. Through the entire process, Respondents provided no statutes, regulations, law, or

special circumstances that would defeat Applicant’s recovery of the interest that had been

granted to Respondents in that certain deed of trust dated [date]. Instead, Respondents stood

silent, thereby acquiescing, assenting, and consenting.

OR Instead, Lender or its agents ridiculed, intimidated, and threatened Applicant.

OR Instead, Respondents merely proceeded as though they still had a claim against

Applicant, without providing a statute, regulation, or law that would support their actions.

As a party to a contract with Applicant through the Note and deed of trust, Respondents had

a duty to release their interest in the Collateral as requested, or in the alternative,

demonstrate to Applicant why Respondents would be exempt from a commercial and moral

duty to so respond. Respondents did neither.

Effect of failure to deny or otherwise respond with affirmative defenses44. Respondents provided no affirmative defenses and failed to deny the statements in

the Notice of Redemption or statement of account, with documentation that would abate the

self-help nonjudicial remedy. The supplemental terms, as itemized in Part 36 above, stand

uncontested, and are therefore, agreed, and constitute no issues of material fact in dispute.

Arizona Rules of Civil Procedure Rule 8(d): Effect of Failure to Deny. Averments in a pleading to which a responsive pleading is required, other than those as to the amount of damage, are admitted when not denied in the responsive pleading.

SUMMARY

Respondents had every opportunity to provide facts that barred the self-help,

nonjudicial remedy that was chosen to settle the Account. Respondents elected to remain

silent, and do not have standing in equity to bring defenses in this action.


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On this ____ day of _______________, 2004, Applicant respectfully submits this

memorandum in support of its request to this Court to execute on the agreement

Applicant has with Respondents, by signing the order attached to Applicant’s Verified

Complaint.

[NAME OF APPLICANT]

______________________________ by [name of man]

ORIGINAL FILED COPY of the foregoing sent ____ ________ 2004 with proof of service to:

<Respondent 1 >,<BENEFICIARY ADDRESS><BENEFICIARY CITY-ST-ZIP>

<Respondent 2 >,<TRUSTEE ADDRESS><TRUSTEE-CITY-ST-ZIP>

NOTES

This particular memorandum is prepared to be used with the Verified Complaint

for judicial review, when it is filed with the clerk of court. THIS ONE IS FOR DEED

OF TRUST STATES. There is a different memorandum for mortgage states to be filed

with the Verified Complaint. There are different memoranda to be filed with the Motion

for Summary Judgment if one was already filed with the Verified Complaint, or if one

was not filed with the Verified Complaint.

There are numerous places that have yellow highlighting. These are the places

where you either need to enter information OR insert the applicable statute or rule for

your state or county. DO NOT use Arizona statutes or rules in another state!!!!!!

Change <STRAWMAN> and JOHN HENRY DOE to the straw man’s name in

all caps. Change John Henry Doe to your name in upper case and lower case.

Paragraph 36 is a restatement of the statements made in your Notice of

Redemption. YOU MUST BE SURE THE WORDING IN THESE STATEMENTS IS

EXACTLY THE SAME AS WHAT IS ON YOUR NOTICE OF REDEMPTION WITH

THE EXCEPTION OF WORD TENSE CHANGES WHEN NECESSARY. Use the


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statements I put in Paragraph 36 as a guide. Be sure they are exact. If a word, phrase, or

whole sentence is not on your Notice of Redemption, delete it from Paragraph 36.

There is one place in paragraph 43, where you need to cutomize the statement to fit

your process. If the Respondent never sent anything to you during the DD process, you can

use the statement that is already there – “Instead, Respondent stood silent.” If the

Respondent “ridiculed, intimidated, and threatened”, you can use the statement that says

that. Do not use words in this statement that are not true. Customize it to fit what really

happened. Do not use adverbs or adjectives here. It is just a plain statement of fact with no

embellishment. It is meant to show their dishonor, and needs no more than what we have

written, and it must be accurate. If they did not threaten, then don’t use the word

“threatened”. If they did not “ridicule”, then don’t use that word. If all they did, was

continue to send standard payment demand letters, use the statement that says that and

delete the alternatives.

There should be no red or yellow on the memorandum when you print it.
