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Jay Scott
Advanced Member
uSA
181 Posts |
 Posted - 03 Sep 2007 : 10:59:26
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quote:
Originally posted by Lewish
Why not simply put what you wrote: "accepted in lieu of lawful money"?
That sounds good to me.
quote:
Originally posted by David Merrill
That would be an endorsement of private credit from the Fed.
Thanks for that. How so?
Black's 4th:
quote:
IN LIEU OF. Instead of; in place of; in substitution of.
"accepted in lieu of (instead of; in place of; in substitution of) lawful money"
David Merrill, is that not the metaphysical substitution you've mentioned? Pardon me if you've already explained and I do not get it.
Jay Scott.
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Lewish
Advanced Member
uSA
496 Posts |
Posted - 03 Sep 2007 : 12:52:43
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George,
They have no value in the Republic States, but do have value in the compact states. See Compact State Act of 1934.
Regards,
Lewis
A Man on the Land on Washington as a Citizen thereon. |
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David Merrill
Advanced Member
USA
1147 Posts |
Posted - 03 Sep 2007 : 18:58:36
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quote:
quote:
IN LIEU OF. Instead of; in place of; in substitution of.
"accepted in lieu of (instead of; in place of; in substitution of) lawful money"
David Merrill, is that not the metaphysical substitution you've mentioned? Pardon me if you've already explained and I do not get it.
Jay Scott.
Stated in lieu, you are negating - like a double negative in grammar says the opposite of what you are trying to say.
The FRNs you get from the teller are lawful money - they are US notes in the form of FRNs. You are not accepting FRNs in lieu of lawful money. You are getting lawful money in the form of FRNs.
FRNs are redeemable in lawful money so the best form yet for getting in and out of the bank with your cash is:
quote:
DEPOSITED FOR CREDIT ON ACCOUNT OR EXCHANGED FOR NON-NEGOTIABLE FEDERAL RESERVE NOTES OF FACE VALUE
However when a new suitor is filing a Libel of Review in the US District Courthouse I will have them sign the $350 Withdrawal Slip:
quote:
Redeemed in lawful money pursuant to Title 12 U.S.C. §411
True Name (signature) dba First M. Last (neatly printed exactly as on the account)
And we get a copy of that into the case before copying for filing. A federal magistrate pretending to be a judge can be expected to understand the machinations of elastic currency from the Fed. Not a bank teller.
Regards,
David Merrill. |
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Cornerstone Foundation
Advanced Member
uSA
254 Posts |
Posted - 06 Sep 2007 : 16:39:30
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quote:
Originally posted by Lewish
They have no value in the Republic States, but do have value in the compact states. See Compact State Act of 1934.
Lewis,
Where can we find which states are "Republic States" and which states are "compact states"
Thank you for giving this your attention.
Best Regards,
Marty |
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Jay Scott
Advanced Member
uSA
181 Posts |
Posted - 06 Sep 2007 : 17:35:02
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quote:
Originally posted by David Merrill
Stated in lieu, you are negating - like a double negative in grammar says the opposite of what you are trying to say. The FRNs you get from the teller are lawful money - they are US notes in the form of FRNs. You are not accepting FRNs in lieu of lawful money. You are getting lawful money in the form of FRNs.
Ah, yes. Apparently I meant to say "Federal Reserve Notes accepted in lieu of US Notes".
quote:
Originally posted by David Merrill
FRNs are redeemable in lawful money so the best form yet for getting in and out of the bank with your cash is:
quote:
DEPOSITED FOR CREDIT ON ACCOUNT OR EXCHANGED FOR NON-NEGOTIABLE FEDERAL RESERVE NOTES OF FACE VALUE
I thought so and have had success for several months and at most banks, until the people at a bank where I held an account at closed the account due to using the above "non-endorsement".
After a few meetings at the bank and letters to headquarters, I received a response from the bank's attorney. Click this link to view an image of the letter (sanitized):
http://xs218.xs.to/xs218/07320/non-neg.jpg
You should be able to read more about my experience here (post #154):
http://goldismoney.info/forums/showthread.php?t=148416&page=4#154
Therefore, I'm looking for something more straight forward. Why not merely, "accepted lawful money"? Or "redeemed in lawful money"?
Thanks, David Merrill, I appreciate you taking the time to explain (again).
Jay Scott.
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Edited by - Jay Scott on 06 Sep 2007 17:36:34 |
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David Merrill
Advanced Member
USA
1147 Posts |
Posted - 06 Sep 2007 : 21:50:34
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You are welcome;
Order up a copy of the US Code from my clerk. Highlight the seal with red ink. Bells and whistles...
(719) 520-6200 Reception #207015932. |
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Jay Scott
Advanced Member
uSA
181 Posts |
Posted - 04 Oct 2007 : 13:13:33
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Yesterday, at a medium to small size bank,I brought a check someone gave me. I've done this many times at this bank without problems, other than not having government issued identification to show them. And this was always solved with a phone call to the people that gave me the check. Well, this time the head teller couldn't get a satisfactory description of me from the lady she got on phone to identify me. So I was referred to another branch of that bank in town (where the account was opened). They recognized me there (small town) but said they had to get approval on the "restricted endorsement":
"Exchanged for Non-Negotiable
Federal Reserve Notes of Face Value
FOR: <STRAWDUDE>
BY: <my mark>"
She offered to allow me to get a new check and generally endorse or wait for them to get approval. I said I don't mind waiting, that's how I do it. A couple hours later another lady called back to say I could cash the check.
Yesterday: 4 checks, 4 banks, 3 satisfactory transactions. (I'm still having trouble with the bank that closed an I account I held.)
Jay Scott.
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Lewish
Advanced Member
uSA
496 Posts |
Posted - 08 Oct 2007 : 17:42:21
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Marty,
The states as formed as States are Republic States. The states as they exist in de facto corporate form are compact STATES. Thus, the State of Washington is a Republic State, whereas the STATE OF WASHINGTON is one of the compact states. Look up the Compact State Act of 1934 in the Congressional Record.
Lewis
A Man on the Land on Washington as a Citizen thereon. |
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Greg
Advanced Member
uSA
76 Posts |
Posted - 03 Jan 2008 : 13:27:22
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Greetings and many blessings group.
While searching for something entirely different I ran across "completely anonymous banking" by accident, and my mind immediatley reverted to you guys/gals as I know many of us struggle with this particular aspect of living apart and seperate from them.
Though I generally wouldn't share this on a forum for fear that the resulting compounding over exposure would rednder it unavailable at a nearer future point than would naturally occure, I am doing so here as this group seems compiled predominately of a "peculiar people"...and this site doesn't show up on search engines even if you type the address directly into the search bar (big grin).
I would like to also note that while browsing their site I noticed them mention "united States" followed by a remark in captions that this was the actual/proper spelling.
They are a referal service to contacts for many different...ummm services? One of which is a diplomatic consular appointment from a UN recognized Country for $75K. Not a shabby price in my humble opinion for diplomatic immunity...if one is so inclined towards such a thing.
I have not used them yet as I just found them yesterday (and had to pray about sharing them before I posted this). So if one of you beat me to it please share your experience and I will do likewise for the edification, and to the benefit of, the rest of the group.
So, without further adou...
http://www.ptclub.com/index.html
and another similar one,
http://www.privacyworld.com/index.html
Be Blessed group!
in Christ,
Greg.
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yardstick
Senior Member
USA
52 Posts |
Posted - 20 Jun 2008 : 15:51:47
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quote:
Originally posted by Greg
Hello group, Just wanted to share that a large national bank chain has in their training material that if a check is autographed "without recourse" then one is absolved of all legal liabilities pertaining to that check. Just got access to the info and look forward to sharing it with you as it continues to become available. Peace and Blessings to the House. I am Greg
A certain national city bank has a policy in place that states that they will not "cash" a check if a restrictive endorsement (e.g. "without recourse") is placed upon it. |
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Livefree
Advanced Member
USA
270 Posts |
Posted - 22 Jun 2008 : 12:54:14
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quote:
Originally posted by yardstick
quote:
Originally posted by Greg
Hello group, Just wanted to share that a large national bank chain has in their training material that if a check is autographed "without recourse" then one is absolved of all legal liabilities pertaining to that check. Just got access to the info and look forward to sharing it with you as it continues to become available. Peace and Blessings to the House. I am Greg
A certain national city bank has a policy in place that states that they will not "cash" a check if a restrictive endorsement (e.g. "without recourse") is placed upon it.
That's interesting. Would you care to tell us the name of that certain national city bank?
So far I have not had a problem with using "without recourse". |
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yardstick
Senior Member
USA
52 Posts |
Posted - 23 Jun 2008 : 11:57:05
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quote:
Originally posted by Livefree
quote:
Originally posted by yardstick
quote:
Originally posted by Greg
Hello group, Just wanted to share that a large national bank chain has in their training material that if a check is autographed "without recourse" then one is absolved of all legal liabilities pertaining to that check. Just got access to the info and look forward to sharing it with you as it continues to become available. Peace and Blessings to the House. I am Greg
A certain national city bank has a policy in place that states that they will not "cash" a check if a restrictive endorsement (e.g. "without recourse") is placed upon it.
That's interesting. Would you care to tell us the name of that certain national city bank?
So far I have not had a problem with using "without recourse".
I did infer their name in my prior post... without capitals, so as to make it less obvious. You also reiterated the name in your reply...
I should also clarify my statement to mean that they will only accept blank indorsements. |
Edited by - yardstick on 23 Jun 2008 13:09:38 |
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yardstick
Senior Member
USA
52 Posts |
Posted - 23 Jun 2008 : 13:03:52
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Most of the following may be well known, however I am posting it for comments, or verification by the knowledge base here; as to whether I have reached a correct conclusion from my research. Please note my comments at the bottom. Thanks.
Definition of Negotiable Instrument- UCC 3-104
http://www.law.cornell.edu/ucc/3/article3.htm#s3-104
Definition of Indorsement- UCC 3-204
http://www.law.cornell.edu/ucc/3/article3.htm#Indorsement
Read sections 3-205 and 3-206 for types of indorsements.
Also note section 3-109
Then I went here:
http://www.legal-dictionary.biz/search.php
The definition of indorsement:
http://www.legal-dictionary.biz/INDORSEMENT-definition/
This definition shows that negotiability cannot be restrained on a blank indorsement:
http://www.legal-dictionary.biz/BLANK+INDORSEMENT-definition/
A qualified indorsement appears to restrict the negotiability of the instrument:
http://www.legal-dictionary.biz/QUALIFIED+INDORSEMENT-definition/
According to this, a restrictive indorsement appears to apply only to a promissory note or bill of exchange:
http://www.legal-dictionary.biz/RESTRICTIVE+INDORSEMENT-definition/
Definition of Promissory Note:
http://www.legal-dictionary.biz/PROMISSORY+NOTE-definition/
". Although a promissory note, in its original shape, bears no resemblance to a bill of exchange; yet, when indorsed, it is exactly similar to one; for then it is an order by the indorser of the note upon the maker to pay to the indorsee. The indorser is as it were the drawer; the maker, the acceptor; and the indorsee, the payee."
Definition of Bill of Exchange
http://www.legal-dictionary.biz/BILL+OF+EXCHANGE-definition/
Conclusion
Since the bank referred to in my previous post only permits blank indorsements, it logically follows that they appear to be converting the draft into a promissory note, and then subsequently into a bill of exchange. Does this sound correct?
Comments welcome.
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Jay Scott
Advanced Member
uSA
181 Posts |
Posted - 23 Jun 2008 : 15:42:45
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quote:
Originally posted by yardstick
quote:
Originally posted by Greg
Hello group, Just wanted to share that a large national bank chain has in their training material that if a check is autographed "without recourse" then one is absolved of all legal liabilities pertaining to that check. Just got access to the info and look forward to sharing it with you as it continues to become available. Peace and Blessings to the House. I am Greg
A certain national city bank has a policy in place that states that they will not "cash" a check if a restrictive endorsement (e.g. "without recourse") is placed upon it.
Are we talking about the "endorsement" on the back of the check? Or the "authorized signature" on the face (bottom right) of the check? I'm assuming the writings on the back of the check.
What is the difference between writing:
<autograph>
without recourse
...and...
FOR: ALL CAPS NAME
BY: <autograph>, authorized representative
?
...or instead of "auth. rep.", "agent"? (Same thing, right?)
The question may first need to be answered what entity one believes the check is being written to. The private entity? Or the public entity?
If one believes the private entity, then, I suppose, the only option one has is the "without recourse" option. (Other than privately ensuring the funds purported on the face of the instrument [signing by accommodation], which is what I think we may be trying to prevent. Correct me if I'm wrong.) Then, according to my research, if the bank refuses to accept the presentment of the check, the presenter's only recourse is to return the check to the drawer, report the dishonor, and demand another form of payment. The presenter has no recourse against the bank upon dishonor of the check. Only the drawer has recourse against the bank for a dishonored check.
From Black's 4th:
quote:
WITHOUT RECOURSE. This phrase, used in making a qualified indorsement of a negotiable instrument, signifies that the indorser means to save himself from liability to subsequent holders, and is a notification that, if payment is refused by the parties primarily liable, recourse cannot be had to him.
An indorser "without recourse" specially declines to assume any responsibility for payment.
He assumes no contractual liability by virtue of the indorsement itself...and becomes a mere assignor of the title to the paper...but such an indorsement does not indicate that the indorsee takes with notice of defects, or that he does not take on credit of the other parties to the note.
So what does that mean? If Joe Bloe, who wrote the check is not good for the amount of the check, then you, the drawee bank, cannot come after me for the cash handed to me over the counter. Right? Or wrong? If Joe Bloe writes me a bad check, who gets the short end of the stick? Me? Or the bank?
Here's a twist. What if the funds for the cash you receive do not actually come from Joe Bloe's account but are instantiated upon your signature? What if when Joe deposits (deposes) the funds he thinks he's transferring to you by way of check are not actually held in account but actually yielded to the bank in exchange for bank credit, then when Joe writes you a check it's really a transfer of a portion of the lien Joe has on a portion of the bank's credit. And what if credit is not the same as cash, therefore, if you want cash, you (or the public entity) need to insure the conversion of credit to cash.
That leads this flow of semi-consciousness to the public entity. If someone wants the cash (for whatever reason) that is "represented" by the check, and if Joe has given his right to the cash he deposited (deposed) with the bank and now only has a lien on bank credit, then where is the cash going to come from? Can the bank instantiate the cash? I hope not. Should the bank take the cash out of their cash resources? I'm not aware they are required to or ought to. Joe deposited his cash to the bank and wrote you a check. If you want Joe's cash, get it straight from Joe. If you want cash from the bank, then accommodate the check instrument so the bank can instantiate the cash for you. Eh?
If one indeed believes the check is made out to the public entity, and one does not want the private entity or living soule to accommodate the instantiation of cash at the bank, then it seems the "authorized representative" option may be accomplish both goals. Instantiate the cash and not have the private entity accommodate the instantiation of cash. It's not only does not accommodate the one making the autograph, but also is not a restrictive or qualified endorsement.
As always, correct me if I'm wrong. I don't really know what I'm talking about. (Who does?)
Jay Scott.
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yardstick
Senior Member
USA
52 Posts |
Posted - 24 Jun 2008 : 16:09:25
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The reply below may contain speculation or opinion:
quote:
Originally posted by Jay Scott
quote:
Originally posted by yardstick
quote:
Originally posted by Greg
Hello group, Just wanted to share that a large national bank chain has in their training material that if a check is autographed "without recourse" then one is absolved of all legal liabilities pertaining to that check. Just got access to the info and look forward to sharing it with you as it continues to become available. Peace and Blessings to the House. I am Greg
A certain national city bank has a policy in place that states that they will not "cash" a check if a restrictive endorsement (e.g. "without recourse") is placed upon it.
Are we talking about the "endorsement" on the back of the check? Or the "authorized signature" on the face (bottom right) of the check? I'm assuming the writings on the back of the check.
I am referring to the indorsement on the back of the draft/check.
quote:
What is the difference between writing:
<autograph>
without recourse
...and...
FOR: ALL CAPS NAME
BY: <autograph>, authorized representative
?
...or instead of "auth. rep.", "agent"? (Same thing, right?)
Have you done either of these; and if so, what was the outcome?
quote:
The question may first need to be answered what entity one believes the check is being written to. The private entity? Or the public entity?
If one believes the private entity, then, I suppose, the only option one has is the "without recourse" option. (Other than privately ensuring the funds purported on the face of the instrument [signing by accommodation], which is what I think we may be trying to prevent.
Correct me if I'm wrong.)
I believe you understand correctly. Further, I believe there is a movement to try to prevent the subsequent fractionalization /collateralization and/or placement of the draft into the secondary securities market (however you wish to call it); since the last indorser (I do not believe the bank indorses the draft after you or I) is responsible for the amount on the draft; and thus, the debt that the draft creates.
quote:
Then, according to my research, if the bank refuses to accept the presentment of the check, the presenter's only recourse is to return the check to the drawer, report the dishonor, and demand another form of payment. The presenter has no recourse against the bank upon dishonor of the check. Only the drawer has recourse against the bank for a dishonored check.
Once again, I believe you are correct.
quote:
From Black's 4th:
quote:
WITHOUT RECOURSE. This phrase, used in making a qualified indorsement of a negotiable instrument, signifies that the indorser means to save himself from liability to subsequent holders, and is a notification that, if payment is refused by the parties primarily liable, recourse cannot be had to him.
An indorser "without recourse" specially declines to assume any responsibility for payment.
He assumes no contractual liability by virtue of the indorsement itself...and becomes a mere assignor of the title to the paper...but such an indorsement does not indicate that the indorsee takes with notice of defects, or that he does not take on credit of the other parties to the note.
So what does that mean? If Joe Bloe, who wrote the check is not good for the amount of the check, then you, the drawee bank, cannot come after me for the cash handed to me over the counter. Right? Or wrong? If Joe Bloe writes me a bad check, who gets the short end of the stick? Me? Or the bank?
What is happening, is that this particular bank is forcing anyone who wants to negotiate the draft into taking responsibility for the draft, thereby relieving the bank of responsiblity. So if the draft "bounces" the person left holding the bag is not the bank (because the bank does not indorse the draft) but the you or I (the indorser has responsiblity per the UCC!).
What is really bad about it, is that the tellers get into trouble if they do not comply with the bank policy. And since they are ignorant of the machinations going on, they refuse to process the transaction if you or I do not comply.
Then, to compound the issue, the bank is, after indorsement is made, converting the draft into a Promissory Note, and subsequently into a Bill of Exchange, all the while leaving the indorser (not the bank) liable for any dishonors.
quote:
Here's a twist. What if the funds for the cash you receive do not actually come from Joe Bloe's account but are instantiated upon your signature? What if when Joe deposits (deposes) the funds he thinks he's transferring to you by way of check are not actually held in account but actually yielded to the bank in exchange for bank credit, then when Joe writes you a check it's really a transfer of a portion of the lien Joe has on a portion of the bank's credit. And what if credit is not the same as cash, therefore, if you want cash, you (or the public entity) need to insure the conversion of credit to cash.
That leads this flow of semi-consciousness to the public entity. If someone wants the cash (for whatever reason) that is "represented" by the check, and if Joe has given his right to the cash he deposited (deposed) with the bank and now only has a lien on bank credit, then where is the cash going to come from? Can the bank instantiate the cash? I hope not. Should the bank take the cash out of their cash resources? I'm not aware they are required to or ought to. Joe deposited his cash to the bank and wrote you a check. If you want Joe's cash, get it straight from Joe. If you want cash from the bank, then accommodate the check instrument so the bank can instantiate the cash for you. Eh?
If one indeed believes the check is made out to the public entity, and one does not want the private entity or living soule to accommodate the instantiation of cash at the bank, then it seems the "authorized representative" option may be accomplish both goals. Instantiate the cash and not have the private entity accommodate the instantiation of cash. It's not only does not accommodate the one making the autograph, but also is not a restrictive or qualified endorsement.
As always, correct me if I'm wrong. I don't really know what I'm talking about. (Who does?)
Jay Scott.
What is really ironic, is that the tellers are told by their legal department that any indorsement other than a blank indorsement, is either restrictive or qualified. And at this particular bank, only blank indorsements appear to be permitted.
Fun stuff.... |
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Jay Scott
Advanced Member
uSA
181 Posts |
Posted - 24 Jun 2008 : 19:11:31
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quote:
Originally posted by yardstick
quote:
What is the difference between writing:
<autograph>
without recourse
...and...
FOR: ALL CAPS NAME
BY: <autograph>, authorized representative
?
...or instead of "auth. rep.", "agent"? (Same thing, right?)
Have you done either of these; and if so, what was the outcome?
"without recourse" once. The teller brought the check in the back and some other lady came out and asked me if I was having trouble with the drawer. I said no and then received cash.
"non-accommodation" many many times (and on various types of documents). Never been refused.
quote:
Originally posted by yardstick
I believe you understand correctly. Further, I believe there is a movement to try to prevent the subsequent fractionalization /collateralization and/or placement of the draft into the secondary securities market (however you wish to call it); since the last indorser (I do not believe the bank indorses the draft after you or I) is responsible for the amount on the draft; and thus, the debt that the draft creates.
Please elaborate on this statement. What is the movement? Who is the mover? What is the act that prevents subsequent fractionalization /collateralization and/or placement of the draft into the secondary securities market? What does that mean? What effect does the last indorser being responsible for the debt have on subsequent fractionalization /collateralization and/or placement of the draft into the secondary securities market? Your contribution is much appreciated.
quote:
Originally posted by yardstick
What is happening, is that this particular bank is forcing anyone who wants to negotiate the draft into taking responsibility for the draft, thereby relieving the bank of responsiblity. So if the draft "bounces" the person left holding the bag is not the bank (because the bank does not indorse the draft) but the you or I (the indorser has responsiblity per the UCC!).
If one makes a blank endorsement (merely a signature, even a non-accommodating indorsement, I believe) one is making the instrument a "bearer instrument", as I understand it. Therefore the bearer of the instrument may negotiate the instrument without indorsement as long as the instrument is surrendered upon presentment.
Read § 3-501 (b)(2) http://www.law.cornell.edu/ucc/3/3-501.html
And § 3-205 (b). http://www.law.cornell.edu/ucc/3/3-205.html
I'm not sure I would characterize it as "forcing". If it is true that the drawer deposed his cash to the "bank" in exchange for "bank" credit, then where is the cash you want supposed to come from? The "bank"? The drawer gave up his cash. He gave you a check (a lien on "bank" credit, sort of like a hot potato). If you chose to exercise your lien by converting it into cash, who should be responsible for that? The "bank"? You the man? Or the entity conveniently conceived for you for the purpose of setting off the liabilities you generate in the public? Are there any other options? Are any of these options faulty thinking? I may be wrong. If I'm not, then it sounds like us converting these checks into cash with blank endorsements is contributing to inflation and other kinds of mayhem. Therefore necessitating some sort of adjustment or accounting to balance the books, whatever that would be. I don't know...thinking out loud.
"Cash Only" is sounding better all the time. How else can one avoid expanding elastic currency?
quote:
Originally posted by yardstick
Then, to compound the issue, the bank is, after indorsement is made, converting the draft into a Promissory Note, and subsequently into a Bill of Exchange, all the while leaving the indorser (not the bank) liable for any dishonors.
Please elaborate. What specifically do you mean, what are the consequences of this and what are your sources of information that lead you to this conclusion. Very interesting!
quote:
Originally posted by yardstick
What is really ironic, is that the tellers are told by their legal department that any indorsement other than a blank indorsement, is either restrictive or qualified. And at this particular bank, only blank indorsements appear to be permitted.
Do you think the tellers at this "bank" would consider the non-accommodation indorsement to be restrictive? If so, do you think it would be worth the effort to inquire with the "bank" manager whether or not he believes it is indeed an restrictive indorsement? Maybe bringing along a good business law book or excerpts from the UCC to edify if necessary? If that does not convince the "bank" to accept the presentment, then I suppose one must return the instrument to the drawer of the instrument and request another form of payment if one requires that sort of thing.
§ 3-205. SPECIAL INDORSEMENT; BLANK INDORSEMENT; ANOMALOUS INDORSEMENT.
http://www.law.cornell.edu/ucc/3/3-205.html
§ 3-206. RESTRICTIVE INDORSEMENT.
http://www.law.cornell.edu/ucc/3/3-206.html
(Their rules, not mine.)
quote:
Originally posted by yardstick
Fun stuff....
Ya sure, you betcha!
Jay Scott.
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Edited by - Jay Scott on 24 Jun 2008 19:25:56 |
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yardstick
Senior Member
USA
52 Posts |
Posted - 25 Jun 2008 : 17:17:51
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quote:
Originally posted by yardstick
I believe you understand correctly. Further, I believe there is a movement to try to prevent the subsequent fractionalization /collateralization and/or placement of the draft into the secondary securities market (however you wish to call it); since the last indorser (I do not believe the bank indorses the draft after you or I) is responsible for the amount on the draft; and thus, the debt that the draft creates.
quote:
Please elaborate on this statement. What is the movement? Who is the mover? What is the act that prevents subsequent fractionalization /collateralization and/or placement of the draft into the secondary securities market? What does that mean? What effect does the last indorser being responsible for the debt have on subsequent fractionalization /collateralization and/or placement of the draft into the secondary securities market? Your contribution is much appreciated.
I assume you have read all the posts of this topic, so I do not understand why you are asking these questions? Perhaps you interpret them differently than I.
If you read the links and quote I provided, I am hoping you may have come to the same comclusion that I have (although I will admit that I am awaiting confirmation so as to verify my observations are correct):
That banks which mandate blank indorsement only, routinely convert blank-indorsed drafts into promissory notes, and then subsequently into bills of exchange, and then exchange them for Federal Reserve credits, creating debt/obligatoin/liability for the indorser and not for the bank. Banks compel persons who have received said drafts in payment; and who attempt to negotiate said drafts into making a blank indorsement of said drafts, thereby relieving the bank from the obligations created when the conversion takes place.
quote:
If one makes a blank endorsement (merely a signature, even a non-accommodating indorsement, I believe) one is making the instrument a "bearer instrument", as I understand it. Therefore the bearer of the instrument may negotiate the instrument without indorsement as long as the instrument is surrendered upon presentment.
Read § 3-501 (b)(2) http://www.law.cornell.edu/ucc/3/3-501.html
And § 3-205 (b). http://www.law.cornell.edu/ucc/3/3-205.html
And who becomes the bearer of the instrument? The bank at which it was negotiated! The bearer has no liability for the draft until it is indorsed by the bearer, because the indorser has liability once the indorsement is made per the UCC; and (speculation) the Bank does not indorse the draft.
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I'm not sure I would characterize it as "forcing".
We will assume for the sake of discussion that the draft has not been indorsed yet, and that the bearer of the draft will not deposit the draft for credit to account, but intends to exchange the draft for whatever currency is currently used as a medium of exchange.
If the bearer of the draft cannot exchange the draft for any goods or services, or anywhere other than a bank; and if the bank the bearer takes it to refuses to negotiate the draft without a blank indorsement, then the bearer's only recourse is to return to the drawer and return the draft, dishonored. What happens then? What are the scenarios at this point? Where does the bearer regain what is due him?
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If it is true that the drawer deposed his cash to the "bank" in exchange for "bank" credit, then where is the cash you want supposed to come from? The "bank"? The drawer gave up his cash. He gave you a check (a lien on "bank" credit, sort of like a hot potato). If you chose to exercise your lien by converting it into cash, who should be responsible for that? The "bank"? You the man?
The drawer may have given up his cash, but perhaps you have forgotten that that cash can be theoretically transferred physically between banks, so the cash can still be extant. (We are not considering here the issuance of new FRNs and/or the destruction of old FRNs) It is neither the maker's nor the indorser's responsibility to ensure that the bank has adequate cash on hand to cover every draft extant.
As to responsibility for exchanging the draft for cash, the responsibility for the "convertibility" of the draft (having adequate funds to cover the draft) should be squarely in the lap of the drawer. Nevertheless, the UCC prescribes the responsibility to be that of the indorser after indorsement is made!
However, these are off point tangents. The point we should be discussing is The bank's fiduciary responsibility, and why a bank would deliberately breach that responsibility to compel blank indorsement where one is not required.
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Or the entity conveniently conceived for you for the purpose of setting off the liabilities you generate in the public? Are there any other options? Are any of these options faulty thinking? I may be wrong. If I'm not, then it sounds like us converting these checks into cash with blank endorsements is contributing to inflation and other kinds of mayhem. Therefore necessitating some sort of adjustment or accounting to balance the books, whatever that would be. I don't know...thinking out loud.
"Cash Only" is sounding better all the time. How else can one avoid expanding elastic currency?
Please elaborate. What specifically do you mean, what are the consequences of this and what are your sources of information that lead you to this conclusion. Very interesting!
[/quote]
While cash only is preferred, using cash only does not prevent the expansion of elasic currency. Qualified or Restrictive indorsements do that by preventing the fractionalization/collateralization and or placement of drafts into the secondary securities market as Promissory Notes/Bills of Exchange.
Here are the quotes from the links I posted earlier:
http://www.law.cornell.edu/ucc/3/3-205.html
(b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement." When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.
Definition of indorsement
http://www.law.cornell.edu/ucc/3/3-204.html
Restrictive indorsement
http://www.law.cornell.edu/ucc/3/3-206.html
Payable to Bearer
http://www.law.cornell.edu/ucc/3/3-109.html
Negotiate
http://www.law.cornell.edu/ucc/3/3-201.html
Presentment
http://www.law.cornell.edu/ucc/3/3-501.html#Presentment_3-501
Qualified Indorsement
Unable to find a definition in the UCC. This led me to an online legal dictionary
http://www.legal-dictionary.biz/QUALIFIED+INDORSEMENT-definition/
A transfer of a bill of exchange or promissory note to an indorsee, without any liability to the indorser; the words usually employed for this purpose, are sans recours, without recourse.
http://www.law.cornell.edu/ucc/3/article3.htm#s3-415
Where we find further use of the phrase "Without Recourse"
In interesting aside, the qualified indorsement definition implies the use of "without recourse" only on bills of exchagne or promissory notes. Not drafts. UCC 3-415 specifies "instruments" not "drafts"
Instrument
http://www.law.cornell.edu/ucc/3/article3.htm#Instrument
(b) "Instrument" means a negotiable instrument.
Negotiable Instrument
http://www.law.cornell.edu/ucc/3/article3.htm#negotiableinstrument
§ 3-104. NEGOTIABLE INSTRUMENT.
(a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:
(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
The definitions provided imply restriction the use of "Without Recourse" to promissory notes/bills of exchange
Promissory Note
http://www.legal-dictionary.biz/PROMISSORY+NOTE-definition/
A written promise to pay a certain sum of money, at a future time, unconditionally...In its form it usually contains a promise to pay, at a time therein expressed, a sum of money to a certain person therein named, or to his order, for value received. It is dated and signed by the maker. It is never under seal....He who makes the promise is called the maker, and he to whom it is made is the payee....Although a promissory note, in its original shape, bears no resemblance to a bill of exchange; yet, when indorsed, it is exactly similar to one; for then it is an order by the indorser of the note upon the maker to pay to the indorsee. The indorser is as it were the drawer; the maker, the acceptor; and the indorsee, the payee....Most of the rules applicable to bills of exchange, equally affect promissory notes. No particular form is requisite to these instruments; a promise to deliver the money, or to be accountable for it, or that the payee shall have it, is sufficient....There are two principal qualities essential to the validity of a note; first, that it be payable at all events, not dependent on any contingency;nor payable out of any particular fund.And, secondly, it is required that it be for the payment of money only; and not in bank notes, though it has been held differently in the state of New York....A promissory note payable to order or bearer passes by indorsement, and although a chose in action, the holder may bring suit on it in his own name. Although a simple contract, a sufficient consideration is implied from the nature of the instrument.
Bill of Exchange
http://www.legal-dictionary.biz/BILL+OF+EXCHANGE-definition/
A bill of exchange is defined to be an open letter of request from, and order by, one person on another, to pay a sum of money therein mentioned to a third person, on demand, or at a future time therein specified....1. The parties to a bill of exchange are the drawer, (q. v.) or he who makes the order; the drawee, (q. v.) or the person to whom it is addressed; the acceptor, (q. v.) or he who accepts -the bill; the payee, (q. v.) or the party to whom, or in whose favor the bill is made. The indorser, (q. v.) is he who writes his name on the back of a bill; the indorsee, (q. v.) is one to whom a bill is transferred by indorsement; and the holder, (q. v.) is in general any one of the parties who is in possession of the bill, and entitled to receive the money therein mentioned....When a bill is made payable to a fictitious person, and indorsed in the name of the fictitious payee, it is in effect a bill to bearer, and a bona fide holder, ignorant of that fact, may recover on it, against all prior parties, who were privy to the transaction....The form of the bill. 1. The general requisites of a bill of exchange, are,
1st. that it be in writing. That it be for the payment of money, and not for the payment of merchandise.
2d. That the money be payable at all events, not depending on any contingency, either with regard to the fund out of which payment is to be made, or the parties by or to whom payment is to be made....
The several parts of a bill of exchange are,
1st. that it be properly dated as to place
2d. That it be properly dated as to the time of making. As the time a bill, becomes due is generally regulated by the time when it was made, the date of the instrument ought to be clearly expressed.
3d. The superscription of the sum for which the bill is payable is not indispensable, but if it be not mentioned in the bill, the superscription will aid. the omission.
4th. The time of payment ought to be expressed in the bill; if no time be mentioned, it is considered as payable on demand.
5th. Although it is proper for the drawer to name the place of payment, either in the body or subscription of the bill, it is not essential; and it is the common practice for the drawer merely to write the address of the drawee, without pointing out any, place of payment; in such case the bill is considered payable, and to be presented at the residence of the drawee, where the bill was made, or to him personally any where.
6th. There must be an order or request to pay and that must be a matter of right, and not of favor.
7th. Foreign bills of exchange...
8th. The bill ought to specify to whom it is to be paid....It may, however, be drawn payable to bearer, and then it is assignable by delivery....
9th. To make a bill negotiable, it must be made payable to order, or bearer, or there must be other operative and equivalent words of transfer.if, however, it is not intended to make the bill negotiable, these words need not be inserted, and the instrument will, nevertheless, be valid as a bill of exchange.
10th. The sum for which the bill is drawn, must be clearly expressed in the body of it, in writing at length. The sum must be fixed and certain, and not contingent.
11th. It is usual to insert the words, value received, but it is. implied that every bill and indorsement has been made for value received, as much as if it had been expressed in totidem verbis.
12th. It is usual, when the drawer of the bill is debtor to the drawee, to insert in the bill these words: " and put it to my account but when the drawee, or the person to whom it is directed, is debtor to the drawer, then he inserts these words : "and put it to your account;" and, sometimes, where a third person is debtor to the drawee, it may be expressed thus: "and put it to the account of A B;"but it is altogether unnecessary to insert any of these words.
13th. When the drawer is desirous to inform the drawee that he has drawn a bill, he inserts in it the words, "as per advice;" but when he wishes the bill paid without any advice from him, he writes, "without further advice." In the former case the drawee is not authorized to pay the bill till he has received the advice; in the latter he may pay before he has received advice.
14th. The drawee must either subscribe the bill, or, it seems, his name may be simply inserted in the body of the instrument.
15th. The bill being a letter of request from the maker to a third person, should be addressed to that person by the Christian name and surname, or by the full style of their firm.
16th. The place of payment should be stated in the bill.
17th. As a matter of precaution, the drawer of a foreign...
18th. The drawer may also add a request or direction, that in case the bill should not be honored by the drawee, it shall be returned without protest or without expense, by subscribing the words, " retour sans protet," or " sans frais;" in. this case the omission of the holder to protest, having been induced by the drawer, he, and perhaps the indorsers, cannot resist the payment on that account, and thus the expense is avoided.
19th. The drawer may also limit the amount of damages, by making a memorandum on the bill, that they shall be a definite sum; as, for example: "In case of non-acceptance or non-payment, re-exchange and expenses not to, exceed dollars."...
Bills of, exchange are either foreign or inland. Foreign, when drawn by a person out of, on another in, the United States, or vice versa; or by a person in a foreign country, on another person in another foreign country; or by a person in one state, on another in another of the United States....An inland bill is one drawn by a person in a state, on another in the same state. The principal difference between foreign and inland bills is, that the former must be protested, and the latter need not....The English rule requiring protest and notice of non-acceptance of foreign bills, has been adopted and followed as the true rule of mercantile law, in the states of Massachusetts, Connecticut) New York, Maryland, and South Carolina....But the supreme court of the United States, in Brown v. Berry, 3 Dall. R. 365, and in Clark v. Russell, cited in 6 Serg. & Rawle, 358, held, that in an action on a foreign bill of exchange, after a protest for non-payment, protest for non-acceptance, or notice of non-acceptance need not be shown, inasmuch as they were not required by the custom of merchants in this country; and those decisions have been followed in Pennsylvania.
Studying the face of a draft should show that the draft has the same features as a Bill of Exchange sans the indorsement (which is of course, located on the back). Once indorsed, the draft becomes a promissory note/bill of exchange. Banks mandate indorsement before negotiation, and blank indorsement in the case that I have previously described.
If per UCC 3-415(d) the indorser no longer has liability once a draft is accepted by a bank, how does this erase liability when the draft has been converted from a draft into a promissory note/bill of exchange? |
Edited by - yardstick on 25 Jun 2008 17:26:38 |
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Jay Scott
Advanced Member
uSA
181 Posts |
Posted - 05 Jul 2008 : 10:46:52
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Thanks, yardstick. That's a brainful! Takes me some time to carefully consider and study.
It appears I did not communicate at least one point clearly. Let me elaborate for the sake of discussion.
quote:
Originally posted by yardstick
We will assume for the sake of discussion that the draft has not been indorsed yet, and that the bearer of the draft will not deposit the draft for credit to account, but intends to exchange the draft for whatever currency is currently used as a medium of exchange.
If the bearer of the draft cannot exchange the draft for any goods or services, or anywhere other than a bank; and if the bank the bearer takes it to refuses to negotiate the draft without a blank indorsement, then the bearer's only recourse is to return to the drawer and return the draft, dishonored. What happens then? What are the scenarios at this point? Where does the bearer regain what is due him?
quote:
If it is true that the drawer deposed his cash to the "bank" in exchange for "bank" credit, then where is the cash you want supposed to come from? The "bank"? The drawer gave up his cash. He gave you a check (a lien on "bank" credit, sort of like a hot potato). If you chose to exercise your lien by converting it into cash, who should be responsible for that? The "bank"? You the man?
The drawer may have given up his cash, but perhaps you have forgotten that that cash can be theoretically transferred physically between banks, so the cash can still be extant. (We are not considering here the issuance of new FRNs and/or the destruction of old FRNs) It is neither the maker's nor the indorser's responsibility to ensure that the bank has adequate cash on hand to cover every draft extant.
As to responsibility for exchanging the draft for cash, the responsibility for the "convertibility" of the draft (having adequate funds to cover the draft) should be squarely in the lap of the drawer. Nevertheless, the UCC prescribes the responsibility to be that of the indorser after indorsement is made!
However, these are off point tangents. The point we should be discussing is The bank's fiduciary responsibility, and why a bank would deliberately breach that responsibility to compel blank indorsement where one is not required.
quote:
Or the entity conveniently conceived for you for the purpose of setting off the liabilities you generate in the public? Are there any other options? Are any of these options faulty thinking? I may be wrong. If I'm not, then it sounds like us converting these checks into cash with blank endorsements is contributing to inflation and other kinds of mayhem. Therefore necessitating some sort of adjustment or accounting to balance the books, whatever that would be. I don't know...thinking out loud.
"Cash Only" is sounding better all the time. How else can one avoid expanding elastic currency?
Please elaborate. What specifically do you mean, what are the consequences of this and what are your sources of information that lead you to this conclusion. Very interesting!
While cash only is preferred, using cash only does not prevent the expansion of elasic currency. Qualified or Restrictive indorsements do that by preventing the fractionalization/collateralization and or placement of drafts into the secondary securities market as Promissory Notes/Bills of Exchange.
When I write the drawer "deposes" his cash to the bank, I don't mean he merely transfers it to the bank for safekeeping, or that the bank ledgers the amount of the cash to his account for later retrieval in like kind (cash). What I mean is the drawer EXCHANGES his cash with the bank for BANK CREDIT and only bank credit; not cash. So if the drawer gives me a check I don't believe he's giving me an order for the bank to pay me the equivalent in cash. He and the bank may have some agreement about someone (including the depositor) getting cash for the checks he writes and I may not find out about those agreements until I take the check he gave me to the bank and attempt to exchange it for cash (or non-negotiable Federal Reserve Notes of face value, if I don't want to participate in elastic currency). Since I cannot intervene in the agreement between the drawer and the drawee and compel the bank to give me cash in exchange for the drawer's bank credit, my only recourse is to return the dishonored instrument to the drawer and demand another form of payment.
I don't see how an unfavorable agreement between the drawer and the drawee constitutes forcing me to blank indorse the check. I can demand another form of payment from the drawer, like cash. Or adopt a payment policy from those I may be inclined to exchange with, like "Cash Only".
The only way I can see one is forced to blank indorse, is if one is forced to take checks.
I didn't mean to trigger tangent discussions about account balances and physical transfer of cash between banks. I too don't think they apply to the discussion.
I don't know this is the case when a depositor deposes his cash to the bank. I'm merely suggesting it may be. I have a lot more to study in your response and intend to respond.
Be blessed.
Jay Scott.
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Edited by - Jay Scott on 06 Jul 2008 17:27:48 |
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Interesting experience at the bank
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