Source: http://www.freedom-school.com/money/ultra-vires-banks.html
Timestamp: 2019-04-20 07:16:31+00:00

Document:
The United States Code, Title 12, Section 24, Paragraph 7 confers upon a bank the power to lend its money, not it’s credit. In First National Bank of Tallapoosa vs. Monroe, 135 Ga 614; 69 S.E. 1123 (1911), the court, after citing the statue heretofore 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 there any authority to issue them through such power incidental of the business of banking. A bank can lend its money, not its credit.” Meanwhile, they do it anyway from a profit motive, even though it flies in the face of their primary duty to protect people’s money.
C.E. Healey & Son v. Stewardson Nat. Bank, 1 N.E.2d 858, 285 Ill. App. 290.
People’s Nat. Bank of Winston-Salem vs. Southern States Finance Co., 122 S.E. 415, 192 N.C. 69, 48 A.L.R. 519.
Colley v. Chowchilla Nat. Bank, 255 P. 188, 200 C. 760, 52 A.L.R. 569.
Rice & Hutchins Atlanta Co. v. Commercial Nat. Bank of Macon, 88 S.E. 999, 18 Ga.App. 151.
City Nat. Bank of Wellington v. Morgan, Civ. App., 258 S.W. 572.
Farmers’ & Merchants’ Bank of Reedsville v. Kingwood Nat. Bank, 101 S.E. 734, 85 W.Va. 371.
Best v. State Bank of Bruce, 221 N.W. 379, 197 Wis. 20.
A national bank’s charter requires that they protect customers money first, and then make money second. National banks are only allowed to make money in order to protect people’s money so one serves the other, but the priority is to protect.
b. “A national bank cannot lend its credit to another by becoming surety, endorser, or guarantor for him, such an act; is ultra vires…” Merchants Bank v. Baird 160 F 642.
• “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 LED 637.
• “Mr. Justice Marshall said: The doctrine of ultra vires is a most powerful weapon to keep private corporations within their legitimate spheres and to punish them for violations of their corporate charters, and it probably is not invoked too often. Zinc Carbonate Co. v. First National Bank, 103 Wis 125, 79 NW 229. American Express Co. v. Citizens State Bank, 194 NW 430.
• “A bank may not lend its credit to another even though such a transaction turns out to have been a benefit to the bank, and in support of this a list of cases might be cited, which-would like a catalog of ships.” [Emphasis added] Norton Grocery Co. v. Peoples Nat. Bank, 144 SE 505. 151 Va 195.
• “It has been settled beyond controversy that a national bank, under federal Law being limited in its powers and capacity, cannot lend its credit by guaranteeing the debts of another. All such contracts entered into by its officers are ultra vires…” Howard and Foster Co. v. Citizens Nat’l Bank of Union, 133 SC 202, 130 SE 759 (1926).
• “…checks, drafts, money orders, and bank notes are not lawful money of the United States…” State v. Neilon, 73 Pac 324, 43 Ore 168.
• “Neither, as included in its power not incidental to them, it is a part of a bank’s business to lend it’s 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,… 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. Morse. Banks and Banking 5th Ed. Sec. 65; Magee, Banks and Banking, 3rd Ed. Sec 248.” American Express Co. v. Citizens State Bank, 194 NW 429.
• “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 national bank cannot lend its credit or become an accommodation endorser.” National Bank of Commerce v. Atkinson, 55 E 471.
• “…the bank is allowed to hold money upon personal security; but it must be money that it loans, not its credit.” Seligman v. Charlottesville Nat. Bank, 3 Hughes 647, Fed Case No. 12, 642, 1039.
• “A loan may be defined as the delivery by one party to, and the receipt by another party of, a sum of money upon an agreement, express or implied, to repay the sum with or without interest.” Parsons v. Fox 179 Ga 605, 176 SE 644. Also see Kirkland v. Bailey, 155 SE 2d 701 and United States v. Neifert White Co., 247 Fed Supp 878, 879.
• “The word ‘money’ in its usual and ordinary acceptation means gold, silver, or paper money used as a circulating medium of exchange…” Lane v. Railey 280 Ky 319, 133 SW 2d 75.
• “A promise to pay cannot, by argument, however ingenious, be made the equivalent of actual payment..” Christensen v. Beebe, 91 P 133, 32 Utah 406.
• “A bank is not the holder in due course upon merely crediting the depositors account.” Bankers Trust v. Nagler, 229 NYS 2d 142, 143.
• “A check is merely an order on a bank to pay money.” Young v. Hembree, 73 P2d 393.
• “Any false representation of material facts made with knowledge of falsity and with intent that it shall be acted on by another in entering into contract, and which is so acted upon, constitutes ‘fraud,’ and entitles party deceived to avoid contract or recover damages.” Barnsdall Refining Corn, v. Birnam Wood Oil Co., 92 F 26 817.
• “Any conduct capable of being turned into a statement of fact is representation. There is no distinction between misrepresentations effected by words and misrepresentations effected by other acts.” Leonard v. Springer 197 Ill 532.64 NE 301.
• “If any part of the consideration for a promise be illegal, or if there are several considerations for an unseverable promise, one of which is illegal, the promise, whether written or oral, is wholly void, as it is impossible to say what part or which one of the considerations induced the promise.” Menominee River Co. v. Augustus Spies L and C Co., 147 Wis 559.572; 132 NW 1122.
• “The contract is void if it is only in part connected with the illegal transaction and the promise single or entire.” Guardian Agency v. Guardian Mut. Savings Bank, 227 Wis 550, 279 NW 83.
• “It is not necessary for recession of a contract that the party making the misrepresentation should have known that it was false, but recovery is allowed even though misrepresentation is innocently made, because it would be unjust to allow one who made false representations, even innocently, to retain the fruits of a bargain induced by such representations.” Whipp v. Iverson, 43 Wis 2d 166.
First National Bank of Montgomery vs. Jerome Daly. “Regarding the power to delegate the control of our money supply to a private corporation can be found in 16 Am Jur 2d, Section 347, which states: "The rule has become fixed that the legislature may not delegate legislative functions to private persons or groups, or to private corporations or a group of private corporations." "
Despite the above court cases, Ralph Gelder, Superintendent, Department of Banks and Banking, State of Maine, said on Feb. 20, 1974, "A commercial bank is able to make a loan by simply creating a new demand deposit (so called checkbook money) through bookkeeping entry." This is in total contradiction to what the courts have said. Yet, that is exactly how the banks create the money to loan to its customers or to buy government bonds.
• If a party breaches its authority, by entering into an agreement that it knows it is not allowed by law to execute, is it moral to allow that party to enforce the agreement?
• Is it moral to force a person to pay on a loan, when that person did not know that the bank did not have the legal authority to issue credit or to become surety?
• Is it moral for a bank to place a negative mark on your credit report, when they did not have the authority to enter into the agreement in the first place, and that any deficit in payment has been insured by a third party insurance company and can be written off as a claim?
In addition to these three points, consider also that moral arguments (arguments based in equity), verses legal arguments (arguments based in law), are only upheld if the party seeking to enforce the agreement comes to the court with “clean hands.” This concept is known as the clean hands doctrine. What this doctrine means is that if a bank desires to enforce an agreement based on equity (morality), then they must have acted equitable (moral). In the case of credit, if the banks know that the law prevents them from loaning credit (there is over a hundred years of case law on this point) and they do it anyway, then they simply do not have clean hands, and cannot argue their case in equity. Therefore they must argue in law.
MEANWHILE, THE LAW PREVENTS THEM FROM LOANING CredIT. There are penalties and forfeitures attached to what the bank did. In this case there are. In fact there are penalties attached to national banks going beyond their express powers in that they are exposing depositor’s money to loss in contradiction to the bank’s primary duty. Therefore, the issue that can be raise is the argument of ultra virus and not only is the contract void, but even if the borrower did receive a benefit, the borrower was not unjustly enriched. If the contract is void then both parties walk away as if there never was a contract. The judge is then asked to declare a zero balance and deem it as paid as agreed. Since the borrower provided the value for the source of funds, the borrower is also entitled to a judgment in the amount of the highest credit limit issued or loan amount. Also, since the banks acts demonstrates that the bank took unfair advantage of the borrower, this results in the bank needing to be penalized. Typically, the borrower is entitled to ask for a financial award against the bank in the amount of the debt forgiven. Since fraud is committed, the borrower is entitled to all sums paid on the contract including interest, plus treble (triple) damages, attorney fees expended and court and other costs in addition. The borrower can also demands a zero balance on this debt, and a voidance of the loan agreement, and a financial judgment in favor of the borrower due to the bad behaviour of the lender.
In Federal District Court, the borrower may have additional claims for relief under “Civil RICO” Federal Racketeering laws. (18 U.S.C. 1964) As the lender may have established a “pattern of racketeering activity” by using the U.S. Mail more than twice to collect an unlawful debt and the lender may be in violation of 18 U.S.C. 1341, 1343, 1961 and 1962. The borrower may have other claims for relief. If he can prove there was or is a conspiracy to deprive him of property without due process of law. Under 42 U.S.C. 1983 (Constitutional Injury), 1985 (Conspiracy) and 1986 (“knowledge” and “Neglect to Prevent” a U.S. Constitutional Wrong). Under 18 U.S.C.A. 241 (Conspiracy) violators, “shall be fined not more than $10,000 or imprisoned not more than ten (10) years or both.
In a Debtor’s RICO action against its creditor, alleging that the creditor had collected an unlawful debt, an interest rate (where all loan charges were added together) that exceeded, in the language of the RICO Statute, “twice the enforceable rate.” The Court found no reason to impose a requirement that the Plaintiff show the Defendant had been convicted of collecting an unlawful debt, running a “loan sharking” operation. The debt included the fact that exaction of a usurious interest rate rendered the debt unlawful and that is all that is necessary to support the Civil RICO action. Durante Bros. And Sons, Inc. v. Flushing Nat’l Bank, 755 F2d 239, Cert. Denied, 473 US 906 (1985).25. The Supreme Court found that the Plaintiff in a civil RICO action, need establish only a criminal “violation” and not a criminal conviction.
Further, the court held that the Defendant need only have caused harm to the Plaintiff by the commission of a predicate offense in such a way as to constitute a “pattern of Racketeering activity.” That is, the Plaintiff need not demonstrate that the Defendant is an organized crime figure, a mobster in the popular sense, or that the Plaintiff has suffered some type of special Racketeering injury; all that the Plaintiff must show is what the Statute specifically requires. The RICO Statute and the civil remedies for its violation are to be liberally construed to effect the congressional purpose as broadly formulated in the Statute. Sedima, SPRL v. Imrex Co., 473 US 479 (1985).
Richard L. S*******, et. al.
This is an action for recovery of damages. This counter complaint is filed and these proceedings are instituted under the Consumer Credit Protection Act, 15 U.S.C. §1601 et seq. and Title 12 Code of Federal Regulations, Part 226, regulation Z and X. Jurisdiction of this court is invoked pursuant to Title 15 U.S.C. §§1601, 1640(e).
The credit transaction was rescindable and subject to the disclosure requirements of Title 15 U.S.C. §1635(a) and Title 12 Code of Federal Regulations, Section 226.23(a) even though Plaintiff did not waive their right to retain or acquire a UCC lien on the property. The UCC lien, nevertheless apply to the transaction under revised Article 9 and to Plaintiff because lien rights on the property arose in favor of the Plaintiff as a result of the transaction. The Federal Reserve Board Interpretation, Title 12 Code of Federal Regulations Part 226, Supplement I, Paragraph 23(a)(1), provides that in such a situation the transaction is rescindable.
(a) Right to rescind or cancel was inside other disclosure statements and went unsigned by both parties.
(b) The interest disclosures were grouped together with other information within the documents.
(c) The two required statements under 15 U.S.C. §1639(a)(1)(A) and (B) are completely missing.
(d) Required disclosure statements are completely missing under 15 U.S.C. §1638(a)(2)(B) (a)(9), (a)(11) and (a)(12).
The notice of the right to rescind delivered to Defendant by Plaintiff consisted of a single sheet of paper, and did not include a form by which Defendant could exercise such right, as required by Title 12 Code of Federal Regulations, Section 226.23(b)(3).
Since this action was commenced, Plaintiff has continued and so continues to violate the Consumer Credit Protection Act, Title 15 United States Code, Section 1601 et seq., and Regulation Z, Title 12 Code of Federal Regulations, Part 226, which was adopted pursuant to such Act, by failing to properly make the disclosures required by the Act and Regulation Z and X, as herein after more particularly set forth.
Plaintiff failed to disclose the amount of its finance charge in the disclosure statement, using the term "finance charge," as required by Title 12 Code of Federal Regulations, Section 226.7(f).
Plaintiff failed to disclose in or with the disclosure statement each periodic rate that may be used to compute its finance charge, the range of balances to which such periodic rate is applicable, and the corresponding annual percentage rate.
Plaintiff failed to compute in or with the disclosure statement the annual percentage rate (or rates) of its finance charge as required by Title 12 Code of Federal Regulations, Section 226.7(g).
Plaintiff failed to disclose in or with the periodic statement the amount of the balance to which the periodic rate was applied and an explanation of how that balance was determined and further failed to disclose the fact that the balance is determined without first deducting all credits and payments made after acceleration and the amount of such credits and payments as required by Title 12 Code of Federal Regulations, Section 226.7(e).
Plaintiff failed to disclose in or with the acceleration statement the amounts, itemized and identified by type, of charges other than finance charges debited to the account during the acceleration period as required by Title 12 Code of Federal Regulations, Section 226.7(h).
Plaintiff failed to disclose the date by which or the time period within which the new balance or any portion of the new balance must be paid to avoid additional finance charges as required by Title 12 Code of Federal Regulations, Section 226.7(j).
By reason of the foregoing, Plaintiff has failed to make the disclosures required by 15 U.S.C. §1601 et. seq. and Title 12 Code of Federal Regulations, Section 226.7, clearly and conspicuously in writing, in a form that Defendant could keep as required by 15 U.S.C. §1601 et. seq. and Title 12, Code of Federal Regulations, Section 226.5(a)(1).
As a result of Plaintiff’s aforesaid violations, Plaintiff is liable to Defendant in an amount not less than $2000.00 per violation, clear title to property with fixtures and cost of litigation, as provided in Title 15 United States Code, Section 1601 et. seq.

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