The Dispatch of Merchants

8/14/2019 The Dispatch of Merchants

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THE DISPATCH OF MERCHANTS

by William L. Avery, A.M

A shor !rese"aio" o" he s#b$e% o& so#r%es o& he liabiliy &or he so %alle' I"%ome Ta( as

)ro#"'e' i" he La* Mer%ha" hro#)h he Fe'eral Reserve a"' oher sa#es.

INTRODUCTION

+alla" a(&i)hers a"' oher live Parios have ha#le' %o"si'erable la* i"o he %o#rs o" a(a"' mo"ey iss#es. -e, *haever evi'e"%e o& la* hey bri") a"' ho*ever e(e"sively heyresear%h heir %ases, hey are r#le' a)ai"s a"' eve" im!riso"e' i" %rimi"al %o#rs. We have yeo )ai" a si")le 'e%isio" o" s#bsa"ive la* o &ree #s &rom he %or!orae &e#'alism s#&&o%ai")he *orl' i" he "ame o& a"iComm#"ism. So, here has )o o be a reaso" *hy *e mee &ail#rea&er &ail#re beyo"' he %har)e ha he $#')es are all %orr#! a"' )o'less.

The r#h seems o be ha *e have sim!ly "o ye hi #!o" he vial "erve *hi%h *ill %o"v#lsehe *hole s*i"'li") la* &ormally %o"si#io"al la*/ #!o" *hi%h he $#')es are %om!elle' o)ive heir 'e%isio"s. I is he o"ly a"s*er ha ma0es se"se. Is his a"s*er 'is%overable so ha *e%a" bea hose ha "%io" by hese la*s a heir o*" )ame1 The *rier believes ha he has'is%overe' he a"s*er hro#)h vario#s heae' %o"&ro"aio"s a"' !lea'i")s i" several %o#rs.

I"'ee', i" Se!ember o& 2345, he *rier s#%%ee'e' i" %or"eri") he %o#"y $#')e o" he mo"eya"' e"'er iss#e, a"' by ba')eri") a"' bliseri") him #"il he %ho0e' *ih ra)e, %om!elle' himo bl#r o# he se%re allo*i") him o si)" a *ri o& assisa"%e remember hose1/ a)ai"s he*rier &or 'o))e'ly resi") o bar)ai" *ih ba"0er s*i"'lers over he ri)h o his o*" !ro!ery.The re%e" Com!lai", i" a %ivil a%io" i" Fe'eral Co#r, res#li") &rom his a% is a''e' as !ar

o& he a!!e"'i( o his boo0.

Well, he a"s*er is i" he mo"ey, all ri)h, b# &ar beyo"' *ha has bee" !lea'e' so &ar. I iesi"o oher s#bsa"ive iss#es raise' by 6ill Ha"0s o" "o"liabiliy o& "a#ral !erso"s &or i"%omea(es o" &ra"%hises )ra"e' by he saes. This is he o"ly )e"#i"e basis &or over#r"i") he ille)al!erso"al i"'ivi'#al/ i"%ome a(, *hi%h is a "#lliy o be)i" *ih a"' absol#ely 7vol#"ary7 &orreaso"s ha *ill be %overe' laer.

The e"ire a( s%heme is )ro#"'e' i" he so %alle' 7%ommer%e %la#se7 o& Ari%le I, se%io" 2,%la#se 8, o& he Fe'eral Co"si#io", allo*i") Co")ress o 7re)#lae %ommer%e *ih &orei)""aio"s, a"' amo") he several saes, a"' *ih he I"'ia" ribes.7 The S#!reme Co#r hel' i"

+ibbo"s v. O)'e" i" 29:; ha %ommer%e 7%om!rehe"'s ra&&i%, ra'e, "avi)aio",%omm#"i%aio", he ra"si o& !erso"s a"' he ra"smissio" o& messa)es by ele)ra!h< i"'ee'every s!e%ies o& %ommer%ial i"er%o#rse.7

This %la#se *as *rie" o !reve" he Saes &rom *re%0i") he ="io" #!o" erro"eo#s heorieso& 7i"er!osiio"7 o 7"#lli&i%aio"7 a"' o )#ara"ee he 7&ree &lo* o& i"ersae %ommer%e,7%erai"ly a le)iimae aim. Ho*ever, o re)#lae a"' )#ara"ee are "o he same as s!o"sor a"'!romoe.


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Neverheless, %omme"%i") *ih he I"ersae Commer%e A% o& 2994, mo"olihi% !rivaee"er!rise s#%%ee'e' i" e(!ro!riai") he Fe'eral )over"me" o is o*" #ses by several %leverla*s. O"e s#%h *as he Sherma" A"iTr#s A% o& 293>, *hose *or'i") !roe%s &ar 'i&&ere"7!erso"s7 ha" o"e mi)h s#s!e%. 6y i, eve" he i""o%e" #"em!loye' are 7i" resrai" o& ra'e7by he mere &a% o& bei") #"em!loye'.

The "'ame"al !remise has bee" o %om!el as ma"y !rivae i"'ivi'#als as !ossible o be%ome7mer%ha"s7 s#b$e% o hese la*s, *here hey %o#l' be s#b$e% o "o ohers, a"' ha' a%#allybee" !romoi") he 7&ree &lo* o& i"ersae %ommer%e,7 b# ri)h srai)h i"o o"e mo"o!oli?e'o%ea" o& !rivae %o"rol o#si'e he )over"me".

This res#l is a%hieve' hro#)h he ="ie' Naio"s reay, #!o" *hi%h, by he %ommer%e %la#sea"' he 7la* o& "aio"s,7 every h#ma" bei") has be%ome, i" o"e *ay or a"oher, a 7mer%ha"7s#b$e% o a" i"er"aio"al s#!ersomehi") %alle' he 7La* Mer%ha".7 This is sri%ly avol#"ary la* "o*here *rie" 'o*" a"' i is sri%ly a !rivae la* o& "e)oiable i"sr#me"s,sales, i"s#ra"%e, a"' oher maers bi"'i") o"ly #!o" he ho"or o& 7mer%ha"s,7 as he !erso"al

i"%ome a(.

Th#s, he sim!les *ay o %om!el everyo"e o be%ome a 7mer%ha"7 #"'er his #"*rie" la* iso %om!el him o a%%e! bills o& e(%ha")e as mo"ey. These %om!#lsory bills o& e(%ha")e are"o"e oher ha" he Fe'eral Reserve Noes, series 23@8, 23@3, a"' 234;, le)ali?e' as 7mo"ey7 o"Mar%h 29,23@9, bei") also irre'eemable !er!e#al a""#iy bo"'s, or small %ha")e &or)over"me" se%#riies.

The basis &or his a%io" *as lai' i" he Fe'eral Reserve A% *hi%h ma0es %ommer%ial !a!er he"'ame"al 7la*l mo"ey7 *hi%h &orm he reserves o& member ba"0s. This mea"s !rivae"oes, a%%e!a"%es, a"' bills o& e(%ha")e, be%ome la*l mo"ey b# "o le)al s!e%ie, &or s!e%ie

'e&eas he s*i"'le by 'esroyi") %re'i a"' 'eb.

I li0e*ise mea"s %he%0s. Th#s, by he 'aily !assi") o& Fe'eral Reserve Noes a"' e"'orsi") o&%he%0s a"' he #se o& Cre'i Car's, every i"'ivi'#al, *haever his %alli"), be%omes a %re'imer%ha" s#b$e% o s#mmary $#')me" #"'er he !rivae %#som o& mer%ha"s, *hose !rimaryr#le is he liabiliy o i"&orm o" o"esel& #!o" o"es o*" a%s, )oo's, a"' 'eali")s.

No*, his La* Mer%ha" has "ever bee" he !#bli% !osiive la* o& a"y !ari%#lar %o#"ry, b# hemere !rivae, %o"se"s#al, vol#"ary !ra%i%e o& i"er"aio"al mer%ha"s a"' ra'ers. Alho#)h!arially i"%or!orae' i"o vario#s #"i&orm sae %o'es o" "e)oiable i"sr#me"s, m#%h o& i is"o "e%essarily i" !ri". I"'ee', some o& i %ha")es *ih *ome"s &ashio"s.

Th#s, i is his #"*rie" !rivae la* o& *hi%h he $#')es are bo#"' o a0e 7$#'i%ial "oi%e7 i"heir r#li")s. The !ri"%i!le bei") ha, *haever else %a" be !lea'e', a"y s#!!ose'ly "aio"al la*o& %ivil %o"si#io"al ri)h %laime' violae' %a" be r#le' immaerial o" he basis o& his #"see",#"s!o0e", im!ri"e', 7"a#ral7 la*. I "ever "ee's o be )ive" i" evi'e"%e, a"' al*ays &avors he!ra%i%i") 7mer%ha"7 %omm#"i?er as a)ai"s he B#asi 7mer%ha"7 %ii?e" *ho has" he &ai"esi'ea ha he $#')e sees him as a mer%ha", #"able o #"'ersa"'.


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This is he 7la*7 #"'er *hi%h a"iComm#"is %omm#"i?ers !romoe 7*ih +o's hel!, a beer*orl'7 o& Mer%a"ile S#!er Re!#bli%, i" *hi%h he 7!erso"al res!o"sibiliy7 o& sel&i"%rimi"aio"*ill be he "'ame"al r#le, !roe%e' #"'er he 2;h Ame"'me".

I"%or!oraio" o& his La* Mer%ha" i"o he E")lish %ommo" la* by Lor' Ma"s&iel' s#bseB#e"

o 245@ se o&& he Ameri%a" Revol#io". This !roves ha i has "ever bee" a !ar o& o#r o*"la*, eve" by 'e%ei.

These are he iss#es o& la* #!o" *hi%h *e %a" re%over o#r !riva%y, o#r &ree'om, o#r "aio", a"'o#r mo"ey a !ar.

The &ollo*i") !a)es !rese" 'eaile' 'is%#ssio"s o& hese iss#es, a"' li0e*ise !rese" ma"yobvio#s bases o" *hi%h 'e&e"ses a"' aa%0s i" he %o#rs %a" very e&&e%ively be ma'e. The%o"e" o& hese !a)es, a he leas, *ill &or he &irs ime !rovi'e #s *ih a &ooi") eB#al o hao& o#r orme"ors a"' !erha!s eve" more a'va"a)eo#s.

The a#hor *as &or several years a" e'ior a"' ra"slaor o& he %ommer%ial %o'es o& ma"y WesE#ro!ea" "aio"s, a"' mos So#h a"' Ce"ral Ameri%a" "aio"s, a"' o& he %or!orae i"%omea(es o& he same, i"%l#'i") %o#r %ase 'e%isio"s.

The s#bsa"%e o& he o#li"e o& hisori%al ba%0)ro#"' o" he !a)es imme'iaely &ollo*i") sho#l'&irs be *ell 'i)ese' be&ore !ro%ee'i").

The mos 'isasro#s %o#rse *e %a" !#rs#e is o blame o#r !li)h o" 7he +over"me"7 *he", as*ill be see", i is !rivae i"eress alo"e *hi%h are e"slavi") #s i" he "ame o& &ree'om.

6ill Avery

Fra"0li", Ne* -or0#ly ;, 234@

OUTLINE AND HISTORICAL BACKGROUND OF THE ARGUMENT

2:25 . . . . . . Ma)"a Chara )#ara"ees &orei)" mer%ha"s he ri)h o ra'e &reely i" E")la"'.2:;4 . . . . . . Hamb#r), L#be%0, a"' 6r#"s*i%0 be)i" he Ha"sab#"' or Ha"seai% Lea)#e o&

mer%a"ile %iies i" +erma"y.2:98.. . . . . . 22 E'*. I. Sa#e o& A%o" 6#mel. Firs la* o e"able &orei)"/ mer%ha"s o

%olle% 'ebs by s#mmary !ro%ess a"' arbirary sei?#re o& !ro!ery a"' im!riso"me".

e*s are s!e%i&i%ally e(%l#'e' &rom he be"e&is o& his la*.2889 . . . . . . E'*ar' III )ra"s e(e"sive !rivile)es o he Ha"sa i" re#r" &or "'s o re'eem his#ee"s $e*els !a*"e' o mo"ey mer%ha"s i" Colo)"e.

2585 . . . . . . oh" Calvi"s I"si#es o& he Chrisia" Reli)io" )ives he blessi")s o& he re&orme'reli)io" o he a0i") o& i"eres a"' #s#ry.

2585 . . . . . . He"ry III sei?es he mo"aseries.2585 . . . . . . Ma%hiavellis The Pri"%e.


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2599 . . . . . . S!a"ish Arma'a la#"%he' by D#%h a"' S!a"ish mer%a"ile i"eress a)ai"sE")la"' is *re%0e' by sorms.

2539 . . . . . . Eli?abeh I e(!els he Ha"seai% mer%ha"s &rom E")la"' &or resi") o )ra"re%i!ro%al !rivile)es o E")lish ra'ers. Closes he Seelyar'. They reire o Hamb#r).

2@>;.. . . . . . ames I o& E")la"'. The La* Mer%ha" e&&e%ively i"%or!orae' i"o he %ommo"

la* o& E")la"'. This is esse"ially he la* o" "e)oiable i"sr#me"s a"' i"s#ra"%eere%e' o# o& he Civil La*.2@29;9 . . . .Reli)io#s *ars 'esroy millio"s i" +erma"y. Norher" mer%a"ile %iies es%a!e

har'ly o#%he'.2@;3.. . . . . . Charles I m#r'ere' &or o!!osi") he mer%a"ile i"eress o& he Ciy o& Lo"'o".

Crom*ell a"' %liB#e.2@99 . . . . . . D#%h a"' +erma" mer%a"ile i"eress !la%e William II o& ora")e o" he 6riish

hro"e.242; . . . . . . Ho#se o& Ha"over a"' 6r#"s*i%0 a%B#ires he 6riish hro"e i" he !erso" o&

+eor)e I, &aher o& +eor)e II, a"' )rea )ra"'&aher o& +eor)e III.245@.. . . . . . Lor' Ma"s&iel' be%omes Chie& #si%e o& he i")s 6e"%h, ma0e vas a''iio"s o

Civil La* i"o he Commo" La*. Es!e%ially #r"e' he a%io" o& ass#m!si &or 'eb/i"o a" eB#iable a%io", h#s 'e"yi") rial by $#ry o" *ris o& assisa"%e.2445 . . . . . . Revol o& Ameri%a" %olo"ies a)ai"s 6riish mer%a"ile la* 'erive' &rom Lor'

Ma"s&iel's 'e%isio"s.292> . . . . . . Lea)#e o& Hamb#r), L#be%0, a"' 6reme" em!orarily bro0e" by Na!oleo".29;: . . . . . . Case o& S*i& v. Tyso" 'e%lares he mer%a"ile la* mer%ha"/ o be %ommo" la* o&

he ="ie' Saes, h#s )#ara"eei") rial by $#ry #"'er he Seve"h Ame"'me" i" he=.S. Co#rs i" %ommer%ial 'is!#es. I" e&&e% )ra"e' a !re&ere"ial &or#m i" Fe'eralCo#r *here relie& mi)h "o be ha' i" a Sae Co#r.

29@2@5 . . . .Ameri%a" Civil War.29@3 . . . . . . ay +o#l' aem!s o %omer )ol'. Mor)a" o he res%#e.294> . . . . . . Pri"%i!le o& limie' liabiliy &or %or!orae %ommer%ial i"eress e"ers !ra%i%e.

Pri"%i!les o& Calvi" a!!lie' o ra'e.294> . . . . . . Hamb#r), L#be%0, a"' 6reme" a)ai" be%ome i"'e!e"'e".294> . . . . . . Pr#ssia 'e&eas Fra"%e, e(a%s a" i"'em"iy o& o"e billio" 'ollars )ol'.293> . . . . . . Sherma" A"iTr#s A% ma0es ille)al all %ombi"aio"s i" resrai" o& ra'e i"

i"ersae or &orei)" %ommer%e. Does "o a!!ly o ma"#&a%#ri") mo"o!olies. E&&e%ivelyma0es every %ii?e" a 7mer%ha"7 eve" #!o" his o*" !erso" #"'er he %ommer%e %la#se.

293> . . . . . . ="ie' Saes a'o!s he )ol' sa"'ar'.23>> . . . . . . ="ie' Saes %eases %oi"a)e o& he )ol' 'ollar.23>4 . . . . . .Ro%0e&ellerHarrima" la#"%h *ar o" Mor)a" i"eress. Pa"i%.23>9 . . . . . . Ro%0e&eller a"' Al'ri%h see0 o# Warb#r)s o& Hamb#r) o se #! he Fe'eral

Reserve.2328 . . . . . . Creaio" o& Fe'eral Reserve a"' o& so%alle' I"%ome Ta(, o)eher he bases I &or

he #"iversal 'eba"'%re'i &ra"%hise #!o" *hi%h !rivae i"'ivi'#als %a" be %om!elle'o i"&orm o" hemselves as 7mer%ha"s.7

232; . . . . . . Clayo" A% rei"&or%es he Sherma" A%. E(em!s 7"o"!ro&i7 or)a"i?aio"s &romall a"ir#s la*s, i.e. &o#"'aio"s.

232;29 . . . .Worl' War I. Ro%0e&eller+erma" %liB#e 'e&eas Mor)a"Rohs%hil' %liB#e, la#"%h%am!ai)" o %hemi%ali?e a"' !lasi%i?e he *orl' i"o sy"hei% li&e.


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2325 . . . . . . Case o& 6r#shaber v. ="io" Pa%i&i%, reieraes he "o"liabiliy o& !rivaei"'ivi'#als &or he so%alle' I"%ome Ta(. De%lares )e"#i"e 7I"%ome Ta(7 o be a 'ire%a( "o a#hori?e' by he 2@h Ame"'me", a"' ha 2@h Ame"'me" is s#!er&l#o#sbe%a#se Co")ress alrea'y ha' !o*er o a#hori?e he a( i" B#esio", "amely a" e(%isea( o" %or!orae or $#risi% !rivile)es meas#re' by he amo#" o& i"%ome !ro'#%e' by he

e(er%ise o& he !rivile)e.2324 . . . . . . 6olshevi0 Revol#io". La#"%he' o &ase" he +erma" yo0e o" R#ssia a"' %reae a!erma"e" eleme" 7hosile7 o he =.S. a"' he &ree *orl'. Pa"+erma"ism a *or0#"'er %over o& !a"Savism o %o"B#er boh =SSR a"' =SA #"'er he 6riish &la).

23:3 . . . . . . Crash i"'#%e'. +erma"y a"' Ro%0e&ellers i)he" )ri! o" =.S. Coal a"' !erole#m%arels ma0e &irsha"' a)reeme"s o" *orl' mar0es. Ro%0e&ellersI.+. Farbe" allia"%e.

2389 . . . . . . Case o& Erie R.R. v. Tom!0i"s reverses S*i& v. Tyso", 'e%lari") here is "o)e"eral &e'eral %ommo" la*, h#s 'esroyi") ri)hs o "ormal $#ry rial as )#ara"ee' byS*i&. Also allo*s $#')e o )ive $#'i%ial "oi%e o he i"'is%rimi"ae a"' #"*rie"7%#som o& Mer%ha"s7 as 'omesi% r#le o& la*, e.). !#bery ries i" Samoa. Hi"'erli'er%ase 'e%i'e' he same 'ay.

2383 . . . . . . W.W.II. Re"e*al o& Ro%0e&eller allia"%e *ih Na?i L+. Farbe".23;2 . . . . . . 7The Presi'e" a"' he Prime Mi"iser7 by he Ala"i% Charer, ma'e o" he hi)hseas, arro)ae o hemselves he %a!a%iy o )ra" 7h#ma" ri)hs7 i" he 7Fo#r Free'oms7o he !eo!les o& he =.S., 6riai" a"' he *orl'. Ma0es all 7Civil Ri)hs7 e&&e%ive o"lyi" e"&or%eme" o& 7"a#ral la*7 o& s#mmary $#')me" #"'er he La* o& Mer%ha"s, a"'ha !roe%e' by he =N reaies o be ma'e i" 23;5.

23;:.. . . . . . Case o& DOe"%h, D#hme G Co. v. FDIC e"lar)es s%o!e o& Erie R.R. a"'Hi"'erli'er.

23;8.. . . . . . Case o& easley G Maeso" v. Rohe"sies rher rai&ies 6r#shaber.23;8 . . . . . . I"%ome Ta( *ihhol'i") be)i"s o" #ly 2.23;5 . . . . . . =N Treay #r"s all =.S. %o#rs i"o ra'i") !is a"' %o#rs o& he sa!le #!o" he

#"*rie" !ra%i%e o& mer%ha"s.23;5 . . . . . . Ro%0e&ellerNa?i a(is la#"%hes !ho"y 7Col' War7 a F#lo", Misso#ri, i" s!ee%h by

Wi"so" Ch#r%hill o" he 7Iro" C#rai".723;4 . . . . . . Israel %reae' as 'iversio"ary 7io"is7 !a*" o& +erma"y o %o"%eal r#e Calvi"is

io"ism o& Pa"+erma"ism #"'er he Fo#rh Rei%h b#il'i") o" Ameri%a" soil. Re', lilyWhie, a"' 6l#esa"s6la%0a"'e*.

2354 . . . . . . =.S. so#r%es la#"%h Sovie 7s!#"i07 o %om!el =SA i"o !ho"y %om!#lsive 7s!a%era%e.7 Sovies lose by 'esi)".

23@4 . . . . . . :5h Ame"'me" %ha")es i%e!resi'e"%y i"o a 6oar' o& Dire%ors o& %or!oraeAmeri%a *hi%h may 'ismiss he Presi'e" a *ill. Presi'e"%y "o* e&&e%ively aCha"%ellorshi! i" e(e%#ive eB#iy.

23@9 . . . . . . Wih'ra*al o& 2s )ol' re'eemabiliy &or =.S. %#rre"%y by P#bli% La* 3>:@3 lo%0sall =.S. %ii?e"s i"o sa#s o& !erma"e" &e#'alisi% 'ebor%re'ior o" he 7"a#ral la*7o& s#mmary $#')me" hro#)h #se o& "e)oiable i"sr#me"s i" he &orm o& irre'eemable!er!e#al a""#iy bo"'s FRNs/, %he%0s, a"' %re'i %ar's. This is he #"iversal %re'ia"'i"s#ra"%e &ra"%hise #!o" *hi%h he e"&or%eme" o& he %o'e o& he IRS is base',i"%l#'i") he So%ial Se%#riy )ro#"'s.

2348 . . . . . . -om i!!#r War. Ro%0e&eller !erole#m a"' e"er)y )a") la#"%hes Worl' War IIIa)ai"s !eo!les o& =.S. a"' 6riai", i"si#i") mass ria)e amo")s all !eo!les


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se!araio" o& he 7re!robae7 #"able o 'e&e"' hemselves &rom 7+o's Peo!le7 o& heE((o"/, !romoi") &ra#'#le" e"er)y %risis. Ro%0e&eller+erma" eleme" be)i"s &i"alim!erialisi% assa#l o" all remai"i") &ree a"' i"'e!e"'e" e"er!rise i" he *orl', os#b$e% i o a !yrami' o& mi"im#m i"vesme" !rivae i"erlo%0i") %or!orae &e#'alisi%%re'i&ra"%hises or !rivile)es.

2348 . . . . . . =.S. S#!reme Co#r o" aborio", #"'er %olor o& La* Mer%ha", allo*i") *ome"he 7h#ma" ri)h7 o& reai") heir bo'ies as *ares a"' %ommo'iies. So he #"bor", *hoare "o %o"si'ere' o be 7h#ma"7 or have 7h#ma" ri)hs7 be&ore &o#r mo"hs. E&&e%ivelyle)islaes he maerialisi% raio"ale esablishme". Le)ali?es basis &or massm#r'ers#"'er %olor o& 7"a#ral la*,7 rher se!arai") he millio"s o& he 7Re!robae7 &rom heha"'l o& sel&a!!oi"e' 7Sai"s7 *ho be%ome he 7&ies7 by "i%ely s#rvivi") heir o*"*ars a"' !olii%al assa#ls.234@.. . . . . . Ral!h Na'er !ro!oses ha he &e'eral )over"me" a0e over he &ra"%hiseso& he !erole#m %om!a"ies o# o& he ha"'s o& he saes.

PREFATORY MEMO ON THE LAW MERCHANT

The 2@h Ame"'me" a"' Fe'eral Reserve boh !asse' i" 2328, he same year o& revisio" o& heFe'eral EB#iy R#les.

P#r!ose o& he Fe'eral Reserve Noes/J To s#b$e% all i"ersae %ommer%e o he r#le o& EB#iyoverr#li") S*i& v. Tyso" o& 29;:/ #!o" %laim ha here is "o &e'eral %ommo" la* e(%e! La*Mer%ha" #"'er FRNs a"' Naio"al 6a"0s/, 7%ommo" la*7 K la* o& !rivae !ro!ery )ro#"'e'i" la"' as e(!o#"'e' i" he %ase 'e%isio"s. Sa#e la* is 7%ivil la*.7

Th#s, he Robber 6aro"s a%B#ire' he mea"s o& eva'i") he Co"si#io"al i"$#"%io" o& Ari%leI, se%io" 2>, %la#se 2, o" he s#b$e% o& e"'er by he Saes. I" 2389 hey e(e"'e' i by mea"s

o& he Erie R.R. 'e%isio". 6y i, he #"*rie" La* Mer%ha" *as a0e" o# o& he %ommo" la*h#s 'e&eai") he Seve"h Ame"'me"/ a"' !# i"o EB#iy, *here i %o#l' be 7$#'i%ially"oi%e'7 i" a"y $#ris'i%io". La* Mer%ha" K S#mmary #')me" K 7La* o& Na#re7 ooh a"'%la*/.

FRNs 'e%lare' la*l by Milam, *hi%h reierae' he le)al e"'er %ases o& 299; #illiar', &ore(am!le/. The mea"i") is ha he Fe'eral +over"me" %a" o#la* %ommo" la* o" he Fe'erallevel a"' re!la%e i *ih a" EB#iy e"&or%eable #!o" sa#es a"' a "e* ma""er o& !lea'i")7%o"&essio" a"' avoi'a"%e7 i"sea' o& he 'em#rrer/, h#s #r"i") he %o#rs i"o ra'i") a"'bar)ai"i") !is, &ormerly %alle' mer%ha" %o#rs o& he sa!le. !rivae/.

6# he Fe'eral +over"me" %a""o by Ari%le I, se%io" 2>, %la#se 2/ o#la* he s#bsa"%e o&he %ommo" la* o& he several saes a"' h#s re)#lae %ommer%e *ihi" he Saes by%om!elli") eB#iable mo"ey %ommer%ial !a!er, "e)oiable i"sr#me"s/ i" e(%ha")es be*ee"Saes a"' %ii?e"s o& Saes. Nor %a" he Saes. The bes he Fe'eral +over"me" %a" 'o is o%om!el he a%%e!a"%e o& !a!er be*ee" i"'ivi'#als.

Loo0 %arelly a yo#r Sae Civil Pra%i%e La* a"' R#les. The 7La*7 is he La* o& he Sae, o" #"il Mar%h 29, 23@9, *ere h#s !ayable, or a leas so mar0e'.

-e i&, by he Fe'eral Reserve A%, every Fe'eral Reserve Noe, *haever he series, is a 7le)ale"'er,7 is i also 7la*l mo"ey 17 Treas#ry o&&i%ials "o* ell #s ha boh e(!ressio"s mea" hesame hi"). Ta0e i or leave i, *haever bears he 7le)al e"'er7 B#aliy is 7la*l mo"ey.7

-e as easily as hey %o#l' have 'o"e *ih "o a!!are" $eo!ar'y o he s#bsa"%e o& heir 'e&e"seo Dalys asserio"s a"' he $#rys &i"'i")s, he 6a"0 'e%li"e' o e"'er a"yhi") b# he Fe'eralReserve Noes. We ri)hly as0 o#rselves 7Why17 Well, *hy i"'ee'1 Wha ma0es hem sos!e%ial1

Les see i& *e %a" &i"' o# *hy. A"' *he" *e 'o, *e *ill have he a"s*er o he so%alle'I"%ome Ta( a"' ="ie' Naio"s Treaies, a"' every o"e o& he a#horiies *ill be &o#"'e' i" o#r

o*" Co"si#io"al la*< !ervere' !erha!s, b#, as o#r orme"ors say, 7as Ameri%a" as a!!le!ie.7

Well he", *ha is 7la*l mo"ey 17 Thas a )oo' B#esio" o sar. I has "ever bee" 'e&i"e' i"he sa#es, b# *e %a" sill 'is%over *ha i is &rom i"'ire% so#r%es. A Fe'eral Reserve Noe as*e 0"o* i, ho#)h al*ays le)al e"'er, 'i' "o be%ome absol#e 7la*l mo"ey7 #"il Mar%h 29,23@9. We remember ha 7la*l mo"ey7 !rior o he Civil War, ="ie' Saes Noes re'seal"oes/ be%ame 7la*l mo"ey.7 Tha is, he eB#ivale" o& %oi", "o a s#bsi#e, b# he


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eB#ivale". They *ere !ai' i"o %ir%#laio" by he )over"me" a"' *iho# i"eres. They *ere"o le" i"o %ir%#laio", b# o#ri)h !ai'. Th#s, *hile hey *ere 7la*l mo"ey,7 ba"0"oes"ever *ere. They *ere "o &or he reaso" ha, alho#)h la*l mo"ey may be !rivaely le" ai"eres, i is he "o"i"eres beari") B#aliy ha ma0es he la*l mo"ey as %#rre"%y *iho# a!remi#m or 'is%o#". La*l mo"ey may be le" a i"eres, b# is "o iss#e' a i"eres. Th#s,

le)al e"'er may eiher bear i"eres, or i may "o, be&ore bei") le" %ommer%ially a !rivaei"eres. Fe'eral Reserve Noes o'ay 'o "o bear i"eres, a%%or'i") o %orres!o"'e"%e *ih heFe'eral Reserve 6a"0 o& Ne* -or0. Th#s, ba"0"oes are o"ly le)al e"'er re'eemable i" la*lmo"ey. La*l mo"ey may be 'e&i"e' !arially as a %ir%#lai") me'i#m o& e(%ha")e iss#e'*iho# i"eres, a"' re!rese"i") sa"'ar' s!e%ie, a"' !ayable o" 'ema"'.

S#&&i%e i o say ha, #! #"il 2328, 7la*l mo"ey7 *as re%o)"i?e' as *haever mi)h %om!risehe reserves o& a Naio"al 6a"0. Tha *as )ol' %oi", silver %oi", )ol' a"' silver %eri&i%aes,Treas#ry Noes, a"' ="ie' Saes Noes.

A"' *ha ha!!e"e' i" 23281 Wha else, a&er 2328, besi'es he above, %o#l' %om!rise he

reserves o& a Naio"al 6a"01 Somehi") "e* *as a''e' %alle' Fe'eral Reserve Noes. Wha *ass#!!ose' o be he hear o& he Fe'eral Reserve Sysem, ha is, %ommer%ial !a!er or *ha eiherare or amo#" o !rivae obli)aio"s o& 'eb, all 0i"'s o& lo")erm or shorerm !rivaeobli)aio"s, obli)aio"s #!o" *hi%h %re'i i" le)al e"'er *as )ra"e' or *hi%h %o"ra%e'!ayme" i" 7la*l mo"ey7 a he e"' o& he li"e o& "e)oiabiliy "o* oo0 o" a %a!a%iy o&%leari") ho#se %eri&i%aes $#s as Fe'eral Reserve Noes.

No*, his %ommer%ial !a!er, as i *as %alle', has al*ays bee" %o"si'ere' 7as )oo' as )ol'7 #!o"he mer%ha"s *or' i" )e"eral %ommer%ial %ir%les *heher 'omesi% or i"er"aio"al. So, oo, hashe *or' o& a"y mer%ha", 'omesi% or i"er"aio"al, amo") hemselves, a"' base' #!o" i, bee"%o"si'ere' 7as )oo' as )ol'.7 Tha is, #limaely !ayable i" har' mo"ey a he e"' o& he li"e, o"

he same !ri"%i!le as a bill o& e(%ha")e.

Here, !are"hei%ally, *e see he mea"i") o& he s#mmary $#')me". This "oorio#s eB#iable'evi%e, !assi") as le)al, is he mea"s by *hi%h %re'imo"ey %a" be %o"vere' i"o 7la*lmo"ey7 a"' be %om!elle' o& a%%e!a"%e as s#%h. Si"%e he s#mmary $#')me" a%%om!lishes he'ema"' !ayme" o& s!e%ie or is eB#ivale" i" a")ible !ro!ery, i %a#ses he 7'is!a%h o&mer%ha"s.7 O" his basis a"' &or his !#r!ose 'i' %ommer%ial !a!er be%ome 7la*l mo"ey7#"'er he Fe'eral Reserve, ha is, mere %hosesi"a%io" %o#l' be %o"si'ere' he eB#ivale" o&a")ible s!e%ie.

No*, he sra")e hi") is ha he !ra%i%es o& mer%ha"s a"' ra'ers have "ever bee" base' o"he la* o& a"y !ari%#lar "aio" or lo%aliy, or bee" 'erive' &rom s#%h. O" he %o"rary, hey*ere solely a"' sri%ly he !ra%i%e o& !rivae mer%ha"s. A"' alho#)h i *as "ever a"y si")le"aio"s 7la*,7 he !rivae %ommer%ial !ra%i%e o& mer%ha"s *as 'i)"i&ie' *ih he ile o& 7la*7mer%ha". As i *as sri%ly !rivae %#som a"' !ra%i%e, i %o#l' "o be e"&or%e' i" he 'omesi%%o#rs o& a"y hos %o#"ry i"%l#'i") !ari%#larly +rea 6riai", a"' he reaso" *as ha i *as "oimme'iaely &o#"'e' i" har' mo"ey, b# o"ly #!o" *ha are )e"erally %alle' 7"e)oiablei"sr#me"s7. I"'ee', as lo") as i"'ivi'#al %o#"ries !reserve' heir "aio"al mo"eys i" har'%oi", %ommer%ial !ra%i%e i" %ommer%ial !a!er %o#l' "o 'ema"' heari") i" he %o#rs i" a"


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a%io" &or 'eb %alle' a" ass#m!si/. Nor %o#l' i be e"&or%e' i" he %o#rs o& E")la"' #"il a%erai" )e"lema" "ame' Lor' Ma"s&iel' be%ame Chie& #si%e o& he i")s 6e"%h o +eor)e IIi" 245@, %omme"%i") a heavy o#r o& '#y i" 'eali") i" %ommer%ial eB#iy.

II LAW AND EQUITY

The "'ame"al 'i&&ere"%e be*ee" La* a"' EB#iy is ha La* is )ro#"'e' i" or 'erive' &rom)#ara"ee' allo'ial la"' iles, *hile eB#iy is base' o" e"&or%eme" o& 7"a#ral7 ri)hs *hi%h he%ommo" la* 'oes "o "e%essarily !rovi'e &or. Tha is a" overall sim!li&i%aio", b# 'is%loses*ha is esse"ially a iss#e. La* 'eals i" s#bsa"%e, EB#iy i" !oe"ialiy #!o" he s#bsa"%e. I%o#l' be sai' ha La* 'eals *ih he realiy o& he s#bsa"%e, *hile EB#iy 'eals i" o"ly heheory o& he s#bsa"%e.

Wha has his o 'o *ih Fe'eral Reserve Noes a"' *ih ="ie' Saes Noes1 #s his, "amelyha a Fe'eral Reserve Noe, bei") a !rivae *rie" obli)aio", is *ha *e %all %ommer%ial!a!er. Tho#)h i bears "o i"eres, i is base' o" obli)aio"s *hi%h 'o bear i"eres, a"' is

"e)oiable, alle)e'ly iss#e' 7&or val#e re%eive',7 ha is &or ="ie' Saes se%#riies or oher7la*l mo"ey7 o& he ="ie' Saes. They are 7as )oo' as )ol',7 b# o"ly be*ee" mer%ha"s.Th#s, o %om!el yo# o a%%e! hem, yo# yo#rsel& m#s someho* be ma'e a mer%ha" 'es!ieyo#rsel& or yo#r i"%li"aio"s. ="li0e ="ie' Saes Noes, Fe'eral Reserve Noes are "o heeB#ivale" o& s!e%ie, si"%e i is a %ommer%ial obli)aio", a"' "o i" a"y *ay !ayable i" s!e%ie oi"erme'iaries. They %a" be re'eeme' o"ly i" ="ie' Saes 6o"'s.

III CONFISCATION OF REAL PROPERTY

I so ha!!e"s ha he $#')es are bo#"' by Co"si#io"al %la#ses a"' =N reaies o a0e7$#'i%ial "oi%e7 o& his 7"a#ral7 La* Mer%ha", *hi%h has bee" o"ly !arially *rie" i"o

%ommer%ial a"' mer%a"ile %o'es, or %o'es o& la*, o& he saes, or o& #"i&orm %o'es o& la* o""e)oiable i"sr#me"s. There are several reaso"s &or his, *hi%h m#s be #"'ersoo' &or #s o!#rs#e o#r ar)#me".

The r#le o& all r#les o& his La* Mer%ha", his la* s#!reme o& 7!rivae e"er!rise7 is, *ho ra'es*ih a mer%ha" be%omes a mer%ha" &or he !#r!ose o& he ra"sa%io" a ha"'. Tha is, liable os#!!or he !a!er a *haever sa)e i is i" or a. F#rher, i ma0es a"yo"e liable i" eB#iy o" as#mmary $#')me" o a"y mer%ha" *ho may bri") a %har)e o& 'e&a#l. A"' ha mea"s "o $#ryrial, 'es!ie *ha o"e mi)h be le' o believe #"'er he Seve"h Ame"'me" be%a#se $#ry rialsare base' i" Mo"ey ra"sa%io"s a"' "o Deb ra"sa%io"s. EB#iy, yo# see, is "o sri%ly7%ommo" La*.7 The r#le %a" also %om!el *ha is %alle' a" 7a%io" o& a%%o#"7 i" eB#iy/ o" he

'ebor%re'ior basis. I is his %o"i"#i") relaio"shi! *hi%h %reaes he liabiliy o &ile "o"e%essarily o )ive i"&ormaio", or o !ay a(/ #"'er he Co'e o& he 2.R.S..

Th#s, he %o"i"#i") 'ebor%re'ior relaio"shi! %reaes he r#""i") a%%o#", *hi%h %ashra"sa%io"s 'o "o. Tha is he hear o& he maer, b# o"ly he be)i""i") o& he ma?e o& 'e%eia"' rea%hery reveale' i" %halle")i") he sysem. The o"ly *or' &or *ha &ollo*s is 7sly.7


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Si"%e $#ry rials i" o#r sysem o& la* ori)i"ae' i" la"' a"' real !ro!ery iles a"' i" heir!roe%io", i &ollo*s ha s#mmary $#')me"s i" eB#iy o" he la* mer%ha" are he esse"%e o&%omm#"isi% so%ialism a"' he mea"s o& *holesale %o"&is%aio" a"' 'esr#%io" o& !rivae la"'iles. The Fe'eral Reserve Noe is h#s a m#li!le!ary %omm#"is )ro#!ie'ollar %o"&is%aoryo& real !ro!ery, *here all *ealh ori)i"aes.

I"'ee', i& he Fe'eral Reserve Noes have o"e overri'i") !#r!ose a"' he same hi") )oes &ora"y s#%h "oes iss#e' by he so%alle' I"er"aio"al Mo"eary F#"'/, i is o %o"&is%ae i" eB#iys#mmary $#')me"/ all !rivae la"'e' !ro!ery &or he be"e&i o& %erai" i"er"aio"al%ommer%ial 7!rivae e"er!rise7 i"eress *hi%h iss#e hem. I is o" his )ro#"'s ha Fe'eralReserve Noes %a" raio"ally be aa%0e' as ille)al by %al%#lae' 'is%rimi"aio" #"'er he eB#al!roe%io" %la#se o& he 2;h Ame"'me". They 'is%rimi"ae a)ai"s real !ro!ery, as real!ro!ery is "o !erso"aliy or *ha is %alle' a %hosei"a%io".

Si"%e Mar%h 29,23@9, here are e%h"i%ally "o more ri)hs o a $#ry rial i" %ommo" la* 'e&a#l%ases. Thro#)h 7"e)oiable i"sr#me"s,7 Fe'eral Reserve Noes a"' %he%0s *hi%h re!rese" he

%ommer%ial !a!er %alle' 7la*l mo"ey7 i" he ba"0s, every i"'ivi'#al *ho a%%e!s o"e o&hese, or i"'ee' a 'ra& or %he%0 #!o" hem, *heher he li0es i or "o be%omes a %re'i mer%ha"*ih "o/ri)h o& 'e&e"se a)ai"s ohers #!o" a $#ry rial o& !eers !er !ais/. The IRS also o!eraeso" he same #"!ri"%i!le' !ri"%i!le, b# i" 'i&&ere" areas.

Co"si'er he &ollo*i") &or a mome". Almos he o"ly $#ry rials remai"i") )e"erally a %ommo"la* %ases are "o #!o" s#bsa"ive la* b# #!o" "ohi") more ha" he amo#" o& 'ama)es i"'eb mo"ey/ o be a*ar'e' i" %ivil %ases. I is he $#')e *ho 'e%i'es *heher here are o be a"y'ama)es a*ar'e' by &as 'e%i'i") *heher here is a"y 7%o"roversy7 or 7riable iss#e o& &a%.7The $#')e 'e%i'es he )#il by allo*i") he rial, a"' he $#ry he amo#" o& 'ama)es #!o" herial. This is esse"ially r#e i" %rimi"al %ases oo *here he amo#" o& 7'ama)es7 or 7!e"aly7 is

e%h"i%ally )over"e' by he severiy o& he !#"ishme". The $#ries &i"' o" 7'e)rees o& )#il7*hi%h has alrea'y bee" 'eermi"e' i" a !rior eB#iable !ro%ee'i"), as o"e is !re'eermi"e' &or7&ail#re o &ile7 )ro#"'e' i" a" a%io" o& a%%o#" o" he 'ebor%re'ior relaio"shi!.

So, *e #"'ersa"' somehi") rher abo# Fe'eral Reserve Noes. We #"'ersa"' *hy heyhave e&&e%ively o#la*e' rials by $#ry o" a"yhi") b# he amo#" o& 'ama)es or e(e" o&!#"ishme". This is he basis o& he e(e%#ive s#mmary #')me"s o& he I"er"al Reve"#e a"'hey are all %alle' 7%ivil.7 All he 7%rimi"al7 %har)es arise i" *a" o& !er&ormi") 7%ivil7 a%s#"'er he $#s 7"a#ral la*7 o& he La* Mer%ha".

Le #s see rher *ha he Fe'eral Reserve Noes have o 'o *ih liabiliy &or he I"%ome Ta(isel&, a"' ho* hey %reae liabiliy *here "o"e e(iss by all he oher la* *e ever 0"e* e(%e!he !rivae La* Mer%ha" o& i"er"aio"al e"er!rise, *hi%h %a" overri'e all lo%al Co"si#io"s2.

l. See Leer From Aor"ey, A!!e"'i(

IV CORPORATE PRIVILEGE


13/81

The S#!reme Co#r has isel& r#le' ha he Si(ee"h Ame"'me" %reae' "o "e* Ameri%a" la*,)ave Co")ress "o !o*ers i 'i' "o alrea'y have, a"' i" e&&e% mi)h $#s as *ell "o have bee"*rie". I has rher 'e%lare' re!eae'ly ha he alle)e' 7I"%ome Ta(7 i %reae' is "o a"I"%ome Ta( a all, be%a#se a )e"eri% I"%ome Ta( is a 'ire% a( o" !ro!ery, *hile he a(le)islae' #"'er he Si(ee"h Ame"'me" is "o more ha" a a( o" a &ra"%hise, or more

!re%isely o" he !rivile)e o& 'oi") b#si"ess i" a %or!orae %a!a%iy, ha is he !rivile)e o&!er!e#al e(ise"%e, !er!e#al s#%%essio", a"' limie' liabiliy &or 'eb. A"' i is so, be%a#se i is"o a!!orio"e' amo") he several saes as a 'ire% a( *o#l' have o be.

This so%alle' I"%ome Ta(, is a a( o" a &ra"%hise !rivile)e/ o& $#risi% !erso"s a"' is o"lymeas#re' by he amo#" o& i"%ome !ro!ery o& a $#risi% !erso" or %or!oraio" s#b$e%e' o i#!o" some %lear %o"ra%#al &ra"%hise or !rivile)e.

A"' he $#risi% !erso", bei") %reae' by so%iey, %a" be %om!elle' by la* o reveal ho* io!eraes o" he !rivile)e )ra"e' o i, a"' also o re!or is ear"i") a"' !ay a re#r" &or he!rivile)e. Wha i 'oes is o re"'er #"o is %reaor a meas#re o& )rai#'e a"' liabiliy o&

'is%i!li"e &or is %reaio". I" !lai" 'o*" o earh erms, he a( is #!o" he B#asiimmoraliy)ra"e' o so%iey. To see his i" o!eraio" '#ri") he ime o& es#s, see Ma. ::.24:2.

Na#ral !erso"s, %a""o be s#b$e%e' o bei") %om!elle' o i"&ormi") o" hemselves i" eiher%rimi"al or %ivil %ases. The IRS i"imi'aio" ariss *ill ell yo# ha he liabiliy o i"&orm o"o"esel& is o"ly a %ivil liabiliy #"'er he Co'e, a"' o"e %a" i"'ee' be %om!elle' o )ivei"&ormaio". 6# *ha yo# are "o ol' is ha ha i"&ormaio" %a" a#omai%ally %ha")e he %ase&rom alle)e'ly %ivil o o#ri)h %rimi"al be%a#se o& i"&ormaio" ri)h o# o& o"es mo#h. So heIRS *ill ry a"yhi") o 0ee! is )oo"s i" b#si"ess as !rivae %o"ra%ors i" harassme" a"'sha0e'o*".

So, i& o"ly $#risi% !erso"s are liable #"'er he Si(ee"h Ame"'me", ho* %a" "a#ral !erso"sbe liable &or he a(1 ery sim!leJ by e"$oyi") he &avors o& he hol'er o& he &ra"%hise heybe%ome 'ebor%re'ior mer%ha"s hemselves by bar)ai"i") *ih mer%ha"s o" he %or!orae&ra"%hise, a"' h#s e"$oyi") he ri)h o s#mmary $#')me" hemselves o" a 'e&a#l o& *haever'es%ri!io" a)ai"s he %hi%0e" "e( 'o*" he !e%0i")or'er i" his 7"a#ral la*7 o& s#mmary$#')me".

This is a 'o#blebarrele' ra! &or he "a#ral or "o"$#risi% !erso". He be%omes liable o" a%or!orae &ra"%hise a"' o" he %ommer%ial !a!er %he%0s/ *hi%h i iss#es, s#!!ose'ly 7as )oo'as )ol'.7

Th#s, he %or!orae &ra"%hise !ree"'s "o o 'esroy his %ivil imm#"iy a"' "o reveali"&ormaio" #"'er he 5h Ame"'me" a"' he ;h Ame"'me", *hile he Fe'eral Reserve Noesas *ell as b#si"ess a"' !erso"al %he%0s )#ara"ee a s#mmary $#')me" o" a"y %har)e bro#)ha)ai"s he !erso" 7e"$oyi")7 he be"e&is o& he %ommer%ial !a!er. Th#s, he em!loyer, hebe"e&i%iary o& he &ra"%hise, reveals o" his i"&ormaio" re#r"s he amo#" o& *a)es alle)e'ly!ai', %alle' i"%ome, #!o" *hi%h %har)es %a" be bro#)h a)ai"s he em!loyee &or 7*illl&ail#re7 o &ile #!o" he !a!er, be%a#se 7i"%ome7 is "o* %o"si'ere' o be a"y 0i"' o&7%o"si'eraio",7 $#s as i #se' o be o" His Lor'shi!s ma"or i" &e#'al imes.


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6# "o*, all ha %a" be s#%%esslly aa%0e', be%a#se yo# have here lear"e' he "'ame"alse%re relaio"shi! be*ee" he I"%ome Ta( a"' he Fe'eral Reserve Noes. So he res is #! oyo#. A"' *ha 0i"' o& 'e&e"ses %a" be ma'e1 Well, les see.

V DEFENSES TO THE FRN

A%#ally, here are ma"y 'e&e"ses. The &as is he 'e&e"se ha a "a#ral !erso" or i"'ivi'#al%a""o be liable o" a &ra"%hise, as he has )ra"e' "o &ra"%hise o himsel&. Ca" a" i"'ivi'#alre"'er himsel& immoral or liberae himsel& &rom "a#ral !ro%ess1 Nor %a" a" i"'ivi'#al be liableo" a %or!orae &ra"%hise be%a#se "o o"e %a" be %om!elle' o s#bmi o a" #"soli%ie' or#"*a"e' !rivae boo". I"'ivi'#als %a""o be e"&ra"%hise' by heir o*" %reaio". Di' +o'%reae me" so ha me" %o#l' aler heir %reaor1 These &ra"%hises are 'erive' o"ly &rom hePeo!le hemselves *ho are !oli%e' o"ly by he Provi'e"%e o& heir o*" Creaor.

De&e"se o" he Fe'eral Reserve Noes is esse"ially ha hey %learly 'is%rimi"ae a)ai"s hol'erso& allo'ial la"' iles i" &avor o& la* mer%ha"s. This is be%a#se he Fe'eral Reserve Noes a"'

'ema"' 'e!osis !asse' by %he%0 i" eB#iy/ lay a 'is!ro!orio"ae b#r'e" o& &rom 2> o 2 oabo# 2@ o 2 #!o" real !ro!ery or s#bsa"%e i" la*/. Tha is, he real !ro!ery m#s yiel' or!ro'#%e &rom e" o si(ee" a( or i"%ome 7Dollars7 &or every o"e a( or i"%ome 7Dollar7 !ai' byhe $#risi% !erso". I" oher *or's, 7eB#iable7 %ommer%ial !a!er is *orh &rom e" o si(ee"imes as m#%h i" !#re mo"eyo&a%%o#" as le)al s!e%ie o& )ol' a"' silver, or he real !ro!erys#bsa"%e/ *hi%h i re!rese"s.

I is h#s emi"e"ly %lear, *hy he Mo")omery 6a"0 %hose "o o a!!eal o" a"yhi") b# a &ee!ai' i" Fe'eral Reserve Noes. I" or'er o *i" heir %ase a"y oher *ay, hey *o#l' have ha' o%om!el he %o#r o !lay mer%ha" o he 6a"0s ra'e o& mer%ha" #!o" he %ommer%ial !a!er%alle' he Fe'eral Reserve Noe, a"' #!o" "o oher.

So a Fe'eral Reserve Noe is a "e)oiable i"sr#me", "e)oiable by mere 'elivery a"' &or%e'a%%e!a"%e #!o" everyo"e e(%e! he !ro!rieors o& he Fe'eral Reserve by he same !rivae%or!oraio" i" or'er o %om!el s#b$e%io" o s#mmary $#')me"s #"'er he La* Mer%ha". I isas sim!le as ha. For he !ro!rieors o& he Fe'eral Reserve hol' he real )ol' *hi%h %a""oma0e hem liable i", eB#iy. The Fe'eral Reserve Noe, &or allie' a"' s#bsi'iary !#r!oses, also!asses as several oher hi")s #"'er %olor o& la*. I !asses as a bill o& e(%ha")e, as a %#rre"%ybo"', a"' mos im!ora" o& all !erha!s as a" irre'eemable !er!e#al a""#iy bo"' %har)e' #!o"he la"'. I is e%h"i%ally isel& a bo"', bei") 7small %ha")e7 &or he ="ie' Saes se%#riies*hi%h alle)e'ly ba%0 i alo") *ih oher %ommer%ial !a!er. The sole le)iimae !#r!ose &or heFe'eral Reserve Noe, by he Fe'eral Reserve A%, is o %ashbala"%e i"erba"0 a%%o#"s i"'ema"' 'e!osis a he e"' o& he 'ay.

VI WHAT THE JUDGES KNOW

Sho#l' *e ass#me ha #')e Maho"ey 0"e* somehi") *hi%h oher $#')es 'o" 0"o*1 No"e%essarily. The !robabiliy is ha i *as his mere 'ire%"ess raher ha" a"y so!hisi%ae'0"o*le')e *hi%h h*are' he ba"0s s*i"'le #!o" he Fe'eral Reserve Noes. I" a"y %ase, *e


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shall 'is%over ye more o& he mer%a"ile basis #!o" *hi%h, !ari%#larly si"%e Mar%h l9, 23@9,he hi''e" o*"er o& he Fe'eral Reserve have !romoe' he %omm#"i?aio" o& he *orl'.

This mer%a"ile basis o& %omm#"i?aio" is lai' i" absol#ely "ohi") b# he La* Mer%ha", hela* o& !rivae ra'ers *hi%h s#!!ose'ly i" he ma"y %ases 'e%i'e' by he Lor' Ma"s&iel' above

me"io"e', be%ame a !ar o& he 7%ommo" la* o& E")la"'7 $#s !rior o he Ameri%a"Revol#io". I"'ee', i *as his "e* la* o& s#mmary $#')me"s *hi%h s!ar0e' he Ameri%a"Revol#io", *hi%h isel& re$e%e' he "e* la*.

S#rely, he $#')es *ho e"&or%e i are "o all eiher i)"ora" or %rimi"al, b# hey 'o 0"o*somehi") ha he vas "#mbers o& he res o& #s o"ly 'imly s#s!e% i" o#r a!!are"ly &r#ilesse&&ors o a%hieve $#si%e i" %ases i"volvi") "o o"ly mo"ey a"' a(es, b# ma"y oher areas as*ell, !ari%#larly hose beari") o" marria)e a"' &amily li&e.

We "ee' o e(ami"e he o"e !ari%#lar !la%e *here he ="ie' Saes Co"si#io" me"io"s he7%ommo" la*,7 a"' ha is i" he Seve"h Ame"'me". O"%e *e loo0 %arelly a i, a"' h#s

'eermi"e all ha i im!lies, *e shall see ha 7%omm#"ism7 a"' he br#ali?i") o& Ameri%a'erive &rom he o"e hi") *hi%h ma"y a(resisers #"*ii")ly !romoehemselves< he La*Mer%ha".

VII THE SEVENTH AMENDMENT

The *ors o& he erro"eo#s ass#m!io"s ha %erai" Ta( a"' Mo"ey Fi)hers ma0e, a"' he mossel&'e&eai"), is ha he $#')es eiher 'o" 0"o* he Co"si#io" a"' he La*s, or ha hey areall %orr#! a"' bo#)h. 6# i $#s %a" be so. Why sho#l' *e !re$#'i%e o#r o*" %a#se byass#mi") ha *e 0"o* all he la*s by he mere &a% ha *e %a" rea' a"' B#oe he Co"si#io"*ih 'e(eriy, )ivi") a" imme'iae $#')me" o" is %o"e"1

Les loo0 a he Seve"h Ame"'me", &or e(am!leJ

"In suits at common law, where the value in controversy shall exceed twenty

dollars, the right of trial by jury shall be preserved."

Wha his says i" e&&e% is ha he Co")ress shall !ass "o la* 'e"yi") he ri)h o& rial by $#ry i"s#is o& %ommo" la* *here he val#e i" %o"roversy e(%ee's *e"y 'ollars. I says "o a *or'abo# *ha Sae le)isla#res may 'o. This Ame"'me" merely !roe%s i" he %o#rs o& he="io" %ommo" la* ri)hs arisi") i" he Saes a"' %om!arable o hose o& he Ame"'me". No*les )o eve" rher.

Wha is 7%ommo" la*,7 a"y*ay1 Do all he saes have he same %ommo" la*1 No. Is here a&e'eral %ommo" la*1 No. I& here is "o )e"eral &e'eral %ommo" la*, %a" o"e i"si#e a7%ommo" la*7 a%io" i" a Fe'eral Co#r1 A"s*er, No. Ho*ever, a %ivil a%io" %a" be i"si#e'.As re)ar's he saes, *ha 'oes 7%ommo" la*7 mea"1 Are s#is a %ommo" la* mere s#is overamo#"s o& 'ama)es1 No, ye some !ree"' yes. Wha is 7%ommo" la*,7 a"y*ay1

I& is he #"*rie" la* o& sa"%io"e' s!o"a"eo#s !ra%i%e #!o" i"&orme' %o"se" as e(!o#"'e'by he $#')es i" he %ase 'e%isio"s, *hi%h 'o "o %reae he la*, b# 'is%lose i. Ca" he Fe'eral


16/81

Co#rs im!ose he %ommo" la* o& o"e sae #!o" a"oher1 No. The %ommo" la* me"io"e' i"his Ame"'me" is he %ommo" la* !revaili") i" ea%h sae a he ime o& he a'o!io" o& heirCo"si#io"s. I" some, i bars a"y %ommo" la* o& E")la"' !rior o 2@>4, i" mos o& he ohers!rior o 244@. I e"ers Fe'eral Co#rs o"ly o" a!!eals &rom Sae %o#rs or i" 'iversiy s#isbe*ee" %ii?e"s o& 'i&&ere" saes. M#%h more o" his s#b$e% &ollo*s belo*.

Do i"%ome a(es e(is #"'er he %ommo" la*1 Absol#ely "o They are e"&or%e' !rimarily #!o"sa#es, !rimarily i" eB#iy by s#mmary $#')me"s o& he e(e%#ive *ris o& assisa"%e/.7"a#ral !erso"s7 The alle)e' liabiliy o& he liabiliy. lies %om!leely i" eB#iy, &or he Co'e"o*here 'e&i"es

I" he Seve"h Ame"'me" above, *ha e(a%ly is 7val#e17 Who 'e%i'es he 7val#e17 ThePlai"i&&1 De&e"'a"1 #ry1 #')e1

Wha is 7%o"roversy 17 Do %o"roversies e(is over 7La*7 as *ell as over 7&a%17 O& %o#rse. Areall %o"roversies riable by $#ry1 No. Ca" he Co")ress s#!!ress 'ebaable iss#es o& &a% by

i"%or!orai") hem i" a sa#e IRS a( ables, &or e(am!le/ a"' h#s %all hem maers o& La*1-o#' beer believe i. Do he $#')es 'eal i" La* i" ha %ase1 No, b# i" eB#iy. Tha is,esse"ially i"B#isiory $#si%e o" s#mmary $#')me", i" *hi%h %ase he $#')e is a'vo%ae &or he!lai"i&&, h#s ma0i") i a semi%rimi"al %ase $#s as mos o& eB#iy amo#"s o. Someimes he%o#rs 'e%i'e ha 7&a%s7 oo are o"ly &or he %o#r.

Wha is a 7$#ry 17 T*elve me" or si(1 Ca" a $#')e be a 7$#ry17 #ry mea"s, s*or" o i"'i&&ere"r#h #!o" he la*. A $#')e %a" be a $#ry i" a %ase o& 7&a%s &or he %o#r.7 #')es a"' $#ries are%alle' 7!erso"s i"'i&&ere",7 a"' i& hey are "o hey %a" be s#e' or !rose%#e'. There are "o)e"#i"e $#ries i" eB#iy. #ries %har)e' by a $#')e &rom &ollo*i") a"yhi") b# *ha he 'ire%sare "o more ha a'visory $#ries i" eB#iy.

Is his 7eB#iy7 a !ar o& he Co"si#io"1 Les see Ari%le III, Se%io" :, o& he Co"si#io"JThe $#'i%ial !o*er shall e(e"' o all %ases, i" la* a"' eB#iy, arisi") #"'er his Co"si#io",he la*s o& he ="ie' Saes< a"' reaies ma'e, or *hi%h shall be ma'e #"'er heir a#horiy.7Fe'eral eB#iy r#les *ere revise' i" 2328, he same year as he Fe'eral Reserve a"' he I"%omeTa( *ere i"si#e'. Ima)i"e ha EB#iy *as ori)i"ally a" e(raor'i"ary $#ris'i%io" o& heRi")s !rero)aive i" 'e&i%ie" %ommo" la* !ri"%i!les. I has "o* %ome o be almos a"y 0i"' o&so%iolo)i%al $#si&i%aio" *haever !assi") as "a#ral or h#ma" ri)hs, by he very la*s o& heCo")ress. This is *here he $#')es )e he $#ris'i%io" hey e(er%ise< &rom he Co")ress a"' hele)isla#res, *here else1

So, i is "o "e%essarily he $#')es *ho are ra'#%i") #s, &or hey are, *heher *e li0e i or "o, or*heher *e #"'ersa"' i or "o, r#li") i" 7all %ases i" la* a"' eB#iy, arisi") #"'er hisCo"si#io", he la*s o& he ="ie' Saes, a"' reaies ma'e, or *hi%h shall be ma'e, #"'erheir a#horiy.7 A"' ha %overs a )rea 'eal o& erriory, *heher *e li0e i "o, or *heher *e#"'ersa"' i or "o. Wha i has lo") si"%e bee" o#r obli)aio" o 'o is o 'is%over he so#r%e o&he 'i&&i%#ly, o see ho* he Co"si#io" %a" seemi")ly be ma'e o %o"ra'i% isel&.


17/81

7The le)isla#re has e(%l#sively he !o*er o say *ha he la*s shall be.7 *e rea' i" O)'e" v.6la%0le')e, : Cra"%h :4:. Tha obvio#sly mea"s *ihi" he !o*ers )ra"e' i #"'er heCo"si#io".

No* les see *ha 7%ommo" la*7 *e have o 'eal *ih o" he &e'eral level.

VIII FEDERAL COMMON LAW

Si"%e he %o#r have 'e%lare' here is "o )e"eral &e'eral %ommo" la*, o#si'e he !ri"%i!les o&he Co"si#io", he &e'eral %o#rs 'eal esse"ially, #"less a sae ri)h is i"volve', *ih eihereB#iy or sa#e la* or %ivil la*. A"' eB#iy a"' Civil La* %a" %o"vey almos a"yhi"), as *eshall see, i"%l#'i") he La* Mer%ha". There are hree "'ame"al %ase 'e%isio"s o& heS#!reme Co#r o" 7&e'eral %ommo" la*7 si"%e 23>>, a"' *o be&ore. They are heseJ

Wheao" v. Peers, 9 Peers =.S./ 532

S*i& v. Tyso", 2@ Peers =.S./ 23

Erie R.R. v. Tom0i"s, 8>; =.S. @; Hi"'erli'er v. LaPlaa, 8>; =.S. 3:

DOe"%h, D#hme G Co. v. FDIC, 825 =.S. ;;4

Firs le #s %o"si'er hisJ here are hree s%hools o& ho#)h o" *ha %om!rises he A")loAmeri%a" 7%ommo" la*.7 The &irs says i i"%l#'es he e"ire sysem o& A")loAmeri%a" la* as%o"rase' *ih he Roma" or Civil La*. This mea"s all he #"*rie" la* a"' all he E")lishsa#es *ove" #!o" i. I mea"s also he la* )ive" !rimarily i" he %ase 'e%isio"s. Se%o"', i""arro*er se"se, i 'isi")#ishes be*ee" %ommo" la* a"' eB#iy, a'miraly, a"' e%%lesiasi%al,ho#)h i"%l#'i") he ol'er E")lish sa#es, es!e%ially o" !ro!ery. Thir', i" he "arro*es se"se,i e(%l#'es eve" he a"%ie" sa#es, a"' mea"s o"ly he la* o& he %ase 'e%isio"s.

I" he li)h o& ha, *e m#s %o"si'er he %ase o& =.S. v. Rea', 2: Ho* =.S./ 8@2, 28 L.E'.2>:8, *hi%h 'e%lares ha he E")lish sa#es 'o i"'ee' &orm a !ar o& he %ommo" la*. I& so,ha *o#l' i"%l#'e o"e o& he earlies %alle' A%o" 6#mel, o& *hi%h more laer.

The &irs o& he %ases me"io"e' above, Wheao" v. Peers, 9 Peers @53, 'e%lares hisJ 7I is %learhere %a" be "o %ommo" la* o& he ="ie' Saes. No o"e *ill %o"e"' ha he %ommo" la*, asi e(ise' i" E")la"', ha' ever bee" i" &or%e i" all is !rovisio"s i" a"y sae i" his ="io". I *asa'o!e' so &ar as is !ri"%i!les *ere s#ie' o he %o"'iio" o& he %olo"ies< a"' &rom his%ir%#msa"%e *e see *ha is %ommo" la* i" o"e sae is "o so %o"si'ere' i" a"oher. The$#'i%ial 'e%isio"s, he #sa)es a"' %#soms o& he res!e%ive saes, m#s 'eermi"e ho* &ar he

%ommo" la* has bee" a'o!e' a"' sa"%io"e' i" ea%h.7 Th#s, he Fe'eral %o#rs m#s rely o"sae %ase la* as !re%e'e".

Wheao" v. Peers soo' #"il 29;:, *he" i *as overr#le' by S*i& v. Tyso", h#sJ 7I" his %ase,"o*ihsa"'i") se%io" 8; o& he #'i%iary A%, *hi%h !rovi'es ha he la*s o& he severalsaes, e(%e! *here he Co"si#io", reaies, or sa#es shall oher*ise !rovi'e, shall bere)ar'e' as r#les o& 'e%isio" bi"'i") #!o" he &e'eral %o#rs a"' he hi)hes %o#r o& he Sae o&Ne* -or0 ha' esablishe' a r#le #!o" he B#esio", he Fe'eral Co#r 'e%i'e' %o"rary o ha


18/81

r#le, #!o" he broa' !ri"%i!le o& %ommer%ial or mariime la* i"'i%ae'.7 Also he same %o#rhel' ha he Fe'eral Co#r is bo#"' by he )e"eral %ommer%ial la*, i"'e!e"'e" o& he la* o&a"y !ari%#lar sae.

This 'e%isio" *as re!ore' a)ai" i" Came"er v. Provi'e"%eWashi")o" I"s#ra"%e Com!a"y,

2@ Peers ;3;522, a"' also i" Rail*ay Com!a"y v. Naio"al 6a"0, 2>: =.S. 2;.

S*i& v. Tyso" also 'e%lare', by #si%e SoryJ 7The la* res!e%i") "e)oiable i"sr#me"s maybe r#ly 'e%lare' i" he la")#a)e o& Ci%ero, a'o!e' by Lor' Ma"s&iel' i" L#0e v. Hy'e : 6#rr.R. 998994/ o be i" a )rea meas#re "o he la* o& a si")le %o#"ry o"ly, b# o& he %ommer%ial*orl'. The &ame o& Ma"s&iel', *hose 'e%isio"s *ere 'e!lore' by Thomas e&&erso", lay i"movi") i"o eB#iy o# o& he la* he a%io" %alle' ass#m!si, )ivi") s#mmary $#')me"s omer%ha"s o" *ris o& assisa"%e. The very hi") ha, i" &a%, s!ar0e' he Ameri%a" Revol#io".F#rher, 7I is observable ha he la* mer%ha" a"' he mariime la* are "o )e"erally'isi")#ishe' &rom ea%h oher, b# are &reB#e"ly #se' i"'is%rimi"aely. The o"ly real 'i&&ere"%eis i" he sa"%io". Whe" vie*e' as a !ar o& he m#"i%i!al la* he r#les are %alle' he la*

mer%ha", *he" re)ar'e' &rom he sa"'!oi" o& i"er"aio"al la* he same r#les are he la*mariime.7

Does ha las "o le"' some si"iser amos!here o he Ala"i% Charer 7)ra"e'7 by Roosevela"' Ch#r%hill o" he hi)h seas1

S*i& . Tyso" e&&e%ively ma'e he la* mer%ha" a !ar o& o#r %ommo" la*, h#s bri")i") #!he B#esio" o& $#ry rials a %ommo" la* #"'er he Seve"h Ame"'me". This 'e%isio" soo'&rom 29;: #"il 2389, *he" is a!!li%aio" *as overr#le' by he *ell0"o*" %ase o& Erie R.R. v.Tom0i"s, *hi%h sai'J 7E(%e! i" maers )over"e' by he Fe'eral Co"si#io", or by a%s o&Co")ress, he la* o be a!!lie' i" a"y %ase is he la* o& he Sae. Wheher he la* o& a Sae

shall be 'e%lare' by he le)isla#re i" a sa#e or i" is hi)hes %o#r i" a 'e%isio", is "o a maero& &e'eral %o"%er".7

The %ase a ha"' *as a 'iversiy o& %ii?e"shi! %ase, b# he i"e" o& he 'e%isio" *as o"iversal a!!li%aio" i" &e'eral %o#rs. The 'e%isio" 'e%lare' rher, 7There is "o )e"eral &e'eral%ommo" la*. Co")ress has "o !o*er o 'e%lare s#bsa"ive r#les o& %ommo" la* a!!li%able i" asae . . . a"' "o %la#se i" he Co"si#io" !#r!ors o %o"&er s#%h a !o*er o" he Fe'eralCo#rs.7

O" he same 'ay *as 'e%i'e' he Hi"'erli'er %ase, *hi%h 'e%lare' esse"ially he same hi"),a''i") ha here is a &e'eral %ommo" la* s!e%i&i%ally %reae' by he &e'eral %o#rs hemselves

a"' a!!li%able o hose areas *here he sae la*s %a""o be relie' #!o".

I" 23;: a"oher %ase o& im!ora"%e *as 'e%i'e', "amely DOe"%h, D#hme G Co. v. FDIC,*hi%h e(!a"'e' o" he 'o%ri"e o& Hi"'erli'er ha here is a &e'eral %ommo" la* s!e%i&i%ally%reae' by he &e'eral %o#rs hemselves a"' li0e*ise a!!li%able o hose areas *here he saela*s %a""o be relie' #!o". I"'ee', i" he DOe"%h %ase, #si%e a%0so" *e" so &ar as o re&ero &e'eral $#')ema'e %ase la* as a &e'eral %ommo" la*. The la* %reai") he FDIC sai' i" !arha 7all s#is o& a %ivil "a#re a %ommo" la* or i" eB#iy o *hi%h he %or!oraio" shall be a


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!ary shall be 'eeme' o arise #"'er he la*s o& he ="ie' Saes . . .7 6ase' #!o" ha, here is*ha #si%e a%0so" sai'J 7Alho#)h by Co")ressio"al %omma"' his %ase is o be 'eeme' o"earisi") #"'er he la*s o& he ="ie' Saes, "o &e'eral sa#e !#r!ors o 'e&i"e he %or!oraio"sri)hs as a hol'er o& he "oe i" s#i or he liabiliy o& he ma0e hereo&. There arises here&ore,he B#esio" o& *heher i" 'e%i'i") his %ase *e are bo#"' o a!!ly he la* o& some !ari%#lar

sae or oher or *heher, o !# i bl#"ly, *e may ma0e o#r o*" la* &rom maerials &o#"' i"%ommo" la* so#r%es.7

The #si%e %erai"ly 'i' "o say 7Ameri%a" %ommo"la* so#r%es,7 be%a#se o& he &a% ha heAmeri%a" Revol#io" isel& o#la*e' he i"'is%rimi"ae a!!li%aio" o& he mer%a"ile la*i"$e%e' i"o i by Lor' Ma"s&iel' o# o& he Civil La* !romoe' o" he Co"i"e". There ism#%h more, b# have *e "o esse"ially reveale' he se%re o& he br#ali?aio" o& Ameri%a *hi%his bro#)h by resor o he !rivae %#som o& mer%ha" i"er"aio"al 0"o*" as he La* Mer%ha"1This la* %a""o be ma'e a !ar o& o#r s#bsa"ive or m#"i%i!al la* as i is %alle'. I %a" o"ly bee"&or%e' #!o" a%B#ies%e"%e or, *here ha is li0e o &ail, #!o" i"imi'aio" by !rivae %o"ra%orso" &ra"%hise, as o!erae i" a"' o# o& he I"er"al Reve"#e Servi%e.

Th#s, *hile he a!!li%aio" o& he Erie Railroa' %ase !ree"'e' o overhro* S*i& v. Tyso",*ha i 'i' bl#"ly *as o o!e" #! he *ay &or "e* resors o esablishme" o& a 'e&i"iive7&e'eral %ommo" la*,7 *hile ea%h o& he hree %ases ha' sai' ha here *as "o )e"eral &e'eral%ommo" la*. The sole B#esio" *as o"e o& *here o resor o &i"' o"e beyo"' he )e"eral%ommo" la* o& he saes *hi%h %o#l' be %alle' a 7"aio"al %ommo" la*7 )e"erally share' byhe saes o" he !ri"%i!le o& he Fe'eral Co"si#io", a"' !ari%#larly he 6ill o& Ri)hs, *hose!reamble e%hoes he ri")i") !hrases o& he De%laraio" o& I"'e!e"'e"%e. So *e %a" "o*#"'ersa"' he reme"'o#s la%0 o& '#e !ro%ess *hi%h has )ro*" i" he %o#rs si"%e 2389. Civilri)hs ri)hs o& %ii?e"s o& he ="io"/ have be%ome esse"ially hose *hi%h !romoe ra'e a"'%ommer%e #"'er he %#som o& mer%ha"s, a"' s#!!ore' o he las syllable by he ro!e

mer%ha"s o& he so%alle' servi%e or)a"i?aio"s s#%h as he Roary I"er"aio"al.

Too &e* Parios reali?e ha 7%omm#"ism7 is a hoa( a"' is "o more ha" he e(%#se &ors*allo*i") #! millio"s o& small %ommer%ial e"er!rises i"o he ma* o& mo"sro#s %arels i" hera'iio" o& he De#s%he Ha"sab#"', &rom *hi%h %ame he Warb#r) ar%hie%s o& he i"&amo#sFe'eral Reserve.

I *ill be )oo' a"' s#&&i%ie" ime &or %over !romoers o& mer%a"ilism o 7)e =.S. o#7 o& he=N o"ly *he", a&er re!eae' em!y e(horaio"s, he e"ire *orl' %ommer%e has bee"mo"o!oli?e' by he !ro!rieors o& his %re'i.

IX BUSINESS IN GOVERNMENT

O"e o& he &irs hi")s &or #s o reali?e, is ha i is "o 7he +over"me"7 *hi%h is ra'#%i") a"'berayi") #s, b# !rivae i"eress *hi%h have #s#r!e' he !o*ers a"' o&&i%es o& )over"me"#"'er %olor o& he La* Mer%ha". The !#r!ose has bee" o %reae *o hi")s. O"e, a vasb#rea#%ra%y, a"' se%o"'ly a yra""y. So ha i" he e"', %arelly #!o" %#e, *e %a" be save'&rom 'esr#%io" a"' &rom 7yra""y7 by s!lii") #! he b#rea#%ra%y i"o *aii") !rivae ha"'sa"' by %reai") a 'e%e"rali?e' &e#'alisi% sae i" *hi%h he yra""y is &arme' o# hro#)h


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To..... lay a"' %olle% e(%ises.

To..... re)#lae %ommer%e *ih &orei)" "aio"s, a"' amo") he several saes.

To..... 'e&i"e a"' !#"ish . . . o&&e"ses a)ai"s he la* o& "aio"s. To..... ma0e all La*s

*hi%h shall be "e%essary a"' !ro!er &or %arryi") i"o E(e%#io" he &ore)oi") Po*ers,a"' all oher !o*ers i"vese' by his Co"si#io" i" he +over"me" o& he ="ie'Saes, or i" a"y De!arme" or o&&i%er hereo&.

Ari%le III, Se%io" :

The #'i%ial !o*er shall e(e"' o all %ases i" La* a"' EB#iy, arisi") #"'er hisCo"si#io", he La*s o& he ="ie' Saes, a"' Treaies ma'e, or *hi%h shall be ma'e,#"'er heir a#horiy. I" all oher %ases be&ore me"io"e' he S#!reme Co#r shall havea!!ellae $#ris'i%io", boh as o La* a"' Fa%, *ih s#%h e(%e!io"s, a"' #"'er s#%hRe)#laio"s as he Co")ress shall ma0e.

Ari%le I

This Co"si#io", a"' he La*s o& he ="ie' Saes *hi%h shall be ma'e i" !#rs#a"%ehereo&, a"' all reaies ma'e, #"'er he a#horiy o& he ="ie' Saes, shall be heS#!reme La* o& he La"'. A"' he $#')es i" every sae shall be bo#"' hereby, a"yhi")i" he Co"si#io" or La*s o& a"y Sae o he Co"rary "o*ihsa"'i").

Ari%le

No !erso" shall be %om!elle' i" a"y %rimi"al %ase o be a *i"ess a)ai"s himsel&.

Ari%le II

I" s#is a %ommo" la*, *here he val#e i" %o"roversy shall e(%ee' *e"y 'ollars, heri)h o& rial by $#ry shall be !reserve'.

S#is i" %ommo" la*, i m#s be !oi"e' o#, 'o "o i"%l#'e s#is i" Cha"%ery, beer0"o*" as eB#iy, s#%h as s#is &or i"$#"%io", 'ivor%e, e"&or%i") a r#s, %a"%eli")"a#rali?aio", a%%o#"i"), a"' s!e%i&i% !er&orma"%e.

A" im!ora" "oe abo# reaies m#s be ma'e here. A"yo"e *ho believes ha he ="ie'

Naio"s reaies %a" la*lly overri'e he %lear i"e" o& he Co"si#io" *ill 'o *ill o "oi%ehe &ollo*i"), a0e" &rom A ie* o& he Co"si#io" o& he ="ie' Saes o& Ameri%a, byWilliam Ralle, LL.D., *hi%h %learly e(!lai"s he maer o& reaies #"'er he ="ie' SaesCo"si#io".

"There is a variance in the words descriptive of laws and those of treaties - in the

former it is said those laws which shall be made in pursuance of the Constitution,


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but treaties are described as having been made, or which shall be made under

the authority of the nited !tates.

The explanation is that at the time of adopting the Constitution, certain treatiesexisted, which had been made by Congress under the Confederation #with

$rance, the nited %etherlands, and particularly the treaty of peace with &reat'ritain(, the continuing obligations of which it was proper to declare. The words

under the authority of the nited !tates were considered as extending e)ually tothose previously made, and to those which should subse)uently be effected. 'ut

although the former could not be considered as pursuant to a Constitution, which

was not then in existence, the latter would not be made under the authority of thenited !tates, unless they were conformable to its Constitution."

Wha 0i"' o& la* is i ha he ="ie' Naio"s reaies !roe% !rivae or !#bli%1 Or is i "a#ralor !osiive1 Or is i a))ressive or 'e&e"sive1

XI NATURAL LAW

For hose ma"y Parios %o"%er"e' over *ha hey o&e" re&er o as heir Na#ral Ri)hs, he&ollo*i") shor !assa)e 'eali") *ih he La* Mer%ha" may !erha!s !rovi'e a %l#e o *hy heymay "o %ome by all he imme'iae $#si%e i" he %o#rs, o *hi%h hey may believe hemselvese"ile', i" he &iel' o& Na#ral Ri)hs. The e(%er! is &o#"' a !a)e :>4 i" he Ameri%a" e'iio"o& Coli" 6la%0b#r"s essay o" Co"ra% o& Sale, !#blishe' a Phila'el!hia, 29;4, by T. a"' .W.oh"so". These "oes &ollo* a 'is%#ssio" o& some o& he !eri"e" la* a"e%e'e" o he &amo#s'e%isio" o" so!!a)e i" ra"si i" he %ase o& Li%0barro* v. Maso", : T.R. @8, i" he year [email protected]%0b#r" *ries h#sJ

"There is no part of the history of *nglish law more obscure than that connectedwith the common maxim that the +aw erchant is part of the law of the land. In

the earlier times it was not a part of the common law as it is now, butadministered in its own courts in the staple, or else in the !tar Chamber. The

Chancellor, in the *dw. /, 0, declares his view of the law thus1 This suit is

brought by a alien merchant who is come by safe conduct here, and he is not

bound to sue by the law of the land, to abide the trial of twelve men, and otherforms of the law of the land2 but he ought to sue here #in the !tar Chamber( and

it shall be determined by the law of nature in Chancery, and he may sue from

hour to hour for the dispatch of merchants2 and he said further that a merchantis not bound by statues, where the statutes are introductiva novae legis2 but if

they are declarative anti)ui juris #that is to say of nature, etc.(. 3nd since they

have come into the 4ingdom, the 4ing has jurisdiction over them to administerjustice, but that shall be secundum legem naturae which is called by some the

+aw erchant, which is the law universal of the world. 3nd the justices being

called on, certified that the good of this plaintiff were not forfeited to the crown

as a waif #though those of a subject would have been( because he was an alienmerchant. It is obvious that at that time the law merchant was a thing distinct

from the common law. This accounts for the very remar4able fact that there is no


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mention whatever of bills of exchange, or other mercantile customs in our early

boo4s2 not that they did not exist, but they were tried in the staple, and therefore

were not mentioned in the boo4s of the common law2 just as the matters overwhich the Courts of 3dmiralty, or *cclesiastical Courts, have exclusive

jurisdiction, are at this day never treated as part of the common law. 'ut as the

courts of the staple decayed away, and the foreign merchants ceased to livesubject to a peculiar law, those parts of the law merchant which differed from the

common law either fell into disuse, or were adopted into the common law as the

custom of merchants, and after a time began to appear in the boo4s of commonlaw. 5ow this great change which was brought about does not appear, but

though bills of exchange were in common use among merchants in the th

century2 the first mention of one in an *nglish report is in Cro. 6acl., in the

beginning of the 7th century2 and though, the right of rei vindicatio must haveprevailed in the continent from the time of the revival of the Civil +aw, the first

mention of it in our boo4s is as late as 809. It seems )uite impossible that such

matters should not have been the subject of litigation in some shape or other in

*ngland for centuries before those times."

The remai"'er o& his se%io" is 'evoe' o e(%er!s &rom 23h Ce"#ry !ri"e' maer o" hes#b$e% o& La* Mer%ha", *ih o"ly mi"or aleraio"s by he a#hor o& his boo0s.

"'lac4stone, whom internationalists prefer to )uote over +ord Co4e, classifiedthe +aw erchant as one of the customs of *ngland, and so a part of the

common law2 but it is not properly a custom, as it is not restricted to a single

community, and is not the municipal law of a single country, but regulated

commercial contracts in all civili:ed countries. The body of mercantile usageswhich compose this branch of law, having no dependence upon locality, does not

need to be established by witnesses, but judges are bound to ta4e official noticeof it. The principle branches of the law merchant are the law of shipping, the lawof marine insurance, the law of sales, and the law of bills and notes. The feudal

law, which grew up in a time when property consisted chiefly on land upon

whose alienation great restraints were laid, was found inade)uate for the needsof the mercantile classes who were coming into prominence. The courts when

commercial contracts were brought before them, adonted from the rules which

regulated their business dealing and made them rules of law. any of these rules

were in direct contradiction to the common law. agna Charta contained aspecial provision guaranteeing to merchants, among other things, the right to

buy and sell according to their ancient customs, and many later statutes were

enacted for their special protection. 3s the custom of merchants began toencroach upon the common law, there was a determined effort on the part of

lawyers to resist it. It was attempted to ma4e the custom of merchants a

particular custom, peculiar to a single community, and not a part of the law ofthe land. It was finally decided in the reign of 6ames I #89-8;


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considerable variance, held that it applied to the same con-tracts between

parties and merchants."

The !ara)ra!hs &ollo*i") o he e"' o& his se%io", as he o"e imme'iaely !re%e'i"), are a0e"&rom he ari%les o& Mer%a"ile La* i" he Ameri%a" ="iversal Cy%lo!e'ia, ol#me l, Ne*

-or0, 299;, S. W. +ree"s. They serve o 'emo"srae o he rea'er ho* alie" his la* is o o#rCo"si#io" a"' o o#r a"%ie" %ommo" la* o" real !ro!ery, a"' o sho* ha he r#e !#r!oseo& i is i"'ee' o %o"&is%ae all real !ro!ery o he #ses o& a !rivae mer%a"ile %arel.

"ercantile law is the only branch of municipal law which, from the necessity of

the case, is similar, and in many respects identical, in all the civili:ed and

trading countries of the world. In determining the relations of the family, the

church, and the state, each nation is guided by its own peculiarities of race, ofhistorical tradition, of climate, and numberless other circumstances which are

almost wholly unaffected by the conditions of society in the neighboring stores.

'ut when the arrangements for buying, selling, and transmitting commodities

from state to state alone are in )uestion, all men are very much in the sameposition. The single object of all is that the transaction may be effected in such a

manner as to avoid what in every case must be sources of loss to somebody, andby which no one is ultimately a gainer, vi:., disputes and delay. 3t a very early

period in the trading history of modern *urope, it was found that the only

method by which these objects could be attained was to establishing a commonunderstanding on all the leading points of mercantile, and more particularly of

maritime law. This was effected by the establishment of those maritime codes, of

which the most famous, though not the earliest, was the Consolato del are. It is

sometimes spo4en of as a collection of maritime laws of 'arcelona, but it wouldseem rather to have been a compilation of the laws and trading customs of

various Italian cities such as =enice, >isa, &enoa, and 3malfi, together withthose of the cities with which they chiefly traded - 'arcelona, arseilles, and theli4e. That it was published at 'arcelona towards the end of the th century, or

the beginning of the /th century, in the Catalonian dialect, indicates that it is of

Italian origin. 3s commerce extended itself to the northwestern coasts of *urope,similar codes appeared. There was the &uidon de la er, the ?oles d @leron,

the sages de Aamme, and most important of all the ordinances of the great

5enseatic +eague #Aeutsche 5ansabund(. 3s the central people of *urope, the

$rench early became distinguished as cultivators of maritime law, and one of themost important contributions that ever was made to it was the famous ordinance

of 8B, which formed part of the ambitious and in many respects successful

legislation and codification of +ouis I=. 3ll these earlier attempts at generalmercantile legislation were founded, as a matter of course, on the ?oman Civil

+aw, or rather on what that system had borrowed from the laws which regulated

the intercourse of the trading communities of &reece, perhaps >hoenicia andCarthage, and which had been reduced to a system by the ?hodians.

"$rom the intimate relations which subsisted between !cotland and the continent

of *urope, the lawyers of !cotland became early ac)uainted with the commercial


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arrangements of the continental states2 and to this cause is said to be ascribed

the fact that down to the period when the affairs of !cotland were thrown into

confusion by the rebellions of 7< and 7/


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these causes have been tried by a jury of merchants in +ondon2 and such

)uestions of this 4ind as have come before the Court of the ?ings 'ench in term

time, are laid before the public by a copious and elaborate compiler #!ir 6ames'urrows(.

"The +aw of erchants, as far as it depends on custom, constitutes a part of thevoluntary, not of the necessary, +aw of %ations. It may, therefore, so far as it is

merely positive, be altered by any municipal legislature, where its own subjectsonly are concerned. Innovations may also be made in the voluntary +aw of

%ations, so as to effect the inhabitants of different states, either by the sovereign

thereof #*dens >rim. +aw, sect. ( or any confederated union of humanauthority."

There, he", i" he ="ie' Naio"s, *e &i"' o#r 7%o"&e'erae' #"io" o& h#ma" a#horiy7im!osi") he La* Mer%ha" #!o" every h#ma" %rea#re alive.

Ho* !ahei% a"' &ri)he"i") i is o see a"' hear alle)e' Ameri%a" Parios !#bli%ly 'e%laimi")ha hey are bei") 'e!rive' o& heir ri)hs by Comm#"is hireli")s o# o& he Mos%o* remli",*he" he !erversio" o& he Ameri%a" Co"si#io" %a" %learly be 'is%er"e' o have is solea#he"i% so#r%e i" he la* 'eli"eae' i" he hree !ara)ra!hs above. To rea' he *hole o&Smihs le%#res is a sho%0i") e(!erie"%e, &or i reveals he me%ha"i%s o& he e"ire s*i"'le!er!erae' a)ai"s he Ameri%a" !eo!le by heir o*" bes 7Co"servaive7 !olii%ia"s a"'or)a"i?aio"al 7e'#%aors.7 To rea' Smih is o 'is%over "o o"ly he mea"i") o& Fe'eral ReserveNoes, or he 2>;> &orm, b# also he $oi" re#r" a"' he #r"i") o& &amilies i"o hives o& *arri")%a""ibals.

The moo is he", 7Every ma" a"' *oma" a"' %hil' a ra'er #!o" he La* Mer%ha",7 *heher

he *ill or "o. The e%h"i%al erm &or a" i"'ivi'#al ra'er or mer%ha" is Sole Tra'er. Le #s see*ha *e may 'is%over abo# Sole Tra'ers i" oh" William Smihs Mer%a"ile La*, a)ai" i"Liells series.

"The word trader is used in the ban4rupt laws in a definite and peculiar sense,

which will be treated of in the $ourth 'oo4 under the title of 'an4ruptcy. $or the

general purposes of law it seems to have a wider signification than is eitherthere, or in the common parlance of man4ind, attributed to it2 and perhaps it is

not going too far to say that every man who does an act upon which any of the

rules of mercantile law operate becomes, )uoad that act, a trader though hisordinary pursuits may not be of a mercantile character. Thus, it is laid down by

boo4s of authority that if a man draws a bill of exchange, he is, for the purposes

of that bill, a merchant #Comyns digest, erchant, 3.(. The $rench law definesthe word trader as follows1 !ont commercan ceux )ui exercent les actes de

commerce et en font leur profession habituelle. #Co.B. B


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special prohibition, which ta4es his case out of the ordinary rule, and subjects

him to a peculiar dis)ualification2 nay, such is the anxiety with which the law

watches over the interests of trade and commerce, that it will not allow a man todeprive himself of his right of embar4ing in commercial enterprise. 3 bond or

other contract by which a person binds himself generally not to exercise his

trade or business in this country is merely void #itchell v, ?eynolds, >. Dins.B. +aw +ib. %ew !eries, vol. vii(2 for "the law," to use the expressions of 'est,

C.6., "will not permit anyone to restrain a person from doing what his own

interest and the public welfare re)uire that he should do." #5omer v. 3shford, 'ing. ;B(. 3 partial restraint of this 4ind will indeed be upheld, provided it be

reasonable in its nature and extent, and founded on an ade)uate consideration

#itchell v. ?eynolds, ubi supra2 Chesman v. %ainby, ; !tr. 70(. 'ut if it want

these ; )ualities it will be void #see 5orner v. &ravs, 7 'ing. 7/2 Eoung v.Timmons, Tyrwh. ;;8(. 3nd all contracts in restraint of trade are, if not special

circumstances appear to show them to be reasonable, invalid in the eye of the

law #5orner v. &raves, ubi supra(. >articular personal dis)ualifications,

however, as has been said, exist, which incapacitate the individuals laboringunder them from engaging in commercial pursuits. It may be proper to adduce

one or two examples of this sort of disability2 the instances of most usualoccurrence are to be found in the law relating to the capacity of aliens, infants,

married women, and clergymen."

No*, i& i is everyo"es lo or %hoi%e o& '#y o be%ome a mer%ha" or ra'er merely by!#r%hasi") a meal, &or he sa0e o& e(am!le, a"' i& %o"ra%s i" resrai" o& ra'e are all absol#elyille)al, a"' i& a marria)e %o"ra% %a" !reve" s!o#ses &rom bei") or be%omi") Sole Tra'ers,he" 'oes he aboliio" o& marria)e serve he e"'s o& !rivae mer%a"ilism or o& somehi") %alle'7Comm#"ism1 Les %o"si'er a"oher shor e(%er! &rom Smih, his o"e 'eali") *ih 7$oi"

e"a"%y7 or is varia" 7e"a"%y by he e"ireyJ7

"$or the most distinguished incident of joint tenancy is the 6us acrescendi, by

which, when one joint tenant dies, his interest is not transmitted to his heirs, in

the case of descendible property, nor to his personal representatives, in the caseof personal effects or chattels, but vests in the survivor or survivors2 this right of

survivorship being admitted e)ually in regard to personal chattels, as in estates

of every denomination. %ow if stoc4 in trade were subject to the same claim, one

of two evils might ensue1 either the family of a deceased partner might be leftdestitute2 or mans fear of employing a considerable part of their property in

these underta4ings might hec4 the spirit of commerce. It is therefore, the

established law of merchants, that among them joint tenancy and survivorship donot prevail. #Co.+i. B;a2 3non. ; 'rowne. 002 3non. %oy.


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3n understanding of the full implications of such law is the only basis on which

we can hope to retrieve our rights and our ?epublic in the courts or, indeed,

anywhere else.

XIII NEGOTIABLE INSTRUMENTS

Re)ar'i") Fe'eral Reserve Noes a"' *ha hey are or *ha hey re!rese", le #s %o"si'era"oher shor !assa)e &rom Smihs Mer%a"ile La*, !ari%#larly o" he s#b$e% o& "e)oiablei"sr#me"s, 0ee!i") i" mi"' ha a Fe'eral Reserve Noe is a "e)oiable i"sr#me", "e)oiablemerely by 'elivery as 7!a!er )ol'7

"nder the head of mercantile property, it seems right to advert to a peculiarity

in the mode in which title may be ac)uired to a description of chattels, most

usually found in the hands of mercantile men, vi:., negotiable instruments. Thecommon and well-4nown rule of law is that property in a chattel personal

cannot, except by sale in mar4et overt, be transferred to a vendee, however

innocent, by a party who does not himself possess it. #!ee >eer v. 5umphrey, ; 3F *. /0


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*ngland, Aouglas 80. !nee v. >rescott 3r4. ;/0, per +ord 5ardwic4e,

Treutell v. 'arandon, B Taunt. 99. Cunliffe v. Dhitefield, 'ing. %.C. B;B"

XIV NOW YOU SEE IT, NOW YOU DON'T

We 'o "o "ee' o rea%h so &ar ba%0 as he 'eaile' early %ases %ie' above o sho* he re%0less'isre)ar' ha a(a"'mo"ey lii)a"s have ha' &or he vas amo#" o& la* available o" *hi%h omo#" o&&e"sives a)ai"s he )ra"' lar%e"y i" o#r a( a"' mo"ey la*s.

O"ly *o %ases, or e(ra%s &rom hem, *ill s#&&i%e o 'emo"srae )ro#"'s a"' ar)#me"savailable o a"yo"e *ho a0e he ro#ble o 'is%over hem. O"e o& hese %ases is 6riish, a"' heoher Ameri%a", as lae as 23:@, *ih 'omesi% re&ere"%es o he 7#"hear' o& la* mer%ha".

The &irs is he %ase o& +oo'*i" v. Robars, E(%heB#er, 2945 L.R. 2> E(. 884, 8;@/, as &ollo*sJ

"&odburn, C.6., 5aving given the fullest consideration to this argument, we are

of opinion that it cannot prevail. It is founded on the view that the law merchantthus referred to is fixed and stereotyped, and incapable of being expanded and

enlarged so as to meet the wants and re)uirements of trade in the varying

circumstances of commerce. It is true that the law merchant is sometimes spo4en

of as a fixed body of law, forming part of the common law, and as it were coevalwith it. 'ut as a matter of legal history, this view is altogether incorrect. The law

merchant thus spo4en of with reference to bills of exchange and other negotiable

securities, though forming part of the general body of the lex mercatoria, is ofcomparatively recent origin. It is neither more nor less then the usages of

merchants and traders in the different departments of trade, ratified by the

decisions of Courts of law, which. upon such usages being moved before them,

have adopted them as settled law with a view to the interests of trade and thepublic convenience, the Court proceeding hearing on the well-4nown principle of

law that, with reference to the transactions in the different departments of trade,Courts of law, in giving effect to the contracts and dealings of the parties, will

assume that the latter have dealt with one another on the footing of any custom

or usage prevailing generally in the particular department. 'y this process, what

before was usage only, unsanctioned by legal decision, has become engraftedupon, or incorporated into, the common law, and may thus be said to form part

of it. Dhen a general usage has been judicially ascertained and established,

says +ord Campbell, in 'randao v. 'arnett #; Cl F $ at p. B9


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but which, from its research and ability, deserves to be produced in a form

calculated to insure a wider circulation, that ?ichard alynes, a +ondon

merchant, who published a wor4 called the +ex ercatoria, in 8;;2 and whogives a full account of these bills as used by the merchants of 3msterdam,

5amburg, and other places, expressly states that such bills were not used in

*ngland. There is reason to believe, however, that this is a mista4e. r. c+eodshows that promissory notes, payable to bearer, or to a man and his assigns,

were 4nown in the time of *dward I=. Indeed, as early as the statute of ?ich.;,

c., bills of exchange are referred to as a means of conveying money out of therealm, though not as a process in use among *nglish merchants. 'ut the fact that

a +ondon merchant writing expressly on the law merchant was unaware of the

use of bills of exchange in this country, shows that that use at the time he wrote

must have been limited. 3ccording to >rofessor !tory, who herein is, no doubt,perfectly right, the introduction and use of bills of exchange in *ngland, as

indeed it was everywhere else, seems to have been founded on the mere practice

of merchants, and gradually to have ac)uired the force of a custom. Dith the

development of *nglish commerce the use of these most convenient instrumentsof commercial traffic would of course increase, yet, according to r. Chitty, the

earliest case on the subject to be found in the *nglish boo4s is that of artin v.'oure #Cro. 6ac. 8(, in the first 6ames I. p to this time the practice of ma4ing

these bills negotiable by endorsement had been un4nown, and the earlier bills

are found to be made payable to a man and his assigns, though in some instances

to bearer. 'ut about this period, that is to say at the close of the sixteenth or thecommencement of the seventeenth century, the practice of ma4ing bills payable

to order, and transferring them by endorsement, too4 its rise. 5artmen, in a very

learned wor4 on 'ills of *xchange, recently published in &ermany states that thefirst 4nown mention of the endorsement of these instruments occurs in the

%eapolitan >ragmatica of 897. !avary, cited by ons. %ouguier, in his wor4

Aes +ettres de change, had assigned it to a later date, namely 8;9. $rom itsobvious convenience, this practice speedily came into general use, and as part of

the general custom of merchants, received the sanction of our courts. 3t first the

use of bills of exchange seems to have been confined to foreign bills between*nglish and foreign merchants. It was afterwards extended to domestic bills

between traders, and finally to bills of all persons, whether traders or not1 see

Chitty on 'ills, Bth *d., p. .

"In the meantime, promissory notes had also come into use, differing herein frombills of exchange in that they were not drawn upon a third party, but contained a

simple promise to pay by the ma4er, resting, therefore, upon the security of the

ma4er alone. They were at first made payable to bearer, but then the practice of

ma4ing bills of exchange payable to order, and ma4ing them transferable byendorsement, as had been done with, bills of exchange, speedily prevailed. 3nd

for some time the courts of law acted upon the usage with reference to

promissory notes, as well as with reference to bills of exchange.


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"In 8B9, in the case of !haldon v. 5entley #; !how. 89( an action was brought

on a note under seal by which the defendant promised to pay to bearer 99, and

it was objected that the note was void because not made payable to a specificperson. 'ut it was said by the Court, Traditio facit chatam lo)ui, and by the

delivery he #the ma4er( expounds the person before meant2 as when a merchant

promises to pay to the bearer of the note, anyone that brings the note shall bepaid. 6ones, 6., said that it was the custom of merchants that made that good. In

'romwich v. +loyd the >laintiff declared upon the custom of merchants in

+ondon, on a note for money payable on demand, and recovered2 and Treby,C.6., said that bills of exchange were originally between foreigners and

merchants trading in *ngland, and then afterwards between any traders

whatsoever, and now between any persons, whether trading or not2 and

therefore, the plaintiff need not allege any custom, for now these bills were ofthat general use that upon an indebitatus assumpsit they may be given in

evidence upon the trial. To which >owell, 6., added, @n indebitatus for money

received to the use of the plaintiff the bill may be left to the jury to determine

whether it was given for value received. #; +utw.


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much doubt that by the usage prevalent amongst merchants, these notes had been

treated as securities negotiable by the customary method of assignment as much

as bills of exchange properly so-called. The !tatute of 3nne may indeed,practically spea4ing, be loo4ed upon as a declaratory statute, confirming the

decisions prior to the time of +ord 5olt.

"De now arrive at an epoch when a new form of security for money, namely,

goldsmiths or ban4ers notes, came into general use. 5olding them to be part ofthe currency of the country, as cash, +ord ansfield and the Court of Hings

'ench had no difficulty in holding, in iller v. ?ace # 'urr. /


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"3nother very remar4able instance of the efficacy of usage is to be found in much

more recent times. It is notorious that, with the exception of the 'an4 of *ngland,

the system of ban4ing has recently undergone an entire change. Instead of theban4er issuing his own notes in return for the money of the customer deposited

with him, he gives credit in account to the depositor, and leaves it to the latter to

draw upon him, to bearer or order, by what is now called a chec4. pon thisstate of things the general course of dealing between ban4ers and their

customers has attached incidents previously un4nown, and by these decisions of

the courts have become fixed law. Thus, while an ordinary drawee, although inpossession of funds of the drawer, is not bound to accept, unless by his own

agreement or consent, the ban4er, if he has funds, is bound to pay on

presentation of a che)ue on demand. *ven admission of funds is not sufficient to

bind money deposited with a ban4er is not only money lent, but the ban4er isbound to repay it when called for by the draft of the customer #!ee >ott v. Clegg,

8 FD ;(. 'esides this, a custom has grown up among ban4ers themselves

of ma4ing che)ues as good for the purposes of clearance, by which they become

bound to one another.

"Though not immediately to the present purpose, bill of lading may also be

referred to as an instance of how general mercantile usage may give effect to a

writing which without it would not have had that effect at common law. It is frommercantile usage, as provided in evidence, and ratified by judicial decision in the

great case of +ic4barrow v. ason, that the efficacy of bills of lading to pass the

property in goods is derived.

"It thus appears that all these instruments which are said to have derived theirnegotiability from the +aw erchant had their origin, and that at no very remote

period, in mercantile usage, and were adopted into the law by our courts asbeing in conformity with the usages of trade2 of which, if it were needed, afurther confirmation might be found in the fact that, according to the old form of

declaring on bills of exchange, the declaration always was founded on the

custom of merchants.

"sage, adopted by the Courts, having been thus the origin of the whole of theso-called +aw erchant as to negotiable securities, what is there to prevent our

acting upon the principle acted upon by our predecessors, and followed in the

precedents they have left to usJ Dhy is it to be said that a new usage which hassprung up under altered circumstances, is to be less admissible than the usages

of past timeJ Dhy is the door to be now shut to the admission and adoption of

usage in a manner altogether of cognate character, as though the law had beenfinally stereotyped and settled by some positive and peremptory enactmentJ It is

true that this script purports, on the face of it, to be a security not for money, but

for the delivery of a bond2 nevertheless we thin4 that, substantially and in effect,

it is a security for money, which, till the bond shall be delivered, stands in theplace of that document, which when delivered, will be beyond doubt the

representative of the sum it is intended to secure. !uppose the possible case that


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the borrowing government, after receiving one or two installments, were to

determine to proceed no further with its loan, and to pay bac4 to the lenders the

amount they had already advanced2 the script with its receipts would be thesecurity to the holders of the amount. The usage of the money mar4et has solved

the )uestion whether script should be considered security for, and the

representative of, money, by treating it as such.

"The universality of a usage voluntarily adopted between buyers and sellers isconclusive proof of its being in accordance with public convenience2 and there

can be no doubt that by holding this species of security to be incapable of being

transferred by delivery, and as re)uiring some more cumbrous method ofassignment, we should materially hamper the transactions of the money mar4et

with respect to it, and cause great public inconvenience. %o doubt there is an

evil arising from the facility of transfer by delivery, namely, that it occasionallygives rise to the theft or misappropriation of the security, to the loss of the true

owner. 'ut this is an evil common to the whole body of negotiable securities. It is

one which may be in a great degree prevented by prudence and care. It is onewhich is counterbalanced by the general convenience arising from facility oftransfer, or the usage would never have become general to ma4e script available

to bearer, and to treat it as transferable by delivery. It is obvious that no

injustice is done to one who has been fraudulently dispossessed of script throughhis own misplaced confidence, in holding that the property in it has passed to a

bona fide holder for value, seeing that he himself must have 4nown that it

purported on the face of it to be available to bearer, and must be presumed tohave been aware of the usage prevalent with respect to it in the mar4et in which

he purchased it.

"+astly, it is to be observed that the tendency of the Courts, except only in thetime of +ord 5olt, has been to give effect to mercantile usage in respect tosecurities for money and that where legal difficulties have arisen the legislature

has been prompt to give the necessary remedy, as in the case of promissory notes

and of the *ast India bonds."

The se%o"' %ase is a" Ameri%a" %ase i"volvi") a *ell0"o*" %or!oraio" *hi%h has bee" aro#"'si"%e 2433, &o#"'e' i" ha year by Aaro" 6#rr a"' ohers o !rovi'e he Ciy o& Ne* -or0 *ih!#re 'ri"0i") *aer. I is he %ase o& Presi'e" a"' Dire%ors o& Ma"haa" Com!a"y v. Mor)a",Co#r o& A!!eals o& Ne* -or0, 23:@ :;: N- 89, ;95>/. Car'o?o, .J

"The %egotiable Instruments +aw of %ew Eor4 is much broader than its *nglishmodel. The *nglish act is expressly limited to bills of exchange, chec4s, and

promissory notes. It does not cover bonds or other classes of securities

#Chalmers, 'ills of *xchange, p. 8;(. The argument has been made that bondsare excluded from our statute also. The provisions of section ;, directed as

they are to bonds, municipal and corporate, leave no support for that position.

The statute of %ew Eor4 does not confine itself, if found, to an enumeration ofcertain )ualities which, if found, will ma4e instruments negotiable. It enumerates


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others which will ma4e them non-negotiable. 'y section ;9, an instrument to be

negotiable must conform to the following re)uirements. @f the five re)uirements

that follow, we )uote the second and the third. It must contain an unconditionalpromise or order to pay a sum certain in money. It must be payable on demand,

or at a fixed or determinable future time. 'y section ;, an instrument payable

on a contingency is not negotiable, and the happening of the event does not curethe defect, and by section ;/ there is a li4e declaration as to the non-negotiable

character of any instrument which contains an order of promise to do any act in

addition to the payment of money, with enumer

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