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The follo.i/g 0rief .as prese/ted to a &ra/d 1ur2 i/ the $tate of 3alifor/ia circa 4586 i/ a/ attempt to correct 7udicial a0use of people i/8ol8ed i/ patriot a/d i/come tax protest mo8eme/ts. )a/2 people .ere 0ei/g i/carcerated as political priso/ers of .hat is appare/tl2 a 9shado. go8er/me/t9 /o. i/ co/trol of the +$'. These patriots .ere attempti/g to educate as ma/2 of the ge/eral pu0lic as .ould hear their message. +/fortu/atel2: short;sighted self;i/terest a/d apath2 seem to ha8e pre8ailed. The /ame of the author is u/k/o./. 'lthough this is 0ased upo/ the 'merica/ s2stem: their s2stem of go8er/me/t a/d the 3a/adia/ s2stem: are 0ut 9slips9: or more appropriatel2 9suckers9 off the same pla/t: the !ritish limited mo/arch2. )ost of the follo.i/g: therefore: is directl2 applica0le to the 3a/adia/ dilemma. '. #*T"O,+3T#O* We ha8e a pro0lem a/d .e are here to a/al2ze that pro0lem. Wh2 do the courts refuse to admit certai/ argume/ts a/d cites of the +/ited $tates 3o/stitutio/< '/d further: fi/d some i/ co/tempt of court if the2 persist i/ doi/g so< Wh2 is there so little 7ustice i/ our courts toda2< Our pro0lem is: .e ha8e 0ee/ fighti/g the .ro/g thi/g;;pla2i/g the .ro/g 0all game. We ha8e fou/d that .e are /ot i/ 3ommo/ %a. u/der the 3o/stitutio/ ;; i/ fact: .e=re /ot i/ >uit2 u/der the 3o/stitutio/ ;; .e are i/ )aritime %a.: the %a. of 3ommerce: the %a. of 'dmiralt2. 1ust .hat is this %a. of 'dmiralt2< 'dmiralt2 %a. e/compasses all co/tro8ersies arisi/g out of acts do/e upo/ or relati/g to the sea: a/d >uestio/s of prize. ?rize is that la. deali/g .ith .ar: a/d the spoils of .ar ;; such as capture of ships: goods: materials: propert2 ;; 0oth real a/d perso/al: etc. )aritime %a. is that s2stem of la. that particularl2 relates to commerce a/d /a8igatio/. !ecause of this fact: as 2ou .ill see: 2ou do/=t ha8e to 0e o/ a ship i/ the middle of the sea to 0e u/der 'dmiralt2 1urisdictio/. This 7urisdictio/ ca/ attach merel2 0ecause the su07ect matter falls .ithi/ the scope of )aritime %a. ;; a/d: 0ills: /otes: che>ues a/d credits are .ithi/ the scope of )aritime %a.. 'dmiralt2 %a. gre. a/d de8eloped from the harsh realities a/d expedie/t measures re>uired to sur8i8e at sea. #t has 8er2 exte/si8e 7urisdictio/ of maritime cases: 0oth ci8il a/d crimi/al. !ecause of its ge/esis: it co/tai/s a harsh set of rules a/d procedures .here there is /o right to trial 02 7ur2: /o right to pri8ac2: etc. #/ other .ords: there are /o rights u/der this 7urisdictio/ ;; o/l2 pri8ileges gra/ted 02 the 3aptai/ of the maritime
8o2age. @or i/sta/ce: i/ this 7urisdictio/ there is /o such thi/g as a right /ot to 0e compelled to testif2 agai/st o/eself i/ a crimi/al case ;; the 3aptai/ ca/A ho.e8er: if he .ishes: gra/t 2ou the pri8ilege agai/st self;i/crimi/atio/. there=s /o such thi/g as a right to use 2our propert2 o/ the pu0lic high.a2s ;; 0ut the 3aptai/ ma2 gra/t 2ou the pri8ilege to do so: if he choosesA there is /o such thi/g as a right to operate 2our o./ 0usi/ess ;; o/l2 a pri8ilege allo.ed as lo/g as 2ou perform accordi/g to the captai/=s regulatio/s. Ha8i/g ide/tified the s2mptoms of the pro0lem: .e must diag/ose the cause to fi/d a solutio/. We ha8e 0ee/ fighti/g the effects too lo/g .hile the disease rages u/a0ated. $i/ce .e ha8e ide/tified the cause: a/d u/dersta/d its /ature a/d characteristics: .e Bhopefull2C ca/ 0uild a .i//i/g case. #/ marshalli/g our i/formatio/ a/d facts it is /ecessar2 to go 0ack i/ time. %et us exami/e the e8ide/ce a/d facts: !ack at the time: 7ust 0efore the re8olutio/ ;; .he/ our 3olo/ies .ere festeri/g a/d threate/i/g re8olt from the Di/g ;; .he/ .e had the 3ommo/ %a. of the 3olo/ies. The Di/g=s me/ came o8er to collect their taxes. The2 did/=t use the 3ommo/ %a. o/ us: the2 applied 'dmiralt2 %a. o/ us ;; arrested people: held $tar 3ham0er proceedi/gs a/d de/ied us our commo/ rights as /glishme/. This: more tha/ a/2 o/e thi/g: Esure: taxatio/ .ithout represe/tatio/ .as part of itF ;; 0ut it .as de/ial of our 3ommo/ %a. rights 02 putti/g us u/der 'dmiralt2 %a. .herei/ the Di/g .as the 3ha/cellor. His age/ts depri8ed us of 7ur2 trials: put us o/ ships: se/t us do./ to ports i/ the !ritish West #/dies ;; .here ma/2 died of fe8er i/ the holds of ships ;;a/d 8er2 fe. retur/ed. This .as o/e of the mai/ reaso/s for the re8olutio/ i/ 4GG6. What is the Common Law? Historicall2: the 3ommo/ %a. came from the '/glo; $axo/ 3ommo/ %a. i/ /gla/d. #t existed: a/d co/trolled a/d ruled the la/d of /gla/d pre8ious to the reig/ of William the 3o/>ueror B4H66C: .he/ the *orma/s co/>uered '/glo;$axo/ /gla/d. #/ it .as the &olde/ "ule E"ule of 3i8il 1usticeF that i/ the /egati8e form reads: 9,o /ot u/to others as 2ou .ould /ot ha8e others do u/to 2ou.9 ?.$. The positi8e form deals .ith $ocial 1ustice. Where did this la. come from ;; this '/glo;$axo/ 3ommo/ %a.< ,id it come from 3hristia/it2=s i/troductio/ to /gla/d< 'ppare/tl2 /ot. #t is o/ record i/ the -atica/ ;;; The earl2 3hristia/ missio/aries reported that the people of *orther/ &erma/2 9alread2 ha8e the la.9. #t is suspect that earl2 He0re. ti/ traders taught these people the la. ma/2 2ears 0efore 3hrist. $o .hat has happe/ed< The /glish people had this simple a/d pure 3ommo/ %a. of rights a/d propert2 rights. !ut there also existed alo/g side of it: e8e/ i/ those da2s: the la. of commerce: .hich is the )aritime %a.. The earliest recorded k/o.ledge .e ha8e of )aritime %a. is i/ the #sle of "hodes: 5HH !. 3. ;; the/ there=s the %a.s of Olero/: %a.s of the Ha/seatic %eague: )aritime %a.: .hich .as part a/d parcel of their ci8il
la.. This is the la. of commerce: .hereas the 3ommo/ %a. .as the la. that had to do .ith the la/d: a/d .ith the people of the la/d. William the 3o/>ueror su07ugated all the $axo/s to his rule except %o/do/ To./. The mercha/ts co/trolled the cit2 a/d their .alls held off the i/8aders. The mercha/ts .ere a0le to pro8isio/ the cit2 02 ships a/d William=s soldiers .ere /ot a0le to pre8ail. @i/all2: ack/o.ledgi/g that he could /ot take the 3it2 02 force: he resorted to compromise. The mercha/ts dema/ded 9the 9%ex )erca/toria9 Bthe )aritime %a.C. This .as gra/ted a/d remai/s to this da2. The i//er cit2 of %o/do/ has its special la. .here the )ercha/tIs %a. is the la. of the 3it2 of %o/do/. ?rotectio/ of their shippi/g i/dustr2 .as o/e of the mai/ reaso/s for the resista/ce 02 the mercha/ts of %o/do/. The $axo/ 3ommo/ %a. had /o pro8isio/ for fictitious perso/s Ecompa/iesF or limited lia0ilit2A 0ut: recog/ized o/l2 /atural perso/s a/d full lia0ilit2. The "oma/ 3i8il %a. .as a deri8ati8e of the )aritime %a. a/d is the 0asis of 3i8il %a. i/ most uropea/ cou/tries. #de/tif2i/g features of "oma/ 3ommo/ %a. are the usage of precede/t a/d 7udgeme/t 02 magistrateEsF i/ courts of $ummar2 1urisdictio/. 't "u//2mede: i/ 464J: the !aro/s of /gla/d forced Di/g 1oh/ to sig/ the )ag/a 3arta: o/e of se8eral docume/ts esta0lishi/g the fu/dame/tal rights of the /glish people to this da2: KThe others 0ei/g the re8isio/ of the )ag/a 3arta i/ 466J: the ?etitio/ of "ightsB4668C a/d the !ill of "ights B4685CL. The primar2 o07ecti8e a/d co/te/t of the )ag/a 3arta .as the prohi0itio/ of the use of $ummar2 7urisdictio/ Bthe "oma/ or 'dmiralt2 %a.C as a mea/s of u/authorized taxatio/ a/d seizure of propert2 .ithout due process of %a. or 7ust compe/satio/. The colo/ists .ere: o/ the .hole: 8er2 .ell schooled i/ the 3ommo/ %a. a/d .ere >uite a.are of the .ro/gs that Di/g a/d ?arliame/t .ere committi/g agai/st them. This e8e/tuall2 forced them to re0el. The 3ommo/ %a. that .e had i/ our la/d is parallel to a/other a/cie/t la.. (ou .ill fi/d that .he/ our @ou/di/g @athers set up the declarator2 trust: k/o./ to us as the ,eclaratio/ of 9#/depe/de/ce9: 1efferso/ listed 48 grie8a/ces a/d i/ each o/e of these grie8a/ces he sho.ed ho. .e .ere 0ei/g de/ied our rights as free;0or/ /glishme/. $o: he made a/ appeal to the /atio/s of the .orld that the acts 0ei/g committed agai/st the colo/ists .ere acts committed agai/st the %a.s of *atio/s: a/d it Ethe ,eclaratio/ of #/depe/de/ceF 0ecame a/ ordi/a/ce: a pu0lic trust: .ithi/ the %a. of *atio/s ;; a/d those @ou/di/g @athers k/e. that the2 .ould ha8e to fight to .i/ the i/depe/de/ce that the2 had so declared. 'fter the /glish surre/dered at (orkto./: the 'rticles of 3o/federatio/ period follo.ed. The/ our @ou/di/g @athers impleme/ted the 3o/stitutio/ i/to this ?u0lic Trust: .hich .as the mecha/ism to pro8ide for us our hopes a/d aspiratio/s. #/ the 3o/stitutio/ 2ou .ill fi/d pri/ciplesA 0ut: /ot /ecessaril2 those fou/d i/ the ,eclaratio/ of #/depe/de/ce. $ome of the .riters of the 3o/stitutio/ .as a little too restricti8e. #t .as ge/erall2
co/ceded: for i/sta/ce: that the people had the right to 0ear arms: 0ut the2 also k/e. that if .e e8er .ere placed or allo.ed oursel8es to 0e 0rought u/der )aritime 'dmiralt2 %a. co/cer/i/g our perso/s a/d propert2: .e .ould ha8e dire /eed of a guara/tee for our rights ;; thus: the te/ ame/dme/ts .ere added to the 3o/stitutio/: a/d that 0ecame the su0sta/ti8e part of the 3o/stitutio/. 'rticle ###: $ectio/ 6: of the +. $. 3o/stitutio/ defi/es the )aritime 'dmiralt2 7urisdictio/. Ho. .e ha8e 0ee/ tricked out of our 3ommo/ %a. rightsA a/d: i/to the 'dmiralt2 courts< Ho. has e>uit2 as .ell as 'dmiralt2 0ee/ corrupted< Ho. has the @ederal &o8er/me/t made it almost impossi0le for us to recei8e our co/stitutio/al rights ;; our su0sta/ti8e rights i/ the 3o/stitutio/< *o.: to u/dersta/d the 3o/stitutio/ ;; .e must exami/e the ,eclaratio/ of #/depe/de/ce a/d those J6 me/ .ho sig/ed it: a/d pledged their li8es: li0ert2: famil2: propert2: a/d their ho/or to this sacred trust. 'll of these me/ .ere 8er2 k/o.ledgea0le a/d lear/ed i/ the 3ommo/ %a. ;; the2 k/e. the la. 0ecause the2 studied the la.: the2 ma2 /ot ha8e had a high school educatio/ Ema/2 of themF. !ut the2 could read: a/d the2 read a/d studied la.. The2 .ere me/ of the age or reaso/ a/d the2 k/e. a/d the2 u/derstood. The2 k/e. exactl2 .hat the ki/g .as doi/g. The2 k/e. the la.. D/o.ledge is a 8er2 importa/t thi/g. '/d: as 1ames )adiso/ .rote 2ears ago : 9D/o.ledge .ill fore8er go8er/ ig/ora/ce: a/d a people .ho mea/ to 0e their o./ go8er/ors must arm themsel8es .ith the po.er .hich k/o.ledge gi8es.9 ducatio/ should /e8er 0e termi/alM The @irst 'me/dme/t to the + $ 3o/stitutio/ cites [email protected]
of "eligio/9 that i/ actual fact is [email protected]
of ducatio/9 si/ce the church co/trolled educatio/: at the time of .riti/g. *o.: there is a chro/ological se>ue/ce of e8e/ts that placed us .here .e are toda2. We ca/ almost assure 2ou that 2ou .ill re7ect: or .a/t to re7ect: parts of .hat 2ou are a0out to see a/d hear. There is a theor2 k/o./ as the Theor2 of 3og/iti8e ,isso/a/ce ET3,F that holds that the mi/d i/8olu/taril2 re7ects i/formatio/ /ot i/ li/e .ith pre8ious thoughts a/d/or actio/s. !race 2ourself: the follo.i/g message ma2 0e e/tirel2 differe/t from a/2thi/g 2ou heretofore 0elie8ed to 0e true. #f 2ou are u/a.are: 2ou are u/a.are of 0ei/g u/a.areM BUILDING THE CASE The first step i/ 0uildi/g a/2 case .hich has a cha/ce of .i//i/g is to a/al2ze the pro0lem. ' commo/ patter/ for doi/g this is to recog/ize a pro0lem that /eeds a/s.eri/gA a/al2ze the pro0lem 02 first stati/g itA reach a satisfactor2 7udgme/tA a/d the/ defe/d our 7udgme/t. #/ prepari/g our case: our legal research .ill 0e determi/ed e/tirel2 02 the facts of the case for: .ithout facts: the la. is mea/i/gless. #/ marshalli/g our facts .e /eed to keep a fe. guidi/g pri/ciples i/ mi/d so .e are/=t led astra2: .e must discou/t preco/ceptio/sA postpo/e 7udgeme/tsA a/d .e must o0ser8e for a purpose:
k/o. .h2 .e are o0ser8i/g a/d stick to rele8a/t facts a0out the case. The a/s.ers must 0e 0ased o/ e8ide/ce: premises a/d i/fere/ces. TH 3O))O* %'W %et=s explore the 3ommo/ %a. i/ depthA a/d: its em0odime/t i/ our 3o/stitutio/. ?ro0a0l2 o/e of the 0est .a2s of explai/i/g .hat this 3ommo/ %a. is: is to explai/ .hat it is /ot ;; to compare it to its a/tithesis. There are: fu/dame/tall2: t.o competi/g s2stems of ma/;made la. i/ the .orld that are i/ co/sta/t ideological co/flict agai/st each other. O/e is the 3ommo/ %a. a/d the other is the 3i8il %a.: or "oma/ 3i8il %a.. ' 0rief stud2 of the philosophic 0ackgrou/d is prese/ted i/ order to grasp the sig/ifica/ce of the differe/ces i/ the t.o s2stems. ' tri;u/it2 of &od Eor: $upreme !ei/gF co/cepts: composed of: 4. &od #s Bthe &od out thereC: 6. &od Withi/ B&od i/d.elli/g each i/di8idualC: a/d: 3. Withi/ &od Bthe perso/ 0ei/g a part of &od: a cell i/ the 0od2 of &od: etcC: are the 0asic 0uildi/g 0locks of religious u/dersta/di/g: the 0asic eleme/ts of ma/=s religio/s a/d religious i/stitutio/s. ' 0ala/ced tri;u/it2: regardless of co/cept >ualit2: .ould make for a harmo/ious religious a/d social structure. B$ome of the *orth 'merica/ #/dia/ tri0es achie8ed such a reaso/a0l2 0ala/ced plateau i/ their cultureC. Ho.e8er: some sociall2 domi/ati/g cultures: such as 1udaism: are domi/ated 02 N 4: a/d a 0it of N 3. !uddhism calls mostl2 o/ N 3 .ith some N6. 3o/sider .here o/e .ould place 3ommu/ism: Oligarchic domi/a/ce: 'merica/ repu0lica/ism: the "e/aissa/ce< O/e ca/ fi/d these co/cepts ruli/g a/cie/t ci8ilizatio/s: a/d exte/di/g i/to the 8er2 roots of our curre/t co/cepts of statehood. The a/cie/t &reek cit2 states de8eloped i/ t.o: a/d opposi/g directio/s 0ecause their philosophic thought ga8e some the 9&od is9 co/cept i/ isolatio/ to the other t.o co/cepts: .hile the other took the 9&od .ithi/9 as their sole co/cept. O/e .as Oligarchic: the other .as "epu0lica/. 'ristotle .as a spokesma/ of the first: ?lato: of the seco/d. The first leads to the fi/al co/clusio/ that ma/ is a/ e8ol8ed a/imalA a/d: as this thread of 0elief structures comes do./ to our curre/t era. O/e of the stro/gest of such 0elief structures resides .ithi/ the curre/t huma/ist mi/d;set ;; the +/i8erse is Bsupposedl2C deteriorati/g a/d retur/i/g to 0asic eleme/ts: ;; so too .ould ma/ re8ert to lo.er forms of a/imalism: if left o/ his o./: .ithout di8i/el2 appoi/ted leaders: the oligarchs: the captai/ of the ship. The cult of )other arth B /8iro/me/talismC falls i/to this school of thought. The "epu0lica/ 9&od .ithi/9 societ2 0elie8es i/ the .orth a/d respo/si0le /ature of the i/di8idual. #/ a true "epu0lic: represe/tati8es are appoi/ted a/d gi8e/ respo/si0ilit2 for the pu0lic good as 9ser8a/ts9. ,emocrac2 is a/ oligarchic mecha/ism to appease those people .ho 02 /ature reall2 are "epu0lica/. ' ,emocrac2 allo.s the people to choose their 9leaders9: their sla8e;masters. The Oligarchs ma/ipulate the eco/omic a/d social structures so as to create a turmoil to keep their su07ects co/sta/tl2 stri8i/g for the 0asic huma/ i/stitutio/s: self;mai/te/a/ce: self;perpetuatio/ a/d self;gratificatio/A a/d: /e8er allo. these to reach a poi/t .here "epu0lica/ thought: creati8it2 a/d altruism: ma2 0ecome esta0lished.
$o: .ith this 0ackgrou/d: 2ou might 0etter u/dersta/d the differe/ce 0et.ee/ the oligarchic )aritime %a. a/d the "epu0lica/ e/ha/ci/g $axo/ 3ommo/ %a.. The oligarchic e/trepre/eur=s o8erthro. of a/cie/t #srael repu0lica/ form of go8er/me/t is recorded i/ 4 $amuel: 3hapter 8 Bsome .orth.hile readi/gC. To co/sider the 8alue of the 9&od .ithi/9 co/cept to societ2: stud2 the effect of the results of the 3ou/cil of @lore/ce B4435C called 02 the ?ope of the "oma/ 3hurch of that time: at .hich the ,octri/e of 9The @ilio>ue9 B3hrist i/d.elli/gC .as esta0lished. E'ctuall2: it .as a re8i8al of the teachi/gs of $t. 'ugusti/e a/d ?hilo of 'lexa/dria. The a/ti;?hilo i/trigues surrou/di/g the *ice/e 3ou/cil a/d its resulti/g *ice/e 3reed is a stud2 i/ itself regardi/g the impositio/ of oligarch2 a/d its accompa/2i/g "oma/ dictators t2pe of rule o8er the 3hurchF. 8e/ though it .as /ot accepted 02 the aster/ B!2za/ti/eC "ite a/d the 1esuits: it resulted i/ the "e/aissa/ce: the 'ge of "easo/: great artistic expressio/: a/d the repu0lica/ mo8eme/ts i/ urope a/d 'merica. 1. "eu0e/ 3lark: a former +$ +/der;$ecretar2 of $tate a/d 'm0assador to )exico: succi/ctl2 stated the pri/ciples a/d applicatio/s of these t.o s2stems of la. .he/ he .rote: 9!riefl2: a/d stated i/ ge/eral terms: the 0asic co/cept of these t.o s2stems .as as opposite as the poles. #/ the 3i8il %a.: the source of all la. is the perso/al ruler: .hether: ki/g: or emperorA he is so8ereig/. #/ the 3ommo/ %a.: certai/l2 as de8eloped i/ 'merica: the source of all la. is the people. The2: as a .hole: are so8ereig/. ,uri/g the ce/turies: these t.o s2stems ha8e had a/ almost deadl2 ri8alr2 for the co/trol of societ2: the 3i8il %a. a/d its fu/dame/tal co/cepts 0ei/g the i/strume/t through .hich am0itious me/ of ge/ius a/d selfish/ess ha8e set up a/d mai/tai/ed despotisms: the 3ommo/ %a.: .ith its 0asic pri/ciples: 0ei/g the i/strume/t through .hich me/ of e>ual ge/ius: 0ut .ith lo8e of ma/ki/d 0ur/i/g i/ their souls: ha8e esta0lished a/d preser8ed li0ert2 a/d free i/stitutio/s. The 3o/stitutio/ of the +/ited $tates em0odies the loftiest co/cepts 2et framed of this exalted co/cept.9 Thus: our heritage of freedom is a direct a/d proximate result of the 3ommo/ %a.: deri8i/g its authorit2 solel2 from usages a/d customs of immemorial a/ti>uit2. The 3ommo/ %a. is the legal em0odime/t of practical commo/ se/se: a/d: its guidi/g star has al.a2s 0ee/ the rule of right a/d .ro/g ;the &olde/ "ule. The 3ommo/ %a.: as em0odied i/ the +$ 3o/stitutio/: for the protectio/ a/d securit2 of perso/s a/d propert2: is $u0sta/ti8e 3ommo/ %a. ; Bsu0sta/ti8e right: a right Kas of life: li0ert2: propert2: or reputatio/L held to exist for its o./ sake a/d to co/stitute part of the /ormal legal order of societ2C ; the i/te/tio/ of the @ou/di/g @athers 0ei/g the assura/ce of access to this la. 02 the people. 8ide/ce .ill 0e further prese/ted to sho. ho. other parts of the +$ 3o/stitutio/ deali/g .ith the totall2 differe/t 7urisdictio/s of 'dmiralt2 a/d )aritime %a.: ha8e 0ee/ used to su08ert the people i/to: or u/der this 7urisdictio/: a/d 0ar access to the su0sta/ti8e 3ommo/ %a..
The 0asic eleme/t of the su0sta/ti8e 3ommo/ %a. is 2ou Bthe i/di8idual /atural perso/C. #/ this 7urisdictio/: 2ou are the so8ereig/ a/d the captai/ of 2our o./ ship. The restoratio/ of that exalted co/cept: a/d access to the la. 02 .hich me/ ha8e esta0lished li0ert2 a/d free i/stitutio/s ; is the o07ect of this 0rief.
3H"O*O%O'% $ O+ *3 [email protected]
- *T$ '*, " % -'*T @'3T$: The facts that appear rele8a/t to this case co8er a se>ue/ce of e8e/ts 0egi//i/g .ith the ,eclaratio/ of #/depe/de/ce o/ 1ul2 4th 4GG6. We .ill i/troduce a/d discuss these facts i/ se>ue/ce of occurre/ce. We .ill sho. 2ou: 02 the facts surrou/di/g these e8e/ts: a/d 02 the la.: ho. our courts ha8e 0ee/ co/8erted to courts of 'dmiralt2 that ha8e /o 7urisdictio/ to hear 3ommo/ %a. B!ill of "ightsC issues 0rought 0efore them. These e8e/ts are: a. ,eclaratio/ Of #/depe/de/ce B4GG6C 0. +$ 3o/stitutio/ B4G8GC c. 1udiciar2 'ct B4G85C d. &eorge "app Harmo/2 $ociet2 B48HJC e. ,e%o8io 8. !oit B484JC f. ,r. %ist=s %etters B486JC g. $.ift 8. T2so/ B4846C h. %imited %ia0ilit2 'ct B48J4C i. To/ti/e #/sura/ce B4868C 7. @ederal "eser8e 'ct B4543C k. House 1oi/t "esolutio/ 456 B4533C l. rie "ailroad 8. Tompki/s B4538C m. -ictor2 Tax 'ct B4546C /. +$ 8. $outh; aster/ +/der.riters 'ssociatio/ B4544C o. )c3arre/ 'ct B454JC The facts prese/ted i/ this se>ue/ce .ill sho.: 4. That the ,eclaratio/ of #/depe/de/ce a/d the +$ 3o/stitutio/ are ordi/a/ces .ithi/ the %a. of *atio/s.
6. That the primar2: a/d compelli/g reaso/ for the ,eclaratio/ of #/depe/de/ce .as to elimi/ate 'dmiralt2 %a.: a/d 7urisdictio/ from the ,omestic la. of the colo/ies. 3. That the 1udiciar2 'ct of 4G85 clearl2 recog/ized the disti/ct: a/d separate 7urisdictio/ of 'dmiralt2 a/d ,omestic la..K3ommo/ %a.L 4. That the formula a/d 0luepri/t of the @ederal "eser8e $2stem is ide/tical: i/ its esse/tial features: to that of the &eorge "app Harmo/2 $ociet2A a/d: to the To/ti/e #/sura/ce schemes B.hich .ere pure .ageri/g policies a/d are specificall2 for0idde/ i/ the co/stitutio/s of se8eral $tatesC. J. That the @ederal "eser8e is a maritime le/der a/d i/sura/ce u/der.riter to the +/ited $tatesA a/d: as such: has /o risk i/ the maritime 8e/ture as a le/der: or as i/surer: has /o 8ested i/terest i/ the su07ect matter i/sured. 6. That the su07ect matter i/sured 02 the @ederal "eser8e is the ?u0lic *atio/al 3redit $2stem: .hich is a maritime 8e/ture for profit u/der limited lia0ilit2 for pa2me/t of de0t. G. That: for the pri8ilege of limited lia0ilit2 for pa2me/t of de0t: a/2o/e .ho 0e/efits from the Public National C e!it Bpro8ided 02 the @ederal "eser8eC has a/ i/sura0le i/terest i/ a maritime 8o2age ;a/d is: therefore su07ect to: a/d ca/ 0e re>uired to: make premium pa2me/ts u/der the %a. of 'dmiralt2 a/d )aritime Bthe i/come taxC " as lon# as the cont act is in $o ce% 8. That all the esou ces o$ the USA ha&e been h'(othecate!) o (le!#e!) to the *e!e al +ese &e as a secu it' $o the Public National C e!it S'stem% 5. That the House 1oi/t "esolutio/ 456: passed 02 3o/gress o/ 1u/e J: 4533: made it impossi0le for a/2o/e to pa2 a de0t at la.A a/d: this $act ma,es an'one who bene$its $ om the Public National C e!it S'stem a sole me chant) su07ect to 'dmiralt2 1urisdictio/ i/ all co/tro8ersies i/8ol8i/g said credit. 4H. That: 0ecause of House 1oi/t "esolutio/ 456: .e ha8e lost access to su0sta/ti8e 3ommo/ %a.: .e ha8e lost our allodial la/d titles ; a/d a foreig/ 7urisdictio/ of 'dmiralt2 %a. has 0ee/ imposed upo/ our domestic la. ; 7ust as occurred a 0it o8er 6HH 2ears ago. *aturall2: .e ca/ expect these facts to ge/erate more >uestio/s that must 0e a/s.ered. We .ill 0e raisi/g some >uestio/s oursel8es as .e proceed. 's .e proceed: .e .ill appl2 the la. to these facts a/d sho.: 4. That the maritime 8e/ture for profit: 02 .a2 of the ?u0lic *atio/al 3redit $2stem is 0ased o/ a false a/d fraudule/t premise that this 8o2age is a la.ful o/e. 6. That this 8o2age is: i/ fact: is i/ direct 8iolatio/ of the ?ositi8e %a. of the %a. of *atio/sA a/d: therefore: is: a/d al.a2s .as 8oid from its i/ceptio/. 3. That: 0ecause of this fact: /o age/c2 of go8er/me/t: a/d /o court i/ this la/d has la.ful 7urisdictio/ to e/force a/2 claim arisi/g out of: or i/8ol8i/g the ?u0lic *atio/al 3redit $2stem. 4. That the de facto 7urisdictio/ curre/tl2 0ei/g exercised 02 our go8er/me/t age/cies Ba/d psuedo;age/cies such as the #"$: 3#': a/d @!#C a/d especiall2 @ederal ,istrict 3ourts .ill co/ti/ue 0ei/g exercised u/til successfull2 challe/ged .ith rele8a/t facts
a/d issues: i/ a court of proper 7urisdictio/. J. @i/all2: .e .ill sho.: 02 .a2 of these facts a/d la.: 7ust .hat .e ha8e to do to regai/ access to our su0sta/ti8e 3ommo/ %a. ; a/d regai/ our allodial la/d titles. *o.: .e are read2 to go i/to more detail of the rele8a/t facts surrou/di/g this se>ue/ce of e8e/ts: , 3%'"'T#O* [email protected]
#*, ? *, *3 ; 1ul2 4: 4GG6: 's pre8iousl2 stated: ma/2 reaso/s impelled the 'merica/ colo/ists to separate themsel8es from &reat !ritai/: 0ut the more o08ious reaso/s .ere gi8e/ i/ the ,eclaratio/ itself. Writte/ i/ the st2le of a formal complai/t: or actio/ at la.: it co/tai/s a ,eclaratio/: a 3ommo/;%a. !ill of ?articulars or 3ou/ts: a/d a pra2er to the $upreme 1udge of the .orld. The stated purpose of the declaratio/ .as to assume amo/g the po.ers of the earth: the separate a/d e>ual statio/ to .hich the %a.s of *ature a/d the %a.s of &od e/title them: a/d that: out of respect for the opi/io/s of ma/ki/d: the2 should declare the causes .hich impel them to the separatio/. @or our purposes: .e .ill zero i/ o/ the 43th 3ou/t .here it is stated that: He EDi/g &eorgeF has com0i/ed .ith others to su07ect us to a 7urisdictio/ foreig/ to our co/stitutio/: a/d u/ack/o.ledged 02 our la.sA gi8i/g asse/t to their acts of prete/ded legislatio/:9 The ,eclaratio/ the/ goes o/ to defi/e the foreig/ 7urisdictio/ referred to as follo.s : P @or >uarteri/g large 0odies of armed troops amo/g us P for protecti/g: 02 mock trial: from pu/ishme/t for a/2 murders .hich the2 should commit o/ the i/ha0ita/ts of these states: P @or cutti/g off our trade .ith all parts of the .orld: P @or imposi/g taxes upo/ us .ithout our co/se/t: P @or depri8i/g us: i/ ma/2 cases: of the 0e/efit of trial 02 7ur2: P @or a0olishi/g the free s2stem of /glish la.s i/ our /eigh0ori/g pro8i/ce: esta0lishi/g therei/ a/ ar0itrar2 go8er/me/t: a/d e/largi/g its 0ou/daries so as to re/der it at o/ce a/ example a/d fit i/strume/t for i/troduci/g the same a0solute rule i/to these colo/ies: P @or taki/g a.a2 our charters: a0olishi/g our most 8alua0le la.s a/d alteri/g fu/dame/tall2 the forms of our go8er/me/ts: P @or suspe/di/g our o./ %egislatures: a/d declari/g themsel8es i/8ested .ith po.er to legislate for us i/ all cases .hatsoe8er: What the/: .as this 7urisdictio/ foreig/ to their co/stitutio/< 8er2 itemized complai/t listed i/ the 43th cou/t falls u/der the 7urisdictio/ of 'dmiralt2 %a. a/d the %a. of *atio/s. 'lthough the colo/ists .ere !ritish su07ects: the2 .ere 0ei/g treated as if the2 .ere a co/>uered /atio/ ;;such treatme/t: if such .ere the actual case: 0ei/g sa/ctio/ed i/ o/e 7urisdictio/ o/l2 ;; a/d that is the %a. of 'dmiralt2.
The ,eclaratio/ goes o/ to state that Ethose +/ited 3olo/iesF 9as @ree a/d #/depe/de/t $tates: the2 ha8e the full po.er to le82 War: co/clude peace: co/tract allia/ces: esta0lish commerce: a/d to do all other acts a/d thi/gs .hich i/depe/de/t states ma2 of right do.9 Thus: upo/ the sig/i/g of the ,eclaratio/: the2 ope/l2 declared to all the /atio/s of the .orld that the2 .ere of e>ual status ;; a/d that: there02: the2 .ere 0ou/d 02 the %a. of *atio/s .he/ deali/g .ith other /atio/s. The ,eclaratio/ also clearl2 expressed the i/te/t to 0a/ the 'dmiralt2 7urisdictio/ from .ithi/ $tate 0orders: or from the domestic la. of the states ;; the mai/ purpose a/d reaso/ for separatio/. '/ e>uall2 sig/ifica/t e8e/t is that it 0roke the hold of /glish feudalism o8er colo/ial la/d a/d i/sta/tl2 co/8erted all la/d title to allodiums. This fact .as clearl2 a/al2zed 02 the $upreme 3ourt of the $tate of ?e//s2l8a/ia i/ the case of Wallace -. Harmstad i/ 4863: .he/ the court said: 9# see /o .a2 of sol8i/g this >uestio/: except 02 determi/i/g .hether our ?e//s2l8a/ia titles are allodial or feudal. ;;9 9# 8e/ture to suggest that much of the co/fusio/ of ideas that pre8ails o/ this su07ect has come from our retai/i/g: si/ce the 'merica/ "e8olutio/: the feudal /ome/clature of estates a/d te/ures: as fee: freehold: heirs: feoffme/t: a/d the like.9 9Our >uestio/: the/: /arro.s itself do./ to this: is fealt2 a/2 part of our la/d te/ures< What ?e//s2l8a/ia/ e8er o0tai/ed his la/ds 02 ope/l2 a/d hum0l2 k/eeli/g 0efore his lord: 0ei/g u/girt: u/co8ered: a/d holdi/g up his ha/ds 0oth together 0et.ee/ those of the lord: .ho sat 0efore him: a/d there professi/g that he did 0ecome his ma/ from that da2 forth: for life a/d lim0: a/d certai/l2 ho/our: a/d the/ recei8i/g a kiss from his lord< This .as the oath of fealt2 .hich .as: accordi/g to $ir )arti/ Wright: the esse/tial feudal 0o/d so /ecessar2 to the 8er2 /otio/ of a feud. 9We are the/ to regard the "e8olutio/ a/d these 'cts of 'ssem0l2 as ema/cipati/g e8er2 acre of soil of ?e//s2l8a/ia from the gra/d characteristics of the feudal s2stem. 8e/ as to the la/ds held 02 the proprietaries Ecit2 of ?hiladelphiaF themsel8es: the2 held them as other citize/s held: u/der the 3ommo/.ealth: a/d that 02 a title purel2 allodial.9 +. $. 3o/stitutio/ ; 4G8G 'dmiralt2 7urisdictio/ of 3o/gress is defi/ed i/ 'rticle #: $ectio/ 8: 9The 3o/gress shall ha8e the po.er to collect taxes: duties: imposts a/d excises: to pa2 the de0ts ...of the +/ited $tates...9 To 0orro. mo/e2 o/ the credit of the +/ited $tates. To regulate 3ommerce .ith foreig/ /atio/s: a/d amo/g the se8eral $tates: a/d .ith the #/dia/ Tri0es. To esta0lish a/ u/iform "ule of *aturalizatio/: a/d u/iform la.s o/ the su07ect of !a/kruptcies. To defi/e a/d pu/ish piracies a/d felo/ies committed o/ the high seas: a/d offe/ses agai/st the %a. of *atio/s. To declare War: gra/t letters of )ar>ue a/d "eprisal: a/d make "ules co/cer/i/g 3aptures o/ %a/d a/d Water. To raise a/d support armies... To pro8ide a/d mai/tai/ a *a82. To make rules for...%a/d a/d *a8al forces. To pro8ide for calli/g forth the militia... To pro8ide for orga/izi/g: armi/g: a/d discipli/i/g the )ilitia...;; The po.ers listed here are all .ithi/ the 7urisdictio/ of 'dmiralt2 a/d )aritime %a. a/d e/compass most of the po.ers gra/ted to 3o/gress. 'dmiralt2 a/d )aritime 7urisdictio/ of the $upreme 3ourt is defi/ed i/ 'rticle ###: $ectio/ 6 : 9The 7udicial po.er shall exte/d to all cases i/ %a. a/d >uit2: arisi/g u/der
this 3o/stitutio/: the la.s of the +/ited $tates: the Treaties made: or .hich shall 0e made: u/der their authorit2A to all cases affecti/g 'm0assadors: other pu0lic )i/ister a/d 3o/sulsA to all cases of 'dmiralt2 a/d )aritime 7urisdictio/...9. The full scope a/d mea/i/g of 'rticle ###: $ectio/ 6: .as addressed 02 1ustice $tor2 i/ the case of ,e %o8io 8. !oit i/ 484J: 9What is the true i/terpretatio/ of the clause;; all cases of 'dmiralt2 a/d )aritime 7urisdictio/<9 #f .e exami/e the et2molog2: or recei8ed use of the .ords 9'dmiralt29 a/d 9)aritime 7urisdictio/:9 .e shall fi/d: that the2 i/clude 7urisdictio/ of all thi/gs do/e upo/ a/d relati/g to the sea: or: i/ other .ords: all tra/sactio/s a/d proceedi/gs relati8e to commerce a/d /a8igatio/: a/d to damages or i/7uries upo/ the sea. #/ all the great maritime /atio/s of urope: the same 9'dmiralt2 7urisdictio/9 is u/iforml2 applied to the courts exercisi/g 7urisdictio/ o8er maritime co/tract a/d co/cer/s. We shall fi/d the terms 7ust as familiarl2 k/o./ amo/g the 7urists of $cotla/d: @ra/ce: Holla/d a/d $pai/ as of /gla/d: a/d applied to their o./ courts: possessi/g su0sta/tiall2 the same 7urisdictio/: as the /glish 'dmiralt2 i/ the reig/ of d.ard the Third. 9The clause ho.e8er of the co/stitutio/ /ot o/l2 co/fers 'dmiralt2 7urisdictio/: 0ut the .ord 9)aritime9 is superadded: seemi/gl2 exQi/dustria to remo8e e8er2 late/t dou0t. 93ases of )aritime 7urisdictio/9 must i/clude all maritime co/tracts: torts a/d i/7uries: .hich are i/ the u/dersta/di/g of the 3ommo/ %a.: as .ell as of the 'dmiralt2:...9 #/ 'rticle -#: it is stated: 9'll de0ts co/tracted a/d e/gageme/ts e/tered i/to: 0efore the adoptio/ of this 3o/stitutio/: shall 0e 8alid agai/st the +/ited $tates u/der this 3o/stitutio/: as u/der the 3o/federatio/. This 3o/stitutio/: a/d the %a.s of the +/ited $tates .hich shall 0e made i/ pursua/ce thereofA a/d all Treaties made: or .hich shall 0e made: u/der the 'uthorit2 of the +/ited $tates: shall 0e the supreme la. of the la/dA a/d the 1udges i/ e8er2 $tate shall 0e 0ou/d there02: a/2 Thi/g i/ the 3o/stitutio/ or %a.s of a/2 $tate to the 3o/trar2 /ot.ithsta/di/g.9 3learl2: the 'dmiralt2 a/d )aritime 7urisdictio/ gra/ted to the 3o/gress a/d the 1udiciar2 is 8er2 0road a/d exte/si8e. $o: .hat pro8isio/s .ere made i/ the 3o/stitutio/ to pre8e/t the e/croachme/t of this 'dmiralt2 7urisdictio/ i/to our ,omestic la. ;; the su0sta/ti8e 3ommo/ %a. ;;pursua/t to the ,eclaratio/ of #/depe/de/ce< The a/s.er is i/ 'rticle #: $ectio/ 8: a/d 'rticle #: $ectio/ 4H: 3lause 4 ;; 0ut: first: a little 0ackgrou/d ma2 0e helpful: !egi//i/g as lo/g ago as 465H: the colo/ies had periodicall2 experime/ted .ith credit a/d u/0acked paper as a form of pu0lic mo/e2. The results .ere al.a2s the same ;;gold a/d sil8er coi/ disappeared from circulatio/: commerce stag/ated: u/emplo2me/t gre. 02 leaps a/d 0ou/ds: etc. The .ar for i/depe/de/ce exhi0ited a /e. de8elopme/t i/ the s2stem of credit: 02 the reckless disregard of its 0ou/ds. #/ the .ords of 1oh/ 'dams: 9promises of mo/e2 .ere scattered o8er the la/d alike 02 the $tates a/d 02 the +/ited $tates: u/til 0ills 0ecame as ple/t2 as oak lea8es.9 The results .ere recorded 02 ?eletiah We0ster as follo.s : 9?aper mo/e2 polluted the e>uit2 of our la.s: tur/ed them i/to e/gi/es of oppressio/: corrupted the
7ustice of our pu0lic admi/istratio/: destro2ed the fortu/es of thousa/ds .ho had co/fide/ce i/ it: e/er8ated the trade: hus0a/dr2: a/d ma/ufactures of our cou/tr2: a/d .e/t far to destro2 the moralit2 of our people.9 Ouestio/: What had happe/ed to the domestic: su0sta/ti8e: 3ommo/ %a. fought for i/ the War @or #/depe/de/ce ;; the %a. that esta0lishes a/d preser8es free i/stitutio/s< Te/ 2ears after the ,eclaratio/ of #/depe/de/ce: shortl2 0efore the 3o/stitutio/al co/8e/tio/: Washi/gto/ .rote to )adiso/: 9The .heels of go8er/me/t are clogged: a/d .e are desce/di/g i/to the 8ale of co/fusio/ a/d dark/ess. *o da2 .as e8er more clouded tha/ the prese/t.9 '/d o/ @e0ruar2 3: 4G8G: Washi/gto/ .rote to He/r2 D/ox: 9#f a/2 perso/ had told me that there .ould ha8e 0ee/ such a formida0le re0ellio/ as exists: # .ould ha8e thought him fit for a madhouse.9 The 3o/stitutio/al 3o/8e/tio/ .as co/8e/ed i/ ?hiladelphia: )a2 44: 4G8G a/d &eorge Washi/gto/ .as elected ?reside/t. "a/dolph: &o8er/or of -irgi/ia: dre. atte/tio/ to paper mo/e2 i/ his ope/i/g speech 02 remi/di/g his hearers that the patriotic authors of the co/federatio/ did their .ork 9#/ the i/fa/c2 of the scie/ce of co/stitutio/s a/d of co/federacies: .he/ the ha8oc of paper mo/e2 had /ot 0ee/ foresee/.9 The eighth clause of the se8e/th article: i/ the first draft of the 3o/stitutio/: .as as follo.s : 9The legislature of the +/ited $tates shall ha8e the po.er to 0orro. mo/e2 a/d emit 0ills o/ the credit of the +/ited $tates.9 !2 refusi/g the po.er of issui/g 0ills of credit: the door .as shut: 0ut /ot 0arred: o/ paper mo/e2 02 co/stitutio/al la.. 'lthough 3o/gress .as /ot authorized to issue /otes of the +/ited $tates: the 0orro.i/g clause Ethought a0solutel2 /ecessar2 for emerge/ciesF left a mea/s of 0orro.i/g /otes of a/other e/tit2 i/to circulatio/. Ee.g.: a pri8ate 0a/kF. O/e the 68th of 'ugust: the co/8e/tio/ took steps to remed2 that situatio/ a/d: there02: guara/tee a su0sta/ce for our domestic 3ommo/ %a. to fu/ctio/ o/ matters i/8ol8i/g mo/e2. The first draft of the co/stitutio/ had for0idde/ the states to emit 0ills of credit .ithout the co/se/t of 3o/gress. #/ co/8e/tio/ o/ the 68th: )r. Wilso/ a/d )r. $herma/ mo8ed to i/sert after the .ords 9coi/ mo/e29 the .ords 9/or emit 0ills of credit:9 /or make a/2thi/g 0ut gold a/d sil8er coi/ a te/der i/ pa2me/t of de0ts: a/d i/ their .ords: 9maki/g these prohi0itio/s a0solute.9 )r. $herma/ .e/t o/ to sa2 that he 9thought this a fa8ora0le crises for crushi/g paper mo/e2. #f the co/se/t of the legislature could authorize emissio/s of it: the frie/ds of paper mo/e2: .ould make e8er2 exertio/ to get i/to the legislature i/ order to lice/se it.9 'fter discussio/: )r. Wilso/=s a/d )r. $herma/=s motio/ .as u/a/imousl2 agreed to 02 the co/8e/tio/. The result of this actio/ appears i/ 'rticle #: $ectio/ 4H: 3lause 4. #ts most salie/t feature is 9*o $tate shall make a/2 thi/g 0ut gold a/d sil8er coi/ a te/der i/ pa2me/t of de0ts.9 'fter the co/stitutio/al co/8e/tio/: it took /earl2 a 2ear for the states to ratif2 the
3o/stitutio/ ;; primaril2 0ecause the2 i/sisted o/ certai/ su0sta/ti8e 3ommo/ %a. rights a/d pri/ciples 0ei/g specified i/ the 3o/stitutio/. These rights a/d pri/ciples appear as the first 4H 'me/dme/ts: called the !ill of "ights. 3ommo/ %a.: operati/g o/ mo/e2 of su0sta/ce: 0rought >uick relief as docume/ted 02 &eorge Washi/gto/: #/ a letter: dated 1u/e 43: 4G5H: he .rote to )ar>uis de %[email protected]
: 9(ou ha8e dou0tless 0ee/ i/formed: from time to time: of the happ2 progress of our affairs. The pri/ciple difficulties seem i/ a great measure to ha8e 0ee/ surmou/ted.9 #/ a letter: dated )arch 45: 4G54: he agai/ .rote to %[email protected]
: 9Our cou/tr2: m2 dear sir: is fast progressi/g i/ its political importa/ce a/d social happi/ess.9 O/ 1ul2 45: 4G54: he .rote to 3atheri/e )c3aule2: 9The +/ited $tates e/7o2s a se/se of prosperit2 a/d tra/>uilit2 u/der the /e. go8er/me/t that could hardl2 ha8e 0ee/ hoped for.9 '/d o/ 1ul2 6H: 4G54: he .rote to ,a8id Humphre2: 9Tra/>uilit2 reig/s amo/g the people .ith the dispositio/ to.ards the ge/eral go8er/me/t: .hich is likel2 to preser8e it. Our pu0lic credit sta/ds o/ that high grou/d .hich three 2ears ago it .ould ha8e 0ee/ co/sidered as a species of mad/ess to ha8e foretold. 1+,#3#'"( '3T E4G85F : O/ $eptem0er 64: 4G85: 3o/gress passed the 1udiciar2 'ct. $ectio/ 5 of this 'ct dealt .ith e>uit2: admiralt2 a/d maritime 7urisdictio/s of our courts. 3o/gress said that 9the forms a/d modes of proceedi/g i/ causes of e>uit2 a/d of admiralt2 a/d maritime 7urisdictio/ shall 0e Raccordi/g to the course of 3i8il %a..9 $ectio/ 34 dealt exclusi8el2 .ith the 3ommo/ %a. 7urisdictio/ of the @ederal courts .herei/ 3o/gress said: 9That the la.s of the se8eral $tates: except .here the 3o/stitutio/: treaties or statutes of the +/ited $tates shall other.ise re>uire or pro8ide: shall 0e regarded as rules of decisio/ i/ trials at 3ommo/ %a. i/ the courts of the +/ited $tates i/ cases .here the2 appl2.9 !2 co/gressio/al actio/ i/ 4G56: the form a/d modes of proceedi/g i/ such cases .ere directed to 0e 9accordi/g to the pri/ciples: rules a/d usages: .hich 0elo/g to courts of e>uit2 a/d to courts of 'dmiralt2 respecti8el2: as co/tradisti/guished from courts of 3ommo/ %a..9 Thus: i/ 4G56: 3o/gress recog/ized three separate a/d disti/ct 7urisdictio/s of the federal courtsA >uit2: 'dmiralt2 a/d 3ommo/ %a.. !2 97urisdictio/9 .e mea/ la.ful authorit2 to act o/ the su07ect matter i/8ol8ed i/ a co/tro8ers2: a particular thi/g .ithi/ that su07ect matter: a/d authorit2 to act agai/st a particular perso/ associated .ith the su07ect matter. TH " '" O*%( TH" 1+"#$,#3T#O*$ ;; '*, *O )O" M
'll three of these 7urisdictio/s ha8e cog/iza/ce o8er ci8il matters: as co/tradisti/guished from crimi/al matters: depe/di/g o/ the su07ect matter i/ co/tro8ers2 a/d /ature of the
cause. #f it is a/ actio/ at 3ommo/ %a. properl2 0rought i/to a commo/ la. court: the court is 0ou/d 02 the pri/ciples: rules a/d procedures of 3ommo/ %a.. #f the actio/ is properl2 0rought 0efore a/ >uit2 or 'dmiralt2 court: the court is 0ou/d 02 the pri/ciples: rules a/d procedures of the ci8il la. deali/g .ith the su07ect matter. >uit2 has /o cog/iza/ce o8er crimi/al matters a/d: therefore: i/ crimi/al cases there are o/l2 t.o 7urisdictio/s ;; e8er2 crimi/al case must 0e prosecuted either i/ the 7urisdictio/ of 3ommo/ %a.: or that of the %a. of 'dmiralt2. #/ crimi/al cases: 3ommo/ %a. courts are 0ou/d 02 the pri/ciples: rules a/d procedures of the 3ommo/ %a.. #/ 'dmiralt2 cases: the court is 0ou/d 02 the pri/ciples: rules a/d procedures of 'dmiralt2 a/d )aritime %a.. (ou .ill see: su0se>ue/tl2: that state courts ha8e co/curre/t 7urisdictio/ i/ 0oth 3ommo/ %a. a/d )aritime la. co/cer/i/g certai/ t2pes of cases a/d su07ect matter. (ou also .ill see that i/ these cases: if the su07ect matter or /ature of this cause is )aritime that: e8e/ if it is heard i/ a 3ommo/ %a. court: that court is 0ou/d to appl2 the )aritime %a. to the case. We also .ill sho. that /o 'dmiralt2 court i/ the la/d has a/2 7urisdictio/ to hear 3ommo/ %a. issues. QQQQQQQ3O))O*Q%'WQQQQQQQQ P "ight To Trial !2 1ur2 P 46 1udges E1ur2F P 46 1udges BThe 1ur2C P 3o/trol the trial N 1udge 1ustice of %a. N ,etermi/e 'dmissi0ilit2 of 8ide/ce N 'pplies %a. to @acts N "e/ders -erdict 'ccordi/g To 3o/scie/ce to %a. QQQQQQQ3#-#%Q%'WQQQQQQQQQQQQ P *o "ight to Trial !2 1ur2 P 4 91udge9 E3ha/cellorF P 4 3ha/cellor 3o/trols Trial N 1ur2 is 'd8isor2 to 3ha/cellorTrial N 3ha/cellor ,etermi/es 'dmissi0ilit2 of 8ide/ce N 1ur2 $.or/ to Take the %a. as the 3ha/cellor gi8es it N 1ur2 "e/der -erdict 'ccordi/g to 8ide/ce ?rese/ted
The $upreme 3ourt a/al2zed these t.o sectio/s of the 7udiciar2 act i/ the Hu/tress case i/ 484H: The Hu/tress case .as a li0el i/ perso/am agai/st the o./ers of the steamship Hu/tress. The 3ourt said: 9#/ these: a/d i/ a/alogous cases: the o/l2 >uestio/ that ca/ 0e co/sidered as a/ ope/ o/e is: .hether the2 come .ithi/ that clause of the 3o/stitutio/ that sa2s: the 7udicial po.er of the +/ited $tates shall exte/d to 9all causes of 'dmiralt2 a/d )aritime 7urisdictio/.9 #f the2 do: the/ the origi/al cog/iza/ce of them is 02 the /i/th sectio/ of the 1udiciar2 'ct: gi8e/ to the district court9 .... 9The argume/t: that this clause is co/trolled 02 the $e8e/th 'me/dme/t: .hich secures the right of trial 02 7ur2 i/ all suits at 3ommo/ %a.: .here the 8alue i/ co/tro8ers2 exceeds t.e/t2 dollars: has /o
applicatio/ to the co/stitutio/al gra/tA 0ecause these are /ot suits at 3ommo/ %a.9A '/d: i/ the ,e%o8io 8s. !oit case: 1ustice $tor2 said: 9'/d: the grou/d is made stro/ger 02 the co/sideratio/: that the right of trial 02 7ur2 is preser8ed 02 the co/stitutio/ i/ all suits at commo/ la.: .here the 8alue i/ co/tro8ers2 exceeds t.e/t2 dollarsA a/d 02 the statute: this right is excluded i/ all cases of 'dmiralt2 a/d )aritime 7urisdictio/.9 Here .e ha8e a clear stateme/t: 02 the $upreme 3ourt that there is /o access to 3ommo/ %a. i/ courts of 'dmiralt2. #/ 4836: the $upreme 3ourt of the $tate of ?e//s2l8a/ia 8er2 a0l2 addressed the mea/i/g a/d i/te/t of the Gth ame/dme/t i/ the case of !ai/s 8. The $choo/er 1ames a/d 3atheri/e: as follo.s: 9...02 attempti/g to i/troduce the admiralt2 7urisdictio/ of the ci8il la.: ... a fou/datio/ is laid for i/termi/a0le co/flicts of 7urisdictio/ 0et.ee/ the courts of the $tate a/d the +/io/.9 9#t is 8ai/ to co/te/d that the $e8e/th 'me/dme/t .ill 0e a/2 efficie/t guara/tee for the right: i/ suits at 3ommo/ la.: if a/ 'dmiralt2 7urisdictio/ exists i/ the +/ited $tates: comme/surate .ith .hat is claimed 02 the claima/t i/ this case. #ts assertio/ is: i/ m2 opi/io/: a re/e.al of the co/test 0et.ee/ legislati8e po.er a/d ro2al prerogati8e: the 3ommo/ a/d the 3i8il %a.: stri8i/g for master2A the o/e to secure: the other to take a.a2 the trial 02 7ur2: ... 7udicial po.er must first a//ul the $e8e/th 'me/dme/t: or 7udicial subtl' t ans$o m a suit at 3ommo/ %a.: i/to a case of 'dmiralt2 a/d )aritime 7urisdictio/: 0efore # take cog/iza/ce as such a case as this .ithout a 7ur2.9 Thus: 'dmiralt2 is 3i8il %a.: a/d: o/ce agai/: 3ommo/ %a. is /ot accessi0le i/ courts of 'dmiralt2 ;; a/d: as 1. "eu0e/ 3lark said: there is a co/sta/t ideological co/flict 0et.ee/ 3i8il a/d 3ommo/ %a. for the co/trol of societ2. #/ the preface to his 0ook 9Ho/est )o/e29: ,r. *or0ur/ .rote: 9What a mar8ellous cou/tr2 .as this /e. .orld ;; ') "#3'. #ts coastli/e: dotted .ith deep har0ors: seemed e/dless. #t had great mou/tai/s a/d great ri8ers. There .ere mag/ifice/t forests a/d 8ast fertile plai/s. #ts earth .as rich .ith mi/erals. Those .ho came to li8e i/ this 8erita0le paradise .ere of sturd2 stock. The2 .ere i/dustrious: sa8i/g a/d i/ge/ious. The2 had the 0est go8er/me/t e8er de8ised. Ho. does it happe/ that /o.: after more tha/ three hu/dred 2ears of i/te/se toil: the i/ha0ita/ts of this /atio/ fi/d themsel8es more tha/ te/ trillio/ dollars i/ de0t< The2 ha8e recei8ed /o 0e/efits to 7ustif2 this de0t. To .hom do the2 o.e it< Ho. .ere the claims ac>uired< 's 2ou .ill see: the factual a/s.ers to ,r. *ar0ur/=s >uestio/s: a/d proper applicatio/ of the appropriate la. to these facts: pro8ide us the /ecessar2 fact a/d la. to 0uild a .i//i/g case that ca/ restore our access to 3ommo/ %a.A a/d ca/ restore our allodial la/d titles. #*T"O,+3T#O* [email protected]
TH & O"& "'?? $O3# T(: P @irst $uccessful commu/istic: religious: orga/izatio/ i/ the +/ited $tates. P The societ2 .as desig/ed for profit maki/g Efor someF a/d its formula i/cluded a
co/trolled eco/om2 u/der limited lia0ilit2: .hich: as 2ou .ill see 0efore this prese/tatio/ is o8er: is the same i/gredie/ts of the @ederal "eser8e formula that is ru//i/g this cou/tr2 toda2M This is the formula that 0rought admiralt2 i/la/d a/d has 0arred our access to su0sta/ti8e 3ommo/ %a.. &eorge "app Harmo/2 $ociet2 ; 48HJ E"e: $chri0er 8. "app: ?a. $upreme 3ourt: 3J4F P &eorge "app fou/ded the 9Harmo/2 $ociet29 i/ 48HJ: at Harmo/2: i/ !ea8er 3ou/t2: ?a.: su0se>ue/tl2 mo8ed to Harmo/2 o/ the Wa0ash: i/ the state of #/dia/a: a/d the/ mo8ed to 9 co/om29 i/ !ea8er 3ou/t2: ?a. The /ature of this societ2 .as 0rought to light i/ the case of $chri0er 8. "app i/ 4836. This case .as a/ actio/ of accou/t 0rought 02 1aco0 $chri0er: admi/istrator of ?eter $chri0er: deceased: agai/st &eorge "app a/d others: doi/g 0usi/ess i/ compa/2 u/der the /ame of Harmo/2 $ociet2. To sustai/ the actio/: the plai/tiff pro8ed 02 testimo/2 that the Harmo/2 $ociet2 possessed a great deal of .ealth i/ the form of perso/al propert2: real propert2: factories: etc. #t .as a pool of propert2. Wit/ess: ,r. $mith: o/ce a mem0er of the associatio/ stated: 9The2 i/te/ded to make mo/e2 .he/ the2 e/tered i/to itA it .as a part of their o07ect. # 0elie8e there .ere 'rticles at Harmo/2: 0ut e8er2o/e .as /ot o0liged to sig/ it. >ual rights: e>ual e/7o2me/ts a/d e>ual profits. ; "app said it should /ot 0e i/corporated: for that .ould take too much po.er from him. "app .as /ot elected. He assumed the po.er that )oses a/d 'aro/ had. #f a/2o/e .ould /ot do .hat he said: he .ould sa2: RWhat ha8e 2ou to do a0out it< # ha8e the po.er ;; # could crush 2ou. 'll 2ou ha8e to do is o0e2.= He got .orse as he got .ealth2.9 &eorge "app .as a preacher ;; a/d a 8er2 persuasi8e o/e. 'dam $hell2 testified o/ 0ehalf of the plai/tiff respecti/g the first articles of associatio/ o/ the Wa0ash. 9The people .ere directed to come i/ compa/ies: o/e of them read it a/d the rest sig/ed it. 's to the article sig/ed at co/om2: "app made a lo/g speech. $aid a/2 o/e .ho .ould sig/ it .ould ha8e his /ame .ritte/ i/ the %am0=s !ook of %ife. #f the2 did /ot: their /ames .ould 0e 0lotted out: a/d god .ould ask him a0out it.9 ,efe/da/ts: to sustai/ the issue o/ their part: produced i/ e8ide/ce the articles of associatio/. $ome perti/e/t excerpts are as follo.s: 'rticle 4: We the u/dersig/ed: for oursel8es a/d our heirs: executors a/d admi/istrators: do here02 gi8e: gra/t a/d fore8er co/8e2: to the said &eorge "app a/d his associates: a/d their heirs: a/d assig/s: all our propert2...for the 0e/efit of said associatio/ or commu/it2. 'rticle 6: We do further co8e/a/t a/d agree to a/d .ith the said &eorge "app a/d his associates: that .e .ill se8erall2 su0mit faithfull2 to the la.s a/d regulatio/s of said commu/it2: ...therefore holdi/g oursel8es 0ou/d to promote the i/terest a/d .elfare of the said commu/it2: /ot o/l2 02 the la0or of our o./ ha/ds: 0ut also 02 that of our childre/: our families a/d all others .ho /o. are or hereafter ma2 0e u/der our co/trol. 'rticle 3: ...that .e .ill /e8er claim or dema/d either for oursel8es: our childre/: or for a/2o/e 0elo/gi/g to us: directl2 or i/directl2: a/2 compe/satio/: .ages or re.ard .hate8er: for our: or their la0or or ser8ices: re/dered to the said commu/it2: ... 'rticle J: The said &eorge "app a/d his associates further agree to suppl2 the u/dersig/ed se8erall2 .ith all the /ecessaries of life
...a/d to such exte/t as their circumsta/ces ma2 re>uire. 'rticle 6: #f a/2 of the u/dersig/ed...shoul! with! aw $ om the association) then the sai! Geo #e +a(( an! his associates a# ee to e$un! to him o them the &alue o$ all such ( o(e t' without inte est) as he o the' ma' ha&e b ou#ht into the communit'... $aid 8alue to 0e refu/ded...as the said &eorge "app a/d his associates shall determi/e. The court ruled for defe/da/t &eorge "app o/ the 0asis that 9a/ associatio/ for the purpose expressed is prohi0ited /either 02 statute /or the commo/ la..9 '/d the court also stated: 9#t is supposed: ho.e8er: that as the i/testate had po.er: 02 the articles: to secede from the societ2 a/d take out .hate8er he 0rought i/to it: the successor to his perso/al rights ma2 exercise it as his represe/tati8e. $uch: ho.e8er: are /ot the terms of the articles... The right of accessio/: therefore: is i/tra/smissa0le.9 The court also stated that 9the la. k/o.s /o duress 02 ad8ise a/d persuasio/9: a/d: therefore there .as /o fraud i/ the i/duceme/t to sig/ the article. #/ a/al2zi/g this case: .e see that: 4. The complai/t .as 0rought u/der the 7urisdictio/ of commo/ la.. 6. The plai/tiff lost 0ecause of the commo/ la. a/d co/stitutio/all2 protected right to co/tract. 3. +/der the commo/ la.: the o/l2 .a2 to 0reak the co/tract .as to pro8e fraud. 4. 'ccordi/g to testimo/2: the mem0ers of the associatio/ 9i/te/ded to make mo/e2 .he/ the2 e/tered i/to it.9 The .it/esses did /ot explai/ ho. the2 expected to 9make mo/e29 u/der the terms of the co/tract. The o/l2 reaso/a0le expla/atio/ is that the2 .ere gam0li/g that the2 .ould 0e last sur8i8ors i/ the 'ssociatio/ ;; a/d share i/ the distri0utio/ of assetsA a/d/or the2 expected to 0e/efit from limited lia0ilit2 02 shari/g a/2 loses of the associatio/ .ith the other mem0ers. %ast sur8i8ors take all is a .ageri/g polic2: a/d mutual shari/g of losses is i/sura/ce. #/ a/al2zi/g the &eorge "app 'ssociatio/ formula: .e see: 4. The co/tract co/tai/ed a forfeiture clause. E)em0ers .ould 9/e8er claim compe/satio/A9 upo/ .ithdra.al: 8alue of propert2 .ould 0e refu/ded 9.ithout i/terest9 ;; The right of accessio/ of propert2 do/ated to the 'ssociatio/ is i/tra/smissa0le to heirs of the decede/t. 6. "app a/d his associates had /o risk as the i/surer. The2 /ot o/l2 had /othi/g to lose i/ the e8e/t of death of a co/tri0utor a/d mem0er ;; 0ut gai/ed all propert2 do/ated .ith /o possi0le claim from heirs of the decede/t. 3. #t .as a co/trolled eco/om2 ;; u/der the exclusi8e co/trol of &eorge "app a/d his associates. 4. There .as /o accou/ta0ilit2 to mem0ers of the 'ssociatio/... (ou .ill see: later o/: that if $chri0er had take/ these facts i/to a/ 'dmiralt2 court a/d applied the proper 'dmiralt2 %a. to these facts ;; he should ha8e .o/ his case.
O/e additio/al /ote o/ &eorge "app: &eorge "app co/ti/ued to gai/ afflue/ce a/d prestige ;; a/d dig/itaries came from all o8er the .orld to his ma/sio/ at 9eco/om29 to mar8el at the fa/tastic success of his societ2. Wh2 should/=t he 0e successful< !2 co/tract: he had sla8e la0or: do/atio/s of u/told .ealth from mem0ers .ho: if the2 chose to .ithdra. 0efore the2 died: could o/l2 get 0ack the e>ui8ale/t of .hat the2 had do/ated .ithout i/terestA a/d: if the2 died as a mem0er: the propert2 a/d assets do/ated remai/ed i/ the societ2 as lo/g as it existed. &eorge "app died i/ 484GA ho.e8er: the societ2 .e/t o/. 8ide/ce .ill sho. that the treme/dous .ealth accumulated 02 this societ2 .as su0se>ue/tl2 used to fashio/ a &eorge "app $ociet2 o/ a much larger scale ; .ith pla/s to ultimatel2 e/compass the .orld i/ a 9superstate9 co/trolled a/d go8er/ed 02 merca/tile i/terests: u/der the la. of admiralt2 ;; a superstate .herei/ all the propert2 i/ the .orld: a/d all the people o/ space;ship 9earth9: are pledged to the 0e/efit of this .orld;.ide merca/tile associatio/. The 9*e. World Order< ,e%O-#O -$. !O#T B484JC: #/ 484J: i/ the case of ,e%o8io 8. !oit: the $upreme 3ourt ruled the follo.i/g: BOpi/io/ .ritte/ 02 1ustice $tor2C 9The 'dmiralt2: from the highest a/ti>uit2: has exercised a 8er2 exte/si8e crimi/al 7urisdictio/: a/d pu/ished offe/ses 02 fi/e a/d impriso/me/t. The cele0rated i/>uisitio/ at Ouee/s0orough: i/ the reig/ of d.ard lll: .ould alo/e 0e decisi8e. '/d: e8e/ at 3ommo/ %a. it had 0ee/ ad7udged: that the admiralt2 might fi/e for co/tempt... 'ppeal: a/d /ot a Writ of rror: lies for its decrees.. (et: it is co/ceded o/ all sides: that of maritime h2pothecatio/s: the 'dmiralt2 has 7urisdictio/.... The 7urisdictio/ of the 'dmiralt2 depe/ds: or ought to depe/d: as to co/tracts upo/ the su07ect matter: i.e. .hether maritime or /otA a/d as to torts: upo/ localit2... *either the 1udicial 'ct /or the 3o/stitutio/: .hich it follo.s: limit the 'dmiralt2 1urisdictio/ of the ,istrict 3ourt i/ a/2 respect to place. #t is 0ou/ded o/l2 02 the /ature of the cause o8er .hich it is to decide. O/ the .hole: # am: .ithout the slightest hesitatio/: read2 to pro/ou/ce: that the delegatio/ of cog/iza/ce of Rall ci8il cases of 'dmiralt2 a/d )aritime 7urisdictio/= to the 3ourts of the +/ited $tates comprehe/ds all maritime co/tracts: torts: a/d i/7uries. The latter 0ra/ch is /ecessaril2 0ou/ded 02 localit2A the former exte/ds o8er all co/tracts: E.heresoe8er the2 ma2 0e made or executed: or .hatsoe8er ma2 0e the form of the stipulatio/F .hich relate to the /a8igatio/: 0usi/ess or commerce of the sea. The /ext i/>uir2 is: .hat are properl2 to 0e deemed 9maritime co/tracts.9 Happil2: i/ this particular there is little room for co/tro8ers2. 'll ci8ilia/s a/d 7urists agree: that i/ this appellatio/ are i/cluded: amo/g other thi/gs: mari/e h2pothecatio/s ...a/d: .hat is more material to our prese/t purpose: policies of i/sura/ce... )2 7udgeme/t accordi/gl2 is: that policies of i/sura/ce are .ithi/ Ethough /ot exclusi8el2 .ithi/F the 'dmiralt2 a/d )aritime 7urisdictio/ of the +/ited $tates.9 #*T"O,+3#*& ?"[email protected]
$$O" @" , "#3H %#$T:
We .ill /o. address the su07ect of ,r. %ist=s letters. The letters of ,r. %ist: a/d the eco/omic theories he espoused i/ those letters: .ill 0ecome 8er2 sig/ifica/t to 2ou .he/ 2ou see that his eco/omic theories are 0ei/g applied agai/st 2ou toda2 02 the @ederal "eser8e ;; a/d are: there02: co/trolli/g e8er2 aspect of 2our life. ?rofessor %ist represe/ted the societ2 of &erma/ mercha/ts a/d ma/ufacturers for the purpose of o0tai/i/g a &erma/ s2stem of /atio/al eco/om2. His pla/s of reform pro8i/g o0/oxious to the go8er/me/t: he .as accused of high treaso/ a/d thro./ i/ priso/: a/d .as su0se>ue/tl2 exiled from &erma/. He settled i/ ?e//s2l8a/ia a/d studied a/d lectured o/ the doctri/es of political eco/om2. ,uri/g his atte/tio/ to that su07ect: he 8olu/taril2 addressed a series of letters .hich .ere pu0lished i/ the *atio/al &azette. ?rofessor %ist .as also a mem0er of the &eorge "app Harmo/2 $ociet2. #/ his first letter he tells us .hat he mea/s 02 the term 9*atio/al co/om2.9 ?.$. The author=s /egati8e opi/io/ of %ist=s eco/omics is /ot shared 02 %. %a"ouche: eco/omist a/d a/ ad8ocate of the origi/al 'merica/ $2stem. 9*atio/al co/om29 teaches 02 .hat mea/s a certai/ /atio/: i/ her particular situatio/: ma2 direct a/d regulate the eco/om2 of i/di8iduals: a/d restrict the eco/om2 of ma/ki/d: either to pre8e/t foreig/ restrictio/s a/d foreig/ po.ers .ithi/ herself:....ithout restricti/g the eco/om2 of i/di8iduals a/d the eco/om2 of ma/ki/d more tha/ the .elfare of the people permits.9 #t is commo/ k/o.ledge that .e ha8e a 9*atio/al co/om29 toda2 that directs a/d regulates the eco/om2 of i/di8iduals: a/d that of ma/ki/d ;; a/d that this eco/om2 is co/trolled a/d regulated 02 the @ederal "eser8e $2stem. $.ift 8. T2so/: 46 ?eters 4 E4846F #/ 4846: i/ the case of $.ift 8. T2so/: the $upreme 3ourt held that there .as a ge/eral federal commo/ la. Ei.e.: at that time: access to su0sta/ti8e commo/ la. existed at the federal le8elF. %imited %ia0ilit2 'ct ; 48J4 O/ )arch 3: 48J4: the 3o/gress of the +/ited $tates e/acted the %imited %ia0ilit2 'ct: Ecodified at 46 +$3 484;485F: as ame/ded i/ 48GJ: 48GG: 453J: 4536: a/d the 'ct of 4884 co8er the e/tire su07ect of limitatio/s. The ?urpose of this act .as to limit the lia0ilit2 for the pa2me/t of de0ts of perso/s .ho .ere ship o./ers i/8ol8ed i/ maritime commerce. This act .as the result of a +. $. $upreme 3ourt decisio/ titled: 9The *e. 1erse2 $team *a8igatio/ 3o. 8s. the )ercha/ts !a/k: 6 Ho.ard 346: E4848F.9 #/ the *e. 1erse2 $team *a8. 3ase: the high court ruled that u/der the 3ommo/ %a.: ship o./ers .ere lia0le for the acts of their ship masters. #/ other .ords: if a part2 .ere to ship goods o/ 0oard a ship a/d somethi/g happe/ed to the goods such as 0ei/g destro2ed or damaged 02 the perils of the sea: the ship o./er .as respo/si0le to the o./er of the goods. The ship o./er must pa2 to the o./er of the goods the amou/t the goods .ere .orth. #f the ship o./er did/=t pa2 the de0t: the o./er of the goods could sue the ship o./er a/d
collect. #f the ship o./er failed to pa2: the creditor could the/ file a lie/ o/ the ship .hich .as called a maritime lie/ .hich does /ot re>uire possessio/ of the o07ect. This 'ct specificall2 gi8es limited lia0ilit2 o/ shipme/ts of 90ills of a/2 0a/k or pu0lic 0od2.9 'merica .as fou/ded upo/ )aritime or 'dmiralt2 %a. 0ecause shippi/g .as the o/l2 mea/s of commerce at the fou/di/g of the cou/tr2. The co/gress decided i/ 48J4 that: as a result of the *e. 1erse2 $team *a8. 3ase: perso/s .ould /o lo/ger 0e dra./ i/to o./ership of ships 0ecause of the lia0ilit2 i/8ol8ed. $hippi/g o/ the high seas is 8er2 risk2 especiall2 at that period of time. 'fter the %imited %ia0ilit2 'ct .as e/acted B4885C: the +.$. $upreme 3ourt i/ !utler 8s. !osto/ S $a8a//ah $teamship 3o.: 43H +.$. J6G: ruled as follo.sA 9!ut it is e/ough to sa2 that the rule of limited respo/si0ilit2 is /o. our maritime rule. #t is the rule 02 .hich through the 'ct of 3o/gress .e ha8e a//ou/ced that .e propose to admi/ister 7ustice i/ maritime cases.9 9The rule of limited lia0ilit2 prescri0ed 02 the 'ct of 48J4 is /othi/g more tha/ the old maritime rule admi/istered i/ courts of admiralt2 i/ all cou/tries except /gla/d from time immemorial a/d if this .ere /ot so: the su07ect matter itself is o/e that 0elo/gs to the departme/t of )aritime %a..9 To/ti/e #/sura/ce ; 4868 #/ order to e8ade the usur2 la.s .hich had pre8e/ted the gro.th of a fu/ded s2stem of /atio/al i/sura/ce: go8er/me/ts had fre>ue/tl2 resorted to the issue of a//uities a/d child e/do.me/ts as a mea/s of raisi/g fu/ds. The to/ti/e .as a some.hat later de8elopme/t: ha8i/g 0ee/ put i/to operatio/ i/ @ra/ce duri/g the 2ear 4685. #t took its /ame from that of its origi/ator: %ore/zo To/ti: a *eopolita/ 02 0irth: .ho .as attracted to ?aris 02 the regime of )azari/. #/ its origi/al form the to/ti/e .as a loa/: 9#/ .hich the premium .as /e8er to 0e repaid: 0ut the e/tire i/terest o/ the loa/ .as to 0e di8ided each 2ear amo/g the sur8i8ors or the origi/al su0scri0ers.9 The chief characteristic: a/d trademark: of to/ti/e is that the pool of assets is di8ided amo/g the sur8i8ors: at the optio/s of those su0scri0ers .ho dropped out: or did /ot sur8i8e u/til the time for distri0utio/ had arri8ed. That is a .ageri/g polic2: 7ust like the &eorge "app $ociet2. The >uita0le %ife #/sura/ce 3ompa/2: i/ 4868: i/troduced the deferred di8ide/d s2stem: .hich .as reall2 a/ applicatio/ of the to/ti/e pri/ciple. The most serious fla. i/ the deferred di8ide/d s2stem .as the i/a0ilit2 of the i/sured to compel a/ accou/ti/g. The ge/eral rule is that the polic2 holder is /ot e/titled to compel the compa/2 to accou/t for di8ide/ds. *or ca/ the polic2holder 9compel the distri0utio/ of the surplus fu/d i/ other ma//er or at a/2 time: or i/ a/2 other amou/ts tha/ that pro8ided for i/ the co/tract.9 's stated i/ the report of the 'rmstro/g 3ommittee: 9the pla/ of deferri/g di8ide/ds for
lo/g periods...has u/dou0tedl2 facilitated large accumulatio/s: pro8idi/g appare/tl2 a0u/da/t mea/s for dou0tful uses o/ the o/e ha/d: .hile co/ceali/g o/ the other the 0urde/ imposed upo/ the polic2 holders...9 'ccordi/g to &eorge %. 'rmhei/: #/structor i/ #/sura/ce at the +/i8ersit2 of ?e//s2l8a/ia: 9 ...deferred di8ide/ds .ere prohi0ited 02 la. i/ the legislatio/ E?a.F of 45H6 a/d su0se>ue/t 2ears. Thus came to a/ e/d a s2stem .hich i/ 4858 had superseded to a 8er2 large exte/t that of a//ual di8ide/ds: a/d .hich i/ 454J seemed a/ti>uated.9 Ouestio/ : What made it 9a/ti>uated9 i/ 454J< 'ccordi/g to )r. 'rmhei/: it .as outla.ed i/ 45H6: 0ut did/=t seem a/ti>uated u/til 454JM 1oh/ D. Tar0ox: The commissio/er of #/sura/ce for the $tate of )assachusetts had this to sa2 a0out to/ti/e i/ his a//ual report: 9The false idea of life i/sura/ce as i/8estme/t 0egat the e>uall2 false co/ceptio/ of life i/sura/ce as a 0et: a/d the latter ga8e 0irth to the moder/ to/ti/e: .hich is a .ager.9 9...#/ the to/ti/e the forfeitures go to e/rich the i/di8idual sur8i8ors of the special class of polic2 holders .ho e/ter the compact: co/stituti/g a compa/2 lia0ilit2 i/stead of a compa/2 asset: for the protectio/ of its polic2 o0ligatio/s... The stake pla2ed for: rather tha/ the game itself: co/stitutes the chief offe/se. Our la. co/dem/s: for0ids: a/d makes 8oid the co/tract of forfeiture.9 9's .as trul2 testified 0efore the committee of the *e. (ork 'ssem0l2: i/ 48GG: ... the to/ti/e polic2 is take/ for purposes of i/8estme/t 02 a set of me/ .ho .ould /ot i/sure their li8es at all. The i/duceme/t to the i/8estme/t is...the expected profits from forfeitures...9 9'side from the moral >ualit2 of the matter: ;;co/cer/i/g .hich # .ai8e co/tro8ers2: ;; the co/sideratio/s .hich the pu0lic aspect seems to me pri/cipall2 to i/8ite are theseA @irst: .hether it is prude/t to make of our i/sura/ce compa/ies great 0a/ki/g esta0lishme/ts:...a/d: seco/d: .hether a/ i/stitutio/ orga/ized as the life i/sura/ce s2stem .as: for a 0e/e8ole/t a/d u/selfish use: shall 0e com0i/ed .ith e/terprises of selfish speculatio/ as the to/ti/e u/de/ia0l2 is.9 # am stro/gl2 persuaded of the implicitl2 a/d positi8e da/ger of mag/if2i/g the 0a/ki/g feature of life i/sura/ce i/stitutio/s: to accommodate moder/ pla/s of to/ti/e speculatio/ a/d e/do.me/t i/8estme/t. 1oh/ Tar0ox .as clearl2 sa2i/g that: at that time: there .ere moder/ pla/s to make i/sura/ce compa/ies Especificall2: to/ti/e i/sura/ce compa/iesF great 0a/ki/g i/stitutio/s. The to/ti/e had 0ee/ declared u/la.ful i/ se8eral states a/d these people k/e. that the2 had to do somethi/g to protect their mo/e2. The2 0rought o8er the so/ of o/e of the 0ig 0a/ki/g families from urope k/o./ as ?aul War0urg: from the House of War0urg: that dates 0ack to the Ha/seatic %eague of mercha/ts. '/d: it .as he .ho sold the 'merica/ pu0lic o/ creati/g a @ederal "eser8e !a/k: so that there .ould/=t 0e a/2 more pa/ics a/d depressio/s: that the2 .ould 0e a0le to e8e/ out
the eco/om2 02 co/trol of the mo/e2 suppl2. !2 this o/e 'ct: the 'merica/ people lost their i/depe/de/ce. #t: i/ fact: .as the opposite of the !ritish surre/der at (orkto./. &i8i/g co/trol of our credit a/d mo/e2 suppl2 to a pri8ate 0a/ki/g orga/izatio/: 02 the /ame of the @ederal "eser8e: .as the surre/der of our i/depe/de/ce. 3o/gress passed the @ederal "eser8e 'ct o/ ,ecem0er 63: 4543 .herei/ it made @ederal "eser8e *otes de0t o0ligatio/s to the +/ited $tates: a/d authorized the @ederal "eser8e to 0e the issuers of these de0t o0ligatio/s. The @ederal "eser8e 'ct also stipulated that the i/terest o/ the de0t Eto the @ederal "eser8e as a maritime le/der to the +/ited $tatesF .as to 0e paid i/ gold. *o pro8isio/ .as made i/ the 'ct for pa2i/g off the pri/ciple. There .as also a pro8iso that the people had 6H 2ears to challe/ge the 'ct ... *OT : 4. +/der the la. of *atio/s: a/ actio/ o/ Ouo Warra/to ca/ 0e 0rought .ithi/ 6H 2ears. Ouo Warra/to: i/ this case: .ould 0e a/ actio/ i/ the 3ourt of 'dmiralt2 dema/di/g 9!2 .hose 'uthorit29: a/d proof of that authorit2: the 'ct .as impleme/ted. 6. 9?u0lic polic29 is part a/d parcel of the %a. of *atio/s. The 'ct .as /e8er challe/ged i/ a court of proper 7urisdictio/ Eadmiralt2F: pro0a0l2 0ecause a/2o/e .ho .a/ted: or tried: to challe/ge it did/=t k/o. ho.. O/ 1u/e 6H: 4536: i/ the midst of the &reat ,epressio/: 3o/gressma/ %ouis T. )[email protected]
/ addressed the House of "eprese/tati8es o/ this su07ect. "eprese/tati8e )[email protected]
/ had pre8iousl2 ser8ed as preside/t of the @irst *atio/al !a/k: 3a/to/: ?a.A a/d later he ser8ed as chairma/ of the 3ommittee o/ !a/ki/g a/d 3urre/c2. @ollo.i/g are selected excerpts from his address: 9$ome people thi/k the @ederal "eser8e !a/ks are +/ited $tates &o8er/me/t #/stitutio/s. The2 are /ot go8er/me/t i/stitutio/s. The2 are pri8ate credit mo/opolies .hich pre2 upo/ the people of the +/ited $tates for the 0e/efit of themsel8es a/d their foreig/ customersA9 9The2 should /ot ha8e foisted that ki/d of curre/c2: /amel2 a/ asset curre/c2: o/ the +/ited $tates &o8er/me/t. The2 should /ot ha8e made the go8er/me/t lia0le o/ the pri8ate de0ts of i/di8iduals a/d corporatio/s a/d: least of all o/ the pri8ate de0ts of foreig/ers.9 9The @ederal "eser8e *otes: therefore: i/ form ha8e some of the >ualities of go8er/me/t paper mo/e2: 0ut: i/ su0sta/ce: are almost purel2 asset curre/c2 possessi/g a go8er/me/t guara/t2 agai/st .hich co/ti/ge/c2 the go8er/me/t has made /o pro8isio/ .hate8er.9 9)r. 3hairma/: there is /othi/g like the @ederal "eser8e pool of co/fiscated 0a/k deposits i/ the .orld. #t is a pu0lic trough of 'merica/ .ealth...9 9# see /o reaso/ .h2 the 'merica/ taxpa2ers should 0e he.ers of .ood a/d dra.ers of .ater for the uropea/ a/d 'siatic customers of the @ederal "eser8e !a/ks.9 9#s /ot it high time that .e had a/ audit of the @ederal "eser8e !oard a/d the @ederal "eser8e !a/ks a/d a/ exami/atio/ of all our go8er/me/ts 0o/ds a/d securities a/d pu0lic mo/ies i/stead of allo.i/g the corrupt a/d disho/est @ederal "eser8e !oard a/d the @ederal "eser8e !a/ks to speculate .ith those securities a/d this cash i/ the /otorious ope/ discou/t market of *e. (ork 3it2< 9 9 8er2 effort has 0ee/ made 02 the @ederal "eser8e !oard to co/ceal its po.er 0ut the truth is the @ederal "eser8e !oard has usurped the &o8er/me/t of the +/ited $tates.9 9)r. 3hairma/: .he/ the @ederal "eser8e 'ct .as passed the people of the +/ited $tates did /ot percei8e that a .orld s2stem .as 0ei/g set up here that the +/ited $tates .as to 0e lo.ered to the positio/ of a coolie cou/tr2...a/d .as to suppl2 fi/a/cial po.er to a/
i/ter/atio/al superstate ;; a superstate co/trolled 02 i/ter/atio/al 0a/kers a/d i/ter/atio/al i/dustrialists acti/g together to e/sla8e the .orld for their o./ pleasure.9 3o/gressma/ Wright ?atma/: of the House !a/ki/g a/d 3urre/c2 3ommittee said i/ 45J6: 9#/ fact there has /e8er 0ee/ a/ i/depe/de/t audit of either of the 46 0a/ks of the @ederal "eser8e !oard that has 0ee/ filed .ith the 3o/gress .here a )em0er .ould ha8e a/ opportu/it2 to i/spect it. The &e/eral 'ccou/ti/g Office does /ot ha8e 7urisdictio/ o8er the @ederal "eser8e.9 Ouestio/: Wh2 does /ot the &e/eral 'ccou/ti/g of the +/ited $tates ha8e 7urisdictio/ o8er the @ederal "eser8e to dema/d a/ accou/ti/g< The a/s.er is that accou/ta0ilit2 of the @ederal "eser8e is /ot i/ the co/tract: the @ederal "eser8e 'ct: 7ust as it .as /ot i/ the co/tract of the &eorge "app $ociet2 or to/ti/e i/sura/ce policies. The @ederal "eser8e 'ct pro8ides for accou/ta0ilit2 of 9mem0er 0a/ks:9 !ut: 02 defi/itio/: i/ the 'ct itself: the @ederal "eser8e 0a/ks are /ot 9mem0er 0a/ks9 a/d: therefore are exempt from accou/ta0ilit2 ;; 02 co/tract. 3o/gressma/ )[email protected]
/ a/d 3o/gressma/ ?atma/: 0oth experts i/ 0a/ki/g a/d fi/a/ce: did /ot u/dersta/d this. Ho. ma/2 se/ators a/d represe/tati8es that sig/ed the @ederal "eser8e 'ct i/ 4543: do 2ou suppose: u/derstood .hat the2 .ere sig/i/g< *ot o/l2 .ith respect to this issue: 0ut others that ha8e 0ee/ raised from time to time< What a0out the /umerous attempts to audit @ort D/ox<< The @ederal "eser8e 'ct stipulates that gold o./ed 02 the @ederal "eser8e ma2 0e stored i/ storage facilities of the +/ited $tates. *o.: if 3o/gress ca//ot compel a/ accou/ti/g for @ort D/ox: .ho: do 2ou suppose o./s the gold< *o.: .e ma2 ask oursel8es a/other >uestio/ at this poi/t ;; #s the @ederal "eser8e a maritime le/der: or is it a/ i/sura/ce u/der.riter: to +/ited $tates< $ome additio/al i/formatio/ from a/ ssa2 o/ )aritime %oa/s: ma2 help us decide this >uestio/: 9The co/tract of maritime loa/ approaches more /earl2 to that of #/sura/ce. There is a stro/g a/alog2 0et.ee/ them. #/ their effects the2 are co/strued o/ the same pri/ciples.9 9#/ o/e co/tract: the le/der 0ears the sea risks: i/ the other: the u/der.riter.9 9#/ the o/e: the maritime i/terest is the price of the perilA a/d this term correspo/ds .ith the premium .hich is paid o/ the other.9 $o .e see that it reall2 is immaterial: u/der )aritime %a.: .hether the @ederal "eser8e is thought of as a maritime le/der: or as a/ i/sura/ce u/der.riter: to the +/ited $tates. #/ either case the le/der: or u/der.riter: 0ears the risks ;;a/d the maritime la.s compelli/g performa/ce i/ pa2i/g the i/terest: or premium: are o/e a/d the same. 'lso: i/ either case: assets ca/ 0e h2pothecated as securit2 for the price of the peril. ...speaki/g of risk: let=s .ee .hat risk the @ederal "eser8e is i/curri/g as le/der: or u/der.riter: to the +/ited $tates i/ excha/ge for +/ited $tates $ecurities: )ari/er ccles: former chairma/ of the @ederal "eser8e !oard: held the follo.i/g excha/ge .ith 3o/gressma/ ?atma/ 0efore the House !a/ki/g a/d 3urre/c2 3ommittee o/ $eptem0er 3H: 4544:
" Con# essman Patman./ % Eccles) how !i! 'ou #et the mone' to bu' those two billions o$ #o&e nment secu ities?. " / % Eccles.We c eate! it%. Patman" .0ut o$ what?. " / % Eccles.0ut o$ the i#ht to issue c e!it mone'%. '/d: from further testimo/2 from the @ederal "eser8e itself: #/ a pu0licatio/ from the @ederal "eser8e !a/k of 3hicago: e/titled 9T.o @aces of ,e0t:9 ;; 93urre/c2 is so .idel2 accepted as a medium of excha/ge that most people do /ot thi/k of it as de0t.9 #/ the 3hicago 0a/k pu0licatio/ e/titled 9)oder/ )o/e2 )echa/ics:9 .e fi/d: 9*either paper curre/c2 /or deposits ha8e 8alue as commodities. #/tri/sicall2: a dollar 0ill is 7ust a piece of paper. ,eposits are merel2 0ook e/tries. 3oi/s do ha8e some i/tri/sic 8alue as metal: 0ut for less tha/ their face amou/t.9 9What: the/ makes these i/strume/ts;;checks: paper mo/e2: a/d coi/s ;; accepta0le at face 8alue i/ pa2me/t of all de0ts a/d for other mo/etar2 uses< )ai/l2: it is the co/fide/ce people ha8e that the2 .ill 0e a0le to excha/ge such mo/e2 for real goods a/d ser8ices .he/e8er the2 choose to do so.9 93o/fide/ce i/ these forms of mo/e2 also seems to 0e tied i/ some .a2 to the fact that assets exist o/ the 0ooks of the go8er/me/t a/d the 0a/ks e>ual to the amou/t of the mo/e2 outsta/di/g: e8e/ though most of these assets are /o more tha/ pieces of paper Esuch as customer=s promissor2 /otesF: a/d it is .ell u/derstood that mo/e2 is /ot redeema0le i/ them.9 )oder/ )o/e2 )echa/ics pu0licatio/ from 3hicago: o/ce agai/: 9,eposits are merel2 0ook e/tries...dema/d deposits are lia0ilities of commercial 0a/ks. The 0a/ks sta/d read2 to co/8ert such deposits i/to curre/c2 or tra/sfer their o./ership at the re>uest of depositors.9 @rom the @ederal "eser8e 0a/k of $t. %ouis "e8ie.: 9!ut .hat i/duces the /o/;0a/ki/g pu0lic to accept lia0ilities of pri8ate: profit;maki/g i/stitutio/s such as 0a/ks<9 9The decrease i/ purchasi/g po.er i/curred 02 holders of mo/e2 due to i/flatio/ imparts gai/s to the i/surers of mo/e2....9 9The gai/s .hich accrue to issuers of mo/e2 are deri8ed from the differe/ce 0et.ee/ the costs of issui/g mo/e2 a/d the i/itial purchasi/g po.er of /e. mo/e2 i/ circulatio/. $uch gai/s are called =seig/iorage=. #f the goods a/d ser8ices for .hich the issuer excha/ges mo/e2 ha8e a market 8alue greater tha/ that of resources used to produce the mo/e2: the/ the issurer recei8es a /et gai/.9 @rom a 0ook e/titles 9The @ederal "eser8e $2stem ; #ts ?urposes a/d @u/ctio/s:9 pu0lished 02 the @ederal "eser8e !oard i/ 4535: [email protected]
"eser8e !a/k 3redit resem0les 0a/k credit i/ ge/eral: 0ut u/der the la. it has a limited a/d special use ;; as a source of mem0er 0a/k reser8e fu/ds. #t is itself a form of mo/e2 authorized for special purposes: co/8erti0le i/to other forms of mo/e2: co/8erti0le therefrom: a/d readil2 co/trolla0le as to amou/t. @ederal "eser8e !a/k credit: therefore: as alread2 stated: does /ot co/sist of fu/ds that the "eser8e authorities 9get9 some.here i/ order to le/d:
0ut co/stitutes fu/ds that the2 are empo.ered to 3" 'T .9Eemphasis addedF #/ his /otes e/titled 9' ?rimer o/ )o/e2:9 3o/gressma/ ?atma/ tells that upo/ heari/g that @ederal "eser8e !a/ks hold a large amou/t of cash: he .e/t to t.o of its regio/al 0a/ks. He asked to see their 0o/ds. He .as led i/to 8aults a/d sho./ great piles of go8er/me/t 0o/ds upo/ .hich the people are taxed for i/terest )r. ?atma/ the/ asked to see their cash. The 0a/k officials seemed co/fused. Whe/ )r. ?atma/ repeated the re>uest: the2 sho.ed him some ledgers a/d 0a/k checks. )r. ?atma/ .ar/s us to remem0er that: 9The cash: i/ truth: does /ot exist a/d /e8er has existed. What .e call Rcash reser8es= are simpl2 0ookkeepi/g credits e/tered upo/ the ledgers of the @ederal "eser8e !a/ks. These credits are created 02 the @ederal "eser8e !a/ks a/d the/ passed alo/g through the 0a/ki/g s2stem.9 $o: 02 the testimo/2 of the @ederal "eser8e itself: .e see: 4. #t creates mo/e2 out of thi/ air ;; at /o cost or risk to the @ederal "eser8e $2stem ;; from its right to issue credit: gra/ted i/ the @ederal "eser8e 'ct. 6. #t gai/s from the i/flatio/ it creates. 3. )o/e2 is /ot redeema0le i/ its lia0ilities. 4. ,ema/d deposits are lia0ilities of 0a/ks. J. @ederal "eser8e *otes are lia0ilities of @ederal "eser8e. 6. #ts gai/s: as issuers of credit mo/e2: are the differe/ce 0et.ee/ the cost of creati/g that credit Eesse/tiall2 /othi/gF a/d the i/itial purchasi/g po.er .he/ the /e. mo/e2 is put i/to circulatio/. #/ a repri/t of the 0ook 9TH @ , "'% " $ "- $($T ) ;#ts ?urpose a/d @u/ctio/s:9 $. W. 'dams: uses the @ederal "eser8es o./ pu0lished figures to gi8e us a/ example of ho. lucrati8e this /o risk scheme is to the @ederal "eser8e: The pauper EThe @ederal "eser8e $2stemF .ith assets of o/l2 TJ6 0illio/ .ith /o producti8e k/o.;ho.: .ith /o productio/s of goods: a/d fe.er tha/ 4HH:HHH stockholders: loa/ed E<F the rich ma/ EThe +/ited $tates of 'mericaF .ith a trillio/ i/ producti8e capacit2 a/d k/o.;ho. .ith .ell o8er T6HH 0illio/ i/ assets a/d 4GH millio/ stockholders: i/cludi/g the aforesaid 4HH:HHH 0a/k stockholders: T6JH 0illio/ to fight World War ##. 3a/ 2ou imagi/e the greatest corporatio/ o/ earth: the &o8er/me/t of the +. $. .ith 4GH millio/ alert full;of;k/o.;ho. stockholders: a/d assets ru//i/g o8er T6HH 0illio/: tur/i/g to a small segme/t of its populatio/: .ith fe.er tha/ 4HH:HHH stockholders a/d assets of o/l2 TJ6 0illio/ to 0orro. mo/e2< 3a/ 2ou co/cei8e of "ockefeller sa2i/g to his chauffeur: 9Tom: # am tra/sferri/g m2 perso/al 0a/k accou/t .hich is .ell o8er T4 0illio/: to 2our accou/t. (ou ma2 spe/d it as 2ou pleaseA pro8ided as ofte/ as # ask for mo/e2: 2ou .ill let me ha8e it. Of course: # .ill gi8e 2ou m2 /ote for cash # recei8e: a/d tr2 to rustle from m2 childre/ e/ough mo/e2 to pa2 2ou i/terest o/ the 0orro.ed mo/e2.9 Well: that is exactl2 .hat 3o/gress did i/
4543 .he/ it passed the @ederal "eser8e 'ct. To fight World War ##: .e ga8e the 0a/kers of the +/ited $tates T6JH 0illio/ i/ +. $. !o/ds that .e might use our o./: the *atio/=s credit. !2 usi/g the reser8e multiplier: this ga8e them T4 trillio/ 6JH 0illio/ 0a/k credit. What a/ u/ear/ed 0o/a/za for the 0a/kersM 3redits are to the 0a/kers .hat 2our deposits are to 2ou. The2 ca/ le/d them: or use them to 0u2 i/8estme/ts ; it is cash to there 0a/kersM $o: 02 addi/g the T6JH 0illio/ i/ +.$. !o/ds .e a0solutel2 ga8e to them their T4 trillio/ 6JH 0illio/ 0a/k credit: a/d .e fi/d that the 0a/kers Ethe the/ paupersF came out of World War ## T4:JHH 0illio/ richer: a/d the Ethe/ rich ma/F the +/ited $tates &o8er/me/t came out T6JH 0illio/ i/ de0t to the 0a/kers Ethe paupersF tha/ks to the stupidit2 a/d/or 8e/alit2 of our 3o/gressme/: /e.spapers: 7our/als: a/d educated people of the /atio/. 3learl2: 02 their o./ testimo/2: the @ederal "eser8e: as a maritime le/der or i/surer: /ot o/l2 has /othi/g at risk Ei.e.: /othi/g to lose i/ the maritime 8e/ture for profitF ;;0ut ca/ o/l2 gai/ o/ a scale that is almost i/co/cei8a0le: 7ust like the to/ti/e i/sura/ce schemes: a/d 7ust like the &eorge "app Harmo/2 $ociet2. The sig/ifica/ce of this .ill 0ecome 8er2 appare/t .he/ .e appl2 the la. to the fact. These same people .ho .ere gi8e/ co/trol of our pu0lic mo/e2 s2stem: for the oste/si0le purpose of e8e/i/g out the eco/om2: usi/g ?rofessor %ist=s formula for a 9*atio/al co/om29: caused a recessio/ i/ 4564 ;; a/d precipitated the crash of R65 02 i/creasi/g the mem0er 0a/k reser8e re>uireme/ts from 4JU to 6HU ;; there02 forci/g a huge li>uidit2 s>ueeze. This set the stage for .hat .as to follo. i/ 4533 02 .a2 of 0a/krupti/g the treasuries of the states a/d federal go8er/me/ts ;; the2 could /o lo/ger pa2 their de0ts at la. to the @ederal "eser8e ;; drastic measures .ere o08iousl2 /ecessar2 ;; .e had a 9*atio/al merge/c29 o/ our ha/dsM O/ 'pril J: 4533: ?reside/t "oose8elt issued a/ executi8e order calli/g for the retur/ of all gold i/ pri8ate hidi/g to the @ederal "eser8e 02 )a2 4 u/der the pai/ of te/ 2ears impriso/me/t a/d T4H:HHH fi/e. Hoarders .ere hu/ted a/d prosecuted: 'ttor/e2 &e/eral 3ummi/gs declared: 9# ha8e /o patie/ce .ith people .ho follo. a course that i/ .ar time .ould class them as slackers. #f # ha8e to make a/ example of some people: #=ll do it cheerfull2.9 O/ )a2 46: 4533: the 3alifor/ia 'ssem0l2 a/d $e/ate adopted 'ssem0l2 1oi/t "esolutio/ *o. 66. This resolutio/ stated i/ part: 9Whereas: it .ould appear that: .ith proper use a/d co/trol of moder/ mea/s of productio/ a/d distri0utio/: it .ould 0e possi0le for practicall2 all perso/s to ha8e a/d e/7o2 a fair share of material goods i/ retur/ for ser8icesA a/d .hereas: such use: co/trol a/d appropriate eco/omic pla//i/g are /ot feasi0le except through the directio/ a/d super8isio/ of a si/gle: ce/tralized age/c2 a/d the remo8al of certai/ co/stitutio/al limitatio/sA /o.: therefore 0e it resol8ed 02 the 'ssem0l2 a/d $e/ate: 7oi/tl2: that the legislature of the $tate of 3alifor/ia here02 memorializes the
3o/gress to propose a/ ame/dme/t to the co/stitutio/ of the +/ited $tates readi/g su0sta/tiall2 as follo.s: RThe 3o/gress a/d the se8eral states: 02 its authorit2 a/d u/der its co/trol: ma2 regulate or pro8ide for the regulatio/ of hours of .ork: compe/satio/ for .ork: the productio/ of commodities a/d the re/ditio/ of ser8ices: i/ such ma//er as shall 0e /ecessar2 a/d proper to foster orderl2 productio/ a/d e>uita0le distri0utio/: to pro8ide rumi/ati8e .ork for the maximum /um0er of perso/s: to promote ade>uate compe/satio/ for .ork performed: a/d to safeguard the eco/omic sta0ilit2 a/d .elfare of the /atio/A= 9resol8ed: that the legislature of 3alifor/ia respectfull2 urges that: pe/di/g the su0missio/ a/d adoptio/ of such ame/dme/t: the 3o/gress pro8ide for such eco/omic pla//i/g a/d regulatio/ as ma2 0e /ecessar2 a/d proper u/der prese/t eco/omic co/ditio/s a/d legall2 possi0le u/der the existi/g pro8isio/s of the 3o/stitutio/A a/d 0e if further "esol8ed: that the chief clerk of the 'ssem0l2 is here02 i/structed forth.ith to tra/smit copies of this resolutio/ to the ?reside/t of the +/ited $tates: a/d to the ?reside/t of the $e/ate: the $peaker of the House of "eprese/tati8es a/d each of the se/ators a/d represe/tati8es from 3alifor/ia i/ the 3o/gress of the +/ited $tates.9 )a2 46: 4533: ?e//s2l8a/ia &e/eral 'ssem0l2 'ct ### This act declared that .he/ the state treasur2 departme/t could /o lo/ger 9pa29 its de0ts a/d .as 7eopardizi/g its depositors a/d creditors: the secretar2 of 0a/ki/g .ould 0e desig/ated as recei8er for the treasur2 a/d he .as to file a certificate of possessio/ i/ ,auphi/ 3ou/t2=s ?rotho/otar2=s Office i/ Harris0urg: the state 3apitol. 's recei8er for the $tate treasur2 a/d all its offices Emea/i/g all the cou/t2 treasurersF: William ,. &ordo/: $ecretar2 of !a/ki/g: .as gra/ted the authorit2 02 'ct ### to appoi/t a fiduciar2 to ma/age all the fi/a/cial matters of the $tate. He also had the po.er to assig/ as securit2 for loa/ co/tracts from the @ederal &o8er/me/t: all propert2 i/ the state: real a/d perso/al: resources a/d ma/2 other assets as i/sura/ce to the @ederal "eser8e. House 1oi/t "esolutio/ 456 ; 4533 E6H 2ears after e/actme/t of the @ederal "eser8e 'ctF O/ 1u/e J: 4533: 3o/gress e/acted H1";456 to suspe/d the gold sta/dard a/d to a0rogate the gold clause. This resolutio/ declared that 9Whereas the holdi/g or deali/g i/ gold affect the pu0lic i/terest: a/d are therefore su07ect to proper regulatio/ a/d restrictio/A a/d .hereas the existi/g emerge/c2 has disclosed that pro8isio/s of o0ligatio/s .hich purport to gi8e the o0ligee a right to re>uire pa2me/t i/ gold or a particular ki/d of coi/ or curre/c2...are i/co/siste/t .ith the declared polic2 of co/gress...i/ the pa2me/t of de0ts. This resolutio/ declared that a/2 o0ligatio/ re>uiri/g 9pa2me/t i/ gold or a particular ki/d of coi/ or curre/c2: or i/ a/ amou/t i/ mo/e2 polic2A a/d ... 8er2 o0ligatio/ heretofore or hereafter i/curred: shall 0e discharged upo/ pa2me/t: dollar for dollar: i/
a/2 coi/ or curre/c2 .hich at the time of pa2me/t is legal te/der for pu0lic a/d pri8ate de0ts.9 P *OT that the .ords do /ot talk a0out 9pa2me/t9 of de0t: 0ut clearl2 states that 9 8er2 O0ligatio/ ... $hall 0e discharged.9 #/ the case of $ta/ek 8. White: 4G6 )i//. 35H: 64J H.W. G84: the court explai/ed the legal disti/ctio/ 0et.ee/ the .ords 9pa2me/t9 a/d 9discharge9: 9There is a disti/ctio/ 0et.ee/ a Rde0t discharged= a/d a Rde0t paid.= Whe/ discharged the de0t still exists though di8ested of its character as a legal o0ligatio/ duri/g the operatio/ of the discharge. $omethi/g of the Origi/al 8italit2 of the de0t co/ti/ues to exist: .hich ma2 0e tra/sferred: e8e/ though the tra/sferee takes it su07ect to its disa0ilit2 i/cide/t to the discharge. The fact that it carries somethi/g .hich ma2 0e a co/sideratio/ for a /e. promise to pa2: so as to make a/ other.ise .orthless promise a legal o0ligatio/: makes it the su07ect of tra/sfer 02 assig/me/t.9 Thus: it is clear that: as a result of H1" 456 a/d from that da2 for.ard E1u/e J: 4533F: /o o/e has 0ee/ a0le to pa2 a de0t. The o/l2 thi/g the2 ca/ do is te/der i/ tra/sfer of de0ts: a/d the de0t is perpetual. The suspe/sio/ of the gold sta/dard: a/d prohi0itio/ agai/st pa2i/g de0ts: remo8ed the su0sta/ce for our 3ommo/ %a. to operate o/: a/d created a 8oid: as far as the la. is co/cer/ed. This su0sta/ce .as replaced .ith a 9?u0lic *atio/al 3redit9 s2stem .here de0t is mo/e2 EThe @ederal "eser8e calls it 9mo/etized de0t9F o8er .hich the o/l2 7urisdictio/ at is 'dmiralt2 a/d )aritime. H1";456 .as impleme/ted immediatel2. The da2 after ?reside/t "oose8elt sig/ed the resolutio/ the treasur2 offered the pu0lic /e. go8er/me/t securities: mi/us the traditio/al 9pa2a0le i/ gold9 clause. 'rticle #: $ectio/ 4H: 3lause 4: proscri0es the states maki/g a/2 thi/g 0ut gold a/d sil8er coi/ a te/der i/ pa2me/t of de0t ;;0ut: this 'rticle does /ot co/tai/ a/ a0solute prohi0itio/ agai/st the $tates maki/g somethi/g else a te/der i/ tra/sfer of de0t. H1";456 prohi0its pa2me/t of de0t a/d su0stitutes: i/ its place: a discharge of a/ o0ligatio/ ;; there02 /ot o/l2 su08erti/g: 0ut totall2 02passi/g the 9a0solute prohi0itio/9 so carefull2 e/gi/eered i/to the 3o/stitutio/. There is: /o.: /othi/g for this 'rticle to operate o/: 7ust as there is /othi/g for 3ommo/ %a. to operate o/. ?erpetual de0t: 0ills: /otes: che>ues a/d credits fall .ithi/ a totall2 differe/t 7urisdictio/ tha/ co/templated 02 'rticle #: $ectio/ 4H: 3lause 4 ;; a/d that 7urisdictio/ 0elo/gs exclusi8el2 to the %a. of 'dmiralt2 a/d )aritime. *o.: it is eas2 to see ho. 90ills9 as ple/t2 as oak lea8es: 9polluted the la.s after the War @or #/depe/de/ce: as descri0ed 02 ?eletiah We0ster9. This is ho. .e lost access to su0sta/ti8e 3ommo/ %a. ;; the 8er2 la. the )i/ute )e/ fought to regai/. H1+"234 (laces e&e ' (e son who !eals in the (ublic national c e!it in the le#al (osition o$ a me chant) an! the onl' 5u is!iction o&e an' cont o&e s' in&ol&in# this sub5ect matte is A!mi alt' an! /a itime. O08iousl2: if .e ca//ot pa2 our de0ts at la.: .e are also 0e/efiti/g from limited lia0ilit2 u/der the %imited %ia0ilit2 'ct .he/ .e use this credit ;; a/d: that is mari/e i/sura/ceM
The defi/itio/s of 9lia0ilit29 a/d 9i/sure9 .ill help co/8i/ce us of this fact ;; i/ a/al2zi/g these defi/itio/s: keep i/ mi/d the disti/ctio/ 0et.ee/ 9pa2me/t9 a/d 9discharge9. %ia0ilit2: The .ord is a 0road term. #t has 0ee/ defi/ed to mea/: all character of de0ts a/d o0ligatio/s ... a/2 ki/d of de0t or lia0ilit2: either a0solute or co/ti/ge/t: express or implied ... co/ditio/ .hich creates a dut2 to perform a/ act immediatel2 or i/ the future ... dut2 to pa2 mo/e2 or to perform some other ser8ice ... the state of 0ei/g 0ou/d or o0ligated i/ la. or 7ustice to do: pa2: or make good somethi/g.9 #/sure: 9To e/gage to i/dem/if2 a perso/ agai/st pecu/iar2 loss from specified perils or possi0le lia0ilit29. O+ $T#O* N4: Who do 2ou suppose took possessio/ of the treasur2 of the $tate of ?a. o/ 1u/e J: 4533: ;; the mome/t H1";456 made it impossi0le for the $tate of ?e//s2l8a/ia to pa2 its de0ts< O+ $T#O* N6: %a/d titles 0ei/g allodial i/ ?e//s2l8a/ia: .hat .as the $tate 'ssem0l2=s authorit2 a/d 7urisdictio/ to pledge these allodiums to the @ederal "eser8e as securit2 for loa/ co/tracts from the @ederal &o8er/me/t< O+ $T#O* N3: #f the i/di8idual citize/s of ?e//s2l8a/ia .ere i/deed 9so8ereig/9 u/der the 3ommo/ %a. ;;What .as the authorit2 a/d 7urisdictio/ of the $tate 'ssem0l2 to pledge their la0or to the @ederal "eser8e pool< 3learl2: the alleged authorit2 a/d 7urisdictio/ is the so;called pu0lic polic2 declared 02 3o/gress. We .ill retur/ to this su07ect later o/. #f all the assets of the +/ited $tates ha8e 0ee/ h2pothecated to the @ederal "eser8e 9pool9 as securit2 for the maritime loa/ a/d i/sura/ce u/der.riti/g polic2: the/ that raises a couple of >uestio/s: O+ $T#O* N4: #f the +/ited $tates 9dies9 Eor is mergedF u/der a o/e .orld go8er/me/t: .ho gets the pool< O+ $T#O* N6: #f the @ederal "eser8e 9dies9 02 .a2 of getti/g its charter resci/ded: .ho gets the pool< The a/s.ers ca/ 0e fou/d i/ the @ederal "eser8e 'ct itself: 9$hould a @ederal "eser8e 0a/k 0e dissol8ed or go i/to li>uidatio/: a/2 surplus remai/i/g: after the pa2me/t of all de0ts: di8ide/d re>uireme/ts as herei/0efore pro8ided: a/d the par 8alue of the stock: shall 0e paid to a/d 0ecome the propert2 of the +/ited $tates a/d shall 0e similarl2 applied9. 34 +$3 34J! pro8ided that : 9*o gold shall after 1a/uar2 3H: 4534: 0e coi/ed: a/d /o gold coi/ shall after 1a/uar2 3H: 4534: 0e paid out or deli8ered 02 the +/ited $tatesA pro8ided ho.e8er: that coi/age ma2 co/ti/ue to 0e executed 02 the mi/ts of the +/ited $tates for foreig/ cou/tries9.
This exceptio/ .as /ecessar2 0ecause foreig/ cou/tries: 0ei/g recog/ized or so8ereig/: could /ot 0e held to the i/ter/al pu0lic polic2 of the +/ited $tates. H1";456 .as 0i/di/g o/l2 upo/ those i/di8iduals .ho .ere 0e/eficiaries of pu0lic polic2A that 0ei/g the pri8ilege of limited lia0ilit2 for pa2me/t of de0t arisi/g out of participatio/ i/ the @ederal "eser8e ?u0lic 3redit $2stem. H1";456 automaticall2 exte/ded the pri8ilege to re/ege o/ de0ts to e8er2 perso/ usi/g the @ederal "eser8e 0a/ki/g s2stemA ho.e8er: /e8er forget that .he/ 2ou operate o/ a pri8ilege: 2ou ha8e to respect the ruler of the gi8er of that pri8ilege. @urthermore: i/ the case of &reat @alls )fg. 3o. 8. 'ttor/e2 &e/eral: 464 +.$. J84: the court said : 9The court .ill /ot pass upo/ the co/stitutio/alit2 of a statute at the i/sta/ce of o/e .ho has a8ailed himself of its 0e/efits.9 Thus) i$ 'ou a&ail 'ou sel$ o$ an' bene$its o$ the (ublic c e!it s'stem 'ou wai&e the i#ht to challen#e the &ali!it' o$ an' statute (e tainin# to) an! con$e in# .bene$its. o$ this s'stem on the basis o$ constitutionalit'% rie "ailroad 8. Tompki/s: 3H4 +.$. 64 E4538F #/ its decisio/ of the case of rie ". ". 8. Tompki/s: i/ 4538: the $upreme court o8ertur/ed the $.ift 8. T2so/ decisio/ of 4846 02 stati/g: #/ the rie case: 1ustice !ra/deis .rote: 9 xcept i/ matters go8er/ed 02 the @ederal 3o/stitutio/ or 02 acts of 3o/gress: the la. to 0e applied i/ a/2 case is the la. of the $tate ... There is /o @ederal &e/eral 3ommo/ %a..9 *ote the exceptio/. The court has excepted matters go8er/ed 02 the co/stitutio/ a/d acts of 3o/gress from 0ei/g go8er/ed 02 $tate la.. He/r2 1. @rie/dl2: 1udge: +/ited $tates 3ourt of 'ppeals for the $eco/d 3ircuit su0se>ue/tl2 ga8e us the follo.i/g i/sights i/to the sig/ifica/ce of this decisio/: 9The clario/ 2et careful pro/ou/ceme/t of rie: RThere is /o @ederal &e/eral 3ommo/ %a.= ope/ed the .a2 to .hat: for .a/t of a 0etter term: .e ma2 call $pecialized @ederal 3ommo/ %a.. # dou0t that .e sufficie/tl2 realize ho. far this de8elopme/t has go/e ;; let alo/e .here is likel2 to go.9 9$i/ce most cases relati/g to @ederal matters .ere i/ the @ederal courts a/d i/8ol8ed Rge/eral= la.: the familiar rule of $.ift 8. T2so/ usuall2 ga8e @ederal 7udges all the freedom the2 re>uired i/ pre; rie da2s a/d made it u//ecessar2 for them to co/sider a more soteric source of po.er ... !2 focusi/g atte/tio/ o/ the /ature of the right 0ei/g e/forced: rie caused the pri/ciple of a specialized @ederal 3ommo/ %a.: 0i/di/g i/ all courts 0ecause of its source: to de8elop .ithi/ a >uarter ce/tur2 i/to a po.erful u/if2i/g force. 1ust as @ederal courts do /ot co/form to $tate decisio/s o/ issues propert2 for the $tates: $tate courts must co/form to federal decisio/s i/ areas .here 3o/gress: acti/g .ithi/ po.ers gra/ted to it: has ma/ifested: 0e it e8er so lightl2: a/ i/te/tio/ to that e/d. 9The %i/col/ )ills doctri/e E3J3 +.$. 448 E45JGF is preg/a/t .ith possi0ilities. #f the gra/t of @ederal 7urisdictio/ i/ suits o/ la0or co/tracts affecti/g commerce .as a ma/date to fashio/ a @ederal 3ommo/ %a. co/siste/t .ith federal la0or legislatio/ ... this like the
@ederal 3ommo/ %a. of la0or .ould ha8e supremac2 o8er $tate la..9 9The @ederal gia/t9 ...AR?rofessor &ilmore= has .ritte/: 9is 7ust 0egi//i/g to stir .ith his lo/g;dela2ed e/tra/ce .e are: it ma2 0e: at last catchi/g sight of the pri/ciple character.9 O+ $T#O* : E4F. What: do 2ou suppose: is the /ature of the right: a/d .hat is the source 1udge @rie/dl2 is referri/g to: that caused the rie 3ourt to o8ertur/ the $.ift 8. T2so/ decisio/ a/d rule that there .as /o lo/ger a &e/eral @ederal 3ommo/ %a.< E6F. Who: or .hat: is the 9pri/ciple character9 that 1udge @rie/dl2: Bor ?rofessor &ilmore: .hom he >uotesC refers< "emem0er: 1ustice $tor2 said i/ the ,e%o8io case that the 7urisdictio/ of 'dmiralt2: as to co/tracts: depe/ds upo/ the su07ect matter a/d the /ature of the causeM #/ a 0ook e/titled 9The %a. of !ills: *otes: a/d 3he>ues9: )el8ille ). !igalo.: ?h. ,. Har8ard: said i/ the 2ear 45HH: 9We are co/cer/ed i/ this 0ook .ith a 0ra/ch .hich deals .ith the la. of 0ills: /otes a/d che>ues. This 0ra/ch of the la. mercha/t has retai/ed throughout its life: to the prese/t da2: its esse/tial characteristics: clearl2 marki/g it off from the 3ommo/ %a. ... The term %a. )ercha/t at the prese/t time usuall2 suggests the la. of 0ills: /otes a/d che>ues. The time came .he/ it must take its place: e8e/ if piecemeal 02 the side of the 3ommo/ %a.: a/d of 'dmiralt2 a/d >uit2: i/ the 7urisprude/ce of /gla/d. 'dmiralt2 had alread2 0ee/ exercisi/g 7urisdictio/ o8er i/strume/ts i/ the /ature of 0ills of excha/ge a/d promissor2 /otes pertai/i/g to co/tracts i/ the commerce of the high seas. The %a. )ercha/t is /ot e8e/ a modificatio/ of the 3ommo/ %a.A it occupies a field o8er .hich the 3ommo/ %a. does /ot a/d /e8er did exte/d.9 '/d: from the 9Ha/d0ook of the %a. of @ederal 3ourts9: ... a u/a/imous 3ourt E3learfield Trust co. 8. +/ited $tates: 4543: 63 $. 3t. JG3F held: 9The rights a/d duties of the +/ited $tates o/ commercial paper that is of issue are go8er/ed 02 @ederal rather tha/ local la.. This does /ot mea/ that i/ choosi/g the applica0le @ederal rule the courts ma2 /ot occasio/all2 select $tate la.. !ut is .as thought that such a course .ould 0e si/gularl2 i/appropriate i/ the 3learfield case. The issua/ce of commercial paper 02 the +/ited $tates is o/ a 8ast scale a/d tra/sactio/s i/ that paper from issua/ce to pa2me/t .ill commo/l2 occur i/ se8eral $tates ... The desira0ilit2 of a u/iform rule is plai/. To fi/d such a u/iform rule the 3ourt looked to the @ederal %a. )ercha/t ...9 [email protected]
courts ha8e made similar decisio/s for themsel8es as to .hat the co/trolli/g rule is to 0e i/ other cases .here the +/ited $tates is a part2 issued 02 the +/ited $tates:9 go8er/me/t co/tracts: or the effect of a @ederal lie/ ...9 9#f a/ issue is co/trolled 02 @ederal 3ommo/ %a.: this is 0i/di/g o/ 0oth $tate a/d @ederal courts. ' case Rarisi/g u/der= @ederal 3ommo/ %a. is a @ederal >uestio/ case: a/d is .ithi/ the origi/al 7urisdictio/ of the @ederal courts as such ...9 The 0urgeo/i/g of a @ederal 3ommo/ %a. 0i/di/g o/ @ederal a/d $tate courts alike has occurred at the same time as the de8elopme/t of the rie doctri/e ...
#t is fre>ue/tl2 said that the rie doctri/e applies o/l2 i/ cases i/ .hich 7urisdictio/ is 0ased o/ di8ersit2 of citize/ship. #/deed i/ a/ actio/ for .ro/gful death caused 02 a maritime tort committed o/ /a8iga0le .aters: the 3ourt curtl2 dismissed rie as 9irrele8a/t:9 si/ce the district court .as exercisi/g its admiralt2 7urisdictio/: e8e/ though it .as e/forci/g a state; created right9... .. ,espite repeated stateme/ts impl2i/g the co/trar2: it is the source of the right sued upo/: a/d /ot the grou/d o/ .hich federal 7urisdictio/ is fou/ded: .hich determi/es the go8er/i/g la..9 O08iousl2: the pri/ciple character 1udge @rie/dl2 .as referri/g to is the 'dmiral himself ;; e/largi/g his po.ers a/d 7urisdictio/ as a result of the 9pu0lic polic29 of H1";456 ;; that 0ei/g perpetual de0t a/d limited lia0ilit2 for pa2me/t of de0t u/der the @ederal %a. )ercha/t a/d the %a. of 'dmiralt2 0ecause of su07ect matter a/d /ature of the cause. -ictor2 Tax 'ct E4546F ?rior to the rie decisio/: it .as .ell esta0lished 02 ma/2 court decisio/s that .ages .ere /ot i/come .ithi/ the mea/i/g of the 46th 'me/dme/t. The -ictor2 Tax 'ct .as passed 02 co/gress i/ 4546: as a/ emerge/c2 .ar measure: authorizi/g i/come tax o/ .ages. This act .as to self; destruct: a/d did: t.o 2ears from its e/actme/t. O+ $T#O* : #t is commo/ k/o.ledge that 9i/come taxes9 o/ la0or ha8e co/ti/ued to 0e collected si/ce the expiratio/ of the -ictor2 Tax 'ct i/ 4544. What is the legal 0asis for a so;called 9i/come tax9 o/ .ages si/ce 4544< The facts clearl2 sho. that it is /ot a/ i/come tax o/ .ages: 0ut: i/stead is a/ i/terest or premium pa2me/t to the maritime le/der: the @ederal "eser8e. The 46th 'me/dme/t does /ot appl2 to the @eds i/ this case ;; 1ust as 'rticle #: $ectio/ 4H: 3lause 4: does /ot appl2 to the statesM +/ited $tates 8. $outh; aster/ +/der.riters 'ssociatio/: 366 +.$. J33: E4544F VTHIS IS WH6 IN CANADA " THE +ECEI7E+ GENE+AL IS C0LLECTING *0+ THE BAN8 0* CANADA) N0T A *EDE+AL INSITITUTI0N% INC0/E TA9 IS A P+E/IU/:INSU+ANCE PA6/ENT;%%m' em(hasis;7ic% #/ 4544 the +.$. $upreme 3ourt decided the case of +.$. 8. $. . +/der.riters 'ssociatio/ holdi/g i/sura/ce to 0e i/ter;state commerce. @#"$T *'T. *. $O3. -. &'""#$O* #*$+"'*3 E454JF:
9The ,istrict 3ourt takes 7udicial /otice that: u/der a rece/t decisio/ of the $upreme 3ourt: i/sura/ce is /o. i/terstate commerce .ithi/ the commerce clause.9 )c3arre/ 'ct E454JF #/ 454J: 3o/gress e/acted the )c3arre/ 'ct declari/g 9that the co/ti/ued regulatio/ a/d taxatio/ 02 the se8eral $tates of the 0usi/ess of i/sura/ce is i/ the pu0lic i/terest a/d that
sile/ce o/ the part of co/gress shall /ot 0e co/strued to impose a/2 0arrier to the regulatio/ or taxatio/ of such 0usi/ess 02 the se8eral $tates.9 !egi//i/g i/ 4563: the .ords 9redeema0le i/ la.ful mo/e29 a/d 9.ill pa2 to the 0earer o/ dema/d9 .ere remo8ed from future issues of @ederal "eser8e *otes: further reflecti/g the pu0lic polic2 stated i/ H1";456. '/d: stra/gel2 e/ough: o/ Octo0er 68: 45GG: H1";456 .as >uietl2 repealed 02 pu0lic la. 5J;44G. The 7oi/t resolutio/ e/titled 91oi/t resolutio/ to assure u/iform 8alue to the coi/s a/d curre/cies of the +/ited $tates9 appro8ed 1u/e J: 4533 E34 +.$.3. 463F: shall /ot appl2 to o0ligatio/s issued o/ or after the date of e/actme/t of this sectio/. The reaso/ for the repeal of H1";456 is some.hat o0scure. 'fter 44 2ears of u/challe/ged impleme/tatio/: this pu0lic polic2 is clearl2 esta0lished 02 custom: usage a/d participatio/ i/ the credit s2stem 02 the 'merica/ pu0lic. Those of us operati/g o/ the pri8ilege of limited lia0ilit2: 8ia the pu0lic credit: are still 0ou/d 02 the rules of the gi8er of the pri8ilege. THE+E WAS A CHANGE IN THE P+0G+A/ BUT WE HAD N0 8N0WLEDGE% 7ic !ut: ho. a0out the @ederal "eser8e itself< ,oes /ot his repeal allo. them to: o/ce agai/: dema/d pa2me/t i/ gold for the i/terest o/ pu0lic de0t ;; pursua/t to the terms of the @ederal "eser8e 'ct< "emem0er: this act co/tai/s a pro8isio/ made .ith respect to a/ o0ligatio/ purporti/g to gi8e the o0ligee a right to re>uire pa2me/t i/ gold ;; a/d that pro8isio/ appears to 0e 0ack i/ effect. #f this 0e so: .hat ca/ .e expect to happe/ .he/ the 0a/kers prese/t their dema/ds ;; k/o.i/g that there .o/=t 0e e/ough gold to meet them a/d /o hope of ac>uiri/g e/ough gold< '/2 good 0a/ker k/o.s that: i/ this situatio/: it is foreclosure time ;; it is time for distri0utio/ of the pool to the last sur8i8ors. These facts pai/t a picture so complex that it is almost 0e2o/d comprehe/sio/: so a summar2 of the most salie/t facts is appropriate at this time. The same people that said gi8e us the @ederal "eser8e 3harter a/d .e .ill see that there is sta0ilit2 to our eco/om2 forced us i/to a recessio/ i/ 4564: 02 a co/tractio/ of the @ederal "eser8e re>uireme/ts of the fractio/al reser8e to the 8arious 0a/ks. This co/tracted the mo/e2 suppl2 02 i/creasi/g the reser8e re>uireme/t from 4JU to 6HU. The2 forced a huge li>uidit2 s>ueeze i/ 4565: .hich 0rought o/ the depressio/. This precipitated our i/a0ilit2 to pa2 off i/terest o/ the de0t to the @ederal "eser8e ;; so i/ 4533 3o/gress e/tered the +/ited $tates i/to 0a/kruptc2: 02 the suspe/sio/ of the pa2me/t of de0t i/ gold ma/dated 02 H1";456 i/ 4533. This o/e act termi/ated /atio/al @ederal 3ommo/ %a.. This o/e act 0reached the flood gates .hich held the maritime la. at the tidela/ds E.ith the e00 a/d flo. of the tideF a/d permitted )aritime 'dmiralt2 %a. a/d its 7urisdictio/ to s.eep o8er the 'merica/ people ;; 0ecause .e su0stituted the pa2me/t of de0t i/ la.ful gold .ith discharge of de0t u/der limited lia0ilit2 i/ maritime. What .e ha8e i/ lieu of la.ful mo/e2 is federal reser8e /otes of a/ i/sura/ce u/der.riti/g scheme that is a to/ti/e ;; 7ust like the &eorge "app $ociet2 .as a to/ti/e a/d 7ust like the earl2
to/ti/e i/sura/ce programs. *o.: 2ou ma2 sa2 to us at this poi/t: ho. is it that a commu/istic: religious societ2 that=s operated for eco/omic profit: a/d i/sura/ce compa/ies: a/d the @ederal "eser8e ;; ho. do these totall2 i/terlock< #/ all three cases there .as a pool of assets i/8ol8ed. #/ all three cases: limited lia0ilit2 .as i/8ol8ed: .hich is i/sura/ce. #/ all three cases: there .as a polic2 of sur8i8ors take all ;; that is a .ageri/g polic2. #/ the &eorge "app $ociet2: people a/d propert2 .ere pledged to the pool. #/ to/ti/e: premium pa2me/ts .ere pledged to the pool. #/ the @ederal "eser8e: premium pa2me/ts: people a/d propert2 are pledged to the pool. #/ all three cases: there .as /o accou/ta0ilit2 to the mem0ers or su0scri0ers. #/ all three cases: there .as forfeiture for .ithdra.al. #/ the &eorge "app $ociet2 it .as la0or i/terest a/d i/tra/smissa0ilit2 of propert2 to heirs. #/ to/ti/e it .as the premiums a/d the i/terest thereo/. #/ the @ederal "eser8e: it is $ocial $ecurit2: +/emplo2me/t ?remiums: propert2 Tax: etc. @or example: what ha((ens i$ 'ou with! aw $ om social secu it') o $ om unem(lo'ment insu ance) o sto( (a'in# ( o(e t' ta<es "" is not a $o $eitu e !eman!e!? #/ the &eorge "app $ociet2: %ist=s 9*atio/al co/om29 .as practiced o/ a small scale ;; i/ the @ederal "eser8e: %ist=s 9*atio/al co/om29 is regulati/g a/d co/trolli/g our eco/om2. #/ the &eorge "app $ociet2: there .as /o risk to the i/surer: &eorge "app a/d his associates. #/ the @ederal "eser8e: there is /o risk to the )aritime le/der: or i/sura/ce u/der.riter. #/ the &eorge "app $ociet2: la0or .as pledged: a/d la0or .as the premium for the pri8ilege of remai/i/g i/ the societ2 for the cha/ce of 9maki/g a profit9. ;; #/ the @ederal "eser8e: la0or is pledged to o0tai/ the u/its of credit [email protected]
"eser8e $cripF to pa2 the i/terest to the maritime le/der: or the maritime i/sura/ce u/der.riter Eo/e a/d the same u/der maritime la.F. #/ the &eorge "app $ociet2: &eorge "app had /o 8ested i/terest i/ the li8es of the societ2 mem0ers. #/ the @ederal "eser8e: the @ederal "eser8e has /o 8ested i/terest i/ the li8es of the +/ited $tates: or its citize/s: /or does it ha8e a/2 risk at stake i/ the maritime 8e/ture of the ?u0lic *atio/al 3redit $2stem. #/ the to/ti/e: the premium .as /e8er to 0e repaid i/ the origi/al to/ti/e schemeA i/ the @ederal "eser8e: /o pro8isio/ is made to e8er pa2 the pri/ciple of the loa/ from the @ederal "eser8e: i/ the @ederal "eser8e 'ct ;; .hich is the co/tract 0et.ee/ the +/ited $tates a/d the @ederal "eser8e $2stem. # am sure that some of 2ou i/ this audie/ce has performed ser8ice i/ the *a82. #magi/e 2ourself as a seama/ a0oard a ship: i/ this case the ship is the credit commu/e i/ a 7oi/t
maritime 8e/ture for profit ;; 0eholdi/g to the class ' $tockholders: the o./ers of the ship: the @ederal "eser8e. The 3aptai/ of the ship: for argume/ts sake: let=s sa2 is the $ecretar2 of the Treasur2. *o. let=s look at 3ommo/ %a. 8ersus )aritime: @irst of all: u/der the 3ommo/ %a.: the rights of pri8ac2 are respected. '0oard the ship: o/ the credit 8o2age: i/ the credit commu/e: there is /o pri8ac2. The 3aptai/ has the right at a/2 time to i/8ade 2our pri8ac2. +/der 3ommo/ %a.: .e al.a2s deal i/ su0sta/ce ;; 02 su0sta/ce .e mea/ .ith gold a/d sil8er: a/d .e are deali/g .ith real goods a/d ser8ices. +/der )aritime %a.: i/ the credit commu/e: .e are deali/g .ith 0ills: /otes: che>ues: a/d credit ;; a/d of course /o. credit cards a/d fictitious docume/ts k/o./ as stocks a/d 0o/ds a/d so o/ do./ the li/e. +/der 3ommo/ %a.: .e protect the right of the famil2 ;;u/dersta/d that this 3ommo/ %a. comes from the earl2 la. of the tri0es of #srael a/d from the la.s a/d teachi/gs of 1esus a/d the !i0le. #/ fact the 3ommo/ %a. a/d the !i0le are totall2 compati0le. !ut: i/ a/d a0oard the ship of the credit commu/e there is /o marriage: there is /o famil2 u/it ;; oh 2es: .e k/o. the 3aptai/ performs marriages a0oard ship for people tra8elli/g a0oard ship ;; 0ut for all practical purposes there is /o famil2 u/it. (ou are a mem0er of the commu/e: a/d 2ou ha8e to o0e2 the orders of that commu/e. #/ fact: 2ou: u/der 3ommo/ %a.: ha8e perso/al rights a/d propert2 rights. !ut: there are /o perso/al or propert2 rights i/ the commu/e ;; Oh 2ou=re allo.ed to keep toilet articles a/d e8er2thi/g else. !ut if 2ou ha8e a/2thi/g that the2 thi/k is a da/ger to the 8o2age: like if 2ou ha8e a .oode/ foot;locker a/d the2 feel that the .ood might 0ur/ a/d might 0e a da/ger to the ship: the2 could make 2ou thro. the foot locker o8er0oard. Or: if 2ou had some propert2 i/ o/e of the holds of the ship a/d that prese/ted some da/ger to the rest of the ship 0ecause of damage i/ that hold: or fire i/ that hold ;; the2 could shut that hold off ;; a/d all 2our goods .ould 0e destro2ed. +/der 3ommo/ %a.: 2our rights a/d propert2 are co/sidered a/d protected. *o.: i/ 3ommo/ %a.: .e are totall2 respo/si0le for our actio/s ;; 0ut u/der )aritime %a. there is limited lia0ilit2 for pa2me/t of de0ts. '/d: if .e 7ust look at that a little 0it further: .e fi/d ho.: /o.: .e ha8e a situatio/ .here e8e/ our crimi/al la. has 0ee/ corrupted 02 )aritime %a. a/d .e fi/d people .ho ha8e murdered a/d raped i//oce/t peopleA eight: te/: t.el8e 2ears later the2 are released from priso/ to 0ecome a pro0a0le da/ger to societ2 agai/. ' perso/ .ho has murdered a super8isor a/d ma2or of $a/ @ra/cisco is also out of 7ail i/ G 2ears: 0ecause of limited lia0ilit2 for pa2me/t of de0t. ?eople ca/ pull the trigger a/d .ou/d the ?reside/t a/d sa2 # .as i/sa/e at the mome/t that # did that ;;a/d other tha/ ha8i/g to go to a me/tal i/stitutio/: ser8ed /o time at all i/ 7ail. +/der 3ommo/ %a.: these people .ould pro0a0l2 ha8e 0ee/ executed. 1oh/ !ooth did/=t e8e/ get a trial .he/ he shot ?reside/t %i/col/. +/der the 3ommo/ %a.: .e ha8e the right to refuse a/ order: as a free so8ereig/. '0oard the ship: the 3aptai/ ca/ make e8er2 seama/ perform: a/d do his dut2 ;; as the 3aptai/ sees fit.
+/der 3ommo/ %a.: the 7ur2 /ot o/l2 determi/es the admissi0ilit2 of e8ide/ce a/d 7udges the facts: 0ut its first a/d foremost dut2 is to 7udge the 7ustice of the la. as it applies to the particular case. #t is this feature of a 3ommo/ %a. 7ur2 that caused our fou/di/g fathers to refer to the 3ommo/ %a. 7ur2 as the 9palladium Ei.e. the 8er2 fou/datio/ or cor/ersto/eF9 of li0ert2. '0oard the ship: the cha/cellor does /ot e8e/ ha8e to ha8e a 7ur2 ;; 0ut if he chooses to ha8e o/e: it is merel2 ad8isor2 ;; a/d those 7urors must co/sider o/l2 the e8ide/ce permitted 02 the cha/cellorA a/d the2 must take the la. as the cha/cellor dictates it to them. The histor2 of due process is esse/tiall2 the histor2 of the 3ommo/ %a. 7ur2. The right of a 3ommo/ %a. 7ur2 to sa2 /o: or 7ur2 /ullificatio/: .as clearl2 esta0lished i/ /gla/d i/ 46GH .he/ the 7ur2 refused to co/8ict William ?e// o/ charges of preachi/g 0efore a/ u/la.ful assem0l2. @or refusi/g to co/8ict: as i/structed from the 0e/ch: the 7urors .ere fi/ed 4H marks each a/d se/te/ced to impriso/me/t till paid. +po/ a Ha0eas 3orpus petitio/ release from priso/: the 7urors .ere 8i/dicated 02 a decisio/ co/curred i/ 02 all the 7udges i/ /gla/d: except o/e: a0olishi/g the practice of pu/ishi/g 7uries for their 8erdicts. #/ the period immediatel2 0efore the "e8olutio/: 7ur2 /ullificatio/ had 0ecome a/ i/tegral part of the 'merica/ 7udicial s2stem a/d there is agreeme/t amo/g ma/2 comme/tators that the right of the 7ur2 to decide >uestio/s of la. a/d fact pre8ailed i/ this cou/tr2 u/til the middle 48HH=s. !2 the e/d of the ce/tur2: ho.e8er: the po.er of the 7ur2 had 0ee/ thoroughl2 decimated 02 a 7ealous 7udiciar2. The specific demise ca/ 0e traced to four highl2 i/flue/tial cases: three of .hich .ere exclusi8el2 .ithi/ the 'dmiralt2 7urisdictio/ of the @ederal courts. !ei/g 'dmiralt2 cases: limitatio/ of the po.ers of those particular 7uries .as perfectl2 proper. The pro0lem is: /ot u/dersta/di/g a/d disti/guishi/g 7urisdictio/al 0ou/ds: .e ha8e allo.ed admiralt2 case la. to 0e imposed i/ the totall2 differe/t: a/d i/applica0le: 7urisdictio/ of 3ommo/ %a.. +/der the 3ommo/ %a.: there is /o such thi/g as a 8ictimless crime: a/d a 8ictim recei8es redress a/d compe/satio/ for damages ;; '0oard the ship: the 3aptai/ ca/ make a/2 act a crime: a/d he ca/ impose his sa/ctio/s accordi/gl2. His co/cer/ is for the safet2 of the 8o2age: a/d he has little time or i/cli/atio/ to see that the 8ictim of a real crime: u/der the 3ommo/ %a.: recei8es compe/satio/ from the perpetrator of that crime. +/der the 3ommo/ %a.: there is 8er2 little /eed for 7ailsA .hereas. a0oard the ship: particularl2 .he/ there is disco/te/t amo/g the cre. regardi/g certai/ policies of the 3aptai/: there is a co/ti/ual /eed to co/tract more 0rigs ;; e/large the pe/al e/forceme/t staff. "emem0er .hat 1ustice $tor2 said i/ the ,e%o8io case a0out appeals a/d Writs of rror<
Writs of rror are 3ommo/ %a. .rits. 'ppeal is >uit2 a/d 'dmiralt2: i/ ci8il matters: a/d 'dmiralt2 alo/e i/ crimi/al matters 0ecause e>uit2 courts do /ot ha8e crimi/al 7urisdictio/. These are some simple tests 2ou ca/ use to determi/e i/ .hich 7urisdictio/ a particular court is operati/g: i/ a/2 particular case. $o 2ou see: 0ecause of the earl2 customs a/d traditio/s of the perils of the sea: a 8er2 harsh group of la.s gre. up. !ecause of the da/ger of shippi/g su0sta/ti8e mo/e2: gold a/d sil8er: from pirates a/d storms the2 started tra/sporti/g 0ills: /otes a/d credits ;; a/d this gre. up i/to the e8il practice of issui/g 0ills: /otes a/d credits .he/ the2 did/=t ha8e the su0sta/ce to 0ack them up. '/d this is the 0asis for our i/flatio/ that is defraudi/g the 'merica/ pu0lic toda2. +/der the 3ommo/ %a.: all these thi/gs .ould /ot 0e possi0le ;; u/der )aritime %a. the2 are. Whe/ .e e/tered the credit commu/e a/d 0ega/ forfeiti/g pa2me/t of de0t a/d su0stituted a mere discharge of a/ o0ligatio/ i/ its place: .e lost access to our 3ommo/ %a. rights a/d .ere ha/ded a pottage of pri8ilegesA a/d i/ fact: .e tra/sferred oursel8es from free allodial title to that of su0;te/e/ts: 8illai/s: .orki/g the la/d su07ect to the 3aptai/ of the ship. (et: people still thi/k that the2 o./ la/d ;; (et: .e still thi/k that .e ha8e rights ;; a/d .e go i/to traffic court /ot k/o.i/g .e are u/der )aritime %a.. This is .h2 .e do/=t get a 7ur2 trial for i/fractio/s a/2more. This is .h2 the 7ur2 is merel2 ad8isor2 i/ e8er2 court i/ this la/d ;; a/d must take the la. as the 7udge gi8es it to them: a/d see a/d hear o/l2 the e8ide/ce allo.ed 02 the cha/cellor. *ot k/o.i/g this: .e ha8e take/: time a/d time agai/: 3ommo/ %a. issues i/to courts of admiralt2 a/d .o/dered .h2 our su0sta/ti8e co/stitutio/al rights .ere /ot upheld a/d respected 02 the courts. !ei/g a/ 'dmiralt2 court: it had /o 7urisdictio/ to rule o/ such issues: or gra/t relief: regardless of ho. sou/d 2our la. a/d facts .ere at 3ommo/ %a.M ' complete a/d thorough u/dersta/di/g of 7urisdictio/al 0ou/ds is so a0solutel2 esse/tial that it is .orth.hile to spe/d 7ust a little more time o/ the su07ect at this time. The *e!e al +ules o$ Ci&il P oce!u e ETitle 68: +/ited $tates 3odeF gi8es us some more specifics: "ule 5. ?% ',#*& $? 3#'% )'TT "$ EHF 'dmiralt2 a/d )aritime 3laims. ' pleadi/g or cou/t setti/g forth a claim for relief .ithi/ the 'dmiralt2 a/d )aritime 7urisdictio/ that is also .ithi/ the 7urisdictio/ of the district court o/ some other grou/d ma2 co/tai/ a stateme/t ide/tif2i/g the claim as a/ 'dmiralt2 or )aritime claim for the purposes of "ules 44EcF: 38 EeF: 86 a/d the $uppleme/tal "ules for 3ertai/ 'dmiralt2 a/d )aritime 3laims. #f the claim is cog/iza0le o/l2 i/ 'dmiralt2: it is a/ 'dmiralt2 or )aritime claim for those purposes .hether so ide/tified or /ot. -#. T"#'%$ "ule 38. 1+"( T"#'% [email protected]
EaF "ight ?reser8ed. The right of trial 02 7ur2 as declared 02 the $e8e/th 'me/dme/t to the 3o/stitutio/ or as gi8e/ 02 a statute of the +/ited $tates shall 0e preser8ed to the parties i/8iolate. EeF 'dmiralt2 a/d )aritime 3laims. These rules shall /ot 0e co/strued to create a right to trial 02 7ur2 of the issues i/ a/ 'dmiralt2 or )aritime claim .ithi/ the mea/i/g of "ule 5 EhF. 's ame/ded @e0. 68: 4566: eff. 1ul2 4: 4566 4566 'me/dme/t "+% 35: EcF 'd8isor2 1ur2 a/d Trial 02 3o/se/t. #/ all actio/s /ot tria0le of right 02 a 7ur2 the court upo/ motio/ or of its o./ i/itiati8e ma2 tr2 a/2 issue .ith a/ ad8isor2 7ur2 or: except i/ actio/s agai/st the +/ited $tates .he/ a statute of the +/ited $tates pro8ides for trial .ithout a 7ur2: the court: .ith the co/se/t of 0oth parties: ma2 order a trial .ith a 7ur2 .hose 8erdict has the same effect as if trial 02 7ur2 had 0ee/ a matter of right. "+% 86. 1+"#$,#3T#O* '*, - *+ +*'@@ 3T , These rules shall /ot 0e co/strued to exte/d or limit the 7urisdictio/ of the +/ited $tates district courts or the 8e/ue of actio/s therei/. '/ 'dmiralt2 or )aritime claim .ithi/ the mea/i/g of "ule 5 EhF shall /ot 0e treated as a ci8il actio/ for the purposes of title 68 +.$.3. 4354;53. P 'fter the War for #/depe/de/ce: 02 .a2 of the ,eclaratio/ of #/depe/de/ce a/d +$ 3o/stitutio/: domestic la. .as to 0e the su0sta/ti8e 3ommo/ %a. i/ the +/ited $tates: fore8er: ;; a/d this .as to operate o/ allodiums a/d gold: a porta0le su0sta/ce represe/ti/g those allodiums. P The e/croachme/t of 'dmiralt2 la. o/to the domestic la. of the colo/ies .as the primar2 i/duceme/t for the ,eclaratio/ of #/depe/de/ce. H1";456 remo8ed access to su0sta/ti8e 3ommo/ %a. a/d 0rought 'dmiralt2 la. i/la/d 02 .a2 of the ?u0lic *atio/al 3redit $2stem ;; maki/g e8er2o/e .ho touches it a mercha/t u/der )aritime %a.. P )aritime loa/s a/d maritime i/sura/ce are treated exactl2 the same u/der the )aritime %a. of the %a. of *atio/s. #/ o/e case the part2 is called the le/der: i/ the other the u/der.riter. #f: as .as .ell;settled la. 02 the courts prior to 4533: .ages .ere /ot i/come .ithi/ the mea/i/g of the 46th 'me/dme/t ;; the/: o08iousl2: .ages are still /ot i/come .ithi/ the mea/i/g of this ame/dme/t. The e8ide/ce co/clusi8el2 esta0lishes that the legal 0asis for the collectio/ of these so; called i/come taxes: si/ce 4544: is that the2 are: i/ fact: i/terest or i/sura/ce premiums to the @ederal "eser8e for the pri8ilege of limited lia0ilit2 for the pa2me/t of de0t. The legal 0asis for this so;called tax .as esta0lished i/ 4533 02 H1";456. The fact that impleme/tatio/ of this premium .as postpo/ed u/til 4546 a/d put i/to effect u/der the guise of a/ emerge/c2 .ar measure: there02 co/ditio/i/g .age ear/ers to 0elie8e it .as actuall2 a tax: smacks of .illful a/d i/te/tio/al co/cealme/t of material facts for the
purpose of decei8i/g .age ear/ers a/d co/ceali/g the truth. @urther: @orest ,. )o/tgomer2: 3ou/sellor to the &e/eral 3ou/sel for the ,epartme/t of Treasur2: .rote a letter to )r. $migeilski o/ this su07ect: .herei/ he stated: 934 +.$. 3ode: $ectio/ G46: ge/erall2 exempts Treasur2 o0ligatio/ from taxatio/ 02 state or local go8er/me/ts. This pro8isio/: as .ell as the 3o/stitutio/: prohi0its state taxatio/ of @ederal "eser8e *otes.9 #f this is true: a/d #@ the states are actuall2 collecti/g 9i/come taxes9 0ased o/ @ederal "eser8e *otes: the2 are i/ clear 8iolatio/ of @ederal la.s. ,o 2ou reall2 0elie8e the $tates are ope/l2 flau/ti/g @ederal la.: or is it possi0le that 0oth the @eds a/d the $tates k/o. somethi/g that has 0ee/ kept from us all these 2ears< This letter .as sig/ed o8er the title of 93ou/sellor to the &e/eral 3ou/sel9 of the ,epartme/t of the Treasur2. $urel2: this ma/ .ould k/o. if the states are flau/ti/g @ederal la.. *ote also: that he sa2s that the 3o/stitutio/ prohi0its state taxatio/ of @ederal "eser8e *otes ;; clearl2 referri/g to the a0solute prohi0itio/ stated i/ 'rticle #: $ectio/ 4H: 3lause 4. 1ust .hat is goi/g o/ here: a/d 7ust .hat is )r. )o/tgomer2 telli/g us< The 3alifor/ia i/sura/ce 3ode itself ca/ help us make the co//ectio/ 0et.ee/ i/sura/ce a/d so;called 9taxes9: $ec.4H3. )ari/e i/sura/ce i/cludes i/sura/ce agai/st a/2 a/d all ki/ds of loss of or damage to: ... all goods: freights: cargos: mercha/dise: effects: dis0urseme/ts: profits: mo/e2: 0ullio/: securities: choses i/ actio/: e8ide/ces of de0t: 8alua0le papers: 0ottomr2: a/d respo/de/tia i/terests a/d all other ki/ds of propert2: a/d i/terests therei/: i/ respect to: appertai/i/g to or i/ co//ectio/ .ith a/2 a/d all risks of perils of /a8igatio/9. '/d: the 3alifor/ia #/sura/ce 3ode ca/ also help us decide ho. a perso/ gets i/8ol8ed: a/d i/curs lia0ilit2: u/der a polic2 of mari/e i/sura/ce: 'rticle 488J. #/terest i/ source of profits #/ mari/e i/sura/ce: a perso/ .ho has a/ i/terest i/ the thi/g from .hich profits are expected to proceed: has a/ i/sura0le i/terest i/ the profits. $o: .e see that pursua/t to 3alifor/ia 3ode: a/2 a/d all ki/ds of such thi/gs as e8ide/ces of de0t a/d 0ottomr2 Ethat is maritime loa/sF are the su07ect matter ; a/d u/der mari/e i/sura/ce la. i/ the $tate of 3alifor/ia. O08iousl2: the %a. of *atio/s applies to the facts prese/ted i/ this case: so: let=s first fi/d out 7ust .hat this la. is.
LAW 0* NATI0NS
&e/eral The /ecessar2 a/d /atural %a.. #t is al.a2s o0ligator2 upo/ a /atio/ .ith respect to its co/scie/ce a/d o/ all /atio/s i/ the regulatio/ of their i/ter/al co/duct.
3o/8e/tio/al )a2 0e co/fi/ed to particular states a/d depe/ds o/ their ar0itrar2 8olitio/. ' rule .hich their .elfare a/d commo/ safet2 o0liges them to o0liges them to follo. i/ mutual i/tercourse Epu0lic polic2F 'rises from express co/se/t Edeclaratio/s of i/depe/de/ce: treaties: co/stitutio/s: etc.F
3ustomar2 )a2 0e co/fi/ed to particular states a/d depe/ds o/ their ar0itrar2 8olitio/. ' rule .hich their .elfare a/d commo/ safet2 o0liges them to o0liges them to follo. i/ mutual i/tercourse Epu0lic polic2F 'rises from tacit co/se/t Ee.g.: co/8e/tio/ a/d customF
xter/al la. .hich dictates .hat e8er2 /atio/ ma2 re>uire of e8er2 other: a/d 2et 0ei/g fou/ded i/ the .ill of the go8er/ed Epu0lic polic2F 02 reaso/ The /atural or i/ter/al la. of co/scie/ce. #t is u/i8ersal a/d fou/ded i/ /ature #t proceeds from the ge/eral co/se/t of ma/ki/d a/d 0i/ds all /atio/s.
!i/ds those .ho ha8e asse/ted to it
O0ligator2 o/ those /atio/s .ho ha8e adopted it
QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ 9The la. of /atio/s ma2 0e co/sidered of three ki/ds: to .it: ge/eral: co/8e/tio/al or customar2. The first is u/i8ersal: or esta0lished 02 the ge/eral co/se/t of ma/ki/d: a/d 0i/ds all /atio/s. The seco/d is fou/ded o/ express co/se/t: a/d is /ot u/i8ersal: a/d o/l2 0i/ds those /atio/s .ho ha8e asse/ted to it. The third is fou/ded o/ tacit co/se/tA a/d is o/l2 o0ligator2 o/ those /atio/s .ho ha8e adopted it9. Ware: 'dmi/istrator of 1o/es 8. H2lto/: et al E4G56F Thus: it is clear that: 4. The +/ited $tates 3o/stitutio/ is a/ ordi/a/ce Eor statuteF .ithi/ the %a. of *atio/s. 6. The 8arious $tate co/stitutio/s are ordi/a/ces Eor statutesF .ithi/ the +/ited $tates 3o/stitutio/: a/d are a part a/d parcel of the la. of *atio/s. 3. 9?u0lic polic29 is .ithi/ the 7urisdictio/ of the la. of *atio/s. #/ the $e/eca 3ase: decided 02 a court of appeals i/ ?e//s2l8a/ia i/ 4865A the court said:
9The 7urisdictio/ of the district court: u/der the 5th sectio/ of the 1udiciar2 'ct of 4G85 E4 $tat. G6F: em0races all cases of maritime /ature: .hether the2 0e particularl2 of admiralt2 cog/iza/ce or /otA a/d such 7urisdictio/: a/d the la. regulati/g its exercise: are to 0e sought for i/ the Gene al /a itime Laws o$ Nations: a/d are /ot co/fi/ed to that of /gla/d: or a/2 other particular maritime /atio/. $o .e see that our 'dmiralt2 a/d )aritime courts are /ot o/l2 0ou/d 02 the )aritime %a.s of this cou/tr2: or /gla/d: 0ut are 0ou/d 02 the &e/eral )aritime %a.s of all /atio/s. *o.: let=s look i/to some of those &e/eral )aritime %a.s deali/g .ith the su07ect matter 0rought i/to e8ide/ce i/ this case. @rom the $tatutes at %arge from the 4Jth to the 6Hth 2ear of Di/g &eorge ##: .e fi/d the follo.i/g: 9The from a/d after the first da2 of 'ugust: o/e thousa/d se8e/ hu/dred a/d fort2 six: /o assura/ce or assura/ces shall 0e made ;; i/terest or /o i/terest: or .ithout further proof of i/terest tha/ the polic2: or 02 .a2 of gami/g or .ageri/g: ... a/d that e8er2 assura/ce shall 0e /ull a/d 8oid to all i/te/ts a/d purposes.9 The reaso/ for this e/actme/t .as stated to 0e: 9Whereas: it has 0ee/ fou/d 02 experie/ce that the maki/g of assura/ces: i/terest or /o i/terest: or .ithout further proof of i/terest tha/ the polic2: hath 0ee/ producti8e of ma/2 per/icious practices: ... a/d 02 i/troduci/g a mischie8ous ki/d of gami/g or .ageri/g: u/der the prete/ce of ... the i/stitutio/ a/d lauda0le desig/ of maki/g assura/ces: hath 0ee/ per8ertedA a/d that .hich .as i/te/ded for the e/courageme/t of trade a/d /a8igatio/: has i/ ma/2 i/sta/ces: 0ecome hurtful: a/d destructi8e to the same:9 Here .e ha8e a clear a/d disti/ct stateme/t that i/terest or /o i/terest: i/sura/ce policies: a/d gami/g a/d .ageri/g: are a0solutel2 agai/st the 9pu0lic polic29 of /atio/s ;; a/d are: therefore: 8oid. @rom the Hals0ur2=s 9$tatutes of /gla/d9 .e fi/d: 9The %ife #/sura/ce 'ct9: 4GG4 E44 &eo. 3c. 48F 4. *o i/sura/ce to 0e made o/ li8es: etc.: 02 perso/s ha8i/g /o i/terest: etc. ;; @rom a/d after the passi/g of this 'ct /o i/sura/ce shall 0e made 02 a/2 perso/ or perso/s: politick or corporate: o/ the life or li8es of a/2 perso/ or perso/s: or o/ a/2 other e8e/t or e8e/ts .hatsoe8er: .herei/ the perso/ or perso/s for .hose use: 0e/efit: or o/ .hose accou/t such polic2 or policies shall 0e made: shall ha8e /o i/terest: or 02 .a2 of gami/g or .ageri/gA a/d that e8er2 assura/ce made co/trar2 to the true i/te/t a/d mea/i/g hereof shall 0e /ull a/d 8oid to all i/te/ts a/d purposes .hatsoe8er. *OT $: 't 3ommo/ %a.: .ager policies .ere legal co/tracts. 9The )ari/e #/sura/ce 'ct: 45H6 E6 d.. Gc. 44F ... 4. )ari/e #/sura/ce ,efi/ed. ; ' co/tract of mari/e i/sura/ce is a co/tract .here02 the i/surer u/dertakes to i/dem/if2 the assured: i/ a ma//er a/d to the exte/t there02 agreed: agai/st maritime losses: that is to sa2: the losses i/cide/t to maritime ad8e/ture.9 4. '8oida/ce of .ageri/g or gami/g co/tracts. E4F 8er2 co/tract of mari/e i/sura/ce 02 .a2 of gami/g or .ageri/g is 8oid.
E6F ' co/tract of mari/e i/sura/ce is deemed to 0e a gami/g or .ageri/g co/tract ; EaF .here the assured has /ot a/ i/sura0le i/terest as defi/ed 02 the 'ct: a/d the co/tract is e/tered i/to .ith /o expectatio/ of ac>uiri/g such a/ i/terestA or E0F Where the polic2 is made Ri/terest or /o i/terest:= or R.ithout further proof of i/terest tha/ the polic2 itself:= ... or su07ect to a/2 other like term.9 J. #/sura0le #/terest ,efi/ed. E4F $u07ect to the pro8isio/s of this 'ct: e8er2 perso/ has a/ i/sura0le i/terest .ho is i/terested i/ a maritime ad8e/ture. E6F #/ particular a perso/ is i/terested i/ a maritime ad8e/ture .here he sta/ds i/ a/2 legal or e>uita0le relatio/ to the ad8e/ture or to a/2 i/sura0le propert2 at risk therei/: i/ co/se>ue/ce of .hich he ma2 0e/efit 02 the safet2 or due arri8al of i/sura0le propert2: or ma2 0e pre7udiced 02 its loss: or damage thereto: or 02 the dete/tio/ thereof: or ma2 i/cur lia0ilit2 i/ respect thereof.9 9,isclosure a/d "eprese/tatio/s9 N4G ... ' co/tract of mari/e i/sura/ce is a co/tract 0ased upo/ the utmost good faith: a/d: if the utmost good faith 0e /ot o0ser8ed 02 either part2: ...*OT ... if this good faith 0e /ot o0ser8ed 02 either part2: there 0ei/g a/2 co/cealme/t or /o/;disclosure of a material particular: the co/tract ma2 0e a8oided 02 the i/7ured part2A9 N44 ... Warra/t2 of %egalit2. ;; There is a/ implied .arra/t2 that the ad8e/ture i/sured is a la.ful o/e: a/d that: so far as the assured ca/ co/trol the matter: the ad8e/ture shall 0e carried out i/ a la.ful ma//er ... *OT $: ... it seems that the assured ca//ot hold the i/surer to a .ai8er of illegalit2 for ... o/l2 legal ad8e/tures ca/ 0e i/sured.9 9The )ari/e #/sura/ce E&am0li/g ?oliciesF 'ct: 45H5: E5 d.. G c. 46F 4. ?rohi0itio/ of gam0li/g or loss 02 maritime perils. E4F #f ; EaF '/2 perso/ effects a co/tract of maritime i/sura/ce .ithout ha8i/g a/2 0o/afide i/terest: direct or i/direct: ... or a 0o/afide expectatio/ of ac>uiri/g such a/ i/terestA ... the co/tract shall 0e deemed to 0e a co/tract 02 .a2 of gam0li/g o/ loss 02 maritime perils ... '/d: from 9'/ ssa2 o/ )aritime %oa/s from the @re/ch9 of ). !althazard )arie merigo/: .e fi/d: 9The %e/der Eof a )aritime %oa/F .as /ot prohi0ited from dema/di/g pledges a/d h2pothecatio/s as a/ additio/al securit2A pro8idi/g it .as /ot a pretext for exacti/g maritime i/terest after the sea risk should 0e at a/ e/d.9 9#t is esse/tial to this co/tract that there 0e a risk: a/d that the risk 0e i/curred 02 the le/der ... The stipulatio/: i/terest or /o i/terest is a real .ager ... This is /ot permitted amo/g us ...9 9#f the co/tract .as 8oid i/ its comme/ceme/t: the maritime i/terest is /ot chargea0le: 0ecause /o maritime da/gers .ere 0or/e 02 the le/der.9 9,iffere/ce 0et.ee/ co/tracts of 0ottomr2 a/d those of %oa/: ?art/ership a/d i/sura/ce. !ottomr2 is differe/t from the co/tract of loa/ 0ecause: 4. The peril of mo/e2: simpl2 le/t: co/cer/s the 0orro.er: .hereas mo/e2 le/t at 0ottomr2 is at the risk of the le/der. 6. #/ a simple loa/: i/terest is due 02 positi8e stipulatio/ o/l2A .hereas: maritime
i/terest is implied i/ the co/tract itself. 3. #/ a simple loa/: the i/terest: amo/g mercha/ts: could /ot exceed the rate fixed 02 the ?ri/ce: or: at most the custom of the cou/tr2A .hereas: 0ottomr2 ma2 carr2 a/2 i/terest.9 9 ... )aritime i/terest is /ot su07ect to the limits of ordi/ar2 legal i/terest: 0ut that it ma2 0e regulated 02 the degree of da/ger to .hich the le/der exposes or 0elie8es he exposes his mo/e2.9 9The co/tract of maritime loa/ approaches more /earl2 to that of #/sura/ce. There is a stro/g a/alog2 0et.ee/ them. #/ their effects the2 are co/strued o/ the same pri/ciples. #/ the o/e co/tract: the le/der 0ears the sea risks: i/ the other: the u/der.riter. #/ the o/e: the maritime i/terest is the price of the perilA a/d this term correspo/ds .ith the premium .hich is paid i/ the other.9 @rom the )ari/e #/sura/ce 'ct of 45H6. ?re8iousl2 referred to: N86. ... /forceme/t of retur/. ; Where the premium or a proportio/ate part thereof is: 02 this 'ct: declared to 0e retur/a0le: ; EaF #f alread2 paid: it ma2 0e reco8ered 02 the assured from the i/surerA a/d E0F #f u/paid: it ma2 0e retai/ed 02 the assured or his age/t.9 N84. ... "etur/ for failure of co/sideratio/. E4F Where the co/sideratio/ for the pa2me/t of the premium totall2 fails: a/d there has 0ee/ /o fraud or illegalit2 o/ the part of the assured or his age/ts: the premium is thereupo/ retur/a0le to the assured ... E3F #/ particular ; EaF Where the polic2 is 8oid: or is 8oided 02 the i/surer as from the comme/ceme/t of the risk: the premium is retur/a0le pro8ided that there has 0ee/ /o fraud or illegalit2 o/ the part of the assuredA9 $o 2ou see: that pursua/t to the ?ositi8e %a. of the %a. of *atio/s: if there has 0ee/ /o fraud or illegalit2 o/ 2our part ;; a/d 2ou ha8e marshalled 2our facts to pro8e that the @ederal "eser8e co/tract is a .ageri/g polic2: 2ou ca/ 8oid the co/tract a/d are e/titled to a refu/d of all premiums paid. '/d: i/ the 3alifor/ia #/sura/ce 3ode: .e fi/d: $ 3.45HH. ,ut2 to ,isclose #/ mari/e i/sura/ce each part2 is 0ou/d to commu/icate: i/ additio/ to .hat is re>uired i/ the case of other i/sura/ce: EaF 'll the i/formatio/ .hich he possesses a/d .hich is material to the risk: except such as is exempt from such commu/icatio/ i/ the case of other i/sura/ce. E0F The exact a/d .hole truth i/ relatio/ to all matters that he represe/ts or: upo/ i/>uir2 assumes to disclose. *o.: let=s co/sider the pu0lic polic2 as stated i/ the ?ream0le to the +/ited $tates 3o/stitutio/ a/d compare this stateme/t of pu0lic polic2 to the pu0lic polic2 of the ?ositi8e %a. of the %a. of *atio/s deali/g .ith .ageri/g policies: a/d to the so;called pu0lic polic2 of the @ederal "eser8e 'ct a/d H1";456M The ?ream0le to the +/ited $tates 3o/stitutio/ states: 9We the ?eople of the +/ited $tates: i/ order to form a more perfect +/io/: esta0lish 1ustice: i/sure domestic Tra/>uilit2: pro8ide for the commo/ defe/se: promote the ge/eral Welfare: a/d secure the !lessi/gs of %i0ert2 to oursel8es a/d our ?osterit2: do ordai/ a/d esta0lish this 3o/stitutio/ for the +/ited $tates of 'merica.9
This ?ream0le is a stateme/t of 9?u0lic polic29 u/der the 9co/8e/tio/al9 0ra/ch of the %a. of *atio/s. $i/ce .ageri/g policies: i/terest or /o i/terest i/sura/ce policies: a/d maritime loa/s at /o risk to the le/der are for0idde/ u/der the pu0lic polic2 of the ?ositi8e %a. of *atio/s ;; reaso/ a/d logic dictates that the: so;called: pu0lic polic2 of the @ederal "eser8e 'ct a/d H1";456 are /ot pu0lic polic2: as alleged 02 3o/gress: a/d the $upreme 3ourt i/ the rie ".". decisio/ ;; 0ut: i/stead: are precisel2 the co/trar2. 3o/gress: therefore: had /o authorit2 a/d 7urisdictio/ to e/act the @ederal "eser8e 'ct: or H1";456: a/d it logicall2 a/d reaso/a0l2 follo.s that these acts are a /ullit2: a0 i/itio. 3o/gress is gra/ted the po.er to defi/e a/d pu/ish offe/ses agai/st the la. of /atio/s i/ 'rticle 4: $ectio/ 8: of the +/ited $tates 3o/stitutio/A a/d: therefore: has the dut2 to do so. We su0mit that the la. a/d the facts prese/ted here toda2 esta0lish 0e2o/d a/2 reaso/a0le dou0t that 3o/gress has authorized a/d impleme/ted a .ageri/g polic2 a/d sa/ctio/ed crimes a/d offe/ses perpetrated a/d committed agai/st the people of the +/ited $tates 02 the @ederal "eser8e !oard a/d its class ' stockholders. 3o/se>ue/tl2: it also follo.s that /o $tate assem0l2 or legislature had the authorit2 a/d 7urisdictio/ to h2pothecate the $tate=s treasuries: la/d a/d people as securit2 to the @ederal "eser8e. Our $tate courts are operati/g i/ 'dmiralt2 7urisdictio/: for the most part. E"emem0er the )c3arre/ 'ct .hich declared that the co/ti/ued regulatio/ a/d taxatio/ of i/sura/ce 02 the states .as i/ the pu0lic i/terest< ;; a/d that 1udge @rie/dl2 said that: as a result of the rie ".". decisio/: the $tate courts must co/form to @ederal decisio/s i/ areas .here 3o/gress has ma/ifested a/ i/te/t to that e/d< ;; a/d that the rie ".". decisio/ .as a result: a/d impleme/tatio/ of: the 9?u0lic polic29 stated i/ H1";456<<<F '*,: #* 3'% ?"'3T#3 : -O%+) 6: ?'"T # $ 3T#O* 8:483. ;; )'"#T#) 3'$ $ 9 ... $T'T T"#!+*'%$ ... H'- 3O*3+"" *T 1+"#$,#3T#O* W#TH TH @ , "'% ,#$T"#3T 3O+"T$ O- " )'"#T#) 3'$ $.9 9WH TH " ' 3#-#% 3'$ #$ [email protected]
',)#"'%T( O" )'"#T#) 1+"#$,#3T#O* , ? *,$ +?O* TH *'T+" [email protected]
TH T"'*$'3T#O* &#-#*& "#$ TO #T #@ TH 3%'#) #$ #* 3O*T"'3T: '*, +?O* TH %O3'%#T( [email protected]
TH T"'*$'3T#O* O" TH 3'+$ [email protected]
TH #*1+"( #@ TH 3%'#) #$ #* TO"T.9 9 ... ' "#&HT $'*3T#O* , !( TH )'"#T#) %'W )'( ! *@O"3 , TH"O+&H '*( '??"O?"#'T " ) ,( " 3O&*#W , 'T 3O))O* %'W. TH+$ TH $T'T )+$T @O%%OW TH $+!$T'*T#- )'"#T#) %'W: '%THO+&H #T 3'* *@O"3 $+3H %'W TH"O+&H '*( 3O))O*;%'W " ) ,(. '33O",#*&%(: TH $T'T H'$ 1+"#$,#3T#O* TO *T "T'#* ?"O3 ,#*&$ #* ? "$O*$ '&'#*$T O* WHO H'$ -#O%'T , ' )'"#T#)
3O*T"'3T O" 3O))#TT , ' )'"#T#) TO"T: $#*3 3O))O*;%'W 3O+"T$ H'- T"',#T#O*'%%( *T "T'#* , $+3H ?"O3 ,#*&$. ' $T'T 3O+"T H'$ 1+"#$,#3T#O* WH " TH $+#T #$ #* ? "$O*') '&'#*$T '* #*,#-#,+'%: '+X#%#'"( 'TT'3H) *T '&'#*$T ' ?'"T#3+%'" TH#*& O" '&'#*$T TH ?"O? "T( [email protected]
TH , @ *,'*T #* & * "'%.9 $ 3T#O* 8:484. #* & * "'% 9& * "'%%(: TH $T'T 3O+"T$ H'- 3O*3+"" *T 1+"#$,#3T#O* W#TH TH @ , "'% 3O+"T$ #* @ , "'% 3#-#% )'TT "$: +*% $$ TH +*#T , $T'T $ 3O*$T#T+T#O* O" '* '3T [email protected]
3O*&" $$ ?"O-#, OTH "W#$ . @ , "'% '*, $T'T 3O+"T$ '" X?" $$%( &#- * 3O*3+"" *T 1+"#$,#3T#O* #* $O) )'TT "$ !( @ , "'% $T'T+ : #*3%+,#*& ... %#'!#%#T( '3T '3T#O*$: ...9 There is a/other su07ect matter that falls exclusi8el2 .ithi/ the 7urisdictio/ of 'dmiralt2 that .e should all 0e a.are ofA a/d that is 9"e8e/ue 3auses:9 #/ ,elo8io 8. !oit: the court said: 9' third expositio/ re>uires a/ exami/atio/ of the authorit2 a/d po.ers of the -ice 'dmiralt2 3ourts i/ the +/ited $tates u/der the colo/ial go8er/me/t ... The commissio/s of the cro./ ga8e the courts: .hich .ere esta0lished: a most ample 7urisdictio/ o8er all maritime co/tracts: a/d o8er torts a/d i/7uries: as .ell i/ ports as upo/ the high seas. '/d acts of parliame/t 02 gi8i/g or co/firmi/g cog/iza/ce of all seizures for co/tra8e/tio/s of the re8e/ue la.s.9 Eemphasis addedF '/d i/ the Hu/tress 3ase: [email protected]
more tha/ a ce/tur2 0efore the formatio/ of the 3o/stitutio/: that is: from the earl2 part of the reig/ of 3harles ##: re8e/ue causes had 0ee/ heard a/d tried i/ the colo/ies 02 courts of -ice 'dmiralt2.9 Eemphasis addedF *either the ,eclaratio/ of #/depe/de/ce: the 3o/stitutio/: /or a/2 su0se>ue/tl2 e/acted statutes ha8e modified the origi/all2 esta0lished 7urisdictio/al 0ou/daries o8er re8e/ue causes i/ this cou/tr2. #/ summar2: some su07ect matters a/d causes that are exclusi8el2 .ith 'dmiralt2/)aritime 7urisdictio/ are: P %imited %ia0ilit2 P !ills: /otes: a/d che>ues issued 02 the +.$. &o8er/me/t P 3redit 0orro.ed i/to circulatio/ 02 the +.$. &o8er/me/t P H2pothecatio/s P -iolatio/ of a maritime co/tract P 3ommissio/ of a )aritime tort Efor example: failure to perform a/ o0ligatio/ fou/ded i/ a maritime co/tract.F These are exclusi8el2 .ithi/ the 7urisdictio/ of 'dmiralt2/)aritime ;; .hether the claim is so ide/tified or /otM 1udge @rie/dl2 also said that the %i/col/ Hills ,octri/e Edeali/g .ith la0or co/tracts a/d commerceF .as 9preg/a/t .ith possi0ilities.9 #/ this co/text the frie/dl2 7udge .as
talki/g a0out the possi0ilities of @ederal courts i/creasi/g their po.ers 0ecause of the /ature of the source: a/d the /ature of the right 0ei/g e/forced. That source 0ei/g the credit 8o2age ;; a/d that right 0ei/g deri8ed from a maritime co/tract u/der 'dmiralt2/)aritime 7urisdictio/. We are co/sta/tl2 told that: toda2: the la. is .hat the $upreme 3ourt sa2s it is. Well: that is perfectl2 true: if this 8o2age is .ere la.ful o/e ;; it is a0solutel2 /ot true: if this 8o2age Ethe source of its i/creased po.ersF .as u/la.ful from its i/ceptio/. The task 0efore us is clear. )a20e .e ca/ take a page or t.o from their o./ 0ook. The facts a/d la. prese/ted here toda2 are trul2 preg/a/t .ith possi0ilities for those of us .ho .a/t to appl2 them effecti8el2MM *o. that .e u/dersta/d the particulars of ho. .e ha8e 0ee/ tricked i/to 7oi/i/g this maritime 8o2age for profit: a/d .hat: a/d .here our remedies are: .e .ill the/ ha8e to k/o. much more fact a/d la.: i/ order to do this: .e .ill ha8e to k/o. ho. to a/al2ze a/d determi/e .hich 7urisdictio/ a particular issue is i/ ;; or should 0e i/A .e .ill ha8e to k/o. courtroom procedures for that particular 7urisdictio/: .e .ill ha8e to u/dersta/d the esse/tial issues a/d k/o. them i/side;out a/d fro/t.ard a/d 0ack.ardsA .e .ill ha8e to de8elop a .i//i/g strateg2 to appl2 a/d use this k/o.ledge most effecti8el2. (ears ago: particularl2 i/ the late 45GH=s ma/2 of us .ere 0ri/gi/g 3i8il: 3ommo/ %a.: actio/s i/ $tate a/d @ederal courts ;;0ased o/ alleged 8iolatio/s of 3o/stitutio/al a/d 3ommo/ %a. rights u/der color of la.. 'll of these complai/ts .ere summaril2 dismissed o/ the grou/ds that 9There is /o cause of actio/ stated for .hich the court ca/ gra/t relief.9 Others ha8e relied o/ 3ommo/ %a. defe/se i/ crimi/al actio/s. There ha8e 0ee/ a fe. mi/or 98ictories9 ;; some stalemates ;; ma/2 outright losses ;; a/d: /e8er: a su0sta/ti8e .i/. 8e/ i/ crimi/al cases: some of us ha8e 0ee/ told that: 9(our la. is 8alid a/d sou/d: 0ut 2our co/clusio/s are .ro/g.9 What .ere the courts telli/g us< %et=s co/sider a h2pothetical situatio/. (ou are i/ $a/ @ra/cisco: short of fu/ds: a/d hear a0out a fa/tastic 8o2age o/ a ship a0out to set sail from port ;; securit2 a/d profits guara/teedMM (ou go do./ to the ship a/d sig/ up to the 8o2age. %et=s also assume that material facts a0out the 8o2age are .ithheld from 2ou: i/ order to i/duce 2ou to sig/ up ;; a/d: that the co/templated 8o2age .as i/ 8iolatio/ of the positi8e la.s of the %a. of *atio/s: a/d .as co/trar2 to the mea/i/g a/d i/te/t of the +/ited $tates 3o/stitutio/. *e8ertheless: the ship sets sail i/ the middle of the /ight ;; .he/ /o o/e .as .atchi/g from the shore. 'fter a .eek at sea: 2ou ha8e disco8ered that co/cealme/t of material facts ;; a/d that 2ou are o/ a/ u/la.ful 8o2age. (ou go to the 3aptai/: i/form him of 2our /e.l2 disco8ered e8ide/ce ;;a/d dema/d 2our 3o/stitutio/al a/d 3ommo/ %a. rights: as a +/ited $tates citize/. What do 2ou suppose the 3aptai/ is goi/g to do<< He has /o 7urisdictio/ to hear 3ommo/ %a. complai/ts ;; his sole respo/si0ilit2 is to i/sure the safet2 of the 8o2age: u/der )aritime %a.. His o/l2 7urisdictio/ is u/der maritime la.. He sees 2ou as possi0l2 i/flue/ci/g other mem0ers of the cre. ;; there02 fome/ti/g
a muti/2. To him: his dut2 is clear: He must mete out a form of pu/ishme/t: to some degree: there02 i/stilli/g i/ other mem0ers of the cre. a fear of 7oi/i/g i/ that li/e of co/duct. Therefore: he ma2 gi8e 2ou o/e of t.o alter/ati8es: E4F &o 0ack to .ork a/d co/ti/ue to perform: a/d # .ill forgi8e this out0urst: a/d allo. 2ou to remai/ o/ this 8o2age: if 2ou agree to pa2 a pe/alt2 .hich # shall determi/e a/d impose. E6F #f 2ou refuse to perform: # .ill order 2ou to 0e co/fi/ed to the !rig. What: i/ this situatio/: is 2our recourse< O08iousl2 /o/e: u/til 2ou get 0ack to a port. %et=s sa2 that: e8e/tuall2: that port is *e. (ork ;; /o.: .hat ca/ 2ou do that makes se/se< E4F #f 2ou ca/ fi/d a court of 3ommo/ %a. 7urisdictio/: 2ou ca/ file a 3ommo/ %a. actio/. The o/l2 proper issue i/ this court 0ei/g fraud: a/d fraud is /ot eas2 to pro8e. *o.: .e k/o. that there are /o 3ommo/ %a. courts i/ *e. (ork ;; a/d .e k/o. .h2. $o: .here does that lea8e 2ou<< E6F The o/l2 place left for 2ou to go is i/to a/ 'dmiralt2 court: a/d 2ou ca/ fi/d a proper court of 'dmiralt2 7urisdictio/: i/ *e. (ork: to hear these issues. (ou ca/ file a/ actio/ i/ admiralt2 .here the proper issues are: u/der 'dmiralt2 a/d )aritime %a.: the u/la.ful/ess of the 8o2age itself: from its i/ceptio/: pursua/t to the ?ositi8e la. of the %a. of *atio/s ;; all goi/g directl2 to the issue of 7urisdictio/: 0ased o/ the fact that the co/tract .as a /ullit2: a0 i/itio. *o.: 2ou ha8e a proper cause of actio/ filed i/ a court of compete/t 7urisdictio/MM The possi0ilities are trul2 preg/a/t 0ecause .e ca/ pro8e se8eral 8iolatio/s of the ge/eral )aritime %a. of all /atio/s ;; la.s that .ere de8eloped to protect the mercha/ts a/d e/ha/ce commerce ;; la.s that a/2 )aritime court i/ the .orld is 0ou/d 02MM To de/2 these la.s: a/d properl2 prese/ted facts a/d issues: .ould: there02: destro2 the 8er2 fou/datio/s that this merca/tile superstructure is 0ased upo/. 'fter ma/2 futile attempts .ith 3ommo/ %a. issues a/d actio/s: that: 7ust possi0l2: there ma2 0e somethi/g more to the la. 0ei/g applied i/ the courts tha/ .e k/e. a0out. #t da./ed o/ us that a far more comprehe/si8e approach to the pro0lem: tha/ had e8er 0ee/ attempted 0efore: .ould ha8e to 0e u/dertake/ if there .as a/2 possi0le solutio/ 'T %'W. We are all i/8ol8ed i/ a situatio/ that /ot o/l2 is e/sla8i/g us: 0ut .ill make the li8es of our childre/ a/d gra/d;childre/ u/0eara0le. #f .e are to experie/ce true freedom: .e must educate oursel8es /o.. We: as so8ereig/ i/di8iduals: ha8e all the po.er .e /eed to tur/ this i/sa/e s2stem arou/d. This docume/t has 0ee/ edited 02 ldo/ Warma/: 34H:84J;JH '8e $W: 3algar2. 6J5; HHH6. This 0rief ide/tifies the chai/s .ith .hich the2: the )ercha/ts of -e/ice a/d their direct desce/da/ts: ha8e used to make: .e the people of *orth 'merica i/to de0t sla8es. The )ercha/ts of -e/ice 0astardized the ma/2 courts of urope duri/g the )iddle 'ges so as to effect their co/ti/ued co/trol: .hich the2 had esta0lished duri/g the period after the collapse of the "oma/ mpire up to the ,ark 'ges. The direct effect o/ us .as their i/flue/ce i/ the 8arious mixi/gs of the %a. of the $ea .ith the %a. of the %a/d i/ the !ritish %imited )o/arch2 s2stem. The situatio/ is as a frog immersed i/ cold .ater
0rought slo.l2 to a 0oilA the poor creature does/=t recog/ize the temperature cha/ge a/d cooks u/a.are. #t is >uite o08ious that the &o8er/me/t of 3a/ada has 0ee/ usi/g similar tactics to e/sla8e the people of 3a/adaA a/d: to tur/ o8er this cou/tr2=s ra. materials to the O8erlords .ho hold the eco/omic stri/gs .hich co/trol it. $i/ce editi/g this docume/t for 3a/adia/ readers E4556F: # ha8e lear/ed that the !*' 'ct of 486G did /ot co/federate 3a/adaA 0ut: o/l2 com0i/ed four !ritish colo/ies i/to o/e colo/2: the ,omi/io/ E3olo/2F of 3a/ada. The go8er/me/t .as a dictatorship: a &o8er/or &e/eral a/d 3ou/cil E3a/ada=s ?arliame/tF. The status of 3a/ada .as similar to that of a ship of the !ritish 'dmiralt2. The status of the people of 3a/ada .as similar to sailors o/ a ship of the !ritish 'dmiralt2A /ot that of a/ /glish freema/. #/ 4534: the $tatute of Westmi/ster effecti8el2 decommissio/ed the colo/ies of the !ritish mpire 7ust as the2 .ould decommissio/ outdated ships of the 'dmiralt2. 3a/ada .as take/ o8er 02 a usurper cli>ue of fi/a/cial 0aro/s at that time: supposedl2 u/der the 9right of sal8age9: a/d: /o cha/ge has take/ place si/ce the/......... 't the time of .riti/g of this docume/t: the author .as o08iousl2 u/a.are of the status of 9+$ citize/9. 's origi/all2 co/cei8ed: the $tates .ere i/depe/de/t cou/tries tied together 02 a pact or treat2 i/ .hich certai/ so8ereig/ states rights .ere gi8e/ o8er to a federal go8er/me/tA first i/ the 'rticles of 3o/federatio/: a/d the/ more succi/ctl2 i/ the 3o/stitutio/ of the +$'. ach perso/ 0or/ .ithi/ a $tate or /aturalized i/ a $tate .as a citize/ of that $tateA a/d the/ 02 the 9commo/alit2 clause9 of the 3o/stitutio/: a citize/ of the other $tates ; a citize/ of the +$'. @or emi/e/t domai/ purposes: so that the @ederal &o8er/me/t could purchase la/d E%ouisia/a ?urchase a/d 'laska ?urchaseF a/d e/ter i/to i/ter/atio/al treaties: a piece of la/d Ea @ederal $tateF .as pro8ided for i/ the 3o/stitutio/ Ea /ecessit2 arisi/g out of the rules go8er/i/g emi/e/t domai/F. $i/ce the @ederal &o8er/me/t .as /ot gi8e/ a/2 $axo/ 3ommo/ %a. 7urisdictio/ i/ the 3o/stitutio/ E.hether this .as 02 o8ersight or 02 desig/i/g scheme: co/sideri/g later circumsta/ce: remai/s for co/7ectureF ; o/l2 )aritime 7urisdictio/: the people .ithi/ such a federal state EWashi/gto/: ,3F come u/der )aritime la.. #/ legal terms: +/ited $tates o/l2 mea/s the ,istrict of 3olum0ia: some territories: a/d /a82 0ases. The +/ited $tates of 'merica is the com0i/ed JH $tates. Through i/terpretatio/s of the @ourtee/th 'me/dme/t a/d the $ocial $ecurit2 'ct Ethe act of appl2i/g for a/d recei8i/g a $ocial $ecurit2 *um0er 0ei/g the 0i/der of the co/tractF: a +$' citize/ also 0ecomes a +$ citize/. The former has 3ommo/ %a. "#&HT$: the latter has )aritime ?"#-#% & . The author ade>uatel2 co8ers the differe/ces i/ 3ommo/ %a. a/d )aritime %a.. The former citize/ship 2ou .ere 0or/ or 9/aturalized9 i/toA the latter: 2ou .ere hood.i/ked i/to. ..................... *,Q