by Gabriel Donohoe
At least one U.S. judge didn’t think foreclosures are legal.
On December 7th, 1968, in Credit River Township, Scott County, Minnesota, a court handed down a spectacular decision that has never been challenged or overturned and still stands in U.S. law. The jury found on behalf of the defendant, one Jerome Daly, and against the plaintiff, The First National Bank of Montgomery, Minnesota, who moved to foreclose on Mr. Daly’s $14,000 mortgage and repossess his property.
Mr. Daly, an attorney, defended himself on the basis that the bank did not provide a ‘consideration’ which is required for a mortgage contract to become legal and binding. A ‘consideration’ means that something of value must be provided by both parties to a contract.
Jerome Daly said that he provided his property on Fairview Beach as a consideration but that the bank provided nothing of tangible value. The $14,000 bank loan did not come from the bank’s existing capital but was actually created out of “thin air” as soon as Daly signed a Pledge of Indebtedness to the bank. The $14,000 magically came into existence simply by entering an amount of $14,000 in the bank’s bookkeeping ledger. This could not be termed a valid consideration, Daly claimed.
When the main witness for the prosecution, Lawrence V. Morgan, President of The First National Bank of Montgomery, admitted that the bank did indeed create money out of thin air by bookkeeping entry the jury was gobsmacked.
Mr. Morgan said that all banks create money out of thin air – a process known as Fractional Reserve Lending – and that this was standard practice exercised by his bank in conjunction with the Federal Reserve Bank of Minneapolis, another private bank.
The trial justice, Martin V. Mahoney, was heard to say, “That sounds like fraud to me.”
When pressed further by the judge Mr. Morgan conceded that he knew of no United States Law or Statute that gave the bank authority to create money out of nothing.
At 12.15 p.m., on that December 7th, the jury returned a famous verdict, unanimously finding for the Defendant, Jerome Daly.
Justice Mahoney’s ensuing Judgment and Decree makes for fascinating reading. Here are some of his major points:
• The Plaintiff (the bank) was not entitled to recover the possession of Lot 19, Fairview Beach
• Because there was no lawful consideration the Mortgage was Null and Void
• The Bank parted with absolutely nothing except a little ink
• The Plaintiff had no right, title, interest, or lien on the property
• Defendant is awarded costs in the amount of $75
In his Memorandum Justice Mahoney went on to say, “The jury found there was no lawful consideration and I agree. Only God can create something of value out of nothing.”
And incredibly… “[The bank’s] act of creating credit is not authorized by the Constitution and Laws of the United States, is unconstitutional and void, and is not a lawful consideration in the eyes of the Law…”
In his Findings of Fact and Conclusions of Law, Justice Mahoney made some further extraordinary observations…
• The activity of the [Banks] is contrary to public policy and the Constitution of the United States and constitutes an unlawful creation of money and credit and the obtaining of money and credit for no valuable consideration.
• The [Banks] exercise an exclusive monopoly and privilege of creating credit and issuing their Notes at the expense of the public, which does not receive a fair equivalent. This scheme is for the benefit of an idle monopoly and is used to rob, blackmail and oppress the producers of wealth.
• No rights can be acquired by fraud. The Federal Reserve Notes are acquired thru [sic] the use of unconstitutional statutes and fraud.
This is a thoroughly amazing legal decision, unprecedented in the history of the United States. Justice Mahoney said, in summary, that the banks’ creation of money out of thin air is illegal, fraudulent, and unconstitutional and does not constitute a valuable consideration, which is necessary for a mortgage contract to become legal. He said that Fractional Reserve Lending (practised by banks worldwide, including Irish banks) was a scheme to rob, blackmail, and oppress the people, the real producers of wealth, and was designed to benefit and enrich the banks, whom he referred to as an idle monopoly.
Justice Mahoney’s decision rocked the U.S. banking establishment to its very core.
However, when other defendants fighting repossession of their homes attempted to use this decision as a precedent they were not so lucky as Jerome Daly. Other U.S. judges felt that (to quote Lord Denning) there would be an ‘appalling vista’ of financial turmoil and meltdown if all mortgages and borrowings were declared null and void because of invalid consideration.
But perhaps what really concentrated these judges’ minds was the fact that Justice Martin Mahoney, five months after his famous decree, died in a mysterious boating accident. According to close friends his body was found to be heavily poisoned.
Those interested in examining the original documents of this monumental legal decision will find scores of documents at: http://www.lawlibrary.state.mn.us/CreditRiver/CreditRiver.html
If the legality of foreclosures is open to question then one must wonder if foreclosures are actually planned and welcomed by scheming, calculating bankers.
First, we need to look at how money is created.
As we’ve seen, banks create money out of nothing. But money can only be created when someone goes into debt. Most of the world’s money is borrowed into existence and is largely created by private banking cartels. They will only create this new money when the borrower signs a promise to pay and backs this up with the collateral of a house, car, etc. If everyone, including businesses and governments, paid back all their borrowings there would be no money in the world. This system amounts to debt slavery and is thoroughly unacceptable, but that’s another story.
When banks create money they only create the principal, not the interest. Therein lies the problem. It is impossible to pay principal and interest out of a pool that only contains the principal. Borrowers have to keep borrowing more and more to keep money flowing into the pool while they scramble and compete with each other to find the interest to repay the bankers.
For example, the principal sum of one hundred thousand euro borrowed as a house loan will, over time, with interest, need to be repaid as perhaps two hundred and fifty thousand euro. The hundred thousand euro is created out of nothing by the banks. Where will the additional one hundred and fifty thousand euro come from?
It is like a game of musical chairs – when the music stops, someone must lose. That’s how the whole game is planned and operated.
Bankers know that some borrowers will default and they actually welcome that eventuality. They get to seize the defaulter’s property, with the full backing of the law. What a business! You give someone money that you’ve created out of nothing and when they can’t pay, you get to seize their property. That is nothing but legalized theft. No wonder bankers are referred to as banksters, a contraction of ‘banker’ and ‘gangster’.
There is a huge upsurge in foreclosures in Ireland at the moment because of the recent profligacy of the banksters. It would be interesting to see these foreclosures challenged in the courts, based on the integrity and rationale of Justice Martin V. Mahoney’s landmark decision.
Is there an Irish judge brave enough to stand up to these conmen in pin-striped suits?