FRNs and "Lawful Money" (U.S. v. Thomas)

[David Merrill]

Reply to Dan's analysis of Thomas: with all due respect, I think you put too fine a point on it. The only doctrine that matters is the old in rem principle that, once a seized item is abandoned, it cannot later be forfeited. The only factual/legal question is whether the government's conversion of cash (FRNs) into a cashier's check constitutes "abandonment". You really don't need to analyze the nature of FRNs to answer this question. As the Third Circuit itself said in Thomas, "no legal significance attaches to the bills themselves". To avoid a result that the Third Circuit called "absurd" in an analogous case, it held "that the DEA did not abandon the res when it converted the currency to a cashier's check".

The Third Circuit need have gone no further than that. However, despite having called the FRNs in question "money" no fewer than five times and "cash" or "currency" several more, the Third Circuit digresses with the passage quoted in this thread. Whether the presence of that passage is simply careless, or represents a judge or law clerk attempting to demonstrate historical erudition, is unimportant. Wherever the issue is squarely raised - and it rarely is, because "lawful money" is not a legal term - FRNs are held to be "lawful money". I cited only a sampling of those cases above. The facts of Thomas don't raise the issue.

There really isn't an explanation for sloppiness other than sloppiness. It happens to everyone.

I agree that you are not coercing your own intent out of the opinion as much as I am coercing "lawful money" upon the mention of money in it. We should read the entire paragraph at least:



It is fairly easy to see that you are painting a flourish upon the topic sentence since dissecting it properly required citing and paraphrasing (quoting) Title 12 USC §411 from §16 of the 1913 Fed Act. Therefore I will delude myself into thinking that we agree the Third Circuit was sloppy with Qualoosian State Secrets (FRNs are not money). How dare the justices put you into such a clumsy position as to have to call them "sloppy"!


Thank you for cleaning up all the misnomer flames! I realize that had to take a bit of your time.

[Pottapaug1938]

The way that I read the paragraph quoted by ***** is that, if FRNs were indeed "money per se", converting them into a cashier's check, which is not "money per se", would raise legal issues about whether or not the seized items were destroyed, lost or commingled. As it was, since neither FRNs nor cashiers' checks are "money per se", no such issue arises.

[wserra]

Sorry, but I think Pottapaug's point just illustrates, once again, that the Thomas court is being sloppy. 31 USC 5103 in so many words makes FRNs legal tender. How can something be legal tender but not money?

As for avoiding the conflict of "converting" money into non-money - there isn't a conflict. The standard for defeating a forfeiture is abandonment. It's perfectly logical to hold that the govt didn't abandon the seized money by converting it into a cashier's check in equal amount. No discussion of the nature of FRNs is necessary.

[notorial dissent]

I have to agree with you, and by extension Pottapaug, that the Thomas court was just being sloppy in both their thinking and their writing when they digressed to discussing the currency issue when all they had needed to do was say that “no, converting the currency to a check did not alter it in any way” and been done with it. In as much what they wrote wasn’t actually part of the ruling in the case as much as a side light, I really don’t see that it actually matters one whit. Since they did say that the FRN’s could be converted to check form without loss of value or possession, it places them outside the definition of an “obligation”, which generally cannot automatically be converted to cash and retain its identity, or in fact cannot always be converted at all.

When it comes right down to it, unless and until the courts start referring back to this with regards to currency, it has no value whatsoever. The fact that there are a myriad of cases out there that explicitly state that FRN’s are currency, and are “lawful money” in a few instances just for good measure, I will go with the majority of them rather than one oddball poorly written opinion that wasn’t even considering the issue to begin with.

[LPC]

As for avoiding the conflict of "converting" money into non-money - there isn't a conflict. The standard for defeating a forfeiture is abandonment.

I didn't know that. Judging by the quotation I was reading, I thought that a sale or conversion created a problem.

If the standard is abandonment then you're right, the whole discussion of money and the nature of paper currency is worse than mere "dicta" because it's totally irrelevant to the result, as well as misguided and misleading.

[Dr. Caligari]

Reply to Dan's analysis of Thomas: with all due respect, I think you put too fine a point on it. The only doctrine that matters is the old in rem principle that, once a seized item is abandoned, it cannot later be forfeited.

I think you're all missing the forest here. Who cares if FRNs are "lawful money" or merely "legal tender"? What is absolutely nutty is David's contention that you can somehow utter some magic words over your FRNs and make them non-taxable. That is a statement about tax law, not about "lawful money," and it is 1000% wrong. You could get paid in Iraqi dinars, wampum or sacks of horse manure, and it would still be taxable. In fact, I'm quite sure that the Internal Revenue Code nowhere uses the words "lawful money."

[wserra]

I think you're all missing the forest here. Who cares if FRNs are "lawful money" or merely "legal tender"?

The enlightened denizens of Suijurisforum. That's how this thread started, and the context in which someone there first cited Thomas.

What is absolutely nutty is David's contention that you can somehow utter some magic words over your FRNs and make them non-taxable.

Yes, that is certainly also nutty.

[wserra]

If the standard is abandonment

Writing for the Court, Justice Story explained that judicial cognizance of a forfeiture in rem requires

a good subsisting seizure at the time when the libel or information is filed and allowed. If a seizure be completely and explicitly abandoned, and the property restored by the voluntary act of the party who has made the seizure, all rights under it are gone. Although judicial jurisdiction once attached, it is divested by the subsequent proceedings; and it can be revived only by a new seizure. It is, in this respect, like a case of capture, which, although well made, gives no authority to the prize Court to proceed to adjudication, if it be voluntarily abandoned before judicial proceedings are instituted

If the seizing party abandons the attachment prior to filing an action, it, in effect, has renounced its claim.

Republic National Bank of Miami v. United States, 506 U.S. 80 (1992), quoting The Brig Ann, 9 Cranch 289 (1815) (emphasis supplied).

[JamesVincent]

If I was trying to impress anybody around here I would have brought up:

Paper currency, in the form of the Federal Reserve Note, is defined as an “obligation[ ] of the United States” that may be “redeemed in lawful money on demand.” 12 U.S.C. § 411 (2002). These bills are not “money” per se...

And if you had kept going through Thomas you would have noticed that the incident occurring had nothing to do with your theory (big surprise) and you would have noted another quoted precedent:

...[c]urrency, cashier's checks, and bank deposits are simply surrogates for each other, and in modern society are certainly regarded as `fungible,' when the question is ownership of the funds each represents.

Basically saying that no matter what form it exists in... its still money.

[JamesVincent]

Oh yeah, did you pull it off of Fourwinds or did you post it there? Either way the explanation there is just like all the others that you have posted; no part of reality. And the case of Thomas did not state that FRN's are not money and had nothing to do with income tax in any way. So the rest of you can read what was posted there.

[David Merrill]

It says that Federal Reserve notes are not the same thing as lawful money.

[Famspear]

It says that Federal Reserve notes are not the same thing as lawful money.

No. Go back and read it again.

[Judge Roy Bean]

It says that Federal Reserve notes are not the same thing as lawful money.

No. Go back and read it again.

Do you really think Van Pelt would publicly admit he was wrong or that he had changed his mind? You'd have better luck trying to nail Jell-0 to a wall.

[David Merrill]

I have integrated the quote into the templates for redeemed lawful money. I like it because it actually does say that Federal Reserve notes are not lawful money.

...The cash filing fee is fully paid in public money and not in private credit (US notes in the form of Federal Reserve notes). The funds were redeemed lawful money according to the US Supreme Court's interpretation of the Congress' definition from US v Rickman; 638 F.2d 182

In the exercise of that power Congress has declared that Federal Reserve Notes are legal tender and are redeemable in lawful money. And, US v Ware; 608 F.2d 400

United States notes shall be lawful money, and a legal tender in payment of all debts, public and private, within the United States, except for duties on imports and interest on the public debt. Also, in USA v. Thomas 319 F.3d 640

Paper currency, in the form of the Federal Reserve Note, is defined as an “obligation[ ] of the United States” that may be “redeemed in lawful money on demand.” 12 U.S.C. § 411 (2002). These bills are not “money” per se...

[Famspear]

I have integrated the quote into the templates for redeemed lawful money. I like it because it actually does say that Federal Reserve notes are not lawful money.

No. It does not say that Federal Reserve notes are not lawful money. It didn't say that before, and it doesn't say that now, and it won't say that tomorrow, David.

Read it again, David.

[Pottapaug1938]

I have integrated the quote into the templates for redeemed lawful money. I like it because it actually does say that Federal Reserve notes are not lawful money.

No. It does not say that Federal Reserve notes are not lawful money. It didn't say that before, and it doesn't say that now, and it won't say that tomorrow, David.

Read it again, David.

What's the point of doing that? David will see only what he wants to see, and ignore the rest.

[LaVidaRoja]

Google "redeeming lawful money" and you will see why these posts and threads are here. People who are willing to use their brains will be able to find the FACTS.

[David Merrill]

Here is a reminder:

(b) The amount of United States currency notes outstanding and in circulation—
(1) may not be more than $300,000,000; and
(2) may not be held or used for a reserve.

The court says that Federal Reserve notes are reserves, ergo they cannot be lawful money in the same sense as US notes.

Ergo - US notes in the form of Federal Reserve notes.

One still has the right to non-reserve currency; inelastic currency. Federal Reserve notes are elastic because banks can lend against reserves.



Regards,

David Merrill.

[David Merrill]

Google "redeeming lawful money" and you will see why these posts and threads are here. People who are willing to use their brains will be able to find the FACTS.

I am having difficulty understanding how when the case opinion says that Federal Reserve notes are not lawful money, that you keep saying the case opinion says otherwise?

[Famspear]

Google "redeeming lawful money" and you will see why these posts and threads are here. People who are willing to use their brains will be able to find the FACTS.

I am having difficulty understanding how when the case opinion says that Federal Reserve notes are not lawful money, that you keep saying the case opinion says otherwise?

The answer is right in front of you. The case opinion does not say that Federal Reserve notes are not lawful money. The opinion says only that that they are "not 'money' per se." Read the text again.

David, you are engaging in a two-step mis-reading of the text, perhaps an unconscious process.

First, you are mis-reading the phrase "not 'money' per se" to be "not money." The court did not say that Federal Reserve notes are "not money." The court said only that they are not money "per se."

Second, you are taking your erroneous interpretation ("not money") to be "not lawful money."

Your problem is further complicated by the fact that you are focusing on what the court said, rather than what the court (and all other courts) have ruled. You are taking what the court said and pulling it out of its context (this is a fallacy sometimes called "quote mining"), misinterpreting what the court said, and then (in effect) trying to argue that the law is something other than what the law actually is.

You have gone part of the way to help yourself by admitting that there are no court cases where the courts have ruled that the receipt of Federal Reserve notes is non-taxable. You need to recognize the rest of the structure of the logical mistakes you are making.

There is still another problem here. You also need to recognize that the judge who wrote the opinion in Thomas probably was incorrect anyway -- in his description of what Federal Reserve notes are. He said that Federal Reserve notes are "not 'money' per se." That is an arguable statement, perhaps a misleading statement.

AND.... you need to recognize that in any case, the judge did not RULE that Federal Reserve notes are not money, or even that they are not money per se. The judge was simply explaining his rationale. The words he used to explain his rationale are called obiter dicta, or "words said in passing," or just "dicta."

Dicta are non-binding statements (not part of a holding or ruling) by a judge in a court opinion. People who have studied thousands and thousands of case reports generally know how to identify dicta, and how to use them.

These people are called "lawyers." Often, lawyers do not expressly identify dicta as being dicta when we quote them. Even in court opinions, judges will quote dicta from other cases all the time, without identifying the words as dicta.

At any rate, David, even if you had correctly read what the court said, and even if the court had meant what you interpreted what thought the court meant, your analysis would still be incorrect -- because you have focused on what the court said, rather than what the court ruled.

Under the U.S. legal system, what is of primary importance is what the court RULED, not what the court said.

Focus on judicial precedent, on the concept of stare decisis. Stop obsessing over what the court said, and concentrate on what the courts have ruled:

Stare decisis is the policy of the court to stand by precedent; the term is but an abbreviation of stare decisis et quieta non movere — "to stand by and adhere to decisions and not disturb what is settled." Consider the word "decisis." The word means, literally and legally, the decision. Nor is the doctrine stare dictis; it is not "to stand by or keep to what was said." Nor is the doctrine stare rationibus decidendi — "to keep to the rationes decidendi of past cases." Rather, under the doctrine of stare decisis a case is important only for what it decides — for the "what," not for the "why," and not for the "how." Insofar as precedent is concerned, stare decisis is important only for the decision, for the detailed legal consequence following a detailed set of facts.

--United States Internal Revenue Serv. v. Osborne (In re Osborne), 76 F.3d 306, 96-1 U.S. Tax Cas. (CCH) paragr. 50,185 (9th Cir. 1996).