Lexicon of Key Legal & Banking Terms

Original: August 7, 1999
*Notes on original edition have not been edited.
Introduction & Purpose

Nothing is so frustrating as to read something and think you know what it means when in reality you don’t have the foggiest notion what you’re reading because you don’t know underlying presumptions and "term of art" definitions applied to words and phrases in the text. This disability plagues people sufficiently that most are defenseless, particularly where tax agencies and financial institutions are concerned. Therefore, I am constructing a lexicon of key legal and banking terms, and am adding notes to many in order to help people understand terminology and principles that act as snares. The lexicon also includes terms relating to common law writs, and terms that should be mastered when seeking redress via newer remedies presently surfacing. Sources include law dictionaries, banking dictionaries and standard dictionaries, definitions from court decisions, and definitions found in codes of laws. The lexicon of necessity begins with modest beginnings, but the number of terms addressed will be increased as time permits.

Material immediately following the term defined comes from some published source. The source may be editorially introduced or cited, or may be identified in parentheses immediately following the definition. Where there are editorial comments and additions following definitions, they are set out following the designation "NOTES." Unless the term is a proper noun or there is some other significant reason, all lower case letters are used in order to follow standard dictionary format.

A limited number of abbreviations are employed. The "§" sign indicates "section" when used in conjunction with cites from constitutions, the United States Code and state codes, the Statutes at Large and some resources such as Black’s Commentaries. It means "part" when used in conjunction with the Code of Federal Regulations. The "¶" sign means "paragraph." U.S.C. = United States Code; U.S.C.A. = United States Code Annotated. References to the U.S.C. and U.S.C.A. are to the 1996 edition and/or supplements unless otherwise indicated. CFR = Code of Federal Regulations. Stat. = Statutes at Large. F.R.Civ.P. = Federal Rules of Civil Procedure. F.R.Crim.P. = Federal Rules of Criminal Procedure. F.R.Ev. = Federal Rules of Evidence. F.R. = Federal Register. In abbreviations, title or volume numbers precede authority designation, then page numbers, sections, or parts follow the authority designation. For example, 26 U.S.C. § 7621 indicates section 7621 of title 26 of the United States Code, where 1 Stat. 10 is page 10 of volume 1 of the Statutes at Large. Where other abbreviations are used in any given definition, the resource title will be used the first time, then the abbreviation will follow on the rule of first use.

Where Uniform Commercial Code (UCC) definitions and other provisions are included, each person who wants to use any given provision should refer to corresponding sections enacted in his state code.

This endeavor is by no means being undertaken in isolation. Ralph Winterrowd of Anchorage, Alaska in particular has made and continues to make significant contributions through his personal research and by way of resource materials, some of which are rare and expensive. As a longtime student of legalese, Peter Kay Stern of North Carolina has made significant contributions over a number of years. Timothy McCrory of Blackwell, Oklahoma assists with tracking down many of the terms included in this lexicon. The list of other people who have isolated key terms, particularly relating to commercial law and banking, is long enough that those known to have done original research will have to be named in general credits. Andrew Fuetterer and Ken Gullekson were kind enough to review the first submission and make format suggestions.

Dan Meador, Ponca City.

 

Key Terms

acceptance.

UCC 3-408. DRAWEE NOT LIABLE ON UNACCEPTED DRAFT.

A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.

UCC 2-207. Additional Terms in Acceptance or Confirmation.

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

* (a) the offer expressly limits acceptance to the terms of the offer;

* (b) they materially alter it; or

* (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

UCC 3-409. ACCEPTANCE OF DRAFT; CERTIFIED CHECK.

* (a) "Acceptance" means the drawee's signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee's signature alone. Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any person.

* (b) A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue, or has been dishonored.

* (c) If a draft is payable at a fixed period after sight and the acceptor fails to date the acceptance, the holder may complete the acceptance by supplying a date in good faith.

* (d) "Certified check" means a check accepted by the bank on which it is drawn. Acceptance may be made as stated in subsection (a) or by a writing on the check which indicates that the check is certified. The drawee of a check has no obligation to certify the check, and refusal to certify is not dishonor of the check.

UCC 3-410. ACCEPTANCE VARYING DRAFT.

* (a) If the terms of a drawee's acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance.

* (b) The terms of a draft are not varied by an acceptance to pay at a particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at that bank or place.

* (c) If the holder assents to an acceptance varying the terms of a draft, the obligation of each drawer and indorser that does not expressly assent to the acceptance is discharged.

See "offer."

 

accommodation.

UCC 3-419. INSTRUMENTS SIGNED FOR ACCOMMODATION.

* (a) If an instrument is issued for value given for the benefit of a party to the instrument ("accommodated party") and another party to the instrument ("accommodation party") signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party "for accommodation."

* (b) An accommodation party may sign the instrument as maker, drawer, acceptor, or indorser and, subject to subsection (d), is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding any statute of frauds and whether or not the accommodation party receives consideration for the accommodation.

* (c) A person signing an instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation if the signature is an anomalous indorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument. Except as provided in Section 3-605, the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.

* (d) If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if (i) execution of judgment against the other party has been returned unsatisfied, (ii) the other party is insolvent or in an insolvency proceeding, (iii) the other party cannot be served with process, or (iv) it is otherwise apparent that payment cannot be obtained from the other party.

* (e) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party.

 

accord. See also, "satisfaction" and "discharge."

UCC 3-311. ACCORD AND SATISFACTION BY USE OF INSTRUMENT.

* (a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.

* (b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.

* (c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies:

o (1) The claimant, if an organization, proves that (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place.

o (2) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This paragraph does not apply if the claimant is an organization that sent a statement complying with paragraph (1)(i).

* (d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

 

account debtor.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (a) "Account debtor" means the person who is obligated on an account, chattel paper or general intangible;

acquisition. See also, "reacquisition."

 

 

Act of Congress. Rule 54(c), Federal Rules of Criminal Procedure, "Application of Terms". "(c) Application of Terms. As used in these rules the following terms have the designated meanings. ‘Act of Congress’ includes any act of Congress locally applicable to and in force in the District of Columbia, in Puerto Rico, in a territory or in an insular possession."

NOTES: The key term "Act of Congress" should be read in conjunction with application of the term "State" in Rule 54(c), F.R.Crim.P.: "’State’ includes District of Columbia, Puerto Rico, territory and insular possession."

An Act of Congress, when so designated, is municipal law in territory subject to sovereignty of the United States under the territorial clause at Article IV § 3 ¶ 2 of the Constitution of the United States, and the District of Columbia, which is subject to sovereignty of the United States by virtue of Article I § 8 cl. 17. A vast majority of the United States Code, and general Federal enforcement authority, is limited to the District of Columbia and the five major insular possessions, Puerto Rico, the Virgin Islands, American Samoa, Guam, and to a lessor extent, the Northern Mariana Islands. Other than it applies to Federal officers and employees and officers of corporations where the United States has a proprietary interest, the current Internal Revenue Code is municipal law in the "geographical" United States. Virtually all Federal taxing authority was shifted from Article I to Article IV authority via and subsequent to the revenue act of November 23, 1921. In the 1920’s and particularly the 1930’s, state and local public servants in the several states of the Union aligned the states respectively as territories or political subdivisions of the United States on a par with insular possessions of the United States. This paved the way for encroachment under an umbrella scheme known as Federalism or Cooperative Federalism.

 

affidavit.

 

agency.

Defined at 18 U.S.C. § 6: The term "department" means one of the executive departments enumerated in section 1 of Title 5, unless the context shows that such term was intended to describe the executive, legislative, or judicial branches of the government.

The term "agency" includes any department, independent establishment, commission, administration, authority, board or bureau of the United States or any corporation in which the United States has a proprietary interest, unless the context shows that such term was intended to be used in a more limited sense.

NOTES: What does or doesn’t constitute an agency or employee of the United States or one of the several States is a fine line variously addressed by courts. This matter is particularly relevant to Federal government since various entities such as the Internal Revenue Service, the Bureau of Alcohol, Tobacco and Firearms, the Drug Enforcement Administration, the Federal Bureau of Investigation, etc., were not created by Congress. IRS and BATF are successors of the Bureau of Internal Revenue, Puerto Rico, BIR, Porto Rico having been created May 1, 1901 by the first civil governor and executive committee of what was then Porto Rico, and FBI and DEA are administrative agencies, they were not created by Congress.

Another extremely important matter is, "Who and what is the United States of America?"

This question is framed by 18 U.S.C. § 1001, edited from 18 U.S.C. § 80, 1940 ed. In Historical and Statutory Notes for the current § 1001, we find the following: "Words ‘or any corporation in which the United States of America is a stockholder’ in the said § 80 were omitted as unnecessary in view of definitions of ‘agency’ in § 6 of this title."

The original United States of America was antecedent to the United States, formally established in the Articles of Confederation. The new kid on the block, so to speak, didn’t make its appearance in legislation until 1918. The "United States" and the "United States of America" both appear in predecessors to the current 18 U.S.C. § 1001 through the 1940 edition of the U.S.C. In notes cited above. This seemingly new creation is defined as an agency of the United States, thereby making the United States the antecedent entity. Consequently, the matter of status and standing, i.e., authority to prosecute, sue, etc., and the relationship of this "United States of America" to the United States and the Union of several States party to the Constitution is a paramount question. "Where does it come from and what authority does it have?"

Minimum requirements to exercise government authority are clearly set out in Metcalf & Eddy v. Mitchell (1926) 269 U.S. 514, 519:

We think it clear that neither of the plaintiffs in error occupied any official position in any of the undertakings [269 U.S. 514, 520] to which their writ of error in No. 183 relates. They took no oath of office; they were free to accept any other concurrent employment; none of their engagements was for work of a permanent or continuous character; some were of brief duration, and some from year to year, others for the duration of the particular work undertaken. Their duties were prescribed by their contracts and it does not appear to what extent, if at all, they were defined or prescribed by statute. We therefore conclude that plaintiffs in error have failed to sustain the burden cast upon them of establishing that they were officers of a state or a subdivision of a state within the exception of section 201(a).

An office is a public station conferred by the appointment of government. The term embraces the idea of tenure, duration, emolument and duties fixed by law. Where an office is created, the law usually fixes its incidents, including its terms, its duties and its compensation. United States v. Hartwell, 6 Wall. 385; Hall v. Wisconsin, 103 U.S. 5. The term 'officer' is one inseparably connected with an office; but there was no office of sewage or water supply expert or sanitary engineer, to which either of the plaintiffs was appointed. The contracts with them, although entered into by authority of law and prescribing their duties, could not operate to create an office or give to plaintiffs the status of officers. Hall v. Wisconsin, supra; Auffmordt v. Hedden, 137 U.S. 310, 11 S. Ct. 103. There were lacking in each instance the essential elements of a public station, permanent in character, created by law, whose incidents and duties were prescribed by law. See United States v. Maurice, Fed. Cas. No. 15,747, 2 Brock. 96, 102, 103; United States v. Germaine, 99 U.S. 508, 511, 512 S.; Adams v. Murphy, 165 F. 304, 91 C. C. A. 272.

Nor do the facts stated in the bill of exceptions establish that the plaintiffs were 'employees' within the meaning of the statute. So far as appears, they were in the position of independent contractors. The record does [269 U.S. 514, 521] not reveal to what extent, if at all, their services were subject to the direction or control of the public boards or officers engaging them. In each instance the performance of their contract involved the use of judgment and discretion on their part and they were required to use their best professional skill to bring about the desired result. This permitted to them liberty of action which excludes the idea that control or right of control by the employer which characterizes the relation of employer and employee and differentiates the employee or servant from the independent contractor. Chicago, Rock Island & Pacific Ry. Co. v. Bond, 240 U.S. 449, 456, 36 S. Ct. 403; Standard Oil Co. v. Anderson, 212 U.S. 215, 227, 29 S. Ct. 252. And see Casement v. Brown, 148 U.S. 615, 13 S. Ct. 672; Singer Mfg. Co. v. Rahn, 132 U.S. 518, 523, 10 S. Ct. 175.

Requirements set out in Metcalf & Eddy v. Mitchell are applicable to state and national governments: By virtue of Separation of Powers Doctrine, the legislative branch of government must legislatively create all departments and agencies of government not created by the applicable constitution, and must prescribe duties by way of positive law. This is as much the case for inferior courts not established by applicable constitutions as it is for executive departments and agencies. The principle is clearly states in the Constitution of the State of Oklahoma at Article IV § 1: § 1. Departments of government - Separation and distribution

The powers of the government of the State of Oklahoma shall be divided into three separate departments: The Legislative, Executive, and Judicial; and except as provided in this Constitution, the Legislative, Executive and Judicial departments of government shall be separate and distinct, and neither shall exercise the powers properly belonging to either of the others.

The distinction between a "department" and an "agency" of United States government obviously has considerable import. Departments are agencies, but all agencies are not necessarily departments of United States government. If the "United States of America" is an agency of United States government, but not a department, it in one way or another stands at arm’s length from the Union of several States and the American people as a whole. Likewise, if IRS and BATF are classified as agencies, but are not bureaus in the Department of the Treasury of the United States (see table of contents for Chapter 3 of Title 31), they bear a unique and special relationship to government of the United States and the Union of several States. Unless and until these entities are proven to meet criteria set out in Metcalf & Eddy v. Mitchell, they must be viewed as de facto. In the case of the FBI, the administrative agency may exercise only lawful authority vested in the Department of Justice (see 28 U.S.C. § 531 and notes following, and 28 U.S.C. § 535).

 

 

agent.

 

agent provocateur.

 

agreement.

UCC 1-201 General definitions

(3) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Act (Sections 1-205 and 1-206). Whether an agreement has legal consequences is determined by the provisions of this Act, if applicable; otherwise by the law of contracts (Section 1-103). (Compare "Contract".)

 

alteration.

UCC 3-407. ALTERATION.

* (a) "Alteration" means (i) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party, or (ii) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

* (b) Except as provided in subsection (c), an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. No other alteration discharges a party, and the instrument may be enforced according to its original terms.

* (c) A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument (i) according to its original terms, or (ii) in the case of an incomplete instrument altered by unauthorized completion, according to its terms completed.

 

assessment.

 

attachment. (see under "commercial law", Black’s 6th)

 

augmentation.

 

bank.

UCC 1-201 General definitions.

(4) "Bank" means any person engaged in the business of Banking.

 

 

bills of credit. [classified under Bill] A bill or promissory note issued by the government, upon its faith and credit, designed to circulate in the community as money. See Federal reserve notes; Treasury bill. (Black’s Law Dictionary, 6th edition)

NOTES: At Art. I § 10 ¶ 1, the Constitution of the United States prohibits the several States from issuing bills of credit. Obviously, state governments cannot authorize, endorse or enforce private bills of credit if they themselves are prohibited from issuing bills of credit. It follows that a "bill of credit" issued by a financial institution must therefore be under another authority, that authority being the United States. All "credit" issued by Federally chartered and/or approved financial institutions is "hypothecated" on credit of the United States. Definition of the term "credit" in the Consumer Credit Protection Act (15 U.S.C. § 1602) helps to understand the source of virtually all bank-generated credit: "credit" is a grant of authority from a creditor to a debtor to defer payment of debt, or to incur debt then defer payment. No private enterprise has unilateral authority to issue "credit" that circulates in the general economy as a grant of authority to "defer payment of debt." It is obvious that the United States is principal of interest when any Federally chartered or endorsed financial institution issues "credit".

 

bill of exchange.

 

cause debendi.

 

certificate of title.

 

charge. An incumbrance, lien, or claim; a burden or load; an obligation or duty; a liability; an accusation. A person or thing committed to the care of another. The price of, or rate for, something. See also Charged; Charges; Floating chare; Rate; Surcharge. (Black’s Law Dictionary, 6th edition)

 

chargeable. The word, in its ordinary acceptation, as applicable to the imposition of a duty or burden, signifies capable of being charged, subject to be charged, liable to be charged, or proper to be charged. (Black’s Law Dictionary, 6th edition)

 

charged. Accusation of crime by complaint, indictment, or information. With respec to "notice", a person is charged with such if he has information sufficient to apprise him of the subject, e.g. under land recording acts, a person is charged with notice of a lien or attachment if it is on record. (Black’s Law Dictionary, 6th edition)

 

charged (see under commercial law)

 

chattel paper.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (b) "Chattel paper" means a writing or writings which evidence both a monetary obligation and a security interest in or a lease of specific goods, but a charter or other contract involving the use or hire of a vessel is not chattel paper. When a transaction is evidenced both by such a security agreement or a lease and by an instrument or a series instruments, the group of writings taken together constitutes chattel paper;

 

Christian. 6. Christian name: the name given at christening; the personal name, as distinguished from the family name or surname. (The Oxford English Dictionary, Second Edition (1989))

 

claim.

UCC 3-306. CLAIMS TO AN INSTRUMENT.

A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument.

 

collateral.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (c) "Collateral" means the property subject to a security interest, and includes accounts and chattel paper which have been sold;

 

commerce.

 

commercial crimes.

complainant. One who applies to the courts for legal redress by filing complaint (i.e. plaintiff). Also, one who instigates prosecution or who prefers accusation against suspected person. (Black’s Law Dictionary, 6th edition)

NOTE: See "prefer".

complaint. The original or initial pleading by which an action is commenced under coes of Rules of Civil Procedure. E.g. Fed. R. Civil P. 3. The pleading which sets forth a claim for relief. Such complaint (whether it be the original claim, conterclaim, cross-claim, or third-party claim) shall contain: (1) a short and plain statement of the grounds upon which the court’s jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds of jurisdiction to support it, (2) a short and plain statement of the claim showing that the pleader is entitled to relief, and (3) a demand for judgment for the relief to which he deems himself entitled. Relief in the alternative or of several different types may be demanded. red.R. Civil P. 8(a). The complaint, together with the summons, is required to be served on the defendant. Rule 4. See also Counter-claim; Cross-claim; Supplemental complaint; Third party complaint.

In criminal law, a charge, preferred before a magistrate having jurisdiction, that a person named (or an unknown person) has committed a specific offense, with an offer to prove the fact, to the end that a prosecution may be instituted. The complaint can be "taken out" by the victim, the police officer, the district attorney, or other interested party. Although the complaint charges an offense, an indictment or information may be the formal charging document. The complaint is a written statement of the essential facts constituting the offense charged. In the federal courts, it is to be made upon oath before a magistrate. red.R.Crim.P. 3. If it appears from the complaint that probable cause exists that the person named in the complaint committed the alleged crime, a warrant (q.v.) for his arrest will be issued. Fed.R.Crim.P. 4. (Black’s Law Dictionary, 6th edition)

NOTES. See also, "preferred".

 

Conflict of laws [doctrine]. Inconsistency or difference between the laws of different states or countries, arising in the case of persons who have acquired rights, incurred obligations, injuries or damages, or made contracts, within the territory of two or more jurisdictions. Hence, that branch of jurisprudence, arising from the diversity of the laws of different nations, states or jurisdictions, in their application to rights and remedies, which reconciles the inconsistency, or decides which law or system is to govern in the particular case, or settles the decree of force to be accorded to the law of another jurisdiction, (the acts or rights in question having arisen under it) either where it varies from the domestic law, or where the domestic law is silent or not exclusively applicable to the case in point. Restatement, Second, Conflicts of Law, § 2. See also Center of gravity doctrine; Choice of law; Grouping of contracts; Kilberg doctrine; Lex celebrationis; Lex contractus; Lex fori; Lex loci; Lex loci celebrationis; Lex loci contractus; Lex situs; Lex solutionis; Lex validitatis; Renvoi doctrine. (Black’s Law Dictionary, 6th edition)

Oklahoma Conflict of Law Doctrine:

75 O.S. § 11. Statutes defined

The statutes of Oklahoma are hereby defined to be:

First. Original acts enacted by the legislature.

Second. Statutes taken from other sources and adopted and enacted by the legislature as statutes of this State.

75 O.S. § 12. Original acts shall govern

In all cases where there is a conflict between the original acts and adopted statutes, the original acts shall govern, and the adopted statutes shall be deemed as repealed, amended, or modified thereby, without reference to the date of the approval of such original acts. For purposes of this section, "original acts" means the enrolled documents of the acts as produced by the house of origin.

NOTES: The question arises, "What are original acts and what are adopted acts?"

Constitutions of the United States and the several States, the Articles of Confederation, the Ordinance of 1787 for government of the Northwest Territory, the Declaration of Independence, and the Magna Charta constitute the fundamental law of the land for governments of the United States and the Union of several States. Original engrossed acts enacted within the bounds of constitutionally delegated authority belong to this body of law known as Original Acts.

By approximately 1926, Congress had for all practical purposes abandoned Article I delegated powers, moving Federal government to Article IV territorial jurisdiction (see "Act of Congress" above), and law applicable to Federal employees. The "normal tax" resurrected via the revenue act of 1918 to replace individual income tax imposed via the revenue acts of 1916 & 1917 is one example; what most people today know as income tax has never applied to the population at large.

Officers of the several States accommodated the Federal shift by posturing each of the several States as territories and instrumentalities of the United States. The most significant shifts came as the New Deal was imposed from the Federal side in 1933 and after. The evening of March 6, 1933, governors of the several States were in conference in the White House, and via various resolutions, more or less handed President Franklin D. Roosevelt an executive dictatorship. Also in 1933, the Council of State Governments was incorporated, and this became the chief vehicle for what are defined as adopted acts in 75 O.S. § 11. Via the Council of State Governments, which now has headquarters in Lexington, Kentucky, officers of state and local governments endorsed Declarations of Intergovernmental Dependence in 1935, 1937, and since. The 1937 agreement, titled the Declaration of Interdependence of the Governments within the United States of America in Common Council, was endorsed in Washington, D.C., on January 22. It is published on page 143 & 144 of The Book of the States, Vol. 2, Book 2.

Thus the Form State, or "this State," identified in 75 O.S. § 11 Second was formalized. Virtually all adopted acts are predicated on the notion that each of the several States party to the Constitution is a Federal territory on a par with the District of Columbia and insular possessions subject to sovereignty of the United States. The Uniform Commercial Code, which was adopted by legislatures of all fifty States of the Union by the early 1960’s is today the centerpiece of Federalism on the state side. The Form State exists conterminous or conteminous with the constitutionally established state as a colored transparency that might be laid over a map to show weather conditions. But conflict of law doctrine preserves the original jural society, i.e., the limited constitutional government established by the sovereign people of each state and the nation.

Oklahoma is fortunate in that Article 23 of our constitution reinforces conflict of law doctrine in §§ 8 & 9:

§ 8. Contracts waiving benefits of Constitution invalid

Any provision of a contract, express or implied, made by any person, by which any of the benefits of this Constitution is sought to be waived, shall be null and void.

§ 9. Notice or demand, stipulation for

Any provision of any contract or agreement, express or implied, stipulating for notice or demand other than such as may be provided by law, as a condition precedent to establish any claim, demand, or liability, shall be null and void.

There is inherent conflict between the Constitution of the State of Oklahoma, which embraces the Constitution of the United States as the law of the land, and the Uniform Commercial Code. If there was no other conflict, the UCC is the vehicle by which state courts routinely enforce private bills of credit issuing from Federally chartered and insured financial institutions. In reality, the UCC tacitly preserves fundamental law: UCC 1-103. Supplementary General Principles of Law Applicable.

Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, Bankruptcy, or other validating or invalidating cause shall supplement its provisions.

The problem, of course, is the officer wearing a black robe. He or she is required to take judicial notice of constitutions and laws of the United States and the several States and adjudicative facts, including constitutionally secured rights and remedies. Conflict of law doctrine preserves the hierarchy of law.

conterminous. Adjacent; adjoining; having a common boundary; coterminous. (Black’s Law Dictionary, 6th edition)

 

consideration. See also, "value."

 

contract.

UCC 1-201 General Definitions

(11) "Contract" means the total legal obligation which results from the parties' agreement as affected by this Act and any other applicable rules of law. (Compare "Agreement".)

UCC 2-106. Definitions: "Contract"; "Agreement"; "Contract for sale"; "Sale"; "Present sale"; "Conforming" to Contract; "Termination"; "Cancellation".

(1) In this Article unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (Section 2-401). A "present sale" means a sale which is accomplished by the making of the contract.

(2) Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract.

(3) "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives.

(4) "Cancellation" occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of "termination" except that the cancelling party also retains any remedy for breach of the whole contract or any unperformed balance.

 

conversion.

UCC 3-420. CONVERSION OF INSTRUMENT.

* (a) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.

* (b) In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument.

* (c) A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.

 

Coterelli. Anciently, a kind of peasantry who were outlaws; robbers. (Black’s Law Dictionary, 6th edition)

 

Coterie. A fashionable association, or a knot of persons forming a particular circle. The origin of the term was purely commercial, signifying an association, in which each member furnished his part, and bore his share of the profit and loss. (Black’s Law Dictionary, 6th edition)

 

Courts of the United States. Courts of the United States are "defined" (listed), at 28 U.S.C. § 610: "As used in this chapter the word ‘courts’ includes the courts of appeals and district courts of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, the District Court of the Virgin Islands, the United States Court of Federal Claims, and the Court of International Trade."

The above definition is from Chapter 41, the Administrative Office of United States Courts. The section is referred to as authority for transfer to cure want of jurisdiction (28 U.S.C. § 1631). The General Accounting Office restates this definition in GAO regulations to identify courts of the United States.

For Federal Debt Collection Procedure (Chapter 176 of Title 28), another definition is employed for the term "court" that focuses on the obvious (28 U.S.C. § 3002(2)): "As used in this chapter: (2) ‘Court’ means any court created by the Congress of the United States, excluding the United States Tax Court."

For purposes of the Federal criminal code, a special definition of courts of the United States identifies all surviving territorial courts in insular possessions of the United States (18 U.S.C. § 23): "As used in this title, except where otherwise expressly provided the term ‘court of the United States’ includes the District Court of Guam, the District Court for the Northern Mariana Islands, and the District Court of the Virgin Islands."

The definition at 18 U.S.C. § 23 is 1994 legislation that updates the list of territorial courts itemized in 28 U.S.C. § 610, Rule 54(a) of the Federal Rules of Criminal Procedure, and other lists and definitions sprinkled through the United States Code.

NOTES: Compare definitions of "District Court of the United States" and "United States District Court". The District Court of the United States is the first level Article III court of the United States created by Congress, where the United States District Court is a territorial court created by Congress. The two are mutually exclusive. When any given state is admitted to the Union, the territorial United States District Court is replaced by an Article III District Court of the United States. The United States District Court operating in each of the states of the Union was not created by Congress and is not a court of the United States. The United States District Court for the District of the Canal Zone was abolished when the United States surrendered the Panama Canal lease; the District Court for the Northern Mariana Islands was created after transfer from United Nations to United States protectorate jurisdiction. For several decades the United States operated under United Nations agreement to provide military protection and maintain what was then known as the Pacific Trust Territories.

 

credit.

Definition in Federal Consumer Protection Act at 15 U.S.C. § 1602(e): The term "credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.

Definition in state Consumer Protection Act at Okla. Stat. 14A-1-301(7): "Credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.

 

creditor.

UCC 1-201 General Definitions.

(12) "Creditor" includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in Bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor's or assignor's estate.

 

debtor.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (d) "Debtor" means the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral, and includes the seller of accounts or chattel paper. Where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision of the Article dealing with the collateral, the obligor in any provision with the obligation, and may include both where the context so requires;

 

defense.

UCC 3-117. OTHER AGREEMENTS AFFECTING INSTRUMENT.

Subject to applicable law regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the instrument is issued or the obligation is incurred in reliance on the agreement or as part of the same transaction giving rise to the agreement. To the extent an obligation is modified, supplemented, or nullified by an agreement under this section, the agreement is a defense to the obligation.

UCC 3-305. DEFENSES AND CLAIMS IN RECOUPMENT.

* (a) Except as stated in subsection (b), the right to enforce the obligation of a party to pay an instrument is subject to the following:

o (1) a defense of the obligor based on (i) infancy of the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under other law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings;

o (2) a defense of the obligor stated in another section of this Article or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract; and

o (3) a claim in recoupment of the obligor against the original payee of the instrument if the claim arose from the transaction that gave rise to the instrument; but the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing on the instrument at the time the action is brought.

* (b) The right of a holder in due course to enforce the obligation of a party to pay the instrument is subject to defenses of the obligor stated in subsection (a)(1), but is not subject to defenses of the obligor stated in subsection (a)(2) or claims in recoupment stated in subsection (a)(3) against a person other than the holder.

* (c) Except as stated in subsection (d), in an action to enforce the obligation of a party to pay the instrument, the obligor may not assert against the person entitled to enforce the instrument a defense, claim in recoupment, or claim to the instrument (Section 3-306) of another person, but the other person's claim to the instrument may be asserted by the obligor if the other person is joined in the action and personally asserts the claim against the person entitled to enforce the instrument. An obligor is not obliged to pay the instrument if the person seeking enforcement of the instrument does not have rights of a holder in due course and the obligor proves that the instrument is a lost or stolen instrument.

* (d) In an action to enforce the obligation of an accommodation party to pay an instrument, the accommodation party may assert against the person entitled to enforce the instrument any defense or claim in recoupment under subsection (a) that the accommodated party could assert against the person entitled to enforce the instrument, except the defenses of discharge in insolvency proceedings, infancy, and lack of legal capacity.

 

delegation.

UCC 2-210. Delegation of Performance; Assignment of Rights.

(1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2) Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

(3) Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.

(4) An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.

(5) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (Section 2-609).

 

delivery.

UCC 1-201 General Definitions

(14) "Delivery" with respect to instruments, documents of title, chattel paper, or certificated securities means voluntary transfer of possession.

See also, "documents."

 

deposit.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (e) "Deposit account" means a demand, time, savings, passbook or like account maintained with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a certificate of deposit;

 

discharge.

UCC 3-310. EFFECT OF INSTRUMENT ON OBLIGATION FOR WHICH TAKEN.

* (a) Unless otherwise agreed, if a certified check, cashier's check, or teller's check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation. Discharge of the obligation does not affect any liability that the obligor may have as an indorser of the instrument.

* (b) Unless otherwise agreed and except as provided in subsection (a), if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken, and the following rules apply:

o (1) In the case of an uncertified check, suspension of the obligation continues until dishonor of the check or until it is paid or certified. Payment or certification of the check results in discharge of the obligation to the extent of the amount of the check.

o (2) In the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid. Payment of the note results in discharge of the obligation to the extent of the payment.

o (3) Except as provided in paragraph (4), if the check or note is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or the obligation. In the case of an instrument of a third person which is negotiated to the obligee by the obligor, discharge of the obligor on the instrument also discharges the obligation.

o (4) If the person entitled to enforce the instrument taken for an obligation is a person other than the obligee, the obligee may not enforce the obligation to the extent the obligation is suspended. If the obligee is the person entitled to enforce the instrument but no longer has possession of it because it was lost, stolen, or destroyed, the obligation may not be enforced to the extent of the amount payable on the instrument, and to that extent the obligee's rights against the obligor are limited to enforcement of the instrument.

* (c) If an instrument other than one described in subsection (a) or (b) is taken for an obligation, the effect is (i) that stated in subsection (a) if the instrument is one on which a bank is liable as maker or acceptor, or (ii) that stated in subsection (b) in any other case.

UCC 3-601. DISCHARGE AND EFFECT OF DISCHARGE.

* (a) The obligation of a party to pay the instrument is discharged as stated in this Article or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract.

* (b) Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge.

UCC 3-604. DISCHARGE BY CANCELLATION OR RENUNCIATION.

* (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party's signature, or the addition of words to the instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed writing.

* (b) Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect the status and rights of a party derived from the indorsement.

UCC 3-605. DISCHARGE OF INDORSERS AND ACCOMMODATION PARTIES.

* (a) In this section, the term "indorser" includes a drawer having the obligation described in Section 3-414(d).

* (b) Discharge, under Section 3-604, of the obligation of a party to pay an instrument does not discharge the obligation of an indorser or accommodation party having a right of recourse against the discharged party.

* (c) If a person entitled to enforce an instrument agrees, with or without consideration, to an extension of the due date of the obligation of a party to pay the instrument, the extension discharges an indorser or accommodation party having a right of recourse against the party whose obligation is extended to the extent the indorser or accommodation party proves that the extension caused loss to the indorser or accommodation party with respect to the right of recourse.

* (d) If a person entitled to enforce an instrument agrees, with or without consideration, to a material modification of the obligation of a party other than an extension of the due date, the modification discharges the obligation of an indorser or accommodation party having a right of recourse against the person whose obligation is modified to the extent the modification causes loss to the indorser or accommodation party with respect to the right of recourse. The loss suffered by the indorser or accommodation party as a result of the modification is equal to the amount of the right of recourse unless theperson enforcing the instrument proves that no loss was caused by the modification or that the loss caused by the modification was an amount less than the amount of the right of recourse.

* (e) If the obligation of a party to pay an instrument is secured by an interest in collateral and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of an indorser or accommodation party having a right of recourse against the obligor is discharged to the extent of the impairment. The value of an interest in collateral is impaired to the extent (i) the value of the interest is reduced to an amount less than the amount of the right of recourse of the party asserting discharge, or (ii) the reduction in value of the interest causes an increase in the amount by which the amount of the right of recourse exceeds the value of the interest. The burden of proving impairment is on the party asserting discharge.

* (f) If the obligation of a party is secured by an interest in collateral not provided by an accommodation party and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of any party who is jointly and severally liable with respect to the secured obligation is discharged to the extent the impairment causes the party asserting discharge to pay more than that party would have been obliged to pay, taking into account rights of contribution, if impairment had not occurred. If the party asserting discharge is an accommodation party not entitled to discharge under subsection (e), the party is deemed to have a right to contribution based on joint and several liability rather than a right to reimbursement. The burden of proving impairment is on the party asserting discharge.

* (g) Under subsection (e) or (f), impairing value of an interest in collateral includes (i) failure to obtain or maintain perfection or recordation of the interest in collateral, (ii) release of collateral without substitution of collateral of equal value, (iii) failure to perform a duty to preserve the value of collateral owed, under Article 9 or other law, to a debtor or surety or other person secondarily liable, or (iv) failure to comply with applicable law in disposing of collateral.

* (h) An accommodation party is not discharged under subsection (c), (d), or (e) unless the person entitled to enforce the instrument knows of the accommodation or has notice under Section 3-419(c) that the instrument was signed for accommodation.

* (i) A party is not discharged under this section if (i) the party asserting discharge consents to the event or conduct that is the basis of the discharge, or (ii) the instrument or a separate agreement of the party provides for waiver of discharge under this section either specifically or by general language indicating that parties waive defenses based on suretyship or impairment of collateral.

 

dishonor.

UCC 3-502. DISHONOR.

* (a) Dishonor of a note is governed by the following rules:

o (1) If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment.

o (2) If the note is not payable on demand and is payable at or through a bank or the terms of the note require presentment, the note is dishonored if presentment is duly made and the note is not paid on the day it becomes payable or the day of presentment, whichever is later.

o (3) If the note is not payable on demand and paragraph (2) does not apply, the note is dishonored if it is not paid on the day it becomes payable.

* (b) Dishonor of an unaccepted draft other than a documentary draft is governed by the following rules:

o (1) If a check is duly presented for payment to the payor bank otherwise than for immediate payment over the counter, the check is dishonored if the payor bank makes timely return of the check or sends timely notice of dishonor or nonpayment under Section 4-301 or 4-302, or becomes accountable for the amount of the check under Section 4-302.

o (2) If a draft is payable on demand and paragraph (1) does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment.

o (3) If a draft is payable on a date stated in the draft, the draft is dishonored if (i) presentment for payment is duly made to the drawee and payment is not made on the day the draft becomes payable or the day of presentment, whichever is later, or (ii) presentment for acceptance is duly made before the day the draft becomes payable and the draft is not accepted on the day of presentment.

o (4) If a draft is payable on elapse of a period of time after sight or acceptance, the draft is dishonored if presentment for acceptance is duly made and the draft is not accepted on the day of presentment.

* (c) Dishonor of an unaccepted documentary draft occurs according to the rules stated in subsection (b)(2), (3), and (4), except that payment or acceptance may be delayed without dishonor until no later than the close of the third business day of the drawee following the day on which payment or acceptance is required by those paragraphs.

* (d) Dishonor of an accepted draft is governed by the following rules:

o (1) If the draft is payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and the draft is not paid on the day of presentment.

o (2) If the draft is not payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and payment is not made on the day it becomes payable or the day of presentment, whichever is later.

* (e) In any case in which presentment is otherwise required for dishonor under this section and presentment is excused under Section 3-504, dishonor occurs without presentment if the instrument is not duly accepted or paid.

* (f) If a draft is dishonored because timely acceptance of the draft was not made and the person entitled to demand acceptance consents to a late acceptance, from the time of acceptance the draft is treated as never having been dishonored.

UCC 3-503. NOTICE OF DISHONOR.

* (a) The obligation of an indorser stated in Section 3-415(a) and the obligation of a drawer stated in Section 3-414(d) may not be enforced unless (i) the indorser or drawer is given notice of dishonor of the instrument complying with this section or (ii) notice of dishonor is excused under Section 3-504(b).

* (b) Notice of dishonor may be given by any person; may be given by any commercially reasonable means, including an oral, written, or electronic communication; and is sufficient if it reasonably identifies the instrument and indicates that the instrument has been dishonored or has not been paid or accepted. Return of an instrument given to a bank for collection is sufficient notice of dishonor.

* (c) Subject to Section 3-504(c), with respect to an instrument taken for collection by a collecting bank, notice of dishonor must be given (i) by the bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor of the instrument, or (ii) by any other person within 30 days following the day on which the person receives notice of dishonor. With respect to any other instrument, notice of dishonor must be given within 30 days following the day on which dishonor occurs.

UCC 3-505. EVIDENCE OF DISHONOR.

* (a) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated:

o (1) a document regular in form as provided in subsection (b) which purports to be a protest;

o (2) a purported stamp or writing of the drawee, payor bank, or presenting bank on or accompanying the instrument stating that acceptance or payment has been refused unless reasons for the refusal are stated and the reasons are not consistent with dishonor;

o (3) a book or record of the drawee, payor bank, or collecting bank, kept in the usual course of business which shows dishonor, even if there is no evidence of who made the entry.

* (b) A protest is a certificate of dishonor made by a United States consul or vice consul, or a notary public or other person authorized to administer oaths by the law of the place where dishonor occurs. It may be made upon information satisfactory to that person. The protest must identify the instrument and certify either that presentment has been made or, if not made, the reason why it was not made, and that the instrument has been dishonored by nonacceptance or nonpayment. The protest may also certify that notice of dishonor has been given to some or all parties.

 

District Court of the United States. District Courts of the United States, a/k/a, district courts of the United States, are Article III courts of the United States, as defined in Mookini v. United States 303 U.S. 201 (1938):

"The term 'District Courts of the United States,' as used in the rules, without an addition expressing a wider connotation, has its historic significance. It describes the constitutional courts created under article 3 of the Constitution. Courts of the Territories are legislative courts, properly speaking, and are not District Courts of the United States. We have often held that vesting a territorial court with jurisdiction similar to that vested in the District Courts of the United States does not make it a 'District Court of the United States.' Reynolds v. United States, 98 U.S. 145, 154; The City of Panama, 101 U.S. 453, 460; In re Mills, 135 U.S. 263, 268, 10 S.Ct. 762; McAllister v. United States, 141 U.S. 174, 182, 183 S., 11 S.Ct. 949; Stephens v. Cherokee Nation, 174 U.S. 445, 476, 477 S., 19 S.Ct. 722; Summers v. United States, 231 U.S. 92, 101, 102 S., 34 S.Ct. 38; United States v. Burroughs, 289 U.S. 159, 163, 53 S.Ct. 574. Not only did the promulgating order use the term District Courts of the United States in its historic and proper sense, but the omission of provision for the application of the rules to the territorial courts and other courts mentioned in the authorizing act clearly shows the limitation that was intended."

The definition of "district court of the United States" for purposes of the Federal civil code, Title 28, is at 28 U.S.C. § 451: "The term ‘district court’ and ‘district court of the United States’ mean the courts constituted by chapter 5 of this title."

NOTE: See also, Courts of the United States and United States District Court. The district court of the United States and the United States District Court are distinct creatures. The district court of the United States is the first-level Article III court of the United States in the Union of several States, where the United States District Court is a territorial court created by virtue of Congress’ plenary power in territory belonging to the United States (Art. IV § 3 ¶ 2). The two kinds of courts are mutually exclusive. When any given state was admitted to the Union, the territorial court had to be abolished and an Article III court established. Congress did not create or otherwise authorize United States District Courts in the Union of several States party to the Constitution. They are therefore private courts. It appears that the private judicial United States District Court scheme was formalized in 1948. See 18 U.S.C. § 3231 for original venue (territorial jurisdiction) of district courts of the United States for Federal criminal prosecution; 26 U.S.C. § 7402 for original jurisdiction relating to tax cases; and 28 U.S.C. § 1345 for jurisdiction where the United States is plaintiff. Note use of the term "Act of Congress" used in 28 U.S.C. § 1345. An "Act of Congress" is applicable only in territory subject to sovereignty of the United States, i.e., this term relates to territorial courts. See "Act of Congress" in this lexicon.

 

document.

UCC 2-514. When Documents Deliverable on Acceptance; When on Payment.

Unless otherwise agreed documents against which a draft is drawn are to be delivered to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (f) "Document" means document of title as defined in the general definitions of Article 1 (Section 1-201), and a receipt of the kind described in subsection (2) of Section 7-201;

 

document of title.

UCC 1-201 General Definitions.

(15) "Document of title" includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers. To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.

 

Downes Doctrine. The Downes Doctrine was established in Downes v. Bidwell in 1901. Downes and three other insular tax cases decided in the 1901-1904 period laid a foundation for Congress’ exercise of power in insular possessions not incorporated in the constitutional scheme. The Supreme Court, via plurality opinion, determined that in many respect, the unincorporated insular possessions ceded by Span following the Spanish American War, are "foreign" to the United States, and by implication, the Union of several States. While the Downes Doctrine itself has been nullified, the following principles set out in the Downes decision remain firm. Downes v. Bidwell (1901) 182 U.S. 244, 270:

Eliminating, then, from the opinions of this court all expressions unnecessary to the disposition of the particular case, and gleaning therefrom the exact point decided in each, the following propositions may be considered as established:

1. That the District of Columbia and the territories are not states within the judicial clause of the Constitution giving jurisdiction in cases between citizens of different states;

2. That territories are not states within the meaning of Rev. Stat. 709, permitting writs of error from this court in cases where the validity of a state statute is drawn in question;

3. That the District of Columbia and the territories are states as that word is used in treaties with foreign powers, with respect to the ownership, disposition, and inheritance of property;

4. That the territories are not within the clause of the Constitution providing for the creation of a supreme court and such inferior courts as Congress may see fit to establish;

5. That the Constitution does not apply to foreign countries or to trials therein conducted, and that Congress may lawfully [182 U.S. 244, 271] provide for such trials before consular tribunals, without the intervention of a grand or petit jury;

6. That where the Constitution has been once formally extended by Congress to territories, neither Congress nor the territorial legislature can enact laws inconsistent therewith.

 

draft. A written order by the first party, called the drawer, instructing a second party, called the drawee (such as a bank), to pay money to a third party, called the payee. An order to pay a sum certain in money, signed by a drawer, payable on demand or at a definite time, and to order or bearer. People v. Norwood, 26 Cal.App. 3d 148, 103 Cal.Rptr. 7, 11. An unconditional order to pay money drawn by drawer on drawee to the order of the payee; same as a bill of exchange. U.S.C. § 3-104. See also Check; Documentary draft; redraft; Sight draft; Trace acceptance.

A tentative, provisional, or preparatory writing out of any document (as a will, contract, lease, etc.) for purposes of discussion and correction, which is afterwards to be prepared in its final form.

Compulsory conscription of persons into military service.

Also, a small arbitrary deduction or allowance made to a merchant or importer, in the case of goods sold by weight or taxable by weight, to cover possible loss of weight in handling or from differences in scales.

Bank draft. One drawn by one bank on another.

Clean draft. One which has no shipping documents attached.

Documentary draft. One to which various shipping documents are attached.

Overdraft. Writing a check for more money than is in account.

Sight draft. One which is payable on presentation or demand. UCC § 3-108.

Time draft. One payable a certain number of days after sight or after presentation for acceptance. The number of days must be specified. UCC § 3-109.

 

duty. A human action which is exactly conformable to the laws which require us to obey them. An obligation that one has by law or contract. Obligations to conform to legal standard of reasonable conduct in light of apparent risk. Karrar v. Barry County Road Com’n, 127 Mich.App. 821, 339 N.W.2d 653, 657. Obligatory conduct or service. Mandatory obligation to perform. Huey v. King, 220 Tenn. 189, 415 S.W. 2d 136. An obligation, recognized by the law, requiring actor to conform to certain standard of conduct for protection of others against unreasonable risks. Samson v. Saginaw Professional Bldg., Inc. 44 Mich. App. 658, 205 N.W. 2d 833, 835. See also Legal duty; Obligation.

A thing due; that which is due from a person; that which a person owes to another. An obligation to do a thing. A word of more extensive signification than "debt," although both are expressed by the same Latin word "debitum." Sometimes, however, the term is used synonymously with debt.

Those obligations of performance, care, or observance which rest upon a person in an official or fiduciary capacity; as the duty of an executor, trustee, manager, etc.

In negligence cases term may be defined as an obligation, to which law will give recognition and effect, to comport to a particular standard of conduct toward another, and the duty is invariably the same, one must conform to legal standard of reasonable conduct in light of apparent risk. Merluzzi v. Larson, 96 Nev. 409, 610 P. 2d 739, 741. The word "duty" is used throughout the Restatement of Torts to denote the fact that the actor is required to conduct himself in a particular manner at the risk that if he does not do so he becomes subject to liability to another to whom the duty is owed for any injury sustained by such other, of which that actor’s conduct is a legal cause. Restatement, Second, Torts § 4. See Care; Due care.

In its use in jurisprudence, this word is the correlative of right. Thus, whenever there exists a right in any person, there also rests a corresponding duty upon some other person or upon all persons generally.

It also denotes a tax or impost due to the government upon the importation or exportation of goods. See 19 U.S.C.A. Seealso Customs; Customs duties; Tariff; Toll; Tonnage-duty.

Judicial duty. See Judicial. (Black’s Law Dictionary, 6th edition)

UCC 3-307. NOTICE OF BREACH OF FIDUCIARY DUTY.

* (a) In this section:

o (1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.

o (2) "Represented person" means the principal, beneficiary, partnership, corporation, or other person to whom the duty stated in paragraph (1) is owed.

* (b) If (i) an instrument is taken from a fiduciary for payment or collection or for value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:

o (1) Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person.

o (2) In the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

o (3) If an instrument is issued by the represented person or the fiduciary as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.

o (4) If an instrument is issued by the represented person or the fiduciary as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

 

encumbrance.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (g) "Encumbrance" includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests;

 

enforcement.

UCC 3-301. PERSON ENTITLED TO ENFORCE INSTRUMENT.

"Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

UCC 3-309. ENFORCEMENT OF LOST, DESTROYED, OR STOLEN INSTRUMENT.

* (a) A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

* (b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, Section 3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

 

examination.

 

fault.

UCC 1-201 General Definitions

(16) "Fault" means wrongful act, omission or breach.

 

Federalism. Term which includes interrelationships among the states and relationship between the states and the federal government. (Black’s Law Dictionary, 6th edition)

 

fictio. In Roman law, a fiction; an assumption or supposition of the law. Such was properly a term of pleading, and signified a false averment on the part of the plaintiff which the defendant was not allowed to travers; as that the plaintiff was a Roman citizen, when in truth he was a foreigner. The object of the fiction was to give the court jurisdiction. (Black’s Law Dictionary, 6th edition)

fiction of law. An assumption or supposition of law that something which is or may be false is true, or that a state of facts exists which has never really taken place. An assumption, for purposes of justice, of a fact that does not or may not exist. A rule of law which assumes as true, and will not allow to be disproved, something which is false, but not impossible. Ryan v. Motor Credit Co., 30 N.J.Eq. 531, 23 A.2d 607, 621.

These assumptions are of an innocent or even beneficial character, and are made for the advancement of the ends of justice. They secure this end chiefly by the extension of procedure from cases to which it is applicable to other cases to which it is not strictly applicable, the ground of inapplicability being some difference of an immaterial character.

See also, Legal fiction.

Estoppels distinguished. Fictions are to be distinguished from estoppels; an estoppel being the rule by which a person is precluded from asserting a fact by previous conduct inconsistent therewith on his own part or the part of those under whom he claims, or by an adjudication upon his rights which he cannot be allowed to question.

Presumptions distinguished. Fictions are to be distinguished from presumptions of law. By the former, something known to be false or unreal is assumed as true; by the latter, an inference is set up, which may be and probably is true, but which, at any rate, the law will not permit to be controverted. It may also be said that a presumption is a rule of law prescribed for the purpose of getting at a certain conclusion, though arbitrary, where the subject is intrinsically liable to doubt from the remoteness, discrepancy, or actual defect of proofs. (Black’s Law Dictionary, 6th edition)

 

fictitious. Founded on a fiction; having the character of a fiction; pretended; counterfeit. Feigned, imaginary, not real, false, not genuine, nonexistent. Arbitrarily invented and set up, to accomplish an ulterior object. (Black’s Law Dictionary, 6th edition)

 

 

financial institution or organization.

Definition for state Consumer Protection Act, Okla. Statut. 14A-1-301(17): "Supervised financial organization" means a person, other than an insurance company or other organization primarily engaged in an insurance business

 

financing agency.

UCC 2-104. Definitions: "Merchant"; "Between Merchants"; "Financing Agency".

(2) "Financing agency" means a bank, finance company or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller's draft or making advances against it or by merely taking it for collection whether or not documents of title accompany the draft. "Financing agency" includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods (Section 2-707).

 

genuine.

UCC 1-201 General Definitions.

(18) "Genuine" means free of forgery or counterfeiting.

 

good faith.

UCC 1-201 General Devinitions.

(19) "Good faith" means honesty in fact in the conduct or transaction concerned.

UCC 1-203. Obligation of good faith.

Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement.

 

goods.

UCC 2-105. Definitions: Transferability; "Goods"; "Future" Goods; "Lot"; "Commercial Unit".

(1) "Goods" means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107).

(2) Goods must be both existing and identified before any interest in them can pass. Goods which are not both existing and identified are "future" goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.

(3) There may be a sale of a part interest in existing identified goods.

(4) An undivided share in an identified bulk of fungible goods is sufficiently identified to be sold although the quantity of the bulk is not determined. Any agreed proportion of such a bulk or any quantity thereof agreed upon by number, weight or other measure may to the extent of the seller's interest in the bulk be sold to the buyer who then becomes an owner in common.

(5) "Lot" means a parcel or a single article which is the subject matter of a separate sale or delivery, whether or not it is sufficient to perform the contract.

(6) "Commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of sale and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article (as a machine) or a set of articles (as a suite of furniture or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (h) "Goods" includes all things which are movable at the time the security interest attaches or which are fixtures (Section 9-313), but does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like (including oil and gas) before extraction. "Goods" also includes standing timber which is to be cut and removed under a conveyance or contract for sale, the unborn young of animals, and growing crops;

 

holder.

UCC 1-201 General Devinitions.

(20) "Holder" with respect to a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession. "Holder" with respect to a document of title means the person in possession if the goods are deliverable to bearer or to the order of the person in possession.

UCC 3-110. IDENTIFICATION OF PERSON TO WHOM INSTRUMENT IS PAYABLE.

* (a) The person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as, or in the name or behalf of, the issuer of the instrument. The instrument is payable to the person intended by the signer even if that person is identified in the instrument by a name or other identification that is not that of the intended person. If more than one person signs in the name or behalf of the issuer of an instrument and all the signers do not intend the same person as payee, the instrument is payable to any person intended by one or more of the signers.

* (b) If the signature of the issuer of an instrument is made by automated means, such as a check-writing machine, the payee of the instrument is determined by the intent of the person who supplied the name or identification of the payee, whether or not authorized to do so.

* (c) A person to whom an instrument is payable may be identified in any way, including by name, identifying number, office, or account number. For the purpose of determining the holder of an instrument, the following rules apply:

o (1) If an instrument is payable to an account and the account is identified only by number, the instrument is payable to the person to whom the account is payable. If an instrument is payable to an account identified by number and by the name of a person, the instrument is payable to the named person, whether or not that person is the owner of the account identified by number.

o (2) If an instrument is payable to:

+ (i) a trust, an estate, or a person described as trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named;

+ (ii) a person described as agent or similar representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative;

+ (iii) a fund or organization that is not a legal entity, the instrument is payable to a representative of the members of the fund or organization; or

+ (iv) an office or to a person described as holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent.

* (d) If an instrument is payable to two or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.

 

holder in due course.

UCC 3-302. HOLDER IN DUE COURSE.

* (a) Subject to subsection (c) and Section 3-106(d), "holder in due course" means the holder of an instrument if:

o (1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and

o (2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3-305(a).

* (b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.

* (c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.

* (d) If, under Section 3-303(a)(1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.

* (e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.

* (f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.

* (g) This section is subject to any law limiting status as a holder in due course in particular classes of transactions.

UCC 3-308. PROOF OF SIGNATURES AND STATUS AS HOLDER IN DUE COURSE.

* (a) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on the instrument as a represented person under Section 3-402(a).

* (b) If the validity of signatures is admitted or proved and there is compliance with subsection (a), a plaintiff producing the instrument is entitled to payment if the plaintiff proves entitlement to enforce the instrument under Section 3-301, unless the defendant proves a defense or claim in recoupment. If a defense or claim in recoupment is proved, the right to payment of the plaintiff is subject to the defense or claim, except to the extent the plaintiff proves that the plaintiff has rights of a holder in due course which are not subject to the defense or claim.

 

honor. See also, "dishonor." UCC 1-207 General Devinitions.

(21) To "honor" is to pay or to accept and pay, or where a credit so engages to purchase or discount a draft complying with the terms of the credit.

 

hypothecate. To pledge property as security or collateral for a debt. Generally, there is no physical transfer of the pledged property to the lender, nor is the lender given title to the property; though he has the right to sell the pledged property upon default. Moore v. Wardlaw, C.C.A.Tex., 522 S.W. 2d 552, 554. See alsoPledge; Rehypothecation. (Black’s Law Dictionary, 6th edition)

NOTES: See related definitions in Black’s. This principal comes from Roman Civil Law. All "credit" advanced by Federally chartered financial institutions is "hypothecated" on credit of the United States. See also, Rehypothecation.

 

indorsement.

UCC 3-204. INDORSEMENT.

* (a) "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than indorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument.

* (b) "Indorser" means a person who makes an indorsement.

* (c) For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument.

* (d) If an instrument is payable to a holder under a name that is not the name of the holder, indorsement may be made by the holder in the name stated in the instrument or in the holder's name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection.

UCC 3-205. SPECIAL INDORSEMENT; BLANK INDORSEMENT; ANOMALOUS INDORSEMENT.

* (a) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a "special indorsement." When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. The principles stated in Section 3-110 apply to special indorsements.

* (b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement." When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.

* (c) The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable.

* (d) "Anomalous indorsement" means an indorsement made by a person who is not the holder of the instrument. An anomalous indorsement does not affect the manner in which the instrument may be negotiated.

UCC 3-206. RESTRICTIVE INDORSEMENT.

* (a) An indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument.

* (b) An indorsement stating a condition to the right of the indorsee to receive payment does not affect the right of the indorsee to enforce the instrument. A person paying the instrument or taking it for value or collection may disregard the condition, and the rights and liabilities of that person are not affected by whether the condition has been fulfilled.

* (c) If an instrument bears an indorsement (i) described in Section 4-201(b), or (ii) in blank or to a particular bank using the words "for deposit," "for collection," or other words indicating a purpose of having the instrument collected by a bank for the indorser or for a particular account, the following rules apply:

o (1) A person, other than a bank, who purchases the instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the indorser or applied consistently with the indorsement.

o (2) A depositary bank that purchases the instrument or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement.

o (3) A payor bank that is also the depositary bank or that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement.

o (4) Except as otherwise provided in paragraph (3), a payor bank or intermediary bank may disregard the indorsement and is not liable if the proceeds of the instrument are not received by the indorser or applied consistently with the indorsement.

* (d) Except for an indorsement covered by subsection (c), if an instrument bears an indorsement using words to the effect that payment is to be made to the indorsee as agent, trustee, or other fiduciary for the benefit of the indorser or another person, the following rules apply:

o (1) Unless there is notice of breach of fiduciary duty as provided in Section 3-307, a person who purchases the instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.

o (2) A subsequent transferee of the instrument or person who pays the instrument is neither given notice nor otherwise affected by the restriction in the indorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of fiduciary duty.

* (e) The presence on an instrument of an indorsement to which this section applies does not prevent a purchaser of the instrument from becoming a holder in due course of the instrument unless the purchaser is a converter under subsection (c) or has notice or knowledge of breach of fiduciary duty as stated in subsection (d).

* (f) In an action to enforce the obligation of a party to pay the instrument, the obligor has a defense if payment would violate an indorsement to which this section applies and the payment is not permitted by this section.

 

in rem.

 

 

instrument.

UCC 9-105 Definitions and Index of Definition

(1) In this Article unless the context otherwise requires:

* (i) "Instrument" means a negotiable instrument (defined in Section 3-104), or a certificated security (defined in Section 8-102) or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary indorsement or assignment;

 

issue of instrument.

UCC 3-105. ISSUE OF INSTRUMENT.

* (a) "Issue" means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.

* (b) An unissued instrument, or an unissued incomplete instrument that is completed, is binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.

* (c) "Issuer" applies to issued and unissued instruments and means a maker or drawer of an instrument.

 

 

 

judicial duty. One that requires exercise of judgment or choice of alternatives in its performance. One that requires exercise of judgment or decision of a question of fact. State ex rel. Coast Holding Co. v. Ekwall, 144 Or. 672, 26 P.2d 52. One that requires use of discretion or examination of evidence and decision of questions of law or fact. One that legitimately pertains to an officer in judicial department. Harding v. McCullough, 236 Iowa 556, 19 N.W. 2d 613, 617. Ex parte Lewis, 328 Mo. 843, 42 S.W. 2d 21, 22. See also Judicial act; Judicial action; Judicial discretion. (Black’s Law Dictionary, 6th edition)

 

 

jural. Pertaining to natural or positive right, or to the doctrines of rights and obligations; as "jural relations." Of or pertaining to jurisprudence; juristic; juridical.

Recognized or sanctioned byu positive law; embraced within, or covered by, the rules and enactments of positive law. Founded in law; organized upon the basis of a fundamental law, and existing for the recognition and protection of rights.

The "jural sphere" is to be distinquished from the "moral sphere;" the latter denoting the whole scope or range of ethics or the science of conduct, the former embracing only such portions of the same as have been made the subject of legal sanction or recognition.

The term "jural society" is used as a synonym of "state" or "organized political community." (Black’s Law Dictionary, 6th edition)

 

jural society. See "jural."

 

letter of credit.

UCC 2-325. "Letter of Credit" Term; "Confirmed Credit".

(1) Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale.

(2) The delivery to seller of a proper letter of credit suspends the buyer's obligation to pay. If the letter of credit is dishonored, the seller may on seasonable notification to the buyer require payment directly from him.

(3) Unless otherwise agreed the term "letter of credit" or "banker's credit" in a contract for sale means an irrevocable credit issued by a financing agency of good repute and, where the shipment is overseas, of good international repute. The term "confirmed credit" means that the credit must also carry the direct obligation of such an agency which does business in the seller's financial market.

 

long arm statute.

 

minimum contact calculus.

 

money.

UCC 1-201 General Definitions.

(24) "Money" means a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

 

mortgage.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (j) "Mortgage" means a consensual interest created by a real estate

mortgage, a trust deed on real estate, or the like;

 

negotiable instruments.

UCC 3-102. SUBJECT MATTER.

* (a) This Article applies to negotiable instruments. It does not apply to money, to payment orders governed by Article 4A, or to securities governed by Article 8.

* (b) If there is conflict between this Article and Article 4 or 9, Articles 4 and 9 govern.

* (c) Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of this Article to the extent of the inconsistency.

UCC 3-104. NEGOTIABLE INSTRUMENT.

* (a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

o (1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

o (2) is payable on demand or at a definite time; and

o (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

* (b) "Instrument" means a negotiable instrument.

* (c) An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check.

* (d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.

* (e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft," a person entitled to enforce the instrument may treat it as either.

* (f) "Check" means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as "money order."

* (g) "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.

* (h) "Teller's check" means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank.

* (i) "Traveler's check" means an instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term "traveler's check" or by a substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.

* (j) "Certificate of deposit" means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.

 

negotiation.

UCC 3-201. NEGOTIATION.

* (a) "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.

* (b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.

UCC 3-202. NEGOTIATION SUBJECT TO RESCISSION.

* (a) Negotiation is effective even if obtained (i) from an infant, a corporation exceeding its powers, or a person without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part of an illegal transaction.

* (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.

 

notice. See also, "dishonor".

UCC 1-201 General Definitions.

(25) A person has "notice" of a fact when

* (a) he has actual knowledge of it; or

* (b) he has received a notice or notification of it; or

* (c) from all the facts and circumstances known to him at the time in question he has reason to know that it exists.

A person "knows" or has "knowledge" of a fact when he has actual knowledge of it. "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather than to reason to know. The time and circumstances under which a notice or notification may cease to be effective are not determined by this Act.

(26) A person "notifies" or "gives" a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it. A person "receives" a notice or notification when

* (a) it comes to his attention; or

* (b) it is duly delivered at the place of business through which the contract was made or at any other place held out by him as the place for receipt of such communications.

(27) Notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and in any event from the time when it would have been brought to his attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of his regular duties or unless he has reason to know of the transaction and that the

transaction would be materially affected by the information.

 

notice of dishonor. (see in UCC)

 

obligation of acceptor.

UCC 3-413. OBLIGATION OF ACCEPTOR.

* (a) The acceptor of a draft is obliged to pay the draft (i) according to its terms at the time it was accepted, even though the acceptance states that the draft is payable "as originally drawn" or equivalent terms, (ii) if the acceptance varies the terms of the draft, according to the terms of the draft as varied, or (iii) if the acceptance is of a draft that is an incomplete instrument, according to its terms when completed, to the extent stated in Sections 3-115 and 3-407. The obligation is owed to a person entitled to enforce the draft or to the drawer or an indorser who paid the draft under Section 3-414 or 3-415.

* (b) If the certification of a check or other acceptance of a draft states the amount certified or accepted, the obligation of the acceptor is that amount. If (i) the certification or acceptance does not state an amount, (ii) the amount of the instrument is subsequently raised, and (iii) the instrument is then negotiated to a holder in due course, the obligation of the acceptor is the amount of the instrument at the time it was taken by the holder in due course.

UCC 3-414. OBLIGATION OF DRAWER.

* (a) This section does not apply to cashier's checks or other drafts drawn on the drawer.

* (b) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the drawer signed an incomplete instrument, according to its terms when completed, to the extent stated in Sections 3-115 and 3-407. The obligation is owed to a person entitled to enforce the draft or to an indorser who paid the draft under Section 3-415.

* (c) If a draft is accepted by a bank, the drawer is discharged, regardless of when or by whom acceptance was obtained.

* (d) If a draft is accepted and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft is dishonored by the acceptor is the same as the obligation of an indorser under Section 3-415(a) and (c).

* (e) If a draft states that it is drawn "without recourse" or otherwise disclaims liability of the drawer to pay the draft, the drawer is not liable under subsection (b) to pay the draft if the draft is not a check. A disclaimer of the liability stated in subsection (b) is not effective if the draft is a check.

* (f) If (i) a check is not presented for payment or given to a depositary bank for collection within 30 days after its date, (ii) the drawee suspends payments after expiration of the 30-day period without paying the check, and (iii) because of the suspension of payments, the drawer is deprived of funds maintained with the drawee to cover payment of the check, the drawer to the extent deprived of funds may discharge its obligation to pay the check by assigning to the person entitled to enforce the check the rights of the drawer against the drawee with respect to the funds.

UCC 3-415. OBLIGATION OF INDORSER.

* (a) Subject to subsections (b), (c), and (d) and to Section 3-419(d), if an instrument is dishonored, an indorser is obliged to pay the amount due on the instrument (i) according to the terms of the instrument at the time it was indorsed, or (ii) if the indorser indorsed an incomplete instrument, according to its terms when completed, to the extent stated in Sections 3-115 and 3-407. The obligation of the indorser is owed to a person entitled to enforce the instrument or to a subsequent indorser who paid the instrument under this section.

* (b) If an indorsement states that it is made "without recourse" or otherwise disclaims liability of the indorser, the indorser is not liable under subsection (a) to pay the instrument.

* (c) If notice of dishonor of an instrument is required by Section 3-503 and notice of dishonor complying with that section is not given to an indorser, the liability of the indorser under subsection (a) is discharged.

* (d) If a draft is accepted by a bank after an indorsement is made, the liability of the indorser under subsection (a) is discharged.

* (e) If an indorser of a check is liable under subsection (a) and the check is not presented for payment, or given to a depositary bank for collection, within 30 days after the day the indorsement was made, the liability of the indorser under subsection (a) is discharged.

 

obligation to pay.

UCC 3-412. OBLIGATION OF ISSUER OF NOTE OR CASHIER'S CHECK.

The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the issuer signed an incomplete instrument, according to its terms when completed, to the extent stated in Sections 3-115 and 3-407. The obligation is owed to a person entitled to enforce the instrument or to

an indorser who paid the instrument under Section 3-415.

 

offer.

UCC 2-206. Offer and Acceptance in Formation of Contract.

(1) Unless otherwise unambiguously indicated by the language or circumstances

* (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

* (b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

 

organization.

Definition in state Consumer Protection Act at Okla. Stat. 14A-1-301(11): "Organization" means a corporation, government or governmental subdivision or agency, trust, estate, partnership, cooperative or association.

 

payment.

UCC 3-602. PAYMENT.

* (a) Subject to subsection (b), an instrument is paid to the extent payment is made (i) by or on behalf of a party obliged to pay the instrument, and (ii) to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under Section 3-306 by another person.

* (b) The obligation of a party to pay the instrument is not discharged under subsection (a) if:

o (1) a claim to the instrument under Section 3-306 is enforceable against the party receiving payment and (i) payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction, or (ii) in the case of an instrument other than a cashier's check, teller's check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument; or

o (2) the person making payment knows that the instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.

UCC 3-603. TENDER OF PAYMENT.

* (a) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract.

* (b) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender, of the obligation of an indorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.

* (c) If tender of payment of an amount due on an instrument is made to a person entitled to enforce the instrument, the obligation of the obligor to pay interest after the due date on the amount tendered is discharged. If presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is deemed to have made tender of payment on the due date to the person entitled to enforce the instrument.

 

person.

Definition in state Consumer Protection Act at Okla. Stat. 14A-1-301(11): "Person" includes a natural person or an individual, and an organization, joint venture or any legal entity however organized.

 

 

plenipotentiary. One who has full power to do a thing; a person fully commissioned to act for another. A term applied in international law to ministers and envoys of the second rank of public ministers. (Black’s Law Dictionary, 6th edition)

NOTES: When treaties following the American Revolution were signed, French, British and American representatives functioned as "Ministers Plenipotentiary". Franklin, Jay and others who represented the "United States of America", the "United States", etc., functioned in this capacity. While the proposed treaties were variously submitted to Congress, then convened under the Articles of Confederation, the American contingent of "Ministers Plenipotentiary" were ultimately empowered to give binding endorsement to the treaties.

This is more or less the capacity assumed by state and local officers when they endorsed the Declarations of Intergovernmental Dependence in 1935, 1937 & 1976. They assumed the role of Ministers Plenipotentiary to establish a their "nonconstitutional" tier of government. What they did was patently unconstitutional as constitutions of the several states do not vest state and local public servants to unilaterally amend, suspend or otherwise overthrow constitutions of the states respectively, and Article I § 10 ¶ 1 of the Constitution of the United States prohibits officers of the several states from effecting treaties or interstate compacts; Congress must specifically authorize interstate compacts, and it is obvious that Congress may not authorize compacts that implement provisions contrary to constitutional mandates or prohibitions. State and Federal public servants may not unilaterally amend or annul the Constitution of the United States.

Assumption of "plenipotentiary" authority via the various compacts, and adopted acts promulgated unconstitutional acts under auspices of the de facto third tier of government, amounts to usurpation of power.

 

Perfection of security interest. In secured transactions law, the process whereby a security interest is protected, as far as the law permits, against competing claims to the collateral, which usually requires the secured party to give public notice of the interest as by filing in a government office (e.g. in office of Secretary of State). Perfection of a security interest deals with those steps legally required to give a secured party an interest in subject property against debtor’s creditors. Bramble Transp., Inc. v. Sam Senter Sales, Inc., Del.Super., 294 A. 2d 97, 102.

The minimum meaning of this term in connection with a security interest is that the secured party has done whatever is necessary in the way of giving notice to make his security interest effective at least against lien creditors of the debtor. Depending upon the type of collateral and the method of perfection, it may mean more; e.g. it may mean that the interest is good even against all purchasers. The methods for attaining perfection are stated in U.C.C. Section 9-302 through 9-306. In most cases the secured party may obtain perfection either by filing (i.e. with Secretary of State) or by taking possession of the collateral. When the collateral is held by a bailee who has not issued a negotiable document of title, perfection by notification is possible; e.g. the secured party may obtain perfection by notifying the bailee of the secured party’s interest. For a few special situations the Code provides that a security interest is perfected without any of the above actions on the part of the secured party. Such perfection is called automatic perfection, or perfection by attachment. (Black’s Law Dictionary, 6th edition)

 

prefer. To bring before; to try; to proceed with. Thus, preferring an indictment signifies prosecuting or trying an indictment.

To give advantage, priority, or privilege; to select for first payment, as to prefer one creditor over others. (Black’s Law Dictionary, 6the edition)

preference. The paying or securing to one or more of his creditors, by an insolvent debtor, the whole or a part of their claim, to the exclusion or detriment of the rest. The act of an insolvent debtor who, in distributing his property or in assigning it for the benefit of his creditors, pays or secures to one or more creditors the full amount of their claims or a larger amount than they would be entitled to receive on a pro rata distribution. Jackson v. Coons, 285 Ky. 154, 147 S.W. 2nd 45, 47. It imports the relation of existing creditors having equal equities at the time of the transfer whereby the rights of one are advanced over those of another. In re George Rodman, Inc., C.A. Okl. 792 F.2d 125, 127.

In bankruptcy law, a transfer by an insolvent debtor to one or more of his or her creditors whereby the creditor to whom the property was transferred is put in a better position than other creditors with respect to their priority claims to the assets of the insolvent. The bankruptcy trustee may disallow such preferential payments or transfers of property. Bankruptcy Code § 547. Se also Secured creditor; Voidable preference. (Black’s Law Dictionary, 6th edition)

preferential debts. In bankruptcy, those debts which are payable in preference to all others; as, wages of employees and administrative costs. Such debts are classified according to priority of claim. See Bankruptcy Code § 507. (Black’s Law Dictionary, 6th edition)

 

preferred. Possessing or accorded a priority, advantage, or privilege. Generally denoting a prior or superior claim or right of payment as against another thing of the same kind or class; e.g. creditor with perfected security interest. (Black’s Law Dictionary, 6th edition)

The word is relative; it refers to something else and it means that the thing to which it is attached, whatever that may be, has some advantage over another thing of the same character, which, but for this advantage, would be like all others. (Informal definition from lecture.)

preferred creditor. Creditor with preferential right to payment over junior creditors; e.g. creditor with perfected security interest has priority over unsecured creditor, U.C.C. § 9-301. See also, Preferential debts. (Black’s Law Dictionary, 6th edition)

 

presentment.

UCC 3-501. PRESENTMENT.

* (a) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument (i) to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank, or (ii) to accept a draft made to the drawee.

* (b) The following rules are subject to Article 4, agreement of the parties, and clearing-house rules and the like:

o (1) Presentment may be made at the place of payment of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; and is effective if made to any one of two or more makers, acceptors, drawees, or other payors.

o (2) Upon demand of the person to whom presentment is made, the person making presentment must (i) exhibit the instrument, (ii) give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (iii) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.

o (3) Without dishonoring the instrument, the party to whom presentment is made may (i) return the instrument for lack of a necessary indorsement, or (ii) refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule.

o (4) The party to whom presentment is made may treat presentment as occurring on the next business day after the day of presentment if the party to whom presentment is made has established a cut-off hour not earlier than 2 p.m. for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cut-off hour.

UCC 3-504. EXCUSED PRESENTMENT AND NOTICE OF DISHONOR.

* (a) Presentment for payment or acceptance of an instrument is excused if (i) the person entitled to present the instrument cannot with reasonable diligence make presentment, (ii) the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings, (iii) by the terms of the instrument presentment is not necessary to enforce the obligation of indorsers or the drawer, (iv) the drawer or indorser whose obligation is being enforced has waived presentment or otherwise has no reason to expect or right to require that the instrument be paid or accepted, or (v) the drawer instructed the drawee not to pay or accept the draft or the drawee was not obligated to the drawer to pay the draft.

* (b) Notice of dishonor is excused if (i) by the terms of the instrument notice of dishonor is not necessary to enforce the obligation of a party to pay the instrument, or (ii) the party whose obligation is being enforced waived notice of dishonor. A waiver of presentment is also a waiver of notice of dishonor.

* (c) Delay in giving notice of dishonor is excused if the delay was caused by circumstances beyond the control of the person giving the notice and the person giving the notice exercised reasonable diligence after the cause of the delay ceased to operate.

 

presumed.

Defined in the state Consumer Protection Act, Okla. Stat. 14A 1-301(15): "Presumed" or "presumption" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.

 

presumption.

UCC 1-201 General Definitions.

(31) "Presumption" or "presumed" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its non-existence.

 

prohibition. Inhibition; interdiction. Act or law prohibiting something, as 18th Amendment to the U.S. Const. (1920) prohibited the manufacture, sale, or transportation of intoxicating liquors, except for medicinal purposes (such Prohibition Amendment was repealed by 21st Amendment in 1933).

Writ or process. Prohibition is that process by which a superior court prevents an inferior court or tribunal possessing judicial or quasi-judicial powers from exceeding its jurisdiction in matters over which it has cognizance or usurping matters not within its jurisdiction to hear or determine. The Florida Bar, Fla., 329 So.2d 301, 302. A means of restraint on judicial personnel or bodies to prevent usurpation of judicial power, and its essential function is to confine inferior courts to their proper jurisdiction and to prevent them from acting without or in excess of their jurisdiction; it is preventive in nature rather than corrective. State ex rel. McDonnell Douglas Corp. v. Gaertner, Mo. App., 601 S.W. 2d 295, 296. (Black’s Law Dictionary, 6th edition)

NOTES: The Writ of Prohibition is one of the extraordinary writs, also known as common law writs.

 

promise.

UCC 3-103 DEFINITIONS

o (9) "Promise" means a written undertaking to pay money signed by the person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation.

UCC 3-106. UNCONDITIONAL PROMISE OR ORDER.

* (a) Except as provided in this section, for the purposes of Section 3-104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another writing, or (iii) that rights or obligations with respect to the promise or order are stated in another writing. A reference to another writing does not of itself make the promise or order conditional.

* (b) A promise or order is not made conditional (i) by a reference to another writing for a statement of rights with respect to collateral, prepayment, or acceleration, or (ii) because payment is limited to resort to a particular fund or source.

* (c) If a promise or order requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the promise or order, the condition does not make the promise or order conditional for the purposes of Section 3-104(a). If the person whose specimen signature appears on an instrument fails to countersign the instrument, the failure to countersign is a defense to the obligation of the issuer, but the failure does not prevent a transferee of the instrument from becoming a holder of the instrument.

* (d) If a promise or order at the time it is issued or first comes into possession of a holder contains a statement, required by applicable statutory or administrative law, to the effect that the rights of a holder or transferee are subject to claims or defenses that the issuer could assert against the original payee, the promise or order is not thereby made conditional for the purposes of Section 3-104(a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.

UCC 3-108. PAYABLE ON DEMAND OR AT DEFINITE TIME.

* (a) A promise or order is "payable on demand" if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (ii) does not state any time of payment.

* (b) A promise or order is "payable at a definite time" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of (i) prepayment, (ii) acceleration, (iii) extension at the option of the holder, or (iv) extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event.

* (c) If an instrument, payable at a fixed date, is also payable upon demand made before the fixed date, the instrument is payable on demand until the fixed date and, if demand for payment is not made before that date, becomes payable at a definite time on the fixed date.

UCC 3-109. PAYABLE TO BEARER OR TO ORDER.

* (a) A promise or order is payable to bearer if it:

o (1) states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;

o (2) does not state a payee; or

o (3) states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person.

* (b) A promise or order that is not payable to bearer is payable to order if it is payable (i) to the order of an identified person or (ii) to an identified person or order. A promise or order that is payable to order is payable to the identified person.

* (c) An instrument payable to bearer may become payable to an identified person if it is specially indorsed pursuant to Section 3-205(a). An instrument payable to an identified person may become payable to bearer if it is indorsed in blank pursuant to Section 3-205(b).

 

proper. A. adj. I. 1. Belonging to oneself or itself; (one’s or its) own; owned as property; that is the, or a, property or quality of the thing itself, intrinsic, inherent. Usually preceded by a possessive…

2. a. Belonging or relating to the person or thing in question distinctively (more than to any other), or exclusively (not to any other); special, particular, distinctive, characteristic; peculiar, restricted; private, individual; of its own. Opp. To common.

b. Gram. Applied to a name or noun which is used to designate a particular individual object (e.g. a person, a tame animal, a star, planet, country, town, river, house, shit, etc.). Opposed to common a.

A proper name is written with an initial capital letter… (The Oxford English Dictionary, Second Edition (1989))

 

prove.

UCC 3-103 DEFINITIONS

o (10) "Prove" with respect to a fact means to meet the burden of establishing the fact (Section 1-201(8)).

 

purchaser.

UCC 1-201 General Definitions.

(32) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien, issue or re-issue, gift or any other voluntary transaction creating an interest in property.

 

Quo Warranto. In old English practice, a writ in the nature of a writ of right for the king, against him who claimed or usurped any office, franchise, or liberty, to inquire by what authority he supported his claim, in order to determine the right. It lay also in case of non-user, or long neglect of a franchise, or misuser or abuse of it; being a writ commanding the defendant to show by what warrant he exercises such a franchise, having never had any grant of it, or having forfeited it by neglect or abuse. 3 Bl.Comm. 262.

A common law writ designed to test whether a person exercising power is legally entitled to do so. An extraordinary proceeding, prerogative in nature, addressed to preventing a continued exercise of authority unlawfully asserted. Johnson v. Manhatton Ry. Co., N.Y., 289 U.S. 479, 53 S.Ct. 721, 77 L.Ed. 1331. It is intended to prevent exercise of powers that are not conferred by law, and is not ordinarily available to regulate the manner of exercising such powers.

An ancient prerogative right through which the state acts to protect itself and the good of public generally through the chosen agents as provided by its Constitution and laws, though sometimes it is brought at instance of and for benefit of a private individual who may have a special interest. Lewis v. Drake, Tex.App., 641 S.W. 2d 392, 394. Legal action whereby legality of exercise of powers by municipal corporation may be placed in issue. People ex rel. City of Des Plaines v. Village of Mount Prospect, 29 Ill. App. 3d, 807, 331 N.E. 2d 373, 377.

In the law of corporations, quo warranto may be used to test whether a corporation was validly organized or whether it has power to engage in the business in which it is involved.

The federal rules are applicable to proceedings for quo warranto "to the extent that the practice in such proceedings is not set forth in statutes of the United States and has heretofore conformed to the practice in civil actions." Fed.R. Civil P. 81(a)(2). Any remedy that could have been obtained under the historic writ of quo warranto may be obtained by a civil action of that nature. U.S. v. Nussbaum, D.C.Cal., 306 F. Supp. 66. (Black’s Law Dictionary, 6th edition)

NOTES: The Writ of Quo Warranto is more or less the opposite of the Writ of Mandamus. Where mandamus compels performance, the quo warranto is designed to remove from office or abolish a franchise where there is an abuse of authority of acts which amount to de facto authority. It appears that process in the likeness of quo warranto existed in Roman Civil Law, it is considered to be a common law instrument where the course of the common law is the basic process for at law actions.

 

reacquisition.

UCC 3-207. REACQUISITION.

Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise. A former holder who reacquires the instrument may cancel indorsements made after the reacquirer first became a holder of the instrument. If the cancellation causes the instrument to be payable to the reacquirer or to bearer, the reacquirer may negotiate the instrument. An indorser whose indorsement is canceled is discharged, and the discharge is effective against any subsequent holder.

 

redeem. To buy back. To free property or article from mortgage or pledge by paying the debt for which it stood as security. To repurchase in a literal sense; as, to redeem one’s land from a tax sale. It implies the existence of a debt and means to rid property of that incumbrance. Talley v. Eastland, 259 Ky. 241, 82 S.W. 2d 368, 372. (Black’s Law Dictionary, 6th edition)

 

redemption. The realization of a right to have the title of property restored free and clear of the mortgage; performance of the mortgage obligation being essential for that purpose.

The right of a debtor, and sometimes of a debtor’s other creditors, to repurchase from a buyer at a forced sale property of the debtor that was seized and sold in satisfaction of a judgment or other claim against the debtor, which right usually is limited to forced sales of real property. Also, a bankruptcy term for extinguishing a lien on exempt property by making a cash payment equal to the value of the property.

The reacquisition of a security by the issuer pursuant to a provision in the security that specifies the terms on which the reacquistion may take place. A security is called for redemption when the issuer notifies the holder that the redemption privilege has been exercised. Typically, a holder of a security that has been called for redemption will have a limited period thereafter to decide whether or not to exercise the conversion right, if one exists.

A repurchase; a buying back. The act of a vendor of property in buying it back again from the purchaser at the same or an enhanced price. The process of annulling and revoking a conditional sale of property, by performance of the conditions on which it was stipulated to be revocable.

The process of cancelling and annulling a defeasible title to land, such as is created by a mortgage or a tax sale, by paying the debt or fulfilling the other conditions. The liberation of an estate from a mortgage. Webb v. Williamson, 202 Ark. 763, 152 S.W. 2d 312, 314. The liberation of a chattel from pledge or pawn, by paying the debt for which it stood as security.

Repurchase of notes, bonds, stock, bills, or other evidences of debt, by paying their value to their holders. The payment of principal and unpaid interest on bonds or other debt obligations.

Repurchase by corporation of its shares at a price equal to the net asset value of the shares on date a redemption request is received by the corporation. Kreis v. Mates Inv. Fund, Inc., D.C.Mo., 335 F. Supp. 1299, 1302. See als0o Stock (Stock redemption).

See also Certificate of redemption; Equitable redemption; Equity of redemption; Right of redemption; Tax redemption. (Black’s Law Dictionary, 6th edition)

NOTE: redemption is also a biblical term. See variously in Zondervan’s Pictorial Encyclopedia of the Bible, The Expanded Vines Expository Dictionary of New Testament Words, etc. The Vines publication cites Luke 24: 21 for a natural sense of delivering via the setting of Israel free from the Roman yoke. The sense here relates to liberating from foreign or de facto bondage.

 

rehypothecation. To pledge to another or to transfer to another a note, goods, or other collateral which have been already pledged; e.g. a broker may pledge securities pledged to him by a customer (under e.g. a margin account) to finance his borrowings from a bank. (Black’s Law Dictionary, 6th edition)

 

reif. A robbery. (Black’s Law Dictionary, 6th edition)

NOTES: A "reif" is a robbery. The "reification" policy endorsed by the Uniform Commercial Code is for all practical purposes "legalized robbery".

 

reification. The embodiment of a right to the payment of money in an instrument so that transfer of the instrument transfers also the right. The term can also refer generally to the embodiment of any other property in a writing, which writing represents the property. (Black’s Law Dictionary, 6th edition)

 

remedy.

UCC 1-201 General Definitions.

(34) "Remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.

 

remitter.

UCC 3-103 DEFINITIONS

o (11) "Remitter" means a person who purchases an instrument from

its issuer if the instrument is payable to an identified person

other than the purchaser.

 

representative.

UCC 1-201 General Definitions.

(35) "Representative" includes an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate, or any other person empowered to act for another.

 

res.

 

rescission of contract. To abrogate, annul, avoid, or cancel a contract; particularly, nullifying a contract by the act of a party. The right of rescission is the right to cancel (rescind) a contract upon the occurrence of certain kinds of default by the other contracting party. To declare a contract void in its inception and to put an end to it as though it never was. Russell v. Stepehens, 191 Wash. 314, 71 P.2d 30, 31. A "rescission" amounts to the unmaking of a contract, or an undoing of it from the beginning, and not merely a termination, and it may be effected by mutual agreement of parties, or by one of the parties declaring rescission of contract without consent of other if a legally sufficient ground therefor exists, or by applying to courts for a decree of rescission. Adballah, Inc. v. Martin, 242 Minn. 416, 65 N.W. 2d 641, 644. It necessarily involves a repudiation of the contract and a refusal of the moving party to be further bound by it. Nonetheless, not every default in a contract will give rise to a right of recission. See also Cancellation; Renunciation; repudiation; Revocation; Termination.

An action of an equitable nature in which a party seeks to be relieved of his obligations under a contract on the grounds of mutual mistake, fraud, impossibility, etc. (Black’s Law Dictionary, 6th edition)

UCC 2-209. Modification, Rescission and Waiver.

(1) An agreement modifying a contract within this Article needs no consideration to be binding.

(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

(3) The requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions.

(4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver.

(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

 

retail.

 

rights.

UCC 1-201 General Definitions.

(36) "Rights" includes remedies.

UCC 1-207. Performance or Acceptance Under Reservation of Rights.

(1) A party who with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest" or the like are sufficient.

(2) Subsection (1) does not apply to an accord and satisfaction.

[Note: As amended in 1990.]

 

secured party.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (m) "Secured party" means a lender, seller or other person in whose favor there is a security interest, including a person to whom accounts or chattel paper have been sold. When the holders of obligations issued under an indenture of trust, equipment trust agreement or the like are represented by a trustee or other person, the representative is the secured party;

 

security.

 

Security agreement.

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (l) "Security agreement" means an agreement which creates or provides for a security interest;

 

security interest. (elements necessary to perfect a security interest at UCC 9-203)

UCC 1-201 General Definitions.

(37) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (Section 2-401) is limited in effect to a reservation of a "security interest". The term also includes any interest of a buyer of accounts or chattel paper which is subject to Article 9. The special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 2-401 is not a "security interest", but a buyer may also acquire a "security interest" by complying with Article 9. Unless a consignment is intended as security, reservation of title thereunder is not a "security interest", but a consignment in any event is subject to the provisions on consignment sales (Section 2-326).

Whether a transaction creates a lease or security interest is determined by the facts of each case; however, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and

* (a) the original term of the lease is equal to or greater than the remaining economic life of the goods,

* (b) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods,

* (c) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement, or

* (d) the lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.

A transaction does not create a security interest merely because it provides that

* (a) the present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into,

* (b) the lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing, recording, or registration fees, or service or maintenance costs with respect to the goods,

* (c) the lessee has an option to renew the lease or to become the owner of the goods,

* (d) the lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed, or

* (e) the lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.

For purposes of this subsection (37):

* (x) Additional consideration is not nominal if (i) when the option to renew the lease is granted to the lessee the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed, or (ii) when the option to become the owner of the goods is granted to the lessee the price is stated to be the fair market value of the goods determined at the time the option is to be performed. Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease agreement if the option is not exercised;

* (y) "Reasonably predictable" and "remaining economic life of the goods" are to be determined with reference to the facts and circumstances at the time the transaction is entered into; and

* (z) "Present Value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate is not manifestly unreasonable at the time the transaction is entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.

 

send.

UCC 1-201 General Definitions.

(38) "Send" in connection with any writing or notice means to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and in the case of an instrument to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances. The receipt of any writing or notice within the time at which it would have arrived if properly sent has the effect of a proper sending.

 

signature.

UCC 3-401. SIGNATURE.

* (a) A person is not liable on an instrument unless (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under Section 3-402.

* (b) A signature may be made (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing.

UCC 3-402. SIGNATURE BY REPRESENTATIVE.

* (a) If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be bound if the signature were on a simple contract. If the represented person is bound, the signature of the representative is the "authorized signature of the represented person" and the represented person is liable on the instrument, whether or not identified in the instrument.

* (b) If a representative signs the name of the representative to an instrument and the signature is an authorized signature of the represented person, the following rules apply:

o (1) If the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument.

o (2) Subject to subsection (c), if (i) the form of the signature does not show unambiguously that the signature is made in a representative capacity or (ii) the represented person is not identified in the instrument, the representative is liable on the instrument to a holder in due course that took the instrument without notice that the representative was not intended to be liable on the instrument. With respect to any other person, the representative is liable on the instrument unless the representative proves that the original parties did not intend the representative to be liable on the instrument.

* (c) If a representative signs the name of the representative as drawer of a check without indication of the representative status and the check is payable from an account of the represented person who is identified on the check, the signer is not liable on the check if the signature is an authorized signature of the represented person.

UCC 3-403. UNAUTHORIZED SIGNATURE.

* (a) Unless otherwise provided in this Article or Article 4, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified for all purposes of this Article.

* (b) If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.

* (c) The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this Article which makes the unauthorized signature effective for the purposes of this Article.

UCC 3-404. IMPOSTORS; FICTITIOUS PAYEES.

* (a) If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or to a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the payee, an indorsement of the instrument by any person in the name of the payee is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

* (b) If (i) a person whose intent determines to whom an instrument is payable (Section 3-110(a) or (b)) does not intend the person identified as payee to have any interest in the instrument, or (ii) the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special indorsement:

o (1) Any person in possession of the instrument is its holder.

o (2) An indorsement by any person in the name of the payee stated in the instrument is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

* (c) Under subsection (a) or (b), an indorsement is made in the name of a payee if (i) it is made in a name substantially similar to that of the payee or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.

* (d) With respect to an instrument to which subsection (a) or (b) applies, if a person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from payment of the instrument, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.

UCC 3-405. EMPLOYER'S RESPONSIBILITY FOR FRAUDULENT INDORSEMENT BY EMPLOYEE.

* (a) In this section:

o (1) "Employee" includes an independent contractor and employee of an independent contractor retained by the employer.

o (2) "Fraudulent indorsement" means (i) in the case of an instrument payable to the employer, a forged indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee.

o (3) "Responsibility" with respect to instruments means authority (i) to sign or indorse instruments on behalf of the employer, (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the name of the employer, (iv) to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to act otherwise with respect to instruments in a responsible capacity. "Responsibility" does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.

* (b) For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent indorsement of the instrument, the indorsement is effective as the indorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.

* (c) Under subsection (b), an indorsement is made in the name of the person to whom an instrument is payable if (i) it is made in a name substantially similar to the name of that person or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.

UCC 3-406. NEGLIGENCE CONTRIBUTING TO FORGED SIGNATURE OR ALTERATION OF INSTRUMENT.

* (a) A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.

* (b) Under subsection (a), if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

* (c) Under subsection (a), the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under subsection (b), the burden of proving failure to exercise ordinary care is on the person precluded.

 

State.

Defined for the Federal Consumer Protection Act at 15 U.S.C. § 1602(r): The term "State" refers to any State, the Commonwealth of Puerto Rico, the District of Columbia, and any territory or possession of the United States.

Application for Federal Rules of Criminal Procedure at Rule 54(c): "State" includes District of Columbia, Puerto Rico, territory and insular possession. (Title 18 U.S.C.)

 

Statute of frauds.

UCC 1-206. Statute of Frauds for Kinds of Personal Property Not Otherwise Covered.

(1) Except in the cases described in subsection (2) of this section a contract for the sale of personal property is not enforceable by way of action or defense beyond five thousand dollars in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.

(2) Subsection (1) of this section does not apply to contracts for the sale of goods (Section 2-201) nor of securities (Section 8-319) nor to security agreement (Section 9-203).

UCC 2-201. Formal Requirements; Statute of Frauds.

(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed

upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.

(2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.

(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable

* (a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or

* (b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or

* (c) with respect to goods for which payment has been made and accepted or which have been received and accepted (Sec. 2-606).

 

stipulation. A material condition, requirement, or article in an agreement.

The name given to any agreement made by the attorneys engaged on opposite sides of a cause (especially if in writing), regulating any matter incidental to the proceedings or trial, which falls within their jurisdiction. Voluntary agreement between opposing counsel concerning disposition of some relevant point so as to obviate need for proof or to narrow range of laitigable issues. Arrington v. State, Fla., 233 So. 2d 634, 636. An agreement, admission or confession made in a judicial proceeding by the parties thereto or their attorneys. Bourne v. Atchison, T. & S.F. Ry. Co., 209 Kan. 511, 497 P. 2d 110, 114. Such are evidentiary devises used to simplify and expedite trials by dispensing with the need to prove formally uncontested factual issues. Paschen v. Ratliff City Trucking Co., Okl.App., 637 P. 2d 591, 593.

Siipulations made during the course of trial may involve jury of less than twelve (Fed.R.Civil P. 48), master’s finding (Rule 53(e)(4)), dismissal of action (Rule 41(a)), or discovery, see below.

A reocgnizance of certain persona (called in the old law "fide jussors") in the nature of bail for the appearance of a defendant. 3 Bl.Comm. 108.

See also Admission, Pre-trial conference; Proviso.

Discovery. Unless the court orders otherwise, the parties may by written stipulation (1) provide that depositions may be taken before any person, at any time or place, upon any notice, and in any manner and when so taken may be used like other depositions, and (2) modify the procedures provided by these rules for other methods of discovery, except that stipulations extending the time provided in Rules 33, 34, and 36 for responses to discovery may be made only with the approval of the court. Fed.R.Civil P. 29. (Black’s Law Dictionary, 6th edition)

 

stock. The capital of a merchant, tradesman, or other person including his merchandise, money, and credits. The goods and wares he has for sale or traffic. Stock is property, not credit. (Informal definition from lecture.)

 

stramineus homo. L. Lat. A man of straw, one of no substance, put forward as bail or surety. (Black’s Law Dictionary, 6th edition)

 

straw man or party. A "front"; a third party who is put up in name only to take part in a transaction. Nominal party to a transaction; one who acts as an agent for another for the purpose of taking title to real property and executing whatever documents and instruments the principal may direct respecting the property. Person who purchases property for another to conceal identity of real purchaser, or to accomplish some purpose otherwise not allowed. (Black’s Law Dictionary, 6th edition)

 

subordinate obligations.

UCC 1-209. Subordinated Obligations.

An obligation may be issued as subordinated to payment of another obligation of the person obligated, or a creditor may subordinate his right to payment of an obligation by agreement with either the person obligated or another creditor of the person obligated. Such a subordination does not create a security interest as against either the common debtor or a subordinated creditor. This section shall be construed as declaring the law as it existed prior to the enactment of this section and not as modifying it.

[Note: Added 1966.]

[Note: This new section is proposed as an optional provision to make it clear that a subordination agreement does not create a security interest unless so intended.]

 

surity.

UCC 1-201 General Definitions.

(40) "Surety" includes guarantor.

 

surname. sb. 1. A name, title, or epithet added to a person’s name or names, esp. one derived from his birthplace or from some quality or achievement.

2. The name which a person bears in common with the other members of his family, as distinguished from his Christian or given name; a family name.

3. A family, clan.

surname, v. To give a surname to: chiefly pass.

1. trans. To give an additional name, title, or epithet to (a person).

2. To give such-and-such a surname to; to call (a person) by his surname or family name.

3. To call by another or additional name; to attach another appellation or designation to; more widely, to designate, entitle. (The Oxford English Dictionary, Second Edition (1989))

 

tender of payment.

UCC 2-511. Tender of Payment by Buyer; Payment by Check.

(1) Unless otherwise agreed tender of payment is a condition to the seller's duty to tender and complete any delivery.

(2) Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives any extension of time reasonably necessary to procure it.

(3) Subject to the provisions of this Act on the effect of an instrument on an obligation (Section 3-802), payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.

 

thing. By this word is understood every object, except man, which may become (futures) an active subject of right. In this sense, in the language of the law, it is opposed to the word "person." See chose, property, in res. (Informal definition given in lecture.)

 

transfer of instrument.

UCC 3-203. TRANSFER OF INSTRUMENT; RIGHTS ACQUIred BY TRANSFER.

* (a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

* (b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

* (c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.

* (d) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this Article and has only the rights of a partial assignee.

 

transmitting utility. [relates to "straw man"]

UCC 9-105 Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires:

* (n) "Transmitting utility" means any person primarily engaged in the railroad, street railway or trolley bus business, the electric or electronics communications transmission business, the transmission of goods by pipeline, or the transmission or the production and transmission of electricity, steam, gas or water, or the provision of sewer service.

NOTES: The JOHN DOE character named on institutional and judicial paperwork rather than John Doe is a nonexistent juristic entity. John Doe is made liable for JOHN DOE. This "Straw Man" character is created for commercial purposes as the "transmitting utility" to pull John Doe into what amounts to private international law. The Uniform Commercial Code is the vehicle employed for this purpose in what amounts to an elaborate system of private State and Federal courts.

 

unauthorized.

UCC 1-201 General Definitions.

(43) "Unauthorized" signature means one made without actual, implied, or apparent authority and includes a forgery.

 

United States.

Definition at 18 U.S.C. § 5: The term "United States", as used in this title in a territorial sense, includes all places and waters, continental and insular, subject to the jurisdiction of the United States, except the Canal Zone.

 

United States District Court. The "United States District Court" was defined in Balzac v. People of Porto Rico, 258 U.S. 298 (1922):

"The United States District Court is not a true United States court established under article 3 of the Constitution to administer the judicial power of the United States therein conveyed. It is created by virtue of the sovereign congressional faculty, granted under article 4, 3, of that instrument, of making all needful rules and regulations respecting the territory belonging to the United States. The resemblance of its jurisdiction to that of true United States courts, in offering an opportunity to nonresidents of resorting to a tribunal not subject to local influence, does not change its character as a mere territorial court. Nor does the legislative recognition that federal constitutional questions may arise in litigation in Porto Rico have any weight in this discussion."

 

usurpation. The unlawful encroachment or assumption of the use of property, power or authority which belongs to another. An interruption or the disturbing a man in his right and possession.

The unlawful seizure or assumption of sovereign power. The assumption of government or supreme power by force or illegally, in derogation of the constitution and of the rights of the lawful ruler.

Usurpation for which writ of prohibition may be granted involves attempted exercise of power not possessed by inferior officer. (Black’s Law Dictionary, 6th edition)

 

usurpation of advowson. An injury which consists in the absolute ouster or dispossession of the patron from the advowson or right of presentation, and which happens when a stranger who has no right presents a clerk, and the latter is thereupon admitted and instituted. (Black’s Law Dictionary, 6th edition)

 

usurpation of franchise of office. The unjustly intruding upon or exercising any office, franchise, or liberty belonging to another. "Usurpation" of public office authorizing quo warranto action under statute may be with or without forcible seizure of office and prerogatives thereof, and may consist of more unauthorized assumption and exercise of power in performing duties of office upon claim of right thereto. State ex rel Kirk v. Wheatley, 133 Ohio St. 164, 12 N.E. 2d 491, 493, 10 O.O. 236. (Black’s Law Dictionary, 6th edition)

 

value.

UCC 1-201 General Definitions.

(44) "Value". Except as otherwise provided with respect to negotiable instruments and bank collections (Sections 3-303, 4-208 and 4-209) a person gives "value" for rights if he acquires them

* (a) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection; or

* (b) as security for or in total or partial satisfaction of a pre-existing claim; or

* (c) by accepting delivery pursuant to a pre-existing contract for purchase; or

* (d) generally, in return for any consideration sufficient to support a simple contract.

UCC 3-303. VALUE AND CONSIDERATION.

* (a) An instrument is issued or transferred for value if:

o (1) the instrument is issued or transferred for a promise of performance, to the extent the promise has been performed;

o (2) the transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding;

o (3) the instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;

o (4) the instrument is issued or transferred in exchange for a negotiable instrument; or

o (5) the instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.

* (b) "Consideration" means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in subsection

(a), the instrument is also issued for consideration.

 

waiver.

UCC 1-107. Waiver or Renunciation of Claim or Right After Breach.

Any claim or right arising out of an alleged breach can be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party.

Also, see "rescission".

 

warranties.

UCC 3-417. PRESENTMENT WARRANTIES.

* (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, (i) the person obtaining payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that:

o (1) the warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;

o (2) the draft has not been altered; and

o (3) the warrantor has no knowledge that the signature of the drawer of the draft is unauthorized.

* (b) A drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft, breach of warranty is a defense to the obligation of the acceptor. If the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from any warrantor for breach of warranty the amounts stated in this subsection.

* (c) If a drawee asserts a claim for breach of warranty under subsection (a) based on an unauthorized indorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the indorsement is effective under Section 3-404 or 3-405 or the drawer is precluded under Section 3-406 or 4-406 from asserting against the drawee the unauthorized indorsement or alteration.

* (d) If (i) a dishonored draft is presented for payment to the drawer or an indorser or (ii) any other instrument is presented for payment to a party obliged to pay the instrument, and (iii) payment is received, the following rules apply:

o (1) The person obtaining payment and a prior transferor of the instrument warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the instrument, a person entitled to enforce the instrument or authorized to obtain payment on behalf of a person entitled to enforce the instrument.

o (2) The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.

* (e) The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) or (d) is discharged to the extent of any loss caused by the delay in giving notice of the claim.

* (f) A [cause of action] for breach of warranty under this section accrues when the claimant has reason to know of the breach.

UCC 3-416. TRANSFER WARRANTIES.

* (a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that:

o (1) the warrantor is a person entitled to enforce the instrument;

o (2) all signatures on the instrument are authentic and authorized;

o (3) the instrument has not been altered;

o (4) the instrument is not subject to a defense or claim in recoupment of any party which can be asserted against the warrantor; and

o (5) the warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.

* (b) A person to whom the warranties under subsection (a) are made and who took the instrument in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.

* (c) The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) is discharged to the extent of any loss caused by the delay in giving notice of the claim.

* (d) A [cause of action] for breach of warranty under this section accrues when the claimant has reason to know of the breach.

 

 

warranty of title.

UCC 2-312. Warranty of Title and Against Infringement; Buyer's Obligation Against Infringement.

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that

* (a) the title conveyed shall be good, and its transfer rightful; and

* (b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.

(2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.

(3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.