Offshore Financial Freedom 2

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OFFSHORE AND ASSET PROTECTION GUIDE 2
COPYRIGHT AND DISCLAIMER
Copyright
All text, graphics, the selection and arrangement thereof (unless otherwise
noted) are Copyright 1997-2016, Top Secret Publishing (TSP), 5025 N Central
Ave #414, Phoenix, AZ 85012 USA. ALL RIGHTS RESERVED.
Some of the article contained in this report are considered Bonus articles,
provided as a benefit to the reader. All Bonus articles are copyright their
respective authors.
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PAGE 2 OF 337
TABLE OF CONTENTS
TRUST OVERVIEW.............................................................................. 5
CITIZENSHIP - INSIDER'S GUIDE TO INSTANT CITIZENSHIPS AND
SECOND PASSPORTS....................................................................... 21
PERSONAL PRIVACY AND PROTECTION MAIL DROPS......................28
KEEPING UP WITH THE JONESES WILL STUNT YOUR GROWTH......35
GUIDE TO OBTAINING VITAL RECORDS BIRTHS, DEATHS,
MARRIAGES, AND DIVORCES...........................................................40
OFFSHORE ORIENTATION EXERCISE...............................................45
ALL YOU EVER WANTED TO KNOW ABOUT TRUSTS.........................58
A COMPARISON OF METHODS OF DOING BUSINESS.......................62
CONTRACT TRUST - COURT CITES AND INTERNAL REVENUE CODE
.......................................................................................................... 63
VARIOUS STRATEGY DESCRIPTIONS...............................................70
MAYBE IT'S TIME FOR A BUSINESS TRUST!......................................75
MORE TRUST TOPICS....................................................................... 81
THE BUSINESS TRUST: THE INTELLIGENT BUSINESS ALTERNATIVE
FOR THE SELF-EMPLOYED...............................................................87
CASES PERTAINING TO TRUSTS BUSINESS TRUST ORGANIZATIONS
AND THE CONTRACTUAL COMPANY.................................................96
EDUCATIONAL PURPOSES ONLY - TAX TIPS...................................100
PROSPER INTERNATIONAL LEAGUE LTD. - FREQUENTLY ASKED
QUESTIONS (FAQ'S)........................................................................102
SECRETS OF THE IRREVOCABLE PURE BUSINESS TRUST............114
AN INTRODUCTION TO THE BUSINESS TRUST (U.B.O.)..................120
OFFSHORE BUSINESS, FINANCE, AND CREDIT - THE SIMPLE WAY
........................................................................................................ 130
THE NEW COLOSSUS? OR PRIVACY: GONE WITH THE WIND?.......131
WORLDWIDE INVESTING: USING YOUR OFFSHORE BANK ACCOUNT
AS A SWORD................................................................................... 135
OFFSHORE MUTUAL FUNDS: HOW DO WE TAX THOSE SUCKERS?
........................................................................................................ 138
A LAND PATENT............................................................................... 140
PAGE 3 OF 337
LAND PATENTS AND ALLODIAL TITLES...........................................169

INTERVIEW: CAROL LANDI ON LAND PATENTS AND TREATY LAW..188
HOW...WHERE ...TO OBTAIN CERTIFIED FEDERAL LAND PATENT
(FLP)................................................................................................ 203
LAND PATENTS, EJECTMENTS, AND ESTOPPEL.............................205
LAND PATENT STOPS BIDDING AT SHERIFF SALE..........................208
PROCEDURE TO FOLLOW IN THE ENFORCEMENT OF A UNITED
STATES LAND PATENT OR LAND GRANT.........................................209
MEMORANDUM OF LAW HISTORY, FORCE & EFFECT OF THE LAND
PATENT............................................................................................ 214
ALLODIAL AND LAND PATENTS TITLES...........................................246
LAND-MINE LEGISLATION...............................................................285
THE OATH THAT NULLIFIES.............................................................293
BIG BROTHER'S CON......................................................................296
THIS OVERVIEW OF THE INTERNATIONAL BUSINESS COMPANY AND
ASSET PROTECTION TRUSTS IS A LARGE AND DETAILED FILE.....305
ASSET PROTECTION TRUSTS - THE MODERN METHOD OF WEALTH
PRESERVATION...............................................................................320
PAGE 4 OF 337
TRUST OVERVIEW
NOTICE - This publication is designed to provide accurate and authoritative

information in regards to the subject matter covered. It is distributed with the
understanding that the publisher is not engaged in rendering legal, accounting,
or other professional services. If legal advice or other expert assistance is
required, the services of a competent professional person should be sought.
(From a Declaration of Principles jointly adopted by a Committee of the
American Bar Association and a Committee of Publishers and Associations.)
What Is A Trust?
A Trust is a Contract in which the Settlor (or Creator, or Trustor, or Grantor)
transfers property (real, personal or both) to one or more Trustees to be held
and/or managed for one or more Beneficiaries.
There are many types of trusts in use today for a variety of reasons. There
are "Short-Term Trusts", "Simple Trusts", "Complex Trusts", "Clifford Trusts",
"Crummey Trusts", "Revocable Inter-Vivos Trusts", "Section 2503(b) Trusts",
"Alimony Trusts", "Foreign Trusts", "Life Insurance Trusts", "irrevocable Inter-
Vivos Trusts", "Testamentary Trusts", "Pourover Trusts", "Generation-Skipping
Trusts" and the like.
This document is concerned primarily with what is termed a "Pure Trust",
basically because of the advantages it has to offer over the other types of trust.
This type of trust can be termed "intervivos" or "living" simply because these
terms apply to any trust which is established during the lifetime of the Settlor,
rather than at his death. It is also termed "irrevocable", because once it has been
set up, the Settlor has no power to change his mind and cancel the trust
organization. It is termed "active" rather than passive because the trustees have
actual duties to perform in administering and conserving the trust estate. It is
termed "nonreversionary" because the Settlor does not get anything back when
the trust terminates. It can be either "simple" (income distributed currently) or
"complex" (income can be accumulated).
Where Do Trusts Come From?

Trusts have had a long history of usage. Plato used a non-profit trust to
finance his university in Greece about 400 BC. Trusts were known in Roman law
as well. In England, trusts were in use as early as the 11th century, and by the
15th century, were being enforced by the Courts of Chancery. In England, many
burdens and conditions fell upon the holder of legal title to real estate. For
example, the lord of the land was entitled to relief or money payments when the
land was passed on to an heir of full age. The lord was given the right to claim
wardship fees when the son of the former owner was a minor. The lord was also
entitled to aid or tax money to pay for the marriage of the lord's daughter or the
knighting of the lord's eldest son. In addition, the owner of the land was usually
PAGE 5 OF 337
prohibited from selling the land or dividing it among his children or grandchildren.
If the owner of the land was convicted of a crime, he forfeited all he owned to the
lord or the king, thereby leaving his family impoverished. These are some of the
major restrictions. There were nearly 100 other taxes and limitations on the
ownership of land.
It was to avoid these restrictions that trusts were first created in England.
They were designed to avoid the application of these rigid laws by allowing the
Settlor to vest legal title in a trustee on behalf of a wife, son, daughter or other
person as beneficiary. It had many advantages, including that it could be kept
secret. Trusts were also used early in English history to allow religious
organizations to use property charitably bestowed which would otherwise not be
able to be enjoyed due to certain restrictions against land ownership by
churches and religious organizations. The English also used (and still use) trusts
to avoid probate of an estate.
What About Here In The United States?

Pure trust organizations arrived in America with the colonists. The first pure
trust of record here was drafted by the famous attorney and patriot Patrick Henry
in 1765, 24 years before the adoption of the- Constitution, for Governor Robert
Morris of the Virginia Colony, who was a prominent financier of the American
Revolution. Known as the North American Land Company, this pure trust is still
in operation today, over 200 years later.
In 1804, William Bingham, a man reputed to be the richest American when
the thirteen colonies won independence, started a pure trust for his vast estate.
At one time, the truss owned two million acres in Maine that sold about the time
of the Civil War. Besides being a very large landowner, Bingham was a Senator
from Pennsylvania of the Second United States Congress. The trust was
terminated by the trustees in 1964, after some 160 years of operation. It was
terminated because of the multiplication of beneficiaries (total 315) and the sale
of the last properties involved. Throughout the years, the income from property
or proceeds from the sale of the land was distributed to the beneficiaries. At the
time of liquidation, it had no termination date. It was not affected during its period
of existence by the death of its Creator, or Settlor, or by succeeding Trustees,
probate procedures, or death transfer taxes.
One of the outstanding examples of the Pure Trust is the Mesabi Trust,
which owns the reserves of the famous Mesabi iron deposits in Minnesota. This
Trust receives the royalty payments from iron deposits -- then distributes the
royalties to the holders of Mesabi's certificates of beneficial interest. Mr. Arnold
Hoffman, then president of the Mesabi Iron Company, transferred the assets of
the company to a Pure Trust -- then announced in the Wall Street Journal on
March 14, 1961, that the Commissioner of the Internal Revenue had ruled that
the Trust would not constitute an association of persons taxable as a
corporation. The shares of beneficial interest are traded daily on the New York
Stock Exchange.
PAGE 6 OF 337
Edward H. Hines, a multimillionaire building supplier, established a $12

million trust in 191C, and he headed his business until his death in 1931. His
two sons, Ralph J. and Charles, succeeded the elder Hines as Trustees of the
trust and retained trusteeship of their father's trust after a court fight instituted by
two nieces, a sister, and a nephew, all seeking to break the trust by claiming that
the administration of the family estate had been erroneous. The court ruled that
the Pure Trust was not an erroneous method of managing the assets, and in fact
was a valid and legal arrangement for the estate. Ralph J. Hines, the eldest son
and head trustee, died in 1950, and again the family assets in the Pure Trust
were not disturbed by estate and inheritance taxes. The younger brother,
Charles, subsequently became the head trustee, handling the trust for many
years. The Edward H. Hines Lumber Company (A Trust) is still operating today,
preserved for future generations intact.
Another example of the Pure Trust used for a family estate is that of the
Joseph Kennedy family. Joseph Kennedy, father of John F. Kennedy, originally
established a Pure Trust to own the famous Chicago Merchandise Mart. The
Kennedy family is known to maintain several other Pure Trusts for tax shelter
purposes as well. One such trust was reported with the caption: "Kennedy
Divides Merchandise Mart", Chicago Tribune, March 22, 1947. "A trust
agreement in which Kennedy's wife, Rose f. Kennedy, and a long time friend and
associate, John L. Ford, joined as trustees of this trust, and formed several
years before, helped materially in distributing ownership in this Thirty Million
(30,000,000) Dollar Merchandise Mart, among members of his family. It is said
that many of these trusts are domiciled in the Fiji Islands of the South Pacific."
William Waldorf Astor created a Fifty Million (50,000,000) Dollar trust estate, by a
conveyance to trustees, recorded in New York, August IS, 1919;, and saved his
heirs several million dollars which would have gone for probate costs and death
taxes, had the estate been distributed by the court instead of trustees.
The Rockefeller family has used various kinds of trusts as a means of
maximizing privacy. Before his death in 1937, John D. Rockefeller tucked much
of his fortune into about 70 trusts for his descendents. The vast web of individual
and group funds represent assets of considerably more than One Billion Dollars.
Nelson A. Rockefeller and his generation are believed to be reducing their
personal holdings by the creation of still more trusts for their own grandchildren
and greatgrandchildren. It has been reported to one source that there are "well
over 100 and perhaps 250 individual Rockefeller trusts" by now. Many of these
trusts are known to be Pure Trusts to place the funds beyond the reach of the
high cost of probate.
H. L. Hunt, the Texas oil billionaire, is reported to have paid $75,000 for the
setting up of the first Hunt family Pure Trust. Hunt then formed at least 25
additional trusts. The trusts seem to follow the names of the Hunt family
members, such as the following:
1. Ruth Ray Hunt Trust Estate - this trust owns a large percentage of the
Hunt Oil Company, estimated to be worth in excess of One Billion Dollars.
2. Caroline Hunt Sands Trust Estate - this trust is estimated to be worth at
least One Hundred Million Dollars.
PAGE 7 OF 337
3. Ray Lee Hunt Trust Estate - this trust bought the Jefferson Dallas Hotel
in downtown Dallas, Texas. Ray Hunt called the purchase by his family's trust
an excellent investment according to the Dallas Morning News. The entire
transaction was kept secret because the City of Dallas wrote off $21,491 on real
estate taxes owed on the Hotel a few weeks before it was revealed that the Hunt
family interests were involved.
4. Nelson Bunker Hunt Trust Estate.
5. Ruth Jane Hunt Trust Estate.
6. Helen Hunt Kreiling Trust Estate.
7. Swanee Hunt Trust Estate.
8. Hassle Hunt Trust - this trust is involved in the new exploratory oil drilling
efforts in the Permian Basin of West Texas and Southwestern New Mexico.
Some persons who claim to have been close to the Hunt family estimate
that there may be as many as 200 Hunt family trusts now in existence. The
recent death of H. L. Hunt will not effect any of these trust estates, as this family
has arranged their affairs so as to increase the estate generation after
generation, rather than see the estate cut to shreds by the high costs of probate.
Even Ronald Reagan has established a trust. Set up in 1966, the "Ronald
Reagan Trust" has enabled him to receive sizable tax advantages. In some
years since it was established, Mr. Reagan paid no taxes at all, while
maintaining a magnificent living standard.
These are but a few of the many family estates that are preserved
generation after generation through the use of the Pure Trust organization,
Okay, So I'll Consider A Trust, Doesn't The IRS Attack Trusts?

The Internal Revenue Service is nothing more than a collection agency for
the federal government. As a collection agency, it attempts to collect as large of
sums as possible from taxpayers. To that end, the IRS is constantly trying to
discourage people from doing anything that might have the effect of saving tax
dollars, as the more you pay, the better it is for the IRS. However, there is
nothing sinister, evil, immoral, or illegal about paying as little as the law allows
you to pay in taxes. A judge highly respected for his legal opinions and often
quoted, Judge Learned Hand, had this to say on that subject, in the case of
Helvering v. Gregory, 60 F.2d 809. "Anyone may arrange his affairs so that his
taxes shall be as low as possible; he is not bound to choose that pattern which
best pays the Treasury; there is not even a patriotic duty to increase one's taxes.
Over and over again courts have said that there is nothing sinister in so
arranging affairs as to keep taxes as low as possible, everyone does it, rich and
poor alike and all do right; for nobody owes any public duty to pay more than the
law demands. Taxes are an enforceable extraction, and not a voluntary
contribution."
Unfortunately, the IRS is not above using every technique in the book to
collect as much in taxes as possible and will not give out information that would
help people to reduce their tax burdens. They intentionally give out press
PAGE 8 OF 337
releases that seem to indicate that certain tax-saving devices are in some way
illegal or a sham, to deliberately mislead and confuse the uninformed public, and
thereby frighten people into a poor tax posture, i.e., paying more than they really
have to pay in taxes. These and numerous other less subtle abuses of the
American public led former IRS Commissioner T. Coleman Andrews to write his
expose on why the IRS should be dissolved. Printed in the April 22, 1956 edition
of the American Weekly, the article was entitled "Let's Abolish The Income Tax!"
Because trusts do have a potential for tax savings, they quite often become
targets of these techniques as well. Take the example of a Montana doctor who
established a trust and then requested that the IRS audit him each year. After
audit, the IRS did not issue a statutory Notice of Deficiency indicating that more
taxes were due. The doctor then requested that the IRS issue a ruling about the
trust. After meeting with the doctor's attorney, the IRS did indeed issue a ruling.
However, the ruling did not discuss the doctor's type of trust at all. In fact, it was
carefully worded to sound as close to that type of trust as possible, without
actually applying to it. The IRS deliberately discussed a trust with obvious
defects, which did not exist in the doctor's trust at all. There was no way that the
ruling could be applied to the doctor's trust. However, the IRS immediately sent
press releases to newspapers all over the country with the catchy line "IRS
Closes Loophole On Family Trust", a classic example of this technique of using
the press to mislead and misinform the American Public.
Unfortunately, the IRS has only a very few people who really understand
Trusts at all. If you should choose to set up a trust, this could work either way.
I.E., the particular office in charge of examining your trust return might do nothing
with It at all, which is what they should do, assuming of course that the return is
correct. However, this ignorance in trust matters might lead someone in that
office to question the return, especially if the agent is one of the over-zealous
types who likes to try to intimidate people. However, this possibility is not unique
to trusts. This can just as easily happen regardless, as the increasing complexity
in the tax laws has made it impossible for anyone to know everything there is to
know about taxes. Obviously, if no one knows all there is to know about taxes,
this means that everyone is ignorant about some areas of the tax law. It is this
ignorance that makes efficient and even-handed operation of the IRS impossible,
and most certainly leads to abuses.
Couldn't I Get My Bank To Set Up My Trust And Be The Trustee?

A very large number of trusts today are set up by and run by banks. Some
people seem to be quite happy with this arrangement, but in order to do it that
way, you have to be willing to totally trust the bank's ability to manage your
assets. Most banks will insist on having full control over the assets, including the
power to sell and invest them as they see fit, all without any input from you or
your experience in managing these assets in the past. In addition, if the bank
should choose bad investments, and lose all of the trust's assets, it would be
extremely difficult, if not impossible, to hold the bank accountable for its judgment
in making those investments.
PAGE 9 OF 337
With the Pure Trust, you have the ability to choose those individuals whom
you feel are trustworthy and qualified to handle those assets you have worked
so long and hard to accumulate.
What About An Attorney To Help Set Up The Trust?

It is not easy to find a competent attorney who knows about Pure Trusts and
who would be willing to assist you in setting one up. The reason for this is that
the business of probate makes up an extremely large portion of the legal
profession's source of income. It certainly is not profitable for lawyers to put
themselves out of the probate business. Many lawyers have turned down
judgeships to remain probate attorneys. Probate attorneys are very well paid,
especially in terms of the amount and the difficulty of the work involved.
When Norman Dacey wrote his book How To Avoid Probate, he was fought
every inch of the way by the American Bar Association who tried unsuccessfully
all the way to the Supreme Court to prevent the publication of the book. As well
as denouncing the probate racket, Mr. Dacey claimed that less than I% of all
attorneys understand the intervivos or living trust.
When those attorneys who do understand Pure Trusts try to share their
knowledge with other lawyers, almost without exception, they will take the
information and use it for themselves, but never share it with their clients. They
just do not want to lose the probate business.
Ask your financial advisor that you trust, if he knows of any attorneys who
would be willing to assist you in setting up a Pure Trust.
Why Must The Trust Be Irrevocable?

A revocable trust is one in which the Settlor can change his mind and
cancel the whole deal, thereby taking back all assets placed into the trust.
Unfortunately, a revocable trust provides no protection of the estate from future
claims against the Settlor. Say for example that someone sued you for no
reason at all, but due to inexperience, lack of knowledge on your part, or
perhaps even incompetent legal advice, they obtain a judgment against you
personally. If you had set up a revocable trust, the judgment creditor could force
you to revoke the trust to allow him to get at those trust assets to satisfy his
judgment, regardless of how the judgment was obtained in the first place. Since
the purpose of the trust is to preserve and enlarge the estate, you would not
want this type of attack to be able to diminish the assets of the trust.
In addition, if you revoked the trust and got the assets back, you have
gained nothing in probate savings at all. Even if you die before the trust expires,
in some jurisdictions, the value of the revocable trust estate is placed in your
estate for probate and tax computations. Under federal law, the value of a
revocable trust is placed in your estate for federal estate tax purposes.
To maximize the benefits of a trust, it should be irrevocable.
PAGE 10 OF 337
How Long Would The Trust Last?

To obtain the maximum benefits from a trust, it should last for at least Ten
years and a day. In almost all jurisdictions, there is no limit on the maximum life
of a Pure Trust. However, to avoid possible conflicts with the rule against
perpetuities in certain jurisdictions, it is wise to make the life of the trust no more
than Twenty-One years. This is not a problem if a longer term is desired for the
trust, as the trust can be made renewable, and most are. If renewed, the life
of the trust will be extended for a specified length of time, up to the original term
of the trust. If the trust is renewable, there is no limit on the number of times it
can be renewed, in effect giving it perpetual life, if desired.
What Can I Put Into A Trust?

A trust may own any property, real or personal, legal or equitable, which is
in existence and which has value. Basically this means there is no limit as to
what a trust may own. It is only limited by what you have to convey into it.
Life insurance is one type of property commonly owned by individuals,
which can be included in their estate for probate and estate tax purposes. Most
people are unaware that regardless who is named as the beneficiary of the
insurance, that its face value is placed in the estate of the person who owns it.
Ownership is determined, among other things, by whoever pays the premiums.
To avoid this large amount of money being subject to probate, life insurance
should either be converted to cash, or the ownership of the policies transferred
to the trust. If the trust owns the life insurance, it should be the one paying the
premiums, and it is also wise for the trust to change the beneficiary of the
policies so that the trust is the beneficiary.
Ownership by the trust of certain property can change its nature.. For
example, if shares in a "S" corporation were to be transferred to the trust, the
trust could own the shares, but the corporation would lose its "5" status, and
would be subject to taxation as a regular corporation. In most instances, this can
be avoided by simply dissolving the corporation and transferring the assets,
instead of the stock, to the trust. In instances where dissolution is not practical,
a special trust can be set up specifically to hold "S" corporation stock.
Who Gets Money From The Trust?

The beneficiaries of a trust are those individuals or entities entitled to
receive income and corpus from the trust. The corpus of a trust is simply the
property conveyed to it originally, and any new property given to it, or obtained
by it through the liquidation of old property. With the Pure Trust, the beneficiaries
are the holders of the Trust Certificate Units (TCU's). The trust corpus is divided
into 100 Units. Each Unit represents I% of the distributable income of the trust
and also represents I% of the actual trust corpus when the trust terminates. If
the trust is a simple trust, the trustees will, at least annually, distribute the net
profit of the trust to the TCU holders.
If the trust is a complex trust, the trustees are given the power to determine
when and how much distribution can be made to the holders of TCU's. Each
PAGE 11 OF 337
year the Board of Trustees will determine how much income the trust has made
that year, and decide either to retain it in the trust and pay taxes on it, or
distribute it to the holders of TCU's in proportion to the number of TCU's that they
hold, or some combination of those two options.
Whether it is a simple or complex trust, when the trust finally terminates,
the total assets remaining in the trust would then be distributed to the holders of
TCU's in proportion to the number of TCU'S that they hold.
Anyone or any entity can be a holder of TCU's. Typically, holders might
include a spouse, children, friends, relatives, even your church or favorite
charity. TCU's can be held by a trust or corporation. If a potential holder is a
minor, the TCU's can even be held by someone else in trust for that minor until
the minor reaches a specified age.
Any money that is distributed to a holder of TCU's is declared by that holder
on his or her income tax return and any income taxes due are paid by the holder.
However, one advantage of a trust is that the income does not lose its character.
What this means is, that whatever the percentage is of the trust income of long-
term capital gains, non-taxable income, and the like, the holder gets the same
percentage treatment on what is distributed to them, i.e., if the trust had 50% of
its total income from tax-free sources, then 50% of the amounts distributed to the
holder would also be tax-free.
Who Handles The Trust Affairs?

Under a Pure Trust, the Trust Organization is a separate legal entity which
is run by the Board of Trustees. Typically, the Board of Trustees consists of one
to three members. The Board holds full legal title to all trust assets, and has the
power to do whatever it determines is in the best interests of the Trust
Organization with those assets. The Board can contract for assistance in running
the day to day business of the Trust by appointing one of the Trustees, or a
qualified non-Trustee, as a Trust Manager.
Obviously, care must be taken in choosing Trustees, for you must rely upon
them to adequately preserve and expand the trust corpus in the directions you
deem best. Any legally competent adult or legal entity can be a Trustee, although
some states require that a trust domiciled in that state must have at least one
Trustee who also is a resident of that state.
Beneficiaries are eligible to become Trustees. So is the Settlor. However, if
the Settlor becomes a Trustee, extreme care must be taken so that he or she
does not violate the provisions of IRC 8S 671 to 677. Otherwise the IRS might
declare the trust to be a "Grantor Trust."
Can I Retain Any Units For Myself?

In almost all jurisdictions, the local state statutes provide that if property is
set aside in trust for the original owner of that property, the property is subject to
the original owner's creditors, both present and future. This means that the
creditors can take the trust property to satisfy their claims. If you were to set up
a Pure Trust and retain any Units, this would mean that your creditors could take,
PAGE 12 OF 337
at the very least, the same percentage of trust assets as your hold Units, to
satisfy their claims. It might even be possible for them to reach all of t'he trust
property.
Since the intent behind setting up a trust is to preserve and expand the trust
property, it does not make good sense to leave the trust property open to this
type of attack.
Can I Add Property To The Trust Later On?

The Trust Organization Bylaws provide that anyone may add to the trust
estate by gift, will or deed, with the consent of the Board of Trustees. However,
what takes the original transfer of property to the trust out of the gift tax
provisions is that there is an equal exchange for consideration. Any time after the
original transfer when property is given to the trust, since there is no
consideration, there would be Rift tax consequences. Under the present gift tax
regulations, however, a single person can gift up to $10,000 and a married
couple can gift up to $20,000 to any person or legal entity, each year, without gift
tax consequences. Note however, that any transfers to the trust, either originally
or later, must be adequately documented. You cannot simply claim, if something
is ever questioned, that "Oh, I gave that to the trust." You must have adequate
documentation that such a transfer was intended and in fact took place.
If you should inherit a large sum of money, win a sweepstakes, or otherwise
come into possession of enough property that you wish to add to the trust, and
there would be gift tax consequences in so doing, you can simply establish
another trust with this additional property. There is no limit to the number of trusts
that you can establish.
Can The Trust Property Ever End Up In Probate?

As long as the trust is active, i.e., it has not been terminated, the trust
property belongs the Board of Trustees, and therefore it cannot be included in
anyone's estate for probate purposes. The death of the Settlor, a trustee, or
holder of TCU's, does not affect the ownership of the trust property, which
therefore cannot be included in their estate.
Under present tax law, some gifts made within three years of the donor's
death are included in the donor's estate for federal estate tax purposes.
However, this does not apply to transfers made for full consideration or for
transfers which do not require the filing of a gift tax return. Therefore, even if the
Settlor were to die within three years of setting up a trust, the trust property
should not be included in his or her estate, as the original transfer was made for
full consideration. The value of the TCU's transferred by the Settlor would not be
included in the Settlor's estate, as no gift tax return is due on their transfer.
Since the death of a holder of TCU's terminates the interest in the TCU's
held, the value of the TCU's are not included in the holder's estate either. Life
estate interests are included in a decedent's estate only if he or she transferred
the property and retained a life estate interest. Since this is not the case with
holders of TCU's, their value is not included in the estate of a holder who dies.
PAGE 13 OF 337
Could I Be Required To Pay Taxes On The Trust Income?

The Internal Revenue Code, under the part on estates and trusts, has a
special Subpart E entitled "Grantors and Others Treated as Substantial Owners,"
which contains several things which if the trust does, or has the power to do,
makes the income from the trust taxable to the Settlor of the trust ( 671-679).
However, a carefully drafted Trust Indenture and Trust Organization Bylaws will
include provisions to insure that these sections do not apply. Note here that it is
essential to the integrity of the trust that the Trust Indenture and Trust
Organization Bylaws be followed to the letter.
Can My Creditors Get To The Trust Property T0 Satisfy My Debts?

All jurisdictions have laws concerning transfers to defraud creditors. If you
transfer assets into a trust and such transfer leaves you insolvent, or with no
means of satisfying your present debts, or if such transfer leaves you without
means to meet your debts which reasonably can be expected to be owed in the
future, a court can rule that the transfer to the trust was made to defraud your
creditors, and set the transaction aside. This would place the trust assets back
in your hands and subject to the claims of creditors. For example, if you were in
the middle of a court case which you have a better than 50% chance of losing,
and you set up a trust which leaves you without the means to pay the judgment
of the court when you do lose, that would probably be considered a defrauding
of your creditors. Also, if a doctor were to set up a trust and at the same time
cancel his malpractice insurance, a court could decide that these two actions
done at the same time defrauded his future patients of,their claims. Note
however, that if a doctor first set up a trust, and then some time in the future
found it financially impossible to continue malpractice insurance, that would be a
different story.
Further, if the trust is not administered according to the dictates of the Trust
Indenture and Trust Organization Bylaws, and, for example, trust funds are used
to pay personal expenses, trust funds are commingled with personal funds, and
the like, a court could rule that the trust was merely the alter-ego of the
individual, and the transfer to the trust a "sham", and in that manner set the trust
aside.
Can Creditors Of The Trustees Or Beneficiaries Get To Trust

Property?
Trust assets are never liable for the personal debts of the Trustees, unless
the Settlor was also a Trustee, and the preceding section applied. As long as the
Board of Trustees has the discretion of distributing or not distributing income to
the beneficiaries, the trust assets cannot be attacked by creditors of a holder of
TCU's, whether or not that discretion is exercised. Specific "spendthrift"
provisions in the Indenture can add more protection.
PAGE 14 OF 337
Can Trustees Or Beneficiaries Be Liable For Debts Of The Trust?

As long as the holders of TCU's do not have the right as a holder to
participate in the management of the trust, they are not liable for trust debts.
This does not stop a holder from being eligible to be a Trustee.
Trustees are not personally liable for trust debts if there is a provision to that
effect in the trust indenture, and the trust indenture is duly recorded for public
notice.
Can The Trust Operate A Business?

The simplest way for a trust to generate income is for the trust to own
business property and lease that property to individuals who use it in their
business. This avoids the headaches of employer-employee confrontations,
business-related taxes, business-related liabilities, and the like. However, if it is
so desired, a trust can operate the business itself, or several businesses for that
matter. The trust might for example want to operate a farm, or a business which
has a large inventory with a constant turnover. These types of businesses do not
lend themselves well to the trust merely owning the assets and leasing them to
the individuals actually running the business.
If operating a business with a trust structure is desired, it would be wisest
for the primary trust to set up a second trust just for the purpose of running that
business. The primary trust could hold all of the TCU's of the second trust. The
reason for a second trust is the same as for setting up a corporation to run a
business, i.e., it limits the liability of those operating the business to the assets of
that business. If the primary trust itself were to run the business, then all of the
primary trust's assets would be liable for the debts and liabilities of that business.
For the same reasons, if more than one business is desired, there should be a
trust for each business.
There is no limit to where a trust can conduct its business. It can do
business in any and all states regardless of its domicile.
Note that there is a difference between a trust which operates a business
and a "business trust". The term "business trust" is a legal term used by most
states in their taxing statutes and by the IRS to dqnote a special kind of trust that
is taxed exactly like a corporation. These trusts are distinguished by having
"associates", i.e., the beneficiaries get together in an association to plan and
promote a joint enterprise for profit. Secondly, a business trust is set up primarily
for the purpose of operating a business for profit. Thirdly, a business trust has at
least three of the following four attributes: (1) centralized management, (2)
continuity of life, (3) limited personal liability of trustees, and (4) easy
transferability of beneficial interest in the trust. As long as a trust set up to
operate a business does not have the characteristics of a "business trust", it will
not be taxed like a corporation.
PAGE 15 OF 337
What If I Get Sued, What Happens To The Trust Assets?

Since you do not own the assets placed into the trust, and they are owned
instead by the Board of Trustees, any lawsuits against you cannot effect the
trust. However, you must establish the trust before you get into legal difficulties.
If not, the transfer to the trust can be held to be a fraudulent conveyance, and set
aside.
What If I Should Co Bankrupt?

Your personal bankruptcy has no effect on the trust assets. John King
placed roughly $240 million into a trust for his family, and later went bankrupt to
over $40 million in creditors' claims. The court ruled that his trust did not have to
pay any of the claims, and it kept the entire $240 million intact for his family. John
King maintained a magnificent living standard all throughout his bankruptcy.
Note here, however, that setting up the trust cannot leave you insolvent, or
without the means to pay your present bills or expected future bills, or contribute
to your personal bankruptcy. If so, then again the transfer to the trust can be set
aside as a fraudulent transfer.
What If I Should Cet A Divorce?

Legally, a divorce has no effect upon the trust organization. Note here that
once a transfer has been made to the trust to begin with, neither spouse has any
marital rights to trust property, and cannot make claims upon trust assets in the
divorce. Trust property cannot properly be a part of a property settlement. To
treat it in that manner would be to say that the original transfer was a fraud and a
sham.
This type of trust is best utilized by those persons who have a strong family
commitment. If you feel that there is a strong likelihood of divorce in your
future, it would be best for you to work out your family problems first before
considering a trust.
If A Trust Is So Good, Why Doesn't Everybody Have One?

Trusts have been in use for centuries. The super-rich use them all the time
to preserve what they have and to let it grow. They, however, do not advertise
their secrets for retaining wealth, as they take pleasure in considering
themselves "exclusive". Most attorneys are not going to inform you about trusts
because of their desire to retain their lucrative probate business. Norman Dacey
in his book How To Avoid Probate said, " I would put the proportion of attorneys
who know about and recommend the intervivos (living) trust as less than one
percent." You won't find many books about trusts in the library, and most people
would not read them if there were. Therefore, the largest reason there are not
more trusts today is simply ignorance or lack of knowledge.
PAGE 16 OF 337
Glossary Of Terms Commonly Used In Connection With Trusts

ACCEPTANCE: An agreeing, either expressly or by conduct, to the act or
offer of another so that a contract is concluded and the parties become bound by
that contract.
ACKNOWLEDGMENT: A declaration or avowal of one's act or a fact to give
it legal validity; specifically, a declaration before a duly qualified public officer by
one who has executed an instrument, that the execution was his (free) act and
deed.
ACTIVE TRUST: A trust where the trustees have actual, active duties, such
as to preserve and increase the trust estate, as opposed to a "passive trust",
where the trustees merely hold title. ADVERSE PARTY: Any individual who has a
substantial economic interest in the corpus and/or income of the trust (usually a
beneficiary) and from whom the settlor, who is also a trustee, must obtain
consent in making certain decisions about the trust (usually by having the
adverse party as a co-trustee).
BENEFICIARY: The person designated to have and hold the equitable
interest in a trust estate. In the case of a Pure Trust, the beneficiaries are the
holders of TCU's.
BUSINESS TRUST: Any trust which by operation of state or federal tax law
is taxed in the same manner as a corporation. Often termed a "Massachusetts
Trust"
COMMON LAW: That part of the law which has developed over time
through court decisions and opinions rather than by statute or other legislative
process, including that inherited from England.
COMPLEX TRUST: Any trust in which the trustees have the discretion
whether or not to distribute income, or a portion thereof, to a beneficiary or
beneficiaries in any year.
COMMUNITY PROPERTY: An undivided interest arising by operation of
statute, in real or personal assets owned during or acquired during marriage by
the spouses. Can be nullified by transfer from one spouse to the other.
CONSIDERATION: That which is regarded as the equivalent return given or
suffered by one for the act or promise of another. Consideration is essential to
the validity of a contract.
CONTRACT: An agreement in which a party undertakes to do, or not to do a
particular thing. The essential elements of a written contract are (a) parties
competent to contract, whose names appear in the writing; (b) the subject matter
of the contract, or a clear statement of what is to be done or not done; (c) lawful
and valid consideration, and if made up of mutual promises, then a clear and
explicit statement of what each party promises to do or not to do; and (d) assent
of the parties, which is evidenced by their signing the contract.
CONVEYANCE: The act by which title to property is transferred. Usually an
instrument in writing. CORPUS: The body of assets or property belonging to an
entity, such as a trust or estate. CREATOR: (trust) The person who establishes a
trust by conveying assets to it. Also known as Grantor, Settlor or Truster.
PAGE 17 OF 337
DECEDENT: The person who has died.

DECLARATION OF TRUST: An acknowledgement, usually in writing, by one
holding or taking title to property, that he holds the property in trust for or to the
use of another. See Trust Indenture. DOMICILE: The legal residence of a person
or entity.
DOWER AND CURTESY: That portion of, or interest in, the real estate of a
deceased husband which the law of certain states gives to the widow during her
lifetime.
EQUITY: A system of law which arose outside of the common law which
has power to enforce discovery, and administers trusts, mortgages, and other
fiduciary obligations, administers and adjusts common-law rights where the
courts of common law have no means, and supplies a specific and preventive
remedy for common-law wrongs where courts of common law only give
subsequent damages.
EXPRESS TRUST: A Trust expressly established by the Settlor as opposed
to an arrangement determined by a court to be an "implied trust".
FAMILY TRUST: A term used by the Internal Revenue Service, as defined
by IRS rulings, to apply to a special type of Grantor Trust.
FEE SIMPLE: Absolute title. This is the kind of ownership which enables the
owner to manage and dispose of property in whatever way he may wish. The
Board of Trustees of a Pure Trust have this this type of title to the corpus of the
trust.
FIDUCIARY: A person, persons, or entity having duty, created by their
undertaking, to act primarily for another's benefit in matters connected with Such
undertaking; such as a trustee, guardian, conservator, administrator, executor,
and the like.
GRANTOR: (deed) The person transferring his title to another (the Grantee)
under a deed. (trust) The same as Creator, Settlor, or Truster.
GRANTOR TRUST: Any trust, the income of which, by operation of the
Internal Revenue Code, is taxed to the Settlor.
INTER VIVOS TRUST: Any trust which is established during the Settlor's
life.
IRREVOCABLE TRUST: Any trust in which the Settlor retains no power to
revoke or cancel the trust agreement, and have the trust assets returned to him,
as opposed to "Revocable Trust."
JOINT TENANCY: An undivided interest in property held by two or more
persons, who all hold the same title and rights of possession, at the same time,
jointly, and under which the survivor or survivors take the entire interest. In a
Pure Trust arrangement the Board of Trustees hold title in joint tenancy to all
trust assets.
PROBATE: Procedures which are followed under court direction and
supervision to allocate property either bequeathed by a will, or in cases where
the owner died without a will.
PAGE 18 OF 337
PURE TRUST: A trust arrangement which is express, active, intervivos,

irrevocable, and either Simple or complex,. and in which the trustees hold full fee
simple title to the trust assets in joint tenancy. The beneficiaries of which are the
holders of TCU's.
QUIT-CLAIM DEED: A legal instrument by which one conveys all of his
right, title and interest in real estate to another without giving any guarantees of
any kinds at to what, if any, that right to, title, or interest in the property is.
REVERSIONARY TRUST: Any trust where the ownership of the trust assets
goes back to the Settlor when the trust terminates.
SETTLOR: (trust) same as Creator, Grantor, or Truster. The preferred term.
SIMPLE TRUST: Any trust which is required by its terms to distribute all the
net income in any year to the beneficiaries of the trust.
TCU's: Trust Certificate Units. In a Pure Trust arrangement, the division of
the right to receive distributed income and right to receive corpus at termination,
into 100 units which represent one percent each of those rights.
TENANTS IN COMMON: An undivided interest in property held by two or
more persons in common, however, there is no right of survivorship, the interest
passes to the heirs.
TESTAMENTARY TRUST: Any trust which is established by will, or does not
take effect until the death of the Settlor.
TESTATOR: A person who leaves a will or testament in force at their death.
TRANSFER: Any act by which the property of one is vested in another, whether
by sale, gift or otherwise.
TRUSTEE OR TRUSTEES: The person, persons or entity appointed or
elected to conserve and administer the assets or properties conveyed to a trust.
TRUSTOR: Same as Creator, Grantor, or Settlor. VOID: Of no legal force or
effect; useless.
WARRANTY DEED: A legal instrument by which one conveys all right, title,
and interest in real estate to another, and at the same time makes certain legally
enforceable guarantees, including the fact of his full title to the property, and his
tight to convey the property.
PAGE 19 OF 337
CITIZENSHIP - INSIDER'S GUIDE TO INSTANT

CITIZENSHIPS AND SECOND PASSPORTS
HOW TO LEGALLY OBTAIN A SECOND FOREIGN PASSPORT

OR DRIVER'S LICENSE.
Argentina, Bolivia, Panama, Venezuela, Brazil, Uruguay, St.Kitts/Nevis, The

Bahamas and the Republic of Ireland all have acquisition programmes.
Citizenship acquisition programmes are available through an extremely
reputable, well established, recommended Immigration Consultant who
represents countries whose passports offer visa-free travel to numerous
destinations.
Citizenship of these countries can be attained by naturalization in a few
months, waiving the normal three to five year residency period.
For a comprehensive analysis of each country, see the previous document.
Consultant controlled programme Argentina, Bolivia, Panama, Venezuela
and Brazil offer programmes that are controlled by our recommended consultant.
These can be processed in 60 to 90 working days. (In cases of emergency, for a
priority rush fee of US$5000 per application with a minimum of five orders,
documents can be processed in 18 to 24 days.)
Everything is included in the processing fee specified in the section
allocated to each country. There are no additional costs and no further
investments necessary. Since your money is placed in an escrow account
controlled by you, your funds are never at risk. If delivery is not made within the
specified period of time your funds are released to you in full.
You will not have to make a visit to your chosen country in connection with
your application, nor will you incur any tax or other obligations by virtue of your
having become a citizen of another country. It is not necessary for you to
renounce your present citizenship and no one will be notified of your new
nationality.
Should you require another identity and/or name other than your own,
official, legal, name change documents must be filed. Your name change will be
recorded by the issuing country, but nowhere else. There is an additional fee for
this procedure.
All passports come complete with exit stamps.
Some Common Questions And Answers

These are questions that have been posed to our consultant on many
occasions, and his replies.
Question. What can I gain from second citizenship?
PAGE 20 OF 337
Answer. Many people see a very ominous trend developing in the "free
countries of the world". Every year, more and more of our freedoms are being
shaved away. Already, many Western Governments have removed their citizens
right to obtain a second passport (and therefore to travel) if the hapless citizen is
having any of a number of civil disputes with government, including tax disputes.
Even if the citizen is completely in the right he cannot leave. This would have
been inconceivable just ten, fifteen years ago. Unfortunately, things seem to be
getting worse rather than better and many thoughtful observers are becoming
quite concerned for the future of freedom.
For the moment our firm is holding open a window of opportunity that allows
one to obtain what many forward thinking individuals now consider an essential
element of insurance against further loss of freedoms. How long we will be able
to keep this window open is uncertain at this time, but many feel that this is a
very appropriate moment to obtain supplementary citizenship, against some
future "rainy day".
Question. Which countries can I visit without visas?
Answer. For St. Kitts/Nevis, a Commonwealth country, the major visa-free-

travel countries are limited to: Bahamas, Bermuda, Denmark, Finland, Hong
Kong, Korea, Norway, Sweden, Thailand, United kingdom and Venezuela. Visas
are required for all other countries. We do not recommend St. Kitts/Nevis
passports at this time.
Regarding the Bahamas, another Commonwealth country, the major-visa-
free-travel countries are more extensive than Belize and St. Kitts/Nevice.
Bahamian documentation is also not recommended at this time due to the large
investment required to get involved. If you already have an excellent passport,
we do however, recommend the Bahamas as a domicile for you to obtain
Permanent Residency. The island lifestyle is superb and the available tax
benefits for Permanent Residents are very advantageous.
The Republic of Ireland, a respected member of the European Community,
offers the best visa-free-travel in the world, plus holders of Irish passports can
live and work without a visa in any EC member country. Effectively if you or your
family are Irish Citizens, you become citizens of the UK, France, Germany, Italy,
Netherlands, Belgium, Luxembourg, Spain, Greece, Denmark, Portugal and
soon Austria, Sweden and Finland. The cost for your entire family to become full
naturalized citizens of Ireland in 90 to 120 working days is substantial. If you can
afford it, then without doubt Ireland is the top of the list. Our next best selection is
Venezuela which provides excellent visa-free-travel at a fraction of the cost of
Ireland.
Question. Is it difficult to obtain visas?
PAGE 21 OF 337
Answer. All of the Central and South American countries have excellent
diplomatic relations and visas are easily obtainable (while you wait or overnight).
You can apply in your country of "residence". Commonwealth countries require a
longer wait.
Question. Where do I take delivery of my passport?
Answer. Delivery is normally made in Switzerland which is greatly to your

benefit. Switzerland is the easiest country to enter on your present passport and
if you like you can travel out of Switzerland on your new passport. The Swiss do
not stamp visa-free passports either upon entry or exit. Passports that need
visas like St.Kitts/Nevis and the Bahamas will be stamped.
Delivery can also be made throughout the world by courier service. The
price includes air courier delivery from the country of origin to you.
We also offer a personal delivery service (for a minimum of five orders)
whereby the completed documents will be picked up and delivered to you by a
personal courier at a fee of US$300 per passport to North America or US$600
per passport to selected European countries, Asia and the Far East, plus air
travel expenses
Question. Why is there an additional cost for family members?
Answer. A few countries such as Argentina and Bolivia allow additional

family members to be included in the original passport which greatly reduces the
cost to additional family members. However the countries currently on offer issue
a separate passport for each family member and the processing time is the
same for each. Remember a passport is for life, so even if a child is newly born,
he will need a passport to travel and the cost is the same. There are however
reduced rates, in some cases, for ch ildren under the age of 18 years. If family
members are processed at a later date than when the original application was
processed then the cost is the same as the original, as the processing
implications are the same.
Question. For how long are passports valid and can they be renewed?
Answer. Most passports are valid for ten years, but may have to be
extended at the end of five years. This is not a formal renewing process requiring
new forms and photographs. Your present passport is simply taken to any
Consulate and is stamped, extending it for a further five years, usually while you
wait. At the end of ten years a new passport will be issued through a Consulate
or Embassy, new forms and photographs are required. The process will take a
few days depending on Consular policy and u pon passport traffic at the
particular office.
PAGE 22 OF 337
Question. How is payment made and is my money at risk?
Answer. We are obliged to pay in full, in cash, in advance for your passport
package (which is only of value to you) before your application is even
considered. Your full payment therefore must be placed in an escrow account
with Swiss Bank corporation (SBC), one of five remaining AAA rated banks in the
world. The money remains your property while it is in the account. It takes two
signatures ( yours and that of our representative) to release the funds. The
money is only released to us when you rece ive your passport package. If you
do not receive satisfactory delivery by a specified time then your money (upon
your request) is returned to you in full. You are never at risk. We assume all risk.
Question. Are prices negotiable?
Answer. All prices are fixed. To the best of our knowledge we have the only
reputable organization offering these services. We have an impeccable record of
delivery, which we are very proud of. We will deliver valid passports, valid ID
cards and valid drivers licenses through the naturalization process in the
specified time, waiving the normal 3 to 5 year residency requirement and under
absolute confidentiality and security, delivered to your door. Our fees are not
expensive fo r the service offered and you receive a degree of integrity and
reliability that is absolutely without equal. There are many travel documents of
dubious validity being sold by other firms at the moment, you can be totally
confident that those supplied by us are exactly what they are represented to be.
Question. Are there any countries on offer but that you do not recommend?
Answer. As a last resort, we will offer Paraguay, Chile and Peru. We will not
however accept any responsibility for these countries because of constant
political and legal changes. There are also potential problems related to
customs, immigration and passport renewal procedures
Question. I am a little skeptical. What else should I avoid?
Answer. Remain skeptical, Investigate thoroughly before you part with your
money. Obtaining a second passport is a major step, and you must choose the
firm with which you deal as carefully as you would choose a surgeon. Avoid any
firm which asks for advance up front consultancy fees. You will never again see
your money or any documents. Your money must go into a protected account
with a reliable bank where it takes your signature to release any funds. This is
the only way your money is safe.
PAGE 23 OF 337
Question. Are my affairs kept confidential?
Answer. We are professionals of many years standing. When you become

our client your secrets and your privacy are absolutely safe. No one and no
other government or any other authority will be notified that you have applied for,
much less obtained, a second passport. It is a private affair.
Question. Is it possible for me to obtain documents under a different name?
Answer. Yes. The question often arises from Middle Eastern clients whose
surname might subject them to terrorism. Therefore once we are satisfied that
your record is free of criminal convictions, it is possible to apply under a different
name, by using a deed-poll legalized name change procedure. We can legally
change your name in the country from where your new passport will be issued.
To do this we must file the documents necessary for a legal name change in the
issuing country, which will then al low us to apply for the passport in the new
name. The name change will only be recorded in the issuing country and
nowhere else. The additional fee is US$7,500 but we must emphasize that
although it is perfectly legal to carry out this task, we must first be satisfied that
your intentions are proper.
Question. What advantages do Latin American passports have over other

passports?
Answer. Legally every Latin American has two last names. Firstly, his or her
father's last name, followed by his or her mother's last name. For example if your
name is John Doe because your father's name was Jacob Doe and your
mother's maiden name was Sarah Smith then your full legal name, carried in
your Latin American passport is John Doe Smith. Legally you may call yourself
John Doe or John Smith or John Doe-Smith, and legally you may travel in any of
these names, open bank accounts in any of the se names, hold assets in any of
these names and maintain credit cards in any of these names. Since most
people (i.e. creditors, friends, associates, tax authorities, and even ex-spouses)
have no idea what your mother's maiden name was this is a perfect opportunity
to protect your assets by using a legal alternative name. And it is 100% legal.
Question. Do you plan to offer any other countries in the future?
Answer. Yes. We do hope to be able to offer other countries in the future

under our expedited naturalization process, including several other EC
countries. For the moment however, the countries that we offer represent the
best choices available in the world today. If there was something better available,
we would have already made arrangements to be able to offer it to our clients.
PAGE 24 OF 337
The vast majority of our business comes from referrals by satisfied clients.
The reasons for this are simple: service, security and satisfaction. Our years of
experience, global research and worldwide contacts keep us instantly informed
of new developments. If we do not offer a particular passport, there is almost
certainly a very good reason.
Question. What is involved in the application process?
Answer. You will submit a completed application form ( which we will supply
to you) along with passport photos, a police clearance, a copy of your present
passport and copies of your birth and marriage certificates. We cannot accept an
application if we have any doubt as to the intent or background of our client. In
the interest of time-saving, if you have ever been indicted or charged with a
criminal offence (except for political offences), or if you have ever been
imprisoned for one year or longer , please enclose full details with your
application.
In cases where a police clearance cannot be obtained because of political
instability in your country of origin, your attorneys affidavit, on our affidavit form
may be acceptable under some circumstances.
When you become our client, your application is received in absolute trust
and is covered by the Attorney-Client Fiduciary Privilege of total confidentiality. If
for any reason your application is refused, your entire file will be destroyed, and
your escrowed funds returned to you in full immediately.
Question. How do I start the Process?
Answer. Simply notify us through The Freebooter, that you would like to
begin and tell us which country you desire. We will fax you the application form,
a copy of the escrow agreement, together with our final letter of transmittal. You
will then simply complete the application form, along with the other required
documents and a bankers draft in favor of the escrow account. Things will then
get underway immediately. Most of our clients prefer to wire-transfer their funds
directly to the Swiss Bank Corporation Escrow Account, so we also provide wire
transfer instructions.
After the payment is funded in the Escrow, we will consider your application.
We will inform you when your application is accepted and ready for processing.
At this point all you need do is sit back and wait for your papers to be delivered.
The process is really quite simple and absolutely secure.
Question. Will your prices increase?
Answer. Our prices will go up. All prices are quoted in US dollars. The
prices in the June 1st. 1994 Fee Schedule list. (These prices are specified in the
PAGE 25 OF 337
sections on each country and are subject to change without notice). All prices
are however, firm once your application has been accepted, there will be no
further increases. Fees include Air Courier delivery and cover all banking fees,
escrow fees and Swiss taxes, if any. Your payment is fully inclusive - except of
course for the direct government investments required by Uruguay, St.
Kitts/Nevis, The Bahamas and Ireland.
PAGE 26 OF 337
PERSONAL PRIVACY AND PROTECTION MAIL

DROPS
Why they are an indispensable item in the Perpetual Traveler's

(PT's) self protection portfolio
Mail drops, also known as letter boxes, accommodation addresses, remail
services, and mail forwarding services play an important role in the life of the PT
community. Many people encounter them without realizing what they are, hence
this article.
What are mail drops? Basically, mail drops are small businesses which
allow clients to use their addresses for a fee. They receive mail and either hold it
for collection or re-mail it to their clients instructions.
Most mail drops offer additional confidential services such as phone
answering and message forwarding, fax receiving and re-faxing. Clients, in turn,
have various reasons for using alternative addresses. Most have to do with
secrecy. Some are absolutely legal and above board. Others are questionable.
Some are totally illegal.
A study of mail drops (officially known as "Commercial Mail Receiving
Agencies or Bureau's" by postal authorities) and their clients is a fascinating
subject, even if you would never use one personally. Mail drops obviously attract
all kinds of users, some with ordinary motives and others who can best be
described as "real characters."
Why the need for mail drops? In modern times the need for confidentiality is
becoming extremely apparent. Not only do government officials, in the interests
of an "orderly society", want to know exactly what John Q. Citizen is doing, they
are also vitally interested in his money. As a result government is spending an
ever increasing amount of their budget on the surveillance of its citizens.
In spite of citizens rights of privacy entrenched in many so called
democratic constitutions and bills of right, we find ourselves becoming more and
more vulnerable to government snooping. New technology in the hands of the
bureaucrats provides sophisticated methods of penetrating our affairs. Our mail
is a good example.
Postal authorities use a little known surveillance technique known as the
"mail cover", which operates informally and allows them to investigate your mail
without having to first obtain a court order, a requirement in most countries. 'The
mail cover' is simply an instruction to the mail carrier requesting that they note
the return addresses on mail delivered to any address under investigation. This
is far worse than a court order to open mail, as it's totally indiscriminate. It means
that whoever sends a letter or package to the marked address can end up on
the suspect list. Postal inspectors often run mail covers for their own
investigations, and in co-operation with other investigative agencies.
PAGE 27 OF 337
The worst thing about an investigation such as this, is the assumption of

"guilt by association" on the part of the investigators. Money laundering
operations, for example, often involve people with no criminal records,
investigators are more likely to believe in the guilt of anyone who corresponds
with suspects. Likewise in their investigations of political adversaries of whatever
party happens to be in power. Police agents are constantly seeking to widen the
sphere of their investigations by enlarging suspect lists. The easiest way of
countering 'the mail cover' ploy is to refrain from placing a return address on
your envelopes. You should be safe until such time as postal services make an
announcement to the effect that they will no longer accept mail items without
return addresses specified.
Wide use of computers has made surveillance far easier. Envelopes are
increasingly carrying 'address bars'. Businesses and even private individuals are
obtaining bar code reading equipment to make mail sorting easier. As address
bars become universally used, the odds that postal authorities will make their
use mandatory, increases.
Routine opening of mail is practiced by government agencies to assist in
the apprehension of tax evaders, subversives and other assorted individuals.
Officials will often use the 'misdirected mail' scam to read your letters. Your
mail will "accidentally" end up at a government office where it is opened "in
error", read, the contents noted, re-sealed and sent on its way. When you
receive it, it could carry an "opened in error" stamp, and more often than not, you
won't think any further about it.
Preventing the surreptitious reading of your mail by the bad guys, can be
very difficult because of scientific methods that have been developed. Spray-on
cleaning solvents such as carbon tetrachloride, trichlorethylene, and
perchlorethylene will cause some types of envelopes to go translucent
temporarily when these solvents are applied, thus allowing the contents to be
read.
There are also ways of opening envelopes that leave no traces at all if
handled by a skilled operative. For instance they use a thin flat metal tool,
resembling a two pronged fork. The tool is gently slipped under the flap of the
envelope and onto the edge of the letter inside, between the prongs. The letter is
then rolled tightly around the tool and withdrawn, read and returned the same
way.
Steaming an envelope open is a simple matter and leaves hardly a trace.
The use of sealing tape is no guarantee either, carbon tetrachloride will handle
the tape instantly.
So what's the solution?
Protecting your mail There are several methods you can use to protect your
mail from unauthorized readers:
(a) Bankers Envelopes go part of the way, they are made from opaque
paper that you can't see through when you hold the envelope up to the light.
There are envelopes available that have a heavy printed pattern on the inside
also making it impossible to read what's inside.
PAGE 28 OF 337
(b) Double seal the complete envelope with scotch tape but take the added
precaution of using some superglue to stick the flap down, before you tape it.
(c) Use several envelopes, one inside the other. This will cause aggravation
to any would be reader, he'll probably give the idea of reading your mail a miss.
(d) Wrap your confidential letters in aluminum foil. This will render chemical
spray useless. Even if the envelope becomes translucent, your letter can't be
read unless the envelope is opened.
(e) Wrap your letter in carbon paper, this stops anybody from checking the
contents of the envelope. If solvent is used the carbon will run, you'll know that
your mail has been tampered with.
(f) Address the letter with a felt tipped, or fountain pen, the ink will run if
solvent is used.
(g) When writing to a bank, Trust Company or any other financial institution,
particularly if the addressee is located in a tax haven country, do not write the
name of the establishment on the envelope. Rather address it to a person, make
it look like a private, rather than a business letter. It goes without saying that it's
far more practical to totally avoid having to take steps to safeguard your postal
privacy, than it is to continually be concerned about your vulnerability. By having
all your confidential mail addressed to a fictitious person or company and posted
to an alternative address, you avoid possible surveillance and you will escape
scrutiny. One of the major reasons why mail drops can work for you.
Who uses mail drops? Many different types of people use mail drops for
many different reasons, not all relate to secrecy. Some have to do with
convenience or practicality.
Individuals: All categories of people who move around a lot or spend long
periods away from their home base are potential mail drop users. Truck drivers,
retired folks, merchant seamen, commercial representatives, inveterate travelers
and PT's are good examples. When one is away for long periods of time it's
inconvenient to continue to use your home address, unless you have a trusted
person available to forward your mail. A mail drop with a forwarding service will
solve the problem.
In recent years, post lost or stolen in the delivery process or from domestic
mailboxes has become a problem, particularly in some areas of third world
countries. The use of a mail drop will cut the risk.
Parties involved in divorce proceedings can be vulnerable to surveillance
by opposing attorneys. A battered wife might be under threat of more violence
from her spouse. Child custody might be an issue. In both these cases one or
other of the parties might want to keep their address secret- a mail drop fits the
bill.
Subscribers to various types of books or magazines that are categorized as
unconventional, members of some clubs, who certainly don't want fellow
members pitching up on their doorstep, and mail order shoppers of various
products, possibly deemed to be a little risqu, are all users of mail drops for
reasons of secrecy. Many of them use aliases partly because in their normal,
PAGE 29 OF 337
quite, possibly middle-class suburb their pursuits could be considered to be

stigmatized, anti-social, even odd-ball by their friends and neighbors.
Debtors in financial trouble dodging their creditors, others simply seeking to
enhance their financial privacy, are also users.
Some citizens simply prefer not to deal with the post office, possibly they
feel they're not getting service, they don't like standing in line, whatever-they're
mail drop candidates.
Those involved in illicit romantic or sexual liaisons will not want to take the
risk of having their correspondence intercepted, a mail drop is the perfect
solution.
Entrepreneurs and Businessmen: An untraceable address has many uses
for this category of person. For instance, whilst opening negotiations on delicate
matters it could be prudent not to divulge one's correct identity or that of one's
employer or employee.
Many businessmen like to get their mail at a specific time and postal
deliveries might not meet their specific needs. Collection from your drop at a time
to suit is probably more convenient.
A small new business just starting from back yard or residential premises
can benefit from having a prestigious address. Arranging a mail drop address in
a high profile area can provide the answer.
Some cities will not issue business licenses to home based businesses,
even to low profile ones. A mail drop can provide the illusion of a business
district address to satisfy the demands of city hall.
It might be an advantage for an employer to keep certain information from
his employees from a day to day security point of view. He might want to
safeguard himself against possible theft or embezzlement or industrial
espionage. Very possibly, he might want to keep the source of his orders or the
identity of his suppliers confidential. Maybe he simply has paperwork that he
would prefer his staff not to see. Once again a mail drop will do the job.
A company owner might want to sell his company. He doesn't want his staff
to get wind of the possibility and panic. He might not want his customers or
suppliers to know either. He can advertise the sale without mentioning his
company name and use a mail drop to field the inquiries.
When seeking new staff a mail drop is ideal as an address for applicants.
This stops the possibility of unsuitable candidates arriving at the company and
enables the advertiser to do initial checks on prospects even before he grants
the first interview or divulges the name of his company.
We have looked at many uses for mail drops in this section of the article. No
doubt your creative juices have started to flow, you should now be able to
identify many areas where mail drops can work for you.
Mail drop or post box, which works better? In real terms, there's just no
comparison for the following reasons:
PAGE 30 OF 337
(a) Arranging a mail drop is as simple as walking or writing in and paying

your money. There are very often delays and usually formalities to put up with
whilst arranging a P.O. box.
(b) Mail drops usually have street addresses and not post office box
numbers. This always makes a better impression.
(c) You can always phone, fax or write to a mail drop to give instructions or
to check on mail. Post offices do not have these facilities.
(d) Mail drops will accept courier service packages on your behalf. Post
offices won't.
(e) Mail drops will forward your mail to whichever address you have
requested them to. For instance, if you're on a trip you can give them points
along your itinerary to mail to and for an extra fee they will comply.
(f) It's possible to obtain street address details of a box holder from the post
office. Mail drop owners would lose all credibility if they provided information
about their clients. It's doubtful they could stay in business. This ensures privacy.
(g) In most countries it is a requirement that you show identity when renting
a P.O. box. Mail drops will usually accept you at face value. A big advantage
when using a nom de plume.
(h) Mail drops will receive a letter from you, open the outer envelope and
remail the enclosed letter from their location, this gives the impression that you
are writing from that location. Post offices do not remail.
(i) Mail drops offer many services compared to post offices. Many offer full
secretarial services including typing, photocopying, faxing, word processing,
quick printing. Some will arrange for telegrams and money orders. One of the
best known services: Wayne Budd. RR#1 Box 63, Eldorado, Ontario, Canada
KOK 1YO., will pay checks drawn on his account on your behalf. This conceals
your identity from whom ever you are making payment. There are others that
offer various unusual additional services, like key cutting, passport and visa
photographs, rubber stamps etc.
(j) A mail drop can be used as a "safe" for items you want to keep "on ice"
for awhile. Simply mail them to your drop with instructions for them to hold
pending your further advice. As you can see mail drops offer a lot for people on
the move, particularly those who want to retain as much privacy as possible.
Most serious PT's couldn't operate without such a facility.
Finding the right service for you when you are ready to go the mail drop
route there are many factors that you must consider. You'll have to weigh up the
advantages of the types of service available and the costs involved. You should
look at post boxes, secretarial services and mail drops depending on your
needs.
There are other possibilities to consider. Perhaps a friend can receive and
remail post for you, possibly this will strain your relationship. He might get tired of
running around for you and become inefficient. If there's money being sent
through your mail or if you are using your home address to re-mail cheques
PAGE 31 OF 337
from, it could prove very embarrassing, if your friend gets tardy. There is always
the possibility of unwelcome visitors showing up at your door if you go this route.
Using the post office's general delivery system enables you to collect mail
from a post office without having to rent a box. You don't need a street address if
you use this system, post is held for you at the general delivery counter.
Disadvantages are that you have to call during business hours and you might
have to stand in line to get your mail. The post office will not hold mail indefinitely,
they usually return to sender after two weeks or so.
Another way you can establish a secret street address is to rent a room in a
boarding house or residential hotel. This is a fairly costly exercise but it does
have a couple of advantages. You can normally make arrangements without
having to show ID. You pay in advance and are not required to fill in any official
forms, the only paperwork is normally the receipt you get for your rental
payment. You can come and go as you like and can possibly, for a small financial
consideration, arrange for the landlord or desk clerk to forward your mail.
Even more expensive but possibly more permanent and certainly an
attractive option, if your budget will allow, is to rent an office in a short term office
rental suite. This provides a presentable street address if you're setting up a
secret business address. There are a minimum of formalities, you pay cash in
advance and if you're dressed in some classy threads and carrying a briefcase
there'll be no questions asked. It's a good idea to mention to the lessor that your
business demands are such that you travel extensively and that you won't be
around all that often.
A refinement is to use the secretarial service, usually provided by temporary
office providers, to answer calls and take messages for you. This gives a far
better impression than the use of an answering machine. You can call in for
messages received either by fax or phone and reply from wherever you are.
International direct dialing will create the illusion that you're actually on the
premises.
It's important to always match your choice of accommodation address,
whether it be a mail drop, office suite, post box or boarding house room with
whatever illusion you want to portray. For instance it would be less than
intelligent to use a downtown office address as your residential address and vice
versa.
If you're ready to go the secret address route you must carefully consider
the options available to you; not everyone has the same requirements. Our
experience tells us that the best choice is generally to use a professional,
commercial mail drop. They are fully equipped to cater for you and know exactly
where you're coming from-whatever your purpose.
Endpiece - The obvious question you'll ask at this point is: How do you a
find a suitable mail drop? The answer is far simpler than you think. You can get a
pretty fair selection from the Yellow Pages in most cities. You will find mail drops
listed under "mail receiving services" or similar classifications. Look under
secretarial services and office services as well. Check out the classifieds in the
major newspapers of whatever city or country in which you're interested.
PAGE 32 OF 337
Surprisingly enough, particularly to those who have never realized just how
widely mail drops are used, there are several excellent directories available. We
have listed these below.
How to use Mail Drops for Privacy and Profit. By Jack Luger.
Directory of US Mail drops.
Both published by Loompanics Unlimited, P.O. Box 1197, Port
Townsend, WA 98368, USA.
Also available from the Freebooter Underground Library.

Mail Drops. By C.W.L., The Technology Group, P.O.Box 93124
Pasadena, CAL 91109.
International Mail Drop Directory. By Dr. Gerhard Kurtz. (Lists over 2,245
mail drops in 117 countries and 50 US States). Get it from Confidential Papers
Unlimited, BCM 3557, London WC1N 3XX, England.
There is also a trade association that provides referrals for over 525
members in the USA. Details are: Association of Commercial Mail Receiving
Agencies, 131 Coors Road, NW, Albuquerque, NM 87114, Phone (505) 892
3331. Att. James W. Baer, Executive Director.
PAGE 33 OF 337
KEEPING UP WITH THE JONESES WILL STUNT

YOUR GROWTH
WHY YOU SHOULD TAKE PRACTICAL PRECAUTIONS TO

ENSURE THAT YOUR HARD EARNED WEALTH IS NOT
SPIRITED AWAY BY LITIGATION, THEFT, BLACKMAIL,
EXTORTION, EMBEZZLEMENT, KIDNAPPING, DIVORCE
ACTION, OR THE TAXMAN.
You've made a few bucks during a lifetime of blood, sweat and tears. You've
arrived according to your peers. Society says "if you have it flaunt it". Nobody's
going to get an argument from you on that score. In fact, you'll be doing what
comes naturally enjoying the fruits of your labours and the bounty of your genius
for being a success.
For instance, you like nothing better of an evening than to slip into those
designer threads and leave 'the home that has everything' and is definitely in the
best part of town, in one of your luxury cars. You make the grand entrance at the
latest 'hot spot'. Your current lady on your arm, dressed to kill in that small black
number, sporting a gold Rolex and dripping with jewellery.
You've really made it. There's no question, you certainly deserve the
accolades. You have every right to feel great, and you do.
But stop for a moment and re-assess the situation. Consider the fact that
you don't live in a vacuum. While you've been doing the best you can, the people
you've been rubbing shoulders with have also been doing the best they can;
looking for opportunities, identifying prospects. Prospects like yourself who ring
bells in their heads and identify you as a target ripe and ready for the plucking.
Every con artist, insurance rep, fund manager, grifter, investment planner, time
share salesman, financial adviser, capital seeker and thief is looking to
appreciate your success. Ask yourself - do you really want to be a target - and
provide the means to fulfil somebody else's ambitions?
The Evidence
All you need do to verify this, is to check out the popular local press,
business, society and social magazines and suddenly it becomes very clear.
Take note of the publicity and scandal surrounding civil cases, criminal court
actions involving fraud, divorce hearings, etc. Who is involved in these often
spectacular proceedings? In the majority of cases you'll find high profile
flamboyant individuals are defendants. Big time divorce lawsuits well featured in
the press usually involve socialites, celebrities, and other perceived-to-be-
wealthy members of society. In spectacular criminal cases the plaintiff is normally
thought to be well to do. The same can be said where the state is litigating
against citizens for tax evasion or contravention of foreign exchange regulations.
PAGE 34 OF 337
High profile people always seem to be involved. Why? Because they stand out
like colourful cardboard ducks in a shooting gallery.
A sure bet
Most of us live in a society which has some influence on the lifestyle we
personally lead. We are swayed by our contemporaries and to some extent by
the advertising industry's version of how we should be living. They dictate the
use of products and even the image we should be portraying, depending on our
self perceived status in the community
In short, we spend a lot of time trying to keep up with the Joneses, and very
little time considering the folly of our actions.
If you're guilty of the above, it's time to take stock. One of life's racing
certainties is the irrefutable fact that sooner or later you will come across
somebody that would like nothing better than to exploit your wealth. It's probably
already happened to you. Can you un-reservedly say that you've never been
taken for a ride? If you can you're a far better person than I and most others,
Gunga Din!
Poverty Policy
The best way to protect yourself against this eventuality is to demonstrate
neither visible assets nor substantial means. This advice is also for those of you
who haven't quite arrived, but are taking on all the trappings of success; such as
a classy car, upmarket home, stupendous wardrobe and all the right club
memberships. Not least of all the organisation of a large bank overdraft or credit
line to pay for everything. Don't be the flashy guy that gets followed home, has
his car hi-jacked and his property plundered.
Apparent poverty is the best protection you can have against lawsuits, tax
claims by governments, and other forms of robbery, blackmail, theft, extortion or
kidnapping. If it looks like you have nothing or very little in the way of assets to
justify pressure, you most probably will never be pressurised. Practice the
poverty policy and the sharks will give you a miss and concentrate on more
obvious and far easier prey.
Deep Pocket Theory

The prudent will be cognisant of the fact that in today's society one can
become embroiled in a serious legal action whether justified or not. If you're
living an obvious 'fat cat' lifestyle you're increasing the odds of this happening to
you.
Judges and juries today work on the deep pocket theory. They believe that
the person who can best afford to pay a judgment is the one who should pay. To
hell with what's right and what's wrong. The swelling ranks of contingency fee
lawyers bears witness to this state of affairs.
PAGE 35 OF 337
These characters are capable of dreaming up all kinds of unfair litigation

against unsuspecting Joe Public. Their plaintiff can't afford not to go with the
action as it only costs if the lawyer wins the case.
Most of us believe that it can't happen to us. Do yourself a favour and read
the recent novel by Tom Wolfe called Bonfire of the Vanities. It's about a man
who had everything going for him. He thought he was 'Master of the Universe'-
for awhile. Due to unfortunate circumstances, mainly a lawsuit in which he was
falsely accused, he lost his family, his fortune and his freedom.
The Sting
We recently heard of a case in the US. A paint store owner sent an
employee to mix some paint in the back room. There was a chemical reaction.
The employee inhaled some noxious fumes and died. The employer did not
intend for this to happen. It was an unfortunate accident.
Yet the boss received a long jail term for involuntary manslaughter. After the
criminal verdict was issued, the wife and children of the store owner were sued
and completely impoverished. The employees widow was awarded the store and
all the boss' money
In these times it appears to be open season on the moderately wealthy.
Court process is the modern equivalent of the club, spear, or bow and arrow.
Plaintiff's lawyers are constantly looking for prey. Prosecutors with political
ambitions build their future on winning cases against wealthy defendants. There
is no prestige in putting away an ordinary rapist or bank robber. But getting a
verdict against a wealthy heiress (like Patty Hearst), and the publicity that goes
with it, practically guarantees an appointment as a judge. Public prosecutors are
fond of saying "Convicting the guilty is easy, putting the innocent away takes
more work."
The Conservative Route

It takes a considerable part of the average person's working life to become
financially independent. To have the wherewithal to enjoy lengthy periods without
full time employment. Generally this happy state occurs rather later than sooner
during their working career. When it would be almost impossible to start again
should things go terribly wrong.
It has become mandatory to take all the precautions necessary to protect
what you have. Accept the fact that an assault on your wealth can happen to
you, not just Mr. Guilty, or the next guy. That is why it is so important to keep a
low profile. That may prove to be difficult, especially for people who want to flaunt
their financial success to contemporaries; practice conspicuous consumption
and public display. An ostentatious car, expensive jewellery, a spectacular home,
perhaps journalist's profiles in the popular press. Don't make this mistake. It
brings government tax officials, conmen, thieves, and hungry lawyers out of the
woodwork. It makes you a sitting target.
What's our advice? Live comfortably, but not ostentatiously. Don't keep up
with the Joneses.
PAGE 36 OF 337
Let them stay far ahead and pay the price. Be low profile. Do not flaunt your
lack of regard for local morality, wherever you are. Practice your perversions (if
any) in private. Even take a leaf out of the book of the true wealthy from the old
world. See how they have learnt to project a conservative, non-flamboyant
lifestyle, while enjoying their considerable wealth to the hilt.
Why cause people you don't know to hate you? Don't give anyone cause to
consider you 'uppity' or disrespectful. You can do your unconventional thing, but
do it quietly. Do it only in places where it is not considered scandalous, illegal or
immoral. Those who violate this rule, as the brilliant homosexual playwright
Oscar Wilde did a generation ago, may shine brightly for awhile. But people who
are too far out front, those who seek confrontations with the establishment will
generally be broken by society. Never seek publicity. Don't be a hero. Don't
engage in head-on confrontations with anyone, particularly government
agencies. Put yourself in a position to be able to retire gracefully from any
dispute. Oscar Wilde spent his final years in jail on morals charges. Don't let that
happen to you.
Guidelines
If you end up in dispute with a government agency, a tax collector, a plaintiff
in a lawsuit, a creditor, or even an aggravated spouse, it is more than likely that
the opposition will try to sequester your visible assets. They'll go to the extreme
and have your passport confiscated to prevent you from leaving the country.
Make no mistake a good lawyer will tie you up and restrict your movements
regardless of the facts. If you are eventually proven innocent after a "fair trial" or
not liable, in the case of a civil action, a long drawn out affair could cost you
dearly. You could lose your business as a result of sequestration and be
bankrupted by prohibitive legal fees. Not to mention the effects on your family,
your reputation and your standing in the community. The damage is done
whether you win or lose.
What practical guidance do you need for maximum protection?
Start accumulating a secret judgement-proof nest egg abroad. It will stand
you in good stead for the inevitable rainy day when you might have to leave in a
hurry. Stash a fair percentage of your assets: cash, securities, bank accounts,
real estate outside of the country in which you live; of which you're a citizen;
where you're a legal resident.
Now you know why your assets should be kept outside places where
disputes could possibly arise. That may not be enough. In a civil case you can
be placed in physical custody, and ordered by a judge to reveal and surrender
your foreign assets to the court.
Untouchable
In these trying times Big Brother rules the roost in most countries. Hordes of
lawyers and accountants are competing for a piece of your pie. Dupe them.
Establish a substantial secret nest-egg abroad. Preferably held under another
identity with which you cannot be associated in any way. Don't talk or boast
PAGE 37 OF 337
about what you have. Be mindful of the fact that your overseas investments
should never be repatriated, reported, nor brought home - for any reason.
Rather, from time to time, visit your money. If you want to spend part of your
profits, spend or invest abroad.
How do you go about securing another identity? Begin using another name.
To open a bank account however, it will probably be necessary to show evidence
of identity. When you obtain a second passport, most countries will permit you to
take a name that is more suitable to the language of the country. For example, in
the US, Giuseppi Verdi becomes Joe Green. In Israel Dov Vardi. In Japan Kazo
Midori. The Arab Joe Green equivalent is Mohammed Khadra.
There is a wealth of material available on legal second passports and
alternative identities. Several books contain information on the subject, such as
PT Volume 1 and the Passport Report as featured in the Underground Library.
They will give you everything you need to know -- and then some.
If you have the wherewithal you owe it to yourself and your loved ones to
make a good chunk of your wealth safe from lawsuits or seizures. Your nest egg
abroad could very well save your life, or in the event of legal or government
problems, preserve your lifestyle.
PAGE 38 OF 337
GUIDE TO OBTAINING VITAL RECORDS BIRTHS,

DEATHS, MARRIAGES, AND DIVORCES
Introduction
As part of its mission to provide access to data and information relating to
the health of the Nation, the National Center for Health Statistics produces a
number of publications containing reference and statistical materials.
The purpose of this publication is solely to provide information about
individual vital records maintained only on file in State or local vital statistics'
offices. An official certificate of every birth, death, marriage, and divorce should
be on file in the locality where the event occurred. The Federal Government
does not maintain files or indexes of these records. These records are filed
permanently either in a State vital statistics office or in a city, county, or other
local office.
To obtain a certified copy of any of the certificates, write or go to the vital
statistics office in the State or area where the event occurred. Addresses and
fees are given for each event in the State or area concerned. To ensure that you
receive an accurate record for your request and that your request is filled
expeditiously, please follow the steps outlined below for the information in which
you are interested:
Write to the appropriate office to have your request filled.
Under the appropriate office, information has been included for birth
and death records concerning whether the State will accept checks
or money orders and to whom they should be made payable. This
same information would apply when marriage and divorce records
are available from the State office. However, it is impossible for us to
list fees and addresses for all county offices where marriage and
divorce records may be obtained.
For all certified copies requested, make check or money order
payable for the correct amount for the number of copies you want to
obtain. Cash is not recommended because the office cannot refund
cash lost in transit.
Because all fees are subject to change, a telephone number has
been included in the information for each State for use in verifying
the current fee.
Type or print all names and addresses in the letter. Give the
following facts when writing for birth or death records: 1. Full name
of person whose record is being requested. 2. Sex. 3. Parents'
names, including maiden name of mother. 4. Month, day, and year of
birth or death. 5. Place of birth or death (city or town, county, and
State; and name of hospital, if known). 6. Purpose for which copy is
needed. 7. Relationship to person whose record is being requested.
PAGE 39 OF 337
Give the following facts when writing for marriage records: 1. Full
names of bride and groom. 2. Month, day, and year of marriage. 3.
Place of marriage (city or town, county, and State). 4. Purpose for
which copy is needed. 5. Relationship to persons whose record is
being requested.
Give the following facts when writing for divorce records: 1. Full
names of husband and wife. 2. Date of divorce or annulment. 3.
Place of divorce or annulment. 4. Type of final decree. 5. Purpose for
which copy is needed. 6. Relationship to persons whose record is
being requested.
Foreign or high-seas births and deaths and certificates of citizenship

Birth records of persons born in foreign countries who are U.S. citizens at
birth the birth of a child abroad to U.S. citizen parent(s) should be reported to the
nearest U.S. Consulate or Embassy as soon after the birth as possible. To do
this, the child's parent or legal guardian should file an Application for Consular
Report of Birth Abroad of a Citizen of the United States of America (Form FS-
579/SS-5). This form may also be used to apply for a Social Security Number for
the child. A $10.00 fee is charged for reporting the birth.
The application must be supported by evidence to establish the child's U.S.
citizenship. Usually, the following documents are needed:
1. the child's foreign birth certificate;
2. evidence of the U.S. citizenship of the parent(s) such as a certified copy
of a birth certificate, U.S. passport, or Certificate of Naturalization or Citizenship;
3. evidence of the parents' marriage, if applicable; and
4. affidavit(s) of the physical presence of the parent(s) in the United States.
Each document should be certified as a true copy of the original by the
registrar of the office that issued the document. Other documents may be
needed in some cases. Contact the nearest U.S. Embassy or Consulate for
details on what evidence is needed. When the application is approved, a
Consular Report of Birth Abroad of a Citizen of the United States of America
(Form FS-240) is given to the applicant. This document, known as the Consular
Report of Birth, has the same value as proof of citizenship as the Certificate of
Citizenship issued by the Immigration and Naturalization Service. A Consular
Report of Birth can be prepared only at a U.S. Embassy or Consulate overseas,
and only if the person who is the subject of the report is under 18 years of age
when the application is made. A person residing abroad who is now 18 years of
age or over, and whose claim to U.S. citizenship has never been documented,
should contact the nearest U.S. Embassy or Consulate for assistance in
registering as a U.S. citizen.
As of November 1, 1990, the U.S. Department of State no longer issues
multiple copies of the Consular Report of Birth. However, a replacement
Consular Report of Birth may be issued if the original document is lost or
mutilated. The U.S. Department of State also issues certified copies of the
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Certification of Report of Birth (DS-1350), which contains the same information

as on the Consular Report of Birth. The DS-1350 serves most needs and can be
issued in multiple copies. Documents are issued only to the subject of the
Consular Report of Birth, the subject's parents or legal guardian, or a person
who submits written authorization from the subject. To request copies of the DS-
1350 or a replacement FS-240, write to Passport Services, Correspondence
Branch, U.S. Department of State, 1425 K St. NW, Room 386, Washington, DC
20522-1705. Please include the following items:
1. the full name of the child at birth (and any adoptive name);
2. the date and place of birth;
3. the names of the parents;
4. the serial number of the FS-240 (if the FS-240 was issued after
November 1, 1990);
5. any available passport information;
6. the signature of the requester and the requesters relationship to the
subject;
7. a check or money order for $10.00 per document requested, made
payable to the U.S. Department of State; and
8. if applying for a replacement FS-240, a notarized affidavit by the subject,
parent, or legal representative that states the name, date and place of birth of the
subject, and the whereabouts of the original FS-240.
To obtain a Consular Report of Birth in a new name, send a written request
and fees as noted above, the original (or replacement) Consular Report of Birth,
or if not available, a notarized affidavit about its whereabouts. Also, send a
certified copy of the court order or final adoption decree which identifies the child
and shows the change of name with the request. If the name has been changed
informally, submit public records and affidavits that show the change of name.
Birth records of alien children adopted by U.S. citizens Birth certifications for
alien children adopted by U.S. citizens and lawfully admitted to the United States
may be obtained from the Immigration and Naturalization Service (INS) if the
birth information is on file. Certification may be issued for children under 21
years of age who were born in a foreign country. Requests must be submitted on
INS Form G-641, which can be obtained from any INS office. (Address can be
found in a telephone directory.)
For Certification of Birth Data (INS Form G-350), a $15.00 search fee, paid
by check or money order, should accompany INS Form G-641. Certification can
be issued in the new name of an adopted or legitimated child after proof of an
adoption or legitimation is submitted to INS. Because it may be issued for a child
who has not yet become a U.S. citizen, this certification (Form G-350) is not
proof of U.S. nationality. Certificate of citizenship Persons who were born abroad
and later naturalized as U.S. citizens or who were born in a foreign country to a
U.S. citizen (parent or parents) may apply for a certificate of citizenship pursuant
to the provisions of Section 341 of the Immigration and Nationality Act.
Application can be made for this document in the United States at the nearest
office of the Immigration and Naturalization Service (INS). The INS will issue a
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certification of citizenship for the person if proof of citizenship is submitted and

the person is within the United States. The decision whether to apply for a
certificate of citizenship is optional; its possession is not mandatory because a
valid U.S. passport or a Form FS-240 has the same evidentiary status.
Death records of U.S. citizens who die in foreign countries

The death of a U.S. citizen in a foreign country may be reported to the
nearest U.S. consular office. If reported, and a copy of the local death certificate
and evidence of U.S. citizenship are presented, the consul prepares the official
"Report of the Death of an American Citizen Abroad" (Form OF-180). A copy of
the Report of Death is then filed permanently in the U.S. Department of State
(see exceptions below). To obtain a copy of a report filed in 1960 or after, write to
Passport Services, Correspondence Branch, U.S. Department of State,
Washington, DC 20522- 1705. The fee for a copy is $10.00. Fee may be subject
to change. Reports of Death filed before 1960 are maintained by the National
Archives and Records Service, Diplomatic Records Branch, Washington, DC
20408. Requests for such records should be sent directly to that office. Reports
of deaths of persons serving in the Armed Forces of the United States (Army,
Navy, Marines, Air Force, or Coast Guard) or civilian employees of the
Department of Defense are not maintained by the U.S. Department of State. In
these cases, requests for copies of records should be sent to the National
Personnel Records Center (Military Personnel Records), 9700 Page Ave., St.
Louis, Missouri 63132-5100. Records of birth and death occurring on vessels or
aircraft on the high seas When a birth or death occurs on the high seas, whether
in an aircraft or on a vessel, the record is usually filed at the next port of call.
1. If the vessel or aircraft docked or landed at a foreign port, requests for
copies of the record may be made to the U.S. Department of State, Washington,
DC 20522-1705.
2. If the first port of entry was in the United States, write to the registration
authority in the city where the vessel or aircraft docked or landed in the United
States.
3. If the vessel was of U.S. registry, contact the local authorities at the port
of entry and/or search the vessel logs at the U.S. Coast Guard Facility at the
vessel's final port of call for that voyage. Records maintained by foreign
countries Most, but not all, foreign countries record births and deaths. It is not
possible to list in this publication all foreign vital records offices, the charges they
make for copies of records, or the information they may require to locate a
record. However, most foreign countries will provide certifications of births and
deaths occurring within their boundaries.
Persons who need a copy of a foreign birth or death record should contact
the Embassy or the nearest Consulate in the U.S. of the country in which the
death occurred. Addresses and telephone numbers for these offices are listed in
the U.S. Department of State Publication 7846, "Foreign Consular Offices in the
United States," which is available in many local libraries.
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Copies of this publication may also be purchased from the U.S.

Government Printing Office, Washington, DC 20402. If the Embassy or
Consulate is unable to provide assistance, U.S. citizens may obtain assistance
by writing to the Office of Overseas Citizens Services, U.S. Department of State,
Washington, DC 20520-4818. Aliens residing in the United States may be able to
obtain assistance through the Embassy or Consulate of their country of
nationality.
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OFFSHORE ORIENTATION EXERCISE
BY THE OFFSHORE ADVISOR

Once, it was relatively easy to be quite sure that your wealth was something
that could be relied upon to be around for many generations after having
achieved it, providing that your successors were wise enough to maintain or
improve upon the work that had been done to create that wealth in the first
place... How wonderful it must have been to enjoy such apparent stability!
However, times have changed.
With events such as two World Wars, rampant global political
encroachment, acts of financial terrorism (the Oil *wars* for example,) and a
myriad of other, similar and seemingly innocent incidents, the assumption that
your life's efforts will provide for you and your family in your latter years,
becomes more in doubt each day.
Changes which have altered the course of financial history and the ability to
rely on the benevolence of ones government, are affecting everyone in ways that
are only vaguely understood by many at best, and not understood at all by most.
Many events that affect our rights pass right under our noses and are now
almost a daily occurrence.... What does this mean to you?
Perhaps a few examples would give some perspective as to some of the
nasty surprises that our rapidly evolving world can dish up without notice.
However, the time and space needed to provide those examples may be better
utilized here employing other means.
The number of cases where innocent, law abiding citizens have had the
stability and comfort of their lives destroyed by the actions of government
department(s) or an endless list of other vultures, are far too frequent to be
random acts of aggression. Most of us know someone, or are aware of
someone who has been ravaged by various quasi-legal ploys, the end result
being extreme discomfort and more often than not, complete destitution or loss.
Rest assured that virtually no one is immune from the ravages of the tax
man. The wealthy are as vulnerable as the wage earner, and anyone in
between. Perhaps the only difference is that the greater your net worth is, the
larger is the target represented.
There are too many real situations by which you are already being
constantly threatened, with more devious and creative ploys being invented daily
and it is extremely dangerous to enjoy the luxury of taking them lightly. This
deserves some very serious thought.
Two constants which are common in virtually every act of confiscation are
worthy of careful consideration here:
1. The victims had ignored the fact that they were subject to the whims of
their government(s) and had made no provision for the increasing possibility of
having their number come up. That, and the fact that in the seats of power there
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is a dominant factor that is worth noting: *What is theirs is theirs and what is
yours is theirs too*
2. Had any of the unwitting combatants in this one sided war been a little
less trustful, they might have taken the minor but significant precaution of placing
at least a portion of their assets or capital beyond the reach of avaricious and
heartless attackers, whoever they may be.
Unfortunately, most are not prepared to act unless given good reasons to
do so.., the old adages *It can't happen to me*, or ,It always happens to
someone else+, are all too prevalent. Nevertheless, the likelihood of it
happening to you or someone close to you is increasing very rapidly. The pity is
that unless a good reason or reasons for acting are decided upon, a reason may
well find you... at which point it is far too late.
Why do we buy insurance? Generally it is with the knowledge that we will
likely not need that safety net that we make the purchase. Chances of actually
needing fire insurance, for example, are fairly slight, but we still pay the
premiums... just in case. Likewise, the needs for a fallback financial plan should
have every bit as much or more importance attached to them, just in case.....
The variables that exist to create financially devastating situations beyond
our control are largely overlooked as the possibilities of getting caught in the
crunch tend to seem fairly remote to most law abiding citizens. You may be
conducting yourself in what to you is a normal, totally acceptable manner.
Having done so all your life, why should you consider changing now?
You may not have knowingly crossed the line between legality and illegality,
but almost daily the line is moving and sooner or later it will probably move to
include you too - if it hasn't already. All it takes is another senseless law to be
passed quietly, to make criminals out of the most upstanding of people - it
happens all too often.
How many times have YOU thought that it might be a good idea to sock
away some cold cash where nobody can find it? Have you done it? If so, you
are being prudent and should be commended for your foresight.., if not, it is time
to think again, but we need to look beyond the stash in the back yard...
Absolutely the nearest you should be focusing for solutions is Europe, the Pacific
or Asia.
In fact, if you are a resident of the USA, Canada, or any Commonwealth
country, you are now faced with the same urgency for protecting yourself and
your cash and assets as those who find themselves in many of the so called
Third World countries.
We almost automatically assume that because of our supposedly
democratic systems of government, we should be relatively free of the sort of
despotism that takes place *elsewhere*. Not so. The only real difference is that it
is done more subtly in the major Western countries... the results are still the
same in the end.
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Other Important Indicators

Have you ever reflected upon the real reason for the reporting laws that are
a fact of life today? Reporting to whom and why? For what earthly reasons,
other than to monitor your every move? The various authorities involved in
these scheming activities will tell you that, *...if you are not breaking the law, then
you have absolutely nothing to worry about.*
They fail to mention that every time you are arbitrarily forced to report your
actions (or have them reported for you), yet another of your precious few
remaining vestiges of privacy is crushed by the monster we have loosed on
ourselves.
Cash transaction reporting, cash withdrawal reporting, cash transfer
reporting and of course, the *pants around the ankles* federal tax reporting, are
amongst a plethora of other insidious, downright underhanded methods of
extracting revenue from all and sundry. You were probably told (after the fact)
that these measures would be good for you as it would help your benevolent,
grandmotherly and interfering government to better serve you by *curbing
organized crime*, amongst other, good sounding nonsense.
To date, I know of no instance of any organized crime that has been more
than slightly inconvenienced by any of these measures. However, I do know of
THOUSANDS of law abiding folk that have had their lives destroyed or altered
beyond recognition by these and related preventative measures that were
supposed to benefit them....
If your present government were suddenly overthrown by an even less
benevolent mob of power mongers who were intent on feeding on you and your
resources... would you have anything that they could not take or use?
Imagine if you will, the comfort of knowing that you had even a few
thousand dollars in a foreign bank account, somewhere beyond the prying eyes
and hooks of anyone else. It need not necessarily be a lot of money but it may
be well be extremely significant should you ever find that you have to make
another start... or just the fact that it is there to add to what you may already
have put aside.
If it can he attached to you, it can just as easily be taken from you and there
is precious little you, or anyone else can do about it. If the government decides
that your number is up (they really have nothing better or honest to do), then
you're the animal in their trap until they tire of you and move on to seek out fresh
and unwitting participants to harass, until they too succumb to the destructive
feeding frenzy of insatiable, confiscatory government.
Do you think that's a little harsh?? When was the last time that real taxes
were actually reduced? What about P.S.T., G.S.T., capital gains tax, death
duties/estate tax, income tax, property tax, the countless hidden taxes that make
your dollar worth only pennies** every time you spend it?
* Fact: Your dollar today is worth less than 10, compared to 1939 a loss of
over 904
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Who do you know that has been bitten by the fiscal fiend and is now out of
business or has gone elsewhere to lick their wounds? Not long ago, it was
unheard of to be asked to provide your social security/insurance number to open
a bank account or invest in a mutual fund, or to automatically be asked to
provide a major credit card before you can pay cash for things like a hotel stay,
car hire, airline tickets or darn near anything else. Unless you are `pegged at the
post', you don't get to play at all.
Another thought to ruminate on is the fact that in most western countries,
income taxes are not even legal. *Income* taxes were brought about as
"temporary measures" to offset the cost of recovery from war or other incidents
that had absolutely nothing to do with you or me, but here we are being gouged
continually, in ever growing amounts, well after the temporary has become
permanent and all pervading.
Does it not seem odd that 50 years since the LAST war, we are still being
raped financially under laws and statutes that are in fact illegally implemented in
the war before that one? As surely as the Mongol Hoards of the past overran all
before them, the gun backed agents of today's major governments will act in
kind, against all but those who have removed themselves from the path of
destruction.
How is it that we acquiesce with barely a murmur and leave the door wide
open for virtually anyone with a reasonable bent (or the *law* on their side), to
skin us alive at their every whim? In almost every case, the reasons for being
unprepared are largely due to the lack of information and access to the facilities
which can alter the way we think and make money, or more accurately, the ways
in which we make money work for us. The only way you can hope to score in a
game like this, with rules that are constantly changing (and not in your favor) is
to play by your own rules to a certain extent.
The degree of change to the rules is a function of your reasons for seeking
to take advantage of the opportunities that exist beyond your national
boundaries and your financial capacity to do so.
Nor are there valid reasons for moral dilemma. Only the how to go about it
and when are the relevant factors in creating a personal insurance plan, one
which can place you and your financial gains outside the reach of those who see
no wrong in robbing you of that which is rightfully yours.
What About Your Privacy?

When was the last time you felt secure in knowing that your financial affairs
were yours and only yours to know? Probably never, unless you are
approaching a hundred years of age! One of the grimmer hallmarks of this
century is the all seeing, all pervading intrusions into our personal and financial
lives.
Today, almost anyone with a telephone or fax can find out more about you
in a couple of hours than you can probably even remember yourself. Things like
how much you make, what you spend it on, who you owe it to, what your home
is worth, what you buy, who you buy it from, who you talk to, how often, and
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without much trouble at all, even what you are talking about. Your privacy and
your wealth are both at extreme risk today and it is not a situation that is likely to
improve for the better, unless you instigate the changes.
It is possible to take some of the sting out of these bites into our life and
livelihood and it is important to understand the reasons for taking action, as
much as it is critical to gain access to the facilities used in designing and
implementing your plan. The reasons for creating an offshore plan are as
diverse as the number of people that represent those who are intelligent and
capable enough to realize that there is a need to do so. There are four principal
reasons that are the focus of this report which should become an integral part of
the foundations of your offshore plan; these are,
1. TAX MINIMIZATION
2. PRIVACY
3. ASSET PROTECTION
4. PROFIT
Each of the four main considerations are generally the subject of much
debate, but let us take a brief look at each in turn;
1. TAX MINIMIZATION: There is only one thing that has relevance when
looking at this critical aspect of planning and that is to pay the least possible
amount of tax that is legally allowable. This is not to say that you become
involved in tax evasion, you must pay that tax which you are legally bound to
pay, otherwise you are liable to face severe penalties if round out.
It is not the intention of this report to encourage anyone to evade paying
taxes of any kind. However, it is suggested that the means to make use of
various legal techniques for total minimization be employed, in order that you
can maximize the amount of capital that is available to invest offshore.
Essentially, this is the forum of your local tax attorney or accountant and beyond
the scope of this material.... But once you are outside the international
boundaries that are the limit of the expertise of your internal advisors, other
factors which are beneficial to you come to bear.
For the purpose of this exercise, that income which is received in your
hands in your country of residence is that which you are concerned with for the
focus of tax minimization initially.
2. PRIVACY: This is without a doubt, one of the most sensitive issues we
face... what amount of privacy (or lack of it) are we prepared to settle for? There
is no patent answer other than to say that you are the one who will ultimately
decide what degree of privacy is sufficient to meet with your desire for and right
to privacy. In the process of creating your offshore/international plan, privacy is
relatively easy to achieve and maintain, as long as you are prepared to invest
the time and thought required to insure that the level of privacy is adequate for
your own personal needs.
There are literally thousands of ways to create a realm of impenetrability
within which to conduct your affairs, somewhat like the layers of an onion... each
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layer is closer to the core, but as long as the skin is healthy and well developed,
the soft inner layers will seldom be attacked by even persistent pests.
3. ASSET PROTECTION: When assets are improperly secured, it is
relatively simple for creditors, governments, individuals, business partners or
others to attack, attach, freeze or confiscate them, with almost total impunity. The
most preferred method of asset protection is the use of a trust, with or without
the addition of holding company(s) to further isolate the assets from personal
ownership, and thus attack.
Each case must be weighed on the basis of the needs of the individual, but
suffice to say that a trust, if properly used, is often the ultimate choice for total
asset protection and should be considered the absolute cornerstone of any
sound financial plan.
4. PROFIT: Without bringing profit into the equation, the previous three
categories are generally somewhat a waste of time and money. A very important
point to consider though is that virtually ANY offshore investment will be more
profitable to you than one that is within your country of residence, as the
proceeds are almost invariably higher due to the fact that a non resident foreign
investor is seldom required to pay tax on their earnings. Normally, tax will not be
payable until the earnings are returned to your country of residence should you
elect to repatriate them.
Almost any investment made outside your country of residence will give a
higher return as there are no taxes which will reduce the yield. A simplified
example is this: Let us say that a particular investment available overseas,
returns 12'; annually. With a similar return from an internal investment, it may
appear that one may match that return. However, the gain on the internal
investment will be subject to taxes, often before you see any of it, then be taxed
again in your hands.
A rule of thumb is that about half of it will be lost to tax one way or another.
Meanwhile, the return from the external investment is net, free of tax. In other
words, to equal the external investment, one would need to find a yield at home
that is nearly twice as high as the external yield if it were to result in the same net
benefit at the end of the year
The means for making use of your offshore earnings, while enjoying their
full, tax-free value, are many and diverse. Complete attention must be given to
the reasons for using your gains at home, if it is your intention to do so, as are
the methods to be employed in making the capital available for such use.
If this factor is overlooked, you will inadvertently be undoing many of the
functions of the other reasons for creating the plan in the first place. Once you
have made the moves which provide the protection that is sought, repatriation of
all or any of the capital (unless carefully and appropriately done) will serve only
to expose the existence of your facilities to those prying eyes you are seeking to
avoid.
There will never be more time to begin making your international plan than
there is today. The quicker your move is made towards international
diversification, the sooner the benefits of being a part of the international world of
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profits, privacy, asset protection and tax benefits will manifest themselves in
improvements to your lifestyle and peace of mind. It is hoped that your journey
towards greater privacy and financial freedom is a safe, happy and enjoyable
one and that The Offshore Advisor will be able to point you in the right direction.
Do You Long To Live A Visa Free, Tax Free, Bureaucracy Free Life?
With the ever turning tides of fortune it is essential for the security of anyone
of substance or ambition to have at least one other passport and nationality.
Dual citizenship can also be thought of as a business proposition. The tax
benefits and investment opportunities can be enormous and total financial
privacy can be achieved.
Passports from many respectable countries are available, easily obtainable
and often free. But which countries offer the best advantages? What are the
costs? What are the easiest ways for obtaining a second passport?
This information is not publicized by most foreign ministries and is generally
very difficult and expensive to acquire. However, all the facts you will ever need
to find your way through a possible bureaucratic nightmare have been compiled
in numerous reports and are freely available if you know where to look.
A forthcoming issue of the Offshore Advisor will look into the various
aspects of how to assess which countries are available (you would be surprised
which ones are the simplest to access), and where to go for reliable contact
names and detailed reading on the subject.
By seeking out the material available regarding dual citizenship, you will be
able to profit from the numerous benefits and advantages of holding a second
passport, and perhaps just as significantly, be better equipped to realistically
evaluate the dangers of NOT having a second passport.
Be sure that your subscriptions are in soon enough to avoid missing the
coming issues - the value of the information you will receive will be worth many
times more than your subscription to The Offshore Advisor.
It Is A Puzzle To Me...
You may well be among those of us who consider that the state is out of
control like a cancer and we are its source of nourishment, where all its citizens
are its chattels. Government agents permeate our lives, regulating us,
inspecting us, outlawing our private behavior and hampering our movement as
well as threatening us with dire consequences if we resist.
It always amazes me how such wailing and gnashing of teeth occurs over
the amounts that government is taxing the lives of its citizens, the runaway
spending and how little, if anything, of value appears as a result of the capital
gleaned from our pockets. Every effort is made to shield assets and property
from the insatiable tax collector, often to the extent of not telling the whole story
on the annual tax returns....
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How is it then that after being so successful at resisting the politicians

extortionate demands for revenue (so much so that they are unable to confiscate
enough by force to pay their salaries and pensions, expenses, travel, foreign
adventures, office staffs, health benefits, pet projects, payoffs and more), the
same investors turn around and willfully make loans to these robbers?
Perhaps it is time to think very seriously about NOT buying government or
municipal securities, the resort of authority when it cannot extract enough
revenue through taxation. By investing in government bonds, bills or other
issues, we are in fact lending the crooks the money to defeat us. It does not sit
well with me to think that because they are offering a reasonable rate of interest
to attract the funds they need to meet their agendas, we blindly hand them the
money that has been so hard won from them in the first place.
A great libertarian theorist, Lysander Spooner (1808-1887) put the case
quite accurately thus:
"....men who never think of lending a shilling to their next door neighbors for
purposes of honest industry... unless upon the most ample security, and at the
highest rate of interest... stand ready, at all times to lend money in unlimited
amounts to those robbers and murderers who call themselves governments, to
be expended in shooting down those who do not submit quietly to being robbed
and enslaved. They lend their money in this manner, knowing that it is to be
expended in murdering their fellow men for simply seeking their liberty and their
rights; knowing also that neither the interest nor the principal will ever be paid,
except as it will be extorted under terror of the repetition of such murders as
those for which the money lent is to be expended... And why are these men so
ready to lend money for murdering their fellow men? Solely for this reason, viz.,
that such loans are considered better investments than loans for purposes of
honest industry. They pay higher rates of interest; and it is less trouble to look
after them. This is the whole matter."
It is curious that the leaders of the major western nations will all give the
same hollow rhetoric when saying that their notes are *backed by the full faith
and credit of the nation.* This means backed by you and everything you own...
In fact, these thugs are the epitome of ruthless thieves and murderers and so
could hardly be considered faithful.
As Spooner stated 150 years ago *...neither the interest nor principal will
ever he paid except as it will be extorted under terror.* This is still the case
today, but more so than ever.
What About Your Retirement?

With changes in the laws regarding the deductability of retirement fund
contributions (RRSPs, KEOGHs, Superannuation etc.), just how well do you
think your present retirement fund will bear up under the increasing load of tax..,
either on contributions or when withdrawing from the fund on retirement, or
both....? It doesn't make much sense to have your plans thwarted by changes
that may be just the political flavor of the day, especially when it can mean the
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difference between a comfortable lifestyle (one which most have planned on for
their entire working life) and one which is a struggle from one day to the next.
With careful planning it is prudent and fairly simple to set up your retirement
fund offshore. In fact, if you were to do only one thing to safeguard your financial
future, a well thought out and properly positioned retirement fund where nobody
else can get a piece of it is of paramount importance.
Look at it this way... if you are prepared to have to rely on minimum
contributions to a pension type fund, with the hopes that there will also be a
stipend paid to you monthly by the government when you do retire, it is highly
unlikely that you will see the wisdom of having a fall back plan.
However, I believe that it is equally, if not more important, to have your
offshore nest egg in place, with contributions being made as large and as often
as possible, just in case there is no relief from the encroachment that
governments are making into our ability to look after our own affairs, especially
our retirement.
The Myth Of Unemployment

Have you ever wondered why the unemployment rate in the major
developed nations of the world is so high? Why is it that with every
announcement of new +revised* unemployment figures by the government, it is
pretty obvious to most that someone isn't telling the truth...
The real culprit is the minimum wage *standard* which is simply another
form of price control: it prevents anyone from offering employment below a
certain price, and like any other price control, the result is a shortage or a
surplus... in the case of a minimum wage, the surplus is called *unemployment.*
Only in countries where there is no minimum wage laws is there relatively
little or no unemployment. Politicians and economists claim that a minimum
wage raises wages for all workers at the lower end of the pay scale. All the
evidence is to the contrary... every country with minimum wage laws (or high
unemployment benefits, which have the same effect, establishing a minimum
below which it is unprofitable to work) also have high and persistent levels of
unemployment.
The reason is quite simple: an employer will only offer someone a job when
the value of his work exceeds the amount of his salary. When a minimum wage
is set at, say, $4 an hour, only those people whose value to an employer is
GREATER than $4 an hour will find employment.
The Security Of The Free Market

One very beneficial result of a Free Market Economy is that there are no
minimum wage laws and no unions. Contrary to popular belief, instead of
exploitation being rampant, employees actually have far greater job security...
security provided by the market.
PAGE 52 OF 337
For a clear example of what is a phenomenon to most Westerners, we need

only look as far as Hong Kong where there are no minimum wage laws and no
laws establishing unions, and unemployment is virtually unheard of.
Another Change That Will Make And Lose Fortunes

If you have ever wondered about the wisdom or necessity of owning a
Laptop or Notebook (miniature, portable computers), the technology has
reached a point now where the affordability and usefulness of such devices is
beyond question for most.
The newer versions of these tiny powerhouses are quite astonishing as
size, weight, battery life and functionality is rapidly approaching that of their
desktop relatives. Interchangability of peripherals is becoming a simple matter
of exchanging a slot in card from one or more of the PCMCIA ports which
support everything from memory modules, fax/data modems and software
*suites* to detachable hard drives.
The same devices can now be plugged into the new desktop machines as
they are being built to enhance the sharing of information between the different
types of machines - a time consuming nuisance in the past. As more people
obtain these handy devices to handle the logistics of their daily phone/fax/data
communications, (also video phone and voice-modem through your wireless
computer, which operates through digital cell-phone networks) doing so will
make keeping in touch and doing business much more convenient, without
being anchored to a permanent station and will serve to further decentralize all
manner of businesses.
The medium of computers as a rapid and convenient means for exchange
of information of all kinds, is well within the reach of anyone with just some basic
computer skills. For example, the electronic version of this newsletter will out
circulate the printed version by a factor of 4 to 5 or more to 1 as it is a much
more convenient and cost effective medium to utilize, compared to conventional
print. As more people become aware of the wealth of knowledge and
opportunity that exists in doing business via modem using their computer, the
world will continue to shrink at an ever increasing rate.
The publishing of a wide variety of material that would normally be in *print*
is changing the ease of disseminating and/or accessing information in ways that
will affect a wide swath of activities in our society. Telephone companies will be
among the big winners if they focus on the growing needs of the consumer for
having access to clean, high speed lines/facilities for data and fax transmissions.
As an example of how one small adjustment in thinking can affect a large
amount of information and the cost of moving it, weigh the differences in the
following:
A one page fax will normally take anything up to 1 minute or more to
transmit with the commonly used 9600 Baud send/receive fax modems. No big
deal, it is a lot faster than the mail you say. Well yes, but what about the real
cost? A letter with 2 to 3 pages of printed material will usually get through for the
PAGE 53 OF 337
minimum postal rate, but may or may not get where it is going, as postal services
increase in cost but with declining reliability.
The same number of pages fared to the other side of the country would be
a similar or greater cost than a letter, depending on your long distance rates, but
will certainly take less than the days (if not weeks) to get to its destination when
mailed.
As the cost effectiveness of faring information is reduced rapidly as the
number of pages increases, rapid dissemination of *printed* information can
better be achieved using other, more efficient and reliable methods.
For instance, what about something the size of this newsletter, or a small
book or catalog? The volume of material and the speed of transmission would
make it very costly to distribute by fax, especially to destinations that are a
considerable distance away... the long distance charges would be prohibitive.
However, sending the same or more information in a compressed data file, using
a high-speed modem (14,400 baud or higher), can move literally hundreds of
times the information at greater speed, in less time and with extremely high
reliability and subsequently much lower cost than any other presently available
means.
Almost all the modems that function at high transfer rates have built in error
correcting ability so your files arrive intact and can be read at the other end in
original form. No deterioration to the quality of the images and/or text takes
place as is the norm with fares either... all too often, telephone lines are too poor
for reliable fax transmissions, but high speed, error correcting modems will allow
file transfers to be conducted at rates that are staggering by comparison and,
over the same lines, with no loss of data quality.
This newsletter, in its digital format, can be sent by modem anywhere in the
world in a matter of only minutes.., complete, unchanged and safely too: the
information can be encrypted by various means and only read by the recipient if
they have the appropriate "key" or encryption algorithm that was used to
scramble the files in the first place. Without the key, only sophisticated computer
*hacking* exhibits even a remote possibility that one could eventually decipher
the file... this means that it must be important enough to someone to go to the
trouble. There will be more on data encryption and related security measures in
future issues.
As increasingly reliable telephone lines and equipment become more
readily available, the volume of data and all kinds of *printed* information that is
transmitted this way will multiply exponentially, as will there be increasing growth
in the number of publishers that will use this medium as their preferred method
of presentation. The Offshore Advisor is proud to be amont the very first (as far
as we can ascertain) financially oriented newsletter/publication that has made
the digital format the mainstay of the issue. The hard copy, paper version of The
Offshore Advisor is representative of less than 20X of it's distributed volume.
Upside: Publishers, businesses and their clients that utilize the
technology of high speed communications this way will have a distinct time and
PAGE 54 OF 337
cost advantage. Providers of services in this corner of the information industry

will be profit makers, well into the foreseeable future.
Downside: The mail services will have to pull up their socks or they will
lose a lot of business to the telephone companies. Paper manufacturers will be
pinched by it soon too... who needs thousands of tons of newsprint per minute
when a whole publication can be downloaded in a few minutes for the cost of
a phone call and read *offline* at your convenience?
If you are not ready for that one, you are not alone, but in spite of the
marked reluctance exhibited by some, it is happening in the world of publishing
in a big way. There are numerous private bulletin boards (BBSs) as well as the
major online services such as Compuserve, America Online, Delphi and of
course, the Internet, that provide up to the minute news from all corners of the
world as well as an extremely broad scope of subject matter.
The material that you read either on or off line this way will almost certainly
be many hours, if not many days more current than what you read in the major
newspapers. The material you read in the papers is first in digital format on
computer before it is run on paper. Digital publishing and distribution simply
eliminates the physical printing and delivery... with great savings in time and non-
renewable energy and resources.
Local newspapers are even further behind in the ability to bring you detailed
and relevant articles of global or national importance.., the kind of critical issues
that will concern the sort of person who is making the time to read this material
for instance....
The day has already arrived where most people should have access to an
Internet gateway, either locally or regionally, where the access fees are around
$25 or less per month. The benefits of an Internet access more than outweigh
the cost in many ways. With the account comes the availability of all manner of
information and services around the globe, much of it virtually as it happens, as
well as the ability to communicate world wide with others who share your
interests and/or are able to enrich your life in some way, all without you having to
leave the comfort of your home.
Bill Machrone, former Editor of PC Magazine who still writes regularly in that
publication, has joined the rest of us in *seeing the truth* about the future of
electronic publishing. In his *Discontent with Content* editorial in the May 11,
1993 issue, he writes:
"We're in danger of drowning under a deluge of information bases, online
News services, electronic mail, bulletin board services, and publications. The
information available to us greatly exceeds our ability to absorb it... Some solve
it [the information overload problem] by prestructuring the data. A number of
electronic books, aimed at both the PC and Mac markets, stand ready to
enhance your reading experience with indexing, searching, graphics,
annotations, glossaries, sound clips, animation, and bookmarks. As one who
has pooh poohed such efforts in the past, I can finally say that the products are
tolerable, even desirable. Books on-disk are going to be big, and now that the
software works, smaller, cheaper laptops will be the gaging factor."
PAGE 55 OF 337
PAGE 56 OF 337
ALL YOU EVER WANTED TO KNOW ABOUT

TRUSTS
Understanding the differences between a statutory trust, a trust agreement,

and a trust contract is essential to financial planning. Confusion reigns supreme
on the subject of trusts because the person discussing a "trust" in one context
may not have full agreement with another who has assumed a different
understanding of what a trust is. Both parties may be right in their selfish point of
view; however, unless discussion begins and ends on common ground, neither
will be in agreement, a debate ensues, and the disarray of ideas leaves
everyone in an arena of disillusionment regarding the value of trusts in the first
place.
Contributing to the confusion of trusts is its application to financial planning.
There are many who believe the avoidance of probate is the central issue. Yet
the prospect of an estate facing probate, through an important concern, is not
the major concern. Consider this: it is a statistical reality that chances of being
sued in one's lifetime is three times greater than the expectancy of death. Thus --
no estate, nothing to probate. A recent study reveals a catastrophic health
situation is the number one even that causes the majority of Americans to lose
virtually everything they own. Again, no estate, nothing to probate. The emphasis
in financial planning continues to focus on the "Living Revocable Trust", a
probate court-only avoidance entity.
Combatting the loss of one's estate due to other contributing negative
elements, the professional financial planner often turns to the statutory trust.
True, such a trust removes the estate from individual ownership thereby
eliminating the onerous effects of frivolous lawsuits, liens, a?d judgments which
subject an estate to potential lass. On the other hand, the contract trust with
similar but expanded benefits does the same thing but without the downside
effects associated with statutory entities.
With all of these various factors tugging at the available advice, is it any
wonder the end-user swims in a sea of bewilderment, misinformation and
anxiety? The explanation that follows is offered to clarify precisely how each of
the three types of trusts work, what they are, and why only the contract trust is
best suited for almost everyone.
Statutory Trust
Statutory trusts are familiar entities to attorneys, bankers, and some
professional financial planners. Statutory trusts are regulated by each of the
States with certain requirements granted by state statutes. The Internal Revenue
Service dictates how these trusts will be taxed and specifies how each will be
treated under IR Code in general.
PAGE 57 OF 337
For the most part, statutory trusts are commonly referred to as "irrevocable"
trusts. And it is in this area of discussion that confusion results more than any
other. Since the advisor generally assumes there are two kinds of functioning
trusts: (1) revocable, or (2) irrevocable, in the minds of many, "irrevocable" refers
only to a statutory trust. In particular it is the legal professional who renders such
an assumption which is where confusion seems to be born. Trained in statutory
law, this is understandable. However, it should be emphasized here the
assumption is misplaced.
Statutory trusts are not contracts since no consideration is rendered by the
trust agreement to validate the contract concept. The Trustor grants (transfers)
property into the trust which is held by a trustee for the benefit of a beneficiary.
Upon the death of the Truster, the property held in trust is then passed on to its
designated beneficiary.
Since the Truster has divested himself of all property ownership, he is now
considered at arms-length from those assets. No longer owning the assets
means he has shielded the property from frivolous lawsuits, liens, or judgments
that may be rendered personally against him and an estate that was once his
personal property. In the vernacular, this is referred to as "bullet-proofing" your
estate! This is also an excellent method to ensure beneficiaries are prevented
from squabbling over shares of an inheritance or allowing individual beneficiaries
to jeopardize their portions of the estate prior to its distribution.
Disadvantages
There are four distinct disadvantages to a statutory trust:
(1) Because it is not a contract (no consideration is tendered by the trust for
transfer of property being placed into it), there is a gift tax on the fair market
value of the property being transferred into trust.
(2) Because it is an irrevocable arrangement, it cannot be changed.
Generally attorneys are well aware of this detail and do indeed (rightfully so)
advise stating the following:
a) Your estate is not large enough to consider an irrevocable trust.
b) You can't change your mind.
c) You're locked in forever, and forever is a long time.
d) You don't ever want one of these.
(3) Title is split: Legal title rests with the trust while equitable title is with the
beneficiary, making the beneficial equity an attachable commodity.
(4) Does not apply to business.
Advantage
The advantage of a statutory trust is primarily for very large estates with
passive assets. Trust contents pass to beneficiaries without gift tax (since the
gift tax was paid when the assets were initially transferred into the trust) or an
inheritance tax to the estate upon death of the Truster.
PAGE 58 OF 337
However, as the reader begins to distinguish between the three major

entities and how each is applied to estate planning, you will grasp the
importance of the contract trust and why it is truly the centerpiece of estate
engineering.
In dealing with statutory trusts, assets placed into trust are accomplished by
"transfer". Contrast such a transfer with "exchange", an important difference
between the statutory trust and the contract trust.
Contract Trust
Contract law is an interesting phenomena since it is the very foundation of
our existence. Without it, we have chaos! Businesses, for example, would not
function very well unless the contracts you have entered into were not honored.
Yet when it comes to the various government agencies, certain contracts with
the government are not necessarily honored in many instances. Let me explain.
A person could have applied for one of the three forms of doing business
available, sole proprietorship, partnership, or corporation. Sole proprietorship,
partnerships and corporations are contracts of sort. A person formed a business
based on certain rules and facts, and agreed to the terms and conditions...a
contract. But look closely at the contract: it is a one-way contract. The opposing
party changes the rules to fit their needs (such as the great tax reform act). The
latest was in 1990 and will more than likely do so again in 1991! (Also refer to
the 1040 tax returns.) Not much of a contract to say the least. Such contract
alterations occur routinely in all three dorms of doing business. There is actually
a fourth way of doing business under the constitutional law of contracts, called
"Unincorporated Business Organization". This form of business is sometimes
referred to as a business trust, but actually it is a contract in the true sense.
However, since we have the "Right to Contract" (under the United States
Constitution) without government interference, we may enter into a business
type contract or into a contract trust for asset preservation. Neither California nor
any other State in the Union can dictate to us, that which our Constitution gives
us the right to, "No State Shall Pass Any Bill Of Attainder, or Law Impairing The
Obligation Of Contracts", as long as that form does not violate statutory state,
federal, or moral law.
The trust has a myriad of benefits available to us and our families. The first
rule-of-thumb when employing a trust is to protect the roof over your head. When
your home is placed into trust by transferring title to the name of the trust, you as
the creator of the trust, can appoint trustees of the trust to hold the assets that
you have placed in trust for the beneficiaries. These beneficiaries can be your
children or even another trust. The home and the assets are what is called
being at arms-length, thus effectively insulating them from probate, frivolous
lawsuits, liens, or judgments. We don't own the assets, so we can't lose them,
but being put in a controlling position such as the General Manager, Secretary
and Agents, we control everything. Additional trusts may be employed to
separate additional assets to get additional liability protection.
Under contract law there is no gift tax on the assets you placed into trust
because you exchange the assets for beneficial certificates of indeterminate
PAGE 59 OF 337
value. This transaction is neither a gift nor a sale... it is an exchange. To help

further confuse the issue, in a statutory trust (those sanctioned by the state and
federal statutes), there are no beneficial certificates, thus no consideration,
thereby rendering the transaction an absolute gift, which translates into a gift tax.
In the "Revocable Living Trust" (the one familiar to most people),the assets
placed in these entities are not subject to a gift tax. Since the transaction is
incomplete at this point, because the assets still belong to you and you have no
protection for your assets from lawsuits, liens, or judgments.
Summary
The most significant advantages to Common Law Contract Trust are: The
Right to Privacy, Limited Liability Protection, Asset Preservation, Tax Reduction
Planning, Complete Estate Planning, Probate Avoidance, Business Organization,
and many other benefits too numerous to list. Your future planning using
Contract Law Trust, may only be limited to your lack of knowledge and your own
imagination.
PAGE 60 OF 337
A COMPARISON OF METHODS OF DOING

BUSINESS
Business Liability Tax Advantages Probate Privacy Control Avoid Family

Methods Protection Avoidance Conflicts
Sole Proprietor NO NO NO NO SOME NO
Partnership NO NO NO NO NO NO
Corporation LIMITED SOME SOME NO NO NO
Family Limited YES YES LIMITED LIMITED YES YES
Partnership
Trust YES YES YES YES YES YES
Organization
PAGE 61 OF 337
CONTRACT TRUST - COURT CITES AND

INTERNAL REVENUE CODE
I. Confirms the Trust Contract
A) Certificate holders are devoid of legal rights, have no officers, are and
must remain forever mute as to the selection, approval or disapproval of the
trustees and their methods of conduct of business affairs would make the trustee
absolute owner.
Bourchard v. First People's Trust, 253 Mas 351, 148 NE 895.
B) Right to Contract
Schumann-Heink v. Folsom, 159 NE 250. (1927)
C)United States Supreme Court has long held and recognized that freedom
to make contracts and have them enforced by the courts is a part of the bundle
of rights protected by the "due process" clauses of both the Fifth and Fourteenth
Amendments. Patterson v. Bank Eudora (1903) 190 US 169, 47 L Ed 1002, 23 S
Ct 821 Muller v. Oregon, 208 US 412, 52 L Ed 551, 38 S Ct 324 (1908) Frisbie V.
U.S. 157 US 160, 39 L Ed 657, 15 S Ct 586 (1895)
D) The trust contract is established by private parties, for personal

purposes, is not registered with the state corporation commissioner to comply
with statutes relating to incorporating and does not invalidate the trust
organization.
Hodgkiss v. Northland Petroleum Consolidated, 104 Mont 328, 67 P 2d 811
E) Certificate holders of a Trust Contract enjoy an even greater immunity

from personal liability than is accorded to stockholders of corporations.
F) One of the main objectives of a trust contract is to obtain most of the

advantages of corporations, but with freedom from the burdens, restrictions, and
regulations generally imposed upon them.
Ashworth v. Haqen Estates 165 Va 151, 181 SE 381
G) The United States Supreme Court has acknowledged the trust contract
as a "pure or true trust, citing the Hecht case in Navarro v. Lee. Hecht v. Malley
265 US 144 (1924) Navarro v. Lee 446 US 458 (1980)
PAGE 62 OF 337
H) Business trusts are found in Corpus Juris Secundum and American

Jurisprudence, 2d.
I) Business trusts are recognized under the term "common law trust" 88
American Law Reports 3d 704, citing Schumann-Heink v. Folsom 328 ill 321,
159 NE 250, 50 ALR 485 (1927).
J) Probate is cash demands on an estate.

Internal Revenue Code 2042.
K) A Trust is one of several juridical devices whereby one person is enabled

to deal with property for the benefit of another person.
Restatement of the Law of Trusts, 2d Introductory Note, Pg. 1
II. Contract Trust Recognized By IRS
A) Internal Revenue Regulations acknowledgment of Contract Trust

Organization.
IR Regulation 301,7701-4(b)
Berry v. McCourt 204 NE 2d 235, 240 (a)Business Trusts - There are other
arrangements known as trusts because the legal title to property is conveyed to
trustees for the benefit of beneficiaries, but which are not classified as trusts for
purposes of the Internal Revenue Code, "because they are not simply
arrangements to protect and conserve the property for the beneficiaries."
B) An "exchange" is a reciprocal transfer of property as distinguished from

the transfer of property for a money or consideration only.
TR 118,39,112 (a)1,(e)
C) The owner of Beneficial Certificates is not an owner as a stockholder is

an owner; that Certificate Holders have no ownership whatever in property held
by the Contract Trust, nor do they have any voice or control over the Trustees.
Becker v. St. Louis Union Trust Co., 296 US 48,50380L Ed 35, 56 S Ct 78
III. No Gift Or Estate Taxes
PAGE 63 OF 337
A) Certificates have no ascertainable "Fair Market Value", and have minimal

value to someone else. Bad bargains do not result in taxable gifts. Contract Trust
is a genuine business transaction.
Estate of Anderson v. Commissioner of Internal Revenue, 8 Tax Court
706,721
IV. No Capital Gains Taxes
A) If a bona fide transfer, sale or exchange is made at arm's length in the

ordinary course of business, the transaction will be assumed to be for
consideration and not gratuitous. A consideration that is not reducibl~ to a value
in money or money's worth, i.e., love and affection or promise or marriage, is to
be wholly disregarded and considered totally gratuitous.
Internal Revenue Service "Federal Estate and Gift Taxation Publication".
#488
B) The United States Circuit Court of Appeals for the First Circuit has long
held that full and adequate consideration is met by issuance of trust certificate
units in exchange for real and personal property invested in a "pure" trust
organization.
Carpenter v. White, CIR, 80 F 2d 145
C) The measure of the gain...of an exchange is the difference between the

(adjusted) cost...basis of the property transferred...and the fair market value of
the property.., received.
Internal Revenue Code 1001 (a), (b)
Parrington v. Attorney General, L.R.H.L. 100, 122
D) No "Equitable Construction" of a tax statute, Code must be strictly

construed. Gain measured from fair market value of property received.
U.S. v. Merriam, 263 US 179 (1923)
Commissioner v. Harrelson 282 US 55 (1930)
Gould v. Gould US 151
E) The "fair market value" is the price at which the property would change
hands between a willing buyer and a willing seller, neither being under any
compulsion to buy or to sell, and both having knowledge of all the relevant facts.
It may not be determined by a forced sales price, nor is it to be determined by
the sale price of the item in a market other than that in which such item is most
commonly sold to the public.
Federal Estate and Gift Taxation Publication No 448
PAGE 64 OF 337
Davis v. U.S., (1961) 287 F 2d 168, 82 S Ct 1190, 8 L Ed 335

Rehearing denied 371 US 854, 83 S Ct 14, 15
F) Section Ill(b) requires that the capital gain be measured by "the fair
market value" of the property received (emphasis added) by the taxpayer, not by
the fair market value transferred by the taxpayer in exchange for the property
received. To say that the fair market value of the property received is the same
as the fair market value of the property given not only ignores realities, but is the
use of a formula which is radically different from the recognized formula
approved by the courts for determining fair market value.
Commissioner v Marshman 279 F 2d 27 Cert den 364 US 918 8 S Ct 282
286 5 L Ed 2d 259. Maxfield v. U.S. 152 F 2d 593, Cert. den. 2 Cases, 327 US
791, 66S Ct 821, 90
G) This definition primarily benefits the Treasury in estate tax situations.

However, IRS may not have one definition for "fair market value" at one time
when it is beneficial, and a different one for another time when the benefit goes
to the taxpayer. The IRS is obliged to keep their conclusion that the fair market
value of valuable beneficial units cannot be determined in any forum other than a
voluntary sale.
The IRS may not force a sale to determine price where the item displays
an inherent yet unsettled value. They may also not force the beneficial units to
be sold in a market other than that in which such certificates may commonly be
sold to the public. In addition, when the Treasury says "public", they mean at
retail rather than wholesale. The value of the above definition is evident in the
point that the client may plan affairs around hard and fast rules not subject to
change.
Federal Estate and Gift Taxation, Publication No. 448, p. 39 Burnet v.
Logan, 283 US 404, 51 S Ct 75 LED 1143(1931)
H) Interests which terminate "on" or "before" death are not a proper subject
of the Federal Estate Tax.
Knowlton v. Moore, 178 US 41, 20 S Ct 747, 44 L Ed 969 (1900); YMCA V.
Davis, 264 US 47 (1924), 44 S Ct 291, 68 L Ed 564; Goodman v. Gran9er, 243 F
2d 264 (1957); Babb v. US 349 F Supp 792 (1972)
V. Contract Trust As A Legal Entity
A) The Contract Trust owns the property and is a distinct legal entity.
Beneficial Certificate Holders are not treated as co-owners of trust property.
National City Finance v. Lewis (Gal App) 3) 2d 316 (Rehearinq denied) 4
P2d 163, Beilin v. Krenn & Date 350 111 284, 183 NE 330; Hemphil v. Orloff 238
PAGE 65 OF 337
Mich 508, 213 NW 867. 58 ALR 507, affd 277 US 537, 72 L Ed 978, 48 S Ct 577.
Annotation 156 ALR 32.
Goldwater v. Oltman, 210 Cal 408: 292 P 624
B) The Contract Trust does not escape the necessity of having substance
and business motives. "Sham" transactions, having no economic effect other
than the creation of income tax losses, cannot be recognized for tax purposes.
Thompson v, Commissioner, 631 F 2d 642, 646 (1980) Cert. Denied, 452
US 961 (1981)
Edwards v. Commissioner, 415 F 2d 578, 582
Lewis and Taylor Inc. v. Commissioner, 447 F 2d 1074 (1971)
C) The fact that transactions of business are so arranged that tax

consequences are highly favorable (or altogether avoid taxes) affords no license
to the government to recast it into a mold of less advantage.
Gyro Engineering, Inc. v. US, F 2d 578, 582
Peter Pan Seafoods Inc v US 417 F 2d 670
VI. Legal And Equitable Title Held By Contract Trust
A) Legal and equitable title held by contract trust.

Hecht v. Malley US 144, 68 L Ed 949, 44 Ct 462
Williams v. Milton 215 MASS 2. 102 NE 355
Goldwater v Oltman 210 CA 148 292 P624 71 ALR 871
Schumann-Heink v Folsom 328111 321 159 NE 250 48 ALR 485
B) When legal and equitable title, possession and control of property are
legally and irrevocably passed from the Truster (contracting investor) to himself
as Trustee in legal contemplation, it is as though the Trustee receiving the
conveyance is another person.
Commissioner of Internal Revenue v. St. Louis Union Trust Co., 296 US 48,
50 (1935)
C) Property invested in the Contract Trust Organization must be fixed and

irrevocable. Thus the Truster (contracting investor) may legally be recognized as
a different person even when de facto he/she may be the same human being.
Trusteeship is a position created by parties at arm's length which when
established is an office to be occupied by any qualified person.
Becker, Collector of Internal Revenue v. St. Louis Union Trust Co., 296 US
48, 50, 50; 80 L Ed 35 56 S Ct 78
PAGE 66 OF 337
D) Genuine contractual obligations control the substance.

Estate of Hilto N. Goodwyn, T.C. Memo 1976-238
E) Trustees of the Contractual Trust have the exclusive power to interpret or

construe the intent and direction of the Trust Indenture.
Cohen v, US Trust Securities Corporation, 40 NE 2d 282
F) Statutes may authorize limited liability of partnerships and corporations,

but those statutes do not by implication prohibit the creation of Contract Trusts to
enjoy similar immunity by virtue of the Common Law.
Goldwater v. Oltman, 292 P 624, 71 ALR 871 Annotation
G) In tax context, "Associated" relates to a joint action and interest of the

stock holders and their directors. Contract Trust Trustees and Beneficiaries are
not associated in a joint action.
Elm Street Realty Trust, 76 TC No 68 (1981): Morrissev v. CIR, 296 US 34
(1935); Crocker v. Malley, 249 US 223 (1919); Internal Revenue Regulations 301
,7701-1 , 21a)(2); Schumann-Heinkk v. Folsom, 159 NE 250, annotation 58 ALR
485; Hecht v. Malley, 275 US 144
H) IRS Regulations state the term "Person" includes an "Unincorporated

Organization or Group".
Internal Revenue Regulations 301,7701-1 (a)
Internal Revenue Ruling 73-254
I) It is whether the entities were taxable as associations with the corporation

rates applied, or as trusts (with the conduit method applied).
Commissioner v. Brouillard, 70 F 2d 154, 157, Cert. denied 293 US 574 No.
152
J) The United States Supreme court articulated what has become

recognized as the standard for determining whether an entity will be taxed as a
corporation or as a trust by saying that it's the nature of the entity's dominant
functions and attributes which determines whether it is an association for tax
purposes.
The system and course of procedure approximates much more closely
that of an ordinary partnership among personal friends reposing "full confidence"
(Pure trust thus a Contract Trust) in each other. The resemblances predominate
strongly in favor of a trust. Consequently, the entities should have been taxed as
trusts, not associations.
PAGE 67 OF 337
Commissioner of Internal Revenue v. Brouillard, Same v. Shepherd

Syndicate, and Same v. Prvor & Lockhard Development Co., 70 F 2d 154, Cert.
den. 293 US 574 No. 152, Hemphil v. Orloff, 277 US 537, 48 S Ct 277, 72 L Ed
978 cited Brouillard Ibid
V. Foreign Conduit (Foreign Structure), Miscellaneous
A) (A) Foreign trust (is a trust) the income of which, from sources without
the United States which is not effectively connected with the conduct of a trade
or business within the United States, is not includable in gross income under
subtitle A (Income Taxes).
Internal Revenue Code Sec. 7701 (a) (31)
B) Since 1967 the Internal Revenue Code has actually provided that a
blanket exception from federal gift taxation is provided for all gifts made by a
nonresident alien of intangible property even though the cites or location of that
intangible property is within the United States.
IRC Sec. 2501 (a)(2). All intangibles include stock, bonds, funds, notes or
other certificates of indebtedness (not Federal Reserve Notes "green backs" or
US currency, or checks drawn on US banks -- IRR Sec. 25.251 1-3(b)(4)(IV),
bank accounts, or US government bonds, etc.
PAGE 68 OF 337
VARIOUS STRATEGY DESCRIPTIONS
BY FREEDOM UNLIMITED
1) U.S. Business Trust Organization (USBTO)

When standing alone it is utilized not for the main business, but primarily as
an additional structure to hold assets or to lease equipment to the main
business.
This structure is used for better liability protection; to avoid double taxation
of business profits; to reduce self employment taxes significantly; to reduce or
avoid income taxes through income splitting between family members; to divide
the ownership of several high risk assets so not all assets are vulnerable to a
potential lawsuit; to divest ownership of valuable assets from a company
exposed to potential liability and then lease back the assets; to pass on a
business and its assets to heirs with no estate or inheritance taxes and without
the expense and delay of probate; to conduct business in a more private manner
since no public disclosure of directors, officers, or shareholders is required by a
business trust.
2) L.L.C. - U.S. Family Trust Organization (LLC-USFTO)

This combination of the LLC with the family trust structure is used for the
main business enterprise: The LLC conducts business with the public. The client
maintains some control of all daily business affairs as the manager of the LLC.
The independent family trust with an independent trustee receives periodic
distributions from the LLC as a 90% or greater member of the LLC. The client-
manager holds a 10% or less membership interest in the LLC. The trust is safe
from lawsuits or liability incurred by the main business, and with great flexibility
can distribute money to the family member beneficiaries free from self
employment taxes.
This strategy is used for better liability protection of principles than a
corporation or partnership or sole proprietorship; to avoid double taxation of
business profits; to reduce self employment taxes significantly; to reduce or
avoid income taxes through income splitting between family members; to divide
the ownership of several high risk assets so not all assets are vulnerable to a
potential lawsuit; to divest ownership of valuable assets from a company
exposed to potential liability; to pass on a business and its assets to heirs with
no estate or inheritance taxes and without the expense and delay of probate.
3) L.L.C. - Foreign Asset Protection Trust (LLC-FAPT)

This strategy combines an LLC with a foreign asset protection family trust. It
has proven to be one of the most effective at protecting real estate holdings,
homes, stocks, bonds, and other profit producing enterprises from U.S.
PAGE 69 OF 337
judgments. This strategy is tax neutral or has no tax benefit, but excellent asset
protection and estate planning benefits. The current owner who desires to
protect an asset from future claims, transfers this asset into the LLC. The current
owner (client) then becomes the manager of the LLC with control and use of the
asset. The foreign asset protection trust is a member of the LLC and holds 99%
of the membership interests so that the membership interests are safe from
creditor claims. The foreign asset protection trust set up in a jurisdiction that
does not recognize U.S. judgments. The clients family members are the
beneficiaries of the trust which makes it ideal as an estate planning tool.
Creditors of the client and now LLC manager (you) can not take the actual
asset but can only get a charging order on the 1% membership interest held by
the client. This means that the creditor will only be entitled to a 1% share of
profits, if and when any profits are distributed. The creditor must pay taxes on the
1% share of the profits regardless of whether the creditor receives profits or not.
This can be very frustrating and expensive to a creditor. The Foreign Asset
Protection Trust member adds other important jurisdictional asset protection
barriers virtually impossible for U.S. creditors to overcome. The foreign asset
protection trust can also hold assets alone without being combined to the LLC.
4) Foreign Charitable Trust (FCT)

This is a foreign, offshore, or non-U.S. trust set up with a charity as the
beneficiary. It can accumulate profits during it's existence without distributing all
of profits to the charitable beneficiary, but we recommend that charitable
distributions and donations be made. Once offshore a Foreign Charitable Trust
funds can be privately invested in U.S. and foreign stocks, bonds, CDs, treasury
bills, mutual funds, commodities contracts, gold, etc. FREE FROM U.S. TAXES,
for significantly better returns on investments, and faster tax free compound
growth, which can translate into a very large nest egg that can be dipped into at
the discretion of the trustee.
A Foreign Charitable Trust is a valuable asset protection tool. It provides the
added protection of having assets owned in a foreign jurisdiction that does not
recognize U.S. judgments. Lawsuits must be filed against assets owned in
foreign jurisdictions at considerable time and expense for creditors. Jurisdiction
can also be changed at will, frustrating judgment creditors.
Assistance in opening private foreign bank accounts in large, safe, and well
established banking institutions (most are safer and stronger than U.S. banks) is
provided to Foreign Charitable Trust clients at no additional cost. Deposits may
be privately and conveniently accessed with either a VISA or MASTERCARD
credit card through purchases everywhere Visa or Mastercard is accepted at
thousands of locations worldwide, or through cash advances from ATM's or
Banks. Funds can also be accessed through rapid wire transfer of funds or
through the issuance of money orders or bank checks in the currency of your
choice.
PAGE 70 OF 337
5) Foreign Corporation - Foreign Charitable Trust (FC- FCT)

A Foreign Corporation can be used in the FOREIGN BUSINESS
UPSTREAMING SYSTEM. The Foreign Corporation can invest in stocks, bonds,
CDs, mutual funds, gold, etc. FREE FROM U.S. TAXES AND IN TOTAL
PRIVACY (when properly structured), for significantly better returns on
investments, and faster tax fi-ee compounded growth. The Foreign Corporation's
capital and investments are completely protected from U.S. lawsuits. The
Foreign or Charitable Trust holds the shares of the corporation, and makes it
possible for the corporate profits to accumulate free from taxes, as there are no
U.S. shareholders and no U.S. control in this strategy.
Assistance in opening private foreign bank accounts in ultra safe banking
institutions is provided to Foreign Corporation clients at no additional cost.
Deposits may be accessed with either a VISA or MASTERCARD credit card
through purchases everywhere Visa or Mastercard is accepted at thousands of
locations worldwide, or through cash advances from ATM's or Banks. Funds can
also be accessed through rapid wire transfer of funds or through the issuance of
money orders or bank checks in the currency of your choice. Client
confidentiality is strictly upheld.
6) Foreign Grantor - Foreign Trust (FGFT)

This is a foreign, offshore, or non-U.S. trust set up by a non-U.S. grantor
and has U.S. beneficiaries. As of the writing of this material this trust can
distribute non-taxable distributions of offshore trust income to it's U.S.
beneficiaries. This trust is ideal for those who have non-U.S. relatives or
relationships with properly structured foreign corporations. Even though the
distributions are not taxable, according to internal revenue ruling 69-70,
legislation has passed that requires you to report this non-taxable income.
Distributions from this trust are normally made to the clients private and
protected offshore bank account. Funds are then privately and conveniently
accessed with either a VISA or MASTERCARD credit card through purchases
everywhere Visa or Mastercard is accepted at thousands of locations worldwide,
or through cash advances from ATM's or Banks.
7) LLC- Family Trust - Private Family Foundation Upstreaming

System (LLC-FT-PF)
Just as in strategy 2 above an LLC is utilized as the main business
structure, with a family trust as a 90% or greater member. The family trust can
take a tax deduction for up to 100% of it's income for all donation made to the
private family foundation. This is a 100% U.S. strategy to significantly reduce or
defer income taxes on business profits; to transfer ownership of valuable assets
from a company or estate to the foundation without gift taxes while
simultaneously taking a tax deduction; to remove an asset that has experienced
a significant capital gain from an estate and then allow the foundation to sell it
with no capital gains taxes due; to allow investments to grow in the foundation
while paying less than 2% in taxes; to reduce your personal taxes to donate to
PAGE 71 OF 337
worthy causes; to pass on a business (via the business trust) and its assets to
heirs with no estate or inheritance taxes and without the expense and delay of
probate; The private family foundation can be an excellent tool to allow you to
build a retirement nest egg and eventually become a full time philanthropist.
8) LLC - International Trust Upstreaming System (LLC-ITS)

This package provides all of the above domestic and foreign Business Trust
benefits along with TREMENDOUS (We mean TREMENDOUS) INCOME TAX
SAVINGS, PRIVACY. FINANCIAL PROTECTION, AND FINANCIAL FLEXIBILITY
for the medium, or large business that has to much income to get significant
savings in other ways.
This system includes one or more LLC, formed between your current
business and a U.S. Business Trust. The domestic Business Trust then networks
with three Foreign Trusts, the last of which is a foreign charitable or
accumulation trust. A Foreign Grantor - Foreign Trust is also included in this
system (see above for details on these different structures). This Combination
allows significant U.S. income tax reductions, and provides the ultimate in estate,
asset, and income protection and preservation. This package also includes
preparation ofU.S. and foreign trust tax returns. Every $1,000 of profit up
streamed or shifted to a foreign tax free country through this business structure
may reduce combined federal and state taxes by $300 to $500. This strategy is
utilized only if significant savings are not realizable by utilizing the other
strategies.
9) Pension Limited Partnership - International Trust System (PLP-

ITS)
For those who want to protect their pension nest eggs from the recent
court rulings that have made it easier for judgment creditors to get to pension
assets;
For those who want their pensions farther from the reach of the U.S.
government that is passing ever more confiscatory legislation because it is
desperate for cash due to rising deficits and overspending;
For those who want more flexibility in investing their pension nest eggs
internationally and in other currencies;
For those who desire to have the cash in their pensions out of U.S.
jurisdiction and in to offshore banks that pay higher interest rates and offer many
more services;
For those who want any future growth of funds to accrue outside of their
estate so that future growth avoids probate and estate taxes are minimized or
eliminated;
For those who want to receive current tax free income from offshore
investments;
For those who want to achieve all of this without liquidating their pensions
and paying the taxes and early withdrawal penalties associated with liquidation.
PAGE 72 OF 337
This package provides all of the above LLC - Foreign Asset Protection Trust
benefits, all of the above Foreign Charitable Trust advantages, and all of the
above Foreign Grantor -Foreign Trust on trust benefits which includes INCOME
TAX SAVINGS, PRIVACY, FINANCIAL PROTECTION, AND FINANCIAL
FLEXIBILITY for your retirement nest egg.
This system includes one Pension Limited Partnership; a foreign asset
protection trust to protect the funds from U.S. claims or confiscation; a Foreign
Charitable Trust where profits can accumulate outside of the pension and
outside of your estate; and a Foreign Grantor - Foreign Trust that can distribute
the current offshore income generated tax free to U.S. beneficiaries. This
combination allows significant estate, asset, and retirement nest egg protection
and flexibility.
PAGE 73 OF 337
MAYBE IT'S TIME FOR A BUSINESS TRUST!
BY FARR WEST BUSINESS CONSULTING CO TRUST

What in the world is a Business Trust, you may ask. Well, before we answer
that question directly, maybe you should also ask yourself, "jiust how do I
preserve my privacy, protect my assets against judgments and lawsuits and
significantly reduce income taxes but not be exposed to the inherent risks of a
sole proprietorship, partnership, corporation or other legislatively created
business entity?"
A Business Trust can and does accomplish all of these factors. But ... again,
what is a Business Trust? A Business Trust is recognized by the Internal
Revenue Service and the courts as a U.B.O. (Unincorporated Business
Organization).
A Business Trust (UBO) is a powerful entity by which individuals may
combine their resources to operate a business for profit without the inherent
liabilities of a partnership or the double taxation of corporations.
The UBO is an organization created and managed by "trustees" for the
benefit and profit of persons who hold or may acquire transferable Trust
certificates. Similar to stock certificates of a corporation, Trust certificates provide
individual holders evidence of interest in the Trust estate (assets/income).
A UBO is often called a "Common-law Trust" but this phrase is not
descriptive of any of the peculiar characteristics of such organizations. The basis
for the terminology "Common-law Trust" is that they are created under the
Common law of contracts and do not depend upon any statute for their
existence. See the United States Constitution Article I Sec. 10, Clause 1.
As indicated by its name, a Business Trust is an estate adapted to business
or commercial activities. Reduced to its bare essentials, the UBO consists of a
combination of capital vested in trustees who manage the entity profitably for
Trust certificate holders.
A UBO is created when one or more persons transfer the legal title in
property to trustees, with power vested in the latter to manage and control the
property and business, and to pay the profits of the enterprise to the creators of
the Trust or their successors.
In its typical and characteristic form, the UBO is brought into being by two
basic documents: a Declaration of Trust & a Trust Indenture. These two
documents make all the provisions of who is who, and who is responsible for
what, relative to the Trust activities.
The UBO, which had its beginnings in England in the 18th Century, adapts
the ordinary trust to the new purpose of carrying on a business.
Two of the most famous early business Trusts in England were Lloyds of
London (i ill i) and the London Stock Exchange(l802). An explanation of their
PAGE 74 OF 337
function, under the Common-law of England, can be found in Smith v. Anderson,

IS Chancery Division 247 (1880).
The Business trust made its debut in Massachusetts in 1827. As a result, a
U.S. Business Trust today is often called a "Massachusetts Trust" in legal circles.
The U.S. Supreme Court defined the Massachusetts Trust as a form of business
organization, common in Massachusetts consisting essentially of an
arrangement whereby property is conveyed to trustees, in accordance with
terms of the Trust. The business is to be held and managed for the benefit of
persons who hold transferable certificates issued by the trustees showing the
shares into which the beneficial interest in the property is divided.
This method of transacting business in commercial enterprises originated in
Massachusetts as a result of negative laws prohibiting the development of real
estate without a special act of the legislature or in other words, without
"permission" of the State. So, the Business Trust was created under Common-
law right to contract to obtain legislatively constructed business organizations'
advantages but without having to gain "permission" to enter into a business
activity and suffer under the burdens and restrictions that are place on
"statutorily constructed organizations."
During the last century and through the midyears of this century the tax
laws and State regulations strongly favored corporate structures, detrimental
and restrictive changes in these laws in the past 10-15 years have resulted in
the resurgence of the use of the UBO. For example, in 1985 the Scudder Capital
Growth Fund, Inc. and Kemper Money Market Fund, Inc. changed their forms of
organization fiom corporate to a Business Trust Organization.
There are nine basic advantages of operating a business in a UBO which
cause it to operate lawfully. 1) The UBO is formed by contract, between the
parties setting forth the purposes, : terms and conditions. 2) The UBO is a legal
entity and an artificial individual, with rights almost equal to a natural person (a
human being), able to own property and conduct business like a natural person.
It is irrevocable and no one has any reversionary rights to its assts. 3) The
UBO's assets are owned and its business activities managed by the trustees
who accept such responsibility as fiduciaries on behalf of the beneficiaries. 4)
The beneficial interests are divided into Capital Units, evidenced by the issuance
of Trust certificates, conveying to the holder the limited rights to receive their
pr~rate share of any distributions of income or assets that may be made by the
trustees. 5) The Capital Units are personal property which convey neither legal
title to the property nor any voice in the management of the business or the
selection of trustees. 6) The UBO is subject to taxation on its distributable net
income. The beneficiaries are only taxed on what they receive. 7) The assets of
the UBO ate never subject to probate or estate tax because, as an artificial
person, it never dies. Unlike a will, the UBO is set up in contemplation of life, not
death. 8) The Capital Units became void upon the death of the holder and, thus,
have no value to be subject to estate tax or probate. 9) The life of the UBO can
be extended as deemed advisable or terminated at any time by the trustees in
accordance with the Trust Indenture (contract).
PAGE 75 OF 337
Since the Trust indenture is a contract between the creator and the trustee,
the indenture controls the activities, powes and responsibilities of those who
administer the Trust. No one has legal authority to change its provisions except
those so authorized by the indenture. Foremost among the advantages of
trusteeship over the standard legal devices is its flexibility.
The document creating the Trust is the law of the Trust, not statutes created
by the State.
Courts have long supported the principle of the trustees carrying out the
terms of their Trust contract and agreement. Also, Trust property cannot be held
under attachment nor sold upon execution, for the trustees' personal debts.
Personal liability ofa trustee cannot be enforced against the Trust property. Ifthe
trustee personally owned any amounts of beneficial interest, these Units of
Beneficial Interest (Trust Certificates) can be attached.
This doctrine is supported in the case of United States National Bank of
Omaha v. Andres Kaminski (Civil Action No. 77 CV 1830, District Court of
Jefferson County, Colorado, June 16, 1980). The Bank alleged that Kanlinski
owed them S20,000.00. When he had no personal assets to seize after they
obtained judgment, they tried to seize the assets of his Trust he had set up
several years earlier. The Bank's action failed and they were unable to penetrate
the Trust.
Beneficiaries cannot be held liable for debts incurred by the Trust. "If, in
fact, a true Trust has been created (and this is very important; i.e., the Trust must
be correctly written and executed), the certificate holders are not personally
liable on the obligations incurred by the trustees or managing agents appointed
by the trustees." Let's face it. Exposure to liability and potential law suits is one of
those worries most of us lay awake at night thinking about. Especially if we have
a business where liability potential is omnipresent. And if we aren't worried we
should be in the litigious society we live in.
The past several years have seen the rise of multitudinous bankruptcies
being filed. Even many of the long thought of stalwarts of American industry have
gone bankrupt. More than we care to count. Big ones (including a Big 8
accounting firm) and little ones like those of us who make up 90% of America's
gross national product.
One of the recurring reasons given for company failure is being financially
cripple by lawsuits, legal fees and judgment creditors; open times not because of
something the company did wrong but because of an untimely accident or
because of someone in the company who created a liability and the company
lost its assets due to its association with that person or entity.
DON'T PUT ALL YOUR ASSETS IN ONE BASKET!
Pardon my use of this old wisdom, but our fragile assets are a lot like eggs.
Once that shell of protection is broken, the yoke(assets) becomes vulnerable
and the Fox (or the two legged pinstriped-suit adversary) can plunder them. You
can bet that neither of them will show you any mercy if granted access to the egg
house.
PAGE 76 OF 337
This is where the benefit of Trusts is so important. A Trust is a fictitious

person that can do anything a person can legally do. It can conduct business,
execute contracts, sue and be sued. It is often wiser, therefore, to reduce your
exposure to loss by segregating your assets into separate Trusts, each of which
retains its own liability and risk.
For example, a person or family may have a business, a home, a rental
property, and two nice automobiles. If the business got sued all the assets would
be at risk of loss. If a tenant was injured on the rental property, all the assets
would be at risk. You should, by now, get the picture!
WHY NOT SEGREGATE YOUR RISKS BY USING SEPARATE TRUSTS?
There is no cheaper insurance.
When we advocate segregating your assets via the use of Trusts, we aren't
advocating that you can now behave irresponsibly and injure others in your
business dealings, while enjoying the protection of one or more Trusts. We are
simply saying that you are putting yourself in the enviable position of being able
to protect what's yours from the predators (IRS included) and deal from a
position of strength when negotiating with legitimate creditors.
As each of us gets older and wiser, we find that it takes considerable effort
to protect and preserve what is ours.
If we aren't adept at protecting it, a predator will end up stealing it. If we
aren't wise in dealing with legitimate creditors, we encourage them to become
predators as well. In other words, a Trust can put you in a position of control. You
can then put the opposition on notice that you have protected yourself from
exposure to attack and that they will have to deal with you on your terms.
When property is held in Trust, third parties cannot reach the assets.
Individuals can say, "I do not own the property." This kind of protection is called
"insulation from liability." That simply means a person trying to sue you, the
Grantor, or the Beneficiaries cannot get to the property held in Trust if the
Grantor of the Trust does not retain the right or power to revoke the Trust. Easier
management of property is another way the Trust protects resources. People get
old and some become less wise in the way they use their property. Fewer
mistakes are made by putting the property into a Trust, and making sure that
wise and experienced trustees manage it.
A Trust is more efficient than a conventional family operation. The trustees
of the Trust tend to be more careful in managing the property, for they are under
an obligation to be prudent and careful in the way they manage matters.
A Trust can be a living thing. People run it, giving the Trust the flexibility to
do things a deceased 'person could not. The trustees can handle problems that
come up. A Trust can carry out a wide range of .actions in a swift and efficient
manner. For example, when a person dies there is usually a long period of time
during which the property is tied up in probate. During this time, if it is a Trust,
these delays are eliminated. Since the Trust owns the property, the Trust
continues with its daily routine avoiding the delays of probate.
PAGE 77 OF 337
It costs a lot of money to go through probate. The major cost is the

attorney's fees. There are attorney fees on all estates, big and small. Another
cost of probate is the filing fees paid to the Courts.
Another form of cost is the "forced sale" of property to pay fees and make
distributions to tile heirs or pay the estate taxes. When this is necessary,
sometimes the property cannot be sold for its fair market value. Another cost of
probate is the cost of fighting a court suit. Sometimes, when a person dies, an
heir might say the Will was fraudulent, etc. If the fight is prolonged, the only ones
to profit are the attorneys. Further costs may include "appraiser fees" and
"guardian fees." While Trusts have some administration costs, they can be
minimized by selecting people who will work for a low fee.
If a Grantor-type Trust is created, then family members and even the
Grantors (Settlors) may even be a Trustee and then no fee is required. However,
this arrangement negates much of the tax benefits and liability protection
benefits.
One of the most useful advantages of a Trust is the reduction or elimination
of income and estate taxes. When a Trust is constructed in a proper way, it gives
"income splitting" advantages. That is, money @assive and portfolio) earned by
the Trust is separated from money that is earned by the person who gave or
exchanged the property to the Trust. For example, a taxpayer earned
$30,000.00 from their job, and another $25,000.00 from passive income making
them pay taxes ordinarily on $55,000.00.
When they put the passive income into a trust, The Trust could pay taxes on
the $25,000.00 and the taxpayer would move into a lower tax bracket. Dropping
from the higher tax bracket to the lower bracket offers a tremendous savings.
This is the advantage of "income splitting" The use of a business Trust can
eliminate self-employment tax, and Trusts in general are allowed to donate up to
100% of their income to charity which is another way to lower tax liability.
Another tax is "estate tax," the tax paid by a person on his estate when he
dies so the property can be transferred to his heirs. These taxes can be avoided
by placing property in an irrevocable Trust. Since the Trust cannot die when the
person dies, there is no estate to be taxed or probated.
In the writer's own opinion, privacy is the most advantageous reason to
have a Trust created A trust is not required by law to be registered, as opposed
to a corporation or partnership. A corporation must file a report every year telling
about the officers of the corporation. A Trust never does this. A Trust must file a
tax return each year, but it has considerably more privacy than other forms of
business organization. A Trust instrument does not have to be filed in a public
place as do corporate papers. In addition, a Trust can accomplish the desires of
the person who established it without making it public. The richest people in the
country have Trusts which serve this purpose.
The nature of a Trust is such that the trustees must follow the instructions
as outlined in the Trust indenture. Your wishes are carried out as stated, and
money can be easily distributed for the management of the Trust, maintenance
of Trust property, and distribution to the beneficiaries.
PAGE 78 OF 337
A Trust is one of the most flexible forms of organization imaginable. It can

engage quickly in transaction. A Trust can buy, sell, lease or otherwise deal with
its property. This type of flexibility and control is very valuable. Emergencies and
immediate needs can be solved right away.
A Trust can provide for: a possible divorce, needy children, aged parents,
carrying on of a business after the death of the major owner, management of
property in an efficient manner, and any number of other things as specified in
the Trust indenture.
A Trust can donate up to 100% of its adjusted gross income to charity. As
an individual, you can give up to only 50%, while a corporation is restricted to
5%.
In conclusion, a Trust can save you money, lower taxes, avoid probate and
unnecessary attorney fees and delays, manage your family and business affairs
more efficiently, protect your loved ones from others, protect your property
against liability, maintain better records, protect your privacy, and accomplish
many of your desires, both now and after your death, in a most efficient manner.
PAGE 79 OF 337
MORE TRUST TOPICS
BY LONNIE CROCKET, FARR WEST BUSINESS CONSULTING

CO. TRUST
We often hear the words: Common Law Trust, Pure Trust, Constitutional
Trust, COLATO Trust and other high sounding titles as if the "Trust
Peddler/Promotor" has some "magical" secret making his Trust the one to "buy"
instead of all others.
ALL Trusts are written under "Common Law". That is, written under the right
to contract. It is the way it is written (mostly, but function is very important) which
determines if it, (the Trust organization) comes under Statutory Control A Pure
Trust is a contractual indenture organized to function in its own right as an
independent legal entity and cannot be construed to be a Corporation,
Partnership or Association and can ONLY be construed to be a Trust, pure in
Nature and nothing else. A Pure Trust differs from other Trusts in that it owns its
assets outright. It does not act as an agent or bailee, for hire, for owners of
property. It is controlled and regulated by its own Trustees who keep minutes of
their actions.
Trustees of a Pure Trust own the assets in Trust, fee simple absolute for
and on behalf of its beneficiaries with the Fiduciary Responsibilities to manage,
maintain, conserve, preserve and enhance the assets to provide for the
production of income either immediately or at a future dale for tire
Beneficiaries/Certificate holders. Trustees of a Pure Trust are also under
obligation to provide for tire Health, Education, Maintenance and Welfare of the
Beneficiaries under the Trust's ascertainable standard of distribution.
A business organized in Pure Trust form generally pays no fees to exist as
does a Corporation. A Pure Trust reports its profits and distributions to the IRS
for information purposes, provided ii distributes tire income (as a Simple Trust is
required under IRC Sec. 651) during its current year plus 65 days following the
end of its tax year. This is reported to the IRS on form 1041 and forms K-I are
completed and sent to the Beneficiary(ies) showing their proportionate share of
the D.N.I. (Distributable Net Income [profits]) of the Trust business activities.
Under IRC Sec. 652, the Beneficiary(ies) then are obligated to report on their
own tar return that amount reported on the K-I they receive.
A Pure Trust is a TRUE living Trust and tire death of the Certificate holder(s)
(Beneficiaries) does not affect tire Trust Corpus, Res or Principal (assets). The
death of the Grantor (if the Trust is a Nongrantor, irrevocable blind Trust) does
not affect the Trust Estate either. The Trust Estate continues to live on for tire
remaining Beneficiaries/Certificate holders.
One of tire objects of a Pure Trust is to obtain the advantages of a
Corporation, without the authority of any legislative act and without freedom from
the restrictions and regulations generally imposed by statutory law upon
PAGE 80 OF 337
corporations. Where the above mentioned aims can be realized, the Pure Trust
enjoys a definite advantage over the corporate form of doing business.
In tire 1923 Edition of Unincorporated Associations and Business Trusts by
Sydney R. Wrightington, of the Boston Bar, the statement is made in the Preface:
"The development of the law of corporations was tire over shadowing feature of
legal history in this country in the last quarter of the nineteenth century. It was
accompanied by an unreasoning public hostility to corporations which bore fruit
in the imposition of taxes and regulations by Legislatures which in many cases
have seriously impaired tire efficiency of this form of organization for cooperative
business enterprise. One of the most striking features of the recent decisions of
the Courts is tire evidence that business men are reverting to unincorporated
business [organizations] associations to carry our their purposes. "
One thing is for sure, businesses doing business in Trust form (commonly
called Business Trusts) have many of the corporate advantages without the
restrictions of corporate structures and are recognized as lawful entities in
virtually every court in the country. Tire problem however, rises in many areas of
government and banking because of ignorance to this form of doing business.
Tire legal profession has, for many years, feathered its own nest and to some
degree tire revenue enhancement ability of tire Slates, promulgated tire idea of
"Incorporate, Incorporate and let us regulate, restrict and tax you...twice"!
Now, let us come to tire next Term used frequently by "Trust
peddlers/promoters" trying to impress one with the supposed benefits of buying
their Trust package. "Constitutional Trusts". These Trusts are no longer valid
Trusts. They have been invalidated by the courts and IRS years ago. However,
tire name "Constitutional Trust" has been attached to other Trust types by "Trust
promoters/Peddlers" (who do not know what they are talking about) to attach
some Mystique to their Trust packages to entice unsuspectirrg people to
purchase only their Trust package.
The next item I wish to address is tire "COLATO Trust". This is an acronym
for COmmon LAw Trust Organization. I expect the reader to understand this and
no further discussion is necessary. I ant not going to elaborate on any other
"special named" Trust as I feel it doesn't take a rocket scientist to logically
eliminate most, if not all, high sounding name tags for Trusts being peddled by
promoters. I have made only a few exegetical comments on the "COLA TO find
Constitutional" Trusts because it goes without saying that it would be wasted
time and space to elaborate in greater detail; they have no basis in necessity for
tax and estate planning.
Another topic I wish to address is the spurious information being touted by
many Trust Promoters tire idea that "Common Law" Trusts need not file a tax
return and therefore may distribute its D.N.I. (Distributable Net Income) to its
beneficiaries tax-free. A Trust is an artificial person. If it deals in commerce,
under the Internal Revenue Code, it must file a tax return or the Grantor (if a
Grantor type Trust) must report the Trust income and expenses. Don't fall for the
line that the Trust does not have to file a tar return because ii is a "Common Law"
Trust. If it receives income it must file a return or the Grantor must file a return.
PAGE 81 OF 337
Don't fall into this trap. The promotor will not be there to support this argument
because it is indefensible. He will cut the limb off behind you.
Another area of dis-information: Put your assets into Trust if you are under
attack by a creditor or tire I.R.S. This is verrrry bad advice. This comes under
tire "Fraudulent Conveyance" act. Simply stated....if assets are transferred to
Trust to avoid creditors or thwart the efforts of collection of a liability (tar liability
also) you would be guilty of fraudulent conveyance and serious consequences
may result.
Assets in a properly-structured irrevocable Trust cannot be seized to satisfy
a judgement or seizure order. However, threre are situations in which an
irrevocable Trust may be invalidated by creditors or (particularly) the I.R.S.,
which may be able to invade the Trust when no other creditor can. If the I.R.S. is
seeking to collect a past tax liability, it will claim that the liability occurred before
tire Trust's creation, even if it has not yet assessed any tax. The I.R.S. can make
such a claim as long as three years after the tar returns (of the Grantor) were
filed (or due, if none were filed). Six years if it is alleging a 25% or greater
understatement of income or seven years if it is alleging fraud.
In addition, it can claim that any tax liability incurred as long as one year
after the Trust's creation is collectible from the Trust assets. One year before
declaring bankruptcy (two years is better).
Remember, Trusts can be useful tools for effective Estate and Tax planning
purposes. However, look before you leap.
Other Trusts which can be very useful, especially for income property, are
the Land Trusts. In a Land Trust, it is the Beneficiary who needs tire liability
protection, not the Trustee, because the Beneficiary is the only person tire
tenants usually come into contact with. So insurance policies should be in the
Beneficiary's name. In keeping the Beneficiary's identity private is important then
you can use the ploy of having an "agent" named to represent both the Trustee
and Beneficiary and put the insurance into his/her name. This is only one area
of how a Land Trust is valuable. Land Trusts are complex and is for another
discussion.
I think it necessary to hit upon another point which seems to be touted as
the "answer " to I.R.S. Levies and Liens and along with that creditors attempting
to exercise judgements and take property. Quite often I have clients come to my
office to discuss the possibility of creating Trusts for one reason or another.
Many times a client tells me he has an I.R.S. Lien or Levy against him and
wishes to place his property into Trust to keep the I.R.S. from taking it. Another
subject that often arises is that a person is close to petitioning for protection from
creditors by filing bankruptcy but before doing so, threy wish to convey their
property to Trust to protect it. NOT? They have been told in some "Trust
Peddler" seminar or have read same in some literature being handed around
that this can be done. Again...NOT!
There are laws relative to the transference or conveyance of assets to
avoid creditors and that is called the FRAUDULENT CONVEYANCE act. Many
individuals who believe what these "peddlers" tell them, that their property is
PAGE 82 OF 337
safe because ii was "given " or conveyed to a trust may have created a
transferee liability situation. Transferee liability may definitely exist if certain
issues are present when the transfer to the trust was made. This is likewise true
if the assets were transferred/conveyed to another person/individual. 1) The
transfer of the assets was for less than adequate and full consideration ie. (a
legitimate sale). 2) The transfer was made after the liability for taxes accrued. 3)
The transferor is liable for the taw. 4) All reasonable efforts have been made to
collect the tax liability from the taxpayer before a proceeding against the
transferee is commenced 5) The transferor was insolvent when the transfer was
made, or the action left him or her insolvent.
If your situation involves a transfer, you must be careful to protect your
assets. Be careful that you don't get caught in a situation of FRAUDULENT
CONVEYANCE.
Another issue which is often misstated and often misunderstood by "trust
peddlers" and the unsuspecting public, and that is the relationship between the
five individuals involved in the Trust creation, its function and control. The five
titles are: Grantor, Truster, Creator, Settlor & Exchanger. Other individuals
involved are the Trustees, Manager and Beneficiaries. Now, one must remember
that many times these titles (the first five in particular) are used interchangeably
and often two or more titles are placed on the head of one individual. The
relationship, powers, authority, declared purpose and purity must be exact or it
(the Trust) will fail to accomplish the privacy, asset protection and tax savings
available. I will here, attempt to outline just a couple areas least understood and
improperly applied in trust and tax law as it applies to the concept of a "Pure"
trust.
The trust is an entity for tax purposes, separate from the grantor trustee,
and beneficiaries, but this separation may be in effect disregarded where a
person other than the trustee has substantial powers (notice I said "POWERS")
over the trust. Broadly speaking, a trust is subject to income tax as if it were an
individual (natural person individual), but there are many exceptions to this rule.
The most important is that the trust is generally not taxed at all if ii distributes all
its income in the year earned or, in most cases, where it is required to distribute
income (a simple Trust, IRC Sec. 651) as earned but for some reason fails to do
so.
Also, a failing point of "peddlers " in the creation of several trusts for their
clients is that they fail, in the Declaration of Trust to EXPRESS the intention to
create several trusts or only one trust and this should he expressed without
ambiguity. In establishing multiple trusts ii is important to set them up so that they
can be separately administered. Failure to administer the trusts separately may
cause them to be treated as a single trust, IRC Sec. 643. Two or more trusts will
be consolidated and treated as one (for tax and other purposes) if the two
criteria are met as expressed in the IRC.
Consider carefully the choice of trustees. The retention of powers (there's
that word "power" again) to shift benefits won 't cause tax to the grantor if the
powers are held by a trustee independent of the grantor (or grantor's spouse or
other relation by marriage, blood, adoption or employment) as defined for
PAGE 83 OF 337
purposes of the spousal attribution rule. Again, if the grantor or other related
parties, has the power to remove an independent trustee and substitute a non-
independent trustee, or if he can add non-independent trustees, he will be
taxable on trust income if the independent trustee has powers which could NOT
be reserved to the grantor without tax to him Bingo....a GRANTOR TRUST.
Another issue not well understood is that if the grantor or a non-adverse
party (see IRC Sec 672(a)&(c)-Adverse and Subordinate party rules) has
discretion to distribute trust income among a group which includes the grantor or
grantor's spouse, the grantor would be treated as owner of the entire trust.
Thus, where the grantor or a non-adverse party is given such discretion, the
grantor's spouse should not be included among the discretionary beneficiaries.
This result could also be avoided by requiring the consent or approval of an
"adverse" party.
The mere fact that trust income may be paid to members of lire grantor's
family (other than to his spouse) does not make the grantor taxable on the
income. However, if the grantor or Iris spouse is obligated under local law to
support an individual, he will be taxable on trust income actually used to satisfy
that obligation. Be careful with whom you deal to have trusts created. This issue
is nor well understood by most trust "peddlers".
Another issue not well understood, and that is the transfer of or the
exchange of the assets to trust. A grantor's transfer of property to a new or
existing trust does not result in income to the grantor or the trustee, for income
lax purposes, assuming the transfer is without consideration. (See IRC Sec. 102)
Property transferred to a trust during the grantor's lifetime ordinarily is not
included in Iris gross estate for estate lax purposes, but can be included in his
gross estate if he reserved certain interests in or powers (there's that word
"power" again) over the trust or trust property. A transfer in trust is not a Gift for
Sift tax purposes if the grantor retains such powers or controls as to prevent the
gift in trust from being considered a completed gift (ie., beneficial interest
retained). While a completed gift may invoke a gift tax if the tentative tax exceeds
the unified credit allowable, such a gift should be considered where the transfer
to the trust is motivated by a wish to avoid estate lax on any appreciation in the
value of the transferred property between lire date of the gift and the date of the
grantor's death.
To make a completed gift, do not retain the powers which would make the
trust property includible in your (the grantor's) estate. If, on the other hand, the
grantor (or his spouse) retains certain powers ("power" word again) over the
trust, he may be treated as still the owner of the trust property (grantor trust,
subject to seizure, confiscation etc.) even after its transfer to the trust, so that
income from the property may be taxable to him and trust property may be
included in Iris estate for estate tax purposes. It should be made clear to the
grantor that while the tax law does not prohibit a grantor from retaining any
controls over the trust that he wishes, certain retained powers may have adverse
tax consequences to himself or his estate.
In IRC Sec. 671 it states that ".....solely on the grounds of dominion and
control", the grantor will not be treated as the owner. Notice, ii does not say
PAGE 84 OF 337
"power". The grantor is generally treated as the taxable owner of a truss if he llas
power over the beneficial enjoyment of its corpus or income. If he is considered
the owner of the trust (a grantor trust) he would be taxed on its income, and the
trust principal/corpus my be included in his gross estate. But there are
exceptions to this rule and there is nor sufficient space or time here to detail
those exceptions.
I guess what I am attempting to convey to the reader is this: Be extremely
careful with whom you deal regarding trust creation and its proper function.
These things cannot be dealt with lightly. Please don't get "sucked in " by high
sounding Name Tags and statements which sound too good to be true. They
usually are. Be careful with whom you deal in having Trusts created for your
Estate and Tax planning purposes. Many times, one would be better off NOT
having a Trust created at all than functioning incorrectly in Truss.
It is OK to be a Pig, bus don 't be a Hog. Pigs get fat but Hogs get
slaughtered. God notices men with pure, not full ones. Being in Trust is merely
implementing the higher law of STEWARDSHIP.
PAGE 85 OF 337
THE BUSINESS TRUST: THE INTELLIGENT

BUSINESS ALTERNATIVE FOR THE SELF-
EMPLOYED
The Business Trust is not a new concept. It is an established, legal, and

extremely profitable business entity that until recently was simply not known to
those who could benefit the most from its use: The small businessman and
professional. The Business Trust is a method of conducting business with
complete privacy while reducing taxes, limiting liability and preserving the estate.
What Is A Business Trust?

The word "TRUST" means that one has faith in another person based upon
honesty, reliability, and confidence in that person's abilities. People trust their
friends and relatives all the time. They also place a great deal of trust in
complete strangers. They trust mechanics to repair their vehicles properly,
bankers to protect their money, insurance agents to see that the premiums paid,
adequately insure against liability, and the government to guarantee their rights.
If one really takes the time to consider all of the aspects of life that are, and are
not taken for granted, one realizes that trust is an integral part of life.
Trust is intuitive when the person trusted, the trustee, is a friend or relative.
In the case of strangers, the relationship of trust is often bound by a contract.
The Constitution of the United States guarantees the right of contract. A valid
contract is entered into by competent parties for a legal and moral transaction
that is mutually agreeable and represents a meeting of minds. Valid contracts
cannot be intruded upon by outside parties. A relationship of trust bound by a
contract cannot be disturbed by any person or organization who is not directly
involved in the contract.
Another word that needs clarification is "OWNERSHIP". Americans are
accustomed to the idea of ownership. Vehicles, land, homes, businesses,
practices, and a myriad of things can be owned. But ownership is very tentative.
Failure to pay property taxes results in the loss of property and land. Assets
used as collateral can be liquidated if loans are not repaid. Liability claims can
easily wipe out one's entire inventory of business and personal property. The
potential loss of ownership is always present. The conclusion to be drawn is that
ownership is extremely conditional.
The Business Trust employs the concept of managing, rather than owning,
assets. This is done through a trusting relationship with a non-related person
and is bound by a valid contract. The Business Trust is also known as the
Unincorporated Business Organization (UBO), Massachusetts trust, pure trust,
common law trust, and contractual company. The business person who places
his business and assets In the trust reaps all of the benefits of the business and
assets without the responsibilities previously associated with the ownership of
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them. Relinquishing ownership means relinquishing liability, and the contract

assures privacy in the operation of the business. More will be said about these
aspects of the Business Trust in addition to the tax benefits and estate
preservation.
The Business Trust Verses Other Business Entities

To understand the Business Trust, it is helpful to compare it to other
business entities; sole proprietorships, partnerships, and corporation. It is
important to realize that each business entity is considered a separate individual,
just as each person is an individual. It is this individuality that enables the IRS
and the government to regulate them.
The Sole Proprietorship is the most widely used form of business in this
country, but is also the smallest generator of profits. It is owned by one person
and is in operation until the owner dissolves it or dies. Although the business and
the owner's personal assets are considered separate for accounting purposes,
they are one and the same legally. That means that a claim against the business
can seek restitution against owner's personal assets. Taxes are paid by the sole
proprietor on the profits of the business.
The Partnership is similar to the sole proprietorship, However, the
partnership has some additional problems, such as increased liability. Since the
business is considered an individual, a claim against one partner can also
threaten the assets of the other partner. Also, a partnership that was formed
under amiable conditions may cause conflict between the partners in the event
of liquidation. The profits of the business are divided between the partners, and
each partner pays taxes on his own profits.
The Corporate form of business is responsible for most of the revenue
generated in this country. Ownership in a corporation is determined by the
acquisition of stock in the corporation. The stockholders elect a board of
directors which determines the payment of dividends and appoints the officers of
the corporation. These officers usually consist of a president, vice-president,
secretary, treasurer, and controller and are responsible for operating the
business and reporting financial results to the board of directors and
stockholders. To become a corporation, a business must file an application of
incorporation with the appropriate state official. The corporation then pays an
annual fee to the state "for the privilege of doing business" in the state. This
means exactly what it says; it is not a right but a privilege granted by the state for
doing business in that state.
A few advantages of a corporation over a proprietorship and the partnership
are more limited liability and the ability to raise working capital through the sale
of stock. Stockholders cannot be held liable for any claims against the
corporation. However, the board of directors and the officers can be liable for
their individual acts on behalf of the corporation (for instance, withholding Social
Security and income taxes from its employees). In this case, their personal
assets can be attached in a lawsuit. In addition to Social Security and other
taxes, the corporation pays a corporate tax on any profits of the corporation. The
PAGE 87 OF 337
stockholders may have to pay additional income taxes on any dividends that
they receive. This combination of corporate and dividend taxation results in a
situation of double taxation.
The government tends to encourage the formation of corporations over sole
proprietorships and partnerships. The corporation is much easier to monitor than
the other business entities. It is issued a federal ID number that marks it as an
individual, and for regulation and taxation purposes, this ID number makes it
almost as easy to monitor as an individual wage earner. Attorneys often advise
their small business clients to seek incorporation, and within the past 30 years it
has become popular for professional organizations to incorporate. Incentives
have been offered to further encourage incorporation.
One of the greatest incentives devised was the establishment of the S
Corporation. This type of corporation was established primarily for the use of
small businesses and professional organizations. Its chief advantage is the flow-
through connect of taxation. The S corporation eliminated the double taxation by
flowing the tax burden through the corporation directly to the stockholders. No
corporate taxes are paid. This tax benefit is a powerful incentive that has
influenced many business persons; decisions to incorporate in this form.
The S corporation has become attractive because of the reduced taxation
offered in addition to more limited liability. However, there is very little privacy in,
the operation of the corporation, the limited liability does not always extend to the
board of directors and officers and the tax burden is still significant. The
Business Trust offers all the advantages of the corporation in addition to privacy,
limited liability, estate preservation, and tax reduction or elimination. Each of
these aspects will be discussed in detail.
How The Business Trust Works

Taxation and government regulation operate on the principle that business
entities are treated as individuals. A Business Trust is also an individual.
However, a Business trust has a beneficiary. If the beneficiary is another trust,
that trust is yet another individual. Its beneficiary can also be a trust; hence, a
third individual, and so on. If the trusts that are serving as beneficiaries are
located in a foreign country, some interesting IRS codes can be applied.
There are many countries that serve as tax havens for foreign individuals;
that is, these countries offer significant tax breaks as incentives for foreign
investing in the countries. The United States is one of the largest tax havens in
the world. The IRS code states that a foreign individual is not required to pay
taxes on any "interest" income earned in the United States.
However, income that is effectively connected to the operation of (or) a
business "Within" the United States is taxable. Also, foreigners can make tax-
free gifts to citizens of the United States, although there may be other restrictions
on the gift. These codes apply to foreign individuals, and a properly structured
foreign Business Trust is considered to be a foreign individual.
The Business Trust can be a simple trust or a complex trust. A simple trust
is required to distribute all of its income each year. The trust files a tax form, but
PAGE 88 OF 337
since the income has been distributed to the beneficiary, there is no taxable
income for the simple trust. The tax burden has flowed to the beneficiary. A
complex trust has the option to distribute all or a portion of its income each year.
The income remaining in the complex trust is taxable.
For illustrative purposes, one United States domestic trust and three foreign
trusts will be used. The person who gives the assets to the trust is termed a
grantor. The grantor does not actually give the assets to the trust but, exchanges
them for Certificates of Beneficial Interest. Since these Certificates or Shares of
Beneficial Interest are restricted and have only the right to receive income, if and
when there is any, the courts have held their value to be "indeterminable". The
grantor can then gift his Shares of Beneficial Interest to another trust. Since the
Shares have no determinable value, the gift is tax free. There is a trustee for
each trust and these trustees must be adverse (not related to the grantor). The
trustee has legal and equitable title to the assets in the trust. A general manager
is hired by each trust to manage the assets. There is also a secretary and a
protector for each trust who may or may not be the same person. The owner of a
business becomes the grantor of the trust. He exchanges his assets into the
United States domestic trust, (in some instances, the IRS considers this to be a
foreign trust), for the Certificates of Beneficial Interest and can then be hired by
the trust as the general manager. He now manages the assets that he previously
owned, and if he gifts his Shares of Beneficial Interest to another trust, he has
effectively removed himself from any obligations of the trust other than that of an
employee.
Tax Benefits For Social Security

The current Social Security tax rate is 15.3%. This consists of up to 12.4
percent for Old Age, Survivors, and Disability Insurance on the first $53,000 of
self-employed income and 2.9 percent for Medicare tax on the first $125,000 of
self-employed income. The self-employed person who earns $100,000 per year
will pay $9,121.60 in Social Security taxes. Over a ten year period, and
assuming that the rate does not increase, that is $91,216 in Social Security
taxes. There is little likelihood of getting this money returned as Social Security
benefits upon retirement. If the business is placed in a Business Trust, the owner
receives Certificates of Beneficial Interest for the assets of the business and is
then hired as the general manager for say $10,000 per year or whatever is
reasonable. Between the trust and the general manager/employee, this salary is
at 15.3 percent for a total tax of $1,530 or $15,300 over a ten-year period. The
business person has saved $7,591.60 per year or $75,916 over ten years. The
balance of the trust earnings are distributed to the beneficiary, and this
distribution is not subject to Social Security taxes. If the original business owner1
who is the grantor of the trust, is the beneficiary, he will have received the same
income but with less Social Security taxes to pay. He will, however, have to pay
state and federal income taxes on the distribution that he receives as the
beneficiary. The structure on this trust is depicted below:
This is a simple trust that is a United States domestic trust:
BUSINESS TRUST
PAGE 89 OF 337
Grantor $100,000 - Adverse Trustee

$10,000 - General Manager
$90,000 - Beneficiary
Basic Elimination Of Taxes

Now, it this self-employed person wishes to also eliminate the income taxes
on the distributions to the beneficiary, a domestic trust would be used with a
series of foreign trusts. It is important to know that each trust must be created for
the purpose of conducting business. As the grantor, this business person
exchanges his assets into the domestic trust for a Certificate of Beneficial
Interest and is hired by the trust as the general manager. He then gifts his
Certificates to foreign trust number one. The domestic trust is a simple trust and
must distribute its income each year. It distributes the income to foreign trust
number one that is now the holder of the Certificate of Beneficial Interest. The
domestic trust files a 1041 fiduciary tax return which shows that the income was
distributed to foreign trust number one. Since the income was distributed, there
is no income tax for the domestic trust to pay. Foreign trust number one receives
its income from the domestic trust and this income is considered "effectively
connected to the operation of a United States business" and, as such, is taxable.
However, foreign trust number one is also a simple trust and distributes its
income to foreign trust number two. Foreign trust number one files a 1040 NA
(nonresident) tax return showing that its income was distributed to foreign trust
number two. The income received by foreign trust number two came from foreign
trust number one, a foreign source and, therefore, not effectively connects to the
operation of a United States business and not subject to United States income
taxes. It is a complex trust and is not required to distribute all of its income.
However, to further insure privacy, foreign trust number three becomes the
beneficiary of foreign trust number two. These last two trusts file a W-8 form
which is a document of foreign status. The profits can now be placed in a bank in
the United States to earn interest, tax-free. The structure is depicted below using
a business that earns $100,000 per year.
BUSINESS TRUST
DOMESTIC TRUST: FOREIGN TRUST #2:

Grantor $100,000 - Adverse Trustee $90,000 - Adverse Trustee
$10,000 - General Manager - General Manager
Simple Trust 1041 Tax Return Complex Trust W-8
FOREIGN TRUST #1: FOREIGN TRUST #3:

$90,000 - Adverse Trustee $90,000 - Adverse Trustee
- General Manager - General Manager
PAGE 90 OF 337
Simple Trust 1040 NA Tax Return Complex Trust W-8
This depiction does not include all of the fees involved, but does give the
general format for the trust system. The structure of the trust may vary
depending upon the complexity and needs of the business. Real estate buying
and selling, asset protection, business operation, or a combination of needs all
require a different format. Each trust is unique.
Privacy With The Business Trust

As one might guess from the above discussion of tax benefits1 a good deal
of privacy is attained by the time foreign trust numbers two and three are
reached, but the privacy factor extends throughout the trust sequence for very
specific reasons.
Remember that the Business Trust is a valid contract between private
parties and, as such, cannot be intruded upon by outside parties, including the
government. The government regulations governing the sole proprietorships,
partnerships, and corporations do not apply to the Business Trust. The trustee of
the Business Trust is obligated to maintain the privacy of the business operation
and, therefore, cannot reveal the names of beneficiaries of the trust.
Limiting Liability With The Business Trust

It is becoming more and more evident that the premiums paid for insurance
are not adequate to meet potential liability claims. For instance, physicians pay
an average of $50,000 to $75,000 per year in premiums for one $1 million of
malpractice coverage; yet the average claim is over $15 million. The Business
Trust is ideal for solving such liability problems.
The value of an asset is determined by its fair-market value, the monetary
worth of the asset. As was stated earlier, assets or money transferred to a
Business Trust are not given as gifts, but are exchanged for Certificates of
Beneficial Interest in the trust. These Certificates have an indeterminable value.
with the assets now residing in the trust, they cannot be attached due to any
liability that the prior owner may create. This factor alone makes the idea of
managing rather than owning assets sound quite agreeable.
Estate Protection And The Business Trust

Most people are aware of something called "The Living Trust". It is not a
trust in the true sense of the word. It is a holding situation until the donor or
grantor dies and was designed to eliminate probate. With probate costs totaling
30, 50 and even 70 percent of the estate, this is a significant accomplishment,
however, it fails to protect the estate against liability, reductions from catastrophic
illness, and taxes. The Living Trust consists of the grantor, trustee, and
beneficiary or beneficiaries. These parties can all be the same person or be
related to each other. This results in what is called a grantor trust, a trust that
does not ensure the separation of the grantor from the ownership of the assets
in the trust. Because of this, the Living Trust is subject to taxation of the profits of
PAGE 91 OF 337
the trust and liability. If a husband and wife place their assets in the Living Trust
and one or the other experiences a catastrophic illness, then his or her one-half
of the estate may have to be utilized before state or federal aid would become
available.
The first $600,000 for an individual is exempt from federal estate taxes. The
exemption is $1.2 million for a married couple. If a married couple place assets
into a Living Trust and the total value of the estate is less than $1.2 million, then
upon the death of either the husband or wife, the Living Trust begins. The assets
would be divided equally between trust A and trust B. If the assets exceed $1.2
million, then in addition to the A-B trusts, a Q-tip or qualified terminable interest
property trust is formed. The following diagram depicts this structure with $3
million placed in the Living Trust.
THE LIVING TRUST

A B C(Q-TIP)
$1.5 M $600,000 $900,000
Disadvantage Of The Living Trust

Upon the death of the husband or wife, it is this A-B-C structure that
provides for the division of assets, their management, and the rights of the
surviving spouse and heirs. (Assume for this example that the husband dies
first). The $600,000 in trust B represents the husband's exempt portion of the
estate and upon the passing of the wife, can pass directly to their heirs. This
leaves trust A and C for the wife's living, medical, charitable and other daily
expenses for the remainder of her life. When the husband died there was no
probate or estate taxes.
Now assume that the wife dies a year later. Her estate consists of trust A
and C which total $2.4 million. Her exemption is $600,000 leaving $1.8 million
subject to estate taxation. This taxis from 35 percent to 55 percent, so at 40
percent the tax on the estate would be $720,000 due and payable in nine
months from the date of the death of the wife.
The Business Trust solves the problems inherent in the Living Trust. It
eliminates probate and estate taxes and protects the estate from personal
liability and reduction due to catastrophic illnesses. The Business Trust is usually
established for 25 to 30 years and is renewable. Therefore, a Business Trust can
operate a business and preserve assets for a family for many generations.
Starting A Business Trust

Starting a Business Trust requires the assistance of an attorney and/or
certified accountant. Most of these professionals are well trained in the rules and
regulations regarding sole proprietorships, partnerships, and corporations, but
are predominately inadequate when it comes to the Business Trust. This is
because they have not been taught or have been misinformed about the use of
the Business Trust. The exceptions to this are the attorneys and accountants of
PAGE 92 OF 337
the very wealthy, who have been utilizing Business Trusts for many generations.
Until recently, the Business Trust was simply not known as a viable alternative
for the average small-business owner.
During the 1800's Business Trusts were used more prevalently. There were
many good trusts and a few blatantly illegal ones, such as The Rockefeller
Family Trust and The Standard Oil Trust, both of which used the trust system to
monopolize certain Industries. This illegal use of the Business Trust resulted in
The Sherman Antitrust Act which ignored the legitimate use of the trust and cast
a stigma over the entire business. Many attorney's and accountants still
mistakenly consider all Business Trusts to be illegal, based upon this stigma
--even though there are numerous tax codes and laws maintaining the
legitimacy of the trust.
Fortunately, there are some knowledgeable attorneys and accountants
available and more are becoming educated in the use of the Business Trust.
Expect the professional selected to be not only knowledgeable, but attuned to
individual needs, well connected, and highly reputable. Fees for setting up a
Business Trust vary depending upon the complexity involved.
Other tees involved include the costs of trustees, general managers, and
miscellaneous items. These fees are generally minimal (most foreign trustees
earn approximately $250.00 per year for each trust). Foreign trusts tend to be
located in the Caribbean because of its stable governments and economies, use
of United States currency, predominance of the English language, internationally
recognized banks, and functions as tax havens. The domestic and foreign
trustees are professionals who maintain notarized documentation and minutes of
all trust transactions.
Conclusion
The Business Trust is a method of operating a business for profit that has
benefits that cannot be achieved with the use of any other business entity. The
recent availability of the Business Trust for the self-employed business person
and professional, provides the previously unattainable rewards of privacy, limited
liability, tax elimination, and estate protection. These rewards guarantee the
continuing proliferation of the Business Trust as a viable alternative for the
average business person.
INFORMATION MAKES THE DIFFERENCE
PAGE 93 OF 337
CASES PERTAINING TO TRUSTS BUSINESS TRUST

ORGANIZATIONS AND THE CONTRACTUAL
COMPANY
1. CaIdwell vs. Hill, 176 SE 383 (1934)

U.S. adopted Common laws of England with the Constitution.
2. Article 1, Section 101 Constitution (1776)

Includes the sacred right of obligation of contract.
3. Article XIV, Bill of Rights

The sacred right to own properly.
4. 16 AM JU 2d, Section 365

Property, anything of exchangeable value.
5. Elliot vs. Freeman, 220 U.S. 178 (1911)

A Trust is not dependent on statutory law.
6. Burnett vs. Smith, 240 SE 1007 (1922)

A Trust is a legal entity.
7 Schuman-Heink vs. Folsom, 159 NE 250 (1927)

If it is free of control by Certificate Holders, then it is a Pure Trust.
8. Berry vs. McCourt, 204 NE 2nd 235 (1965)

A Pure Trust is a contractual relationship in Tmst form.
9. Goldwater vs. Oltman, 292 P 624 (1930)

A Business Trust is lawful wherever contracts are lawful.
10. Morrissey vs. Commissioner, 296 U.S. 344 (1935)

A Trust is taxable as an association if a corporate structure is maintained.
11. Johnson vs. Lewis, 6 F 27(1881)

Trustees are legal owners of property in Trust (Fiduciary).
PAGE 94 OF 337
12. Bisbee vs. Mackey, 102 NE 327 (1913)

Succeeding Trustees do take title.
13. Commissioner vs. Marshman, CA6 279 F 2nd 27 (1960)

Fair Market Value determined by property received by taxpayer and not the
F.M.V. of property transferred by taxpayer to the Trust.
14. Parker vs. Monarmaric Trust, 278 SW 321(1925)

Certificates are personal property and convey no interest in the Trust
property.
15. Burnet vs. Logan, 283 U.S. 404 (1931)

Certificates in exchange are not taxable until a realized gain has accrued.
16. Tyson vs. Commissioner, 146 F 2d 50 (1944)

Gift tax is only on less than adequate consideration.
17. Estate of Anderson, 8 TC 706 (A) (1947)

Even bad bargains in genuine business transactions don't result in taxable
gifts.
18. Old Kent Bank and Trust vs. U.S., 430 F 2d 392 (1970)
Estate tax is an excise tax on the transfer of property at death.
19. Babb vs. U.S., 349 F Supp. 792 (1972)

Property interests terminating on or before death aren't subject to Estate
Tax.
20. R & H Corporation vs. U.S., 255 F Supp. 870 (1966)

Labor contractor is taxable for income paid to it by a third party.
21. General Am. Oil vs. Wagoner Oil, 247 P 99
22. State vs. Cosgrove, 210 P 393
23. Baker vs. Stem, 58 ALR 462

Valid business organization.
PAGE 95 OF 337
24.Gleason vs. McKay, 124 Mass 419
25.Claggett vs. Kilbourne1 66 U.S. 346
26.Coleman vs. McKee, 257 SW 733
27. Reeves vs. Powell, 267 SW 328

Valid business organization.
28. Crocker vs. Malley, 264 U.S. 144
29. Harris vs. New Mexico Oil, 204 P 754
30. Betts vs. Hachathorn, 252 U.S.A. 602
31. Knemper vs. Welker, 283 P 284
32. Page vs. Arkansas Gas Co., 5F 2d 171
33. Beilen vs. Krenn & Sato Inc., 183 NE 355
34. Carpenter vs. white, 80 F 2d 145
35. Forgan vs. Machie, 206 NW 600
36. Hecht vs. MaIley, 265 U.S. 144

Counterpart to Croker vs. Malley
37. Edwards vs. dR, 41SF 2d 573

Contract cannot be set aside because it saves on taxes.
38. Outlaw vs. U.S., 419 U.S. 844
39. Dunbar vs. Broomfield, 142 NE 148
40. CIR vs. Brouliard, 70 F 2d 154
41. William vs. City of Milton, 102 NE 355
PAGE 96 OF 337
Classic old case on Trusts.
42. Hill vs. Reynolds, 75 FED SUPP. 408
43. Gallaghan vs. Hannigan, SF 2d
44. Smith vs. Anderson British High Court 1880
PAGE 97 OF 337
EDUCATIONAL PURPOSES ONLY - TAX TIPS
There is not much that a person working for wages can do to protect his
income from the ravages of Social Security1 Federal and State Income Taxes.
That is probably the reason many counselors believe that a Home Business Is
the best shelter the wage earner can enter into. Yes, there are risks, but who do
you know that got ahead without taking some risks.
The self employed individual needs much more tax planning today than
ever. Look at the difference in just the social security tax between 1990 and 1991
(they did it to us again, and the question remains ("WHEN AND WHERE WILL IT
STOP").
For 1990, the self employment tax was 15.3% of $51,300.00 which
produces a tax of $7,848.90. The 15.3% is made of as follows:
OASDI Tax - at 12.4% on $51,300.00 = $ 6,361.20
MEDICARE Tax - at 2.9% on $51,300.00 - $1.487.70
TOTAL $7,848.90
Now look at 1991, where the 15.3% Is the same, but the amount on which
the tax is computed has changed:
OASDI Tax - at 12.4% on $53,400.00 = $ 6,621.60
MEDICARE Tax - at 2.9% on $125,000,000 = $3,625.000
TOTAL $10,246.60
What is the answer to the "Sole Proprietor" form of business ownership?

Some will say: A Partnership, others a Sub-S Corporation or a "C" Corpomifon.
They each have advantages, but mostly disadvantages.
The Partnership leaves all the partners liable for the acts of all other
partners. This form of doing business is almost like being a Sole Proprietor, but
with the problems of additional liability for the acts of ones partners. The writer
could not in good conscience recommend the partnership as a viable form for a
business venture.
The Sub-S Corporation and the "C" Corporation do a much better job at
protecting the parties from liability1 but this depends upon the actions of the
parties in their every day business dealings. The Sub-S works tax-wise just like
the Partnership in that the profits of the business are taxed to the Stockholders,
just like it is to the Partners of a Partnership. Neither of these entitles will be able
to escape the ravages of full taxation (from Social Security to Federal and State
Taxes).
The "C" Corporation profits are taxed to the Corporation which is a method
of splitting the profits between the Stockholder (Owners) and the Corporation.
This has an advantage to the Stockholder (Owners) in that they can minimize
PAGE 98 OF 337
their personal income and leave some income to be taxed to the Corporation
and what it left after taxes can be used within the Corporation as working capital.
The major problem with this procedure is that the earnings that are accumulated
in the Corporation could be taxed again to the Stockholder (Owners) if Dividends
are declared and paid to the Stockholders, or the accumulated earnings are
taxed upon the Iiquidation of the Corporation.
This article was an attempt to touch on a couple of the problems In doing
business today. To raise mainly the tax problem of businesses today. The heavy
burden of taxation bleeds badly needed capital out of businesses. This one
burden of business is the biggest reason so many businesses fail, especially In
the early years.
What is the answer? Have you ever heard of an Unicorporated Business
Organization or an "UBO" form of business? It does away with many of the
liability problems associated with a business. It also can solve many of the
problems created by taxes. Does this interest you? It should!!!
PAGE 99 OF 337
PROSPER INTERNATIONAL LEAGUE LTD.

- FREQUENTLY ASKED QUESTIONS
(FAQ'S)
Q - WHAT IS A TRUST AND WHEN DID IT BEGIN?

A - Originally developed in the English Courts in Medieval times. In essence
a trust is an arrangement, an agreement whereby one person a "SETTLOR"
causes a second person, "TRUSTEE" to become the legal owner of property
which he holds for the benefit of a third person the, "BENEFICIARY". The Trust
property may include anything which is capable of being transferred such as
land, buildings, money, shares, bonds (including shares of offshore companies).
Q - WHY WOULD I WANT TO SET UP A TRUST IN AN OFFSHORE

COUNTRY?
A. If you like the idea of having a Trust, let me explain why another country
could be advantageous to your financial well being. In the United States of
America, there are so many UNCLEAR rules, statutes and codes that people
believe are all laws. Everyone seems to believe in different ways when it comes
to the laws of income tax reporting, citizenship and sovereignty, to name a few.
This creates a host of problems for those of us that insist on living under
Common Law as we do. Even though a Common Law Trust is written to be used
as the basis of business dealings and ownership of assets, you may end up
dealing with certain uneducated people anyway. This can cause you undue
hardship and inconvenience. However, with an Offshore Trust, if a problem
arises, you simply notify the interested parties that they're dealing with an
Offshore entity and that eliminates half of the problems they think exist. The
other half of the problems will probably go away once they realize they'll have to
hire a Belizean attorney to pursue it any further.
Q - WHY WOULD I WANT TO CHOOSE BELIZE OVER ANY OTHER
COUNTRY?
A. The Belizean Law on Trusts, specifically called the Belize Trusts Act,
1992 is EXTREMELY CLEAR on what is allowed and what is not. It makes
writing an Offshore Trust much more practical. It leaves very little room for
uncertainty. In 1992, Belize rewrote their laws to be more clear, concise and
above all, more in tune to what people are desiring of an Offshore entity. They
have some of the most liberal laws l've seen for Offshore Trusts that give you so
much more flexibility in what can be done. They are an English speaking country.
They are actively seeking the offshore business, and rapidly becoming on of the
best tax havens! Their confidentiality and privacy laws have been recently tested
and the Belize courts have stood squarely behind them.
PAGE 100 OF 337

Q - HOW CLEAR IS THE BELIZEAN LAW ON TRUSTS?

A The law of Belize is VERY CLEAR AND UNDERSTANDABLE in all facets
of dealing with Trusts. It eliminates the confusion that exists in Trusts written in
the United States of America.
Q - ARE THERE ANY HIDDEN COSTS THAT I WILL INCUR IN SETTLING

AN OFFSHORE TRUST IN BELIZE?
A. Absolutely not! The only additional cost Is a nominal annual
maintenance fee paid to the Trustee.
Q - WHAT IS MEANT BY AN "EXEMPT" TRUST?

A. It simply means that you are not taxed by Belize on the income that the
Trust earns. The Trust is also not taxed on capital gains nor is any duty charged
on any estate through the Trust.
Q - WHAT DETERMINES AN "EXEMPT" TRUST?

A. The SETTLOR, PROTECTOR and BENEFICIARY may not be resident
of Belize, any portion of any calendar year, in order to remain an exempt Trust.
Q - HOW SAFE IS AN OFFSHORE TRUST?

A. The risk you take with any Offshore Trust is that the country is going to
remain stable enough for you to maintain constant access to your dollar account
Because Belize has a stable economy and was founded on English Common
Law, it's biggest advantage is it's clarity in the system of developed law. As a
former British Crown Colony, they adopted the Common Law of England and
thereby inherited what some believe to be the greatest and most distinctive
achievement performed by Englishmen in the field of jurisprudence, which is the
most outstanding creation of equity, the Trust.
Q - WHO KEEPS COPIES OF THE TRUSTS THAT I CREATE?

A. The only copy in existence is the one you have.
Q - HOW PRIVATE ARE THE RECORDS?

A. Think about it. The records are extremely private and confidential and
protected by the laws of Belize. If anyone wants to pursue the Trust with a
lawsuit, they'd have to rely on information being available in Belize. They would
have to track down the Trustee of the Trust, wherever they may be and pursue in
the courts of Belize and subject to the laws of Belize. The jurisdiction may be
moved by the Trustee and the Protector to further confuse the issue.
Q - DO I NEED A TRUSTEE FROM BELIZE?
PAGE 101 OF 337

A. No, that is not necessary. Under the terms of this Trust, a resident of
Belize is not necessary to perform the role of the TRUSTEE. The TRUSTEE can
be resident of any other country in the world.
Q - CAN I STILL USE MY OWN ASSOCIATES TO FILL THE KEY

POSITIONS OF THE TRUST?
A. Yes, however, we do not recommend that you take this approach. Our
Belizian Trustee has been selected after years of due diligence and we stand
behind him 100%.
Q - DOES THE DEATH OF ANY PERSON AFFECT THE TAXES OF THE

TRUST?
A. No! The Trust is not liable for any estate, inheritance, succession or gift
tax or duty by reason of any death in a calendar year
Q - WHO HAS A VESTED INTEREST IN THE TRUST FUNDS?

A. Only the TRUSTEES, not individually, but collectively as the Board of
Trustees.
Q - CAN THE TRUST BE IN EXISTENCE FOR MORE THAN 120 YEARS?

A. No.120 years is the limit. It can be established for a shorter period of time
but the maximum is 120 years, with no exceptions.
Q - HOW DO I GAIN CONTROL OF THE TRUST?

A. You should not be in control, that is what makes a trust vulnerable. You
should only use the "Letter of Wishes" to your Trustee.
Q - IS THIS AN IRREVOCABLE OR REVOCABLE TRUST?

A. This is an IRREVOCABLE Trust, meaning that the SETTLOR can not
change his mind and take control over his property again or withdraw the terms
of the contractual agreement between him and the TRUSTEE.
Q - IS THIS TRUST THE SAME AS A PURE TRUST THAT WE WOULD

FIND IN THE U.S.?
A. No, this can not be compared to the Pure Trust offered in the U.S.
because Belizean Laws are written differently and they purposely address new
issues that are of concern to modern business persons. Belizean Law was
completely revised in 1992 for the specific purpose of attracting new Trust
business that would satisfy those modem requests and situations.
Q - WHAT IS THE JURISDICTIONAL LAW OF THE TRUST?
PAGE 102 OF 337

A. The jurisdictional law of the Trust is the Trust Act of Belize, 1992.
Q - CAN I CHANGE THE JURISDICTION OF THE TRUST TO ANOTHER

COUNTRY IF I FEEL THE NEED?
A. Most certainly! That's one thing that is so great! For protection, the
TRUSTEE can change the jurisdictional law of the Trust, at will. This is only one
way to keep litigants at bay, endlessly. The Protector may also perform this
function.
Q - WHAT IS MEANT BY A "SPENDTHRIFT' OR "PROTECTIVE" TRUST?

A In the event that the BENEFICIARY becomes insolvent or any part of his
property becomes liable to seizure or sequestration for the benefit of his
creditors, the Trust has the right to minimize the BENEFICIARY's interest in Trust
funds to a degree necessary to prevent such action from hindering the smooth
operation of the Trust. It is designed to prctect the BENEFICIARY against his
own incompetence or inability to properly handle money or property.
Q - DOES THE TRUSTEE NEED TO BE BONDED?

A. The laws of Belize have not required bonding until recently. Belize
Offshore Services LTD. as Trustee is in the process of obtaining a bond.
Q - HOW DO I GET MY CURRENT INCOME SHIFTED TO THE TRUST?

A. There are a couple of ways to do this. One is to ask your employer to pay
the Trust directly for work that you perform. Most of the time, this won't work
because the employers (or payroll clerks) are not familiar with Trusts and they
get scared. If you are an independent contractor, this should be easier to do.
Simply have the employer pay the Trust, using the Trust EIN instead of your own
Social Security Number. If you are seI-empIoyed, you have the easiest method
to set this up. You establish that you are working FOR the Trust as an
independent contractor and not an employee. Your pay can be in the form of
money in addition to benefits like paying your rent, light bill, etc.
Q - HOW DO I RECEIVE COMPENSATION FROM THE TRUST FOR MY

SERVICES PERFORMED?
A This is best done as an agreement, in writing, and documented in the
Trust Minutes, that you are an independent contractor working for the Trust in
whatever capacity you have chosen. Spell out the details as to how you are to
be paid, whether it's based on a pay schedule or as a commission I percentage
structure, etc. or some combination of all the above. The whole thing is really up
to you. How do you WANT to be paid? Put it down in writing.
Q - HOW MUCH CAN THE TRUST PAY FOR MY EXPENSES?
PAGE 103 OF 337

A. There's really no limit, within reason. Just don't be silly about it and
expect the Trust to pay out more than it receives each month or more than it's
worth, etc. It has to be workable!
Q - HOW PROPRIETARY IS THIS INFORMATION IN THE TRUST

DOCUMENT?
A. The information contained in the Trust Minutes is VERY CONFIDENTIAL
AND PRIVATE! The TRUSTEE is NOT allowed to disclose this information to
outsiders without just cause.
Q - WHO IS ENTITLED TO SEE COPIES OF THE TRUST DOCUMENTS?

A. Since you have the only copy you can decide who to distribute it to.
Q - HOW IS THE "INTEREST' OF A BENEFICIARY CLASSIFIED AND

DEALT WITH?
A. The "interesr is classified as "personal property" and can be sold, traded,
charged, or otherwise dealt with in any manner whatsoever.
Q - WHO MAY BE THE SETTLOR?

A. Any person who has, under the law of Belize, the capacity to own and
transfer property may be the SETTLOR of the Trust. The SETTLOR may also be
the TRUSTEE, BENEFICIARY or PROTECTOR; although this is not
recommended.
Q - DOES THE SETTLOR HAVE TO LIVE IN BELIZE?

A. No. The SETTLOR cannot be a resident of Belize to comply with the
"exempt' ruling.
Q - WHAT ARE THE SETTLOR'S DUTIES ONCE THE TRUST IS

FORMED?
A The SETTLOR's position is this: He is the person who initially wants to
settle the Trust. He contracts with the TRUSTEE to accept his initial contribution
of money into the Trust in exchange for the Trust Certificate Units (TCUs). He
then Issues a letter of wishes for the distribution of the TCUs to the
BENEFICIARY. After that, the SETTLOR steps out of the picture. He no longer
has any active management duties or ties to the Trust funds.
Q - WHO MAY BE THE TRUSTEE?

A Any person who has, under the law of Belize, the capacity to own and
transfer property, may be the TRUSTEE of the Trust. The TRUSTEE may also be
a corporate or artificial entity. The TRUSTEE may also be the SETTLOR,
BENEFICIARY or PROTECTOR.
PAGE 104 OF 337

Q - DOES THE TRUSTEE HAVE TO LIVE IN BELIZE?

A. No. The Trust document specifically states that the TRUSTEE does not
have to be a resident of Belize. However, P.I.L.L. thinks this is a good idea.
Q - WHAT ARE THE TRUSTEE'S DUTIES ONCE THE TRUST IS

FORMED?
A Once the Trust if formed, the TRUSTEE has the daily duty of maintaining
the Minutes concerning any activity of the Trust. If the Trust decides to purchase
or sell some of irs assets, these things must be recorded in the Minutes of the
Trust. If the TRUSTEE should so choose, he may decide to delegate some of the
day-to-day operations of maintaining the Trust to another person called the
General Director or the General Trust Manager. If no other person is appointed,
the TRUSTEE retains those duties.
Q- IS THE TRUSTEE LIABLE FOR ANY MISTAKES OR BAD JUDGMENTS

OF THE TRUST FUNDS?
A. No, not really. As long as the TRUSTEE can show reasonable care in
selecting his options and making decisions, he is not personally responsible to
the Trust for any shortcomings from those bad judgments.
Q - WHAT IS THE MINIMUM AND MAXIMUM NUMBER OF TRUSTEES

ALLOWED? A At least one (1) and not more than four (4) TRUSTEES.
O - WHO MAY BE THE BENEFICIARY?

A. A BENEFICIARY may be identified by name or by reference to a
relationship to some other person, whether living or not at the time of creation of
the Trust. A BENEFICIARY may also be a certain "class" of individuals. A
BENEFICIARY may also be the SETTLOR, TRUSTEE OR PROTECTOR;
although this Is not recommended.
Q- DOES THE BENEFICIARY HAVE TO LIVE IN BELIZE?

A No, in fact, the BENEFICIARY cannot live in Belize.
Q - WHAT IS THE BENEFICIARY'S OBLIGATIONS OR RIGHTS ONCE

THE TRUST IS FORMED?
A Since the Trust assets are not yet vested in the BENEFICIARY, he has no
voice in the management or the day-to-day operations of the Trust This is also
because of it being a "spendthrift" type of Trust which is designed to protect the
BENEFICIARY more than a normal type of Trust. The BENEFICIARY does,
however, have "Interest Bearer Shares" that can be traded, put up as collateral,
sold, or dealt with in any manner whatsoever. This does give the BENEFICIARY
some present benefit of being a BENEFICIARY.
PAGE 105 OF 337

Q- CAN A BENEFICIARY BE REPLACED ONCE APPOINTED?

A Yes. The TRUSTEE reserves the right to replace or appoint additional
BENEFICIARIES at will. Most offshore Trusts have this stipulation that people
are not aware of. The Protector may also perform this function
Q- ARE THERE ANY ADDITIONAL RIGHTS OR POWERS DUE A SHARE

HOLDER?
A. The BENEFICIARY may give to the TRUSTEE, a letter of wishes with
regard to the exercise of any functions conferred on the TRUSTEE by the terms
of the Trust. But remember, the TRUSTEE does not have to respect those
wishes and will not be accountable in any way for his failure or refusal to do so.
Without the BENEFICIARIES being vested of Trust assets, they have no further
obligations or powers until such time as the assets are distributed.
Q - WHAT HAPPENS TO THE BENEFICIARY's RIGHTS UPON HIS

DEATH?
A. Any rights bestowed upon the BENEFICIARY because of his holding any
Interest Bearer Shares, will terminate upon his death unless a "Transfer Of
Beneficial Interest Upon Death" form is on file with the Board of Trustees.
Q - HOW DOES A BENEFICIARY ARRANGE TO HAVE THAT FORM ON

FILE?
A. The BENEFICIARY simply needs to request a form from the Board and
complete it as soon as possible thereafter. The BENEFICIARY shall appoint
whomever they shall choose to fill the position of Successor-Beneficiary. Once
that form is on file, the transfer of rights is automatic upon the death of the
BENEFICIARY.
Q - WHO IS THE PROTECTOR?

A. PILL. is the PROTECTOR of the Trust.
Q - WHAT IS THE FUNCTION OF THE PROTECTOR AFTER THE TRUST

IS FORMED?
A. The PROTECTOR's job is to watch over the TRUSTEE and make sure
they perform their role as per the wishes of the SETTLOR. The PROTECTOR
has the power to remove and/or appoint a new or additional TRUSTEE. The
PROTECTOR may also be the SETTLOR, TRUSTEE or the BENEFICIARY.
Q - CAN THE PROTECTOR FIRE A TRUSTEE FOR NO REASON?

A. Yes. The PROTECTOR can get rid of a TRUSTEE if this becomes
advisable.
PAGE 106 OF 337

Q - DOES THE PROTECTOR HAVE TO LIVE IN BELIZE?

A. No. In fact, the PROTECTOR cannot live in Belize in order to satisfy the
requirement of being an "exempt" Trust.
Q - WHAT IS A GENERAL TRUST MANAGER OR A GENERAL

DIRECTOR?
A These are different titles that refer to the same basic position. At any time,
the TRUSTEE may choose to delegate the day-to-day duties of managing the
Trust Estate to a qualified TRUSTEE or a qualified non-trustee. The title of that
person may be the General Trust Manager or General Director. An independent
contractor relationship shall exist for the position to take effect.
Q - DOES THE GENERAL TRUST MANAGER HAVE TO LIVE IN BELIZE?

A. No. There is no residency requirement for the GTM or the GD.
Q - WHAT ARE THE ON-GOlNG DUTIES OF THE GENERAL TRUST

MANAGER ONCE THE TRUST IS FORMED?
A. If the position of the GTM or GD has been established, it is assumed that
they will have full control of the day-to-day operations of the entire Trust Estate,
including, but not limited to operating the checking account
Q - WHY IS AN INDEPENDENT CONTRACTOR AGREEMENT

NECESSARY FOR THE POSITION OF GENERAL TRUST MANAGER?
A. This is SO that the Trust does not have to establish an employer-
employee relationship, thus saving the expense of paying unernployment taxes
and workmen's compensation taxes.
Q - CAN ANY OF THE OFFICERS HOLD MORE THAN ONE POSITION IN

THE TRUST STRUCTURE?
A. Yes, as noted above, all the positions: SETTLOR, TRUSTEE,
BENEFICIARY and PROTECTOR can be held by one (1) person or entity.
Q - CAN AN OFFICER RECEIVE COMPENSATION FOR MORE THAN

ONE POSITION?
A Yes, the Trust Indenture allows for remunemtion for a Trust officer holding
more than one position within the structure.
Q - BECAUSE CERTAIN TRUST OFFICERS ARE VESTED OF THE

INTEREST OF THE TRUST ASSETS, DOES THAT MAKE THE TRUST ASSETS
A PART OF THEIR INDIVIDUAL ESTATE?
PAGE 107 OF 337

A. No! Under no circumstances are the assets of the Trust Estate to be

included in the estate of the Trust officers, individually or separately.
Q - IF A TRUSTEE BECOMES INSOLVENT OR HIS PROPERTY IS LIABLE

TO DISTRAINT, SEIZURE OR SIMILAR ACTION, CAN THE CREDITORS
ATTACH TRUST ASSETS?
A. Absolutely not! The Trust is a distinct and separate entity, apart from the
TRUSTEE's personal estate.
Q - CAN A MULTI-LAYERED STRUCTURE BE SET UP WITH A BELIZEAN

TRUST?
A. Absolutely! There are numerous ways to establish a multi- layered
structure. The easiest is setting up a second Trust as the BENEFICIARY of the
first Trust. Then setting up a third Trust as the BENEFICIARY of the second
Trust. You can have one umbrella Trust having multiple subsidiarles off of that or
have one of the Trusts be an underlying umbrella by being the BENEFICIARY of
multiple brother-sister Trusts. Everybody has their own preferences.
Q - CAN THE BENEFICIARIES FORCE A TRUST TO TERMINATE AND

DISTRIBUTE THE FUNDS?
A. Normally they could, under a Belizean Trust. But since we wanted the
TRUSTEE to remain in total control, we elected to write this as a "spendthrlft /
protective" Trust which excludes the ability of the BENEFICIARIES to take
control with a majority vote.
Q - WE ALREADY ESTABLISHED THAT THE TRUSTEE DOES NOT HAVE

TO HONOR A LETTER OF WISHES FROM THE BENEFICIARIES. DOES THE
TRUSTEE HAVE TO HONOR A LETTER OF WISHES FROM THE SETTLOR?
A. Again, no. The TRUSTEE has total control of the Trust Estate and does
not have to report or justify to anyone, his actions, so long as he does not
endanger his fiduciary relationship he has with the BENEFICIARIES.
Q - DO I STILL MAINTAIN CONTROL OVER MY FUNDS?

A. Yes, and no! Your Trustee has control! Your access is through a "Letter of
Wishes."
Q - WHO HAS ACCESS TO THE TRUST FUNDS IN THE ACCOUNT IN

BELIZE?
A. Only the TRUSTEE of that Trust will have access to the funds.
Q - FOR WHAT REASON WOULD I WANT TO "REGISTER" MY TRUST IN

BELIZE?
PAGE 108 OF 337

A. We really don't know why someone would go through the trouble of

establishing a private relationship through a Trust, settled in a foreign country,
and then go ahead and register it with that government if they didn't have to. You
may have different thoughts on this though. You have a choice.
Q - CAN I CONDUCT BUSINESS IN THE COUNTRY OF BELIZE UNDER

THIS TRUST AGREEMENT?
A. No, you cannot conduct business with a Belizean resident nor may the
Trust own any Belizean real property under the Trust name. There are, however,
several ways to get around that by using what is known as a "flushing method"
to pass funds to anyone at anytime. You really should discuss this with the
Trustee.
Q - CAN I CONDUCT BUSINESS IN MY OWN COUNTRY UNDER THE

NAME OF THE TRUST?
A. Absolutely! Simply treat this like a real person and you will understand
more of how a Trust can operate. The Trust can buy, sell and trade assets at any
time or start up any new business activity that the TRUSTEE sees fit and
appropriate.
Q - WHAT IS THE EASIEST WAY TO TRANSFER A HOUSE INTO THE

TRUST?
A. The easiest way is to use something similar to a "Quit-Claim" deed. This
relinquishes your ownership in the real property but does not remove your
obligation to the "note" in which you promised to pay the entire balance. As long
as the payments are still being paid, the mortgage company should not call the
note due.
Q - WHAT IS THE EASIEST WAY TO TRANSFER AN AUTOMOBILE INTO

THE NAME OF THE TRUST?
A One of the easiest ways to avoid the minimum tax on the transfer of the
title is to go down to the registration I tag office and pay the small fee to "add" a
name to the title. Then, you wait about 30 days and go back down and pay the
fee again to "remove" your name from the title, thus leaving only the Trust name
on it.
Q - HOW DO I TRANSFER PERSONAL GOODS AND HOUSEHOLD

FURNISHINGS?
A. Simply use one of the "Bill of Sale" forms that is included in the Trust
package. It clearly states a value and date that the transfer was made. It is
made a part of the Trust documents and Minutes which become a part of the
permanent record of the Trust activities.
PAGE 109 OF 337

Q - AS FOR BUSINESS TACTICS AND STRATEGIES, HOW CAN THIS

BELIZE TRUST HELP ME?
TRUSTEE can borrow funds in the name of the Trust. (Trustee is not
obliged to divulge Trust application to loaner).
TRUSTEE can use Trust funds to buy anything he feels is necessary,
including real property and the improvements thereon.
TRUSTEE can make interest-free loans to people including the
BENEFICIARY.
TRUSTEE can provide Trust property (i.e. real property) rent-free to
persons if necessary.
TRUSTEE can provide benefits to either the SETTLOR or the
BENEFICIARY through a "letter of wishes."
TRUSTEE may distribute Trust funds to any one Beneficiary as necessary.
The possibilities are virtually limitless. Use your imagination!
Belize Court Makes Landmark Decision Protecting

Privacy
Belize City, Friday, January 20,1995
In a landmark decision asserting Belize's

sovereignty as an offshore financial jurisdiction,
the Supreme Court of Belize upheld the country's
confidentiality laws by revoking a previous court
order set in motion by the Securities and Exchange
Commission of the United States requesting that
confidential documents, belonging to Swiss Trade and
Commerce Trust, Ltd., be handed over to them.
In the case, Securities and Exchange Commission
(SEC) vs. Swiss Trade and Commerce Trust, Ltd.,
Banner Fund International, Lloyd Winbum et al,
Supreme Court Justice Troadio Gonzalez ruled that
documents held by the Belize court belonging to
Swiss Trade and sought by the SEC, be immediately
returned to Swiss Trade and Commerce Trust, Ltd.
Lawyers for Swiss Trade said that what this means
for Belize is that this aspect of confidentiality,
which is an important feature of the offshore
industry, has been upheld. "What this means is that
any party who seeks to destroy the concept of
confidentiality would have to contend with our
system, which has demonstrated its ability to uphold
the relevant laws," Allomey Oscar Sabido said.
The decision is expected to have major
international repercussions as the world financial
community looks to Belize and its new offshore
PAGE 110 OF 337

services industry. "It is certainly a shot in the

arm of the offshore industry because of the fact
that it is an Industry which is just beginning,"
Sabido said. A country's ability to assert its
sovereignty without the interference of outside
forces is a major deciding factor in choosing a
place to invest and protect personal property.
When asked for his comment related to the
decision, Uoyd Winburn, Director of Swiss Trade &
Commerce Trust, Ltd, in Belize, stated, "The Court's
decision confirms our reasons for establishing our
company in Belize originally. The Law related to
confidentiality has been tested and found to be not
lacking clarity and strength. Any other ruling by
the Court would have sent a signal throughout the
financial world that Belize could not be trusted to
protect assets, provide confidentiality of
transactions or otherwise serve the needs of those
who seek to do business away from their home
jurisdiction."
The decision dearly shows that the SEC stepped
out of bounds in trying to obtain confidential
information, the matter having been urged on both
sides by learned Queen's Council.
The case arose after the SEC [bureaucrats]
appeared at Swiss Trade's office on March 3, 1994
with the expectation that they would be able to just
take the files and leave the country with them, with
no regard whatever to Belizean law. The quick
reaction of company employees prevented any further
disregard for the law on the part of the SEC
[terrorats] and their Belizean lawyer, Eamon Courte
nay, who previously had been the lawyer for Swiss
Trade.
PAGE 111 OF 337

SECRETS OF THE IRREVOCABLE PURE BUSINESS

TRUST
(UNINCORPORATED BUSINESS ORGANIZATION)
BY LONNIE D. CROCKETT, M.S.

Shopping for a good "Business Trust" can be a frustrating and confusing
experience for the neophyte. Even experienced attorneys, C.P.A..'s and other
professionals in the Estate and Tax planning field are often confused or, worse
still, misinformed concerning the essential nature of the Irrevocable Pure
Business Trust Even professionals who are schooled and law trained or highly
educated in Trust and Tax law feel that since they haven't heard of it or don't
have the education/training in this highly complex area of law are guilty of
Cognitive Dissidence and therefore make erroneous statements such as: "This
is illegal", or: "You can't do this, it won't work". Scores of trust writers, and what I
call "Trust Peddlers" have become convinced that theirs is the only good
"Business Trust" on the market. Case law and rules of law have been cited to
support their various positions. Many treat the creation of Trusts as "selling
Amway or Vacuum Cleaners". A professional service by qualified professionals
should be a client's most important objective in investigating the desire to
entrust.
Can they all be wrong? Are they all right? In whom can we place our trust?
when we seek liability and asset protection for our businesses by means of a
trust arrangement, it is imperative that the client seeks qualified, trained and
highly educated professionals in the area of Trust and Tax Law. Knowledge in
one area or the other is not good enough. Knowledge and expertise in both
areas of the law is essential. The intent of the following message is to grant
knowledge to the potential business person who desires to entrust so that
he/she may have a basic knowledge to inquire in this highly complex area of law
to be able to ask the right questions when seeking a professional in whom one
may place their trust. It is important that the potential client have their
misunderstandings put to rest regarding the Pure Irrevocable Business Trust and
I hope to do this in words that are direct, simple and incapable of being
misunderstood.
There are literally over a hundred different kinds of Trusts. when I was doing
research for my Dissertation for my Doctorate (which I am a few months away
from getting) I found 44 by name. I never realized there were so many. Since
then I have found more than a dozen additional "types" of Trusts. Each and
every Trust was created/legislated for a particular purpose. I believe I am being
conservative in saying that about 98% of all existing trusts were legislatively
created/constructed, that is, created by Statute/Law. when any person (Trusts
are also included in the definition of "Person" in the l.R.C. Sec. 7701) asks
PAGE 112 OF 337

government for permission to do anything, or makes application for a license,

and that "Person" (entity) is granted a privilege to exist and therefore comes
under the jurisdiction of the one granting the permission or privilege. These
entities are called "Statutory Entities" or in this case, "Statutory Trusts".
The reason I bring this up is because, depending on the Form (Language
and Intent of the Trust) incorrect language, or terms/conditions of the Trust can
cause the Trust to be "Statutory" in nature. There is another side of the law which
trips many people up and that is the Doctrine of Substance over Forrn. What this
means is if an individual causes to have Trusts created which he desires to be
free of Statutorial regulation, he can have the very best Trust written and the
Substance over Forrn doctrine will cause the Trust to fail for the purposes
intended. Simply stated, Form is how the Trust is written and created, and
Substance is how the Trust functions. In other words, how an individual functions
within the Trust arrangement and the mechanics of the Trust. Key words are:
Control, power vs. authority, decision making etc. So, to make a long story short,
any Trust can and will be determined to be a sham or to have no economic
substance if the rules are not followed and the Trust is not operated correctly. It
is one thing to write a good Trust, and another to know how to direct someone in
the use and application of trust law. This is where the so-called "Trust Peddlers"
and "Trust Promoters" fall very short because most of them have merely copied
a Trust Indenture from someone else and bingo, they are in the Trust business.
So... back to the difference between "Statutory" Trusts and the true
Irrevocable Pure Business and other Trusts by contract. Trusts which are
defined in precise and peculiar terms are bound by procedural structure fall
under the category of a "Privilege" Trust. In such cases some deciding authority
ie., the I.R.S. or the Court, or perhaps the American Law Institute's Committee on
Trusts, or other agency, has described and limited those particular "types" as
Charitable Trusts. Family Trusts. Grantor Trusts. Testamentary Trusts and so on.
In other words, subject to that Statute which caused it to exist which are
described and limited by the form given them by some committee or agency,
which in turn has based its findings upon judiciary conclusions as found in Case
Law. In a Restatement of the Law of Trusts it is written: "...The sections of the
Restatement express the result of a careful analysis of the subject and a
thorough examination and discussion of pertinent cases. The accuracy of the
statements of law made rests on the authority of the Institute. They may be
regarded as the product of expert opinion and as the expression of the law by
the legal profession."
As stated above, the form of a Trust is normally dependent upon prior case
law, and the authority for that "law" is based upon opinion. when we think of law,
we normally think of statutes passed by a legislative body, not merely rules
passed by administrative agencies, or opinions of Judiciary committees based
upon prior case history. The legislature does not directly describe the form a
particular Trust is to take; but the legislature does have the power to delegate
certain powers to other governmental agencies, including the authority to make
their own rules. These rules are termed "administrative law" and become law (or
the colour of law) simply by being published in the Federal Register.
PAGE 113 OF 337

The Trust writer is then forced to choose the form of the Trust he wishes to
create from what is offered. When he does so, he is accepting a privilege from
(ultimately) the legislature. A privilege, of course, as stated above, is that which
is granted by the good pleasure of the author of that privilege. Privileges can be
withdrawn, revised or modified without prior written notice by the author of such
privilege. The judiciary, on the other hand, is faced with what is known as the
"Rule of Law," an almost impenetrable combination of both rules and case law,
which in most case is merely "opinion".
Case law can and is often very flexible in the opinions of the Courts being
handed down. It seems that for every case cited as authority or "permission" to
do something, 2 other cases can be shown which points in the opposite
direction. In such cases the Trust writer can conform very precisely as possible
with the "rule of law" in forming (writing) a Trust and yet it can still fail under
attack from an opposing attorney citing cases which supports his side of the
argument. Certainly a trust of this nature can successfully avoid probate court
which has long been established by court decisions.
Another question however, needs posing. what about privacy, liability
protection, asset protection? What about tax advantages? Unfortunately, most
Trusts (the 98% mentioned above) fail in this. why? Because they defy the
integrity of the express intent of the Trust which is the basic principle that lies at
the foundation of all Trusts, and that is the transfer (granting) of direct ownership
of the Corpus or Income of the Trust, which of course carries with it the
subsequent transfer of liability. Liability always follows ownership. When this
takes place, transfer of direct ownership to an "artificial" person (a trust of this
nature) is a transfer to the "Corpus" of the Trust. If the form of the transfer is
challenged in court, on the basis of the PROPER "form" of the Trust, then the
liability may be removed from the trust, usually to the detriment of some
individual, usually the beneficiary.
The other category of Trusts as mention earlier are those created by
Contractual Right. Remember, privileges can be withdrawn, revised or modified
by the giver of or the author of the privilege. In this case, the courts or other
authoritative agency. On the other side of the coin, a Right is that which is
incapable of revision, or modification and cannot be withdrawn because Rights
are from God and not government. Rights cannot be legislated away or
restricted and cannot be statutorily abridged.
In Restatement of the Law of Trusts, it is stated: "A statement of the rules of
law relating to the employment of a Trust as a device for carrying on business is
not within the scope of the Restatement of this Subject. Although many of the
rules applicable to Trusts are applied to Business Trusts, yet many of the rules
are not applied, and there are other rules which are applicable only to Business
Trusts. The Business Trust is a special kind of business association and can
best be dealt with in connection with other business associations."
The American Law Institute's classic multi-volume study of Trusts fails even
to discuss the irrevocable, non-grantor Business Trust. Why? Because the true
"Business Trust" is not really a Trust, and the rules for Trusts just don't apply to it.
PAGE 114 OF 337

In reality, it is a business operating in the form of a Trust under the right to

contract. In other words, it is a contract in the form of a Trust.
As business people, we all want privacy, security and mostly, we wish to
keep as much of what we earn in our life time for our posterity. We want security
for our businesses and we don't wish to have others telling us how to run or
organize our businesses. The government loves to regulate and grant privileges.
Thereby, they have control. With the government, it is an issue of control
because control translates into money or "legal plunder" thru taxation. All
businesses in one way or another conduct their business affairs thru the use of
and entering into contracts whether they be "covenant", "adhesion" or "implied"
contracts. The true contract Business Trust permits us to organize our Trust
upon the principle of contract rather than quasi-legislated privilege. See U.S.
Constitution Article I Section 10: "No state shall...pass...any Law impairing the
Obligation of Contracts."
That pertinent part of our Constitution provides and protects, in a concise
manner, the total strength and structure of the pure business contract Trust. The
taking of any other position serves only to weaken the essential nature of the
Business Trust. Indeed, the Courts have decided that: "A pure Trust is not so
much a Trust as a contractual relationship in Trust form." (Berry v. McCourt, 204
NE2d 235) The right to contract is vouchsafed in the U.S. Constitution. "A pure
Trust is established by contract, and any law or procedure in its operation,
denying or obstructing contract rights impairs contract obligation and is,
therefore, violative of the United States Constitution." (Smith v. Morse, 2 CA 524)
and again: "The right to create the Business Trust is based on the Common-law
right to contract by individuals establishing it." (Gleason v. Mackay, 134 Mass,
419).
It is very important that each and every officer (party to the contract) has a
contractual relationship to the Trust; otherwise, the protection of the contract is
lost. The Trustees must be appointed and must accept their position by contract.
This must be a truly written contract. The manager and secretary must be
contracted with in the same manner. Every party to the contract must have some
kind of contractual relationship with the Business Trust. If the Trust should ever
once partake of the privileges afforded by the legislatively granted agencies,
then it will compromise the integrity and strength of its own position. It is true,
statutes rarely directly address Trusts; but, for convenience to the reader, let us,
for a moment, refer to "the rule of law" comprising case law and agency
regulations published in the Federal Register as simply "Statutes".
Now we do know that true Business Trusts, or Contractual Business
Organizations are created by contract between 2 or more persons. But, for
instance, if those Trusts which are created by contract ever partake of the
privileges granted Trusts by the "Legislature," then said Trusts Immediately
become subject to the whims of the "Legislature," and they lose the right to the
unassailable protection of a contract. It is just like a "Tar Baby." Once one
touches the "tar" (the taking of a privilege), we are then stuck.
Let us refer to the "Ashwander Doctrine" which explains this principle: "...
anyone who partakes of the benefits or privileges of a given statute, or anyone
PAGE 115 OF 337

who even places himself into a position where he may avail himself of those
benefits at will, cannot reach constitution grounds to redress grievances in the
courts against the given statute." (Ashwander v. T.V.A., 287 U.S. 288, 56 S.Ct.
466)
I guess the bottom line to all this is quite simple. It is a matter of rights vs.
privileges. Why should we restrict the operation of our businesses to the territory
granted by the government (legislature, rule of law) when it is not necessary and
we can exercise our RIGHTS vouchsafed in the U.S. Constitution? Not only is
this unnecessary, it is downright foolish. Relative to any argument of law, there
always seems that for every argument on one side of an issue, there usually
exists two on the other side. Case law is a two edged sword. It cuts both ways.
The Irrevocable Pure Business Trust (Contract Trust) on the other hand is: "A
trust organization, consisting of a U.S. Constitutional RIGHT of contract which
cannot be abridged. The agreement when executed becomes a Federal
organization and not under the laws passed by any of the several legislatures."
(Crocker v. MacCloy, 649 U.S. Supp 39 at 270).
In summation, there is at least one very important difference between a true
Irrevocable Business Trust and other Trusts. Those "other Trusts" may even
have the outward form and name of the Contractual Trust, but they lack the
substance thereof. It takes a truly educated and experienced "Trust Writer" to not
only know the difference but to be able to consult with and direct the client
correctly.
The difference lies in the contract. If the Trust is formed and organized by
contractual relationships, and protects the parties in interest by providing them
an "arms length distance" relationship to the Trust, then it is a true Irrevocable
Pure Business Trust and will provide the strength of privacy, protection, and
security we all desire. If the Trust partakes of statutory privileges then it is a
"Statutory Trust", and the loopholes provided by privilege can be plugged at will
by the legislature, which has the power to suspend its privileges or modify or
change them as easily as it can grant them. We would be very wise in not relying
upon statutory privilege and the case law that supports those privileges. Rather,
we should rely upon the constitutional safeguards against the IMPAIRMENT of
contracts we cause to be created for our purposes.
By doing this, we will avoid the contentious litigation that comes from
challenges to statutory Trusts. We are then out of the reach of the legislative
statutory system and under the protection vouchsafed in the U.S. Constitution
and that of constitutional common law. We then come under the realm of positive
law and not under (colourable) statutory law.
We are, in short, in a position of strength through having separated
ourselves from any connection with any Trust or Trust property outside the
bounds of a contractual relationship and security is accomplished. The I.R.S.
and the Courts attack the "sham" theory and claim Trusts are merely an
individual's alter ego or nominee. This is axiomatic that liability follows direct
ownership. In a true contractual arrangement, this is not separated. Legal and
equitable ownership is separated (which is a topic for another discussion) and
PAGE 116 OF 337

de facto ownership is where the I.R.S. penetrates the traditional Trust or those
Trusts which fail for substance even tho they perhaps qualify as to form.
While a Trust Indenture (contract) may be considered legal under state law,
the instrument and Trust's operation (substance) may and often do contain
defects, thus failing to comply with federal income, gift, and estate (i.e. transfer)
tax laws or provide any form of liability protection.
The moral to the story is this: Be careful with whom you engage for creating
a Trust arrangement.
PAGE 117 OF 337

AN INTRODUCTION TO THE BUSINESS TRUST

(U.B.O.)
The Importance Of Your Business

How important is your business? How important is it that your business be
well organized to offer the best protection (from liability, harassment, judgments,
etc.) and the greatest benefits? The combination of a business and a personal
estate represents the work and accumulation of a lifetime. If you are going to
spend a lifetime building a business (and accumulating an estate), protecting
and preserving that accomplishment with proper business and estate planning
should be one of your highest financial priorities.
A Basic Business Decision

Every person or group of persons planning to enter into business must
make a basic decision at the outset. This decision will determine such things as
the benefits to be enjoyed, the risks to be assumed (and shared), the problems
to be avoided (or created!), and much more (including the treatment of your
business for estate purposes). This decision concerns the form of business
organization, and it should not be made quickly or taken lightly!
There are in actuality, four (4) basic forms of business organizations (and
numerous variants). The first, and by far the most numerous, is the individual or
Sole Proprietor. According to the 1988 Annual Report of the Internal Revenue
Service, there were some 5,303,000 individual business (or Sole Proprietor) tax
returns filed for 1987. The next most common and widely recognized form of
business is the Corporation. In 1987, over 2,868,500 corporate tax returns were
filed in the United States. Of those, 892,000 were for small business
corporations. A third form of business organization is the Partnership. In 1987,
the IRS received over 1,702,700 tax returns from business partnerships.
The above three forms of business organization, the Sole Proprietor, the
Corporation, and the Partnership, are widely recognized and widely used by the
business community, their accountants, their attorneys, and their consultants.
But there is a fourth form of business organization that is also widely used, but is
not well known among business professionals: the Business Trust. In 1987,
some 2,336,000 fiduciary tax returns were filed with the IRS. A fiduciary return
(Form 1041 or Form 1041 5) is the tax return filed by a trust.
As a form of business organization, Business Trusts are not unusual. For
the average business professional (along with his attorney. his accountant.
and/or his consultant), trusts are simply unknown!
What Is A Trust?
To state it in the simplest terms, "A trust is a right of property, real or
personal, held by one party for the benefit of another." (1)
PAGE 118 OF 337

A trust, then, is a Contract in which an individual (variously called the

Settlor, Creator, Trustor, or Grantor) transfer property, either real or personal, to
one or more Trustees, to be held or managed for one or more Beneficiaries.
There are many types of trusts in use today for a variety of purposes. We
cannot examine them all, but they include Crummey Trusts, Inter Vivos Trusts
(both revocable and irrevocable), Testamentary Trusts, Generation-Skipping
Trusts, Spendthrift Trusts, Foreign Trusts, and many more.
What Is A Business Trust?

The type of trust that we want to pursue is the Business Trust. What exactly
is a Business Trust?
In order to clearly and thoroughly answer this question, we will provide
several complimentary definitions from authoritative sources. We will then
examine and explain those definitions.
"The Massachusetts or business trust, which is also called a common-law
trust, is essentially a business organization cast in the trust form. It is said to
have originated in Massachusetts to circumvent a prohibition in that state against
the organization of corporations to deal in real estate." (2)
"Modern cases support the view that a business trust is an unincorporated
business organization created by an instrument by which property is to be held
and managed by trustees for the benefit and profit of such persons as may be or
become the holders of transferable certificates evidencing the beneficial
interests in the trust estate." (3)
"The 'Massachusetts Trust' is a form of business organization, common in
that State, consisting essentially of an agreement whereby property is conveyed
to trustees, in accordance with the terms of an instrument of trust, to be held and
managed for the benefit of such persons as may from time to time be the holders
of transferable certificates issued by the trustees showing the shares into which
the beneficial interest in the property is divided. These certificates, which
resemble certificates for shares of stock in a corporation and are issued and
transferred in like manner, entitled the holders to share rateably in the income of
the property, and upon termination of the trust1 in the proceeds." (4)
"The trust is a very comprehensive institution. It is as general and as elastic
as contract. It originated and was reduced to practice under the jurisdiction of
courts by the civil law, was expanded and developed in the courts of chancery,
and has been employed in nearly every field of human activity. Of late years it
has been and is utilized in the field of commerce and trade as a substitute for the
corporation or partnership organization. Such a trust is created by the execution
of a declaration of trust by one or more trustees, to whom there has been or will
presently be transferred the property or money which is to constitute the corpus
of the trust... When the express trust is used as an agency of commerce it is
commonly known as a business trust. Because of its development and common
use in the state of Massachusetts it is often called a Massachusetts trust, and
because it finds its basis in the law of contract and does not depend upon any
statute for its existence it is sometimes called a common-law trust. It may be
PAGE 119 OF 337

stated as a general proposition that any one competent to contract may make
such disposition of the legal title to his property as he pleases, may annex such
conditions and limitations to its enjoyment as he chooses, and may vest it in
trustees for the purpose of carrying out his intention. He has the same power to
create trusts as he has to alienate the legal title to his property. " (5)
"These organizations, commonly dominated Massachusetts trusts,
originated because of the hostility of some states towards corporations, and due
to the desire of those organizing the same to secure some of the advantages
that would be secured by incorporating without incurring the burdens and
restrictions resulting therefrom.. .The chief advantage of such organizations from
the standpoint of those desirous of combining their wealth for business purposes
are that until recently they were, in most states, free from regulation, enjoyed
freedom from corporation taxation, and its members enjoyed the freedom from
personal liability that is imposed upon partners. This type of organization is
nothing more than an attempt to use the old common-law trust for the purpose of
carrying on business enterprises." (6)
Necessary Characteristics Of A Business Trust

The legal definitions given above for a Business Trust describe a flexible
and efficient business organization. "The flexibility of the business trust admits
considerable latitude in adapting the organization to unusual requirements of the
particular enterprise." (7) In fact, the Business Trust was historically such an
attractive vehicle for conducting business that John Sears1 in his authoritative
work Trust Estates As Business Companies, maintained that the Business Trust
represented "the ideal toward which much corporate legislation has strived, and
will continue to strive, in vain." (8)
But the Business Trust described in this article is not the same as the
traditional "Massachusetts-type" business trust. Due to changes in the tax laws
since the 1930s, and due to the rise of a great deal of statute law regulating
many aspects of both the corporation and the traditional business trust, the use
of the Business Trust described in this article has required several modifications
in order to achieve all of the desired benefits. A properly constructed Business
Trust of the type described in this article, established for the purpose of
operating an on-going business, must possess certain characteristics.
First, a Business Trust must be a non-grantor trust formed under the
common-law and Constitutional right of contract. (See Article 1, Section 10 of the
Constitution of the United States.) A Business Trust is often referred to as a
"common-law" trust because "it finds its basis in the law of contract and does not
depend upon any statute for its existence." (9)
This raises the distinction between "statutory" trusts (i.e., those dependent
upon a specific statute for their creation) and "common-law" trusts such as the
Business Trust described herein. Most trusts formed by attorneys today are
statutory in nature. This also distinguishes the Business Trust from the
Corporation.
PAGE 120 OF 337

"The right to be a, corporation and to exercise corporate powers, is derived

from the state. The power which creates has the power to destroy. The state has
the right to limit the period of existence of its creature, the corporation; to provide
conditions precedent or subsequent bylaws existing at the time of its creation, or
bylaws subsequently passed to destroy its existence, for such reasons as may
seem to the Legislature sufficient." (10)
The Business Trust described in this article in NOT a creature of the state or
of statute. It owes its existence to the common-law and Constitutional right of
contract.
Second, in order to have a valid contract there must be: (1) a valid offer and
acceptance of valuable consideration; (2) two or more parties involved; (3)
parties who are of legal age and competent understanding; and (4) a termination
date. Hence, upon the initial creation of the trust, the business owner must sell
specific business assets into the trust in exchange and consideration for the
"Capital Units" of the trust. In this way THE TRUST HAS NO GRANTOR! Instead,
property is exchanged in consideration of Capital Units.
Third, there can be no division of ownership (title) in the trust assets. In the
past, traditional business trusts were normally established with the trustee
holding legal title to the trust corpus and the beneficiary holding equitable title in
the form of shares of beneficial interest. (11) But due to changes in the tax laws
and in order to achieve all of the desired benefits (to be discussed below), all
evidences of ownership (both legal and equitable title) must reside in the trustee.
This form of absolute ownership by the trustee is referred to as Fee Simple. This
kind of ownership enables the trustee to manage and dispose of the trust assets
in whatever manner he may wish in keeping with the terms specified by the trust
document. Furthermore, the trust must be under the administration of an
independent, third party trustee. The trust is irrevocable, it is managed by the
trustee who may appoint officers or agents.
Fourth, the Business Trust has no "beneficiaries" (or cestui que trust) in the
traditional sense and, therefore, no "shares of beneficial interest". The trust has
only non-voting capital units which do not grant the holder any rights to control
the actions of the trustee or the activities of the trust. The unit holder stands in
the position of simply receiving any distributions made from the trust as a result
of either operations or the sale of trust assets.
Fifth, the trust must avoid those "corporate attributes" which would cause it
to be treated and taxed like a corporation under statutory provisions regulating
corporations. The four (4) "corporation attributes" are: (1) centralized
management; (2) continuity of life; (3) limited personal liability of trustees; and (4)
easy transferability of beneficial interest in the trust. If the trust possesses any
three (3) of these attributes, it will be treated as a corporation.(12) As long as a
Business Trust established to operate a business does not have the "attributes"
of a corporation (or an old-style Massachusetts-type trust) it will not be treated or
taxed like a corporation.
A Business Trust of the type described herein is referred to as a "Pure
Trust" or a "True Trust".
PAGE 121 OF 337

Why Use A Business Trust?

In general terms, a Business Trust will provide benefits and flexibility not
available with other forms of business organization. As a result, it is finding some
new and contemporary uses. An article in the Wall Street Journal (June 20,1988,
p.20) illustrates one of the many uses of a Business Trust. Media mogul Rupert
Murdock was confronted with a legal hurdle in owning both a newspaper and a
television station in the same market. He solved the problem by placing the
station into a business trust. By so doing, Mr. Murdock divested himself of legal
ownership while retaining effective control of the assets (by means of conditions
stipulated in the trust document). Mr. Murdock also retained all of the benefits
derived from the profitable operation of the trust since his News Corporation was
the trust's named "beneficiary" (holder of its Capital Units).
In further indication of the growing interest in business trusts, the State of
Delaware recently up-dated its statute regarding such trusts. On June 21,1988,
the Delaware General Assembly passed Senate Bill No.355 which amended Part
V, Title 12, of the Delaware Code by adding a new chapter entitled "Chapter 38.
Treatment of Delaware Business Trusts". According to the bill's sponsor, the
banking community within the State of Delaware was a major supporter of the
legislation.
The proper design and use of a Business Trust will provide at least four (4)
important and specific benefits.
ORGANIZATION. A Business Trust will provide an effective and efficient
form of business organization, very similar to a corporation (withou~ the above
mentioned corporate attributes) and far better than either a sole proprietorship or
a partnership (and better than most small corporations, especially closely held
ones).(13)
LIABILITY PROTECTION. The proper design and use of a Business Trust
will provide a high degree of professional liability protection. It is a fact
established at law that "The beneficiary of an ordinary trust is not personally
liable to third persons for torts committed by the trustee." (14) With a Business
Trust, potential liability claims are limited to the assets of the trust. This protection
can be enhanced by separating high-risk assets, equipment, or processes into
separate trusts and then leasing the assets back from the trust. Furthermore, the
assets of a Business Trust are exempt (in the absence of a fraudulent
conveyance within one (1) year prior to a bankruptcy) from the claims and
actions of personal creditors.
TAX MANAGEMENT. A properly designed and operated Business Trust can
provide the ability to control, manage, and limit both estate tax and current tax
liabilities. For example, the 1988 Social Security Handbook states (on page 180,
paragraph 1115) that, "A beneficiary of a trust which operates a trade or
business is not engaged in the trade or business because the trust rather than
the beneficiary is engaged in the activity." This means that a trust beneficiary (or
the holder of Capital Units) who receives income as a k-i distribution rather than
as W-2 wages will realize a current (1989) tax savings of 13.02% on Self-
Employment tax (or 15.02% on the combined corporate rate). Since many
PAGE 122 OF 337

business operators pay out more in personal Social Security tax than in personal
withholding (because it is normally computed on net business income before
personal deductions) this can constitute a significant savings!
Furthermore, a properly designed and operated Business Trust is not
subject to the corporate tax on dividends. According to the Internal Revenue
Code, a SimpIe Trust that is required to distribute all of its income each year is
allowed to treat such distributions as a deduction to the trust1 resulting in no
taxable income to the trust (the K-1 recipients will be required to declare the
income as a taxable income on their personal returns).15 This provides a
significant advantage over a corporate structure.
ESTATE PLANNING. A Business Trust will provide important estate
considerations. Because the business and its assets are owned (in Fee Simple,
both legal and equitable title) by the trustee, there is no probate, no transfer of
ownership, no disclosure of assets (i.e. privacy is maintained)1 and no estate
taxes. The business itself may continue uninterrupted with a successor
operator/manager/agent appointed by the trustee (including a surviving spouse,
children, or a hired employee).
The Capital Units of the trust are regarded as intangible personal property
and are transferable for estate planning purposes. Should a decision be made to
liquidate or sell the business, all proceeds would be payable to the Capital Unit
holders. Because a business and its assets can form a large part of an estate
(and therefore a significant contributor to eventual estate taxes) the value of a
Business Trust in both business and estate planning quickly becomes obvious.
How To Use A Business Trust

SOLE PROPRIETORS AND PARTNERSHIPS: These two forms of business
basically represent individuals in business for themselves with little or no
protection, organization, or benefits. A sole proprietor or a partnership could sell
all of the business assets to a trust in consideration for non-voting Capital Units.
Such assets, in a simple situation, could include business inventory, business
equipment (computer, photocopier, desk, etc.), a business vehicle, and even
business contracts (excellent for anyone receiving 1099's as an independent
contractor). The business would now be operated as a Business Trust under
contract with the Independent Trustee.
CORPORATIONS: A popular form of business organization among
professionals such as physicians, dentists, chiropractors, attorneys, CPAs,
insurance brokers/agents, and other professionals is the Professional Service
Corporation. These are usually small to medium sized businesses and are
usually closely held (i.e., no publicly offered shares). We could include in this
group many other small to medium size professional corporations such as Sub-
Chapter S corporations, that are closely held. In terms of professional liability
protection, estate planning, and tax management, this form of business
organization offers very limited benefits. How could such corporations utilize the
Business Trust?
PAGE 123 OF 337

First, the corporation could divest itself of all real estate/property (if, for
example, it owns the building in which it resides) be selling the property to a
Business Trust in exchange for Capital Units, and then leasing the property from
the trust. As the holder of the Capital Units, the corporation would receive any
benefit derived from the profitable leasing operation of the trust.
Second, the corporation could divest itself of all business equipment and/or
office equipment, by selling such equipment into another separate trust, again in
consideration for its Capital Units, and then leasing the equipment from the trust.
A physician, dentist, chiropractor or other medical professional, for example,
might place all professional equipment (x-rays, ultra-sounds, microscopes, lab
equipment, examination tables, etc.) into a trust for leasing business equipment.
He might then place all other office equipment (desks, typewriters, computers,
fax machines, filing cabinets, etc.) into a separate trust for office equipment.
Finally, the corporation itself could continue to function, receiving payments,
hiring employees, paying bills, etc., but would own few assets (the usual targets
of liability proceedings), leasing its necessary property and equipment from the
various independent trusts. Profits generated by the trust through its leasing
operations would be passed through to its Unit Holders, either the corporation or
the principal who owns it. For its part, the corporation would not own any legal or
equitable title in the trust or exercise any voting rights or control over the trustee
or the activities of the trust.
Flexibility For Business And Estate Planning

The process of separating and divesting assets can be as simple or as
expansive as required by each particular business situation. A sole proprietor,
partnership, or a sole professional operating as a corporation might require only
a single trust. But a dry cleaning business with several locations and a small
fleet of vehicles might need to place each location into a separate trust. A hotel,
for example, might consider placing the bar, restaurant, pool area, and even its
parking lot each into separate trusts (a strategy in liability management that has
been very successful) as a means of either protecting an asset or separating
and isolating a potential liability.
In addition to the business planning aspect, the business person could
carry this process of separating and protecting assets even further by placing
personal assets into other trusts as part of a total estate planning strategy. This
could include a land trust (commonly referred to as an Illinois Land Trust) for
houses, property, or other real estate (or notes and mortgages secured by real
estate), and a living or "inter vivos" trust for other personal property. The use of
the Business Trust along with the land and living trusts contributes significantly to
overall estate planning since such trusts are unaffected by the death of a
beneficiary and since the shares of beneficial interest are transferable as
intangible personal property.
PAGE 124 OF 337

Who Can Use A Business Trust?

In reality, the list of individuals and businesses that could benefit by using a
Business Trust structure is virtually endless. Any business, regardless of its
nature, size or current form of organization is eligible to operate as a Business
Trust (for example, the Fidelity Magellan Fund, the largest mutual fund in
America, was re-organized as a Business Trust on October 1,1984).
The following is a short list of candidates for a Business Trust:
All Sole Proprietors and 1099 Independent Contractors
Accountants and CPAs
Manufacturers
Doctors
Dentists
Chiropractors
Attorneys
Insurance Brokers/Agents
Day Care Operators
Hotel/Motel Owners
Franchise Operators
Multi-Level Sales People
Any Self-Employed Business Person
Any Business Owner
Property Managers
Real Estate Rental Agencies
Rental Apartment Building
References
(1) John H. Sears, Trust Estates as Business Companies, 2nd edition
(Kansas City, Vernon Law Book Company, 1921), p.1, paragraph 1.
(2) 88 American Law Reports, 3d, 711, paragraph 2; see also 13 American
Jurisprudence, 2nd, 375, paragraph 1:156 American Law Reports, 27.
(3) 88 American Law Reports, 3d, 711, paragraph 2.
(4) Hecht V. MaIley, 265 U.S. 144. An important U.S. Supreme Court
decision (1923) acknowledging the legal validity of a Business Trust and defining
it in legal terms.
(5) Schumann-Heink V. Folsom, 159 North Eastern Report 250; 328 Illinois
321. A 1927 decision by the Illinois Supreme Court acknowledging the validity of
the Business Trust and defining it in general terms.
(6) Goldwater V. Oltman, 292 Pacific Reporter 624. A 1930 decision by the
California Supreme Court regarding the nature and validity of the Business Trust.
PAGE 125 OF 337

(7) 13 American Jurisprudence, 2d, 389, paragraph 13.

(8) Sears, Trust Estates As Business Companies, page 7, paragraph 3.
(9) Schumann-Heink V. Folsom, 159 North Eastern Reporter, 250; see also
13 American Jurisprudence, 2d, 375, paragraph 1 and also note 4 regarding the
common-law status; see also 13 American Jurisprudence, 2d, 388, paragraph
13.
(10) City of New York V. Brvan, 130 Appellate Division 658 (1909), 115 New
York Supplement 551, as quoted in Sears, Trust Estates, page 5, paragraph 13.
(11) Sears, Trust Estates, page 1, paragraph 1, "It implies two interests, one
legal and the other equitable; the trustee holding legal title or interest and the
cestui que trust or beneficiary holding the equitable title or interest." See also
156 American Law Reports 102, paragraph 2, "Where (as is usually the case)
the legal title to the trust property is vested in the trustees, the shareholders have
an equitable interest in the property."
(12) The most extensive treatment of corporate characteristics as they
apply to trusts is found in Outlaw v. United States, 494 F.2d, 1376-1386; see also
Morrisey v. Commissioner, 296 U.S. 3~4-362.
(13) 13 American Jurisprudence, 2d, 379, paragraph 5, "One of the
objectives of business trusts is to obtain for the associates most of the
advantages of corporations, without the authority of any legislative act and with
the freedom from the restrictions and regulations generally imposed by law upon
corporations."
(14) 13 American Jurisprudence, 2d, 405, paragraph 35; see also page
430, paragraph 68; and 156 Amenican Law Reports 113, paragraph 3. "It has
been held that public policy is not offended by permitting a business to be carried
on by trustees who limit their liability to the trust estate, nor under the prevailing
view, do statutes authorizing limited liability partnerships and corporations by
implication prohibit the creation of other types of organizations, such as business
trusts, enjoying similar immunity by virtue of the common law." 13 Amenican
Jurisprudence, 2d, 380, paragraph 6.
(15) SRegarding the tax treatment of trusts that distribute current income
only, see Internal Revenue Code Section 651 which reads (in part):
"SEC. 651. DEDUCTION FOR TRUSTS DISTRIBUTING CURRENT
INCOME ONLY.
(a) Deduction.-- ln the case of any trust the terms of which-
(1)provide that all of its income is required to be distributed
currently, and
(2) do not provide that any amounts are to be paid, permanently set
aside, or used for the purposes specified in section 642(c) (relating to
deductions for charitable, etc., purposes), there shall be allowed as a
deduction in computing the taxable income of the trust the amount of the
income for the taxable year which is required to be distributed concurrently."
Regarding the tax treatment of trust income received by beneficiaries, see
internal Revenue Code Section 652, which reads (in part):
PAGE 126 OF 337

"SEC. 652. INCLUSION OF AMOUNTS IN GROSS INCOME OF

BENEFICIARIES OF TRUSTS DISTRIBUTING CURRENT INCOME ONLY.
(a) Inclusion.--Subject to subsection (b), the amount of income for the
taxable year required to be distributed currently by a trust described in section
651 shall be included in the gross income of the beneficiaries to whom the
income is required to be distributed, whether distributed or not."
PAGE 127 OF 337

OFFSHORE BUSINESS, FINANCE, AND CREDIT -

THE SIMPLE WAY
Offshore business opportunities, banking, and credit cards have

traditionally been shrouded in a cloak of secrecy, leading many misinformed
citizens throughout the world to actually believe commerce, banking, and credit
within the friendly confines of an offshore haven is either illegal, or merely, a
benefit afforded to the truly wealthy, when nothing could be further from the truth.
If used properly, the luxury of offshore activities is not only legal, but also
provides the common man with a means for protecting his assets from nasty
creditors, and a universe of Peeping Toms, by taking advantage of the absolute
privacy statutes that are at the heart of many offshore havens.
Did you know that one out of two U.S. marriages ends in divorce... That
nearly 60 million lawsuits are filed in the U.S. annually... That over $2.5 Trillion is
now invested in asset protection trusts... That most Fortune 500 companies go
offshore... Or that 50 of the world's top 100 banks have offices in the Caribbean?
Once taking the plunge into the previously unknown world of international
business and finance, an array of fresh opportunities, ranging from the ability to
reduce and/or defer taxation, the prestige of having and using major credit cards
from offshore banks, all the way to investing in the exploding global marketplace,
will become part of your new horizon.
Just imagine banking without government imposed numbers attached to
your account! No Social Security or E.I.N. Numbers are required! The offshore
banks we work with do not report your banking activity to anyone nor any
government. You are solely responsible for reporting your income in accordance
with applicable laws.
PAGE 128 OF 337

THE NEW COLOSSUS? OR PRIVACY: GONE WITH

THE WIND?
BY MEL LEVINE
"Give me your tired your poor,
Your huddled masses yearning to breath free
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
Emma Lazarus (1849-1887)
I assume most of you recognize these stirring words, written by Emma

Lazarus over one hundred years ago, and forever inscribed on the Statue of
Liberty, sitting in the mouth of the Manhattan harbor, a message to millions of
immigrants, assuring them they had finally reached a safe haven, a home where
they can live and breath free, secure in the knowledge that they can pursue an
honest living within an atmosphere of freedom and unlimited privacy. In fact,
each and every American's right to privacy was guaranteed by our Bill of Rights,
and the First Amendment to the Constitution, which granted freedom of speech,
also implicitly implying that our inalienable right to privacy be protected against
the prying eyes of anyone --- even those of government.
My how things have changed in the last century with the passage of so
many laws and court decisions directed at exposing our financial affairs to just
about anyone in need of some spicy information, including litigants, creditors,
prospective heirs, business competitors and associates as well as government,
leading me to conclude that this once inalienable right, that is, the right to
privacy, is now Gone With the Wind.
Unlike the majority of narrow minded and uninformed Americans who
believe that the use of offshore bank accounts is solely within the province of
drug runners, mobsters with names similar to Vito Corleone, money-launders,
tax evaders, and other assorted trash, the astute and well informed individual
understands that banking, as well as, conducting business offshore is extremely
beneficial to legitimate, law-abiding citizens and corporations without even the
slightest intention of engaging in any unlawful activities, but instead, merely
seeking to take advantage of another nation's more liberal laws. In fact, it is not
the aim of this newsletter, to ever encourage anyone to violate any rule,
regulation, statute, etc. of the United States. Much to the contrary, this
publication is only intended to enlighten subscribers as to the existence of an
entirely different world --- one, which is entirely legal.
There are many advantages to opening up an offshore bank account which
are outside the strict confines of this article including:
PAGE 129 OF 337

Legitimately reducing taxation

Protection of assets
Opportunities to profit from international investing
Diversification of portfolio
Advantageous interest rates for both borrowing and lending
Relaxed environment for conducting business
However, an individual's right to privacy is certainly one of the more
attractive features traditionally offered through offshore banking. Yet, why is this
so important --- especially in times such as these? Let's begin our short analysis
with your own bank --- you know, the financial institution, which is supposed to
strictly guard your financial privacy. Clearly, in one respect, bankers are ethically
committed to maintaining the confidentiality of the financial affairs of its
depositors. In fact, some states prohibit all but extremely reasonable disclosures.
Yet, in this new world of business, including credit cards, credit checks, and
wholesale litigation, the nation's banks are overwhelmed on a daily basis with
requests from businesses, individuals and law enforcement, all wanting
information on its depositors --- including you! Of course, the release of this
information is considered a courtesy to a depositor, and a bank could always
refuse to volunteer information to the private segment of industry if not armed
with a subpoena (which is generally the case with any litigation)---but does the
same hold true for Uncle Sam? Hardly.
In 1970, the United States Congress passed the Bank Secrecy Act, which,
among other provisions, mandates all U.S. banks to maintain duplicate records
of their customer's financial transactions, the law intending to insure that details
of EVERY banking transaction would be FOREVER available to the government.
Included in these provisions is the requirement for a bank to make a microfilm
(or similar reproduction) of each check, draft, or similar instrument drawn upon it
or presented to it for payment, as well as making a record of each check, draft,
or similar instrument received by it for collection. When the constitutionality of the
law was attacked in U.S. vs. Miller, the Supreme Court, in upholding the law
wrote in part that, "bank customers whose records are sought by government ---
for whatever reason --- have no right to (expect) that access is controlled by an
existing legal process." However, even assuming that the government would not
abuse the awesome power granted by this new law, the result was no less
devastating within the private sector. Specifically, though still needing a
subpoena, private litigants achieved unparalleled access to their adversary's
most sensitive records. Perhaps of even more importance was this loss of
banking secrecy trickled down to even those individuals not directly connected
to a legal case, it now being just a routine matter to subpoena "third party"
banking records, despite this individual not even being involved in the litigation.
Thus, if A sues B, and C does business with B, then A, can subpoena many of
C's financial records, to help make his case against B, though C doesn't have a
thing to do with the matter.
Under a tremendous amount of pressure to temper part of the unlimited
power given to government under the Bank Secrecy Act, Congress in 1976, as
PAGE 130 OF 337

part of the Tax Reform Act, gave bank customers the right to challenge attempts
by the Internal Revenue Service to seize bank records. However, this provision
did little, the law providing the IRS the opportunity to sidestep this requirement by
merely alleging the records needed belong to an individual or entity suspected of
a crime. In 1978, The Financial Privacy Act, portended to give U.S. citizens more
protection by requiring the Federal government to notify an individual or entity
beforehand, providing the opportunity to challenge the search. However, anyone
experienced in this regard understands that any challenge is, more or less, futile,
it being more accurate to say that this law only required the customer to be
notified of the search.
Without wanting to beat a dead horse, it is, of course, common knowledge
to most Americans that U.S. banks must maintain records on all cash
transactions (deposits and withdrawals) in excess of $10,000 and credit
transactions over $5,000.
I would guess that many individuals might conclude that if one has nothing
to hide from the government --- then these provisions have little bearing on them.
But is that really true? Frankly no, because all of these provisions aimed at
eroding the confidentiality between the U.S. bank and the customer become
powerful weapons in the hands of litigants, swindlers, dishonest promoters, gold-
diggers, as well as a wealth of other assorted parasites just looking to get their
hands on your money. In fact, anyone can just about find out what you're worth. I
doubt if many of you know this, but one private company, International
Intelligence Network Corp. monitors an individual's personal and financial data
for private institutions as well as certain State and Federal agencies, and even
conduct "Public Information and Asset Tracking" seminars, teaching attendees
how to obtain 50 different financial facts on anyone ---- and this, with only
searching public records.
So, where does this lead us?
Offshore banks have become the best way to protect privacy, this being
accomplished in two ways. First, offshore banks are subject to domestic bank
secrecy laws which keep bank records completely protected against both the
government and private parties, and next, blocking statutes absolutely prohibit
the disclosure, copying, inspection or removal of documents --- even when
subject to an order from a foreign court. These statutes even effectively prevent
the taking of depositions or the subpoena of witnesses within the safe haven.
This guarantee of privacy extends to any of your agents, employees, directors,
customers, etc. involved with your offshore banking affairs. It is illegal for an
offshore bank to violate these secrecy laws, these safe havens imposing strict
penalties on bankers, including imprisonment up to ten years. Thus, in essence,
depositing your money in an offshore account with strong secrecy laws protects
all of the following:
Banking transactions and records
Books and records between yourself and professional advisors
Correspondence between yourself and professional advisors
Records of transactions and communications with common carriers
PAGE 131 OF 337

Again, I am not suggesting in even the remotest terms that an individual

should seek the absolute privacy protection afforded by offshore banking as a
means to engage in any illegal activity. Yet, I am suggesting that if you are an
honest person concerned about your financial affairs becoming an open book to
any number of unscrupulous or unsavory individuals who want to know what
you're worth, then offshore banking is a means to preventing the free-flow of this
information to those prying eyes. And, why shouldn't this be so? After all,
America has always been the cradle of freedom, where the right to privacy is
part of any citizen's inalienable rights.
PAGE 132 OF 337

WORLDWIDE INVESTING: USING YOUR

OFFSHORE BANK ACCOUNT AS A SWORD
BY MEL LEVINE
"I met a traveler from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert? Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed:
And on the pedestal these words appear:
My name is Ozymandius, king of kings:

Look on my works, ye Mighty, and despair!?
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away."
Ozymandius-Percy Bysshe Shelley (1792-1822)
"Never put all your eggs in one basket"

Anonymous (since the dawn of time)
I am not here to suggest the United States is on the brink of total financial
ruin, in which some time in the near future, travelers reaching our shores will
look upon the rubble of a once great economic empire, uncovering decaying
monuments built to ourselves, proclaiming our self-endorsed supremacy as the
leaders of mankind - but, I am suggesting you heed caution in your future
financial dealings --- because, did you know that:
The United States, clearly once the leading industrial nation in the world,
now lags behind in many major industries including automotive, textiles,
computers and electronics.
The United States, though still supporting many nations, is no longer
considered the world's banker. Much to the contrary, we are now a debtor nation,
wherein our balance of trade is tenuous and our national debt grows
PAGE 133 OF 337

exponentially, despite all recent attempts to formulize a plan to balance the

budget.
In 1970, the United States literally controlled over 50% of the world's
economy, yet now control less than 33%, with recent estimates indicating that by
the new millennium, the U.S. will control less than 20%.
Over the last 25 years, the United States Dollar was outperformed by the
currencies of 15 different countries, including the Swiss Franc (245%), Japanese
Yen (182%), West German Mark (150%), Austrian Schilling (150%), Dutch
Glider (120%), Singapore dollar (75%), Luxembourg franc (58%), Belgian Franc
(57%), Taiwanese Dollar (50%), as well as the Maltese Liva, Rwandan Franc,
Gatar Riyal, United Arab Emirates Dirharn, Libyan Dinar, and Bahrain Dinar.
Over the last decade, top-rated foreign investments have grown
substantially faster than comparable U.S. investments.
Over the last decade, some overseas stock markets have out gained the
Dow Jones by over 200%.
What does this all mean? Only that though still strong, America's economy
is shaky, which translates into the following: If an individual's wealth is invested
100% within the United States, and our economy continues to be out performed
by other nations, then, clearly your personal standard of living must fall as a
direct consequence. All of this supports the logical supposition to invest at least
part of your liquid assets offshore, seeking to achieve the safety and stability
which comes through diversification. As a citizen, no law prohibits you from
investing in foreign bonds or overseas corporations, and, of course, as you
know, it is not a crime to open up an offshore bank account. In making this
decision, I am not advising anyone to plunge straight-ahead into uncharted
waters without fully understanding the overseas marketplace as a whole. Once
again, I am only advocating a modest starting point, perhaps consisting of
investing a limited amount in an international mutual fund, or buying shares in
several leading overseas corporations. Alternatively, just opening up a bank
account in an offshore haven is a step in the right direction.
As one might anticipate, the Federal government discourages international
investing by its citizens, making these investments less attractive to investors.
Actually, U.S. Security law is the biggest obstacle to foreign investing by
Americans, since it requires any investment contracts sold within the States to
be registered with both the Security and Exchange Commission and the state
where it is sold. These requirements, however, are quite expensive to foreign
mutual funds, and accordingly, few of these will invest the time and expense
necessary to comply with the restrictive regulations. Thus, the only way for
Americans to legally circumvent these tedious obstacles is through purchasing
these international mutual funds through offshore bank accounts, international
companies or business trusts.
So, why keep all your eggs in one basket? Once your offshore bank
account is in place, you owe it to yourself and your family to, at the very least,
find out about the attractive yields just sitting out there waiting for you.
PAGE 134 OF 337

OFFSHORE MUTUAL FUNDS: HOW DO WE TAX

THOSE SUCKERS?
BY MEL LEVINE
Offshore mutual funds are generally classified either as accumulative or
roll-up funds. Under U.S. income tax law, the mutual fund itself avoids taxes on
its own income and capital gains by distributing annually its profits to
shareholders who are then taxed on their distributive share of earnings. Offshore
funds can generally retain and compound their income and gains, so while taxes
reduce a U.S. citizen's investment each year, overseas investors enjoy tax
deferred investments, the result being their portfolios accumulate more quickly.
Prior to 1986, the Federal government taxed U.S. shareholders with foreign
investment funds the same way foreign governments taxed their own citizens.
Specifically, taxes were paid only when the shares were redeemed. Subsequent
to 1986, in an attempt to fund our tax coffers, the U.S. deferred taxation of
international mutual funds only when 50% or more of the shareholders in the
fund were foreigners.
However, once again, all of this has changed. Under present law, there are
only two ways to circumvent the international mutual fund problem. First, a U.S.
citizen could invest in a qualified electing fund that elects to tax its shareholders
annually on its earnings. Obviously, few offshore funds make this election
because their stockholders would automatically lose the big benefit of tax
deferments, and the foreign fund would be no different than its American
counterpart. The other alternative is to elect to defer taxes until you redeem your
shares. However, Uncle Sam exacts a price for this, requiring the investor to pay
both the regular tax plus a penalty tax (interest for not paying taxes on the
income and gains in the year actually earned). This disadvantage discourages
many U.S. citizens from investing in offshore mutual funds - but it really
shouldn't. Even given the interest charge (3% greater than the Federal short-
term borrowing rate) since the tax is not generally due until after the shares in
the mutual fund are redeemed (or an excess distribution is received by the
shareholder), the benefits of a high-yielding international mutual fund,
compounding tax free generally substantially outdistances the extra penalty tax,
especially if the fund is held a long period of time.
Indirectly, there are a few other methods to circumvent taxation on your
international mutual funds including owning your fund through a non-controlled
foreign corporation with substantial non-subpart F income; not redeeming your
shares at all, instead passing them on to your heirs whose tax basis in the
shares will be their market value at your date of death; or even, owning your
mutual funds through an offshore trust throughout your lifetime.
Remember though, when dealing with the subject of taxation, reading a
newsletter is no substitute for seeking the professional advice of your tax
PAGE 135 OF 337

attorney or certified public accountant, always keeping in mind that under all
circumstances, it's imperative to always comply with U.S. law.
Did You Know That Over 50,000,000 lawsuits are filed in the United States
each year which means the odds of you facing some sort of litigation in the next
several years are better than one in five!
And, if this doesn't get your attention, you must know that more than 50% of
all marriages end in divorce!
Both of these facts giving you all the more reason to look into using your
offshore haven for IRON-CLAD ASSET PROTECTION.
PAGE 136 OF 337

A LAND PATENT
What Is A Land Patent?

Essentially, a Land Patent is the first conveyance of title ownership to land
which the U.S. Government grants a citizen who applies for one. One of the
earliest laws for granting Land Patents was passed by Congress on April 24,
1820. Among other things, Congress set up Government Land officers, now
known as the Bureau of Land Management. Land was usually sold in parcels of
160 acres for $1.25 per acre. The law in 1820 prohibited the borrowing or use
of "credit" for the purchase of government land. In the debates in Congress prior
to passage of this act, Senator King of New York said in March 1820 ... "it was
calculated to plant in the new country a population of independent
unembarrassed freeholder ... that it would place , in every man, the Power to
Purchase a freehold. the price of which could be cleared in 3 years... that it
would cut up speculation and monopoly ... that it would prevent the
accumulation of alarming debt- which experience proved never would and
never could be paid". Later on, in 1862, a Homestead Act stated in Section 4:
"That no lands acquired under the provisions of this act shall in any event
become liable to the satisfaction of any debt or debts contracted prior to the
issuing of the patent therefor".
It can be clearly seen that the intent of these early lawmakers was for the
people of this country to be FREEMEN AND FREEHOLDERS of their land, and
not ever be subject to have it taken from them by any government, feudal
authority or banker or any other party who might have a claim against the
person who owned the land. In plain english, a Land Patent which gave you an
allodial freehold, that was "judgement proof and yes- even immune from tax
liens. In [60] effect, the only authority over you or your land was GOD himself. In
England, a man, who owned free from authority of the king, was known as a
freeholder and his land as a freehold or allodial freehold. Most land patents in
the U.S. were issued prior to 1900. However, even today, new land patents
continue to be issued, mostly for gas, oil and mineral rights on public lands. For
this reason, there are several land offices that remain open in the United States.
What Is The Value Of A Land Patent?

On the basis of all the case law I have seen, there is no doubt in my mind
that a land patent issued by the Bureau of Land Management which gives you a
title at law is far superior to any title acquired in equity. such as a sheriff's deed.
The land patent will, therefore, prevent your ejectment and removal from the
land or the property you occupy on the land. The debts or claims of other
parties will remain, but the land will be removed from assets which they can
attach. The law is on the books today which says that any debts, which lie
against the land, that existed prior to the land patent being issued, are removed
from the land. The next question is; if the land patents were issued 100 or
PAGE 137 OF 337

more years ago to persons who are no longer alive, and if I now reside on
only a portion of the land that was originally described in the original land
patent, then how do I bring up the land patent in my name? And if I bring it up
in my name, will it remove the land as security which the Bank or Mortgage
Company can sell and seize in a foreclosure action? [61]
Declaration Of Land Patent

The procedures which I will describe are not time tested, as they have not
worked their way through the U.S. Supreme Court. This does not mean that
these procedures will not ultimately be successful. Any basis for a legal
approach must be supported by a legal theory. We already know and can
substantiate that an original land patent will protect your land from any equitable
or collateral attack. However, we do not know for certain that the existing
procedures will vest in us the same rights and immunities by filing a
DECLARATION OF LAND PATENT, and updating it in your name. However,
since there is little to lose and possibly much to gain, it would be wise to file a
DECLARATION OF LAND PATENT, in the future event that it is sustained.
The theory is based on two premises. First, in the original land patent, that
was granted, lets say 100 years ago the land patent document itself says that
this patent is granted to the original party AS WELL AS TO THEIR HEIRS AND
ASSIGNS. While most of us are not heirs, ARE NOT WE ALL ASSIGNS? Since
land patents were originally issued, nearly all conveyances of title were done
by the use of deeds, like Quit Claim Deeds and Warranty Deeds. However,
the money lenders found a way around land patents by creating, new paper
instruments like deeds of trust and mortgages, all of which convey equitable
interests. However, the land patent its remains the highest title at law, and few
persons have updated a land patent in their name. Where a land patent exists,
no lien or mortgage could be ever placed on the land. Since the intent of the
lawmakers is the law, historic evidence shows that our founding fathers wanted
us to own the land [62] in its entirety, and subject to the claims of no other man
or government or other institution. Because the laws were passed by
Congress setting up Land Offices to grant land patents, the best jurisdiction in
which to raise these issues are the Federal Courts.
In the Declaration of Land Patent, we then declare that we are the
ASSIGNEE'S of the original land patent, even though we may be 2nd,..3rd, 4th,
etc., after the party to whom the original patent was issued. TO LET YOU
KNOW HOW SERIOUS THE FEDERAL GOVERNMENT IS TAKING THESE
DECLARATIONS OF LAND PATENTS, Don Walker has recently stated: "That
in Illinois, he personally knows of a farmer who applied for a $500,000 loan and
was told by the Federal Land Bank that it would be granted if he removed his
Declaration of Land Patent. Also, the FLB is now itself applying for and filing
Declarations of Land Patents on farms it is "foreclosing on". We have also
learned that oil, gas and coal companies are filing these declarations on land
already titled in their name through deeds. Also, Dennis Schlueter of Fort
Collins, Colorado has stated: he knows of banks who are foreclosing on
mortgages, that are then filing these DECLARATIONS OF LAND PATENTS on
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the property that they just foreclosed on. Now if these land patents were
worthless pieces of paper, then why is everybody jumping on the bandwagon?
After the review of several different land patents, the one enclosed in this
paper is, considered the one that best sums up what is to be said. [63]
The one major pitfall, that must be avoided, is that when filing the
declaration of land patents, do not place the same legal description in the
declarations that was in the original land patent issued by the Bureau of Land
Management. What this does is cloud the title to the property of other persons
who are living in properties that are part of the legal description of the original
land patent. As a result, several lawsuits were filed to quiet title. To prevent this
from happening, you must write in your Declaration of Land Patent only the legal
description of the property to which you are an assignee. In other words, the
legal description from your deed or abstract is what you must use. For this
reason, the enclosed Declaration of Land Patent has in it, adequate language
for this purpose. A Declaration of Homestead should be attached to your
Declaration of Land Patent, but the legal description in your Declaration of
Homestead must be 160 acres or less to comply with Federal Law on filing
Homesteads. Along with the declaration of Land Patent and the Declaration of
Homestead is a certified copy of the original land patent which you can obtain
from your nearest land office. These papers are all stapled together and filed in
either your County Recorder's office or with the Register of Deeds.
DO NOT SEND CHECKS. SEND MONEY ORDERS ONLY / MAKE
PAYABLE TO: Bureau of Land Management
After you receive your copy of the original Land Patent or Land Grant,
then staple it to a Declaration of Land Patent and file it in your County
Recorder's office or Register of Deeds. You now have your allodial title. If you
haven't filed a Declaration of Homestead, then you should do so and attach it to
your Land Patent. You may file a Declaration of Homestead on up to 160 [64]
acres, but not more. A Declaration of Homestead can only be filed on property
that you actually live on. A Land Patent can only be filed on property that has
been assigned to you. You don't file one on your neighbor's property or they can
sue you for slandering his title.
A Declaration of Homestead should be filed whether or not you file a Land
Patent. It may be filed with, before, or after your lawsuit is filed. Both Land
Patents and Declarations of Homestead must be Notarized. A sample of both
are enclosed. Make photocopies of both before using them or you may retype
your own.
After your Land Patent is filed, you must send a photocopy by Certified Mail
Return Receipt Requested to your bank or mortgage company, FLB, FMRA,
PCA, etc and to any and all parties that may have an equitable interest in your
property so they have been placed on NOTICE that you are updating the Land
Patent in your name and they will have 60 days to challenge your claim to your
allodial title in a court of law or forever keep their silence. Be sure to keep your
green tickets when they come back.
PAGE 139 OF 337

GIVING NOTICE IS A BASIC PRINCIPLE OF LAW. WHEN THE

GOVERNMENT LAND OFFICES ORIGINALLY ISSUED THE LAND PATENTS,
THEY PUBLISHED THE LAND PATENT WITH LEGAL DESCRIPTION FOR 60
DAYS: WHEN NOT CHALLENGED BY ANYONE, THE LAND PATENT WAS
THEN GRANTED. AN ALTERNATIVE WAY TO GIVE THE OTHER PARTY
NOTICE IS TO PUBLISH A "NOTICE OF DECLARATION OF LAND PATENT" in
a legal publication in your county of residence.
Include the legal description on your property in the ad with this warning: "If
any party having a claim, lien or debt or other equitable interest fails to file a suit
in a court of law within 60 days [65] from the date of filing or on (insert date),
then they shall waive all future claims against this land and it will become the
property and allodial freehold of the Assignee to said Patent. (your name -
Assignee)
Questions And Answers

Q. Why must we give the other side 'NOTICE'?
A. Giving NOTICE is a basic principle of common law. If someone was
going to file a claim against property that you thought was yours, would you not
want to be given NOTICE? if they fail to file a suit in court within the 60 days, the
case is substantially weakened if they file it later. Also, filing the Land Patent is
an excellent diversionary tactic, since the focus of the court battle shifts to who
has the best title. Remember, you are an Assignee to that original patent, and
your claim is valid. The U.S. Government signed a contract granting that Land
Patent to the original party, their heirs or assigns. YOU ARE AN ASSIGNS to all
allodial title or freehold. The original contract does not specify any expiration
date. it is still in force. If the original land patent is immune from equitable or
collateral attack, then so is yours.
Q. Where can I find more case law on Land Patents?

A. At your local library at your courthouse or university. Look up the
Supreme Court Digests [66] on Land Patents, also a set of books called 43
USCS 17. Also books on State Law Digests. Look underthe section on Land
Patents. There is also material in Bouvier's Law Dictionary. Also look under the
term "Bureau of Land Management". You will also find many court cases and
related documents on the DCS computer system, especially in the directories:
Law Pre1868 - Supreme Court Cases
Post 1868 - Supreme Court Cases
9th US Circuit Court of Appeals
Q. Why send the Bureau of Land Management $20.00?

A. This is the approximate cost for most copies of the original patents. This
includes $4.25 for the patent plus a search fee. A copy of the County Plat map
makes it easier for them to locate the patent or grant. In your letter, BE SURE
TO ASK FOR A CERTIFIED COPY. You should receive it in 4 to 6 weeks.
PAGE 140 OF 337

Who Does Your Land Belong To?

While it is generally believed in America today that the purpose of the
American revolution was to resist taxation without representation. The primary
reason for the revolution was to deliver America's Land Titles out of the hands
of Great Britain and return them to the people. It was assumed by many, before
the Revolution, that England rightfully "owned" America. It was because of this
assumption that she gave grants of land to supportive Colonists, then taxes
the Colonists as subjects. But, the patriots, of that day, insisted that the King of
England did not own the land ... so it was not his to grant. After the Revolution,
the land became the property of each [67] State's people, with the authority in
the people to parcel out the land to claimants in a fair and equitable manner. If
some land remained unoccupied, Jefferson said: that anyone occupying it had
possession, the right of ownership, land title, was then to be held by way of
ALLODIAL TITLE. That simply meant that there was "No Superior" to the land
owner. He was the Superior, the Sovereign on his land.
To encourage railroad growth and provide transportation for over three
million new settlers that had immigrated from the East into a wilderness devoid
of roads, the government gave the first railroad land grant ...2,595,000 acres
of federal land, six alternate numbered sections (640 acres in a section) of
unpreempted, land for every mile of track built, to be issued to fund the building
of the Illinois Central, with a branch to Chicago. The contract said that it should
be completed in six years and that seven percent of the company's gross
should be paid to the state in perpetuity. Also, Uncle Sam was permitted set
his own charge for carrying troops, freight and mail, and eventually settled on
fifty percent for the first two and eighty percent for the mail. The Illinois Central,
then the longest line in the world, was completed three days before the deadline
set in 1856.
One of the earliest laws for granting patents was passed by an Act of
Congress an April 24, 1820. The law in 1820 prohibited the borrowing or use of
credit for the purchase of government land. In the debates in Congress prior to
the passage of this Act, Senator King of New York said "... it (the Act) is
calculated to plant, in the new country, a population of independent,
unembarrassed freeholders ... it will put the power in every man to purchase a
[68] freehold, the price of which can be cleared in three years ... it will cut up
speculation and monopoly ... it will prevent the accumulation of an alarming
debt, which experience proves never could or would be paid." In 1862, the
Homestead Act. in Section 4, provided that "no lands acquired under the
provisions of this Act shall in any event become liable to the satisfaction of any
debts contracted prior to the issuing of the land patent."
When taxation of real property began (and the people did not object) they
voluntarily accepted the premise that government was the Superiors and the
land owner a mere serf in a feudal relationship to his master. And the whole
process helped to contribute to an ever increasing control by Lawless
Government. This Lawless Government has been preparing America for the
time when the land will be confiscated to pay off the indebtedness to the Federal
Reserve that has America on the verge of financial collapse.
PAGE 141 OF 337

According to conservative estimates, possibly half a million U.S. farmers

will be driven from the land in the next several years. Jim Hightower put the
goal of the previous administration at 10,000 super farms. No one knows what
this administration might do. Mr. Hightower is the Texas Commissioner of
Agriculture. A total of "10,000" farms for the nation has been the goal of public
policy ever since the Committee for Economic Development wrote its Adaptive
Program for Agriculture, but true to "People's Republic" type thinking, the matter
has never been taken up with the American Public. [69]
Democrats and Republicans alike have allowed this policy to march
forward, annihilating not only the family farm, but the freedoms of all Americans.
So the mortgage foreclosures, in the words of the great thinkers, will
deliver the landed resources of the United States into a few strong hands.
Thomas Jefferson would have called it "landed aristocracy."
The founding fathers knew that free men could survive only as long as
they owned property, because it was this ownership that accounted for broad
spectrum distribution of income and preservation of the jury system. They also
knew that manipulation of the money supply, via debt, would ultimately take from
the people their substances, by concentrating the property into the hands of a
few, which is now the curse of the majority of the world.
Thomas Jefferson wrote: "If the American people ever allow the banks to
control issuance of their currency, first by inflation and then by deflation, the
banks and corporations that grow up around them will deprive the people of all
property until their children will wake up homeless on the continent their fathers
occupied." [70]
"I Own My Land?"

Taken from a letter/notice from the United States Department of the Interior,
it stated: "the United States has paramount title in the land."
The legal definition of Paramount is as follows:
Paramount Title: "In the law of real property -- one which is superior to the
title with which it is compared, it is used to denote a title which is better or
stronger dm another ..... (Black's Law, 4 Ed. pg 1267)
Under the National Constitution, Article IV & 111, Clause 2, Congress was
given power (by the people) to dispose of its territories and the land acquired
for the people of the United States by purchase and by TREATY. The
Administration (government) holds this land as TRUSTEE for the people!
After the Declaration of Independence and the "REVOLUTION', the land as
to be held by everyone (landowners) in/by Allodial Tils, which simply means
there is no superior or "overlord" to or over the landowner. [71]
Before we get into what Allodial Titles, and Land Patents are, let's go to the
first U.S. Supreme Court case on land titles for a clearer and basic
understanding as to what our forefathers established through their experience
and sacrifice for their progeny.
PAGE 142 OF 337

The case is WALLACE v Harmstad, S Ct 492 (1863), and the opinion of

the Court was delivered, May 6th 1863, by Justice Woodward, and in part, he
stated:
"I see no way of solving this question, except by determining whether our
Pennsylvania titles are allodial or feudal. It seems strange that so fundamental a
question as this should be in doubt at this day, but it has never had, so far as I
know, a direct judicial decision."
In a valuable note by Judge Sharswood to the opening passage of
Blackstone's Chapter on Modern English Tenures. (2 Sharswood's Black. 77),
it is said, "that though there are some opinions that feudal tenures fell with the
Revolution, yet all agree that they existed before, and the better opinion
appears to be that they still exist." In support of this statement, the feudal
principals that have entered into our conveyancing are alluded to, and several
cases are cited in which the consequences and qualities of feudal tenures
have been recognized in our estates, although generally, in these very cases, it
has been assumed that our property is allodial.
I venture to suggest that much of the confusion of ideas that prevails on
this subject has come from our retaining, since the American Revolution, the
feudal nomenclature of estates and tenures, as fee, freehold, heirs, reoffment,
and the like.
Our question, then, narrows itself down to this: is fealty an part of our land
tenures? [72] What Pennsylvanian ever obtained his lands by "Openly and-
humbly kneeling before his lord, being un-grit, uncovered, and holding up his
hands together between those of the lord, who sat before him, and there
professing that he did become his man from that day forth, for life and limb,
and earthly honor, and then receiving a kiss from his lord? - This was the oath of
fealty which was, according to Sir Marlin Wright, the essential feudal bond so
necessary to the very notion of a feud.
But then came the Revolution, which threw off the dominion of the mother
country, and established the independent sovereignty of the state (the
people), and on the 27th day of November 1779 (I Smith's Laws 480), an act
was passed for vesting the estates of the late proprietaries of Pennsylvanian
in the Commonwealth.
Another act on the 9th of April 1781, (2 Smith 532), provided for opening the
land office and granting lands to purchasers; and, says the 11th section, "all
and every the land or lands-granted in pursuance of, this act shall be free and
clear of all reservations and restrictions as to mines, royalties, quit-rents, or
otherwise, so that the owners thereof respectivety shall be entitled to hold the
same in absolute and unconditional property, to all intents and purposes
whatsoever, and to all and all manner of profits, privileges, and advantages
belonging to or occurring from the same, and that clear and exonerated from any
charge or encumbrance whatever, excepting the debts of said owner,..." [73]
The province was a fief held immediately from the Crown, and the
Revolution would have operated very inefficiently towards complete
emancipation, if the feudal relation had been suffered to remain. It was therefore
PAGE 143 OF 337

necessary to extinguish all foreign interest in the soil, as well as foreign

jurisdiction in the manner of government.
We are then to regard the Revolution and these Acts of Assembly as
emancipating every acre of the soil of Pennsylvania from the grand
characteristic of the feudal system. Even as to the lands held by the
propietaries themselves, they held them as other citizens held, under the
Commonwealth, and that by a title purely allodial. All our lands are held
mediately or immediately of the state, by the titles purged of all the rubbish of the
dark ages, excepting only the feudal names of things not any longerfeudal.
Under the Acts of assembty I have alluded to, the state became the
proprietor of all lands, but instead of giving them like a feudal lord to an
enslaved tenantry, she has sold them for the best price she could get, and
conferred on the purchaser the same absolute estate she held herself,... and
these have been reserved, as everything else has been granted, by
CONTRACT."
To get a better understanding of this issue, we must take a look at certain
definition, from Black's Law, as follows:
"ALLODIAL. Free; not holden of any lord or superior, owned without
obligation of vassalage of fealty; the opposite of feudal, " [74]
"ALLODIUM. Land held absolutely in one's own right, and not of any lord of
superior; Land not subject to feudal duties or burdens."
Take note that AIIodiaI is the opposite of Feudal.
"FEUDAL. Pertaining to feuds, fees; relating to or growing out of the
feudal system or feudal law; having the quality of a feud, as distintuished from
'allodial'.
"FEUD. An estate in the land held of a superior on condition of rendering
him services. An inheritable right to the use and occupation of lands, held on
condition of rendering services to the lord or proprietor, who himself retains the
property in the lands. In this sense the word is the same as "feod", "feodum",
"feudom", "fief", or "FEE".
To simplify, one can have two different and opposite titles of land, one of
'Feudal, nature - owing a fee or duty to another who actually retains or own the
land or the other being 'Allodial', Where the land is held absolutely in one's own
right, not subject to another, a fee or a duty!
So the term OWNERSHIP" may take on a totally different meaning,
dependent upon the type of title one has in the land. 'OWNERSHIP-' is a key
principle as it pertains to the rights to acquire and use property as well as
rights in the land as well. Ownership is defined as follows: [75]
"OWNERSHIP: The complete dominion, title, or proprietary right in a thing
or claim. The entirety of the powers of use and disposal by law. The exclusive
right of possession, enjoyment, and disposal. Ownership of property is absolute
or qualified. The ownership of property is absolute when a single person has
absolute dominion over the property. The ownership is qualified when ... use,
of the property is restricted."
PAGE 144 OF 337

The Act of Congress of April 24, 1820 was one of the earliest statutes
passed for granted land Patents, along with the Homestead Act, Sec. 4 in
1862 and as stated earlier, the disposal of its territories and land acquired for
the people is by purchase and by TREATY (Contract of and by the People) to
wit:
1) Northwest Ordinance (1787)
2) Treaty of Peace, 8 STAT.80 (1783)
3) Treaty of Ghent, 8 STAT.218 (1818)
4) Oregon Treaty, 9 STAT.869 (June 15, 1846)
5) Treaty of Guadalupe Hidalgo, 9 STAT.922 (1848)
6) Treaty of Cession, 8 STAT.200 (1863)
The Treaty (Contract) Law cannot be interfered with, as the Supreme
Court has held that 'Treaties' are the 'supreme law of the land'. See also Article
6, Sec.2 of the U.S. Constitution. The Treaty is declared the will of the People of
the United States and shall be superior to the Constitution and the laws of if any
individual State. [76]
It was through the 'experiences' of our Founding Fathers, coming from a
Feudal system, that they desired that in the new country, the United States, that
all men would own their land, in its entirety, absolutely, with full dominion, and
subject to the claims of no man or government! This was done through grant or
purchase.
Black's Law, 4th Ed. pg. 829, defines Grant as a conveyance(?), same
reference, pg. 402 under general, to wit:
Absolute or Conditional Conveyance. An Absolute conveyance is one by
which the right or property in a Thing is transferred, by which it might be
defeated or changed; as an ordinary deed of lands, in contradistinction to a
mortgage which is a conditional conveyance.
Now under the term 'Grant' it shows 'Private Land Grant' as: A grant by a
public authority vesting title to public land in a private (natural) person.
Public Grant: A grant from the public; a grant of a power, license,
privilege, or property, from the state or government to one or more individuals,
contained in or shown by a record, conveyance, Patent, charter, etc.
Before we go on to Patents, and with a little understanding of 'Grants', we
will take a little time to touch up on the 'Purchase' of land as it affects title. Two
points are raised or established, the first, from a court case, called STANEK v
WHITE, 215 NWR 781 (1927), states: [77]
"There is a distinction between a debt discharged and one paid. When
discharged the debt still exists, though divested of its character as a legal
obligation during the operation of the discharge."
How does this affect your land purchase'? Very simple. When Congress, in
1933, suspended the gold standard (Art. 1, Sec. I 0) which denied you the right
to PAY YOUR DEBTS AT LAW (which extinguishes the debt), to a system
where you can only discharge your debts, but the debt still exists. This may be
PAGE 145 OF 337

where your duty or fee comes from in the form of your property tax. But there
may also be a distinction in the form or type of payment that you made in and
for the land. The courts have ruled that the Federal Reserve Bank/System is
not an agency of the U.S. Government, but rather a Private Corporation!
Therefore, when you participate in the Federal Banking System, you are
participating in a private money system, which is a privilege, and therefore a duty
and fee is extracted, in the form of a tax, but since Federal Reserve Notes are
not Lawful Money (no substance backing it!) you cannot pay your debts at law,
they are only pieces of paper of which a debt attaches!
To prove this, we go to the second point, the definition of Title, as found in
Bouvier"s Dictionary of Law:
"The means whereby the owner ... hath just possession of his property. 3.
Title to personal property may accrue in three different ways; by original
acquisition, by transfer by act of law, by [78] transfer by act of the parties. 5.
THE LAWFUL COIN OF THE UNITED STATES WILL PASS THE PROPERTY
ALONG WITH THE POSSESSION."
The Lawful coin of the United States was Gold and Silver which is
'substance'. In olden days, one got gold from the land and one could buy land
with gold. But back then, the conveyance of land through purchase was
honored (in the law) and full and absolute possession and ownership was
transferred!
So what we have covered so far, you can see that perhaps you don't own
your land. Merely compare your so-called title or deed to the points of law as
brought forth herein. See also the attached 'Exhibits' for your comparison. In
mid-stream, we ask you the question, "Is property tax evidence of ownership?"
We'll let you also answer that question.
Now on to Land Patents- Because all Federal Land Patents flow from
Treaties that fall under the "Supremacy Clause," no State, private banking
corporation or other federal agency can question the superiority of title to land
owners who have perfected their land by Federal Land Patent. Public lands,
as found in 42 American Jurisprudence, Sec. 781 thru 873, shows that a Patent
of land is to be the title to land and anything else is FRAUD.
Transfer of a Patent is by release of Patent Interest Right and not by some
form of 'USURY INSTRUMENT' of Trust or Warranty. (See also 40 AM JUR,
577 thru 688) [79]
A Land Patent issued by the United States is legal and conclusive
evidence of title to the land conveyed. (Opinion of U.S. Attorney General -
Sept. 1869). A Land Patent is the highest evidence of title. Since Land
Patents cannot be collaterally attacked as to their "Validity" or
"Authenticity" as the highest evidence of title; Federal Land Patents were given
free and clear 'ALLODIAL Title' with no encumbrances, then and now. Can you
say the same about your land title'?
The Patent alone passes land from the United States to the grantee and
nothing passes a perfect title to land but a (WILCOX v JACKSON, 43 Peter
(U.S.) 498, 10 L Ed. 264) ".... with no fee or duty (TAX)!!!
PAGE 146 OF 337

Since a Land Patent is not a conveyance of title by someone assigning

their equity interest over to you, but a Land Patent is a TITLE AT LAW, which
establishes an ALLODIAL FREEHOLD that is judgement proof and even
immune from tax liens! Again, can you say the same thing about your land
title'? [80]
The Property Tax --- School Funding Issue
Ownership Vs Fraud -- Is It A Master-Slave Relationship?

Well there's a lot of emotions flowing out and about, around this here
Property Tax --- School Funding Issue! Within the State of Oregon, there was
more than a lot of talk about a sales tax, which would accordingly lower
property taxes. Following that, the people voted in the Lottery. With the promise
that funds would or could go to lower property taxes. Time will tell on that one,
just don't hold your breath! Most Oregonians don't want that sales tax! (Nor
does any other person in this country, unless they are a politician.) And if
school funding issues are brought into any discussion, in relation to or based
on property taxes, watch out, 'fur can fly'! I
Many people, with good intentions, support the schools, to a point,
irrespective of the poor quality (the results) and the underlying goals of such
controlled education. It seems that every year, along with teacher strikes, the
property tax issue arises, with all the pros and cons. Seems to just get worse
than better! And haven't you noticed, that all the politicians ever do, at any
level, is to raise taxes ... then again, maybe you haven't noticed!
But then it's a 'Catch 22 Situation'. To support the schools, financially,
property taxes must go up! Vote property taxes down, and the schools must
suffer! It's really a no win situation.
Maybe the solution lies within QUESTIONS, or to put it another way, YOU
may have to go back to the beginning and find or discover the ANSWERS! [81]
In order to get the right answer(s), one must ask the right questions, like:
Are property taxes necessary'? Are property taxes lawful?
But the most important question is: "is property tax indicia (evidence) of
true ownership"?
Well now, let's, do some investigating! What does 'ownership' really
mean? "The complete dominion, title, or proprietary right in a thing or claim.
The entirety of the powers of use and disposal by law. The exclusive right of
Possession, enjoyment, and disposal. Ownership of property is absolute or
Qualified. Ownership of property is Absolute when a single person has absolute
dominion over it. The ownership is qualified when ... use is restricted".! (Black's
Law Dictionwy, 5th Ed., pg.979) (Emphasis Added)
So what does this tells us? Ownership in land is: "THE COMPLETE
DOMINION, TITLE, EXCLUSIVE RIGHT OF POSSESSION, ENJOYMENT,
RIGHT TO CONTROL WITH ABSOLUTE DOMINION OVER IT!!
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That statement seems to be meaningless in view of the compelling of

PERMITS, and of course PROPERTY TAXES! Kind of like there's somebody
watching over you, controlling or dictating what you can or cannot do on your
land, and then demanding "TAXES" as well. [82]
It would then appear that most people who have bought (paid of off) their
land (with or without a home on it) do not have absolute control, dominion, use,
or even full enjoyment of it, when the individual and land is RESTRICTED by
local permits and property taxes!
Then it also follows that, if there are such restrictions on your land, that you
do not have 'absolute title'. Maybe then ... your not really an owner, in the true
sense of the word. I guess you would be called a quasi-owner. They kind of
define that as 'something like" an owner! Maybe there is a 'SUPERIOR' above
you, controlling the use of the land and compelling a duty of fee for the
'interest' or 'use' of the land ... called property taxes! In the old days, way back
in time, it was called "FEUDALISM", which is defined in part as:
"The system was based upon a servile relationship between a "vassal"
and "lord". The vassal paid homage and service to the lord and the lord provided
land and protection." (Black's Law Dictionary, 5th Ed., pg. 559).
Well now, not too bad, but let's take a look at "FEUDUM", defined as: "A
feud, fief, or fee (tax). A right of using and enjoying forever the lands of another,
which the lord (superior) grants on condition that the tenant shall render (duty
or tax) military duty, and other services. It is not properly the land, but an in
the land." (Black's Law Dictionary, 5th Ed.,pg. 560) [83]
So what you may be involved in, as a so called 'property owner', is a form
of feudalism, which is basically in modem terms:
"A system based upon a servant relationship between the servant and a
superior (State, Banking Co., Corporation, or other). The servant for the
payment of a property tax (fee) has a right to use the land on conditions! "
For today,, those conditions are the property tax, land use laws and
permits. It should be noted however that if the servant falls to pay the property
taxes or violates any of the conditions, the servant will be removed off the
land and another servant will be allowed to use the land ...on the same
conditions! One must remember, however, the state will use any means to
remove a servant/slave who fails to pay the taxes, even to the point of using a
SWAT TEAM!
The right to use the land does not grant absolute title. The servant is
without and is denied the true title, and is involved in what is called simply a
'feudal system'. Please bear with me, my leading is not in vain!
Let us now look at and define the word "FEUDAL", it is: "Pertaining to
feuds or fees; relating to or growing out of the feudal system or feudal
law;having the quality of a feud, as distinguished from 'Allodial". (Black's Law
Dictionary, 5th Ed., pg.559) (Emphasis added) [84]
Well now, that's damn right interesting. This thing called "ALLODIAL",
which is distinguished (opposite) from the "Feudal System" of the use of land
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without true ownership - for a fee! Well, we're going to take a good look at this
'Allodial' thing.
But now those people who are in the know, or supposed to be, from REAL
ESTATE AGENTS, STATE OFFICIALS, to POLITICIANS, obviously are not
directed to this information, or most likely this information has been suppressed
or even denied, not only from them ... but from you too, the so-called property
owner!!! Could it be that those we elect(?) or the powers that are in the
'mushroom business', keeping everyone in the dark and feeding them 'bull'?
Well hang on, we're getting warm. I now direct you to the definition of
Allodial, it is: "Free; not holden of any lord or superior; owned without ablization
of vassalage of fealty; the opposite of feudal." (Black's Law Dictionary, 5th Ed.,
pg.70)
Can you believe, a title of land where you are not 'beholden to anybody',
owned without any 'obligation', of any duty or fee... a property tax? Amazing
but true!
Strictly speaking, in regards to land, we go to yet another definition, and
that is of land being held in ALLODIUM, as- [85] "Land held absolutely in one's
own right, and not of any lord or superior; land not subject to feudal duties or
burdens. An estate held by absolute ownership, with out recognizing any
superior to whom any duty is due on account there of". (Black's Law
Dictionary, 5th Ed., pg. 70)
Therefore, if any title on land would be wanted or sought after, as a
treasure, it would certainly be an 'Allodial Title' would it not'? Imagine a 'Title', on
your land, where you are not subject to duties, fees, or taxes! Land held in
absolute ownership with no superior above you! That means (what should have
happened) when you paid off the debt on your land, the State, the Bank, or the
party holding the contract until full payment, should of then transferred the
proper true title, an Allodial Title. You would then own your land free and clear,
fee simple. absolute! It could then be said, that you held your land in
"PARAMOUNT", as in holding paramount title. Paramount being defined as:
"In the law of real property, one which is superior to the title with which it is
compared, in the sense that the former is the source of the later. It is, however,
frequently used to denote a title which is simply better or stronger than another,
or will prevail over it." (Black's Law Dictionary, 5th Ed., pg. 1001) [86]
So now the question is, does the title you hold, or will receive, give you full
absolute ownership, free and clear, fee simple, not subject to any duty or
tax .... do you hold your land in Allodium with a paramount title'???
In the old days, it is my understanding, that land held under these titles
could not be licesned, seized, or taxed! Of course this applied to the land as
well, because of the "STATUS" of not only the land, but the "owners" as well.
The land was owned, and nobody else had any control, what so ever! The land
represented the wealth of the family, it was the family! Irrespective of hardships,
family members could always go back to the land, the family farm, to survive
and rebuild any monetary loss and self esteem!
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But no so today! With the many restrictions placed upon the land, and of
course, with the State owning the land (State holds true titles) the people cannot
use the land for their needs, purposes, or desires.
Many people have been forced onto the welfare system as a result of this
modern day 'Feudal System'. The land is simply ... not yours!
But now the question is this; "Why do you, the so called property owner, do
not have and hold an "Allodial/Paramount Title" to the land (And Home) that
you THINK you own? [87]
Why are you, the individual(s), the true substance and strength of this
country, denied the proper lawful title to your land? Why are you denied the full
enjoyment, from the use and ownership of your land'? Is the quest for control
and power, by those in authority over you, worth the violation of your "Life",
"Liberty", and "Pursuit of Happiness"? Why are you led to believe that you own
the land? Why are you called a landowner, when you are compelled to duties,
fees, and taxes'? When you bought your property, did you understand and
agree to having a 'superior' above you, controlling the use of your land? Why
has the State denied you true title to your property?
Is it because the need and greed for power and control over the masses
that necessitates the fraud and scams to keep the State coffers full and the
sheep in line, thinking and believing that they own their land, thereby making
it a little easier to fleece! State Dictatorial control, under the guise of permits,
property taxes, and school funding, in relation to the ownership of land"
necessitates..."the end justifies the means!"
This "Citizen", having an interest in the basic land/title issue, and fully
understanding the principles involved, the truth that "we are merely serfs upon
the land," that no one really owns their land, and having no need to participate in
"their" deceitful fraud ... has turned his energy toward other interests.
One such interest was 'prospecting' and its related area of information. That
of course led to collecting and reading books and information about mining
claims and U.S. regulations on [88] mining claims from the Bureau of Land
Management (BLM). One of the letter documents that I had received was quite
a surprise, since I had skimmed over it some time back.
The letter was from the "United States Department of the Interior",
"Bureau of Land Management", titled "Notice to Mining Claimant", 2nd.
paragraph, and in part said:
"Since a mining claimant has merely a possessory interest in the location,
the United States has PARAMOUNT TITLE in the land..." *this statement could
apply to so-called Property owners!
NOW THE QUESTION IS! "By what authority does the U.S. Government
and your State Government hold land in paramount title (untaxable, unalienable,
and unseizable) and yet denies the very people of this country the RIGHT to
hold their land in same status ... in Allodium?"
Is this not a government of the people, by the people, and for the people?
Who's fooling who? Who's controlling who? Those are questions you need to
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get answered. Its' been said many times, but here, it is more than applicable -
and that is:
"All had better WAKE UP! For Gods' sake, WAKE UP!!!" [89]
Consider and understand that, your government(?) is involved in a 'belief
system scam'. That is, if they can get the people to believe in certain things,
then the Government can not only control the people, but also get the people
to pay for their own servitude!
HERE ARE SOME EXAMPLES:
1. Socialistic Income Tax
2. Socialistic Social Security
3. The Welfare System
4. Government Schools
5. State Ownership of your Vehicles
6. Zoning
Get the people to 'believe' that 'they' own their own land and they will pay
the taxes on it, most of them, with a smile on their face! Get the people to
'believe' they need to pay a property tax to support the schools (free education)
and the Government can add another link in the chain ... in the enslavement of
the people in this "Land of the Free!".
One might ask now, "How do the schools get funding"? Well, that's
simple. Since the monetary system of this country is run by a "Private
Corporation" circulating 'Bills', 'Notes" and 'Checks' (credit) without substance
and in violation of U. S. and every State Constitutions (U. S. Art. I Sec. I 0) (Look
up your own States' Constitution Article and Section). Since most taxing
schemes are based upon fraud and theft, demand your public servants to return
the power [90] and authority to regulate the money system back to the U.S.
Treasury, and then demand the Treasury to turn on the printing presses. I
mean it's not really money, there's no substance, it's just paper! It's one of those
'belief scams', you believe its money, that it has value, and your 'confidence' thus
makes it so! But it's just paper with nothing of value for support! Since your
Government can and should operate honestly, they can just send the 'cash'
directly to the schools!
Of course, the other alternative is to shut all the schools down and turn over
the education to `private enterprise' and 'home schools'!
But remember, the issue here is "That you don't own your land!" And
that's why you are compelled to pay property taxes ... to support the
schools. Now I realize that every point cannot be raised here, either in support
or otherwise, but you must start with the basics.
"Get your land back, under a lawful, paramount, Allodial Title whereby you
own it free and clear, fee-simple, ABSOLUTELY, owing nothing to nobody!" To
do this, there's a price to be paid, and it is; Tum off the boob tube, put the beer
down, read the Constitution, study the points raised herein, write some
demanding, letters to your public servants, get together in your local and MAKE
it happen.
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"Yes, we may not know what the future lies, but MAYBE IT'S TIME FOR
EXODUS!!!" [91]
This same point and principle applies to your automobile, you think you
own it, but the State compels you to 'Drivers License, Registration, and
Insurance, because the State holds the true title to your car, you merely carry
a 'Certificate of Title', certifying that a true title exists. You do not have
paramount title to your car, which is your property('?)(possession 9/10 of the
law). [92]
Property Ownership
When you buy property, you must know the difference between Allodium
and Feudal, and the various kinds of Titles.
When you own property, Allodial, no one can claim any control over your
property but you. When you own property Feudally, you do not really own it, but
are only renting it, and the owner has control of the use of the property. Feudal
ownership is a deception, because you have, in actuality, contracted for a third
party to own the property. Therefore. you must abide by the provisions of the
contract, and pay the third party a rent for the use of the property. If you do not
pay that rent or tax, you will be removed from it and it will be "sold" to someone
who will pay. Property is "sold" on the courthouse steps every day of the year,
except weekends. You ask "Why on the courthouse steps and not in the
courthouse'?". This is because the property is "sold" under color of law, and not
according to the Common Law.
In order to own the property Allodial, you must make a Bill of Conveyance
to contract with the seller of the property, get the property surveyed, do a Title
search, and file those documents with the Recorder in the Judicial Circuit or
District in which the property is located. If you do not file for "homestead
exemption or make any other contracts with the County or State, then you
cannot be assessed any tax or be forced to obtain permits to improve upon your
property. This means that the property is yours and no one else's, and that you
are the only one in control of your property. I feel that every property owner
should have a copy of "Blacks Law Dictionary". [93]
When you buy, make sure that the seller includes "ALL RIGHTS to the
property in the Bill of Conveyance including mineral rights.
When you buy a car, you must also know the difference. I will give you an
example.
When you buy a car from a dealer, the MANUFACTURER CERTIFICATE
OF ORIGIN is sent to the State (Department of Motor Vehicles). The
Manufacturers Certificate of Origin IS THE TITLE!!! The State records the Title
on microfilm and ISSUES a Certificate of Title, which does nothing but certify
that there is a Title. THE STATE HAS THE TITLE!!! If you read the small print at
the bottom of the certificate, you will find that you only have "VESTED
INTEREST" in the conveyance, and not ownership of it. YOU HAVE JUST
CONTRACTED FOR THE STATE TO OWN YOUR CAR!!!. When you do this,
you must comply with the provisions of that contract and register the car every
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year, so the State knows where the car is, obtain a drivers license, and
purchase insurance.
You must also obey the statutes of the Corporate State and all the
regulations that go along with them, so the Corporate State can keep their large
greedy, deep into your pockets.
You must also know the difference between paying and discharging a debt.
When you pay a debt, you must pay with value or substance. (see Art. 1,
Sect. 8, Cl. 5 and Art. I Sect. 10, Constitution for the United States of America).
You pay a debt with Gold and/or Silver coin, but you can only discharge a debt
with "Federal Reserve Notes". Gold and Silver coins are value, [94] if coined by
Congress at the U.S. Mint. (Art. 1, Sect. 8, Cl. 5), and only Gold and Silver coin
can be used to pay debts. (Art. 1, Sect. I 0). When you use Gold and Silver
coin to pay a debt, it is paid in full. A Federal Reserve Note cannot pay a debt,
because it is only BANK CREDIT, or a debt in itself. How can you pay a debt
with a debt? You cannot! You can only discharge the debt with Federal Reserve
Notes. The debt still exists and is not paid.
Article 1, Section 8, Cl. 17, of the Constitution for the united States of
America, establishes the District of Columbia as a DIFFERENT and SEPARATE
NATION from the Republic of the united States of America. The Congress has
the EXCLUSIVE RULE OVER THE Citizens of the District of Columbia, it's
territories, Insular possessions and Federal enclaves. Those people have no
RIGHTS, WHATSOEVER, other than what Congress gives them. The Social
Security Number is the Main Contract with this Foreign government that creates
this status of slavery.
The way to own property in a Freehold status is to rescind ALL
CONTRACTS with the Foreign Corporate Federal Government and the
Corporate Regional State, county and municipality.
These contracts include:
1. Birth Certificate
2. All licenses (including Marriage)
3. All permits
4. Social Security numbers [95]
5. Bank accounts (except barter banks)
6. Any contract that requires a Social Security Number
7. Any incorporation, entitlement, or privilege from any level of
government.
This you must do by Affidavit. This is your declaration that you are a Free
American, and not a United States Citizen (Citizen of the District of Columbia).
You MUST, after you type them, get them notarized and have three of your
peers witness yours, and the notaries signatures. The only reason for the
notary, is to make the document cognizant in a foreign venue.
Send a copy of the affidavit to the pertinent agency, along with the original
True copy and certification and service. Keep two copies for yourself, and file
the original Affidavit with a copy of the true copy certification and service with the
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Recorder of the Judicial Circuit or District in your area. You can do this in
person (in the Common Law) or by return receipt mail. One copy goes with
you, in your car, and the other remains in your files.
With every Affidavit that you send to an agency, the number or
identification card must be surrendered. In the case of the Social Security
Administration, if you have a card, it must be surrendered and accompany the
affidavit. In the case of the Department of Motor Vehicles, the Number Plate,
Registration, Certificate of Title, and Driver's License must be enclosed with
the Affidavit, etc.. The only exception to this would be if you do drive for hire,
i.e., Taxi, Bus, or Truck driver.
Make a copy of your Positive Identification in the size of an ID card with
your right thumb print overlapping the bottom of the photo, laminate it, and
carry it as your photo ID.
Always work on a contract basis and NEVER sign anything "under the
penalties of perjury," or use any Social Security number. You are then, a Free
American and NOT a U.S. Citizen.
Note Added By DCS Staff:

When making up your photo ID, you MUST, absolutely MUST, place a
disclaimer on the ID such as: "Not a government issued identification."
The disclaimer must appear on both the front and rear of the identification
card.
This step is necessary due to the fact that Congress has passed a law
stating that it is Fraud for anyone to carry an non-governmental identification
card without the disclaimer.
Property Ownership
When you "buy" property today, you do not buy the property, you buy a
lease from the County? Think about it for a minute. If the county can tax the
property, require a permit to improve it, take it away from you if you do not pay
the tax, who owns it? (see Black's Law Dictionary, definitions, included.)
If you PAY for it in Gold Coin, and on a Bill of Conveyance, do your Title
search, and survey, file those three documents with the clerk of Circuit Court
and the county recorders office, then you own allodial property and the county
cannot tax it, make you get any permits, take it from you, or even zone it,
because the county does not own it anymore. Make sure that you retain ALL
rights to the property on the Bill of Conveyance.
The same goes for your car. Lets say that you buy a car from a dealer, and
that you discharge the price of the car with Federal Reserve debt (FRAUDS).
The Manufacturers certificate of origin (Title) goes from the dealer to the State
(regional) Department of Motor Vehicles. When you sign all those papers at
the dealership, you are contracting for the Regional State to own your car!
When you do this, you must abide by the provisions of the contract and register
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it every year, so the owner knows where it is, buy insurance (a paeans scheme)
and get a drivers license.
The drivers license was only designed to regulate "Driving for Hire" and not
to regulate the right to travel.
A license is "privilege, or permission to do what is otherwise unlawful".
The Right to travel cannot be regulated or taxed. (Art. 9 of the Bill of Rights).
As for payment, you cannot pay a debt with a check or Federal Reserve
Notes (FRAUDS).
They only, discharge the debt and the debt still exists. To PAY a debt, you
must barter, or pay in Gold or Silver Coin, which cancels the debt. The Federal
Reserve Note is debt and you cannot pay a debt with a debt! (see Art. 1, Sec.
8, Cl. 5 and Sec. 10, Constitution for the United States of America)
To own your own car you must buy it on a Bill of Conveyance, and obtain
the manufacturers Certificate of Origin. THE DISTRICT OF COLUMBIA AND
IT'S REGIONAL STATE WANTS TO BE YOUR GOD, BUT YOU CANNOT BE A
U.S. CITIZEN (under the U.S. Code and statutes passed by Congress and the
regional State legislators) and an American (under the Constitution and Gods
Laws) at the same time. You cannot serve two masters. YOU HAVE THE
CHOICE, MAKE IT! [98]
Wallace Vs Harmstad
Ground-rent Deed invalid for fraudulent Altemation in hands of Flurchaser
for Value without Notice. Effect of Altemation on the parties and those claiming
them. Ground-rents are Rents - Service. Statute of quia emptores not in force in
Pennsylvania. Titles to Land in Pennsylvania are allodial.
1. Where a landlord after a sale of lots reserving groundments, and
delivery of the deeds, obtained possession of them, and having fraudulently
altered the causes reserving the rents, sold them: the purchaser, though bona
fide and without notice of the fraud, cannot recover, either by action at law or by
distress.
2. A vested estate will survive the loss of the instrument by which it is
created, for the deed may be proved by secondary evidence or presumed from
prescription; but if destroyed by the fraudulent act of the party claiming under it,
it cannot be then proved or supplied by any presumption in his behalf.
3. Ground-rents are rents-service of which distress is a necessary
incident: but a grantor who has not reserved his rent by a valid deed cannot
enforce it, because the statute of which would have converted the rent-
service into a rent-charge, is not in force here, and it cannot exist independently
of the deed, because Pennsylvania titles are allodial and not feudal. [99]
ERROR to the District of Philadelphia.
This was an action of replevin, by Edwin Harmstad against Mrs. Alice
Wallace, who avowed for rent in arrear as reserved in one of the four
ground-rent deeds, the validity of which was passed upon by this court in the
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cases of Arrison v Harmstad, 2 Barr 191, and Wallace v Harmstad, 3 Harris

462.
The material facts connected with these cases will be found in the reports
of these cases, and are in substance as follows:
In the fall of 1838 Matthew Arrison agreed to sell to four brothers
Harmstad, four adjoining lots of ground, reserving out of each lot a yearly rent of
$60, payable half-yearly on January 1st and July 1st, in every year; the first half-
yearly payment was to fall due on the 1st of July 1839. Under the deeds
executed in accordance with this agreement, each of the Harmstads entered
upon his lot and built a house thereon. The deeds were executed in duplicate,
each deed was signed by both parties; a part of the bargain was that the
grantees might extinguish their ground-rents at par whenever they pleased.
When the deeds came to be executed, one of the four brothers discovered an
'open space, or unfilled blank, in all eight of the deeds; and in answer to his
inquiry, was told by the alderman, that it meant that there was to be no limit of
time within which the rents should be extinguished. This being in accordance
with their understanding, the deeds were executed and delivered - the
Harmstads took away their four deeds, while Arrison took away the four
counterparts. [100]
Some time afterwards an agent of Arrison procured from the Harmstads
their four deeds, for the alleged purpose of getting them recorded, and while
they were with Arrison, or another party beneficially interested in the ground-
rents, the same, together with the four counterparts, were, either by Arrison or
by some one under him, altered, by the filling up of the blank in each of them
with the words "within ten years front the date thereof." In the mean time the first
half-year's ground-rent falling due July 1 st 1839, was paid by the Harmstads
without any knowledge of the alteration. When they paid it they asked for their
deeds, and found they have not been recorded. Another agent of the grantor,
or of his cestui que use, then carried the deeds to the recorder's office, left
them there, and gave the Harmstads the recorder's receipts therefor; and it was
not until some weeks afterwards, when the deeds came back, that they
discovered the alteration. Since that time they refused to pay any more ground-
rent.
The case of Arrison v Harmstad, 2 Barr 191, and Wallace v Harmstad, 3
Harris 462, having settled that an action of debt on such ground-rent deed, or
on the original contract prior to the deed, but supposed to be executed by
possession, or for use and occupation, or of covenant on the ground-rent deed,
will not lie--that all the covenants in the deed are gone, and that the estate in
the land is vested in the grantee, freed and discharged therefrom--that the
spoliator may lose, but could not gain from his wrongful act, and that any
innocent purchaser of the rent is in no better condition, having bought from the
spoliator nothing at all, and that there is no similitude between these cases
and the case of negotiable paper in third hands, the owner of this deed, Mrs.
Wallace, resorted to a distress for rent, on which distress this action of
replevin was founded, as above stated. [101]
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Under the ruling of the court below there was a verdict and judgement for
plaintiff; whereupon the defendant sued out this writ, assigning the judgement
of the court below for error.
E.S. Miller, for plaintiff in error.
J.A. Phillips, for defendant in error.
The opinion of the court was delivered, May 6th 1863, by Woodward, J.- It
is not to be doubted that the cases of Arrison v Harmstad, 2 Barr 191, and
Wallace v Harmstad, 3 Barr 462, do decide that by reason of the fraudulent
alteration of the deeds, reserving the ground-rent in question, neither an action
of debt or covenant would lie on any one of the deeds for recovery of the rent,
nor is it recoverable in an action on the verbal contract under which possession
was obtained, nor in any action for use and occupation of the premises. Setting
aside all the obiter dieta of those cases, they clearly established these several
conclusions, grounding them all on the policy of the law which altogether
forbids parties from tampering with written instruments or deeds, and which, in
its application to the deed in question here, avoids the covenant reserving rent
in favor of the fraudulent grantor, but preserves the fee simple to the innocent
grantee, discharged from the covenants in the deed. When it was said in the
argument of the first of the above cases that equity would reform the instrument
in favor of a purchaser, Chief Justice Gibson replied, "Show a case; the deed
is dead, and equity cannot put life into it."
The stern ruling in those cases was applied without hesitation to a bona fide
purchaser of the ground-rent without notice of the fraud, so that, as far [102] as
concerns Arrison, and all persons claiming under him, the part of the deed
which was intended to enure to his benefit, may indeed be said to be dead. It
was not merely a voidable instrument, it was void. It was called a forgery, and
treated as such, and neither law nor equity would tolerate it even in the hands of
an innocent purchaser.
The question presented now is whether a ground-rent so emphatically
condemned, and denied all remedy, both at law and equity, can be enforced by
distress. Mrs. Wallace having executed a distress, was sued in this action of
replevin, when she avowed for rent in arrear, as reserved by one of the four
deeds which were the subjects of animadversion in the above cited cases.
Her learned counsel does not impugn those cases, but he seeks to parry the
authority of them by a distinction so nice as to be highly creditable to his
acumen, even if it be not well founded in law. Let me try to state it distinctly.
He says that a ground-rent reserved in a deed by a grantor is an estate
which vests in him the instant the fee simple in the land vests in the grantee
that estate is a rent-service; that it continues to exist, though the instrument
reserving it be destroyed- and that a right of distress is one of the necessary
legal incidents of the estate. Then he argues that the plaintiffs distress was not
by virtue of the deed, but was founded on the intrinsic and essential qualities of
the estate in the grantor, and that the reference to the deed in the avowry was
only for the purpose of defining the estate and the amount of the rent. [103]
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I think the defect of the argument will be found to consist in the third
proposition. Not that it is untrue as a general position that a vested estate will
survive the instrument of its creation, but that the position is too broadly stated
when it is made to include an incorporeal hereditament which lies in grant, and
can only exist by virtue of a deed, devise, or record, or by prescription, which is
rather to be considered as an evidence of a former acquisition, than as an
acquisition de nora: 2 Black 266.
That ground-rent is a rent-service was demonstrated in Ingersoll v
Sergeant, 1 Wh. 337, a case which has been so often recognized and followed
as to have become a rule of property. Rent-service was the only kind of rent
originally known to the common law; a right of distress was inseparably incident
to it so long as it was payable to the lord who was entitled to the fealty; and it
was called a rent-service because it was given as a compensation for the
military or other services for which the land was originally liable. When a rent
was granted out of lands by deed, the grantee had no power to distrain for it,
because there was no fealty annexed to such grant. To remedy this
inconvenience an express power of distress was inserted in grants of this kind,
and it was thence called a rent charge, because the lands were charged with a
distress. Rent-seek, or barren rent, is in effect nothing more than a rent for the
recovery of which no power of distress is given, either by rules of the common
law or the argument of the parties: 1 Co. Lit. (Thomas' ed.) star p.443, in note,
and 2 Black. (Sharswood's) 42, and note. Blackstone ranks all of these rents as
incorporeal hereditament, and Coke, commenting on Littleton's distinction
between feoffment and grants, says, here is implied a division of fees into
corporeal, as lands and tenements which lie in livery, comprehended in this
word feoffment, and may pass by livery with [104] or without deed, and
incorporeal, which lie in grant, and cannot pass by livery but by deed, as
advowson, commons, etc: 2 Coke Lit. (Thomas' ed), star page 333. Rent
belongs to this category, and is implied by Lord Coke's "etc.," and is indeed the
most perfect illustration of an incorporeal hereditament, for it issues directly out
of the thing corporate, without being any part of it.
But suppose the deed by which an incorporeal hereditament was granted
be lost or destroyed, must the grantee lose his estate? Lord Chief Justice Eyre
answers this question in Bolton v The Bishop of Carlisle, 2 H. Black. 263, where
he says, "In pleading a grant the allegation is that the party at such time did
grant, but if by accident the deed be lost, there are authorities enough to show-
that other proof may be admitted; the question in that case is whether the
parties did grant? To prove this, the best evidence must be produced, which is
the deed, but if that be destroyed, other evidence may be received to show that
the thing was once granted. " So in Reed v Brookman, 3T. R. 151, where a lost
release of an annuity was pleaded without profert, the King's Bench sustained
the plea and overruled the demurrer to it.
These cases, and others cited in the argument to the same effect, assert
nothing more than a rule of evidence in very familiar practice with us, that
secondary evidence will be received where the party shows it is out of his
power, without any fault of his, to produce the primary, but they establish no
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exception to the general rule that incorporeal estates must be evidence by a

grant. If the best evidence of the grant cannot be had, the next best will be
received; but the result of the evidence must be to establish the grant. Even
when an easement is to be suswned by [105] prescription, or a right of way by
necessity, a grant is presumed from long enjoyment, of the easement, or from
the necessity for the right of way, and thus again the result of the evidence is to
establish the grant. So true is the maxim that incorporeal hereditament lie only in
grant.
But what is to be said to a party who is unable to produce the original grant
because he has himself fraudulently altered it? Shall he or his alienee be
permitted to go into secondary evidence? When the law has refused him all its
forms of action on such a mutilated instrument, will it allow him to take redress
into his own hands and levy a distress for himself? This would be to reverse the
maxim, in idium spoliatofis, omniapraesumuntur. In accordance with the maxim,
we ought rather to presume that he never had a grant, and therefore no estate
which carried with it the incidental fight of distress.
It is apparent that this view of the case places the plaintiff in error upon the
Arisen deed just as much as she stood upon it in her former action of covenant,
and it has been suggested, not in forgetfulness that it is not the position chosen
for her by her consul, but by way of showing that his main proposition was too
broadly stated for the case in hand, and that, holding only an incorporeal
hereditament, he cannot get her case away from the deed. It seems to me that
her fight of distress must be judged by the deed, and that the deed is no more
available for this purpose than it was for the actions of debt and covenant.
But now let the case be looked at from another stand-point. By the
common law, before the statute of quia emptores (18 Edw. l,c. 1,A.D. 1290), ac-
cording to the text of Littleton, "if a man [106] made a feoffment in fee
simple, by deed or without deed, yielding to him and his heirs a certain rent,
this was a rentservice, and for this he might distrain of common right; and if
there were no reservation of any rent, nor of any service, yet the feoffee held of
the feoffor by the same service as the feoffor did hold over of his lord next
paramount." Upon which latter clause beginning with the words "and if there
were no reservation," Lord Cokes's comment is, "This is evident, and agreeth
with our books that in this case the law created the tenure," and on the words
"by deed or without deed," he observes, "for all rent-services may be reserved
without deed; and at the common law, if a man made a feoffment in fee by
parol, he might upon that reoffment reserve a rent to him and his heirs -
because it was a rent-service, and a tenure thereby created:" 1 Thomas' Co.
Litt. star p.444
Rent-service, then, was an essential element of the feudal tenure. It did
not depend on contract, it resulted necessarily out of the grant of the feud. The
services which the vassal was bound to preform were indeed declared by
the lord at the time of the investiture in the presence of the other vassals: 1
Craise's Digest 9, and were assented to of course by the vassal: but as these
were to a great extent uncertain, they could not be specified, and were only
declared in a general way, as to attend on the lord in war, and on his courts in
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times of peace; to defend his person, and aid him to pay his debts, etc.; terms
not agreed upon as between contracting parties, but terms dictated by a
superior to an inferior. And by the old feudal law, the nonperformance of these
services was not redressed by distress, but by forfeiture of the feud. Baron
Gilbert, in his excellent little work on the "Law of Replevins, " tells us that the
distress came from the civil law into the common law, and that there appear no
footsteps of it in the feudw authors. He [107] admits, however, that it is
immemorial in the common law " and was at first as burdensome and grievous
to tenants as the feudal forfeiture for to the tenant there was no difference
between the lord's seizing the land itself, or stripping him of the whole produce
and fruits of it at his pleasure. But these oppression ended with the wars of the
Barons, and towards the end of the reign of Henry III, particular laws were
made to regulate the manner of distressing, and not to suffer the lords to extend
this remedy beyond the mischief it was first introduced for, which was no more
than to empower the lord, by seizing the chattels, to oblige the tenant to preform
the feudal services: Gilbert's Law of Replevins, pp. 4-6. Fealty to him from
whom the lands were holden was the great characteristic of feudal tenures; the
services of fealty were enforced by distress, and hence, although a feud were
granted absolutely, in fee simple, by livery of seisin only, and without a word of
reservation expressed, the lord had his right of distress for the rent, which came
to be the substitute of the feual services. That right depended not on contract,
or the terms of the reoffment, but was a condition of the tenure. It is very clear
that it would have been no answer to a distress to tell the lord that he had lost,
or by his wrongful act avoided, the deed which expressed the reservation of
his rent-service. The reply could have been that the rent-service depended on
no formal reservation, but that it resulted by inherent necessity out of the
tenure, and that distress was its inseparable incident. This is the ground on
which the present case is attempted to be supported. Let us proceed carefully in
tracing the principles of the law that must determine whether it can be placed
on this ground.
The statute of quia emptores destroyed subinfeudation in England. Saith
Littleton (speaking of the effect of the statute), "where a man upon a gift in tail, or
a lease for life, will reserve to [108] himself a rent-service, it behoveth that the
reversion of the lands and tenements be in the donor or lessor, for if a man will
make a reoffment in fee, or will give lands in tail, the remainder over in fee
simple, without deed reserving to him a certain rent, this reversion is void; for
that no reversion remains in the donor, and such tenant holds his lands
immediately of the lord of whom his donor held:" I Thomas, Coke Litt- star p.
444. Such was the effect of the statute.
I find the best explication of this subject in Comment on Landlord and
Tenant, p.97, to the effect following: "The statute quia emptores having
abolished all intermediate tenures, and the reversion of every fee being by the
feoffment divested out of the feoffor, and transferred to the original lord of the
fee; the fealty and rent, as incident thereto, were likewise transferred. The
fealty was inseparably incident to the reversion, and therefore never could be
lost to the ultimate lord. But the rent, though generally incident to the reversion,
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might, at the will of the feoffor, be so separated from it, and reserved to the
feoffor himself, provided such reservation were by deed. But the fealty being
now severed from the rent, the remedy by distress, which was only given in
respect of the fealty, became lost to the feoffor; and therefore such rent stood
precisely in the same situation as other rents before the statute; and could
only be distrained for by being charged upon the land by a special clause in the
deed of reservation. When, therefore, a man aliens all his estate, and leaves no
reservation in him, as if tenant in fee make a reoffment, or tenant for life alien his
life estate, no rent can be reserved, except it be by a deed. On the other hand,
a lease for years not being alienation of the freehold, but a mere contract for a
temporary enjoyment of the land, a rent might well be reserved by parol upon
such a contract." [109]
The effect of the statute, to state it more briefly, was to take the rent-
service out of the tenure, upon subinfeudation, and to convert it into a rent-
charge, which must have a contract to support it. Now it is apparent that any
right of distress which Arrison or his alienee, Mrs. Wallace, possessed, would in
England be referred to the deed, because the reversion was gone from them,
and all the essential qualities of the tenure went with the reversion. But the
statute of quia emptores was never in force in Pennsylvania, Ingersoll v
Sergeant, 1 Wh. 337, and therefore this rent-service is not converted into a
rent-charge. Can it exist then independently of the deed? It certainly can, in the
absence of the statute quia emptares, if our titles be feudal: it as certainly
cannot, if our titles be allodial.
I see no way of solving this question, except by determining whether our
Pennsylvania titles are allodial or feudal. It seems strange that so fundamental a
question as this should be in doubt at this day, but it has never had, so far as I
know, a direct judicial decision. In a valuable note by Judge Sharswood to the
opening passage of Blackstone's Chapter on Modem English Tenures (2
Sharswood's Black. 77), it is said, "that though there are some opinions that
feudal tenures fell with the Revolution, yet all agree that they existed before,
and the better opinion appears to be that they still exist," in support of this
statement, the feudal principles that have entered into our conveyancing are
alluded to, and several cages are cited in which the consequences and
qualities of feudal tenures have been recognized in our estates, although
generally, in these very cases, it has been assumed that our property is allodial.
I venture to suggest that much of the confusion of ideas that prevails on this
subject has come from our retaining, since the American Revolution, the feudal
nomenclature of estates and tenures, as feel, freehold, heirs, reoffment, and the
like. [110] This term "rent-service" is feudal language, as we have seen, and
yet there is nothing in the application of such terms to determine the quality of
the tenure; for Cruise tells us, 1 Digest 7, that the circumstance of annexing a
condition of military service to a grant of lands does not imply that they are held
by a feudal tenure for the possessors of allodial property, who were called in
France liberi homines, were bound to the performance of military service. He
defines a feud as a tract of land held by a voluntary and gratuitous donation, on
condition of fidelity and certain services, and allodial lands as those whereof the
PAGE 161 OF 337

owner had the dominium directum et verum, the complete and absolute
property, free from all services to any particular lord. And yet the accident of
services being annexed to an allodial grant, did not make it feudal, which
shows that the genuine distinction consisted in fealty, and not in services.
Fealty, says Christian, in his note to 2 Black. 46, quoting Wright's Law of
Tenures 35: "Fealty, the essential feudal bond, is so necessary to the very
notion of a feud, that it is a downright contradiction to suppose the most
improper feud to subsist without it; but the other properties or obligations of an
original feud may be qualified or varied by the tenure or express terms of the
feudal donation."
Our question, then narrows itself down to this: is fealty any part of our
land tenures? What Pennsylvanian ever obtained his lands by "openly and
humbly kneeling before his lord, being ungrit, uncovered, and holding up his
hands both together between those of the lord, who sat before him, and there
professing that he did become his man from that day forth, for life and limb,
and earthly honour, and then receiving a kiss from his lord?" This was the oath of
fealty which was, according to Sir Martin Wright, the essential feudal bond so
necessary to the very notion of a feud.
I grant that the charter to Penn was in free and common socage, to which
feudal tenures had at that time been reduced in England, and that the oath of
fealty belonged to socage tenures as much as to original feuds, and was
expressly recognized in the charter. But then came the Revolution, which
threw off the dominion of the mother country, and established the independent
sovereignty of the state and on the 27th day of November 1779 (I Smith's
Laws,480), an act was passed for vesting the estates of the late proprietaries
of Pennsylvania in the Commonwealth. This act, after reciting in four sections
the rights and duties of a sovereign state, proceeded in sec. 5 to transfer to the
Commonwealth every estate, right, title, interest, property, claim, and demand of
the proprietaries, as fully as they hold them on the 4th day of July 1776, and all
royalties, franchises, and lordships, granted in the Charter of King Charles the
Second, were vested in the state. The manors and lands which had been
surveyed for the proprietaries were excepted, and a pecuniary compensation to
them was provided. Another Act of 9th of April 1781, 2 Smith 532, provided for
opening the land office and granting lands to purchasers; and, says the 11th
section, "all be free and clear of all remorvations and restrictions as to mines,
royalties, quit-rents, or otherwise, so that the owners thereof respectively
shall be entitled to hold the same in absolute and unconditional property, to all
intents and purposes whatsoever, belonging to or accruing from the same, and
that clear and exonerated from any charge or encumbrance whatever, excepting
the doubts of the said owner, and excepting and reserving only the fifth part of
all gold and silver ore for the use of the Commonwealth, to be delivered at the
pit's mouth, clear of all charges. [112] If it should be suggested that these acts
were inapplicable to the city of Philadelphia, because it had been laid out by
the proprietaries before the opening of the land office by the state, I would refer
to Judge Gibson's observations in Bubley v Vanhom, 7 S. & R. 184, where he
says, to have suffered the Penn family to retain those rights which they held
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strictly in their proprietary character, would have been inconsistent with the
complete political independence of the state. The province was a fief hold
immediately from the Crown, and the Revolution would have operated very
inefficiently towards complete emancipation, if the feudal relation had boon
suffered to remain. It was therefore necessary to extinguish all foreign interest in
the soil, as well as foreign jurisdiction in the matter of government.
emancipating every acre of the soil of Pennsylvania from the grand
characteristic of the feudal system. Even as to the lands held by the
proprietaries themselves, they held them as other citizens held, under the
Commonwealth, and that by a title purely allodial. All our lands are held
mediately or immediately of the state, but by titles purged of all the rubbish of the
dark ages, excepting only the feudal names of things not any longer feudal.
Escheat, which was one of the incidents of feudal tenures, is sometimes
mentioned as making the feudal origin of our titles, and the allegiance which
we owe to the state is also often spoken of as fealty. Escheat, with us, depends
on positive statute, which makes the state the heir of property on defect of
known kindred of the decedent. Nothing about it but the name is feudal, and this
is another instance in which a word applied in a sense different from its original
[113] meaning, suggests ideas which have been exploded. As to allegiance, it is
indeed due from every citizen to the state, but it is a political obligation, and is
as binding on him who enjoys the protection of the Commonwealth, without
owning a foot of soil, as on him who counts his acres by hundreds and
thousands. So also it is due to the Feudal Government, through which none of
our titles have been derived. The truth is, that this obligation, which is
reciprocal to the right of protection, results out of the political relations
between the government and the citizen, and bears no relation whatever to his
land titles any more than to his personal property.
Under the Acts of Assembly I have alluded to, the state became the
proprietor of all lands, but instead of giving them like a feudal lord to an
enslaved tenantry, she has sold them for the best rice she could get, and
conferred on the purchaser the same absolute estate she held herself, except
the fifth of gold and sliver, and six acres in the hundred for roads, and these
have been reserved, as everything else has been granted, by contract. Her
patents all acknowledge a pecuniary consideration, and they stipulate for no
fealty, no escheat, rent-service, or other feudal incident. I conclude, therefore,
that the state is lord paramount as to no man's land. When any of it is wanted
for public purposes, the state, in virtue of her political sovereignty, takes it,
but she compels herself, or those who claim under her, to make full
compensation to the owner.
Now, if the state was not paramount lord of the lots which Arrison
possessed, how could he become the lord of his grantee? How could he
receive anything out of those lots, against his absolute deed in fee simple,
except, by an express reservation? To do so, he must ignore the American
Revolution, and all our legislation about lands, and place himself back upon the
[114] common law, as it stood in the thirteenth century, before the statute of
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quia emptores was passed. But if he is not permitted to do all this, then he must
show a deed for what he claims, and this brings us back to the first conclusion,
that the present right of distress depends on a deed no less than the previous
actions at law.
There is in the English reports a long line of cases terminating in Ward v
Lumley, decided in the Exchequer in 1860, and reported in 5 Huristone, Young
& Gordon, wherein it was held that canceling a lease by mutual consent of both
parties, does not destroy the estate vested in the lessee, and the lessor may
therefore maintain an action of debt on the demise for the recovery of the
rent, a case which is a fair type of its class and which it is said rules the present
case in favor of the plaintiff in error.
An obvious distinction betwixt that case and the present is the absence of
all fraudulent intent in the destruction of the lease; but not to insist on this, let me
say that all cases of that sort proceed on the ground that, the lease leaves a
reversion in the lessor, in virtue of which he may sue for rent. That this in that
ground of recovery in such instances, is shown by the cases in which it has
been held that a lessor cannot bring an action of covenant, after he has
assigned the reversion for any breach subsequent to the assignment, but the
action can only be brought by the assignee of the reversion. Consequently, if the
assignee of the reversion sue the assignee of the term, or the assignee of the
term sue the lessor, the action is local, and must be brought in the county where
the land lies: Thursby v Plant, I Saund. Rep. 241, and notes. [115]
Now, whoever will tum back and read the extract I made from Comyn, will
see that the statute quia emptores did not affect leases of chattel interests, but
only reoffment by mesne lords. Subinfeudation was what the statute destroyed,
and it destroyed it by vesting the reversion in the ultimate signory. But in leases
for years, the reversion remains in the lessor, and goes by assignment, to his
assignee, and carries with it the right of action. The reason, therefore, why this
class of cases does not embrace this case, is that here was a conveyance in
fee simple of an allodial estate, without any reversion remaining in the grantor,
and therefore all his remedies for rent on his contract. If the estate were feudal
the absence of the stawte would lead to a different conclusion - but with great
deference to all counter opinions, I hold that the estate was strictly allodial,
and that Anison retained only what was expressed in the deed.
If the question were up for the first time, we might perhaps doubt whether
the alteration made by Arrison was fatal to Mrs. Wallace's rights; but we
consider ourselves concluded on that question by the previous decisions, and
have not therefore discussed it. Taking the doctrine of those cases, the only
question left has seemed to us to be, whether Mrs. Wallace had any remedy
by virtue of the estate that is in her, and independently of the deed; and all we
have said must be understood as applying to that question.
We have not thought it worth while to consider the case in connection with
the Statute of Frauds and Peduries, for if that statute should be found to be
applicable, it would only bring us to the conclusion which we reach without it.
The judgment is affirmed. [116]
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PAGE 165 OF 337

LAND PATENTS AND ALLODIAL TITLES
Introduction
If the American people ever allow the banks to control issuance of their
currency, first by inflation and then by deflation, the banks and corporations that
grow up around them will deprive the people of all property until their children
will wake up homeless on the continent their father occupied.
- Thomas Jefferson
While it is generally believed in America today that the purpose of the
American Revolution was to resist taxation without representation, the actual
reason was to eliminate the cause of this and many other injustices, and that
cause was the admiralty jurisdiction imposed within the bodies of the counties.
A major effect of this cause was a contractual feudal/serf relationship between
the colonial landholders and the Crown - legal title being held by Great
Britain and an equitable title being held by the colonist/serf in possession of
and working the land.
This presumption of rightful legal title was challenged by the colonists,
who insisted that the King of England did not own the land and, therefore, it was
not his to grant to supportive colonists. After the Revolution, the land became
the property of each State's people, with the authority of the people to parcel
out the land to claimants in a fair and equitable manner. If some land remained
unoccupied, Jefferson said that anyone occupying it has, by possession, the
right [117] of ownership. Land was to be held by allodial title, which simply
means there is "No superior or overlord" to the land owner. He was Sovereign
on his land.
One of the earliest statutes for granting land patents was passed by an Act
of Congress. April 24, 1820. which prohibited the use of credit for the purchase
of government land. In the debates in Congress prior to the passage of this Act,
Senator King of New York said:
It (the Act) is calculated to plant in the new country a population of
independent, unembarrassed freeholders ... it will put it in the power of every
one to purchase a freehold, the price of which can be cleared in three years ... it
will prevent the accumulation of an alarming, debt which exigrience proves
never could or would be paid.
In 1862, the Homestead Act, Section 4, provided that:
No lands acquired under the provisions of this Act shall in any event
become liable to the satisfaction of any debt or debts contracted prior to the
issuing of the land patent.
The issue of allodial v feudal land titles in Africa was addressed by the
Supreme Court of the State of Pennsylvania in the case of Wallace v
Harmstad in 1863:
I see no way of solving this question, except by determining whether our
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Pennsylvania titles are allodial or feudal .... [118]

I venture to suggest that much of the confusion of ideas that prevails on
this subject has come from our retaining, since the American Revolution, the
feudal nomenclature of estates and tenures, as fee, freehold, heirs, feoffment
and the like.
Our question, then, narrows itself down to this: is fealty any part of our
land tenures?
What Pennsylvanian ever obtained his lands by openly and humbly
kneeling before his lord, being ungirt, uncovered, and holding up his hands both
together between those of the Lord, who sat before him, and there professing
that he did become his man from that day forth, for life and limb, and certainly
honour, and then receiving a kiss from his lord? This was the oath of fealty which
was, according to Sir Martin Wright, the essential feudal bond so necessary to
the very notion of a feud.
emancipating every acre of soil of Pennsylvania from the grand characteristics
of the feudal system. Even as to the lands held by the proprietaries (City of
Philadelphia) themselves,they held them as other citizens held, under the
Commonwealth, and that by a title purely allodial. [Wallace v Hanmtad, 44 Pa.
492, (1863))
So, the people had a right to allodial land titles as a direct result of the
Declaration of Independence and the War for Independence that followed.
A holder of an allodial title, (i.e., there being no Superior or overlord)
cannot be taxed on that property against his consent. There [119] could be a
transfer or sales tax imposed by the State at the time of purchase, but no
taxation on the property itself against the owner's consent. And yet, the
taxation of property soon became the custom, and not the exception, in this
country. Why and How?
When taxation of real property began, because of "the confusion of ideas
that prevails on this subject," the people unknowingly, and voluntarily accepted
the premise that government was the Superior and the legal title holder; and
their interest in the land was merely an equitable one. This voluntary
acceptance constituted tacit consent to a feudal contract. King George, once
again, was back in America.
When the gigantic public trust was implemented in 1913 via the Federal
Reserve Act, no immediate changes with regard to this master/serf
relationship between government and landholder were necessary. Life went on
as usual with no clues to the fact that all property had been hypothecated to the
Board of Governors of the Federal Reserve; and as trustees, they held legal
title. This was accomplished by allowing the same taxing agencies to act as
administrating agents for this newly formed trust.
With the feudal tenant registered as a beneficiary of this trust via a Birth
Certificate, and title to the land held in trust, further involvement and the
consequent subjection to the controls of management was left to the individual.
For example: The farmer/tenant was left to his own devices and discretion as to
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what to plant, when to plant, how much to plant, etc. - as long as he paid his
tithes to - the tax collector (now, in actuality, a collector of interest and/or
insurance, [120] premiums). However, when he applied, for, and received, such
"benefits" as farm subsidy, government supported grain storage, etc., he
became further bound to the trust and incurred certain additional obligations
and duties, he voluntarily subjected himself to the coercive terms of adhesion.
Now, he could be ordered and directed as what to plant, where to plant, when
to plant, how much of each crop, and even be ordered to destroy crops
already in existence. If he thought that such coercive, and apparently insane,
actions were violative of his rights to due process of law and went to court, as
many farmers did, he lost; and the court did not tell him that a contract was
being enforced against him in which he had voluntarily subjected himself to its
coercive terms.
If he had understood the facts and the applicable law, as it applies to those
facts, he could have used the law to extricate himself from such an intolerable
situation, in lieu of having the law used against him.
The founding fathers knew free men could survive only as long as they
owned allodial title to property, because it is this type of ownership that
accounted for broad spectrum distribution of income and preservation of the
common law jury system, which they referred to as the "palladium," or the very
comerstone, of liberty. They also knew that manipulation of the money supply,
via debt, would ultimately take from the people their substance by concentrating
the property into the hands of a few. [121]
According to conservative estimates, possibly half a million U.S. farmers
will be driven from the land in the next several years. Jim Hightower had put
the goal of the past administration at 10,000 super farms and there is no reason
to believe that this is also not the goal of the present administration or any
administration. Mr. Hightower is the Texas Commissioner of Agriculture. A total
of 10,000 farms for the nation has been the i!oal of public policy, i.e., the
policy of the Board of Govemors of the Federal Reserve, our trustees, ever
since its Committee for Economic Development wrote its Adaptive Program for
Agriculture.
Mortgage foreclosures of equitable title interests are on the increase, and
are the means of implementing this public policy.
The best title one can acguire from a title comp is a "Fee Simple Absolute"
defined as:
A fee simple absolute is an estate limited absolutely to a man and his heirs
and assigns forever without limitation or condition.
At first blush it would appear that this is the same title as "allodial;"
deemed as:
Free, not holden to any lot or superior; [Black's Law Dictionary] [122]
In order to discover the legal distinction between the terms "allodial", and
"fee simple absolute," we must define the word "estate as used in the definition
of "fee simple absolute."
PAGE 168 OF 337

ESTATE: The degree, quantity, nature, and extent of interest which a

person has in real property is usually referred to as an estate, and it varies
from absolute ownership down to naked possession. (Black's Law Dictionary)
Thus, "fee simple absolute" is an over broad, catch-all, phrase that
encompasses all interests in land from allodial down to naked possession. It in
no way describes or defines your vested interest in the land. Clearly, if the land is
in trust, with legal title being held by the trustees of that trust, you do not
possess allodial title. In order to discover your particular interest in this "fee
simple absolute" (your degree of serfdom), we must know of all adhesion
contracts you have consummated, placing additional burdens and restrictions
upon your use of that land.
Maybe we are beginning to understand the legal basis for planning
commissions, land use permits, building permits, etc., etc... The bottom line is
the degree, quantity, nature, and extent of interest; and which party to the
contract(s) possesses what.
What we are going to examine now is how one, as a free sovereign, can
claim allodial title to property hypothecated to a trust governed by the
Monetary Power. [123]
The formula of the Monetary Power for a world program to deprive land-
owners of their lands has been stated thus:
We shall soon begin, to establish huge monopolies, colossal reservoirs of
wealth, upon which even the big ... properties will be dependent to such an
extent that they will all fall together with the government credit on the day
following the political catastrophe. The economists here present, must carefully
weigh the significance of this combination. We must develop, by every means,
the importance of OUR SUPER GOVERNMENT, REPRESENTING IT AS THE
PROTECTOR AND BENEFACTOR OF ALL WHO VOLUNTARILY SUBMIT TO
US. (join the Trust wherein "US" are the trustees)
The aristocracy ... as a political force has passed away. We need not take
theirs into consideration. But, as owners of land, they are harmful to us in that
they are independent in their sources of livelihood. THEREFORE, AT ALL
COSTS, WE MUST DEPRIVE THEM OF THEIR LAND.
THE BEST MEANS TO ATTAIN THIS, IS TO INCREASE THE TAXES AND
MORTGAGE INDEBTEDNESS. These measures will keep land ownership in a
state of unconditional subordination
At the same time, IT IS NECESSARY TO ENCOURAGE ...
ESPECIALLY... SPECULATION... Without Speculation, industry will cause
private capital to increase and tend [124] to improve the condition of Agriculture
by freeing the land from indebtedness for loans by the land banks. It is
necessary for industry to deplete the land both of and through speculations,
transfer all the money of the world into our hands....
To destroy... industry, we shall, as an incentive to this speculation,
encourage a strong demand for luxuries, all enticing luxuries.
We will force up waies-which however will be of no benefit to the
workers, for we will at the same time cause a rise in the prices of 12rime
PAGE 169 OF 337

necessities, pretending that this is due to the decline of agriculture and cattle
raising....
That THE TRUE SITUATION SHALL NOT BE NOTICED PREMATURELY,
(before recognition of the Anti-Christ), WE WILL MASK IT, BE A PRETENDED
EFFORT TO SERVE THE WORKING CLASS AND PROMOTE GREAT
ECONOMIC PRINCIPLES, FOR WHICH AN ACTIVE PROPAGANDA WILL BE
CARRIED ON THROUGH OUR ECONOMIC THEORIES.[A] Color of Title [B]
Today, the American based system establishing land ownership consists of
three key requirements. These three are the warranty deed or some other @ of
deed purporting to convey ownership of land, title abstracts to chronologically
follow the development of these different types [125] of deeds to a piece of
property, and title insurance to protect the ownership of that land. These three
ingredients must work together to ensure a systematic and orderly conveyance
of a piece of property. None of these three by itself can act to completely convey
possession of the land from one person to another. At least two of the three are
always deemed necessary to adequately satisfy the legal system and real
estate agents that the title to tile property has been placed in the hands of the
purchaser. Often, all three are necessary to properly pass the ownership of the
land to the purchaser. Yet does the absolute title and the ownership of the land
really pass from the seller to purchaser with the use of any one of these three
instruments or in any combination thereof? None of the three by itself passes
the absolute or allodial title to the land, the system of land ownership in America
originally operated under, and even combined, all three can not convey this
absolute type of ownership. What then, is the function of these three
instruments that are used in land conveyances; and what type of title is
conveyed by the three? Since the abstract only traces the title and the title
insurance only insures the title, the most important and therefore the first group
to examine are the deeds that purportedly convey the fee from seller to
purchaser.
These deeds include the ones as follows: warranty deed, quit-claim deed,
sheriff's deed, trustee's deed, judicial deed, tax deed, will, or any other
instrument that purportedly conveys the title. Each of these documents state that
it conveys the ownership to the land. Each of these, however, is actually a
color of title. [G. Thompson, Title to Real Property, Preparation and Examination
of Abstracts Ch. 3, Section 73, p. 93 (1919). [126]
A color of title is that which in appearance is title but which in reality is not
title; [B] (1) and, in fact, any instrument may constitute color of title when it
purports to convey title to the land, as well as the land itself, although it is
void as a muniment of title. [BI (2). The Supreme Court of Missouri has stated:
[when we say a person has a color of title, whatever way be the meaning of
the phrase, we express the idea, at least, that act has been previously done ...
by which some title, good or bad, to a parcel of land of definite extent has been
conveyed to him. [St. Louis v Gorman, 29 Mo. 593 (1860)]
In other words, a color of title is an appearance of apparent title, an "image"
of the true title, hence the qualification "color or which, when coupled with
PAGE 170 OF 337

possession, purports to convey the ownership of the land to the purchaser.

However, this does not say the color of title is the actual or true title itself, nor
dies it say the color of title itself actually conveys ownership. In fact the
claimant or holder of a color of title is not even required to trace the title
through the chain down to his instrument. [BI (3). Rather it may be said a color
of title is prima facia evidence of ownership of land, and rights to possession of
the land until such time as that presumption of ownership is disproved by a
better title or the actual title itself. If such cannot be proven to the contrary, then
ownership of the land is assumed to have passed to the occupier of the land. To
further strengthen a color of title holder's position, courts have held that the
good faith of the holder of a color of title is presumed in the absence of
evidence to, the contrary. [B] (4). [127]
With such knowledge of what a color of title is, it is interesting to discover
what constitutes colors of title:
1. Warranty deed A warranty deed is like any other deed or conveyance, [B]
(5) and a warranty deed or conveyance is a color of title. IBI (6).
2. Deeds generally Deeds constitute colors of title (BI (7) and a deed that
purports to convey interest in land is a color of title. [B] (8) A deed which, on its
face, purports to convey a title constitutes a claim and color of title. [B] (9).
3. Quit-claim deeds A quit-claim deed is a color of title [B] (10) and can pass
the tide as effectively as a warranty with full covenants. [B] (I 1).
4. decds, and tax deeds are also colors of title [B] (12), as are Judicial
deeds [B] (13). The Illinois Supreme Court went into detail in its determination
that a tax deed is only a color of title:
There the complainant seems to have relied upon the tax deed as
conveying to him the fee, and to sustain such a bill, it was incumbent of him to
show that all the requirements of the law had been complied with. [Huls v
Buntin, 47 111. 396 (1865)) [128]
A simple tax deed by itself is only a color of title and does not meet all the
requirements of the law for a fee simple, allodial title. Thus any tax deed which
purports, on its face, to convey title is a good color of title. [B] (14).
5. Wills A will passes only a color of title and can pass only so much as the
testator owns, though it may attempt to pass more. [B] (15).
6. Trustee's deed, mortgage and foreclosure A trustee's deed, a mortgage
and strict foreclosure [B] (16) or any document defining the extent of a
disseisor's claim or purported claim [B] (17) have all been held to be colors of
title:
[there is nothing here requiring a deed, to establish a color of title, and
under the former decisions of this court, color of title may exist without a
deed. [Baldwin v Ratcliff, 125 Ill. 376, 383 (1888).]
Thus, a color of title does not mean the actual title, nor does the question
of notice of outstanding title effect a color of title. [B] (18).
None of these cases have been overruled and are still valid, well
established, law. All of the documents described in these cases are the main
PAGE 171 OF 337

avenues of claimed land ownership in America today; yet, none actually

conveys the true and allodial title. They in fact convey something quite different.
[129]
When it is stated that a color of title conveys only an appearance of title,
such a statement is correct but, perhaps, too vague to be properly understood
in its correct legal context. Of better use are the more pragmatic statements
conceming tide. A title, or color of title, in order to be effective in transferring the
ownership, or purported ownership, of the land must be a marketable or
merchantable title.
A marketable or merchantable title is one that is reasonably free from
doubt. [B] (19). This title must be reasonably free from doubts as necessary to
not affect the marketability or salability of the property, and must be a title a
reasonably prudent person would be willing to accept. (B] (20). Such a title is
often described as one which would ensure to the purchaser a peaceful
enjoyment of the property [B] (21); and it is stated that such a title must be
obvious, evident, apparent, certain, sure or indubitable. [B] (22).
Marketable Title Acts adopted in several states generally do not lend
themselves to an interpretation that they might operate to provide a new
foundation of title based upon a stray, accidental, or interloping conveyance.
Their object is to provide for the recorded, fee simple ownership an exemption
from the burdens of old conditions,, which at each transfer of the property
interferes with its marketability. [B] (23). What each of these legal statements in
the various factual situations says is that the color of title is never described as
the absolute or actual title, rather each says that"is one of the types of titles
necessary to convey ownership or apparent ownership. In order for a title to be
effective it must be marketable it must be a title which is good of recent record
even if it may not be the actual title in fact. [B] (24). [130]
Authorities hold that to render a title marketable, it is not only necessary
that it shall be free from reasonable doubt; in other words, that a purchaser is
not entitled to demand a title absolutely free from every possible suspicion.
[Cummings v Dolan, 52 Wash. 496, 100 P. 989 (1909)]
The record referred to is the title of abstract and all documentary evidence
pertaining to it:
It is an axiom of hornbook law that a purchaser has notice only of recorded
instruments that are within his chain of title. II R. Patton & C. Patton, Patton on
Land Titles. Section 69, at 230-233. (2nd ed. 1957); Sabo v Tiorvath, 559 P. 2d
1038, 1043 (Ak. 1976)]
Title insurance then guarantees that a title is marketable but not absolutely
free from doubt, and under the color of title system used most often in this
country today, no individual operating under this type of title system has the
absolute or allodial title. All that is really necessary to have a vlid title is to
have a relatively clean abstract with a recognizable color of title as the
operative marketable title within the chain of title. It therefore becomes
necessarily difficult, if not impossible after a number of years, considering the
inevitable contingencies that must arise and the title disputes that will occur, to
PAGE 172 OF 337

ever properly guarantee an absolute title. This is not necessarily the fault of the
seller, but it is the fault of the legal and real estate systems for allowing such a
diluted form of title to be controlling in an area where it is imperative to have the
absolute title. In order to correct this problem, it is important to return to those
documents the early leaders of the nation created to properly ensure that
property remained one of the inalienable rights the newly established
sovereign freeholders could rely on [131] to always exist. This correction must
be in the form of restricting or perhaps eliminating the widespread use of a
marketable title and refuming to the absolute title.
Land Patents Why They Were Created

The Americans had a choice as to how they wanted their new government
and country to be formed. Having broken away from the English sovereignty
and establishing themselves as their own sovereigns, they had their choice of
types of taxation, freedom of religion, and most importantly ownership of land.
The Founding Fathers chose allodial ownership of land for the system of
ownership in this country:
After the American Revolution, lands in this state (Mmyland) became
allodial, subject to no tenure nor to any services incident thereto. [in re Waltz et
al., Burlow v. Security Trust and Savings Bank, 240 P. 19 (1925), quoting
Matthews v Ward, 10 Gill & J. (Md.) 443 (1839)].
The tenure referred to in this case was the feudal tenure and the services
or taxes required to be paid to retain possession of the land under the feudal
system. This new type of ownership was acquired in all thirteen states. [B] (25).
The basis of English land law is the ownership of the realty by the
sovereign and from the crown all titles flow. [B] (26). It was stated this way in
the case of McConnell v Wilcox: [132]
From what source does the title to the land derived from a government
spring? In arbitrary governments, from the supreme head be he the emperor,
king or potentate; or by whatever name he is known. In a republic, from the law
making or authorizing to be made the grant or sale. In the first case, the party
looks alone to his letters patent; in the second, to the law and the evidence of
the acts necessary to be done under the law, to a perfection of his grant,
donation or purchase ... The law alone must be the fountain from whence the
authority is drawn; and there can be no other source. [I Scam. Ill. 344, 367
(1837)]
The American people as newly established sovereigns after the
Revolutionary War, became complete owners in their land beholden to no lord or
superior, sovereign freeholders in the land themselves. These freeholders in
the original thirteen states now held allodial the land they possessed before the
war only feudally. This new and more powerful tide protected the sovereigns
from unwarranted intrusions or attempted takings of their land. More
importantly, it secured in them a right to own land absolutel in perpetuity. By
definition, the word perpetuity means: Continuing forever. Legally, pertaining to
PAGE 173 OF 337

real property, any condition extending the inalienability... [Black's Law

Dictionary, p. 1027 (5thed. 1980).]
In terms of an allodial title, it is to have the property of inalienability
forever. Nothing more need be done to establish the ownership of the
sovereigns to their land, although confirmations were usually required to avoid
possible future title confrontations. [133]
The Constitution in its original form was ratified by a convention of the
states on September 17, 1787. The Constitution and the government formed
under it were declared in effect on the first Wednesday of March, 1789. Prior
to this tine, during the Constitutional Convention, there was serious debate on
the disposal of what the convention called the "Western territories," now the
states of Ohio, Indiana, Illinois, Michigan, Wisconsin and part of Minnesota,,
more commonly known as the Northwest Territory. This tract of land was
ceded to the new American republic in the treaty signed with Britain in 1783.
Part of the method by which the new United States decided to dispose of
its territories, was stipulated in Article IV, Section 111, Clause 2, of the U.S.
constitution:
The Congress shall have the power to dispose of and make all needful
Rules and Regulations respecting the Territory or other Property belonging to
the United States.
Thus, Congress was given the power to create a vehicle to divest the
National government of all its right and interest in the land. This vehicle. known
as the land patent, was to forever divest the government of its land and was to
place such total ownership in the hands of the freeholders who collectively
created the government. The land patents issued prior to the initial date of
recognition of the United States Constitution were ratified by the members of
Constitutional Congress. Those patents created by statute after March, 1789,
had the Congressional intent behind such statutes as a reference and basis for
the determination of their powers and operational effect. [134]
There have been dozens of statutes enacted pursuant to Art. Art. IV Sec.
111, Cl. 11. [B] (27). Some of these statutes had very specific intents of aiding
soldiers of wars or dividing lands in a very small region of one state, but all
had the main goal of creating in the sovereigns freeholders on their lands a
status in which they were beholden to no lord or superior. One of these acts
however, was the main patent statute in reference to the intent Congress had
when creating the patents. That Statute is 3 Stat. 566.
In order to understand the validity of a patent in today's property law, it is
necessary to turn to other sources than the acts themselves. These sources
include the Congressional debates and case law citing such debates. The best
source is the Abridgment of the Debates of Congress, Monday, March 6, 1820.
This abridgment and the actual debates found in it concern 3 Stat, 566, one of
the most important of the land patent statutes.
In this important debate, the reason for such a particular act in general and
the protection afforded by the patent in particular were discussed. As Senator
Edwards stated:
PAGE 174 OF 337

But, he said, it is not my purpose to discuss, at large, the merits of the

proposed change. I will, at present, content myself with an effort, merely, to
shield the present settlers upon public lands from merciless speculators,
whose cupidity and avarice would unquestionably be tempted by the
improvements which those settlers have made with the sweat of their brows,
and to which they, have been encouraged by the conduct of the government
itself; for though they might be considered as embraced by the letter of the law
which provides against intrusion [135] on public lands, yet, that their case has
not been considered by the Government as within the mischiefs intended to be
prevented is manifest, not only from the forbearance to enforce the law, but
from the positive rewards which others, in their situation, have received, by the
several laws which have heretofore been granted to them by the same right of
preemption which I now wish extended to the present settlers. Ild. at 456.1
Further, Senator King from New York stated:
He considered the change as highly favorable to the poor man and he
argued at some length, that it was calculated to plant in the new country a
population of independent, unembarrassed freeholders... that it would cut up
speculation and monopoly; that the money paid for the lands would be carried
from the state or country from which the purchaser should remove; that it
would prevent the accumulation of an alarming debt, which experience proved
never would and never could be paid. [Id. at 456-571]
In other statutes, the Supreme Court recognized much of these same
ideas.
The object of the Legislation is manifest. It was intended to prevent
speculation by dealings for rights of preference before the public lands were in
the market. The speculator acquired power over choice spots, by procuring
occupants to seat themselves on them and who abandoned them as soon as
the land was entered under their preemption rights, and the speculation
accomplished. Nothing could be more easily done than this, if contracts of this
[136] description could be enforced. The Act of 1830, however, proved to be of
little avail; and then came the Act of 1838 (5 stat. 251) which compelled the
preemptor to swear that he had not made an arrangements by which the title
might inure to the benefit of anyone except himself, or that he would transfer
it to another at any subsequent time. This was preliminary to the allowing of his
entry, and discloses the policy of Congress. (United States v Reynes, 9 How.
U.S. 127 (1850)]
Congress has the sole power to declare the dignity and effect of titles
emanating from the United States and the whole legislation of the government
must be examined in the determination of such titles. [B] (28). It was clearly
the policy of congress, in passing the preemption and patent laws, to confer the
benefits of those laws to actual settlers upon the land. [B] (29). The intent of
Congress is manifest in the determinations of meaning, force, and vested in the
patent. These cases illustrate the power and dignity given to the patent. It was
created to divest the government of its lands, and to act as a means of
conveying such lands to the generations of people that would occupy those
lands. This formula, "or his legal representatives," embraces representatives of
PAGE 175 OF 337

the original grantee in the land, by contract, such as assignees or grantees, as

well as by operation of law, and leaves the question open to inquiry in a court of
justice as to the party to whom the patent, or confirmation, should enure. [B] (30).
The Patent was and is the document and law that protects the settler from
the merciless speculator from@the people that use avarice to unjustly benefit
themselves against an unsuspecting nation. The patent was created with these
high and grand intentions, and was created with such intentions for a sound
reason. [137]
The Power And Authority Of A Patent

Legal titles to lands cannot be conveyed except in the form provided by
law. IBI (31) Legal title to property is contingent upon the patent issuing from the
government. [B] (32)
That the patent canes the fee and is the best title known to a court of law is
the settled doctrine of this court. [Marshall v Ladd, 7 Wall. (74 U.S.) 106
(1869).]
A patent issued, by the government of the United States is legal and
conclusive evidence of title to the land described therein. No equitable interest,
however strong, to land described in such a patent, can prevail at law, against
the patent. [Land Patents, opinions of the United States Attomey General's
office. (Sept. 18691
A patent is the highest evidence of title, and is conclusive against the
government and all claiming under junior patents or titles, until it is set aside or
annulled by some judicial. [Stone v United States, 2 Wall. (67 U.S.) 765
(1865)]
The patent is the instrument which, under the laws of Congress, passes
title from the United States and the patent when regular on its face, is
conclusive evidence of tide in the patentee. When there is a confrontation
between two parties as to the superior legal title, the evidence as to
ownership. [B] (33). Congress having the sole power to declare the dignity and
effect of its titles has declared the patent to be the superior and conclusive
evidence of the legal title. [B] (34). [138]
Issuance of a government patent granting title to land is 'the most
accredited type of conveyance known to our law'. (United States v Creek
Nation, 295 U.S. 103, Ill (1935); see also United States v Cherokee Nation,
474 F. 2d 628, 634 (1973)]
The patent is the only evidence of the legal fee simple title. (B] (35). These
various cases and quotes illustrate one fact that should be thoroughly
understood. THE PATENT IS THE HIGHEST EVIDENCE OF TITLE AND IS
CONCLUSIVE OF OWNERSHIP OF LAND IN COURTS OF COMPETENT
JURISDICTION.
PAGE 176 OF 337

Treaties The Substance Of Federal Land Patents

The question of supremacy of confirmed federal patent proceedings,
pursuant to an 1851 Act that had been enacted to implement the Treaty of
Guadalupe Hidalgo in 1848, versus a claimed public trust easement by the
City of Los Angeles, and State of California, was decided by the United States
Supreme Court in April, 1984 (Summa Corporation v State of Califor nia, 104
U.S. 1751) In this case petitioner (Summa Corporation) owned the fee title to
the Bailona Lagoon, a narrow body of water connected to a manmade harbor
located in the City of Los Angeles on the Pacific ocean. The lagoon became
part of the united States following the war with Mexico, which was formally
ended by the Treaty of Guadalupe Hidalgo in 1848. Petitioner's predecessors-
in-interest had their interest in the lagoon confirmed in federal patent
proceedings pursuant to an 1851 Act to implement the treaty, which provided
that the validity of claims to California lands would be decided according to
Mexican law. California made no [139] claim to any interest in the lagoon at the
time of the patent proceedings, and no mention was made of any such interest
in the patent that was issued.
Los Angeles brought suit against petitioner in a Califomia state court,
alleging that the city held an easement in the Bailona lagoon for commerce,
navigation, fishing, passage of fresh water to canals, and water recreation; such
an easement having been acquired at the time Califomia became a State.
Califomia was joined as a defendant as required by state law and filed a
cross-complaint alleging that it had acquired such an easement upon its
admission to the Union and had granted this interest to the city.
The trial court ruled in favor of the city and State, finding the lagoon was
subject to the claimed public easement. The Califomia Supreme Court affirmed,
rejecting petitioner's arguments that the lagoon had never been tideland. Even
if it had been, Mexican law imposed no servitude on the fee interest by reason
of that fact, and such a servitude was forfeited by the State's failure to it in the
federal patent proceedings. The Supreme Court ruled as follows:
The question we face is whether a property interest so substantially in
derogation of the fee interest patented to petitioner's predecessors can
survive the patent proceedings conducted pursuant to the statute implementing
the Treaty of Guadalupe Hidalgo ...
CALIFORNIA ARGUES THAT SINCE ITS PUBLIC TRUST SERVITUDE IS A
SOVEREIGN RIGHT, THE INTEREST DID NOT HAVE TO BE RESERVED
EXPRESSLY [140] ON THE FEDERAL PATENT TO SURVIVE THE
CONFIRMATION PROCEEDINGS...
The necessary result of the Coronado Beach decision (U.S. v Coronado
Beach Co., 255 U.S. 472 (1921), is that even "sovereign" claims such as,
those raised by the State of California in the present case must, like other
claims, be asserted in the patent proceedings or be barred...
Those decisions control the outcome of this case. WE HOLD THAT
CALIFORNIA CANNOT AT THIS LATE DATE ASSERT ITS PUBLIC TRUST
EASEMENT OVER PETITIONERS PROPERTY, WHEN Petitioner's
PAGE 177 OF 337

PREDECESSORS-IN-INTEREST HAD THEIR INTEREST CONFIRMED

WITHOUT ANY MENTION OF SUCH AN EASEMENT in proceedings taken
pursuant to the Act of 1851. The interest claimed by California is one of such
substantial magnitude that ... (it) must have been presented in the patent
proceedings or be barred.
The Land Acquisition Treaties [C]
Northwest Ordinance:
A resolution of Congress that merely stated its intent that the territory shall
be divided into three to five states to be created upon the existence of a certain
number of inhabitants required to become states of the Union. The Ordinance
was not a treaty. Its subject matter was part of [141] all territory gained from
Great Britain under the Treaty of Peace with Great Britain, 1783, 8 Stat. 80.
Treaty of Peace, 8 Stat. 80 (1783):

The boundaries of the territory are given in Article 11 of the treaty, i.e., the
western boundaries of those states today known as Mississippi, Tennessee,
Kentucky, Illinois and Minnesota all the states from the Mississippi River and
eastward to include the, original 13 colonies. Therefore, every federal land
patent in every state thereof flows from that treaty.
Treaty Of Cession, 8 Stat. 200 (April 20, 1803):

This was the famous "Louisiana Purchase" from which was gained the
following states: Louisiana, Arkansas, Oklahoma, Kansas, Nebraska, Iowa,
Wisconsin, North and South Dakota, Montana, Wyoming, and the Northeast
two-thirds of Colorado.
Treaty Of Ghent: 8 Stat. 218 (October 20, 1818):

Merely established the northern boundary of the Louisiana Purchase as
the 49th parallel to the Rocky mountains. [142]
The Oregon Treaty, 9 Stat. 869 (June 15, 1846):

An agreement with Great Britain that gave the United States undisputed
claim to the Pacific Northwest south of the 49th parallel. The states created from
this acquisition are Oregon, Washington, Idaho, and the southwest corner of
Wyoming.
Treaty Of Guadalupe Hidalgo, 9 Stat. 922 (1848):

Following the War with Mexico, under this treaty, the United States paid
Mexico $15 million dollars in gold coin for reparations, and the territory now
PAGE 178 OF 337

known as the states of Califomia, Nevada, Utah, Arizona, and the western
portions of Colorado and New Mexico.
It is noteworthy that all lands under this treaty, purchased by private
individuals from the United States, were paid for in gold and silver coin, after
which a federal land patent was confirmed and issued to the private claimant.
Because of the confusion of land claims by the Gold Rush settlers on
Mexican land grants, Congress enacted the Act of Congress, March 3, 1851, to
ascertain and settle the private land claims in the State of California. For the first
time, a Land Commissioner was established to confirm the claims and the
Court of Private Land Claims was established to settle disputes before final
confirmation by what is now known as the U.S. Bureau of Land Management
under the present Department of the Interior of the United States. The Act of
1851 established [143] a two year limit to contest claims, after which the
confirmed land claims were closed forever by the issuance of a federal land
patent that generally included the phrase: given this day to his heirs and
assigns forever.
No claims could be made after the issuance date of the patent. This is what
Summa (supra) was all about. The two year limitation on contests of federal
land patents issued to private land claimants was extended by the Act of March
3, 1891, and is still in force today.
Gadsden Purchase, 10 Stat. 1031 (Dec. 30, 1853):

This was a treaty between Mexico and the United States in which the U.S.
paid $10 million dollars in gold coin to Mexico for that southernmost strip, of New
Mexico. The treaty is significant because it refers back to the Treaty of
Guadalupe Hidalgo and conferred all the same rights and privileges to citizens of
that territory as in the 1848 treaty. Hence, that southernmost portion is, in actual
fact included in the Treaty of Guadalupe Hidalgo. All feudal land patents in this
area also flow from treaty law.
Cession of Texas:
Texas was annexed to the United States by the independent vote of the
inhabitants. [144]
While the Cession of Texas is a treaty, it was annexed as a House Joint
Resolution (HJR) and it should be reasonably certain that its inhabitants had
the same protection as those given under treaty law.
The Supremacy Clause [C]

The lead case which said treaty law cannot be interfered with by a state
legislature is Ware v Hytton (1796), 3 Dall. (3 U.S. 199). In this case, the
Supreme Court held that a treaty is the supreme law of the land, pursuant to
Article VI, Section 2 of the United States Constitution. ... and the judges in every
state shall be bound thereby, anything in the Constitution or the laws of any
State to the contrary notwithstanding... ... any act of the legislature cannot stand
PAGE 179 OF 337

in the way because a treaty is the declared will of the people of all the United
States and shall be superior to the constitution and laws of any individual state.
In other words, federal land patents put into evidence by a land owner
cannot be challenged by a state court because it flows from a United States
treaty and, therefore no court has -jurisdiction over title or ownership to land
traced to this paramount source of title. Only private citizens were given federal
land patents, hence the term "private land claim, "or "PLC, " used by the Bureau
of Land Management as the date of the original patent. [145]
Because all federal land patents flow from treaties that fall under the
supremacy clause, no state, private banking corporation or other federal
agency can question the superiority of title to land owners who have "perfected"
their land by federal land patent. Jurisdiction by any state court is invalid. Since
federal land patents cannot be collaterally attacked as to their validity or
authenticity as the highest evidence of title, no mortgage institution can claim
title to land by its "lien." Certified federal land Patents were given free and clear
allodial title with no encumbrances, then and now!
43 USC 59 establishes duly certified copies of federal land patents shall
be evidence in all cases where originals would be evidence. Section 57 covers
the states of Oregon and California. Section 58 covers Louisiana.
43 USC 83 covers the evidentiary effect of certified federal land patents
for all states. All the courts in the United States must take judicial notice of
these federal patents and their evidentiary effect under these federal statutes.
If the patents are not certified when entered into evidence, any court may
ignore the patent and overrule it as evidence of superior or paramount title
versus the mortgage lien, the county tax assessment, etc..
The Act of Congress, March 3, 1851, since updated by the Act of
Congress, 1891, stated anyone who was establishing a claim had to have it
confirmed by the United States Land Commission. If no one protested that claim
within a two year period, it could no longer be attacked under any
circumstances, it was final. This is what the Summa case addressed. When
the United States Supreme Court interprets a federal statute, the courts of
every state are bound by that interpretation. [146]
The key to finding case law in every state upholding federal treaty and its
laws can be found in its law libraries in the Key Digest under "public lands". Am.
Jur, 2d is the starting point to find the case law on treaties as they pertain to
decisions in the states.
In Summary
The federal land patent is the paramount or common source of titles from
the united States government. It is the mechanism and procedure for an
individual to lay claim to his right to allodial title of land, as was established by
the Declaration of Independence (our first organic Law) and the War for
Independence that followed.
A free sovereign individual who has a perfected federal land patent in his
possession, is in a very enviable position at law. No one can take that land from
PAGE 180 OF 337

him without first proving they have a superior vested right in the land, and that is
not possible.
For example, a title company insures "good title" and a bank has given a
farmer a loan on those grounds. Basically the title insurance company is at fault;
they did not search that title back far enough to its original source to see who
owned the land. If the bank subsequently attempts to foreclose, the farmer,
who has done his homework properly should win. Any remaining controversy
is between the bank and the title insurance company. In this example, it appears
that it does not matter whether the farmer is an heir or assign, the bank has to
prove it has superior title in that land in order to take it over. [147]
Anyone who has purchased foreclosed lands has done so without
guaranty of clear title, including IRS and state taxing agency foreclosures. By
perfecting a federal land patent, a free sovereign should now be in a position to
go on the offense. [148]
Bibliography
[B] "Memorandum of Law - History, Force, and Effect of the Land Patent".
(1) Wright v Mattison, 18 How. (U.S.) 50 (1855).
(2) Joplin Brewing Co. v Payne, 197 Mo. 422, 94 S. W. 896 (1906).
(3) Rawson v Fox, 65 111. 200 (1872).
(4) Davis v Hull, 92 111. 85 (1879).
(5) Mahrenholz v County Board of School Trustees of Lawrence County,
et. al., 93 111. App. 3d 366 (1981).
(6) Dempsey v Bums, 281 111. 44, 650 (1917).
(7) Dryden v Newman, 110 111. 186 (1886).
(8) Hinckley v Green, 52 111. 223 (1869).
(9) Busch v Huston, 75 Ill 343 (1874); Chickering v Failes, 26 Ill. 508
(1861).
(10) Sufford v. Stubbs, 117 Ill. 389 (1886).
(11) Grant v Bennett, 96 Ill, 513, 525 (1880).
(12) Kendrick v Latham, 25 Fla. 819 (.1889).
(13) Huls v Buntin, 47 Ill. 396 (1865).
(14) Walker v Converse, 148 Ill. 622, 629 (1894); see also Peadro v
Calliker, 168 Ill. 570 (1897); Chicago v Middlebrooke, 143 Ill. 265 (1892); Piatt
County v Goodell, 97 Ill 84 (1880); Stubblefield v Bordors, 92 Ill, 284 (1879);
Coleman v Billings, 89 Ill 183 (1878); Whitney v Stevens, 89 Ill. 53 (1878);
Thomas v Eckard, 88 Ill 593; Holloway v Clarke, 27 Ill. 483 (1861). [149]
(15) Baldwin v Ratcliff, 125 Ill. 376 (1888); Bradley v Rees, 113 Ill. 327
(1885).
(16) Chickering v Failes, 26 Ill. 508, 519 (1861).
(17) Cook v Norton, 43 Ill. 391 (1867).
PAGE 181 OF 337

(18) Burgett v Taliaferro, 118 Ill. 503 (1886); see also Connor v Goodman,
104 Ill. 365 (1882); County of Piatt v Goodell, 97 Ill. 84 (1880); Smith v
Ferguson, 91 Ill. 304 (1878); Hassett v Ridgely, 49 Ill. 197 (1868); Brooks v
Bruyn, 35 Ill. 391 (1864); McCagg v Heacock, 34 Ill. 476 (1864); Bride v Watt,
23 Ill. 507 (1860); and Woolward v Blanchard, 16 Ill. 424 (1855)
(19) Austin v Barnum, 52 Minn. 136 (1892).
(20) Roberts v McFadden, 32 Tex. Civ. App. 47; 74 S.W. 105 (1903).
(21) Barnard v Brown, 112 Mich. 452; 70 N.W. 1038 (1897)
(22) Ormsby v Graham,, 123 Ia. 202; 98 N.W. 724 (1904).
(23) Wichelman v Messner, 83 N.W. 2d 800, 806 (1957).
(24) Close v Stuyvesant, 132 Ill 607; 24 N. E. 868 (1890).
(25) Wallace v Harmstead, 44 Pa. 492 (1863).
(26) People v Richardson, 269 Ill. 275; 109 N.E., 1033 (1944)
(27) 12 Stat. 392, 37th Cong., Sess. 11, Ch. 75, (1862) (the Homestead
Act); 9 Stat. 520, 31st Cong., Sess. 1, Ch. 85, (1850) (Military Bounty Service
Act); 8 Stat. 123, 29th Cong., Sess. 11, Ch. 8, (1847) (Act to raise additional
military force and for other purposes); 5 Stat. 444, 21st Cong., Sess. 11, Ch.
30 (1831); 5 Stat. 51, 18th Cong., Sess. 1, Ch. 174, (1824); 5 Stat. 52, 18th
Cong., Sess 1, Ch. 173, (1824); 5 Stat. 56, 18th Cong., Sess., 1, Ch. 172,
(1824); 3 Stat. 566 16th Cong., Sess. 1, Ch. 51, (1820) (the major land patent
statute enacwd to dispose of [150] lands); 2 Stat. 748, 12th Cong., Sess. 1, Cli.
99, (1812); 2 Stat. 728, 12th Cong., Sess. 1, Ch. 77, (1812); 2 Stat. 716, 12th
Cong., Sess. 1, Ch. 68, (1812) (the Act establishing the General Land Office in
the Department of the Treasury); 2 Stat. 590, 1 Ith Cong., Sess. 11, Ch. 35,
(1810); 2 Stat. 437, 9th Cong., Sess. 11, Ch. 34, (1807); and 2 stat. 437, 9th
Cong., Sess. 11, Ch. 31, (1807).
(28) Bagnell v Broderick, 38 U.S. 436 (1839).
(29) Close v Stuyvesant, 132 lit. 607, 617 (1890).
(30) Hogan v Page, 69 U.S. 605,,(1864).
(31) McGarrahan v Mining Co., 96 U.S. 316 (1877).
(32) Sabo v Horvath, 559 p. 2d 1038, 1040 (Aka. 1976).
(33) Gibson v Chouteau, 13 Wall. 92 (1871).
(34) Bagnell v Broderick, 38 U.S. 438 (1839).
(35) McConnell v Wilcox, I Scam. (Ill.) 381 396 (1837).
[C] "Acres U. S. A., A Voice for Eco-Agriculture, " November 1984, Volume
14, No. I 1; 10008 East 60th Terrace, Kansas City, Mo. 64113: (An interview with
Carol Landi)
[D] Common Law Liens," from "Memorandum of Law - History, Force, and
Effect of the Land Patent, n (supra).
(1) 1 Kent Commentaries, 471; Western Union Telegraph Company v Call

Publishing Company, 181 U.S. 765, 770 (1901)
PAGE 182 OF 337

(2) Karlson v Murphy, 56 N.E. 2d 839, 387 Ill. 436 (1944); [151] People
exrel. Board of Trustees of University of Illinois v Barret, 46 N.E. 2d 951, 382 Ill.
321 (1943).
(3) Mudge v Mitchell Hutchins and Co., 54 N.E. 2d 708. 322 Ill. App. 409
(1944); Heineman v Hermann, 52 N.E. 2d 263, 385 Ill. 191 (1943).
(4) Williamson v Winningham, 186 P. 2d 644 650 (Okla. 1947); see also
42 Okia. S. 1941 sec. 9.
(5) Williamson (supra) at 650; (Okla. 1947); Cincinnati Tobacco
Warehouse Co. v Lefevre, 146 N.W. 653, 654 (1914)- Sullivan v Sudiak, 333
N.E. 2d 60, 30 Ill. App. 3d 899 (Ill. App. 1975); linger v Checker Taxi Co., 174
N.E. 2d 219, 30 Ill. App. 2d 238 (Ill. App. 1947);
(6) Sullivan (supra) at 899; Deitchman v Corach, 71 N.E., Id. 367, 330 Ill.
App. 365 (Ill. App. 1947);
(7) 51 Am. Jur. Sect. 20.
(8) Williamson (supra) at 650; Boston and Kansas City Cattle Loan Co. v
Dickson, 11 Okla. 680, 69 P. 889 (1902).
(9) Williamson (supra) at 650; Boston and Kansas City Cattle Loan Co. v
Dickson, 11 Okla. 680, 69 p. 889 (1902).
(10) 51 Am. Jur., Sect. 21.
(11) 33 Am. Jur. 419, Sect. 2; City of Sanford v McCleland, 121 Fla. 253,
163 So. 513 (1935); Small v Robinson, 69 Me. 425 (1879).
(12) Peck v Janness, 7 How. (U.S.) 612 (1849).
(13) Williamson (supra): See also Robert v Jacks, 31 Ark. 597 (1876);
Marston v Miller, 35 Me. 153 (1852); Stewart v. Flowers, 44 Miss. 513 (1870).
(14) Gordon v Sullivan, 188 F. 2d 980 982 (1951); See also Brown v
Petersen, 25 App. D.C. 359, [152] 363 (1905); 51 Am. Jur. Sect. 21.
(15) Drummond Carriage Co. v Mills, 74 N.W. 970; 51 Am. Jur. Sect. 21-,
Shaw v Webb, 131 Tenn. 173, 177 (1914). [153]
PAGE 183 OF 337

INTERVIEW: CAROL LANDI ON LAND PATENTS

AND TREATY LAW
In an effort to track a big story called land patents, Acres U.S.A., has
covered both miles and monumental telephone tabs. Tucked into the paragraphs
of the newly released Land Patents, Memorandum of Law, History, Force and
Effect is a reference to a case styled Summa Corporation v The State of Cal-
ifornia. It is this case and the implications it holds, that prompted her to raise a
family, but she is back--in her words, "an advocate," meaning she fights for
causes and principles often left unattended by ordinary lawyers.
She enjoys her role as a researcher because it keeps her in touch with the
real scholarship of the profession. Since this tape is long, we will now
terminate introductory remarks and get down to bare facts.
ACRES U.S.A., Carol Landi, in the course of this business of being an

advocate, you have come in contact with the land patent--the law, the concept,
and what's being done. So, Carol, will you review for our readers what is the
background of the land patent?
LANDI. When I spoke to you before I talked about the Summa Corporation
decision in the U.S. Supreme Court this past spring. This is styled Summa
Corporation v State of California. I hung my hat on the Summa Corporation
decision that just came down from the high court. I've been working with federal
land patents in California and in Utah. I'm doing the historical research on the
federal patents in California. We have what are called ranchos confirmed by the
U.S. government after the conquest of the western states. And these grants are
comprised of anywhere from 5,000, 6,000, 10,000, 23,000, maybe up to 100,000
acres in one shot. A township consists of only 640 acres. [154]
When I read the Summa Corporation decision, I had known about the
Treaty of Guadalupe Hidalgo through researching a case right here in Contra
Costa County. The case is a trial court case and it cannot be found in any
reporters, so I just went over to the court with the name. I found the case and
low and behold it was an eminent do , under the fifth amendment. In California
it's under the California eminent domain laws, and this lady, Virginia Stetson,
held off the redevelopment agency by is evidence in court a copy of the patent
and the lands that they were trying to take. It also gave quite a liability on the
Treaty of Guadalupe Hidalgo.
ACRES U.S.A.: What law was the decision based on?
LANDI: Treaty Law.
PAGE 184 OF 337

ACRES U.S.A.: What is treaty law?
LANDI: The substance of all federal land patents is based upon treaty law.
Treaty law is the law of the nations. It is embraced by the United States
Constitution Article 1. Section 10. Clause 1.
The Treaty Power
The treaty-making power is an extraordinary power, liable to abuse.

Treaties make international law and they also make domestic law. Under our
Constitution treaties become the supreme law of the [155] land. They are indeed
more supreme than ordinary laws, for congressional laws are invalid if they do
not conform to the Constitution, whereas treaty laws can override the
Constitution.
Treaties, for example, can take powers away from the Congress and give
them to the president. They can take powers from the state and give then, to the
federal government or to some international body and they can cut across the
rights given the people by the Constitutional Bill of Rights. John Foster Dulles
ACRES U.S.A.: Which makes a treaty the law of the land?
LANDI: Yes. The Judges of all states shall be bound by treaty law.*
ACRES U.S.A.: And the Treaty of Guadalupe Hidalgo made secure these
grants? Is that what you're saying?
LANDI: That's right. Let me stray from the Treaty of Guadalupe for a
moment and give you a little historical background on treaty laws. Now to
begin with, our entire country was acquired through treaties with other countries
as our young nation conquered lands from the original 13 colonies and
westward to CalifomiaEyeEy inch of land in our couma comes under tr@ law.
[156]
ACRES U.S.A.: Because of the Louisiana Purchase or the Treaty of

Cession, 1803? The Treaty of Ghent? The Texas Treaty?
LANDI: That's rights. Let me parade you through the historical sequence.
Let's take Northwest Ordinance*. This ia a resolution of Congress that merely
stated the intent of Congress that the territory shall be divided into three to five
states to be created upon the existence of a certain number of inhabitants
PAGE 185 OF 337

required to become states of the union--nothing more, nothing less. The

Ordinance was not a treaty. It was part of those unknown lands that were part
of all that territory obtained from Great Britain under the TroV of Peace with
Great Britain, 1783 (8 Stat, 801, in which the original 13 colonies derived their
independence together with lands Britain gave to the original 13 colonies of
territory westward to the Mississippi River. The boundaries of that territory is
given in Article 11 of the treaty, that is, the western boundaries of those states
today known as Tennessee, Kentucky, Illinois and Minnesota. All the states
from the Mississippi River and the states mentioned above, and eastward to
include the orginal 13 colonies comprise all those lands that come under the
Treaty of Peace with Great Britain, therefore, every federal land patent in every
state thereof flows from that treaty.
ACRES U.S.A.: Is there any case law saying the treaty is paramount?
LANDI: Yes. The lead case that said treaty law cannot be interfered with by
a state legislature in Ware v Hylton, 1(1976 3 Dall. (3 U.S. 1991). In this, the
Supreme Court held that a treaty is the supreme law of the land (Article VI,
Section 2: "and the judges in every state shall be bound thereby, [157] anything
in the Constitution or the laws of any State to the contrary
notwithstanding"!) ... that any act of the legislature cannot stand in its way
because a treaty is the declared will of the people of all the United States and
shall be superior to the constitution and laws of any individual State." [Emphasis
by the court.] In other words, federal land patents put into evidence, by a land
owner cannot be challenged by a state court because it flows from a United
States treaty, and therefore, no court has jurisdiction over title or ownership to
land that traces its source to the paramount or common source of title from the
United States government, banks and private corporations notwithstanding,
because federal land patents were never corporations only to private citizens
hence the term 'private land claim" or "PLC" (as we call it) used by the Bureau
of Land Management as the date of the original patent.
ACRES U.S.A.: And then there was the Louisiana Purchase?
LANDI: Yes! The very next treaty of the United States from which all land
patents flow under the supremacy clause is the Louisiana Purchase from
France under the Treaty of Cession, April 20, 1803; 8 Stat, 201, signed at Paris
in which our young nation gained the territory of the following states.
Louisiana, Arkansas, Oklahoma, Kansas, Nebraska, Iowa, Wisconsin, North
and South Dakota, Montana and Wyoming and the Northeast two-thirds of
Colorado. After that we had the Treaty of Ghent, October 20. 1818 [8 Stat.
2181]. It merely established the northern boundary of the Louisiana Purchase as
the 49th parallel to the Rocky Mountains, nothing more, nothing less. The lead
case for the Louisiana Purchase States is American Insurance Company v
Canter [(I 828) 1 Pet (26 U.S. 51 11 in which Justice Marshall held the power
PAGE 186 OF 337

to make treaties is an absolute power of the United States [158] government

and from that power arises the right to govern it, i.e., treaty law is superior to any
state and is the supreme law of the land. "Zoning law" included.*
ACRES U.S.A.: And Texas is in a class by itself?
LANDI: That's right Texas was annexed to United States by the

independent vote of the inhabitants. While the Cession of Texas is a treaty, it was
annexed as a House Joint Resolution (HJR) and it would be fairly certain that
the citizens had the same protection as those given under treaty law. I have not
searched out the HJR as yet, although the HJR would be a simple matter to
locate in the United States Statutes by year of annexation, month and day in the
statutes. It is interesting to note that as an annexed state, it is the only state that
has the power to secede from the United States. Hawaii is the last state with
that power to secede.
ACRES U.S.A. What did the Oregon Treaty do?
LANDI The Oregon Treaty of 1846 was an agreement with Great Britain
that gave the U..S. undisputed claim to the Pacific Northwest south of the 49th
Parallel. The states carved out of this treaty are the present states of Oregon,
Washington, Idaho and the southwest corner of Wyoming. This treaty with
Great Britain was signed on June 15, 1846, [9 Stat. 869], and all federal land
patents of these states flow from the treaty and fall under the supremacy
clause of the constitution therefore, no state, private banking corporation or
other federal agency can question the superiority of title to land owners who
have "perfected" their land by federal land patent. Jurisdiction by any state
court is invaded, and since federal [159] land patents cannot be collaterally
attacked as to their validity or authenticity as highest evidence of title, no
mortgage institution can claim title to land its "lien." Certified federal land
patents were given free and clear title with no encumbrancesthen or now!
ACRES U. S. A.: And this brings us to the Treaty of Guadulupe Hidalgo,

1848.
LANDI: This had to do with the Mexican War following the War with
Mexico, under this treaty,, the United States paid Mexico $15 million dollars in
gold coin for reparations and all that conquered territory now known as the
states of California, Nevada, Utah, Arizona, and the western portions of
Colorado and New Mexico. All lands purchased from the United States as
private land claims were paid for in gold and silver coin, after which a federal
land patent was confirmed and issued to the private claimant. This is a point to
keep in mind regarding "loans of credit" by financial institutions in violation of
Article I Section 10, * 31 USC 463 (a),
PAGE 187 OF 337

ACRES U.S. A.: How did the Act of Congress, March 3, 1851 figure in all of
this?
LANDI: Because of the confusion of land claims by the Gold Rush settlers
on Mexican land grants, Congress enacted this act to ascertain and settle the
private land claims in the state of California. For the first time, a Land
Commission was established to confirm the claims and the Court of Private
Land Claims was established to settle disputes before final confirmation by what
is now known as the U.S. Bureau of Land Management under the present
Department of Interior of the United States. The act of 1851 established a two
year limit to contest claims after which the confirmed land claims were closed
[160] forever by the issuance of federal land patent that generally included the
phrases "given this day to his heirs and assigns forever." No claims could be
made after the issuance date of the patent. This is what Summa [104 U.S.
17541 was all about. The two yearlimitation on contest of federal land patents
issued to private land claimants was extended by the Act of March 3. 1891, and
is still in force today!
ACRES U. S. A.: And of some importance, is the Gasdsen December 30,

1853 110 Stat, [1031].
LANDI: This was a treaty between Mexico and the United States in which
the U.S. paid $10 million dollars in gold coin to Mexico for that southernmost
strip of New Mexico, The treaty is significant because it refers back to the Treaty
of Guadalupe Hidalgo and conferred all the same rights and privileges to citizens
of that territory as in the 1848 treely. Hence, that southernmost portion is, in
actual fact, included in the Treaty of Guadalupc Hidalgo. All federal land
patents in this area also flow from treaty law, still the supreme law of the land by
which all judges in all states shall be bound as to the validity of the patents. 43
USC 59 establishes that duly certified copies of federal land patents shall be
evidence in all cases where the originals would be evidence, Section 57
covers the states of Oregon and California.
Section 58 covers the Louisiana Purchase, Section 83 of Title 43 covers
the evidentiaa effect of certified federal land 12atents for all states, and all the
courts in the United States must take judicial notice of these federal patents and
their evidentiary effect under these federal statutes. If the Patents are not
certified when entered into evidence, the court may ignore the patent and
overrule it as evidence of superior paramount title versus the mortgage lien the
banks use to lay claim to the land. *Assuming "lien" was [161] NOT "Ultra Vires.
ACRES U.S.A.: How. does this figure in lien theory states?
LANDI: If the bank, or lending institution lays claim to the land by the lien
theory, it must have been presented in the contest of the federal land patent
PAGE 188 OF 337

within the two years after the last act of 1891, supra, or forever be barred. In
point of fact, as against a federal land patent, it is extremely doubtful that any of
the present lending institutions were in existence in 1891 in order to present
any claim against the owner of land under a federal land patent flowing from a
United States treaty, also known as the Law of Nations, in which no private
citizen can dispute the terms of a treaty or act of Congress.
ACRE. U.S.A.: What about state conflicts and attorney general opinions,
and the general attitude we find among attorney generals, such as General
Stephens in Kansas?
LANDI: You can print an excerpt from a document I submitted to the state
court, one referring to the California Supreme Court decision which Summa
over turned. What is shown is the dissent of the California Supreme Court
justice(s) that was ultimately upheld by the U.S. Supreme Court (unanimously).
ACRES U.S.A.: So where are we?
LANDI: There is nothing arcane or esoteric about federal land patents,

treaty law and the law of nations. I'll send a news article from Northern
California in which the BLM had to participate and [162] obtain an act of
Congress to clear the way for clear title under treaty and patent law. California is
more than familiar with the obligations of treaty law, and the requirements of
federal patent law under federal Title 43 USCA public Lands.
We have more than a passing acquaintance *stare decisis law on the
subject up to date in the April 1984 case. Courts will resist it, or be confused by
it. However, if nine justices of the United States Supreme Court are not
confused by it, under the supreme law of the land, why should a state judge be
permitted to ignore it? In point of fact, the state of California has just recently
begun to acknowledge U.S. Supreme Court decisions. Because of the great
socialist experiment in California, (courtesy of our unusual Senator Alan
Cranston), California and Justice Rose Bird are not convinced yet that
California is a part of the United States. However, we do have case decisional
law recently reaffirmed by its appellate courts that when the United States
Supreme Court interprets a federal statute, the courts of this state are bound by
it. The key to finding case law in every state upholding federal treaty and its
laws can be found in its law libraries in the Key Digest under Public Lands. I
have had opposing attorneys searching through
American Jurismdence under Public Lands, which is the starting point,
however, the attorneys are still baffled by it all. Am. Jur. 2d. is the best starting
point to find the case law on treaties as they pertain to decisions in the states. It
is all so simple, you can expect judges to be confounded by it; as the scriptures
say, "God takes the foolish things of the world to confound the wise, and God
*takes the weak things of the world to confound the strong. * = To abide by,
decided cases.
PAGE 189 OF 337

ACRES U.S.A.: Earlier, you said every inch of land was acquired by treaty
and falls under land patent. Even the original 13 colonies? [163]
LANDI: I have the treaty with Great Britain, upon which we founded our
original 13 colonies and gained our independence, a treaty dated 1783. And I
have the leading case law on that, their treaty. which covers land from not only
the original 13 colonies, but all the land west to the Mississippi River.
ACRES U.S.A.: In other words, the British were giving away something
by treaty they really didn't have?
LANDI: They didn't know it was out there. They knew about the Mississippi
River, I believe. They knew about it as a result of their trade with France. The
Louisiana Purchase goes from the Mississippi River and covers your midwest
states. The Louisiana Purchase, of course, was the Treaty with France.
That was in 1803, signed at Paris. Some government people who are a bit
busy nowadays, filling land patent orders are telling people there were no
patents in the original 13 colonies. Let me say this for the record, right out of my
survey book. The first patent issued in New York City on March 4, 1788 to John
Martin and is simply for Lot number 20, Township 7, Range 4. And he paid
$640 for that section. That was the very first patent in this country.
ACRES U.S.A.: Who patented that to him?
LANDI: The United States Government.
ACRES U.S.A.: And what does it really mean? [164]
LANDI: John Martin apparently squared off or surveyed a plat of land, a

public layer, that did not belong to a private owner. He squared it out. He applied
to Congress and said, I would like to settle on this land and whatever
provision you require for me to settle on this land I would like to have it confirmed
and have a patent (in those days they didn't know about deeds, so they called
them patents) so that it will be mine. in my name, and it will be my private claim.
And Congress said, Okay, we'll have somebody check on it. They checked on
it, and they agreed with his surveys and gave him a federal patent.
ACRES U.S. A.: And what does the patent mean? It is just a simple title, no
different from any other title, or does it have a special character to it?
PAGE 190 OF 337

LANDI: It has a special character to it. The federal land patent is the
paramount common source of titles from the United States government. All
public land originates from the U.S. government. Even today, any pubilc land in
any state is still under the United States Government.
ACRES U.S.A.: Does this patent inure to heirs and assigns?
LANDI: Yes. Forever. And that is a long time.
ACRES U.S.A.: Okay, this is really the case for the land patent then, isn't it?
LANDI: That's the essence of it. [165]
ACRES U.S.A.: Why does the treaty confer superior status to the land
patent, a status that cannot be retreated from by lessor courts, even the
Supreme Court.
LANDI: It pertains to the pecking order or authority. Potential land

belongs to the person who receives it and his assigned heirs forever. It
doesn't matter who is on that land today. No one can touch that federal land
patent, except the United States Government. No one can challenge it. Let me
bring you up to date from the Treaty of Great Britain. The Act of 1851 which has
been updated in the Act of Congress, 1891 has to be reviewed. California, you
will remember, was badly turned upside down between the Mexican
Government, Spanish Government, and the Gold Rush. The Act of 1851 stated
that anyone who was establishing a claim had to have it confirmed by the
United States Land Commission. It was a commission of three men. If no one
protested that claim within a three year period from the date of the Act, it could
no longer be attacked under any circumstance! It was final. And this is what
Summa Corporation was talking about.
Justice Kaus's Opinion
I confess to a growing unease about what I view as an Accelerating

erosion of private property rights of California citizens. We need to look no
further than the first section of the very first article of the state Constitution to
learn that the sovereign people of California have proclaimed: "All people are by
nature free and independent and have inalienable rights. Among these are
enjoying and defending life and liberty, and protecting property and obtaining
safety, happiness, and privacy." [166] [italics added] From this solemn
pronouncement of the people, identifying the protection of their property with
the defense of their lives and liberty and describing such interests as
PAGE 191 OF 337

"inalienable," I conclude that preserving the sanctity of a citizen's private

property is a singular responsibility of government and its courts. When,
therefore, that government itself seeks to trench on such constitutionally
protected and "inalienable rights", of its own people, its conduct must be closely
scrutinized and its reach carefully measured by the rule of law." --from the
Venice Properties decision.
The state of California has been trying to grab land federal land and
offshore drilling land. With the Department of Interior they have tried to say, well
these are swamplands, these are tidelands, and they belong to us because, as
we became a state, these lands automatically became ours. The courts have
consistently said, NO. Nothing passes to you unless the United States
government grants you this land and it belongs to you, then you can do
whatever you want. NO DNR.
ACRES U.S.A.: What practical application does this knowledge bring to

farmers who are now being foreclosed on by government agencies, namely
FMHA and PCA and Land Bank? Jenny Mae? Freddie Mac?
LANDI: Some are backed by the full face and credit of the United States
government, some are not. If somebody has a claim, if the bank says, they
have a claim on that land, they are going to foreclose. How are they going to
prove that they have title to the land from the United States government? Was
[167] title given to them in their name'? No, it wasn't! It was given to Corporal
John Smith in a land patent 120 years ago, or some such person. It doesn't
matter whether you're an heir, It doesn't matter whether you were an assign. The
bank has to prove it has title to the land, in order to take it over.
ACRES U.S.A.: And so people who filing and getting certified patents and
registering them in the court house are doing something that is proper, for now,
pending disposition of this whole matter.
LANDI: Absolutely.
ACRES U.S.A.: But you see the judges in these equity courts are not
looking at it that way. They say to themselves. We've got to protect the creditors.
It's much easier on the community to let this farmer go down the tube than it is
to put the bank in jeopardy, to a point where there is a run on the bank. How do
you face that proposition'?
LANDI: Well, number one, I would ask you how the case was filed? is the
farmer a defendant in the action?
PAGE 192 OF 337

ACRES U.S.A.: Usually he's a defendant.
LANDI: Is he's a defendant, and he has a patent on his land he says to the
bank: you are making a claim on my land, you want to foreclose on it. Sorry, you
can't do that. You come up with a superior title to my patent, something superior
to my land patent, then, I'll [168] give it to you.
ACRES U.S.A.: But, you see, the judge won't even entertain that particular
point. He is shown the contract and he rules on the contract, and that's it.
LANDI: No, It's not a contract!.
ACRES U.S.A.: Well, what is it, when you have a mortgage? Isn't that a
contract?
LANDI: That's a loan of credit. It is not a contract.
ACRES U.S. A.: Just for the sake of argument, would you set up, for me, in
as good a narrative as you can, the defense that the farmer has? Let me give
you a hypothetical situation. This farmer purchased some land. He now has
some sort of title on it. He went to the bank and he borrowed some money
because he wasn't making enough, and he had been promised the land
values would be increasing. So consequently he was able to borrow money to
keep on farming, to grow more so he could sell it for less and lose money. And
it finally came to a terminal point because the land values have dropped. So
the bank says: You don't have the collateral you had last year. I guess I'm going
to have to foreclose on you. [169]
LANDI: My first question! What does the bank call as collateral'?
ACRES U.S.A.: The land, the building and the cows.
LANDI: Okay, now let me explain something to you. I don't know how it is in
much of the country, but I'm pretty sure its the same as in California, because
property, real estate law, is no more screwed up in the whole country than in
California. If you look at your tax bill I'm sure even in your state--you will see
that the land is assessed at one amount and the improvements at another
amount. I attribute that to, my background information as, being an Assistant
Deputy Tax Collector. I know the difference. So, there is a difference between
land and its improvements. If you look on the title insurance of the American
Land Title Assurance Association standard forms-uniform forms--abbreviated
ALTA--you'll see that the title company insures absolutely nothing but the land!
Four little letters L-A-N-D. I looked and searched those insurance policies. They
PAGE 193 OF 337

will not insure anything. All they insure is good title. And, on those grounds, the
bank has given the farmer a loan. Basically, the title insurance company is at
fault. They did not search that title back far enough to its original source to see
who owned that land.
ACRES U.S.A.: Okay, and it came to the United States by treaty.
LANDI: Right. But the bank can make no claim on that. No one can make
any claims on that land with a federal land patent on it, unless he brought up
that claim during the patent proceedings in 1851 under that two year statute of
limitations. [170]
ACRES U.S.A.: What about that Mexican family that owned land in New
Mexico? Suddenly, that family found itself in the United States. The title that
came into the United States would be secure under treaty, wouldn't it?
LANDI: Absolutely! No question about it.
ACRES U.S. A.: But the land that no biological person had laid claim to was
just wilderness, claimed by Mexico. That land ceded to the United States by the
Treaty of Guadalupe Hidalgo. Then the government patented it over to
somebody a soldier, perhaps! You're saying, that this land, to that man, and to
his heirs and assigns is secure forever?
LANDI: Forever.
ACRES U.S.A: So now we've arrived to 1984, and this farmer, who has
that piece of land, originally patented to some, is being foreclosed, and they
haul him into court. They've got maybe 50 heartbreakers out in the yard to
seize his equipment and to take him off in cuffs if he resists. And they go in front
of a judge and the judge hands it over to the John Hancock Insurance
Company or some bank, or whatever. What is the defense? What can this man
do?
LANDI: I think the problem that you're having out there right now is getting
the patent recognized in court. [171]
ACRES U.S. A.: Right. Nobody will listen.
LANDI: You must record a certified copy with the recorder or register of
deeds.
PAGE 194 OF 337

ACRES U.S.A.: In other words, you get this original information, put it on
the appropriate document, and then have it recorded in the courthouse. What
does that do?
LANDI: There is a copyrighted form that has all the stare decisis* case
law. No one can attack a federal land patent. *To abide by, adhere to, decides
cases.
ACRES: U.S.A. Yes, but they recruit the heartbreakers and come out. A
judge has told them to throw you out. What does this rancer do?
LANDI: Number one, you tell the court it doesn't have jurisdiction over
federal land patents.
ACRES U.S.A. And he ignores that. He says, objection overruled!
LANDI: Say, fine. I'm going to appeal it.
ACRES U.S.A.: Where do you appeal it? [172]
LANDI: You appeal it right then and there, I don't know if you have what is
called a demurrer, a declaratory plea. You bring that up. In California a
declaratory plea is called a demurrer. It's attacking the legal proficiency of the
plainfiff's pleading. As a defendant, you can attack that and you can say right
off, the court does not have jurisdiction over this federal patent. This is a state
court! This is a federal land patent, Case law says; state or federal courts cannot
touch land patents. You don't have jurisdiction. You can't rule on it. Boom, it's
finished! It's over! If you say, No I'm going to appeal it to the highest court in the
state, even the highest court in the land. I don't know of any court that will
foreclose on a property without some kind of notice to the farmer that a court
proceeding is taking place, or in the alternative, the farmers don't know what to
do when the default notice comes that the farm is going up for sale. I am
dealing with residential foreclosures presently, including those under FNMA
(Fannie Mae) and FHLMC (Freddie Mac) both and all of which come under Title
42 USCS "Banks and Banking". I am presently researching these federal
mortgages, and fighting some with federal land patents. Farmers cannot be
lawyers, and lawyers cannot be farmers, there's no question. But someone
should be able to tell the farmers what signs to watch for and when to take
action before the action hits them. I suspect that the only problem the farmers
are having with the courts is purely procedural. I have seen my share of
dishonest judges but, I have also learned how to force there hand in court, on
the record
PAGE 195 OF 337

ACRES U.S.A.: OK, can you walk us through the procedure?
LANDI: After recording the land patent, the important thing is to know the
law of the treaty that covers your state. Every protection a farmer needs is in that
treaty and the judge knows that the by [173] Supreme Law of the Land, he
cannot touch or have any jurisdiction over it. When the banks are faced with
the fact that the court has no jurisdiction over their foreclosure action due to a
federal land patent recorded on the property, and treaty law preempts state
and/or federal law, the court will make a mistake of ruling against the farmer,
which in itself, is good, because now you can appeal and buy more time to
keep the bank at arms length. I would want to look at a court file, to see what
really went wrong, and how. If a defendant is not responding, or if he is
responding, then he doesn't his appeal rights. Any case on federal patent could
end up in the U.S. Supreme Court just as Summa did in California. Appeals are
all done on paper. No court appearances. Everything on appeal is done in
writing, as there are no oral arguments allowed. [Wis. Stat. 407. 103 + 401.
201]
ACRES U.S.A.: What about those who have lost their farms?
LANDI: As to those who have already lost their farm, my position is that,
whoever the bank conned into buying the foreclosed farm, has bought a farm
without warranty or guarantee of clear title. Look at the fine print in a trustee
deed sale notice. IRS does the same thing! IRS sells foreclosed property with
that particular statement! So, no guarantee goes with purchase of foreclosed
lands, except, that you put a federal land patent on it. I would have no
compunction about even IRS auctioning off my land because, as long as I have
the patent recorded, on it, then I can challentye the new buyer that IRS didn't
guarantee clear title, and that I still own my land. Therefore, if I were the new
buyer, I would tell IRS, I want my money back for fraud for not telling me that
there was a federal land patent on the land, that I can't fight to get off my land.
Incidently, even IRS cannot supersede federal treaty law or the provisions of any
treaty of this country. [174]
ACRES U.S.A.: How do you handle the matter of non-real property

seizures?
LANDI: We told the banks that, my federal land patent granted land only,
and that is all I am claiming is land. If they have a lien against something on my
land, then please get it off but don't trespass in the process--not on my land I
have offered banks to take their buildings away, board by board, just let me
know, otherwise, they will be trespassing. Farm equipment cannot be seized on
federally patented land without trespassing. They must have a court order! And
if someone is not defending, in court, against a court order, on grounds of
jurisdiction and statue of limitations, someone needs help, but not from a
PAGE 196 OF 337

lawyer, unless the lawyer is totally dedicated. Let me tell you about a case up in
Oregon. This is heresy on my part, but I can report what I learned from sources I
believe to be sound. A landowner up in Oregon was foreclosed on by the bank.
The court wouldn't listen to his arguments. So. a federal land patent was laid on
that property. By that time the bank had foreclosed. The Sheriff sale had been
held. Now, he went back into court and he said: That sale is illegal. The state
had no jurisdiction over the federal land patent and the court said, oh really?
Where's your proof? How do I know this land patent, that you're talking about,
did not come under my jurisdiction? How do I know it is correct? The land
owner said, Well It's certified! I will bring a witness out from the Bureau of Land
Management, and he will testify and witness that this is an exact duplicate of
the original document which is admissible, as evidence, in the state court. And
that is precisely what they did. They brought in the Chief of Records, as a
witness, to testify that the document was true, and certified, and was
absolutely correct. It could not he changed under any circumstances, by any
court. [175]
ACRES U.S.A. So, what happened'?
LANDI: The judge dismissed the case and said, you are absolutely right.
You own the land. You have perfect title to it. You traced it to its original source.
You own the land!
ACRES U.S.A.: But in the mean time they have carted a farmer's cattle, as
they did in Illinois.
LANDI: He has to bring suit for trespass.
ACRES U.S.A.: OK, now where does he bring this suit?
LANDI: He brings it right to state court. This is what happened. The

landowner sued the bank for trespassing. He Won! You see, this man could sue
the bank. He could sue the judge for involving himself in a case in which he did
not have jurisdiction.
ACRES U.S. A.: For now, what do we do? Step by step.
LANDI: What you do is build a sandwich. You've got your federal land
patent on the bottom. You got that certified at the Bureau of Land Management.
You have to ask for it. The bureau of Land Management, I believe, will charge a
dollar or so to certify. If you don't want it, they wont do it, and you don't pay.
It's part [176] of their service. It must be certified! That's the first layer of the
sandwich. That makes it admissible evidence in the state court.
PAGE 197 OF 337

ACRES U.S.A.: What's the next layer?
LANDI: The next piece of paper is your declaration, Number three, the top
of the sandwich, will be your ordinary deed, whatever it is you call it in your
state. You can grant it to yourself. It could almost he a simple thing, such as a
will. Those are the three pieces of paper. Now you waltz up to the courthouse
and say, I want this stuff a matter of record and I want to know where you record
this. And they give you the reference of where they recorded it. Always take
an extra COPY to the recorder and say, Would you endorse a copy for me?
And of course, they will send the original back to you with a book and a page
number on it.
ACRES U.S.A.: Do all of these pieces of paper have to be certified?
LANDI: No. Just the federal land patent. If you have a certified document
that purports to be a lost or destroyed piece of paper, and someone
certifies it as true and correct copy, this is admissible as evidence in a court.
ACRES U.S. A.: Thousands of people are asking for a copy of the land
patent covering their acres. But the problem is, it seems to bog down at that
point. They get into court and they get clobbered something awful. Either they
don't know the procedure or what issue to bring, in what way, at what [177]
time, in what court.
LANDI: If you don't know how to go into court, you're in the position of the
fellow who goes into farming without knowing a tractor from a disc. The law
won't protect you if you don't know how to use it. [178]
PAGE 198 OF 337

HOW...WHERE ...TO OBTAIN CERTIFIED

FEDERAL LAND PATENT (FLP)
FARM PROPERTY: Send Certified Legal Description of Property (from the

County Treasurer or, Register of Deeds, and Town, Plat Map (from Register of
Deeds or County Recorder) then circle your Property(s) on Plat Map(s) ...
Your Property(s) may be in one or more Sections and/or Counties. (1 FLP per
land Parcel) Be sure to request CERTIFIED COPY of FLP.
Record FLP + Declaration of Land Patent + Deed. If desk clerk refuses to
file ... use procedure outlined above by Paul Tomas. Clerk is bonded to perform
"ministerial duties"... NOT "Judicial".
Certified FLP supersedes ALL CLAIMS. Bank must prove Title to land per
#25 p.4. ALTA insures only "good title" per #32 p.5. Bank claims ceased March
3, 1893 FOREVER BARRED per #12-14 pgs.2&3.
ALL STATE COURTS LACK JURISDICTION OVER FEDERAL LAND
PATENTS issued per TREATY LAW = Superior Status can NOT be overruled ...
even by U.S. Supreme Court! (See A on the Treaty Power, p. 1)
CITY PROPERTY: Can also be "patented" ... obtain Range and Township
Numbers from City Engineer + total Certified Legal Description of lot/Property
(obtain FLP as above) ... Record with a Declaration of Land Patent + Certified
FLP + Declaration of Homestead attached and marked "Exhibit A & B"...on
Declaration of, Land Patent write: "Attached hereto are Exhibits A & B". Register
of Deeds or County Recorder then Records in "Real Estate" file. [179]
CONTACT: FAMILY FARM PRESERVATION, Box 2587, Hwy. M, Tigerton,
Wis. 54486.
PROPERTY OWNERS RECEIVE DEEDS TO ANGELS LAND
ANGELS CAMP. The first of local property owners

who for decades have been paying taxes on land
actually owned by the federal government were to
receive title to their property last night.
At the City Council meeting, the five landowners
were to receive quitclaim deeds from the city and
the federal government, which until recently was
the rightful owner of the land.
The parcels in question were created when old
mines, with federally owned claims, were gradually
worked out and broken up for sale. Mine owners
apparently never went through the formality of
patenting the land before they sold it. The buyers
built homes on the land and paid taxes on it. The
problem came to light, some three years ago, when a
PAGE 199 OF 337

local surveyor, trying to determine title for a

land division he had surveyed, found out the
property still was federally owned and under
jurisdiction of the Federal Bureau of land
Management.
BLM officials agreed to cooperate to make sure
the land became the legal property of those who had
purchased it from the mines, however, an Act of
Congress was necessaq to clear the way. [180]
Congressman Norm Shumway introduced the necessary
legislation and it was passed by Congress last year.
The legislation turned title of the land over
to the City of Angels Camp, which in turn is
issuing quit-claim deeds to the property owners.
A total of about 80 acres involving 20 plots of
land are involved.
From the Calaveras (California) Enterprise. [181]
PAGE 200 OF 337

LAND PATENTS, EJECTMENTS, AND ESTOPPEL
1. In case of ejectment, where the question is who has the legal title, the
patent of the government is unassailable. Sanford v Sanford, 139 US 642.
2. The transfer of legal title (patent) to public domain gives the transferee
the right to possess and enjoy the land transferred. Gibson v Chouteau, 80 US
92.
3. A patent for land is the highest evidence of title and is conclusive as
against the government and all claiming under junior patents or titles. United
States v Stone, 2 Us 525.
4. The presumption being that it (patent) is valid and passes the legal
title. Minter v Crommelin, 18 US 87.
5. Estoppal has been sustained as against a municipal corporation
(county). Beadle v Smyser, 209 US 393.
6. A court of law will not uphold or enforce an equitable title to land as a
defense to an action of ejectment. Johnson v. Christian, 128 Us 374: Doe v
Aiken, 31 FED. 393.
7. When congress has prescribed the conditions upon which portions of
the public domain may be alienated (to convey, to transfer), and has provided
that upon the fulfillment of the conditions the United States shall issue a patent
to the purchaser, then such land is not taxable by a state. Sargent v Herrick &
Stevens, 221 Us 404: Northern P,R. Co. v Trail County , 115 US 600.
8. The patent alone passes land from the United States to the grantee and
nothing passes a perfect title to public lands but a patent. Wilcox v Jackson, 13
Peter (US) 498.
9. Patents and other evidences of title from the UNited States government
are not controlled by state recording laws and shall be effective, as against
subsequent purchasers, only from the time of their record in the county.
Lomax v. Pickeriniz, 173 US 26.
10. In federal courts the patent is held to be the foundation of title at law.
Fenn v Holmes, 21 Howard 481.
11. Congress has the sole power to declare the dignity and effect of titles
emanating from the United States and the whole legislation of the government,
in reference to the public lands, declare the patent to be the superior and
conclusive evidence of the legal tide. Until it issues, the fee is in the [183]
government, which by the patent passes to the grantee, and he is entitled to
enforce the possession in ejectment. Bagnell v. Broderick. 13 Peter (US) 436.
12. In ejectment the legal title must prevail, and a patent of the United
States to public lands pass that title; it can not be assailed collaterally on the
ground that false and perjured testimony was used to secure it. Steel v St. Louis
Smelting and Refining Co., 106 US 417.
PAGE 201 OF 337

13. A patent certificate, or patent issued, or confirmation made to an

original grantee or his legal representatives of the grantee or assignee by
contract, as well as by law, Hogan v Pace, 69 US 605.
14. In federal courts, the rule that ejectment cannot be maintained on a
mere equitable title is strictly enforced, so that ejectment cannot be
maintained on a mere entry made with a register and receiver, but only on the
patent, since the certificates of the officers of the land department vest in the
locator only equitable title. This rule prevails in the federal courts even when the
statute of the state in which the suit is brought provides that a receipt from the
local land office is sufficient proof of title to support the action. Langdon v
Sherwood, 124 U.S. 74: Carter v Ruddy, 166 US 493.
15. The plaintiff in ejectment must in all cases prove the legal title to the
premises in himself, at the time of the demise laid in the declaration, and
evidence of an equitable title will not be sufficient for a recovery. The practice of
allowing ejectments to be maintained in state courts upon equitable titles
cannot effect the jurisdiction of the courts of the United States. Fenn v Holme,
21 Howard 481. [184]
16. Under USCA Constitution, Article 4, section 3, clause 2, Congress, in
exercise of its discretion in disposal of public lands, had power, by this section,
to restrict alienation of homestead lands after conveyance by United states in
fee simple, by providing no, such lands shall become liable to satisfaction of
debts contracted prior to issuance of patent. Ruddy v Rossi, (1918) 248 US
104.
17. Patents are tied to the Bible, in Genesis 47 by way of the word
assigned in italicized print. Also note in later verses the beginning of
sharecropping. BC 1701.
18. The right to the ownership of property and to contract with respect of its
use is unalienable. Golding v Schubac, 93 U.S. 32: Seville v C I , 46 U.S. 495.
19. Parties in possession of real property have the fight to stand on their
possessions until compelled to yield to the rule title determined by trial by jury.
47 Am. Jur. 2d 45.
20. Giving a note does not constitute payment. Echart v Commissioners,
C.C.A. 42 F2d 158; 283 U. S. 140.
21. Actual or threatened exercise of power over the property of another is
coercion and duress which will render the payment involuntary. Cleveland v
Smith, 132 US 318.
22. Property value means the price the property will command in the
market, or its equivalent in lawful money. PeQple v Hines, 89 P. 858, 5 Cal.
App. 122 [185]
23. Neither a town nor its officers have any right to appropriate or interfere
with private property. Mitchell v City of Rockland, 45 Me. 496.
24. A state may provide for the collection of taxes in gold and silver only.
State Treasurer v Wright, 28 Ill. 509: Whitaker v Haley, 2 Ore. 128.
PAGE 202 OF 337

25. Taxes lawfully assessed, are collectible by agents in money and notes,
cannot be accepted in payment. Town of Frankfort v Waldo, 128 Me. 1.
26. There must he strict compliance with statutory requirements to divest
property owners of their property titles for non payment of taxes. McCarthy v
Greenlawn Cem., 158 Me. 388.
27. At common law there was no tax lien. Cassidy v Aroostook, 134 Me. 34.
28. A tax on real estate to one not the owner is not valid. Barker v Blake, 36
Me. 1. [186]
PAGE 203 OF 337

LAND PATENT STOPS BIDDING AT SHERIFF SALE
In a recent case, Robert Deardorff of Indianapolis, Ind. had filed a

DECLARATION OF LAND PATENT with a certified copy of the original patent.
In a Sheriff s Sale, which took place last August, Mr. Deardorff and and a
witness went to the Sheriffs Sale and met with the sheriff. He had previously
warned the sheriff that if he went ahead with the Sheriff s Sale, he would go to
the U.S. Attorney and swear out a warrant for his arrest for Criminal Trespass on
his Land Patent. However, the sheriff's counsel advised him to go ahead with
the Sheriff's Sale anyway. So, on the day of the sale and while he and a
witness were in the sheriff's office, he called the Federal Clerk of Courts and
told him what was happening.
The Federal Court Clerk, told Mr. Deardorf that, if the sheriff went ahead
and sold the property, with a Land Patent on it, that inside of three days, there
would be a U.S. Marshall there to arrest the sheriff. Mr. Deardorf then told the
sheriff this, word for word.
Later, at the sale, the sheriff told the bidders, including the bank's attorney,
that there was a Land Patent on the property and that if they bought it, they
could never be able to get a clear title and would never be able to get a loan on
the land. As a result. no one bid. Under Indiana Law, when no bids are placed
on a property, the property reverts back to the owner after 4 p.m. the same
day. No new Sheriff's Sale was ever scheduled and there is no pending action
of any kind in the courts.
(Robert Deardorff, 7002 N. Graham Rd., #128 Indianapolis, IN. 46220;
Phone (317)325-2505). [187]
PAGE 204 OF 337

PROCEDURE TO FOLLOW IN THE ENFORCEMENT

OF A UNITED STATES LAND PATENT OR LAND
GRANT
Instructions to give the Sheriff, Judge, County Attorney and Bidders of your
property. Present all concerned parties with a copy of your Certified Land
Patent and declaration of Land Patent.
1. The Land Patent, issued by the Bureau of Land Management,
Department of the Interior, of the United States Government; is the highest and
best Title at Law. The holder of a Declaration of Land Patent, as an Assign, is the
absolute owner of the property as described on that Patent. No court in the
United States can change a Declaration of Land Patent, without the express
permission of the holder of that patent. A Declaration of Land Patent being the
highest Title at Law is superior to any other type of deed. Included, in this in a
"Warranty Deed" and "Sheriff's Deed". Once a Declaration of Land Patent is in
place and duly recorded it cannot be removed.
2. The only authority responsible to the holder of a Declaration of Land
Patent is the United States Government. A Patent cannot be violated or
transferred without the permission of the Assign. Enforcement of a Patent must
come from the United States Government.
3. Should a Declaration of Land Patent be violated. It is the responsibility of
the Assign's to file charges with the Justice Department of the United States
Government. Specifically, the Attorney General. Criminal Trespass Charges,
Civil Charges and Charges for Fraud should be included in your Statement of
Charges. This being in violation of a United States (Federal) patent. [188]
4. The Sheriff should be notified before the sale, but near the time the sale
is to start, he must notify each and every bidder of the following:
A. The Declaration of Land Patent is the Highest and Best Title at Law.
B. Once this sale is complete, the property can never be resold.
C. A Warranty Deed, can never be drafted on this property. The buyer or
successful bidder of the property will not be able to borrow or get a mortgage
against the land.
D. Title insurance cannot be obtained for this property.
E. The Declaration of Land Patent "CLOUDS" title to the land forever.
F. The successful bidder of the property will not get possession of the
property.
G. The Declaration of Land Patent stops ejectment.
H. A "Sheriffs Deed" or other type of document transfer shall be proof of
fraud. The notification that a Patent exists before.the transfer shall be sufficient
for this charge. [189]
PAGE 205 OF 337

I. Criminal Trespass, Civil and charges for Fraud will be filed against the
successful bidder and all those who took a part in the forced transfer of the
property. The notification that a Patent existed before the transfer shall be
sufficient for the charges stated.
J. Obtain a certified copy of the "Deed of Transfer" or "Sheriff s Deed.
Proof of the charges stated will be necessary for the Attomey General.
K. Mortgage or lending institutions may bid the existing mortgage or lien.
This shall not be sufficient notice for fraud. The transfer of the property to a
second person or persons in the form of that stated above is what will be
necessary to obtain. Bidding of mortgage or lien is not sufficient and cannot
cancel a Declaration of Land Patent. While a "No Bid" is better-for a lending
concern to bid the existing lien is a formality and is not powerful enough to
overcome a Patent.
L. The holder of a land patent, which has been certified. The filing of a
Declaration of Land Patent shall present to the holder all of the rights and
privileges forever. This is stated an the front of the Certified copy of the Land
Patent, which was obtained through the Bureau of land management,
Department of the Interior of the United states of America. [190]
Questions And Answers

Q: Why send the Bureau of Land Management $20.?
A: This is the approximate cost for most land patents. This includes $4.25
for the patent plus a search fee. A copy of the County Plat Map where you
circle the part you want them to find the patent on makes the search job
easier. In your letter, be sure to ask for a Certified copy of the Land Patent.
You should receive it in 4 to 6 weeks. (Note: if you need the land patent faster,
like in a week or so, contact Luther Bartrug, 2708 Fenholloway Drive,
Mechanicsville, VA. 231 1 1. Phone (804)746-1074)
Q: Where can I obtain a brief on Land Patents?

A: Writ to Acres U.S.A. Box 9547, Kansas City, Mo. 64133. Ask for the Land
Patent Brief by S. J. Stewart. Cost is $25.
Q: Is there another way to update a land Patent in my name other than

filing a Declaration of Land Patent?
A: Yes. In some parts of the country, Court Clerks are refusing to file
Declaration of Land Patents even though they will file a copy of the Land
Patent itself. Here is what you do. First, file the Certified Copy of the Land
Patents by itself. Then fill out a Quit Claim Deed (available from, local book
stores or Title Companies) and name yourself as the first and the second party
in [191] the deed. After filing in the legal description of your property, add the
following language in the Quit Claim Deed: "The first party to this deed, (name)
grants and deeds to the second party (name), with all rights, privileges and
immunities, Land Patent # per the above legal description and updates the
PAGE 206 OF 337

Land Patent in the second party(s) name and to his heirs and assigns forever."
(Note: a variation of the above when two people own a property is for one to
file ... the land patent and then file a Quit Claim Deed and assign the Land Patent
to the second party.
Example, a wife filing a Quit Claim Deed to her husband and in it
assigning her interest in the Land Patent to her husband. Once this is filed, the
Land Patent is updated in her husbands name).[192]
United States Department Of The Interior Regional Offices

Here are the offices that can issue a Land Patent if provided with the legal
description of your property.
ALASKA:
United States Department of the Interior
Bureau of Land Management
Anchorage Federal Office Building
701 "C" Street, Box 13
Anchorage, Alaska 99513
ARIZONA:
3707 N. 7th. Street
P.O. Box 16563
Phoenix, Arizona 85011
CALIFORNIA:
Bureau of land Management
Federal Office Building
2800 Cottage Way, Rm. E-2841
Sacramento, California 95825
COLORADO (KANSAS):
United States Department of the Inten@or
1037 20th Street
Denver, Colorado 80202
IDAHO:
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United States Department of the Inten*or

Federal Building
550 West Fort Street
P.O. Box 042
Boise, Idaho 83724
MONTANA (NORTH DAKOTA, SOUTH DAKOTA):

Granite Tower
222 North 32nd Street P.O.Box 30157
Billings, Montana 59107
NEVADA:
Federal Building, RO()m 3008
300 Booth Street P.O. Box 12000
Reno, Nevada 89520
NEW MEXICO (Oklahoma):

Joseph M. Montoya Federal Bldg.
South Federal Place
P.O.Box 1449
Santa Fe, New Mexico 87501
OREGON (WASHINGTON)
825 N.E. Multnomah Street, P.O. Box 2965
Portland, Oregon, 97208
UTAH:
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University Club Building

136 East South Temple
Salt Lake City, Utah, 84111
WYOMING (NEBRASKA)
2515 Warren Avenue
P.O. Box 1828
Cheyenne, Wyoming, 82003
ALL OTHER STATES

Eastern States Office
350 South Pickett Street
Alexandria, Virginia, 22304.
PAGE 209 OF 337

MEMORANDUM OF LAW HISTORY, FORCE

& EFFECT OF THE LAND PATENT
Section I - Allodial V. Feudal Titles

In America today, there is a phenomenon that had not been experienced
since the mid-1930's. That phenomenon is the increasingly rising number of
foreclosures, both in the rural sector and in the cities. This phenomenon is
occurring because of the inability of the debtor to pay the creditor the necessary
interest and principle on a rising debt load that is expanding across the country.
As a defense the land patent or fee simple title to the land, and the
Congressional intent that accompanies the patent is hereby being presented. In
order to properly evaluate the patent in any given situation, it is necessary to
understand what a patent is, why it was created, and what existed before the
patent, particularly in common-law England. These questions must be answered
in order to effectively understand the association between the government, the
land and the people.
First, what existed before land patents, since it is imperative to understand
why the patent was created, the best method being a study of the converse, or
common-law English land titles. This method thus allows us to fully understand
what we are presently supposed to have by way of actual ownership of land.
In England, at least until the mid-1600's and arguably until William
Blackstone's time in the mid-1700's, property was exclusively owned by the
King. In arbitrary governments; the title is held by and springs from the supreme
head--be he the emperor, king, potentate; or by whatever name he is known.
McConnell v. Wilcox, 1 Scam (Ill.) 344, 367 (1837). The king was the true and
complete owner, giving him the authority to take and grant the land from the
people in his kingdom who either lost or gained his favor. The authority to take
the land may have required a justifiable reason, but such a reason could
conceivably have been fabricated by the king leaving the disseise former holder
of the land wondering what it was that had brought the king's wrath to bear upon
him. At the same time the benificiary of such a gift, while undoubtedly knowing
the circumstances behind such a gift, may still not have known how the facts
were discovered and not knowing how such facts occurred, may have been left
to wonder if the same fate awaited him if ever he fell into disfavor with the king.
The King's gifts were called fiefs, a fief being the same as a fued, which is
described as an estate in land held of a superior on condition of rendering him
services. 2 Blackstone's Commentaries, p.105. It is also described as an
inheritable right to the use and occupation of lands, held on condition of
rendering services to the lord or proprieter, who himself retains the ownership in
the lands, Black's Law Dictionary, 4th Edition p. 748 (1968). Thus, the people
had land they occupied, devised, inherited, alienated, or disposed of as they saw
fit, so long as they remained in favor with the King. F.L. Ganshof, Fuedalism, P.
PAGE 210 OF 337

113 (1964). "This holding of lands under another was called a tenure, and was
not limited to the relation of the first or paramount lord and vassal, but extended
to those to whom such vassal, within the rules of feudal law, may have parted
out his own feud to his own vassals, whereby he became the mesne lord
between his vassals and his owm or lord paramount. Those who held directly to
the king were called his 'tenants in...cheif'." 1 E. Washburn, Treatise on The
American Law of Real Property, Ch.II, Section 58, P. 42 (6th Ed. 1902). In this
manner, the lands which had been granted out to the barons principal lands--
were again subdivided, and granted by them to subfeudatories to be held of
themselves. Id., Section 65, p.44. The size of the gift of the land could vary from
a few acres to thousands of acres depending on the power and prestige of the
lord. See supra Ganshof at 113. The fiefs were built in the same manner as a
pyramid, with the King, the true owner of the land, being at the top, and from the
bottom up there existed a system of small to medium-sized to large to larger-
sized estates on which the persoms directly directly beneath one estate owed
homage to the lord of that estate as well as to the King. Id. at 114. At the lowest
level of this pyramid through at least he 14th and 15th centuries existed to serfs
or villians, the class of people that had no rights and were recognized as nothing
more than real property. F. Goodwin, Treatise on The Law of Real Property, Ch.
1, p. 10 (1905). This system of hierarchial land holdings required an elaborate
system of payment. These fiefs to the land might be recompenses in any
number of ways.
One of the more common types of fiefs, or the payment of a rent or
obligation to perform rural labor upon the lord's lands known as socage, was the
crops fief. Id. at 8. Under this type of fief a certain portion of the grain harvested
each year would immediately be turned over to the lord above that particular fief
even before the shares from the lower lords and then serfs of the fief would be
distributed. A more interesting type of fief for purposes of this memoradum was
the money fief. In most cases, the source of money was not specified, and the
payment was simply made from the fiefholder's treasury, but the fief might also
consist of a fixed revenue to be paid from a difinite source in annual payments in
order for the tenant owner of the fief to be able to remain on the property.
Gilsebert of Mons, Chronique, cc.69 and 115, pp. 109, 175 ( ed. Vanderkindere).
The title held by such tenant-owners over their land was described as a fee
simple absolute. "Fee simple, Fee commeth of the French fief, i.e, praedium
beneficiarium, and legally signifieth inheritance as our author himself hereafter
expoundeth it. And simple is added, for that it is descendible to his heirs
generally, that is, simply, without restraint tot he heirs of his body, or the like,
Feodum est quod quis tenet ex quacunque causa sive sit tenementum sive
redditus, etc. In Domesday it is called feudom." Littleton, Tenures, Sec. 1b, Fee
Simple. In Section 11, fee simple is described as the largest form of inheritance.
Id. In modern English tenures, the term fee signifies an inheritable estate, being
the highest and most extensive interest the common man or noble, other than
the King, could have in the feudal system. 2 Blackstone's Commentaries, p.
106. Thus, the term fee simple absolute in common-law England denotes the
most and best title a person could have as long as the King allowed him to retain
PAGE 211 OF 337

possession of (own) the land. It has been commented that the basis of English
land law is the ownership of all reality by the sovereign. From the crown, all titles
flow. The original and true meaning of the word "fee" and therefore fee simple
absolute is the same as fief or feud, this being in contradition to the term
"allodium" which means or is defined as a man's own land, which he possesses
merely in his own right, without owing any rent or service to any superior.
Wendell v. Crandall, 1 N.Y. 491 (1848). Therefore on common-law England
practicallu everybody who was allowed to retain land, had the type of fee simple
absolute often used or defined by courts, a fee simple that grants or gives the
occupier as much of a title as the "sovereign" allows such occupier to have at
that time. The term became a synonym with the supposed ownership of land
under the feudal system of England at common law. Thus, even though the
word absolute was attached to the fee simple, it merely denoted the entire estate
that could be assigned or passed to heirs, and the fee being the operative word;
fee simple absolute dealt with the entire fief and its devisability, alienability and
inheritability. Friedman v. Steiner, 107 Ill. 131 (1883). If a fee simple absolute in
common-law England denoted or was synonymous with only as much title as the
King allowed his barons to possess, then what did the King have by way of a
title?
The King of England held ownership of land under a different title and with
far greater powers than any of his subjects. Though the people of England held
fee simple titles to their land, the King actually owned all the land in England
through his allodial title, and though all the land was in the feudal system, none
of the fee simple titles were of equal weight and dignity with the King's title, the
land always remaining allodial in favor of the King. Gilsbert of Mons, Chronique,
ch. 43, p. 75 (ed. Vanderkindere). Thus it is relatively easy to deduce that
allodial lands and titles are the highest form of lands and titles known to
common-law. An estate of inheritance without condition, belonging to the owner,
and alienable by him, transmissable to his heirs absolutely and simply, is an
absolute estate in perpetuity and the largest possible estate a man can have,
being in fact allodial in its nature. Stanton v. Sullivan, 63 R.I. 216, 7 A. 696
(1839). "The original meaning of a perpetuity is an inalienable, indestructible
interst." Bovier's Law Dictionary, Volume III, p. 2570 (1914). The King had such
a title in land. As such, during the classical feudalistic period of common-law
England, the King answered to no one concerning the land. Allodial titles, being
held by sovereigns, and being full and complete titles, allowed the King of
England to won and control the entire country in the form of one large estate
belonging to the Crown. Allodial estates owned by individuals exercising full and
complete ownership, on the other hand, existed only to a limited extent in the
County of Kent.
In summary of Common-Law England: (1) the King was the only person
(sovereign) to hold complete and full title to a land (allodial title); (2) the people
who maintained estates of land, (eigher called manors or fiefs), held title by fee
simple absolute, (3) this fee simple absolute provided the means by which the
"supposed" owner could divise, alienate, or pass by inheritance the estates of
land (manors or fiefs); (4) this fee simple absolute in feudal England, being not
PAGE 212 OF 337

the full title, did not protect the "owner" if the King found disfavor with the
"owner", (5) the "owner" therefore had to pay a type of homage to the King or a
higher baron each year to discharge the obligation of his fief, (6) this homage of
his fief could take the form of a revenue or tax, an amount of grain, or a set and
permanent amount of money, (7) and therefore a long as the "owner" of the fief
in fee simple absolute paid homage to the king or sovereign, who held the entire
country under an allodial title, then the "owner" could remain on the property with
full rights to sell, divise or pass it by inheritance as if the property was really his.
Section II - Land Ownership In America Today - The American

Feudalistic Society
The private ownership of land in America is one of those rights people have
proclaimed to be essential in maintaining this republic. The necessary question
in discussing this topic however, is whether ownership of land in America today
really is a true and complete ownership of land under an allodial concept, or is it
something much different. In other words, are we living in an actual allodial
freehold or are we living in an updated version of feudalistic common-law. The
answer is crucial in determining what rights we have in the protection of our
reality against improper seizures and incumbrances by our government and
creditors. The answer appears to be extremely clear upon proper reflection of
our rights when payments are missed on mortgages, or taxes, for whatever
reason, are not paid. If mortgage payments are missed or taxes are not paid, we
actually fall into disfavor with the parties who have the power, and these powers
through court proceedings or otherwise, take our land as a penalty. When one
understands if he is unable to perform as the government or his creditors
request and for such failures of performance his land can be forfeited, then he
can begin to understand exactly what type of land-ownership system controls his
life, and he should recognize the inherent unjustness of such constitutional
violations.
The American-based system of land ownership today consists of three key
requirements. These three are the warranty deed or some other type of deed
purporting to convey ownership of land, title abstracts to chonologically follow
the development of these different types of deeds to a piece of property, and title
insurance to protect the ownership of that land. These three ingredients must
work together to ensure a systematic and orderly conveyance of a piece of
property; none of these three by itself can act to comletely convey possession of
the land from one person to another. At least two of the three are always
deemed necessary to adequately satisfy the legal system and real estate agents
that the titles to the property had been placed in the hands of the purchaser and
often-times all three are necessary to properly pass the ownership of the land to
the purchaser, Yet does the absolute title and therefore the ownership of the
land really pass from the seller to purchaser with the use of any one of these
three instruments or in any combination thereof? None of the three by itself
passes the absolute or allodial title to the land, the system of land ownership
America originally operated under, and even combined all three can not convey
this absolute type of ownership. What then is the function of these three
PAGE 213 OF 337

instruments that are used in land conveyances and what type of title is conveyed
by the three? Since the abstract only traces the title and the title insurance only
insures the title, the most important and therefore first group to examine are the
deeds that purportedly convey the fee from seller to purchaser.
These deeds include the ones as follows: warranty deed, quit claim deed,
sheriff'd deed, trustee's deed, judicial deed, tax deed, will or any other instrument
that purportedly conveys the title. All of these documents state that it conveys
the ownership to the land. Each of these, however, is actually a color of title. G.
Thompson, Title to Real Property, Preparation and Examination of Abstracts, Ch.
3, Section 73, p.93 (1919). A color of title is that which in appearance is title, but
which in reality is not title. Wright v. Mattison, 18 How. (U.S.) 50 (1855). In fact,
any instrument may constitute color of title when it purports to convey the title of
the land, as well the land itself, although it is void as a muniment of title. Joplin
Brewing co. v. Payne, 197 No. 422, 94 S.W. 896 (1906). The Supreme Court of
Missouri has stated, "that [w]hen we say a person has a color of title, whatever
may be the meaning of the phrase, we express the idea, at least, that some act
has been previously done,..., by which some title, good or bad, to a parcel of
land of definite extent had been conveyed to him." St. Louis v. Gorman, 29 Mo.
593 (1860). In other words, a color of title is an appearance or apparent title,
and "image" of the true title, hence the phrase "color of", which, when coupled
with possession putports to convey the ownership of the land to the purchaser.
This however does not say that the color of title is the actual and true title itself,
not does it say that the color of title itself actually conveys ownership. In fact, the
claimant or holder of a color of title is not even required to trace the title through
the chain down to his instrument. Rawson v. Fox, 65 Ill. 200 (1872). Rather it
may be said that a color of title is prima facie evidence of ownership of and rights
to possession of land until such time as that presumption of ownership is
disproven by a better title or the actual title itself. If such cannot be proven to the
contrary, then ownership of the land is assumed to have passed to occupier of
the land. To further strengthen a color title-holder's position, courts have held
that the good faith of the holder to a color of title is presumed in the absence of
evidence to the contrary. David v. Hall, 92 Ill. 85 (1879); see also Morrison v.
Norman, 47 Ill. 477 (1868); and McConnell v. Street, 17 Ill. 253 (1855).
With such knowledge of what a color of title is, it is interesting what
constitutes colors of title. A warranty deed is like any other deed of conveyance.
Mahrenholz v. County Board of School Trustees of Lawrence County, et. al., 93
Ill. app. 3d 366 (1981). A warranty deed or deed of conveyance is a color of title,
as stated in Dempsey v. Burns, 281 I..644, 650 (1917) (Deeds constitute colors
of title); see also Dryden v. Newman, 116 I..186 (1886) (A deed that purports to
convey interest in the land is a color of title); Hinckley v. Green 52 Ill. 223 (1869)
(A deed which, on its face, purports to convey a title, constitutes a claim and
color of title); Busch v. Huston, 75 Ill. 343 (1874); Chicking v. Failes, 26 Ill. 508
(1861). A quit claim deed is a color of title as stated in Safford v. Stubbs, 117 Ill.
389 (1886); see also Hoooway v. Clark, 27 Ill. 483 (1861) and McCellan v.
Kellogg, 17 Ill. 498 (1855). Quit claim deeds can pass the title as effectively as a
warrant with full covenants. Grant v. Bennett, 96 Ill. 513, 525 (1880); See also
PAGE 214 OF 337

Morgan v. Clayton, 61 Ill. 35 (1871); Brady v. Spurck, 27 I..478 (1861); Butterfield

v. Smith, 11 Ill. 485 (1849). Sheriff's deeds also are colors of title. Kendrick v.
Latham, 25 Fla. 819 (1889); as is a judicial deed, Huls v. Buntin, 47 Ill. 396
(1865). the Illinois Supreme Court went into detail in its detail in its determination
of a tax deed is only color of title. "There the complainant seem to have relied
upon the tax deed as conveying to him the fee, and to sustain such a bill, it was
incumbent of him to show that all the requirements of the law had been complied
with." A simple tax deed by itself is only a color of title. Fee simple can only be
acquired though adverse possession via payment of taxes; claim and color of
title, plus seven years of payment of taxes. Thus any tax deed purports, on its
face, to convey title is a good color of title. Walker v. Converse, 148 Ill. 622, 629
(1894); see also Peadro v. Carriker, 168 Ill. 570 (1897); Chicago v.
Middlebrooke, 143 Ill. 265 (1892); Piatt County v. Goodell, 97 Ill. 84 (1880);
Stubblefield v. Borders, 92 Ill. 570 (1897); Coleman v. Billings, 89 Ill. 183 (1878);
Whitney v. Stevens, 89 Ill. 53 (1878); Thomas v. Eckard, 88 Ill. 593 (1878);
Holloway v. Clarke, 27 Ill. 483 (1861). A will passes only a color of title. Baldwin
v. Ratcliff, 125 Ill. 376 (1888); Bradley v. Rees, 113 Ill. 327 (1885) (A will can pass
only so much as the testator owns, though it may attempt to pass more). A
trustee's deed, a mortgages and strict foreclosure, Chickering v. Failes, 26 Ill.
508, 519 (1861), or any document defining the extent of a disseisor's claim or
purported claim, Cook v. Norton, 43 Ill. 391 (1867), all have been held to be
colors of title. In fact, "[t]here is nothing here requiring a deed, to establish a
color of title, and under the former decisions of this court, color or title may exist
without a deed." Baldwin v. Ratcliff, 125 I..376, 383 (1882); County of Piatt v.
Goodell, 97 I.. 84 (1880); Smith v. Ferguson, 91 Ill 304 (1878); Hassett v. Ridgely,
49 Ill. 197 (1868); Brooks v. Bruyn, 35 Ill. 392 (1864); McCagg v. Heacock, 34 Ill.
476 (1864); Bride v. Watt, 23 Ill. 507 (1860); and Woodward v. Blanchard, 16 Ill.
424 (1855). All of these cases being still valid and none being overruled, in
effect, the statements in these cases are well established law. All of the
documents described in these cases are the main avenues of claimed land
ownership in America today, yet none actually conveys the true and allodial title.
They in fact convey something quite different.
When it is stated that a color of title conveys only an apperance of or
apparent title, such a statement is correct but perhaps too vague to be properly
understood in its correct legal context. What are useful are the more pragmatic
statements concerning titles. A title or color of title, in order to be effective in
transferring the ownership or purported ownership of the land, must be a
marketable or merchantable title.
A marketable or merchantable title is one that is reasonably free from doubt.
Austin v. Barnum, 52 Minn. 136 (1892). This title must be as reasonably free
from doubts as necessary to not affect the marketability or saleability of the
property, and must be a title a reasonably prudent person would be willing to
accept. Robert v. McFadden, 32 Tex.Civ.App. 47, 74 S.W. 105 (1903). Such a
title is often described as one which would ensure to the purchaser a peaceful
enjoyment of the property, Barnard v. Brown, 112 Mich. 452, 70 N.W. 1038
(1897), and it is stated that such a title must be obvious, evident, apparent,
PAGE 215 OF 337

certian, sure or indubitable. Ormsby v. Graham, 123 Ia. 202, 98 N.W. 724
(1904). Marketable Title Acts, which have been adopted in several if the states,
generally do not lend themselves to an interpretation that they might operate to
provide a new foundation of title based upon a stray, accidental, or interloping
conveyance. Their object is to provide, for the recorded fee simple ownership,
an exemption from the burdens of old conditions which at each transfer of the
property interferes with its marketability. Wichelman v. Messner, 83 N.W. 2d 800
(1957). What each of these legal statements in the marious factual situations
says is that the color of title is never described as the absolute or actual title,
rather each says that it is one of the types if titles necessary to convey
ownership or apparent ownership. A marketable title, what a color of title must
be in order to be effective, must be a title which is good of recent record, even if
it may not be the actual title in fact. Close v. Stuyvesant, 132 Ill. 607, 24 N.E. 868
(1890). "Authorities hold that to render a title marketable it is only necessary that
it shall be free from reasonable doubt; in other words, that a puchaser is not
entitled to demand a title absolutely free from every possible suspicion."
Cummings v. Dolan, 52 Wash. 496, 100 P. 989 (1909). The record being spoken
of here is the title abstract and all documentary evidence pertaining to it. "It is an
axiom of hornbook law that a purchaser has notice only of recorded instruments
that are within his `chain of title'." 1 R. Patton & C. Patton, Patton on Land Title,
Section 69, at 230-33. (2nd ed. 1957); Sabo v. Horvath, 559 P. 2d 1038, 1043
(Ak. 1976). Title insurance then guarantees that a title is marketable, not
absolutely free from doubt.
Thus, under the color or title system used most often in this country today,
no individual operating under this type of title system has the absolute or allodial
title. All that is really necessary to have a valid title is to have a relatively clean
abstract with a recognizable color of title as the operative marketable title within
the chain of title. It therefore becomes necessarily difficult, if not impossible after
a number of years, considering the inevitable contingencies that must arise and
the title disputes that will occur, to ever properly guarantee an absolute title. This
is not necessarily the fault of the seller, but it is the fault of the legal and real
estate systems for allowing such a diluted form of title to be controlling in an area
where it is imperative to have the absolute title. In order to correct this problem,
it is important to return to those documents the early leaders or the nation
created to properly ensure that property remained one of the inalienable rights
that the newly established sovereign freeholders could rely on to always exist.
This correction must be in the form of restricting or perhaps eliminating the
widespread use of a marketable title and returning to the absolute title.
Other problems have developed because of the use of a color of title
system for the conveyance of land. These problems arise in the area of
terminology that succeed in only confusing and clouding the title to aneven
greater extent than merely using terms like marketability, saleablity or
merchantability. When a person must also determine whether a title is complete,
perfect, good and clear, or whether it is a bad, defective, imperfect and doubtful,
there is any obvious possibility of destroying a chain of title because of an
inability to recognize what is acceptable to a reasonable purchaser.
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A complete title means that a person has the possession, right of

possession and the right of property. Dingey v. Paxton, 60 Miss. 1038 (1883)
and Ehle v. Quackenboss, 6 Hill (N.Y.) 537 (1844). A perfect title is exactly the
same as a complete title, Donovan v. Pitcher, 53 Ala. 411 (1875) and Converse v.
Kellogg, 7 Barb. (N.Y.) 590 (1850); and each simply means the type of title a
well-informed, reasonable and prudent person would be willing to accept when
paying full value for the property. Birge v. Bock, 44 Mo. App. 69 (1890). In other
words, a complete or perfect title is in reality a marketable or merchantable title,
and is usually represented by a color of title.
A good title does not necessarily mean one perfect of record but consists of
one which is both of rightful ownership and rightful possession of the property.
Bloch v. Ryan, 4 App. Cas. 283 (1894). It means a title free from litigation,
palpable defects and grave doubts consisting of both legal and equitable titles
and fairly deducible of record. Reynolds v. Borel, 86 Cal. 538, 25 P. 67 (1890).
"A good title means not merely a title valid in fact, but a marketable title, which
can again be sold to a reasonable purchaser or mortgaged to a person of
reasonable prudence as security for a loan of money." Moore v. Williams, 115
N.Y. 586, 22 N.E. 253 (1889). A clear title means there are no incumbrances on
the land, Roberts v. Bassett, 105 Mass. 409 (1870). Thus, when contracting to
convey land, the use of the phrase "good and clear title" is surplusage, since the
terms good title and clear title are in fact synonymous. Oakley v. Cook, 41 N.J.
Eq. 350, 7 A.2d 495 (1886). Therefore, the words good title and clear title, just
like the words complete title and perfect title, describe nothing more than a
marketable title or merchantable title, and as stated above, each can and almost
always is represented in a transaction by a color of title. None of these types of
title purports to be the absolute or allodial title, and none of them are that type of
title. None of these actually claims to be a fee simple absolute, and since these
types of titles are almost always represented by a color of title, and since these
types of titles are almost always represented by a color of title, none represents
that it passes the actual title. Each one does state that it passes what can be
described as a title good enough to avoid the necessity of litigation to determine
who actually has the title. If such litigation to determine titles is necessary, then
the title has crossed the boundaries of usefulness and entered a different
category of title descriptions and names.
This new category consists of titles which are bad, defective, imperfect or
doubtful. A bad title conveys no property to the purchaser of the estates. Heller
v. Cohen, 15 misc. 378, 36 N.Y.S. 668 *1895). A title is defective when the party
claiming to own the land has not the whole title, but some other person has title
to a part or portion of it. Such a title is the same as no title whatsoever. Place v.
People, 192 Ill. 160, 61 N.E. 354 (1901); See also Cospertini v. Oppermann, 76
Cal. 181, 18 P. 256 (1888). An imperfect title is one where something remains to
be done by the granting power to pass the title to the land, Raschel v. Perez, 7
Tex. 348 (1851); and a doubtful title is also one which conveys no property to the
purchaser of the estate. Heller v. Cohen, 15 Misc. 378, 36 N.Y.S. 668 (1895).
Every title is described as doubtful which invites or exposes the party holding it
to litigation. Herman v. Somers, 158 Pa.St. 424, 27 A. 1050 (1893). Each of
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these types of titles describes exactly the same idea stated in many different
ways, that because of some problem, defect, or question surrounding the title, no
title can be conveyed, since no title exists. Yet in all of these situations some
type of color of title was used as the operative instrument. What then makes one
color of title complete, good or clear in one situation, and in another situation the
same type of color of title could be described as bad, defective, imperfect or
doubtful? What is necessary to make what might otherwise be a doubtful title, a
good title, is the belief of others in the community, whether or not properly
justified, that the title is a good one which they would be willing to purchase.
Moore v. Williams, 115 N. Y. 586, 22 N.E. 253 (1889). The methods presently
used to determine whether a title or color of title is good enough to not be
doubtful, are the other two-thirds of the three possible requirements for the
conveyance of a good or complete (marketable) title.
These two methods of properly ensuring that a title is a good or complete
title are title abstracts, the complete documentary evidence of title, and title
insurance. The legal title to land, based on a color of title, is made up of a series
of documents required to be executed with the solemnities prescribed by law,
and of facts not evidenced by documents, which show the claimant a person to
whom the law gives the estate. Documentary evidences of title consist of
voluntary grants by the soverign, deeds if conveyances and wills by individuals,
conveyances by statutory or judicial permission, deeds made in connection with
the sale of land for deliquent taxes, proceedings under the power of eminent
domain, and deeds executed by ministerial or fiduciary officers. These
documentary evidences are represented by the land patent and the colors of
title. 1 G. Thompson, Commentaries on the Modern Law of Real Property, pp.
99-100 (5th ed. 1980). These instruments, relied upon to evidence the title,
coupled with the outward assertive acts that import dominion, must be used by
the abstreactor in compiling the abstract, and the attorney must examine to
determine the true status of the title. Id. The abstract is the recorded history of
the land and the various types of titles, mortgages and other lilens, claims and
interests that have been placed on the property. The abstract can determine the
number of times the patent has been redeclared, who owns the mineral rights,
what color of title is operable at any particular point in time, and what lienholder
is in first position, but it does not convey or even attempt to convey any form of
the title itself. As Thompson, supra has stated, it is necessary when operating
with colors of titles to have an abstract to determine the status of the operable
title and determine whether that title is good or doubtful. Id at 101. If the title is
deemed good after this legthy porcess, then the property may be transferred
without doing anything more, since it is assumed that the seller was the owner of
the property. This is not to say emphatically that the seller is the paramount or
absolute owner. This does not even completely guarantee that he is the owner
of the land against any adverse claimants. It is not even the difficult to claim that
the title holder has a good title due to the leniency and attitude now evidenced by
the judcial authorities toward maintaining a stable and uniform system of land
ownership, whether or not that ownership is justified. This however, does not
explain the purpose and goal of a title abstract.
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An abstract that has been properly brought up simply states that it is

presumed the seller is the owner of the land, making the title marketable, and
guaranteeing that he has a good title to sell. This is all an abstract can legally do
since it is not the title itself and it does not state the owner has an absolute title.
Therefore, the abstract can not guarantee unquestionably that the title is held by
the owner. All of this rhetoric is necessary if the title is good; if there is some
question concerning the title without making it defective, then the owner must
turn to the last of the three alternatives to help pass a good title, title insurance.
G. Thompson, Title to Real Property, Preparation and Examination of Abstracts,
Ch. III, Section 79, pp. 99-100 (1919).
Title insurance is issued by title insurance companies to insure the validity
of the title against any defects, against any incumbrances affecting the
designated property, and to protect the purchaser against any losses he sustains
from the subsequent determination that his title is actually unmarketable. Id. at
100. Title insurance extends to any defects of title. Id. It protects against the
existence of any incumbrances, provided only that any judgments adverse to
the title shall be pronounced by a court of competent jurisdiction. Id. It is not
even necessary that a defect actually exist when the insurance policy was
issued, it is simply necessary that there exists at the time of issuance of the
policy and inchoate or potential defect which is rendered opertive and
substantial by the happening of some subsequent event. Since all one normally
has is a color of title, the longer a title traverses history, the greater the possibility
that the title will become difective. The greater the need for insurance simply to
keep the title marketable, the easier it is to determine that the title possessed is
not the true, paramount and absolute title. If a person had the paramount title,
there would be no need for title insurance, though an abstract might be useful for
recordkeeping and historical purposes. Title insurance and abstract
recordkeeping are useful primarily because of extensive reliance on colors of
title as the operative title for a piece of property.
This then supplies the necessary information concerning colors of title, title
abstracts, and title insurance. This does not describe the relationship between
the landowner and the government. As was stated in the instruction, in feudal
England, the King has the power, right and authority to take a person's land
away from him, if and when the King felt it necessary. The question is whether
most of the American system of land ownership and titles is in reality any
different and whether therefore the American-based system of ownership, is in
reality nothing more than a feudal system of land ownership.
Land ownership in America presently is founded on colors of title, and
though people believe they are the complete and total owners of their property;
under a color of title system this is far from the truth. When people state that
they are free and own their land, they in fact own it exactly to the extent the
English barons owned their land in common-law England. They own their land
so long as some "sovereign", the government or a creditor, states that they can
own their land. If one recalls from the beginning of this memeorandu, it was
states that if the King felt it justified, he could take the land from one person and
give such land to another prospective baron. Today, in American color-of-title
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property law, if the landowner does not pay income tax, estate tax, property tax,
mortgages or even a security note on personal property, then the "sovereign",
the government or the creditor, can justify the taking of the property and the sale
of that same property to another prospective "baron", while leaving the owner
with only limited defenses to such actions. The only real difference between this
and common-law England is that now others besides the King can profit from the
unwillingness or inability of the "landowner" to perform the socage or tenure
required of every landowner of America. As such no one is completely safe or
protected on his property; no one can afford to make one mistake or the
consequences will be forfeiture of the property. If this were what the people in
the mid-1700's wanted, there would have been no need to have an American
Revolution, since the taxes were secondary to having a sound monetary system
and complete ownership of the land. Why fight a Revolutionary War to escape
sovereign control and virtual dictator ship over the land, when in the 1980's
these exact problems are prevalent with this one exception, money now
changes hands in order to give validity to the eventual and continuous takeover
of the property between the parties. This is hardly what the forefathers strived
for when creating the United States Constitution, and what they did strive for is
the next segment of the memorandum of law, allodial ownership of the land via
the land patent. The next segment will analyse the history of this type of title so
that the patent can be properly understood, making it possible to comprehend
the patent's true role in property law today.
Section III - Land Patents Why They Were Created

As was seen in the previous sections, there is little to protect the landowner
who holds title in the chain of title, when distressful economic or weather
condition make it impossible to perform on the debt. Under the color-of-title
system, the property, "one of those inalienable rights", can be taken for the
nonperformance on loan obligations. This type of ownership is similar to the
feudal ownership found in the Middle Ages.
Upon defeating the English in 1066 A.S., William the Conqueror pursuant to
his 52nd and 58th laws, "...effectually reduced the lands of Englands to deuds,
which were declared to be inheritable and from that time the maxim prevailed
there that all land sin England are held from the King, and that all preceeded
from his bounty." 1 E. Washburn, Treatise on The American Law of Real
Property, Section 65, p.44 (6th ed. 1902). All lands in Europe, prior to the
creation of the feudal system in France and Germany, were allodial. Most of
these lands were voluntarily changed to feudal lands as protection from the
neighboring barons or chieftans. Id. Section 56, at 40. Since no documents
protected one's freedom over his land, once the lands were pledged for
protection, the lands were lost forever. This was not the case in England.
England never voluntarily relinquished its land to William I. In fact, were it
not for a tactical error by King Harold II's men in the Battle of Hastings, England
might never have become feudal. A large proportion of the Saxon lands prior to
the Conquest of A.D. 1066 "were held as allodial, that is, by an absolute
ownership, without recognizing any superior to whom any duty was due on
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account thereof." Id. Section 54, at 39. The mode of coveying these allodial
lands was nost commonly done by a writing or charter, called a land-boc, or
land-allodial charter, which, for safekeeping between conveyances, was
generally deposited in the monasteries. Id., Section 54, at 40. In fact, one
portion of England, the County of Kent, was allowed to retain this form of land
ownership while the rest of England become feudal. Id., Section 55, at 40.
Therefore, when William I established feudalism in England to maintain control
over his barons, such control created animosity over the next 2 centuries. F.L.
Ganshof, Feudalism, p.114 (1964). As a result of such dictatorial control, some
25 barons joined forces to exert pressure on the then ruling monarch, King John,
to gain some rights not all of which the common man would possess. The result
of this pressure at Runnymede became known as the Magna Charta.
The Magna Charta was the basis of modern common law, the common law
being a series of judicial decisions and royal decree interpreting and following
that document. The Magna Charta protected the basic rights, the rights that
gave all people more freedom and power. The rights that would slowly erode the
king's power.
Among these rights was a particular section dealing with ownership of the
land. The barons still recognized the king as the lord paramount, but the barons
wanted some of the rights their ancestors had prior to A.D. 1066. F. Goodwin,
Treatise on The Law of Real Property, Ch. 1, p.3 (1905). Under this theory, the
barons would have several rights and powers over the land, as the visible
owners, that had not existed in England for 150 years. The particular section of
most importance was Section 62 giving the most powerful barons letters patent,
raising their land ownership close to the level found in the County of Kent. Other
sections, i.e., 10, 11, 26, 27, 37, 43, 52, 56, 57, and 61 were written to protect the
right to "own" property, to illustrate how debts affected this right to own property,
and to secure the return of property that was unjustly taken. All these
paragraphs were written with the single goal of protecting the "landowner" and
helping him retain possession of his land, acquired in the service of the King,
from unjust seizures or improper debts. The barons attempted these goals with
the intention of securing property to pass to their heirs.
Unfortunately goals are often not attained. Having repledged their loyalty to
King John, the barons quickly disbanded their armies. King John died in 1216,
one year after signing the Magna Charta, and the new king did not wish to grant
such privileges found in that document. Finally, the barons who forced the
signing of the Magna Charta dies, and with them went the driving force that
created the great charter. the Magna Charta may have still been alive, but the
new kings had no armies at their door forcing them to follow policies, and the
charter was to a great extent forced to lie dormant. The barons who received the
letters patent, as well as other landholders perhaps should have enforced their
rights, but their heirs were not in a position to do so and eventually the rights
contained in the charter were forgotten. Increasingly until the mid-1600's, the
king's power waxed, abruptly ending with the execution of Charles I in 1649. By
then however, the original intent of the Magna Charta was in part lost and the
descendents of the original barons never required properly protected free land
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ownership. To this day, the freehold lands in England are still held to a great
extent upon the feudal tenures. See supra Washburn, Section 80, p. 48. This
lack of complete ownership in the land, as well as the most publicized search for
religious freedom, drove the more adventurous Europeans to the Americas to be
away from these restrictions.
The American colonists however soon adopted many of the same land
concepts used in the old world. The kings of Europe had the authority to still
exert influence, and the American version of barons sought to retain large tracts
of land. As an example, the first patent granted in New York went to Killian Van
Rensselaer dated in 1630 and confirmed in 1685 and 1704. A. Getman, Title to
Real Property, Principles and Sources of Titles-Compensation For Lands and
Waters, Part III, Ch. 17, p.229 (1921). The colonial charters of these American
colonies, granted by the king of England, had references to the lands in the
County of Kent, effectively denying the more barbaric aspects of feudalism from
ever entering the continent, but feudalism with its tenures did exist for some time.
See supra Washburn, Section 55, p. 40. "[I]t may be said that, at an early date,
feudal tenures existed in this country to a limited extent." C. Tiedeman, An
Elementary Treatise on the American Law of Real Property, Ch. II, The Principles
of the Feudal System, Section 25, p.22 (2nd ed. 1892). The result was a newly
created form of feudal land ownership in America. As such, the feudal barons in
the colonies could dictate who farmed their land, how their land was to be
divided, and to a certain extent to whom the land should pass. But, just as the
original barons discovered, this power was premised in part of the performance
of duties for the king. Upon the failure of performance, the king could order the
grant revoked and grant the land to another willing to acquiesce to the king's
authority. This authority, however, was premised on the belief that people,
recently arrived and relatively independent, would follow the authority of a king
based 3000 miles away. Such a premise was ill-founded. The colonists came to
America to avoid taxation without representation, to avoid persecution of
religious freedom, and to acquire a small tract of land that could be owned
completely. When the colonists were forced to pay taxes and were required to
allow their homes to be occupied by soldiers; they revolted, fighting the British,
and declaring their Declaration of Independence.
The Supreme Court of the United States reflected on this independence, in
Chisholm v. Georgia, 2 Dall. (U.S.) 419 (1793), stating:
The revolution, or rather the Declaration of Independence, found the people
already united for general purposes, and at the same time, providing for their
more domestic concerns, by state conventions, and other temporary
arrangements. From the crown of Great Britain, the sovereignty of their country
passed to the people of it; and it was then not an uncommon opinion, that the
unappropriated lands, which belonged to that crown, passed, not to the people
of the colony or states within those limits they were situated, but to the whole
people;..."We, the people of the United States, do ordain and establish this
constitution." Here we see the people acting as sovereigns of the whole country;
and in the language of sovereignty, establishing a constitution by which it was
their will, that the state governments, should be bound, and to which the state
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constitutions should be made to conform... It will be sufficient to observe briefly,

that the soverignties in Europe, and particularly in England, exist on feudal
principles. That system considers the prince as the sovereign, and the people
his subjects; it regards his person as the object of allegiance, and excludes the
idea of his being on an equal footing with a subject, either in a court of justice or
elsewhere. That system contemplates him as being the fountain of honor and
authority; and from his grace and grant, derives all franchises, immunities and
privileges; it is easy to perceive, that such a sovereign could not be amendable
to a court of justice, or subjected to judicial control and actual constraint...The
same feudal ideas run through all their jurisprudence, and constantly remind us
of the distinction between the prince and the subject. No such ideas obtain here;
at the revolution, the sovereignty devolved on the people; and they are truly the
sovereigns of the country, but they are sovereigns without subjects...and have
none to govern but themselves; the citizens of America are equal as follow-
citizens, and as joint tenants in the sovereignty. From the differences existing
between feudal sovereignties and governments founded on compacts, it
necessarily follows, that their respective prerogatives must differ. Sovereignty is
the right to govern; a nation or state sovereign is the person or persons in whom
that resides. In Europe, the sovereignty is generally ascribed to the prince; here
it rest with the people; there is sovereign actually administers the government;
here never ina single instance; our governors are the agents of the people, and
at most stand in the same relation to their sovereign, in which the regents of
Europe stand to their sovereigns. Their princes have personal powers, dignities,
and pre-eminences, our rules have none but official; nor do they partake in the
sovereignity otherwise, or in any other capacity, than as private citizens.
(emphasis added). Id. at 470-71.
The Americans had a choice as to how they wanted their new government
and country to be formed. Having broken away from the English sovereignity
and establishing themselves as their own sovereigns, they had their choice of
types of taxation, freedom of religion, and most importantly ownership of land.
The American founding fathers chose allodial ownership of land for the system of
ownership on this country. In the opinion of Judge Kent, the question of tenure
as an incident to the ownership of lands "has become wholly immaterial in this
country, where every vestige of tenure has been annihilated." See supra
Washburn, Section 118, p.59. At the present day there is little, if any, trace of the
feudal tenures remaining in the American law of property. Land in this country
are now held to be absolutely allodial. See Supra Tiedeman, Section 25, p. 22.
Upon the completion of the Revoluntary War, lands in the thirteen colonies
were held under a different form of land ownership. As stated in In re Waltz et.
al., Barlow v. Security Trust & Savings Bank, 240 p. 19 (1925), quoting Matthews
v. Ward, 10 Gill & J. (Md.) 443 (1839), "after the American Revolution, lands in
this state (Maryland) become allodial, subject to no tenure, nor to any services
incident there to." The tenure, as you will recall, was the feudal tenure and the
services or taxes required to be paid to retain possession of the land under the
feudal system. This new type of ownership was acquired in all thirteen states.
Wallace v. Harmstead, 44 Pa. 492 (1863). The American people, before
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developing a properly functioning stable government, developed a stable system

of land ownership, whereby the people owned their land absolutely and in a
manner similar to the king in common-law England. As has been stated earlier,
the original and true meaning of the word "fee" and therefore fee simple absolute
is the same as fief or feud, this being in contradistinction to the term "allodium"
which means or is defined as man's own land, which he possesses merely in his
own right, without owing any rent or service to any superior. Wendall v. Crandall,
1 N.Y. 491 (1848). Stated another way, the fee simple estate of early England
was never considered as absolute, as were lands in allodium, but were subject
to some superior on condition of rendering him services, and in which the such
superior had the ultimate ownership of the land. In re Waltz, at page 20, quoting
1 Cooley's Blackstone, (4th ed.) p. 512. This type of fee simple is a common-law
term and sometimes corresponds to what in civil law is a perfect title. United
States v. Sunset Cemetary Co., 132 F. 2d 163 (1943). It is unquestioned that the
king held an allodial title which was different than the common-law fee simple
absolute. This type of superior title was bestowed upon the newly established
American people by the founding fathers. The people were sovereigns by
choice, and through this new type of land ownership, the people were sovereign
freeholders or kings over their own land, beholded to no lord or superior. As
stated in Stanton v. Sullivan, 7 A. 696 (1839), such an estate is an absolute
estate in perpetuity and the largest possible estate a man can have, being, in
fact allodial in its nature. This type of fee simple, as thus developed, has definite
characteristics: 1) it is a present estate in land that is of indefinite duration; 2) it is
freely alienable; 3) it carries with it the right of possession; and most importantly
4) the holder may make use of any portion of the freehold without being
beholden to any person. 1 G. Thompson, Commentaries on the Modern Law of
Real Property, Section 1856, p. 412 (1st ed. 1924). This fee simple estate
means an absolute estate in lands wholly unqualified by any reservation,
reversion, condition or limitation, or possibility of any such thing present or
future, precedent or subsequent. Id.; Wichelman v. Messner, 83 N.W. 2d 800,
806 (1957). It is the most extensive estate and interest one may possess in real
property. While, an estate subject to an option is not in fee. See supra 1
Thompson, Section 1856, p. 413. In the case, Bradford v. Martin, 201 N.W. 574
(1925), the Iowa Supreme Court went into a lengthy discussion on what the
terms fee simple and allodium means in American property law. The Court
stated:
The word "absolutely" in law has a varied meaning, but when unqualifiedly
used with reference to titles or interest in land, its meaning is fairly well settled.
Originally the two titles most discussed were "fee simple" and "allodium" (which
meant absolute). See Bouv. Law Dict. (Rawle Ed.) 134; Wallace v. Harmstead,
44 Pa. 492; McCartee v. Orphan's Asylum, 9 Cow. (N.Y.) 437, 18 Am. Dec. 516.
Prior to Blackstone's time the allodial title was ordinarily called an "absolute title"
and was superior to a "fee simple title," the latter being incumbered with feudal
clogs which were laid upon the first feudaltory when it was granted, making it
possible for the holder of a fee-simple title to lose his land in the event he failed
to observe his feudatory oath. The allodial title was not so incumbered. Later
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the term "fee simple," however rose to the dignity of the allodial or absolute
estate, and since the days of Blackstone the word "absolute estate" and "fee
simple" seen to have been generally used interchangeably; in fact, he so uses
them-See Book II, chap. 7, pp. 104-105....And further the words "absolute" and
absolutely" usually carry the fee...By the terms "absolute interest" we understand
a complete and perfect interest,...,an estate in fee simple is meant. Id. at 576.
The basis of English land law is the ownership of the realty by the
sovereign, from the crown all titles flow. People v. Richardson, 269 Ill. 275, 109
N.E. 1033 (1914); see also Matthew v. Ward, 10 Gill & J (Md.) 443 (1844). The
case, McConnell v. Wilcox, 1 Scam. (Ill.) 344 (1837), stated it this way:
From what source does the title to the land derived from a government
spring? In arbitrary governments, from the supreme head-be he the emperor,
king, or potentate; or by whatever name he is known. In a republic, from the law
making or authorizing to be made the grant or sale. In the first case, the party
looks alone to his letters patent; in the second, to the law and the evidence of the
acts necessary to be done under the law, to a perfection of his grant, donation or
purchase...The law alone must be the fountain from whence the authority is
drawn; and there can be no other source. Id. at 367.
The American people, newly established sovereigns in this republic after
the victory achieved during the Revolutionary War, became complete owners in
their land, beholden to no lord or superior; sovereign freeholders in the land
themselves. These freeholders in the original thirteen states now held allodially
the land they possessed before the war only feudally. This new and more
powerful title protected the sovereigns from unwarranted intrusions or attempted
takings of their land, and more importantly it secured in them a right to own land
absolutely in perpetuity. By definition, the word perpetuity means, "Continuing
forever. Legally, pertaining to real property, any condition extending the
inalienability..." Black's Law Dictionary, p. 1027 (5th ed. 1980). In terms of an
allodial title, it is to have the property of inalienability forever. Nothing more need
be done to establish the ownership of the sovereigns to their land, although
confirmations were usually required to avoid possible future title confrontations.
The states, even prior to the creation of our present Constitutional government,
were issuing titles to the unoccupied lands within their boundaries. In New York,
even before the war was won, the state issued the first land patent in 1781, and
only a few weeks after the battle and victory at Yorktown in 1783, the state
issued the first land patent to an individual. A Getman, supra, Part III, Ch. 17,
State Legislative Grants, pp. 23132 (1921). In fact, even before the United
States was created, New York and other states had developed their own Land
Offices with Commissioners. New York was first established in 1784 and was
revised in 1786 to further provide for a more definite procedure for the sale of
unappropriated State Lands. Id. The state courts held, "The validity of letters
patent and the effectiveness of same to convey title depends on the proper
execution and record...It has generally been the law that public grants to be valid
must be recorded. The record is not for purposes of notice under recording acts
but to make the transfer effectual." Id. at 242. Later, if there was deemed to be a
problem with the title, the state grants could be confirmed by issuance of a
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confirmatory grant. Id. at 239. This then, in part, explains the methods and
techniques the original states used to pass title to their lands, lands that
remained in the possession of the state unless purchased by the still yet-
uncreated federal government, or by individuals in the respective states. To
much this same extent Texas, having been a separate country and republic,
controlled and still controls its lands. In each of these instances, the land was
not originally owned by the federal government and then later passed to the
people and states. This then is a synopsis of the transition from colony to
statehood and the rights to land ownership under each situation. This however
has said nothing of the methods used by the states in the creation of the federal
government and the eventual disposal of the federal lands.
States, on September 17, 1787. The Constitution and the government formed
under it were declared in effect on the first Wednesday of March, 1789. Prior to
this time, during the Constitutional Convention, there was serious debate on the
disposal of what the convention called the "Western Territories," now the states
of Ohio, Indiana, Illinois, Michigan, Wisconsin and part of Minnesota, more
commonly known as the Northwest Territory. This tract of land was ceded to the
new American republic in the treaty signed with Britain in 1783.
The attempts to determine how such a disposal of the western territories
should come about was the subject of much discussion in the records of the
Continental Congress. Beginning in September, 1783, there was continual
discussion concerning the acquisition of and later disposition to the lands east of
the Mississippi River. Journals of Congress, Papers of the Continental
Congress, No. 25, II, folio 255, p. 544-557 (September 13, 1783).
And whereas the United States have succeeded to the sovereignty over the
Western territory, and are thereby vested as one undivided and independent
nation, with all and every power and right exercised by the king of Great Britain,
over the said territory, or the lands lying and situated without the boundaries of
the several states, and within the limits above described; and whereas the
western territory ceded by France and Spain to Great Britain, relinquished to the
United States by Great Britain, and guarantied to the United States by France as
aforesaid, if properly managed, will enable the United States to comply with their
promises of land to their officers and soldiers; will relieve their citizens from
much of the weight of taxation;..., and if cast into new states, will tend to increase
the happiness of mankind, by rendering the purchase of land easy, and the
possession of liberty permanent; therefore...Resolved, that a committee be
appointed to report the territory lying without the boundaries of the several
states;...; and also to report an establishment for a land office. Id. at 558,
reported in the writing of James McHenry.
There was also serious discussion and later acquisition by the then
technically non-existent federal government of land originally held by the colonial
governments. Id. at 562-63. As the years progressed, the goal remained the
same, a proper determination of a simple method of disposing of the western
lands. "That an advantageous disposition of the western territory is an object
worthy the deliberation of Congress." Id. February 14, 1786, at p. 68. In
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February, 1787, the Continental Congress continued to hold discussions on how

to dispose of all western territories. As part of the basis for such disposal, it was
determined to divide the new northwestern territories into medians, ranges,
townships, and sections, making for easy division of the land, and giving the new
owners of such land a certain number of acres in fee. Journals of Congress, p.
21, February 1787, and Committee Book, Papers of the Continental Congress,
No. 190, p. 132 (1788). In September of that same year, there were most
discussions on the methods of disposing the land. In those discussions, there
were debates in the validity and solemnity of the state patents that has been
issued in the past. Id., No. 62, p. 546. Only a week earlier the Constitution was
ratified by the conventions of the states. Finally, the future Senate and House of
Representatives, though not officially a government for another 1 & 1/2 years,
held discussions on the possible creation of documents that would pass the title
of lands from the new government to the people. In these discussions, the first
patents were created and ratified, making the old land-boc, or land-allodial
charters of the Saxon nobles, 750 years earlier, and the letters patent of the
Magna Charta, guidelines by which the land would pass to the sovereign
freeholders of America. Id., July 2, 1788, pp. 277-286.
As part of the method by which the new United States decided to dispose of
its territories, it created in the Constitution an article, section, and clause, that
specifically dealt with such disposals. Article IV, Section III, Clause II, states in
part, "The Congress shall have Power to dispose of and make all needful Rules
and Regulations respecting the Territory or other Property belonging to the
United States." Thus, Congress was given the power to create a vehicle to
divest the Federal Government of all its right and interest in the land. This
vehicle, known as the land patent, was to forever divest the federal government
of its land and was to place such total ownership in the hands of the sovereign
freeholders who collectively created the government. The land patents issued
prior to the initial date of recognition of the United States Constitution were
ratified by the members of Constitutional Congress. Those patents created by
statute after March, 1789, had only the power of the statutes and the
Congressional intent behind such statutes as a reference and basis for the
determination of their powers and operational effect originally and in the
American system of land ownership today.
There have been dozens of statutes enacted pursuant to Article IV, Section
III, Clause II. Some of these statutes had very specific intents of aiding soldiers
of wars, or dividing lands in a very small region of one state, but all had the main
goal of creating in the sovereigns, freeholders on their lands, beholden to no lord
or superior, Some of the statutes include, 12 Stat. 392, 37th Congress, Sess. II,
Ch. 75, (1862) (the Homestead Act); 9 Stat. 520, 31st Congress, Sess. I, Ch. 85
(1850) (Military Bounty Service Act); 8 Stat. 123, 29th Congress, Sess. II, Ch. 8,
(1847) (Act to raise additional military force and for other purposes); 5 Stat. 444,
21st Congress, Sess. II, Ch. 30 (1831); 4 Stat. 51, 18th Congress, Sess. I., Ch.
174 (1824); 5 Stat. 52, 18th Congress, Sess. I, Ch. 173 (1824); 5 Stat. 56, 18th
Congress, Sess. I, Ch. 172, (1824); 3 Stat. 566, 16th Congress, Sess. I, Ch. 51,
(1820) (the major land patent statute enacted to dispose of lands); 2 Stat. 748,
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12th Congress, Sess. I. Ch. 99 (1812); 2 Stat. 728, 12th Congress, Sess.I, Ch.
77, (1812); 2 Stat. 716, 12th Congress, Sess. I, Ch. 68, (1812) (the act
establishing the General Land-Office in the Department of Treasury); 2 Stat.
590, 11th Congress, Sess. II, Ch. 35,(1810);2 Stat. 437, 9th Congress, Sess. II,
Ch. 34, (1807); and 2 Stat. 437, 9th Congress, Sess. II, Ch. 31, (1807). These,
of course, are only a few of the statutes of enacted to dispose of public lands to
the sovereigns. One of these acts however, was the main patent statute in
reference to the intent Congress had when creating the patents. That status is 3
Stat. 566, supra.
In order to understand the validity of a patent, in today's property law, it is
necessary to turn to other sources than the acts themselves. These sources
include the Congressional debates and case law citing such debates. For the
best answer to this question, it is necessary to turn to the Abridgment of the
Debates of Congress, Monday, March 6, 1820, in the Senate, considering the
topic "The Public Lands." This abridgment and the actual debates found in its
concern one of the most important of the land patent statutes, 3 Stat. 566, 16th
Congress, Sess. I. Ch. 51, Stat. I, (April 24, 1820).
the protections afforded by the patent in particular were discussed. As Senator
Edwards states;
But, said, he, it is not my purpose to discuss, at large, the merits of the
proposed change. I will, at present, content myself with an effort, merely, to
shield the present settlers upon public lands from merciless speculators, whose
cupidity and avarice would unquestionably be tempted by the improvements
which those settlers have made with the sweat of their brows, and to which they
have been encouraged by the conduct of the government itself; for though they
might be considered as embraced by the letter of the law which provides against
intrusion on public lands, yet, that their case has not been considered by the
Government as within the mischief's intended to be prevented is manifest, not
only form the forbearance to enforce the law, but form the positive rewards which
others, in their situation, have received, by the several laws which have
heretofore been granted to them by the same right if preemtpion which I now
wish extended to the present settlers. Id. at 456.
Further, Senator King from New York stated; He considered the change as
highly favorable to the poor man; and he argued at some length, that it was
calculated to plant in the new country a population of independent,
unembarrassed freeholders;...that it would cut up speculation and monopoly;
that the money paid for the lands would be carried from the State or country from
which the purchaser should remove; that it would prevent the accumulation of an
alarming debt, which experience proved never would and never could be paid.
Id. at45657.
In other statutes, the Court recognized much of these same ideas. In United
States v. Reynes, 9 How. (U.S.) 127 (1850), the Supreme Court stated:
The object of the Legislature is manifest. It was intended to prevent
speculation by dealing for rights of preference before the public lands were in the
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market. The speculator acquired power over choice spots, by procuring

occupants to seat themselves on them and who abandoned them as soon as the
land was entered under their preemption right, and the speculation
description could be enforced. The act of 1830, however, proved to be of little
avail; and then came the Act of 1835 (5 Stat. 251) which compelled the
preemptor to swear that he had not made an arrangement by which the title
might insure to the benefit of anyone except himself, or that he would transfer it
to another at any subsequent time. This was preliminary to the allowing if his
entry, and discloses the policy of Congress. Id. at 154.
"It is always to be borne in mind, in construing a congressional grant, that
the act by which it is made is a law as well as a conveyance and that such effect
must be given to it as will carry out the intent of Congress. That intent should not
be defeated by applying to the grant the rules of common law...words of present
grant, are operative, if at all, only as contracts to convey. But the rules of
common law must yield in this, as in other cases, to the legislative will."
Missouri, Kansas & Texas Railway Company v. Kansas Pacific Railway
Company, 97 U.S. 491, 497 (1878). The administration of the land system in this
country is vested in the Executive Department if the Government, first in the
Treasury and now in the Interior Department. The officers charged with the
disposal of the public domain under the authority of acts of Congress are
required and empowered to determine the construction of those acts so far as it
relates to the extent and character of the rights claimed under them , and to be
given, though their actions, to individuals. This is a portion of the political power
of the Government, and courts of justice must never interfere with it. Marks v.
Dickson, 61 U.S. (20 How) 501 (1857); see also Cousin v. Blanc's Ex., 19 How.
(U.S.) 206, 209 (1856). "The power of Congress to dispose of its land cannot be
interfered with, or its exercise embarrassed by any State legislation; nor can
such legislation deprive the grantees of the United States of the possession and
enjoyment of the property granted by reason of any delay in the transfer of the
title after the iniation of proceedings for its acqusition." Gibsion v. Chouteau, 13
Wal. (U.S.) 92, 93 (1871). State statutes that give lesser authoritative ownership
of title than the patent can not even be brought into federal court. Langdon v.
Sherwood, 124 U.S. 74, 81 (1887). These acts of Congress making grants are
not to be treated both law and grant, and the intent of Congress when
ascertained is to control in the interpretation of the law. Wisconsin C.R. Co. v.
Forsythe, 159 U.S. 46 (1895). The intent to be searched for by the courts in a
government patent is the intent which the government had as that time, and not
what it would have been had no mistake been made. The true meaning of a
binding expression in a patent must be applied, no matter where such
expressions are found in the document. It should be construed as to effectuate
the primary object Congress had in view; and obviously a construction that gives
effect to a patent is to be preferred to one that renders it inoperative and void. A
grant must be interpreted by the law of the country in force at the time when it
was made. The construction of federal grant by a state court is necessarily
controlled by the federal decisions on the same subject. The United States may
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dispose of the public lands of such terms and conditions, and subject to such
restrictions and limitations as in its judgment will best promote the public welfare,
even if the condition is to exempt the land from sale on execution issued or
judgment recovered in a State Court for a debt contracted before the patent
issues. Miller v. Little, 47 Cal. 348, 350 (1874). Congress has the sole power to
declare the dignity and effect if titles emanating from the United States and the
whole legislation of the Government must be examined in the determination of
such titles. Bagnell v. Broderick, 38 U.S. 436 (1839). It was clearly the policy of
Congress, in passing the pre-emption and patent laws, to confer the benefits of
those laws to actual settlers upon the land. Close v. Stuyvesant,132 Ill. 607, 617
(1890). The intent of Congress is manifest in the determinations of meaning,
force and power vested in the patent. These cases all illustrate the power and
dignity given to the patent. It was created to dives the government of its lands,
and to act as a means of conveying such lands to the generations of people that
would occupy those lands. This formula, "or his legal representatives,"
embraces representatives of the original grantee in the land, be contract, such
as assignees or grantees, as well as be operation of law, and leaves the
question open to inquiry in a court of justice as to the party to whom the patent,
or confirmation, should enure. Hogan v. Page, 69 U.S.605 (1864). The patent
was and is the document and law that protects the settler from the merciless
speculators, from the people that use avarice to unjustly benefit themselves
against an unsuspecting nation. The patent was created with these high and
grant intentions, and was created with such intentions for a sound reason.
The settlers as a rule seem to have been poor persons, and presumably
without the necessary funds to improve and pay for their land, but it appears that
in every case where the settlement was made under the pre-emption law, the
settler...entered and paid for the land at the expiration of the shortest period at
which the entry could be made..." Close v. Stuyvesant, 132 Ill. 607, 623 (1890).
We must look to the beneficent character of the acts that created this grants and
patents and the peculiar objects they were intended to protect and secure. A
class of enterprising, hardy and most meritorious and valuable citizens has
become the pioneers in the settlement and improvement of the new and distant
lands of the government. McConnell v. Wilcox, 1 Scam.(Ill.) 344, 367 (1837). "In
furtherance of what is deemed a wise policy, tending to encourage settlement,
and to develop the resources of the country, it invites the heads of families to
occupy small parcels of the public land...To deny Congress the power to make a
valid and effective contract of this character...would materially abridge its power
of disposal, and seriously interfere with a favorite policy of the government,
which fosters measures tending to a distribution of the lands to actual settlers at
a nominal price." Miller v. Little, 47 Cal. 348, 351 (1874). The legislative acts,
the Statutes at Large, enacted to divest the United States of its land and to sell
that land to the true sovereigns of this republic, had very distinct intents.
Congress recognized that the average settler of this nation would have little
money, therefore Congress built into the patent, and its corresponding act, the
understanding that these lands were to be free from avarice and cupidity, free
from the speculators who preyed on the unsuspecting nation, and forever under
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the control and ownership of the freeholder, who by the sweat of his brow made
the land produce the food that would feed himself and eventually the nation.
Even today, the intent of Congress is to maintain a cheap food supply though the
retention of the sovereign farmers on the land. United States v. Kimball Foods,
Inc., 440 U.S. 715 (1979); see also Curry v. Block, 541 F. Supp. 506 (1982).
Originally, the intent of Congress was to protect the sovereign freeholders and
create a permanent system of land ownership in the country. Today, the intent of
Congress is to retain the small family farm and utilize the cheap production of
these situations, it has been necessary to protect the sovereign on his parcel of
land, and ensure that he remain in that position. The land patent and the patent
acts were created to accomplish these goals. In other words, the patent or title
deed being regular in its form, the law will not presume that such was obtained
through fraud of the public right. This principle is not merely an arbitrary rule of
law established by the courts, rather it is a doctrine which is founded upon
reason and the soundest principles of public policy. It is one which has been
adopted in the interest of peace in the society and the permanent security of
titles. Unless fraud is shown, this rule is held to apply to patents executed by the
public authorities. State v. Hewitt Land Co., 134 P. 474,479 (1913). It is therefore
necessary to determine exact power and authority contained in a patent.
Legal titles to lands cannot be conveyed except in the form provided by law.
McGarrahan v. Mining Co., 96 U.S. 316 (1877). Legal title to property is
contingent upon the patent issuing from the government. Sabo v. Horvath, 559
P.2d 1038, 1040 (Aka. 1976). "That the patent carries the fee and is the best title
known to a cour to law is the settled doctrine of this court." Marshall v. Ladd, 7
Wall. (74 U.S.) 106 (1869). "A patent issued by the government of the United
States is legal and conclusive evidence of title to the land desribed therein. No
equitable interst, however strong, to land described in such a patent, can prevail
at law, against the patent." Land Patents, Opinions of the United States Attorney
General's office, (September, 1969). "A patent is the highest evidence of title,
and is conclusive against the government and all claiming under junior patents
or titles, until it is set aside or annulled by some judicial tribunal." Stone v. United
States, 2 Wall. (67 U.S.) 765 (1865). The patent is the instrucment which, under
the laws of Congress, passes title from the United States and the patent when
regular on its face, is conclusive evidence of title in the patentee. When there is
a confrontation between two parties as to the superior legal title, the patent is
conclusive evidence of title in the patentee. When there is a confrontation
between two parties as to the superior legal title, the patent is conclusive
evidence as to ownership. Gibson v. Chouteau, 13 Wall. 91=2 (1871).
Congress having the sole power to declare the dignity and effect of its titles has
declared the patent to be the superior and conclusive evidence of the legal title.
Bagnell v. Brodrick, 38 U.S. 438 (1839). "Issuance of a government patent
granting title to land is `the most accredited type of conveyance known to our
law'." United States v. Creek Nation, 295 U.S. 103,111 (1935); see also United
States v. Cherokee Nation, 474 F.2d 628, 634 (1973). The patent is prima facia
conclusive evidence of the title. Marsh v. Brooks, 49 U.S. 223, 233 (1850). A
patent, once issued, is the highest evidence of title, and is a final determination
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of the existence of all facts. Walton v. United States, 415 F.2d 121, 123 (10th Cir.
1969); see also United States v. Beaman, 242 F. 876 (1917); File v.Alaska, 593
P.268, 270 (1979) (When the federal government grants land via a patent, the
patent is the highest evidence of title). Patent rights to the land is the title in fee,
City of Los Angeles v. Board of Supervisors of Mono County, 292 P.2d 539
(1956), the patent os the fee simple, Squire v. Capoeman, 351 U.S. 1,6 (1956),
and the patent is required to carry the fee. Carter v. Rubby, 166 U.S. 493, 496
(1896); see also Klais v. Danowski, 129 N.W.2d 414, 422 (1964)(Interposition of
the patent os interposition of the fee title). The land patent is the monument of
title, such title being absolute in its nature, making the sovereigns absolute
freeholders on their lands. Finally, the patent is the only evidence of the legal fee
simple title. McConnell v. Wilcox, 1 Scam (Ill.) 381, 396 (1837). All these various
cases and quotes illustrate one statement that should be thoroughly understood
at this time, the patent is the highest evidence of title and is conclusive of the
ownership of land in courts of competent jurisdiction. This however, does not
examine the methods or possibilities of challenging a land patent.
In Hooper et. al. v. Scheimer, 64 U.S. (23 How.) 235 (1859), the United
States Supreme Court stated, "I affirm that a patent is unimpeachable at law,
except, perhaps, when it appears on its own face to be void; and the authorities
on this point are so uniform and unbroken in the courts, Federal and State, that
little else will be necessary beyond a reference to them." Id. at 240 (1859). A
patent cannot be declared void at law, nor can a party travel behind the patent to
avoid it. Id. A patent cannot be avoided at law in a collateral proceeding unless it
is declared void by statute, or its nullity indicated by some equally explicit
statutory denuncitions. Id. One perfect on its face is not to be avoided, in a trail
at law, by anything save an elder patent. It is not to be affected by evidence or
circumstances which might show that the impeaching party might prevail in a
court of equity. Id. at 243. A patent is evidence, in a court of law, of the regularity
of all previous steps to it, and no facts behind it can be investigated. Id. A patent
cannot be collaterally avoided at law, even for fraud. Id. at 245. A patent, being a
superior title, must of course, prevail over colors of title; nor is it proper for any
State legislation to give such titles, which are only equitable in nature with a
recognized legal status in equity courts, precedence over the legal title in a court
of law. Id. at 246. The Hooper case has many of the maxims that apply to the
powers and possible disabilities of a land patent, however there is extensive
case law in the area.
The presumptions arise, from the existence of a patent, evidencing a grant
of land from the United States, that all acts have been performed and all facts
have been shown, which are prerequisites to its issuance, and that the right of
the party, grantee therein, to have it issued, has been presented and passed
upon by the proper authorities. Green v. Barber, 66 N.W. 1032 (1896). As
stated in BVovier's Law Dictionary, Vol. II, p. 1834 (1914):
Misrepresentations knowingly made by the application for a patent will
justify the government in proceedings to set it aside, as it has a right to demand
a cancellation of a patent obtained by false and fraudulent misrepresentations.
United States v. Manufacturing Co., 128 U.S. 673 (1888); but courts of equity
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cannot set aside, annul, or correct patents or other evidence of title obtained
from the United States by fraud or mistake, unless on specific averment of the
mistake or fraud, supported by clear and satisfactory proof; Maxell Land Grant
Cancellation, 11 How. (U.S.) 552 (1850); although a patent fraudulently obtained
by one knowing at the time that another person has a prior right to the land may
be set aside by an information in the nature of a bill in equity filed by the attorney
of the United States for the district in which the land lies; Id. A court of equity,
upon a bill filed for that purpose, will vacate a patent of the United States for a
tract of land obtained by mistake from the officers of the land office, in order that
a clear title may be transferred to the previous purchaser; Hughes v. United
States, 4 Wall. (U.S.) 232 (1866); but a patent for land of the United States will
not be declared void merely because the evidence to authorize its issue is
deemed insufficient by the court; Milliken v. Starling's lessee, 16 Ohio 61. A state
can impeach the title conveyed by it to a grantee only by a bill in chancery to
cancel it, either for fraud on the part of the grantee or mistake of law; and until so
cancelled it cannot issue to any other party a valid patent for the same land.
Chandler v. Manufacturing Co., 149 U.S. 79 (1893).
Other cases expouse these and other rules of law. A patentee can be
deprived of his rights only by direct proceedings instituted by the government or
by parties acting in its name, or by persons having a superior title to that
acquired through the government. Putnum v. Ickes, 78 F.2d 233, cert denied 296
U.S. 612 (1935). It is not sufficient for the one challenging a patent to show that
the patentee should not have received the patent; he must also show that he as
the challenger is entitled to it. Kale v. United States, 489 F.2d 449, 454 (1973). A
United States patent is protected from easy third party attacks. Fisher v. Rule,
248 U.S. 314, 318 (1919); see also Hoofnagle v. Anderson, 20 U.S. (7 Wheat.)
212 (1822). A patent issued by the United States of America so vests the title in
the lands covered thereby, that it is the further general rule that, such patents are
not open to collateral attack. Thomas v. Union Pacific Railroad Company, 139
F.Supp. 588, 596 (1956). See also State v. Crawford, 475 P.2d 515 (Ariz. App.
1970) (A patent is primna facia valid, and if its validity can be attacked at all, the
burden of proof is upon the defendant); State v. Crawford, 441 P.2d 586, 590
(Ariz. App. 1968) (A patent to land is the highest evidence of title and may not be
collaterally attacked); and Dredge v. Husite Company, 369 P.2d 676,682 (1962)
(A patent is the act of legally instituted tribunal, done within its jurisdiction, and
passes the title. Such a patent is a final judgement as well as a conveyance and
is conclusive upon a collateral attack). Absent some facial invalidity, the patents
are presumed valid. Murray v. State, 596 P.2d 805, 816 (1979). The
government retains no power to nullify a patent except through a direct court
proceeding. United States v. Reimann, 504 F.2d 135 (1974); See also Green v.
Barker, 66 N.W. 1032, 1034 (1896) (The doctrine announced was that the deed
upon its face, purported to have been issued in pursuance of the law, and was
therefore only assailable in a direct proceeding by aggrieved parties to set it
aside). Through these cases, it can be shown that the patent which passes the
title from the United States to the sovereigns, and was created to keep the
speculators from the land, is only assailable in a direct proceeding for fraud or
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mistake. In no other situation is it allowable for the courts, to simply eliminate the
patent. One question that may arise is what do the courts mean by a collateral
attack and what can be done by courts of equity if a collateral attack is
presented?
Perhaps the easiest means of defining a collateral attack is to show the
converse corollary, or a direct attack on a patent. As was stated in the previous
paragraphs, a direct attack upon a land patent is an action for fraud or mistake
brought by the government or a party acting in its place. Therefore, a collateral
attack, by definition, is any attack upon a patent that is not covered within the
direct attack list. Perhaps the most prevalent collateral attack in property law
today is a mortgage or deed of trust foreclosure on a color of title. In these
instances, it is determined that the complete title and interest in the land is
purchased by the mortgagee or another in his place. Such a determination
displaces the patentee's ownership of the title without the court ever ruling that
the patent was acquired through fraud or mistake. This is against public policy,
legislative intent, and the overwhelming majority of case law. Therefore, it is now
necessary to determine the patent's role in American property law today, to see
what powers the courts of equity have in protecting the rights of the challengers
of patents.
The attitude of the Courts is to promote simplicity and certainty in title
transactions, thereby they follow what is in the chain of title and not what is
outside. Sabo v. Horvath, 559 P.2d 1038, 1044 (1976). However, in equity
courts, title under a patent from the government is subject to control, to protect
the rights of parties acting in a fiduciary capacity. Sanford v. Sanford, 139 U.S.
290 (1891). This protection however does not include the invalidation of the
patent. The determination of the land department in matters cognizable by it, in
the alienation of lands and the validity of patents, cannot be collaterally attacked
or impeached. Id. Therefore the courts have had to devise another means to
control the patentee, if not the patent itself. As stated in Raestle v. Whitson, 582
P.2d 170, 172 (1978), "The land patent is the highest evidence of title and is
immune from collateral attack. This does not preclude a court from imposing a
constructive trust upon the patentee for the benefit of the owners of an equitable
interest." This then explains the most equitable way a court may effectively
restrict the sometimes harsh justice handed down by a strict court of law. Equity
courts will impose a trust upon the patentee until the debt has been paid. As has
been stated, a patent can not be collaterally attacked, therefore the land can not
be sold or taken by the courts unless there is strong evidence of fraud or
mistake. However, the courts can require the patentee to pay a certain amount
at regular intervals until the debt is paid, unless of course, there is a problem
with the validity of the debt itself. This is the main purpose of the patent in this
growing epidemic of farm foreclosures that defy the public policy of Congress,
the legislative intent of the Statutes at large, and the legal authority as to the type
of land ownership possessed in America. Why then is the rate of foreclosures
on the rise?
Titles to land today, as was stated earlier in this memorandum, are
normally in the form of colors of title. This is because of the trend in recent
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property law to maintain the status quo. The rule in most jurisdictions, and those
which have adopted a grantor-grantee index in particular, is that a deed outside
the chain of title does not act as a valid conveyance and does not serve notice of
a defect of title on a subsequent purchaser. These deeds outside the chain of
title are known as "wild deeds." Sabo v. Horvath, 559 P.2d 1038, 1043 (1976);
See also Porter v. Buck, 335 So.2d 369, 371 (1976); The Exchange National
Bank v. Lawndale National Bank, 41 Ill2d 316, 243 N.E.2d 193, 195-96 (1968)
(The chain of title for purposes of the marketable title act, may not be founded on
a wild deed. These stray, accidental, or interloping conveyances are contrary to
the intent of the marketable title act, which is to simplify and facilitate land title
transactions); and Manson v. Berkman, 356 Ill.20, 190 N.E. 77, 79 (1934). This
liberal contruction of what constitutes a valid conveyance has led to a thinning of
the title to a point where the absolute and paramount title is almost impossible to
guarantee. This thinning can be directly attributed to the constant use of the
colors of title. Under the guise of being the fee simple absolute, these titles have
operated freely, but in reality, the evidence something much different.
It was said in common-law England, that when a title was not completly
alienable and not the complete title it was not a fee simple absolute. Rather it
was some type of contingent conveyance that depended on the performance of
certain tasks before the title was considered to be absolute. In fact, normally the
title never did develop into a fee simple absolute. These types of conveyance
were evidenced in part by the operable words in the conveyance and in part by
manner in which the granter could reclaim the property. If the title automatically
reverted to the grantor upon the happening of a contingent action, then the title
was by a fee simple determinable. Scheller v. Trustees of Schools of Township
41 North, 67 Ill.App.3d 857, 863 (1978). This is evidenced most closely today by
deeds of trust in some states. If it required a court's ruling to reacquire the land
and title, then the transaction and title were held by a fee simple with a condition
subsequent. Mahrenholz v. Country Board of Trustees of Lawrence County, 93
Ill.App.3d 366, 370-74 (1981). This is most closely evidenced by a mortgage in
a lien or intermediate-theory state. These analogies may be somewhat startling
and new to some, but the analogies are accurate. When a mortgage is acquired
on property, the mortgagee steps into the position of a grantor with the authority
to create the contingent estate as required by the particular facts. This is exactly
what the grantor in common-law property law could acquire. All the grantor had
to do was choose a particular type of contingency and use the necessary catch-
words, and almost invariably the land would one day be returned due to a
violation of the contingency. In today's property law, the color of title has little
power to protect the landowner. When the sovereign is unable to pay the
necessary principal and interest on the debt load, then the catch-words and
phrases found in the deed of trust or mortgage become operational. Upon the
occurence of that event, the mortgagee or speculator, having through a legal
myth acquired the position of a grantor, is in a position to either automatically
receive the property simply by advertising and selling it, or can acquire the
position of the grantor and eventually the possession of the property by a court
proceeding. In common-law, the grantor of a fee simple determinable where the
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contingency was broken or violated, could automatically take the land from the
grantee holder, by force if necessary. If however, the grant was a fee simple
upon condition subsequent, the grantor, when the contingency broken, had to
bring a legal proceeding to declare the contingence broken, to declare the
grantee in violation, and to order the grantee to vacate the premises. These
situations, though under different names and proceedings, occur every day in
America. Is there really any serious debate therefore, that the colors of title used
today, with the creation of a lien upon the property, become fee simple
determinables and fee simples upon condition subsequent? Is this a legitimate
method of ensuring a stable and permanent system of land ownership? If the
color of title is weak, then how strong is a mortgage or deed of trust placed on
the property?
Fee simple estates may be either legal or equitable. In each situation it is
the largest estate in the land that the law will recognize. Hughes v. Miller's
Mutual Fire Insurance Co., 246 S.W.23 (1922). If a mortgagee, upon the
creation of a mortgage or deed of trust, steps into the shoes of the grantor upon
a conditional fee simple, does it then mean the mortgagee has acquired one of
the two halves of a fee simple, when cases have shown the fee simple is only
evidenced by a patent? Actually, courts have held in many states that a
mortgage is only a lien. United States v. Certain Interests in Property in
Champaign County, State of Illinois, 165 F.Supp.474, 480 (1958) (In Illinois and
other lien theory states, the mortgagee has only a lien and not a vested interest
in the leasehold); See also Federal Farm Mortgage Corp. v. Ganswer, 146 Neb.
635, 20 N.W.2d 689 (1945) (Even after a condition is broken or there is a default
on a mortgage, a mortgagee only has an equitable lien which can be enforced in
proper proceedings); South Omaha Bank v. Levy, 95 N.W.603 (1902) Strict
foreclosure will not lie when mortgagor holds the legal title); First National Bank
v. Sargeant, 65 Neb. 394, 91 N.W. 595 (1902) (Mortgagee cannot demand more
than is legally due); Morrill v. Skinner, 57 Neb. 164, 77 N.W. 375 (1898)
(Mortgage conveys no estate but merely creates a lien); Barber v. Crowell, 55
Neb. 571, 75 N.W. 1109 (1898) (Mortgage is mere security in form of conditional
conveyance), Speer v. Hadduck, 31 Freeman (Ill.) 439, 443 (1863) (Assignments
or conveyances of mortgages do not convey the fee simple, rather they hold
only security interests). These cases amply illustrate that a mortgage or deed of
trust is only a lien in lien and intermediate-theory states. Even in title-theory of
mortgages states, courts of equity have determined that the fee simple title is not
reqally conveyed, either in its equitable or legal state. See supra Barber, at
1110. A fee simple estate still exists even though the property is mortgaged or
encumbered. Hughes v. Miller's Mutual Fire Insurance Co., 246 S.W. 23, 24
(1922). In fact, a creditor asserting a lien (mortgage) must introduce evidence or
proof that will clearly demonstrate the basis of his lien. United States v. United
States Chain Company, 212 F.Supp. 171 (N.D. Ill. 1962). If a mortgagee, even in
the title theory states, has only alien, yet when the mortgage or deed of trust is
created he has a fee simple determinable or condition subsequent, then
obviously the color of title used as the operative title has little force or power to
protect the sovereign freeholder. Nor can it be said that such a color of title is
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useful in the maintenance of stable and permanent titles. The patent, in almost
all cases, has been originally issued to the first purchaser from the government.
Theoretically then the public policy, Congressional intent from the 1800's, and
the Congressional intent of the last few decades should protect the sovereign in
the enjoyment and possession of his freehold. This however is not the case.
Instead, vast mortgaging of the land has occurred. The agriculture debt alone
has risen to over $220,000,000,000 in the past three decades. This is in part
due to the vast expansion of mortgaged holdings and in part due to the rural
sector's inability to repay existing loans requiring the increased mortgaging if the
land. This is in exact contradiction to the public policy and legislative intent if
maintaining stable and simplistic land records, yet marketable titles (colors of
title) were supposed to guarantee such records. Wichelman v. Messner, 83
N.W.2d 800, 805 (1957). Colors of title are ineffective against mortgages and
promote the instability and complexity of the records of land titles by requiring
abstracts and title insurance simply to guarantee a marketable title. Worse, a
practice has prevailed in some of the states...of permitting actions to determine
titles to be maintained upon warrants for land (warranty deeds) and other titles
not complete or legal in their character. This practice is against the intent of the
Constitution and the Acts of Congress. Bagnell v. Broderick, 38 U.S. 438 (1839).
Such lesser titles have no value in actions brought in federal courts not with
standing a State legislature which may have provided otherwise. Hooper et. al.
v. Scheimer, 64 U.S. (23 How.) 235 (1859). It is in fact possible that the state
legislatures have even violated the Supremacy Clause of the United States
Constitution. These actions are against the intent of the founding fathers and
against the legislative intent of the Congressman who enacted the statutes at
large creating the land patent or land grant. This patent or grant, since the land
grant has been states to be another name for the patent, the terms being
synonymous, Northern Pacific Railroad Co. v. Barden, 46 F. 592, 617 (1891);
prevented every problem that was created by the advent of colors of title,
marketable titles, and mortgages. Therefore it is necessary to determine the
validity of returning to the patent as the opertive title.
Patents are issued (and theoretically passed) between sovereigns...and
deeds are executed by persons and private corporations without these
sovereign powers. Leading Fighter v. County of Gregory, 230 N.W.2d 114, 116
(1975). As was stated earlier, the American people in creating the Constitution
and the government formed under it, made such a document and government as
sovereigns, retaining that status even after the creatin of the government.
Chisholm v. Georgia, 2 Dall. (U.S.) 419 (1793). The government as sovereign
passes the title to the American people creating in them sovereign freeholders.
Therefore, it follows that the American people, as sovereigns, would also have
this authority to transfer the fee simple title, through the patent, to others. Cases
have been somewhat scarce in this area, but there is some case law to reinforce
this idea. In Wilcox v. Calloway, 1 Wash. (Va.) 38, 38-41 (1823), the Virginia
Court of Appeals heard a case where the patent was brought up or reissued to
the parties four separate times. Some of the issuance's of the patent came
before the creation of the Constitutional United States government, and some
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occurred during the creation of that government. The courts determined the
validity of those patents, recognizing each actual acquisition as being valid, but
reconciling the differences by finding the first patent, properly secured with all the
necessary requisite acts fulfilled, carried the title. The other patents and the
necessary requisition of anew patent each time yielded the phrase "lapsed
patent." A lapsed patent being one that must be required to perfect the title. Id.
Subsequent patentees take subject to any reservations in the original patent.
State v. Crawford, 441 P.2d 586, 590 (1968). A patent regularly issued by the
government is the best and only evidence of a perfect title. The actual patent
should be secured to place at rest any question as to validity of entries
(possession under a claim and color of title). Young v. Miller, 125 So.2d 257, 258
(1960). Under the color of title act, the Secretary of Interior may be required to
issue a patent if certain conditions have been met, and the freeholder and his
predecessors in title are in peaceful, adverse possession under claim and color
of title for more than a specified period. Beaver v. United States, 350 F.2d 4,
cert. denied, 387 U.S. 937 (1965). A description which will identify the lands
(and possession) is all that is necessary for the validity of the patent. Lossing v.
Shull, 173 S.W.2d 1, 1 Mo. 342 (1943). A patent to two or more persons creates
presumptively a tenancy in common in the patentees. Stoll v. Gottbreht, 176
N.W. 932, 45 N.D. 158 (1920). A patent to be the original grantee or his legal
representatives embrace the representatives by contract as well as by law.
Reichert v. Jerome H. Sheip, Inc., 131 So. 229, 222 Ala. 133 (1930). A patent
has a double operation. In the first place, it is documentary evidence having the
dignity of a recored of the evidence of the title or such equities respecting the
claim as to justify its recognition and later confirmation. In the second place, it is
a deed of the United States, or a title deed. As a deed, its operation is that if a
quitclaim or rather of a conveyance of such interest as the United States
possess in the land, such interest in the land passing to the people or sovereign
freeholders. 63 Am. Jur. 2d Section 97, p. 566. Finally, the United States
Supreme Court, in Summa Corporation v. California ex rel. State Lands
Commission, etc., 80 L.Ed.2d 237 (1984), made determinations as to the validity
of a patent confirmed by the United States through the Treaty of Guadalupe
Hidalgo, 9 Stat. 631 (1951). The State of California attempted to acquire land
that belonged to the corporation. The State maintained that there was a public
trust easement granting to the State authority to take the land without
compensation for public use. The corporation relied in part on the intent of the
treaty, in part on the intent of the patent and the statute creating it, and in part in
the requisite challenge date of the patent expiring. The Summa Court followed
the lengthy dissertation of the dissenting judge on the California Supreme Court,
See 31 Cal.3d 288, dissenting opinion, in determining that the patent which had
been the apparent operative title throughout the years, was paramount and the
actions by the State were against the manifest weight of the Treaty and the
legislative intent of the patent statutes. Id. at 244-46. In each of these cases it is
states that the patent, through possession, or claim and color of title, or through
the term "his heirs and assigns forever", or through the necessary passagve of
title at the death of a joint tenant or teneant in common, is still the operable title
and is required to secure the peaceful control of the land. These same ideas
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can also apply to state patents for lands that went to the state or remained in the
hands of the state upon admission into the Union. Oliphant v. Frazho, 146
N.W.2d 685, 68687 (1966); Fiedler v. Pipers, 107 So.2d 409, 411-412 (1958)
(Not even the State could be heard to question the validity of a patent signed by
the Governor and the Register of the State Land Office). No government can
object to the intent and creation of a patent after such is issued, unless issued
through fraud or mistake. The patent, either federal or state, has an intent to
create sovereign freeholders in the land protected form the speculators, (any
lending institution speculates upon land), and a public policy to maintain a
simplistic, stable and permanent system if land records. Land patents were
designed to effectively insure that this intent and policy were retained. Colors of
title can not provide this type of stability, since such titles are powerless against
liens, mortgages, when the freeholder is unable to repay principle and interest
on the accompanying promissory note. Equity will entertain jurisdiction at the
instance of the owner of fee of lands to remove a cloud upon his title created by
the sale of the premises and a deed issued thereto under a decree of
foreclosure of a mortgage thereon. Hodgen v. Guttery, 58 Free. (Ill.) 431, 438
(1871) (though this case dealt with an improper sale of land covered by a patent,
any forced sales of lands covered by a patent is improper in veiw of the policy
and intent of Congress). Equity however will protect the mortgagee who stands
to lose his interest in the property, thereby requiring a trust to be created until the
debt is erased, making partners of the creditor and debtor. What then exists is a
situation where the patent should be declared (confirmed or reissued), to protect
the sovereign freeholder and to reinstitute the policy and intent of Congress.
The patent as the paramount title, fee simple absolute, can not be collaterally
attacked, but when a debt can not be paid immediately placing the creditor in
jeopardy, the courts will impose a constructive trust until the new "partners" can
mutually eliminate the debt. If the debt can not be satisfactorily removed, it is still
possible, considering the present intent of the government, to maintain sovereign
freeholders on the property immune from the loss of the land, since it is
Congress' intent to keep the family farm in place. The use of colors of title to act
as the operative title is inappropriate considering the rising number of
foreclosures and the inability of the colors of title to restrain a mortgage or lien.
However, the lending institutions, speculators on the land, maintain that the
public policy of the country includes the eradication of the sovereign freeholders
in the rural sector in an effort to implant upon the country, large corporate
holdings. This last area must be effectively met and eliminated.
To those who framed the Constitution, the rights of the States and the rights
of the people were two distinct and different things. Throughout their debates
they had two objects foremost in their minds. First, to create a strong and
effective national government, and secondly to protect the people and their rights
from usurpation and tyranny by government. The people's liberties and
individual rights and safeguards were to be kept forever beyond the control and
dominion of the legislatures of the States, whom they distrusted, and against
whom they so carefully guarded themselves. If such control and domination and
unlimited powers were given to a few legislatures they could override every one
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of the reserved rights covered by the first ten Amendments (the bill of rights);
they could change the government of limited powers to one of unlimited powers;
they could declare themselves hereditary rules; they could abolish religious
freedoms; they could abolish free speech and the right of the people to petition
for redress; they could not only abolish trial by jury, but even the rights to a day
in court; and most importantly they could abolish free sovereign ownership of the
land. The whole literature of the period of the adoption of the Constitution and
the first ten amendments is one great testimony to the insistence that the
Constitution must be so amended as to safeguard unquestionably the rights and
freedoms of the people so as to secure from any future interference by the new
government, matters the people had not already given into its control, unless by
their own consent. United States v. Sprague, 282 U.S. 716, 723-726 (1930).
The problem lies not in the lending institutions that simply practice good
business on their part. The problem in the loss of freedoms by this present
interference with allodial sovereign ownership lies with the state legislatures that
created law, or marketable title acts, that claimed ot enact new simplistic, stable
land titles and actually created a watered-down version of the fee simple
absolute that requires complicated tracing and protection, and is ineffective
against mortgage foreclosures. None of these problems would occur if the
patent were the operable title again, as long as the sovereigns recognized the
powers and disabilities of their fee simple title. The patent was meant to keep
the sovereign freeholder on the land, but the land was also to be kept free of
debt, since that debt was recognized in 1820 as unrepayable, and today is
unrepayable. The redeclaration of the patent is essential in the protection of the
rural sector of sovereign freeholders, but also essential is the need to impress
the state legislatures that have strayed from their enumerated powers with the
knowledge that they have enacted laws that have defeated the intent and goal of
man since the middle ages. That intent, of course, is to own a small tract of land
absolutely, whether by land-boc or patent, on which the freeholder is beholden to
no lord or superior. The patent makes sovereign freeholders of each person
who own his/her land. A return to the patent must occur if those sovereign
freeholders wish to protect that land from the encroachment of the state
legislatures and the speculators that benefit from such legislation.
Section IV - Conclusion
As has been seen, man is always striving to protect his rights, the most
dear being the absolute right to ownership of the land, This right was
guaranteed by the land patent, the public policy of the Congress, and the
legislative intent behind the Statutes at Large. Such rights must be reacquired
through the redeclaration of the patent in the color of title claimant's name, based
on his color of title and possession. With such reborn rights, the land is
protected from the forced sale because of delinquency on a promissory note and
foreclosure on the mortgage. This protected land will not eliminate the debt, a
trust must be created whereby "partners" will work together to repay it. These
rights must be recaptured from the state legislated laws, or the freedoms
guaranteed in the Bill of Rights and Constitution will be lost. Once lost, those
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rights will be exceedingly hard to reclaim, and quite possibly, as Thomas

Jefferson said, the children of this generation may someday wake up homeless
on the land their forefathers founded.
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ALLODIAL AND LAND PATENTS TITLES
DEVELOPED BY CONSTITUTIONAL LAW RESEARCH TRUST

IN ASSOCIATION WITH CITIZENS FOR SOVEREIGNTY
Disclaimer
Much of this information has been gathered over a period of years from
some fifty different sources. It is presented for educational purposes and is up
to you to determine the validity of any and all information presented. The author
makes no claims as to be an attorney, lawyer, para-legal, or other type of legal
counselor and neither recommends nor means to entice the reader to commit
any unlawful act.
If there are questions which come to mind that may not be easily answered
through your research of the enclosed citations, please consult the appropriate
legal counsel. DO NOT attempt to co-mingle or "shepherdise" case law and
other citations to situation which are not specifically defined within each
specified volume.
The materials presented herein are done so under the authority of the
First Amendment to the constitution of the united States of American and said
authority pertains to that Freedom of Speech and Freedom of Press which our
forefathers held so dear.
Preface To The DCS Edition

The DCS Edition of the Manual for the "Freeman", Volume II, "Allodial and
Patent Land Titles", is A WORK IN PROGRESS, i.e., it is continually being
revised and updated to include; new or expanded thinking on the part of the
authors, with new authoritative sources, new court cases and case cites.
Introduction
Personal Property in today's world seems more and more to be what you
can 'hang on to'. It is a shame, but certain people actually believe that the
world owes them something. To some that means a living of the welfare roles
when it truly is not necessary. To others, it is how much of what you have can I
take and hold as my own.
Even cities expanding beyond their original limits now seek new territory
for the tax base. Further, we hear of declared easements where none existed
before. We then find a conspicuous piece of mail in the mailbox which notifies
us that we are about to be moved for the good of the community.
This last few years we have seen natural disasters such as tornadoes,
hurricanes and floods. We pay little attention to the announcer as he orates that
those 'displaced' persons will NOT be allowed to return to their homes.
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We are told of how the 'government' has come to the rescue with relief in
the form of loans. Those 'low interest' loans are to be used to rebuild
elsewhere. Are these loans callable at any time? Some of those now receiving
aide have worked their land for generations. Their land was free and clear of
encumbrances. Their land was allodial in nature and in fact.
Your property is currently held as 'commercial'. Your property needs to be
restated as personal, private and inviolate.
The pages that follow attempt to present a clear and concise review of the
'Law' regarding Allodial or Patent Land. It presents a framework for educational
research which will assist you in the reclamation of your personal property rights.
You can;
1. Own your Land.
2. Remove the requirements of Property Tax.
3. Eliminate the need for Building Permits.
4. Remove your property from Zoning Restrictions.
5. Save your property from foreclosure actions.
6. Eliminate usurpation of property by government.
The applications are endless. You are the sovereign. You create the
ground rules... So go out and take back your rights.
Memorandum Of Law History, Force & Effect Of The Land Patent
Section I - Allodial V Feudal Titles

In America today, there is a phenomenon occurring that has not been
experienced since the mid-1930's. That phenomenon is the increasingly, rising
number of foreclosures, both in the rural sector and in the cities. This
phenomenon is occurring because of the inability of the debtor to pay the
creditor the necessary interest and principle on a rising debt load, that is
expanding across the country. As a defense, the land patent or fee simple title
to the land and the Congressional intent that accompanies the patent is hereby
being presented. In order to properly evaluate the patent in any given situation,
it is necessary to understand what a patent is, why it was created, what existed
before the patent, particularly in Common-Law England.
These questions must be answered in order to effectively understand the
association between the government, the land, and the people.
First, what existed before land patents? Since it is imperative to understand
what the land patent is and why it was created, the best method is a study of
the converse, or the Common-Law English land titles. This method thus allows
us to fully understand what we are presently supposed to have by way of actual
ownership of land. [1]
In England, at least until the mid-1600's, and arguably until William
Blackstone's time in the mid-1700's, property was exclusively owned by the
King. In arbitrary governments; the title is held by and springs from the
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supreme head--be he the emperor, king, potentate; or by whatever name he is

known. McConnell v. Wilcox, I Scam (111.) 344, 367 (1837). The king was the
true and complete owner, giving him the authority to take and grant the land from
the people in his kingdom who either lost or gained his favor. The authority to
take the land may have required a justifiable reason, but such a reason could
conceivably have been fabricated by the king leaving the disseised former
holder of the land wondering what it was that had brought the king's wrath to
bear upon him. At the same time the beneficiary of such a gift, while
undoubtedly knowing the circumstances behind such a gift, may still not have
known how the facts were discovered and not knowing how such facts
occurred, may have been left to wonder if the same fate awaited him if ever he
fell into disfavor with the king.
The King's gifts were called fiefs, a fief being the same as a feud, which is
described as an estate in land held of a superior on condition of rendering him
services. 2 Blackstone's Commentaries, p. 105. It is also described as an
inheritable right to the use and occupation of lands, held on condition of
rendering services to the lord or proprietor, who himself retains the ownership
in the lands, Black's Law Dictionary, 4th Edition p. 748 (1968). Thus, the
people had land they occupied, devised, inherited, alienated, or disposed of as
they saw fit, so long as they remained in favor with the King. F. L. Ganshof,
Feudalism, p. 113 (1964). "This holding of lands under another was called a
tenure, and was not limited to the relation of the first or paramount lord and
vassal, but extended to those to whom such vassal, within the rules of feudal
[2] law, may have parted out his own feud to his own vassals, whereby he
became the mesne lord between his vassals and his own or lord paramount.
Those who held directly to the king were called his "tenants in ... chief. " I E.
Washburn, Treatise on The American Law of Real Property, Ch. 11, Section 58,
P. 42 (6th Ed. 1902). In this manner, the lands which had been granted out to
the barons principal lands were again subdivided, and granted by them to
subfeudatories to be held of themselves. ld., Section 65, p.44. The size of the
gift of the land could vary from a few acres to thousands of acres depending
on the power and prestige of the lord. See supra Ganshof at 113. The fiefs were
built in the same manner as a pyramid, with the King, the true owner of the
land, being at the top, and from the bottom up there existed a system of small to
medium sized to large to large sized estates on which the persons directly
beneath one estate owed homage to the lord of that estate as well as to the
King. Id. at 114. At the lowest level of this pyramid through at least the 14th and
15th centuries existed to serfs or villains, the class of people that had no rights
and were recognized as nothing more than real property. F. Goodwin, Treatise
on The Law of Real Property, Ch. 1, p. 10 (1905). This system of hierarchical
land holdings required an elaborate system of payment. These fiefs to the land
might be recompenses in any number of ways.
One of the more common types of fiefs, or the payment of a rent or
obligation to perform rural labor upon the lord's lands known as socage, was the
crops field Id. at 8. Under this type of fief a certain portion of the grain harvested
each year would immediately be turned over to the lord above that particular fief
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even before the shares from the lower lords and then serfs of the fief would be
distributed. A more interesting type of fief for purposes of this memorandum [3]
was the money fief. In most cases, the source of money was not specified, and
the payment was simply made from the fief holder's treasury, but the fief might
also consist of a fixed revenue to be paid from a definite source in annual
payments in order for the tenant owner of the fief to be able to remain on the
property. Gilsebert of Mons, Chronique, cc. 69 and 1 15, pp. 109, 175 (ed.
Vanderkindere).
The title held by such tenant-owners over their land was described as a fee
simple absolute. "Fee simple, Fee commeth of the French fief, i.e., praedium
beneficiarium, and legally signifieth inheritance as our author himself hereafter
expoundeth it and simple is added, for that it is descendible to his heirs
generally, that is, simply, without restraint to the heirs of his body, or the like,
Feodum est quod quis tenet ex quacunque causa sive sit tenementum sive
redditus, etc. In Domesday it is called feudom." Littleton, Tenures, Sec. lb, Fee
Simple. In Section 11, fee simple is described as the largest form of
inheritance. Id. In modern English tenures, the term fee signifies an inheritable
estate, being the highest and most extensive interest the common man or noble,
other than the King, could have in the feudal system. 2 Blackstone's
Commentaries, p. 106. Thus, the term fee simple absolute in Common-Law
England denotes the most and best title a person could have as long as the
King allowed him to retain possession of (own) the land. It has been commented
that the basis of English land law is the ownership of all reality by the
sovereign. From the crown, all titles flow. The original and true meaning of the
word "fee" and therefore fee simple absolute is the same as fief or feud, this
being in contradiction to the term "allodium" which means or is defined as a
man's own land, which he possesses merely in his own right, without owing any
rent or service to any superior. Wendell [4] v Crandall, 1 N. Y. 491 (1848).
Therefore on Common-Law England practically everybody who was allowed
to retain land, had the type of fee simple absolute often used or defined by
courts, a fee simple that grants or gives the occupier as much of a title as
the "sovereign" allows such occupier to have at that time. The term became a
synonym with the supposed ownership of land under the feudal system of
England at common law. Thus, even though the word absolute was attached to
the fee simple, it merely denoted the entire estate that could be assigned or
passed to heirs, and the fee being the operative word; fee simple absolute dealt
with the entire fief and its divisibility, alienability and inheritability. Friedman v
Steiner, 107 111. 131 (1883). If a fee simple absolute in Common-Law England
denoted or was synonymous with only as much title as the King allowed his
barons to possess, then what did the King have by way of a title?
The King of England held ownership of land under a different title and with
far greater powers than any of his subjects. Though the people of England held
fee simple titles to their land, the King actually owned all the land in England
through his allodial title, and though all the land was in the feudal system, none
of the fee simple titles were of equal weight and dignity with the King's title, the
land always remaining allodial in favor of the King. Gilsbert of Mons, Chronique,
PAGE 245 OF 337

Ch. 43, p. 75 (ed. Vanderkindere). Thus, it is relatively easy to deduce that

allodial lands and titles are the highest form of lands and titles known to
Common-Law. An estate of inheritance without condition, belonging to the
owner, and alienable by him, transmissible to his heirs absolutely and simply, is
an absolute estate in perpetuity and the largest possible estate a man can have,
being in fact allodial in its nature. Stanton v Sullivan, 63 R.I. 216, 7 A. 696 (1839).
"The original meaning of a perpetuity is an inalienable, indestructible interest."
[5] Bovier's Law Dictionary, Volume 111, p. 2570 (1914). The King had such a
title in land. As such, during the classical feudalistic period of Common-Law
England, the King answered to no one concerning the land. Allodial titles, being
held by sovereigns, and being full and complete titles, allowed the King of
England to own and control the entire country in the form of one large estate
belonging to the Crown. Allodial estates owned by individuals exercising full and
complete ownership, on the other hand, existed only to a limited extent in the
County of Kent.
In summary of Common-Law England: (1) the King was the only person
(sovereign) to hold complete and full title to a land (allodial title); (2) the people
who maintained estates of land, (either called manors or fiefs), held title by fee
simple absolute, (3) this fee simple absolute provided the means by which the
"supposed" owner could devise, alienate, or pass by inheritance the estates of
land (manors or fiefs); (4) this fee simple absolute in feudal England, being
not the full title, did not protect the "owner" if the King found disfavor with the
"owner", (5) the xxxxxxxxxx it owner" therefore had to pay a type of homage to
the King or a higher baron each year to discharge the obligation of his fief, (6)
this homage of his fief could take the form of a revenue or tax, an amount of
grain, or a set and permanent amount of money, (7) and therefore as long as
the "owner" of the fief in fee simple absolute paid homage to the king or
sovereign, who held the entire country under an allodial title, then the "owner"
could remain on the property with full rights to sell, devise or pass it by
inheritance as if the property was really his. [6]
Section II -Land Ownership In America Today - The American

Feudalistic Society
The private ownership of land in America is one of those rights people
have proclaimed to be essential in maintaining this republic. The necessary
question in discussing this topic however, is whether ownership of land in
America today really is a true and complete ownership of land under an allodial
concept, or is it something much different. In other words, are we living in an
actual allodial freehold or are we living in an updated version of feudalistic
Common-Law. The answer is crucial in determining what rights we have in the
protection of our reality against improper seizures and encumbrances by our
government and creditors. The answer appears to be extremely clear upon
proper reflection of our rights when payments are missed on mortgages, or
taxes, for whatever reason, are not paid. If mortgage payments are missed or
taxes are not paid, we actually fall into disfavor with the parties who have the
power, and these powers, through court proceedings or otherwise, take our land
PAGE 246 OF 337

as a penalty. When one understands if he is unable to perform as the

government or his creditors request and for such failures of performance his
land can be forfeited, then he can begin to understand exactly what type of
land-ownership system controls his life, and he should recognize the inherent
unjustness of such constitutional violations.
The American-based system of land ownership today consists of three key
requirements. These three are the warranty deed or some other @ of deed
purporting to convey ownership [7] of land, title abstracts to chronologically
follow the development of these different types of deeds to a piece of property,
and title insurance to protect the ownership of that land. These three ingredients
must work together to ensure a systematic and orderly conveyance of a piece of
property; none of these three by itself can act to completely convey possession
of the land from one person to another. At least two of the three are always
deemed necessary to adequately satisfy the legal system and real estate agents
that the titles to the property had been placed in the hands of the purchaser and
often-times, all three are necessary to properly pass the ownership of the land to
the purchaser. Yet does the absolute title and therefore the ownership of the
land really pass from the seller to purchaser with the use of any one of these
three instruments or in any combination thereof None of the three by itself
passes the absolute or allodial title to the land, the system of land ownership
America originally operated under, and even combined all three can not
convey this absolute type of ownership. What then is the function of these
three instruments that are used in land conveyances and what type of title is
conveyed by the three? Since the abstract only traces the title and the title
insurance only insures the title, the most important and therefore first group to
examine are the deeds that purportedly convey the fee from seller to purchaser.
These deeds include the ones as follows: warranty deed, quit claim deed,
sheriffs deed, trustee's deed, judicial deed, tax deed, wig or any other instrument
that purportedly conveys the title. All of these documents state that it conveys
the ownership to the land. Each of these, however, is actually a color of title.
G. Thompson, Title to Real Property, Preparation and Examination of Abstracts,
Ch. 3, Section 73, p.93 (1919). A color of title is that which in appearance is
title, but which in reality is not title. Wright v Mattison, 18 How. (U.S.) 50 (1855)
[8]. In fact, any instrument may constitute color of title when it purports to convey
the title of the land, as well the land itself, although it is void as a muniment of
title. Joplin Brewing Co. v Payne, 197 No. 422, 94 S.W. 896 (1906). The
Supreme Court of Missouri has stated, "that [when we say a person has a
color of title, whatever may be the meaning of the phrase, we express the idea,
at least, that some act has been previously done,..., by which some title, good
or bad, to a parcel of land of definite extent had been conveyed to him." St. Louis
v Gorman, 29 Mo. 593 (1860). In other words, a color of title is an appearance
or apparent title, and "image' of the true tide, hence the phrase 'color of"
which, when coupled with possession purports to convey the ownership of the
land to the purchaser. This however does not say that the color of title is the
actual and true title itself, nor does it say that the color of title itself actually
conveys ownership. In fact, the claimant or holder of a color of title is not even
PAGE 247 OF 337

required to trace the title through the chain down to his instrument. Rawson v
Fox, 65 111. 200 (1872). Rather it may be said that a color of title is prima facie
evidence of ownership of and rights to possession of land until such time as
that presumption of ownership is disproved by a better title or the actual title
itself. If such cannot he proven to the contrary, then ownership of the land is
assumed to have passed to occupier of the land. To further strengthen a color
title-holder's position, courts have held that the good faith of the holder to a
color of title is presumed in the absence of evidence to the contrary. David v
Hall, 92 R. 1. 85 (1879); see also Morrison v Norman, 47 Ill. 477 (1868); and
McConnell v Street, 17 111. 253 (1855).
With such knowledge of what a color of title is, it Is interesting what
constitutes colors of title. A warranty deed is like any other deed of conveyance.
Mahrenholz v County Board of [9] School Trustees of Lawrence County, et.
al., 93 111. app. 3d 366 (1981). A warranty deed or deed of conveyance is a
color of title, as stated in Dempsey v Bums, 281 111. 644, 650 (1917) (Deeds
constitute colors of title); see also Dryden v Newman, 116 111. 186 (1886) (A
deed that purports to convey interest in the land is a color of title) Hinckley v
Green 52 111. 223 (1869) (A deed which, on its face, purports to convey a title,
constitutes a claim and color of title); Busch v Huston, 75 111. 343 (1874);
Chicking v Failes, 26 111. 508 (1861). A quit claim deed is a color of title as
stated in Safford v Stubbs, 1 17 ILL. 389 (1886); see also Hooway v Clark, 27
ILL. 483 (1861) and McCellan v Kellogg, 17 111. 498 (1855). Quit claim deeds
can pass the title as effectively as a warrant with full covenants. Grant v Bennett,
96 111. 513, 525 (1880); See also Morgan v Clayton, 61 111. 35 (187 1); Brady
v Spurck, 27 111. 478 (186 1); Butterfield v Smith, 111. II 1. 485 (1849).
Sheriffs deeds also are colors of title. Kendrick v Latham, 25 Fla. 819 (1889); as
is a judicial deed, Huls v Buntin, 47 111. 396 (1865). The Illinois Supreme Court
went into detail in its determination that a tax deed is only color of tide. "There
the complainant seem to have relied upon the tax deed as conveying to him the
fee, and to sustain such a bill, it was incumbent of him to show that all the
requirements of the law had been complied with." A simple tax deed by itself is
only a color of title. Fee simple can only be acquired though adverse
possession via payment of taxes; claim and color of title, plus seven years of
payment of taxes. Thus any tax deed purports, on its face, to convey title is a
good color of title. Walker v Converse, 148 111. 622, 629 (1894); see also
Peadro v Carriker, 168 111. 570 (1897); Chicago v Middlebrooke, 143 111. 265
(1892); Piatt County v Gooden, 97 111. 84 (1880); Stubblefield v Borders, 92
111. 570 (1897); Coleman v Billings, 89 111. 183 (1878); Whitney v Stevens, 89
111. 53 (1878); Thomas v Eckard, 88 111. 593 (1878); Holloway v Clarke, [10]
27 111. 483 (1861). A will passes only a color of title. Baldwin v Ratcliff, 125 Ill.
376 (1888); Bradley v Rees, 113 111. 327 (1885) (A wig can pass only so much
as the testator owns, though it may attempt to pass more). A trustee's deed, a
mortgages and strict foreclosure, Chickering v Failes, 26 111. 508, 519
(1861), or any document defining the extent of a disseisor's claim or
purported claim, Cook v Norton, 43 111. 391 (1867), all have been held to be
colors of title. In fact, "Itlhere is nothing here requiring a deed, to establish a
PAGE 248 OF 337

color of title, and under the former decisions of this court, color or title may exist
without a deed." Baldwin v Ratcliff, 125 111. 376, 383 (1882); County of Piatt v
Goodell, 97 111. 84 (1880); Smith v Ferguson, 91 111. 304 (1878); Hassett v
Ridgely, 49 111. 197 (1868); Brooks v. Bruyn, 35 111. 392 (1864); McCagg v
Heacock, 34 111. 476 (1864); Bride v Watt, 23 111. 507 (1860); and Woodward
v Blanchard, 16 111. 424 (1855). All of these cases being still valid and none
being overruled, in effect, the statements in these cases are well established law.
All of the documents described in these cases are the main avenues of claimed
land ownership in America today, yet none actually conveys the true and
allodial title. They in fact convey something quite different.
When it is stated that a color of title conveys only an appearance of or
apparent title, such a statement is correct but perhaps too vague to be
properly understood in its correct legal context. What are useful are the more
pragmatic statements concerning titles. A title or color of title, in order to be
effective in transferring the ownership or purported ownership of the land, must
be a marketable or merchantable title.[11]
A marketable or merchantable title is one that is reasonably free from
doubt. Austin v Bamum, 52 Minn. 136 (1892). This title must t)e as reasonably
free from doubts as necessary to not affect the marketability or salability of
the property, and must be a title a reasonably prudent person would be willing to
accept. Robert v McFadden, 32 Tex-Civ.App. 47, 74 S.W. 105 (1903). Such a
title is often described as one which would ensure to the purchaser a peaceful
enjoyment of the property, Barnard v Brown, 112 Mich. 452, 70 N.W. 1038
(1897), and it is stated that such a title must be obvious, evident, apparent,
certain, sure or indubitable. Ormsby v Graham, 123 La. 202, 98 N.W. 724
(1904). Marketable Title Acts, which have been adopted in several of the states,
generally do not lend themselves to an interpretation that they might operate to
provide a new foundation of title based upon a stray, accidental, or interloping
conveyance. Their object is to provide, for the recorded fee simple ownership,
an exemption from the burdens of old conditions which at each transfer of
the property interferes with its marketability. Wichelman v Messner, 83 N.W.
2d 800 (1957). What each of these legal statements in the various factual
situations says is that the color of title is never described as the absolute or
actual title, rather each says that it is one of the types of titles necessary to
convey ownership or apparent ownership. A marketable title, what a color of
title must be in order to be effective, must be a title which is good of recent
record, even if it may not be the actual title in fact. Close v Stuyvesant, 132 111.
607, 24 N.E. 868 (1890). "Authorities hold that to render a title marketable it is
only necessary that it shall be free from reasonable doubt; in other words, that
a purchaser is not entitled to demand a title absolutely free from every possible
suspicion." Cummings v Dolan, 52 Wash. 496, 100 P. 989 (1909). The record
being spoken of here is the title abstract and all documentary evidence
pertaining to it. "It is an axiom of [12] hornbook law that a purchaser has notice
only of recorded instruments that are within his 'chain of title'." I R. Patton & C.
Patton, Patton on Land Title, Section 69, at 230-233. (2nd ed. 1957); Sabo v
PAGE 249 OF 337

Horvath, 559 P. 2d 1038, 1043 (Ak. 1976). Title insurance then guarantees that
a title is marketable, not absolutely free from doubt.
Thus, under the color or title system used most often in this country today,
no individual operating under this type of title system has the absolute or
allodial title. All that is really necessary to have a valid title is to have a relatively
clean abstract with a recognizable color of title as the operative marketable title
within the chain of title. It therefore becomes necessarily difficult, if not
impossible after a number of years, considering the inevitable contingencies that
must arise and the title disputes that will occur, to ever properly guarantee an
absolute title. This is not necessarily the fault of the seller, but it is the fault of
the legal and real estate systems for allowing such a diluted form of title to be
controlling in an area where it is imperative to have the absolute title. In order to
correct this problem, it is important to return to those documents the early
leaders or the nation created to properly ensure that property remained one
of the inalienable rights that the newly established sovereign freeholders could
rely on to always exist. This correction must be in the form of restricting or
perhaps eliminating the widespread use of a marketable title and returning to
the absolute title.
Other problems have' developed because of the use of a color of title
system for the conveyance of land. These problems arise in the area of
terminology that succeed in only confusing and clouding the title to an even
greater extent than merely using terms like [13] marketability, salability or
merchantability. When a person must also determine whether a title is
complete, perfect, good and clear, or whether it Is a bad, defective, imperfect
and doubtful, there is any obvious possibility of destroying a chain of title
because of an inability to recognize what is acceptable to a reasonable
purchaser.
A complete title means that a person has the possession, right of
possession and the right of property. Dingey v Paxton, 60 Miss. 1038 (1883) and
Ehle v Quackenboss, 6 Hill (N.Y.) 537 (1844). A perfect title is exactly the same
as a complete title, Donovan v Pitcher, 53 Ala. 411 (1875) and Converse v
Kellogg, 7 Barb. (N. Y.) 590 (1850); and each simply means the type of title a
well-informed, reasonable and prudent person would be willing to accept when
paying full value for the property. Birge v Bock, 44 Mo. App. 69 (1890). In other
words, a complete or perfect title is in reality a marketable or merchantable
title, and is usually represented by a color of title.
A good title does not necessarily mean one perfect of record but consists
of one which is both of rightful ownership and rightful possession of the property
Bloch v Ryan, 4 App. Cas 283 (1894). It means a title free from litigation,
palpable defects and grave doubts consisting of both legal and equitable titles
and fairly deducible of record. Reynolds v Borel, 86 Cal. 538, 25 P. 67 (1890).
'A good title means not merely a title valid in fact, but a marketable title, which
can again be sold 'to a reasonable purchaser or mortgaged to a person of
reasonable prudence as security for a loan of money." Moore v Williams, 115
N.Y. 586, 22 N.E. 253 (1889). A clear title means there are no encumbrances
on the land, Roberts v Bassett, 105 Mass. 409 (1870). [14] Thus, when
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contracting to convey land, the use of the phrase "good and clear title" is
surplusage, since the terms good title and clear title are in fact synonymous.
Oakley v Cook, 41 N.J. Eq. 350, 7 A.2d 495 (1886). Therefore, the words good
title and clear title, just like the words complete title and perfect title, describe
nothing more than a marketable title or merchantable title, and as stated
above, each can and almost always is represented in a transaction by a color
of title. None of these types of title purports to be the absolute, or allodial title,
and none of them are that type of title. None of these actually claims to be a fee
simple absolute, and since these types of titles are almost always
represented by a color of title, none represents that it passes the actual title.
Each one does state that it passes what can be described as a title good
enough to avoid the necessity of litigation to determine who actually has the
title. If such litigation to determine titles is necessary, then the title has crossed
the boundaries of usefulness and entered a different category of title
descriptions and names.
This new category consists of titles which are bad, defective, imperfect or
doubtful. A bad title conveys no property to the purchaser of the estates.
Heller v Cohen, 15 Misc. 378, 36 N.Y.S. 668 (1895). A title is defective when
the party claiming to own the land has not the whole title, but some other
person has title to a part or portion of it. Such a title is the same as no title
whatsoever. Place v People, 192 111. 160, 61 N.E. 354 (1901); See also
Cospertini v Oppermann, 76 Cal. 181, 18 P. 256 (1888). An imperfect title is one
where something remains to be done by the granting power to pass the title to
the land, Raschel v Perez, 7 Tex. 348 (1851); and a doubtful title is also one
which conveys no property to the purchaser of the estate Heller v Cohen, 15
Misc. 378, 36 N.Y.S. 668 (1895). Every title is described as doubtful [15] which
invites or exposes the party holding it to litigation. Herman v Somers, 158 PA.ST.
424, 27 A. 1050 (1893). Each of these types of titles describes exactly the
same idea stated in many different ways, that because of some problem,
defect, or question surrounding the title, no title can be conveyed, since no title
exists. Yet in all of these situations some type of color of title was used as the
operative instrument. What then makes one color of title complete, good or clear
in one situation, and in another situation the same type of color of title could be
described as bad, defective, imperfect or doubtful? What is necessary to
make what might otherwise be a doubtful title, a good tide, is the belief of others
in the community, whether or not properly justified, that the title is a good one
which they would be w@g to purchase. Moore v Williams, 115 N. Y. 586, 22 N.E.
253 (1889). The methods presently used to determine whether a title or color of
title is good enough to not be doubtful, are the other two-thirds of the three
possible requirements for the conveyance of a good or complete (marketable)
title.
These two methods of properly ensuring that a title is a good or complete
title are title abstracts, the complete documentary evidence of title, and title
insurance. The legal title to land, based on a color of title, is made up of a series
of documents required to be executed with the solemnities prescribed by law,
and of facts not evidenced by documents, which show the claimant a person to
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whom the law gives the estate. Documentary evidences of title consist of
voluntary grants by the sovereign, deeds if conveyances and wills by
individuals, conveyances by statutory or judicial permission, deeds made in
connection with the sale of land for delinquent taxes, proceedings under the
power of eminent domain, and deeds executed by ministerial or fiduciary
officers. These documentary evidences are represented by the land patent
and the [16] colors of title. I G. Thompson, Commentaries on the Modem Law of
Real Property, pp. 99-100 (5th ed. 1980). These instruments, relied upon to
evidence the title, coupled with the outward assertive acts that import dominion,
must be used by the abstractor in compiling the abstract, and the attorney must
examine to determine the true status of the title. Id. The abstract is the
recorded history of the land and the various types of titles, mortgages and other
liens, claims and interests that have been placed on the property. The abstract
can determine the number of times the patent has been redeclared, who owns
the mineral rights, what color of title is operable at any particular point in time,
and what lien holder is in first position, but it does not convey or even attempt
to convey any form of the title itself. As Thompson, supra has stated, it is
necessary when operating with colors of titles to have an abstract to determine
the status of the operable title and determine whether that title is good or
doubtful. Id. at 101. If the title is deemed good after this lengthy process, then
the property may be transferred without doing anything more, since it is
assumed that the seller was the owner of the property. This is not to say
emphatically that the seller is the paramount or absolute owner. This does not
even completely guarantee that he is the owner of the land against any adverse
claimants. It is not even that difficult to claim that the title holder has a good title
due to the leniency and attitude now evidenced by the judicial authorities
toward maintaining a stable and uniform system of land ownership, whether
or not that ownership is justified. This however, does not explain the purpose
and goal of a title abstract.
An abstract that has been properly brought up simply states that it is
presumed the seller is the owner of the land, making the title marketable, and
guaranteeing that he has a good title to [17] sell. This is all an abstract can
legally do since it is not the title itself and it does not state the owner has an
absolute title. Therefore, the abstract can not guarantee unquestionably that the
title is held by the owner. All of this rhetoric is necessary if the title is good; if
there is some question concerning the title without making it defective, then the
owner must tum to the last of the three alternatives to help pass a good title,
title insurance. G. Thompson, Title to Real Property, Preparation and
Examination of Abstracts, Ch. 111, Section 79, pp. 99-100 (1919).
Title insurance is issued by title insurance companies to ensure the
validity of the title against any defects, against any encumbrances affecting the
designated property, and to protect the purchaser against any losses he sustains
from the subsequent determination that his title is actually unmarketable. Id. at
100. Title insurance extends to any defects of title. Id. It protects against the
existence of any encumbrances, provided only that any judgments adverse to
the title shall be pronounced by a court of competent jurisdiction. Id. It is not
PAGE 252 OF 337

even necessary that a defect actually exist when the insurance policy was
issued, it is simply necessary that there exists at the time of issuance of the
policy and inchoate or potential defect which is rendered operative and
substantial by the happening of some subsequent event. Since all one normally
has is a color of title, the longer a title traverses history, the greater the
possibility that the title will become defective. The greater the need for
insurance simply to keep the title marketable, the easier it is to determine that
the title possessed is not the true, paramount and absolute title. If a person had
the paramount title, there would be no need for title insurance, though an
abstract might be useful for record keeping and historical purposes. Title
insurance and abstract record keeping are useful primarily because of
extensive reliance on colors of title as the operative title for a piece of property.
[18]
This then supplies the necessary information concerning colors of title, title
abstracts, and title insurance. This does not describe the relationship
between the landowner and the government. As was stated in the instruction, in
feudal England, the King has the power, right and authority to take a person's
land away from him, if and when the King felt it necessary. The question is
whether most of the American system of land ownership and titles is in reality
any different and whether therefore the American-based system of ownership, is
in reality nothing more than a feudal system of land ownership.
Land ownership in America presently is founded on colors of title, and
though people believe they are the complete and total owners of their property;
under a color of title system this is far from the truth. When people state that
they are free and own their land, they in fact own it exactly to the extent the
English barons owned their land in Common-Law England. They own their
land so long as some "sovereign", the government or a creditor, states that they
can own their land. If one recalls from the beginning of this memorandum, it
was states that if the King felt it justified, he could take the land from one
person and give such land to another prospective baron. Today, in American
color-of-title property law, if the landowner does not pay income tax, estate tax,
property tax, mortgages or even a security note on personal property, then
the "sovereign", the government or the creditor, can justify the taking of the
property and the sale of that same property to another prospective "baron",
while leaving the owner with only limited defenses to such actions. The only real
difference between this and Common-Law England is [19] that now others
besides the King can profit from the unwillingness or inability of the "landowner"
to perform the socage or tenure required of every landowner of America. As
such no one is completely safe or protected on his property; no one can afford
to make one mistake or the consequences will be forfeiture of the property. If
this were what the people in the mid 1700's wanted, there would have been no
need to have an American Revolution, since the taxes were secondary to
having a sound monetary system and complete ownership of the land. Why fight
a Revolutionary War to escape sovereign control and virtual dictator ship over
the land, when in the 1990's these exact problems are prevalent with this one
exception, money now changes hands in order to give validity to the eventual
PAGE 253 OF 337

and continuous takeover of the property between the parties. This is hardly what
the forefathers strived for when creating the United States Constitution, and
what they did strive for is the next segment of the memorandum of law, allodial
ownership of the land via the land patent. The next segment will analyze the
history of this type of title so that the patent can be properly understood, making
it possible to comprehend the patent's true role in property law today.[20]
Section III - Land Patents And Why They Were Created

As was seen in the previous sections, there is little to protect the
landowner who holds title in the chain of title, when distressful economic or
weather condition make it impossible to perform on the debt. Under the color-
of-title system, the property, "one of those inalienable rights", can be taken for
the nonperformance on loan obligations. This type of ownership is similar to the
feudal ownership found in the Middle Ages.
Upon defeating the English in 1066 A.D., William the Conqueror pursuant to
his 52nd and 58th laws, "...effectually reduced the lands of England to feuds,
which were declared to be inheritable and from that time the maxim prevailed
there that all lands in England are held from the King, and that all proceeded
from his bounty. " I.E. Washburn, Treatise on The American Law of Real
Property, Section 65, p.44 (6th ed. 1902). All lands in Europe, prior to the
creation of the feudal system in France and Germany, were allodial. Most of
these lands were voluntarily changed to feudal lands as protection from the
neighboring barons or chieftains. Id. Section 56, at 40. Since no documents
protected one's freedom over his land, once the lands were pledged for
protection, the lands were lost forever. This was not the case in England.
England never voluntarily relinquished its land to William I. In fact, were it
not for a tactical error by King Harold II's men in the Battle of Hastings,
England might never have become feudal. A large proportion of the Saxon lands
prior to the Conquest of A.D. 1066 [21] "were held as allodial, that is, by an
absolute ownership, without recognizing any superior to whom any duty was
due on account thereof." Id. Section 54, at 39. The mode of conveying these
allodial lands was most commonly done by a writing or charter, called a land-
boc, or land allodial charter, which, for safekeeping between conveyances, was
generally deposited in the monasteries. Id., Section 54, at 40. In fact, one
portion of England, the County of Kent, was allowed to retain this form of land
ownership while the rest of England became feudal. Id., Section 55, at 40.
Therefore, when William I established feudalism in England to maintain control
over his barons, such control created animosity over the next 2 centuries. F.L.
Ganshof, Feudalism, p. 114 (1964). As a result of such dictatorial control, some
25 barons joined forces to exert pressure on the then ruling monarch, King John,
to gain some rights not all of which the common man would possess. The
result of this pressure at Runnymede became known as the Magna Carta.
The Magna Carta was the basis of modem common law, the common law
being a series of judicial decisions and royal decrees interpreting and following
that document. The Magna Carta protected the basic rights, the rights that gave
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all people more freedom and power. The rights that would slowly erode the
king's power.
Among these rights was a particular section dealing with ownership of the
land. The barons still recognized the king as the lord paramount, but the
barons wanted some of the rights their ancestors had prior to A.D. 1066. F.
Goodwin, Treatise on The Law of Real Property, Ch. 1, p.3 (1905). Under this
theory, the barons would have several rights and [22] powers over the land, as
the visible owners, that had not existed in England for 150 years. The particular
section of most importance was Section 62 giving the most powerful barons
letters of patent, raising their land ownership close to the level found in the
County of Kent. Other sections, i.e., 10, 11, 26, 27, 37, 43, 52, 56, 57, and 61
were written to protect the right to "own" property, to illustrate how debts
affected this fight to own property, and to secure the return of property that was
unjustly taken. All these paragraphs were written with the single goal of
protecting the "landowner" and helping him retain possession of his land,
acquired in the service of the King, from unjust seizures or improper debts. The
barons attempted these goals with the intention of securing property to pass to
their heirs.
Unfortunately goals are often not attained. Having repledged their loyalty
to King John, the barons quickly disbanded their armies. King John died in
1216, one year after signing the Magna Carta, and the new king did not wish
to grant such privileges found in that document. Finally, the barons who forced
the signing of the Magna Carta died, and with them went the driving force that
created this great charter. The Magna Carta may have still been alive, but the
new kings had no armies at their door forcing them to follow policies, and the
charter was to a great extent forced to lie dormant. The barons who received
the letters of patent, as well as other landholders perhaps should have
enforced their rights, but their heirs were not in a position to do so and
eventually the fights contained in the charter were forgotten. Increasingly until
the mid-1600's, the king's power waxed, abruptly ending with the execution of
Charles I in 1649. By then however, the original intent of the Magna Carta was
in part lost and the descendants of the original barons never required properly
protected [23] free land ownership. To this day, the freehold lands in England are
still held to a great extent upon the feudal tenures. See supra Washburn,
Section 80, p. 48. This lack of complete ownership in the land, as well as
the most publicized search for religious freedom, drove the more adventurous
Europeans to the Americas to be away from these restrictions.
The American colonists however soon adopted many of the same land
concepts used in the old world. The kings of Europe had the authority to still
exert influence, and the American version of barons sought to retain large tracts
of land. As an example, the first patent granted in New York went to Killian Van
Rensselaer dated in 1630 and confirmed in 1685 and 1704. A. Getman, Title to
Real Property, Principles and Sources of Titles Compensation For Lands and
Waters, Part Ill, Ch. 17, p.229 (1921). The colonial charters of these American
colonies, granted by the king of England, had references to the lands in the
County of Kent, effectively denying the more barbaric aspects of feudalism from
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ever entering the continent, but feudalism with its tenures did exist for some
time. See supra Washburn, Section 55, p. 40. "[It may be said that, at an early
date, feudal tenures existed in this country to a limited extent." C. Tiedeman,
An Elementary Treatise on the American Law of Real Property, Ch. 11. The
Principles of the Feudal System, Section 25, p.22 (2nd ed. 1892). The result
was a newly created form of feudal land ownership in America. As such, the
feudal barons in the colonies could dictate who farmed their land, how their
land was to be divided, and to a certain extent to whom the land should pass.
But, just as the original barons discovered, this power was premised in part of
the performance of duties for the king. Upon the failure of performance, the king
could order the grant revoked and grant [24] the land to another willing to
acquiesce to the king's authority. This authority, however, was premised on the
belief that people, recently arrived and relatively independent, would follow the
authority of a king based 3000 miles away. Such a premise was ill-founded. The
colonists came to America to avoid taxation without representation, to avoid
persecution of religious freedom, and to acquire a small tract of land that could
be owned completely. When the colonists were forced to pay taxes and were
required to allow their homes to be occupied by soldiers; they revolted,
fighting the British, and declaring their Declaration of Independence.
The Supreme Court of the United States reflected on this independence, in
Chisholm v Georgia, 2 Dall. (U.S.) 419 (1793), stating: the revolution, or rather
the Declaration of Independence, found the people already united for general
purposes, and at the same time, providing for their more domestic concerns,
by state conventions, and other temporary arrangements. >From the crown of
Great Britain, the sovereignty of their country passed to the people of it; and it
was then not an uncommon opinion, that the unappropriated lands, which
belonged to that crown, passed, not to the people of the colony or states within
those limits they were situated, but to the whole people;..."We, the people of
the United States, do ordain and establish this constitution." Here we see the
people acting as sovereigns of the whole country; and in the language of
sovereignty, establishing a constitution by which it was their will, that the state
governments, should be bound, and to which the state constitutions should be
made to conform It will be sufficient to observe briefly, that the sovereignties in
Europe, and particularly in England, exist on feudal principles. That system [25]
considers the prince as the sovereign, and the people his subjects; it regards
his person as the object of allegiance, and excludes the idea of his being on an
equal footing with a subject, either in a court of justice or elsewhere. That
system contemplates him as being the fountain of honor and authority; and
from his grace and grant, derives all franchises, immunities and privileges; it is
easy to perceive, that such a sovereign could not be amenable to a court of
justice, or subjected to judicial control and actual constraint. The same feudal
ideas run through all their jurisprudence, and constantly remind us of the
distinction between the prince and the subject. No such ideas obtain here; at
the revolution, the sovereignty devolved on the people; and they are truly the
sovereigns of the country, but they are sovereigns without subjects and have
none to govern but themselves; the citizens of America are equal as fellow-
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citizens, and as joint tenants in the sovereignty. From the differences existing
between feudal sovereignties and governments founded on compacts, it
necessarily follows, that their respective prerogatives must differ. Sovereignty is
the fight to govern; a nation or state sovereign is the person or persons in whom
that resides. In Europe, the sovereignty is generally ascribed to the prince;
here it rest with the people; there the sovereign actually administers the
government; here never in a single instance; our governors are the agents of the
people, and at most stand in the same relation to their sovereign, in which the
regents of Europe stand to their sovereigns. Their princes have personal
powers, dignities, and preeminence, our rules have none but official; nor do they
partake in the sovereignty otherwise, or in any other capacity, than as private
citizens. (emphasis added). d. at 470-471. The Americans had a choice as to
how they wanted their new government and country to be formed. Having
broken away from the English sovereignty and establishing themselves as [26]
their own sovereigns, they had their choice of types of taxation, freedom of
religion, and most importantly ownership of land. The American founding
fathers chose allodial ownership of land for the system of ownership on this
country. In the opinion of Judge Kent, the question of tenure as an incident to
the ownership of lands "has become wholly immaterial in this country, where
every vestige of tenure has been annihilated." See supra Washburn, Section
118, p.59. At the present day there is little, if any, trace of the feudal tenures
remaining in the American law of property. Lands in this country are now held
to be absolutely allodial. See Supra Tiedeman, Section 25, p. 22. Upon the
completion of the Revolutionary War, lands in the thirteen colonies were held
under a different form of land ownership. As stated in re Waltz et. al., Barlow v
Security Trust & Savings Bank, 240 p. 19 (1925), quoting Matthews v Ward,
10 Gill & J. (Md.) 443 (1839), "after the American Revolution, lands in this state
(Maryland) became allodial, subject to no tenure, nor to any services incident
there to." The tenure, as you will recall, was the feudal tenure and the services
or taxes required to be paid to retain possession of the land under the feudal
system. This new type of ownership was acquired in all thirteen states. Wallace v
Harmstead, 44 Pa. 492 (1863). The American people, before developing a
properly functioning stable government, developed a stable system of land
ownership, whereby the people owned their land absolutely and in a manner
similar to the king in Common-Law England. As has been stated earlier, the
original and true meaning of the word "fee" and therefore fee simple absolute
is the same as fief or feud, this being in contradistinction to the term "allodium"
which means or is defined as man's own land, which he possesses merely in
his own right, without owing any rent or service to any superior. Wendell v
Crandall, 1 N. Y. 491 (1848). [27] Stated another way, the fee simple estate of
early England was never considered as absolute, as were lands in allodium, but
were subject to some superior on condition of rendering him services, and in
which the such superior had the ultimate ownership of the land. In re Waltz, at
page 20, quoting I Cooley's Blackstone, (4th ed.) p. 512. This type of fee simple
is a Common-Law term and sometimes corresponds to what in civil law is a
perfect title. United States v Sunset Cemetery Co., 132 F. 2d 163 (1943). It is
unquestioned that the king held an allodial title which was different than the
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Common-Law fee simple absolute. This type of superior title was bestowed
upon the newly established American people by the founding fathers. The
people were sovereigns by choice, and through this new type of land
ownership, the people were sovereign freeholders or kings over their own
land, beholden to no lord or superior. As stated in Stanton v Sullivan, 7 A. 696
(1839), such an estate is an absolute estate in perpetuity and the largest
possible estate a man can have, being, in fact allodial in its nature. This type of
fee simple, as thus developed, has definite characteristics: (1) it is a present
estate in land that is of indefinite duration; (2) it is freely alienable; (3) it carries
with it the right of possession; and most importantly (4) the holder may make
use of any portion of the freehold without being beholden to any person. 1 G.
Thompson, Commentaries on the Modern Law of Real Property, Section 1856, p.
412 (1st ed. 1924). This fee simple estate means an absolute estate in lands
wholly unqualmed by any reservation, reversion, condition or limitation, or
possibility of any such thing present or future, precedent or subsequent. Id.;
Wichel'man v Messner, 83 N.W. 2d 800, 806 (1957). It is the most extensive
estate and interest one may possess in real property. Where, an estate subject
to an option is not in fee. See supra I Thompson, Section 1856, p. 413. In the
case, Bradford v Martin, [28] 201 N.W. 574 (1925), the Iowa Supreme Court
went into a lengthy discussion on what the terms fee simple and allodium
means in American property law. The Court stated:
The word "absolutely" in law has a varied meaning, but when unqualifiedly
used with reference to titles or interest in land, its meaning is fairly well settled.
Originally the two titles most discussed were "fee simple" and "allodium" (which
meant absolute). See Bouvier's. Law Dictionary. (Rawle Ed.) 134; Wallace v
Harmstead, 44 Pa. 492; McCartee v Orphan's Asylum, 9 Cow. (N.Y.) 437, 18
Am. Dec. 516. Prior to Blackstone's time the allodial title was ordinarily called
an "absolute title" and was superior to a "fee simple title," the latter being
encumbered with feudal clogs which were laid upon the first feudatory when it
was granted, making it possible for the holder of a fee-simple title to lose his
land in the event he failed to observe his feudatory oath. The allodial title was
not so encumbered. Later the term "fee simple," however rose to the dignity of
the allodial or ab solute estate, andsince the days of Blackstone the word It
absolute estate" and "fee simple" seen to have been generally used
interchangeably; in fact, he so uses them. See Book H, chap. 7, pp. 104-105 ....
And further the words "absolute" and absolutely" usually carry the fee ... By the
terms "absolute interest" we understand a complete and perfect interest,... an
estate in fee simple is meant. Id. at 576.
The basis of English rand law is the ownership of the realty by the
sovereign, from the crown all titles flow. People v. Richardson, 269 M. 275, 109
N.E. 1033 (1914); see also Matthew v. Ward, 10 Gill & J (Md.) 443 (1844).
The case, McConnell v. Wilcox, I Scam. [29] (IR.) 344 (1837), stated it this way:
From what source does the title to the land derived from a government spring? In
arbitrary governments, from the supreme head be he the emperor, king, or
potentate; or by whatever name he is known. In a republic, from the law making
or authorizing to be made the grant or sale. In the first case, the party looks
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alone to his letters patent; in the second, to the law and the evidence of the acts
necessary to be done under the law, to a perfection of his grant, donation or
purchase ... The law alone must be the fountain from whence the authority is
drawn; and there can be no other source. Id. at 367.
The American people, newly established sovereigns in this republic after
the victory achieved during the Revolutionary War, became complete owners in
their land, beholden to no lord or superior; sovereign freeholders in the land
themselves. These freeholders in the original thirteen states now held allodial
the land they possessed before the war only feudally. This new and more
powerful title protected the sovereigns from unwarranted intrusions or attempted
takings of their land, and more importantly it secured in them a right to own
land absolutely in perpetuity. By definition, the word perpetuity means,
"Continuing forever. Legally, pertaining to real property, any condition
extending the inalienability..." Black's Law Dictionary, p. 1027 (5th ed. 1980). In
terms of an allodial title, it is to have the property of inalienability forever. No
more need be done to establish the ownership of the sovereigns to their
land, although confirmations were usually required to avoid possible future title
confrontations. The states, even prior to the creation of our present
Constitutional government, were issuing titles to the unoccupied lands within
their boundaries. In New York, even before the war was won, the state issued
the first land patent in 1781, and only a [30] few weeks, after the battle and
victory at Yorktown in 1783, the state issued the first land patent to an individual.
A Getinan, supra, Part 111, Ch. 17, State Legislative Grants, pp. 23132 (1921).
In fact, even before the United States was created, New York and other states
had developed their own Land Offices with Commissioners. New York was first
established in 1784 and was revised in 1786 to further provide for a more
definite procedure for the sale of unappropriated State Lands. Id. The state
courts held, "The validity of letters patent and the effectiveness of same to
convey title depends on the proper execution and record ... It has generally
been the law that public grants to be valid must be recorded. The record is not
for purposes of notice under recording acts but to make the transfer effectual."
Id. at 242. Later, if there was deemed to be a problem with the title, the state
grants could be confirmed by issuance of a confirmatory grant Id. at 239. This
then, in part, explains the methods and techniques the original states used to
pass title to their lands, lands that remained in the possession of the state
unless purchased by the still yet uncreated federal government, or by
individuals in the respective states. To much this same extent Texas, having
been a separate country and republic, controlled and still controls its lands. In
each of these instances, the land was not originally owned by the federal
government and then later passed to the people and states. This then is a
synopsis of the transition from colony to statehood and the rights to land
ownership under each situation. This however has said nothing of the methods
used by the states in the creation of the federal government and the eventual
disposal of the federal lands.
States, on [31] September 17, 1787. The Constitution and the government
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formed under it were declared in effect on the first Wednesday of March, 1789.
Prior to this time, during the Constitutional Convention, there was serious
debate on the disposal of what the convention called the "Westem Territories,"
now the states of Ohio, Indiana, Illinois, Michigan, Wisconsin and part of
Minnesota, more commonly known as the Northwest Territory. This tract of land
was ceded to the new American republic in the treaty signed with Britain in
1783.
The attempts to determine how such a disposal of the Westem territories
should come about was the subject of much discussion in the records of the
Continental Congress. Beginning in September, 1783, there was continual
discussion concerning the acquisition of and later disposition to the lands east
of the Mississippi River. Journals of Congress, Papers of the Continental
Congress, No. 25, 11, folio 255, p. 544-557 (September 13, 1783).
And whereas the United States have succeeded to the sovereignty over the
Western territory, and are thereby vested as one undivided and independent
nation, with all and every power and right exercised by the king of Great
Britain, over the said territory, or the lands lying and situated without the
boundaries of the several states, and within the limits above described; and
whereas the western territory ceded by France and Spain to Great Britain,
relinquished to the United States by Great Britain, and guarantied to the United
States by France as aforesaid, if properly managed, will enable the United
States to comply with their promises of land to their officers and soldiers; will
relieve their citizens from much of the weight of taxation;.... and if cast into new
states, will tend to increase the happiness of [32] mankind, by rendering the
purchase of land easy, and the possession of liberty permanent; therefore ...
Resolved, that a committee be appointed to report the territory lying without
the boundaries of the several states; ... ; and also to report an establishment for
a land office. Id. at 558, reported in the writing of James McHenry.
There was also serious discussion and later acquisition by the then
technically nonexistent federal government of land originally held by the
colonial governments. Id. at 562-63. As the years progressed, the goal
remained the same, a proper determination of a simple method of disposing of
the western lands. "That an advantageous disposition of the western territory is
an object worthy the deliberation of Congress." Id. February 14, 1786, at p. 68.
In February, 1787, the Continental Congress continued to hold discussions on
how to dispose of all western territories. As part of the basis for such disposal,
it was determined to divide the new northwestern territories into medians,
ranges, townships, and sections, making for easy division of the land, and
giving the new owners of such land a certain number of acres in fee. Journals
of Congress, p. 21, February 1787, and Committee Book, Papers of the
Continental Congress, No. 190, p. 132 (1788). In September of that same year,
there were most discussions on the methods of disposing the land. In those
discussions, there were debates in the validity and solemnity of the state
patents that has been issued in the past Id., No. 62, p. 546. Only a week earlier
the Constitution was ratified by the conventions of the states. Finally, the future
Senate and House of Representatives, though not officially a government for
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another 1 & 1/2 years, held discussions on the possible creation of

documents that would pass the title of lands from the new government to the
people. In these [33] discussions, the first patents were created and ratified,
making the old land-boc, or land-allodial charters of the Saxon nobles, 750 years
earlier, and the letters patent of the Magna Carta, guidelines by which the
land would pass to the sovereign freeholders of America. Id., July 2, 1788,
pp277-286.
As part of the method by which the new United States decided to dispose
of its territories, it created in the Constitution an article, section, and clause, that
specifically dealt with such disposal. Article IV, Section 111, Clause 11, states in
part, "The Congress shall have Power to dispose of and make all needful Rules
and Regulations respecting the Territory or other Property belonging to the
United States. " Thus, Congress was given the power to create a vehicle to
divest the Federal Government of all its right and interest in the land. This
vehicle, known as the land patent, was to forever divest the federal government
of its land and was to place such total ownership in the hands of the sovereign
freeholders who collectively created the government. The land patents issued
prior to the initial date of recognition of the United States Constitution were
ratified by the members of Constitutional Congress. Those Patents created by
statute after March, 1789, had only the power of the statutes and the
Congressional intent behind such statutes as a reference and basis for the
determination of their powers and operational effect originally and in the
American system of land ownership today.
There have been dozens of statutes enacted pursuant to Article IV, Section
111, Clause 11. Some of these statutes had very specific intents of aiding
soldiers of wars, or dividing lands [34] in a very small region of one state, but
all had the main goal of creating in the sovereigns, freeholders on their
lands, beholden to no lord or superior, Some of the statutes include, 12 Stat
392, 37th Congress, Sess. 11, Ch. 75, (1862) (the Homestead Act); 9 Stat. 520,
3 1st Congress, Sess. 1, Ch. 85 (1850) (Military Bounty Service Act); 8 Stat.
123, 29th Congress, Sess. 11 Ch. 8, (1847) (Act to raise additional military force
and for other purposes); 5 Stat 444, 21st Congress, Sess. 11, Ch. 30 (1831); 4
Stat 51, 18th Congress, Sess. I., Ch. 174 (1824); 5 Stat 52, 18th Congress,
Sess. 1, Ch. 173 (1824); 5 Stat 56, 18th Congress, Sess. 1, Ch. 172, (1824); 3
Stat. 566, 16th Congress, Sess. 1, Ch. 51, (1820) (the major land patent
statute enacted to dispose of lands); 2 Stat 748, 12th Congress, Sess. 1. Ch.
99 (1812); 2 Stat. 728, 12th Congress, Sess. 1, Ch. 77, (1812); 2 Stat. 716, 12th
Congress, Sess. 1, Ch. 68, (1812) (the act establishing the General Land-Office
in the Department of Treasury); 2 Stat 590, llth Congress, Sess. U, Ch. 3.5,
(1810);2 Stat 437, 9th Congress, Sess. H, Ch. 34, (1807); and 2 Stat 437, 9th
Congress, Sess. H, Ch. 31, (1807). These, of course, are only a few of the
statutes of enacted to dispose of public lands to the sovereigns. One of these
acts however, was the main patent statute in reference to the intent Congress
had when creating the patents. That status is 3 Stat 566, supra.
In order to understand the validity of a patent, in today's property law, it
is necessary to turn to other sources than the acts themselves. These sources
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include the Congressional debates and case law citing such debates. For the
best answer to this question, it is necessary to turn to the Abridgment of the
Debates of Congress, Monday, March 6, 1820, in the Senate, considering the
topic "The Public Lands." This abridgment and the actual debates [35] found in
its concern one of the most important of the land patent statutes, 3 Stat 566,
16th Congress, Sess. 1. Ch. 51, Stat. 1, (April 24, 1820).
the protection afforded by the patent in particular were discussed. As Senator
Edwards states; But, said, he, it is not my purpose to discuss, at length, the
merits of the proposed change. I will, at present, content myself with an effort,
merely, to shield the present settlers upon public lands from merciless
speculators, whose cupidity and avarice would unquestionably be tempted by
the improvements which those settlers have made with the sweat of their
brows, and to which they have been encouraged by the conduct of the
government itself, for though they might be considered as embraced by the letter
of the law which provides against intrusion on public lands, yet, that their case
has not been considered by the Government as within the mischiefs intended
to be prevented is manifest, not only from the forbearance to enforce the law, but
from the positive rewards which others, in their situation, have received, by the
several laws which have heretofore been granted to them by the same right if
preemption which I now wish extended to the present settlers. Id. at 456.
Further, Senator King from New York stated-, He considered the change as
highly favorable to the poor man; and he argued at some length, that it was
calculated to plant in the new country a population of independent,
unembarrassed freeholders; ... that it would cut up speculation and monopoly;
that the money paid for the lands would be carried from the State or country from
which the purchaser should remove; that it would prevent the accumulation of an
alarming debt, [36] which experience proved never would and never could be
paid. ld. at 45657.
In other statutes, the Court recognized much of these same ideas. In
United States v. Reynes, 9 How. (U.S.) 127 (1850), the Supreme Court stated:
The object of the Legislature is manifest It was intended to prevent
speculation by dealing for rights of preference before the public lands were in the
market The speculator acquired power over choice spots, by procuring
occupants to seat themselves on them and who abandoned them as soon as
the land was entered under their preemption right, and the speculation
description could be enforced. The act of 1830, however, proved to be of little
avail and then came the Act of 1835 (5 Stat 251) which compelled the
preemptor to swear that he had not made an arrangement by which the title
might insure to the benefit of anyone except himself, or that he would transfer it
to another at any subsequent time. This was preliminary to the allowing if his
entry, and discloses the policy of Congress. Id. at 154.
"It is always to be borne in mind, in construing a congressional grant that
the act by which it is made is a law as well as a conveyance and that such
effect must be given to it as will carry out the intent of Congress. That intent
PAGE 262 OF 337

should not be defeated by applying to the grant the rules of common law ...
words of present grant, are operative, if at all, only as contracts to convey. But
the rules of common law must yield in this, as in other cases, to the legislative
will." Missouri, Kansas & Texas Railway Company v. Kansas Pacific Railway
Company, 97 U.S. 49 1, 497 (1878). The administration of the land system in this
country is vested in the Executive [37] Department if the Government, first in the
Treasury and now in the Interior Department the officers charged with the
disposal of the public domain under the authority of acts of Congress are
required and empowered to determine the construction of those acts so far
as it relates to the extent and character of the rights claimed under them , and to
be given, though their actions, to individuals. This is a portion of the Political
power of the Government, and courts of justice must never interfere with it .
Marks v Dickson, 61 U.S. (20 How) 501 (1857); see also Cousin v. Blanc's
Ex., 19 How. (U.S.) 206, 209 (1856). "The power of Congress to dispose of its
land cannot be interfered with, or its exercise embarrassed by any State
legislation; nor can such legislation deprive the grantees of the United States of
the possession and enjoyment of the property granted by reason of any delay in
the transfer of the title after the initiation of proceedings for its acquisition."
Gibsion v Chouteau, 13 Wal. (U. S.) 92, 93 (187 1).
State statutes that give lesser authoritative ownership of title than the
patent can not even be brought into federal court. Langdon v. Sherwood, 124
U.S. 74, 81 (1887). These acts of Congress making grants are not to be treated
both law and grant, and the intent of Congress when ascertained is to control in
the interpretation of the law. Wisconsin C. R. Co. v. Forsythe, 159 U.S. 46
(1895). The intent to be searched for by the courts in a government patent is the
intent which the government had as that time, and not what it would have been
had no mistake been made. The true meaning of a binding expression in a
patent must be applied, no matter where such expressions are found in the
document. It should be construed as to effectuate the primary object Congress
had in view; and obviously a construction that gives effect to a patent is to be
preferred to one that renders it inoperative and void. A grant must be interpreted
by the [38] law of the country in force at the time when it was made. The
construction of federal grant by a state court is necessarily controlled by the
federal decisions on the same subject The United States may dispose of the
public lands of such terms and conditions, and subject to such restrictions and
limitations as in its judgment will best promote the public welfare, even if the
condition is to exempt the land from sale on execution issued or judgment
recovered in a State Court for a debt contracted before the patent issues.
Miller v. Little, 47 Cal. 348, 350 (1874). Congress has the sole power to declare
the dignity and effect if titles emanating from the United States and the whole
legislation of the Government must be examined in the determination of such
titles. Bagneu v. Broderick, 38 U.S. 436 (1839). It was clearly the policy of
Congress, in passing the preemption and patent laws, to confer the benefits of
those laws to actual settlers upon the land. Close v. Stuyvesant, 132 M. 607,
617 (1890). The intent of Congress is manifest in the determinations of meaning,
force and power vested in the patent These cases all illustrate the power and
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dignity given to the patent. It was created to dives the government of its lands,
and to act as a means of conveying such lands to the generations of people that
would occupy those lands. This formula, "or his legal representatives,"
embraces representatives of the original grantee in the land, the contract, such
as assignees or grantees, as well as the operation of law, and leaves the
question open to inquiry in a court of justice as to the party to whom the patent,
or confirmation, should enure. Hogan v. Page, 69 U.S. 605 (1864). The patent
was and is the document and law that protects the settler from the merciless
speculators, from the people that use avarice to unjustly benefit themselves
against an unsuspecting nation. The patent was created with these high and
grant intentions, and was created with such intentions for a sound reason. [39]
The settlers as a rule seem to have been poor persons, and presumably
without the necessary funds to improve and pay for their land, but it appears
that in every case where the settlement was made under the preemption law,
the settler ... entered and paid for the land at the expiration of the shortest
period at which the entry could be made..." Close v. Stuyvesant, 132 HI. 607,
623 (1890). We must look to the beneficent character of the acts that created
this grants and patents and the peculiar objects they were, intended to protect
and secure. A class of enterprising, hardy and most meritorious and valuable
citizens has become the pioneers in the settlement and improvement of the
new and distant lands of the government. McConnell v. Wilcox, l Scam. (M.)
344, 367 (1837). "In furtherance of what is deemed a wise policy, tending to
encourage settlement, and to develop the resources of the country, it invites the
heads of families to occupy small parcels of the public land ... To deny
Congress the power to make a valid and effective contract of this character ...
would materially abridge its power of disposal, and seriously interfere with a
favorite policy of the government, which fosters measures tending to a
distribution of the lands to actual settlers at a nominal price." Miller v. Little, 47
Cal. 348, 351 (1874). The legislative acts, the Statutes at Large, enacted to
divest the United States of its land and to sell that land to the true sovereigns of
this republic, had very distinct intents. Congress recognized that the average
settler of this nation would have little money, therefore Congress built into the
patent, and its corresponding act, the understanding that these lands were to
be free from avarice and cupidity, free from the speculators who preyed on the
unsuspecting nation, and forever under the control and ownership of the
freeholder, who by the sweat of his brow made the land produce the food that
would feed himself and eventually the nation. Even today, the intent of Congress
is to maintain a cheap food supply though the retention of the [40] sovereign
farmers on the land. United States v. Kimball Foods, Inc., 440 U.S. 715 (1979);
see also Curry v. Block, 541 F. Supp. 506 (1982). Originally, the intent of
Congress was to protect the sovereign freeholders and create a permanent
system of land ownership in the country. Today, the intent of Congress is to
retain the small family farm and utilize the cheap production of these situations,
it has been necessary to protect the sovereign on his parcel of land, and ensure
that he remain in that position. The land patent and the patent acts were created
to accomplish these goals. In other words, the patent or title deed being regular
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in its form, the law will not presume that such was obtained through fraud of the
public right This principle is not merely an arbitrary rule of law established by
the courts, rather it is a doctrine which is founded upon reason and the
soundest principles of public policy. It is one which has been adopted in the
interest of peace in the society and the permanent security of titles. Unless
fraud is shown, this rule is held to apply to patents executed by the public
authorities. State v. Hewitt Land Co., 134 P. 474,479 (1913). It is therefore
necessary to determine exact power and authority contained in a patent.
Legal titles to lands cannot be conveyed except in the form provided by
law. McGaffahan v. Mining Co., 96 U.S. 316 (1877). Legal title to property is
contingent upon the patent issuing from the government. Sabo v. Horvath, 559
P.2d 1038, 1040 (Aka. 1976). "That the patent carries the fee and is the best title
known to a court of law is the settled doctrine of this court." Marshall v. Ladd, 7
Wall. (74 U.S.) 106 (1869). "A patent issued by the government of the United
States is legal and conclusive evidence of title to the land described therein. No
equitable interest, however strong, to land described in such a patent, can
prevail at law, against the [41] patent" Land Patents, Opinions of the United
States Attorney General's office, (September, 1969). "A patent is the highest
evidence of title, and is conclusive against the government and all claiming
under junior patents or titles, until it is set aside or annulled by some judicial
tribunal." Stone v. United States, 2 Wall. (67 U.S.) 765 (1865). The patent is the
instrument which, under the laws of Congress, passes title from the United
States and the patent when regular on its face, is conclusive evidence of title
in the patentee. When there is a confrontation between two parties as to the
superior legal title, the patent is conclusive evidence of title in the patentee.
When there is a confrontation between two parties as to the superior legal title,
the patent is conclusive evidence as to ownership. Gibson v. Chouteau, 13 Wall.
912 (1871). Congress having the sole power to declare the dignity and effect of
its tides has declared the patent to be the superior and conclusive evidence of
the legal title. Bagnefl v. Brodrick, 38 U.S. 438 (1839). "Issuance of a
government patent granting title to land is @the most accredited type of
conveyance known to our law'." United States v. Creek Nation, 295 U.S. 103, 111
(1935); see also United States v. Cherokee Nation, 474 F.2d 628, 634 (1973).
The patent is prima facie conclusive evidence of the title. Marsh v. Brooks, 49
U.S. 223, 233 (1850). A patent, once issued, is the highest evidence of title, and
is a final determination of the existence of all facts. Walton v. United States,
415 F. 2d 121, 123 (10th Cir. 1969); see also United States v. Beaman, 242 F.
876 (1917) File v. Alaska, 593 P. 268, 270 (1979) (When the federal
government grants land via a patent, the patent is the highest evidence of title).
Patent rights to the land is the title in fee, City of Los Angeles v. Board of
Supervisors of Mono County, 292 P.2d 539 (1956), the patent of the fee simple,
Squire v. Capoeman, 351 U.S. 1,6 (1956), and the patent is required to carry the
fee. Carter v. Rubby, 166 U.S. 493, 496 (1896); see also Klais v. Danowski, 129
N.W.2d 414, 422 (1964) [42] (Interposition of the patent or interposition of the fee
title). The land patent is the muniment of title, such title being absolute in its
nature, making the sovereigns absolute freeholders on their lands. Finally, the
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patent is the only evidence of the legal fee simple title. McConnell v. Wilcox, I
Scam (ILL.) 381, 396 (1837). All these various cases and quotes illustrate one
statement that should be thoroughly understood at this time, the patent is the
highest evidence of title and is conclusive of the ownership of land in courts of
competent jurisdiction. This however, does not examine the methods or
possibilities of challenging a land patent.
In Hooper et al. v. Scheimer, 64 U.S. (23 How.) 235 (1859), the United
States Supreme Court stated, "I affirm that a patent is unimpeachable at law,
except, perhaps, when it appears on its own face to be void; and the
authorities on this point are so uniform and unbroken in the courts, Federal and
State, that little else will be necessary beyond a reference to them." Id. at 240
(1859). A patent cannot be declared void at law, nor can a party travel behind
the patent to avoid it. Id. A patent cannot be avoided at law in a collateral
proceeding unless it is declared void by statute, or its nullity ind-cated by some
equally explicit statutory denunciations. Id. One perfect on its face is not to be
avoided, in a trail at law, by anything save an elder patent It is not to be
affected by evidence or circumstances which might show that the impeaching
party might prevail in a court of equity. Id. at 243. A patent is evidence, in a court
of law, of the regularity of all previous steps to it, and no facts behind it can be
investigated. Id. A patent cannot be collaterally avoided at law, even for fraud. Id.
at 245. A patent, being a superior title, must of course, prevail over colors of
title; nor is it proper for any state legislation to give [43] such titles, which are
only equitable in nature with a recognized legal status in equity courts,
precedence over the legal title in a court of law. Id. at 246. The Hooper case
has many of the maxims that apply to the powers and possible disabilities of a
land patent, however there is extensive case law in the area.
The presumptions arise, from the existence of a patent, evidencing a
grant of land from the United States, that all acts have been performed and all
facts have been shown, which are prerequisites to its issuance, and that the right
of the party, grantee therein, to have it issued, has been presented and passed
upon by the proper authorities. Green v. Barber, 66 N.W. 1032 (1896). As
stated in Bouvier's Law Dictionary, Vol. H, p. 1834 (1914): Misrepresentations
knowingly made by the application for a patent will justify the government in
proceedings to set it aside, as it has a right to demand a cancellation of a
patent obtained by false and fraudulent misrepresentations. United States v.
Manufacturing Co., 128 U.S. 673 (1888); but courts of equity cannot set aside,
annul, or correct patents or other evidence of title obtained from the United
States by fraud or mistake, unless on specific averment of the mistake or
fraud, supported by clear and satisfactory proof, Maxelli Land Grant
Cancellation, 11 How. (U.S.) 552 (1850); although a patent fraudulently obtained
by one knowing at the time that another person has a prior right to the land may
be set aside by an information in the nature of a bill in equity filed by the
attorney of the United States for the district in which the land lies; Id. A court of
equity, upon a bill filed for that purpose, wig vacate a patent of the United
States for a tract of land obtained by mistake from the officers of the land office,
in order that a clear title may be transferred to the previous purchaser; Hughes
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v. United States, 4 Wall. (U.S.) 232 (1866); but [44] a patent for land of the
United States will not be declared void merely because the evidence to
authorize its issue is deemed insufficient by the country Milliken v. Starling's
lessee, 16 Ohio 61. A state can impeach the title conveyed by it to a grantee
only by a bin in chancery to cancel it, either for fraud on the part of the grantee
or mistake of law; and until so canceled it cannot issue to any other party a
valid patent for the same land. Chandler v. Manufacturing Co., 149 U.S. 79
(1893).
Other cases espouse these and other rules of law. A patentee can be
deprived of his rights only by direct proceedings instituted by the government or
by parties acting in its name, or by persons having a superior title to that
acquired through the government. Putnum v. Ickes, 78 F.2d 233, cert denied 296
U.S. 612 (1935). It is not sufficient for the one challenging a patent to show that
the patentee should not have received the patent; he must also show that he
as the challenger is entitled to it. Kale v. United States, 489 F.2d 449, 454
(1973). A United States patent is protected from easy third party attacks. Fisher
v. Rule, 248 U.S. 314, 318 (1919); see also Hooffiagle v. Anderson, 20 U.S. (7
Wheat.) 212 (1822). A patent issued by the United States of America so vests
the title in the lands covered thereby, that it is the further general rule that, such
patents are not open to collateral attack. Thomas v. Union Pacific Railroad
Company, 139 F.Supp. 588, 596 (1956). See also State v. Crawford, 475 P.2d
515 (A-riz. App. 1970) (A patent is prima facie valid, and if its validity can be
attacked at all, the burden of proof is upon the defendant); State v. Crawford,
441 P.2d 586, 590 (Ariz. App. 1968) (A patent to land is the highest evidence of
title and may not be collaterally attacked); and Dredge v. Husite Company, 369
P.2d 676,682 (1962) (A patent is the act of legally instituted tribunal, done
within [45] its jurisdiction, and passes the title. Such a patent is a final judgment
as well as a conveyance and is conclusive upon a collateral attack). Absent
some facial invalidity, the patents are presumed valid. Murray v. State, 596 P.2d
805, 816 (1979). The government retains no power to nullify a patent except
through a direct court proceeding. United States v. Reimann, 504 F.2d 135
(1974); See also Green v. Barker, 66 N.W. 1032, 1034 (1896) (The doctrine
announced was that the deed upon its face, purported to have been issued in
pursuance of the law, and was therefore only assailable in a direct proceeding
by aggrieved parties to set it aside). Through these cases, it can be shown that
the patent which passes the title from the United States to the sovereigns, was
created to keep the speculators from the land, is only able in a direct
proceeding for fraud or mistake. In no other situation is it allowable for the
courts, to simply eliminate the patent. One question that may arise is what do
the courts mean by a collateral attack and what can be done by courts of equity
if a collateral attack is presented?
Perhaps the easiest means of defining a collateral attack is to show the
converse corollary, or a direct attack on a patent As was stated in the previous
paragraphs, a direct attack upon a land patent is an action for fraud or mistake
brought by the government or a party acting in its place. Therefore, a collateral
attack, by definition, is any attack upon a patent that is not covered within the
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direct attack list. Perhaps the most prevalent collateral attack in property law
today is a mortgage or deed of trust foreclosure on a color of title. In these
instances, it is determined that the complete title and interest in the land is
purchased by the mortgagee or another in his place. Such a determination
displaces the patentee's ownership of the title without the court ever ruling
that the patent was acquired through fraud or mistake. This is against [46]
public policy, legislative intent, and the overwhelming majority of case law.
Therefore, it is now necessary to determine the patent's role in American
property law today, to see what powers the courts of equity have in protecting
the fights of the challengers of patents.
The attitude of the Courts is to promote simplicity and certainty in title
transactions, thereby they follow what is in the chain of title and not what is
outside. Sabo v. Horvath, 559 P.2d 1038, 1044 (1976). However, in equity
courts, title under a patent from the government is subject to control, to protect
the fights of parties acting in a fiduciary capacity. Sanford v. Sanford, 139 U.S.
290 (1891). This protection however does not include the invalidation of the
patent. The determination of the land department in matters cognizable by it, in
the alienation of lands and the validity of patents, cannot be collaterally
attacked or impeached. Id. Therefore the courts have had to devise another
means to control the patentee, if not the patent itself As stated in Raestle v.
Whitson, 582 P.2d 170, 172 (1978), "The land patent is the highest evidence of
title and is immune from collateral attack. This does not preclude a court from
imposing a constructive trust upon the patentee for the benefit of the owners of
an equitable interest" This then explains the most equitable way a court may
effectively restrict the sometimes harsh justice handed down by a strict court
of law. Equity courts win impose a trust upon the patentee until the debt has
been paid. As has been stated, a patent can not be collaterally attacked,
therefore the land can not be sold or taken by the courts unless there is strong
evidence of fraud or mistake. However, the courts can require the patentee to
pay a certain amount at regular intervals until the debt is paid, unless of course,
there is a problem with the validity of the debt itself This is the main purpose of
the patent in this growing epidemic of farm foreclosures that [47] defy the
public policy ()f Congress, the legislative intent of the Statutes at large, and the
legal authority as to the type of land ownership possessed in America. Why
then is the rate of foreclosures on the rise?
Titles to land today, as was stated earlier in this memorandum, are
normally in the form of colors of title. This is because of the trend in recent
property law to maintain the status quo. The rule in most jurisdictions, and
those which have adopted a grantor-grantee index in particular, is that a deed
outside the chain of title does not act as a valid conveyance and does not serve
notice of a defect of title on a subsequent purchaser. These deeds outside the
chain of title are known as "wild deeds." Sabo v. Horvath, 559 P.2d 1038, 1043
(1976); See also Porter v Buck, 335 So.2d 369, 371 (1976); The Exchange
National Bank v Lawndale National Bank, 41 ILL.2d 316, 243 N.E.2d 193, 195-
96 (1968) (The chain of title for purposes of the marketable title act, may not be
founded on a wild deed. These stray, accidental, or interloping conveyances
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are contrary to the intent of the marketable title act, which is to simplify and
facilitate land title transactions); and Manson v. Berkman, 356 ILL. 20, 190 N. E.
77, 79 (1934). This liberal construction of what constitutes a valid conveyance
has led to a thinning of the title to a point where the absolute and paramount
title is almost impossible to guarantee. This thinning can be directly attributed to
the constant use of the colors of title. Under the guise of being the fee simple
absolute, these titles have operated freely, but in reality, the evidence something
much different. [48]
It was said in Common-Law England, that when a title was not completely
alienable and not the complete title it was not a fee simple absolute. Rather it
was some type of contingent conveyance that depended on the performance
of certain tasks before the title was considered to be absolute. In fact, normally
the title never did develop into a fee simple absolute. These types of conveyance
were evidenced in part by the operable word sin the conveyance and in part by
manner in which the granter could reclaim the property. If the title automatically
reverted to the grantor upon the happening of a contingent action, then the title
was by a fee simple determinable. Scheller v. Trustees of Schools of Township
41 North, 67 ILL. App.3d 857, 863 (1978). This is evidenced most closely
today by deeds of trust in some states. If it required a, court's ruling to
reacquire the land and title, then the transaction and title were held by a fee
simple with a condition subsequent. Mahrenholz v. Country Board of Trustees
of Lawrence County, 93 III.App.3d 366, 370-74 (1981). This is most closely
evidenced by a mortgage in a lien or intermediate-theory state. These
analogies may be somewhat startling and new to some, but the analogies are
accurate. When a mortgage is acquired on property, the mortgagee steps into
the position of a grantor with the authority to create the contingent estate as
required by the particular facts. This is exactly what the grantor in Common-
Law property law could acquire. All the grantor had to do was choose a
particular type of contingency and use the necessary catch-words, and almost
invariably the land would one day be refused due to a violation of the
contingency. In today's property law, the color of title has little power to protect
the landowner.
When the sovereign is unable to pay the necessary principal and interest
on the debt load, then the catch-words and phrases found in the deed of trust
or mortgage become operational. Upon the occurrence of that event, the
mortgagee or speculator, having through a legal m@ acquired [49] the position
of a grantor, is in a position to either automatically receive the property simply
by advertising and selling it, or can acquire the position of the grantor and
eventually the possession of the property by a court proceeding. In Common-
Law, the grantor of a fee simple determinable where the contingency was
broken or violated, could automatically take the land from the grantee holder, by
force if necessary. If however, the grant was a fee simple upon condition
subsequent the grantor, when the contingency broken, had to bring a legal
proceeding to declare the contingence broken, to declare the grantee in
violation, and to order the grantee to vacate the premises. These situations,
though under different names and proceedings, occur every day in America. Is
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there really any serious debate therefore, that the colors of title used today, with
the creation of a lien upon the property, become fee simple determinable and
fee simples upon condition subsequent? Is this a legitimate method of ensuring a
stable and permanent system of land ownership? If the color of title is weak,
then how strong is a mortgage or deed of trust placed on the property?
Fee simple estates may be either legal or equitable. In each situation it is
the largest estate in the land that the law will recognize. Hughes v. Miller's
Mutual Fire Insurance Co., 246 S.W.23 (1922). If a mortgagee, upon the
creation of a mortgage or deed of trust, steps into the shoes of the grantor
upon a conditional fee simple, does it then mean the mortgagee has acquired
one of the two halves of a fee simple, when cases have shown the fee simple
is only evidenced by a patent? Actually, courts have held in many states that a
mortgage is only a lien. United States v. Certain Interests in Property in
Champaign County, State of Illinois, 165 F.Supp.474, 480 (1958) (In Illinois and
other lien theory states, the mortgagee has only a lien and not a [50] vested
interest in the leasehold) See also Federal Farm Mortgage Corp. v. Ganswer,
146 Neb. 635, 20 N.W.2d 689 (1945) (Even after a condition is broken or there is
a default on a mortgage, a mortgagee only has an equitable lien which can be
enforced in proper proceedings); South Omaha Bank v. Levy, 95 N.W.603 (1902)
Strict foreclosure will not lie when mortgagor holds the legal title); First National
Bank v. Sergeant, 65 Neb. 394, 91 N.W. 595 (1902) (Mortgagee cannot demand
more than is legally due); Morrill v. Skinner, 57 Neb. 164, 77 N.W. 375 (1898)
(Mortgage conveys no estate but merely creates a lien); Barber v. Crowell, 55
Neb. 571, 75 N. W. 1 109 (1898) (Mortgage is mere security in form of
conditional conveyance), Speer v. Hadduck, 31 Freeman (HI.) 439, 443 (1863)
(Assignments or conveyances of mortgages do not convey the fee simple,
rather they hold only security interests). These cases amply illustrate that a
mortgage or deed of trust is only a lien in lien and intermediate-theory states.
Even in title theory of mortgages states, courts of equity have determined that
the fee simple title is not really conveyed, either in its equitable or legal state.
See supra Barber, at 1110. A fee simple estate still exists even though the
property is mortgaged or encumbered. Hughes v. Miller's Mutual Fire Insurance
Co., 246 S.W. 23, 24 (1922). In fact, a creditor asserting a lien (mortgage) must
introduce evidence or proof that will clearly demonstrate the basis of his lien.
United States v. United States Chain Company, 212 F. Supp. 171 (N. D. M.
1962). If a mortgagee, even in the title theory states, has only alien, yet when
the mortgage or deed of trust is created he has a fee simple determinable or
condition subsequent, then obviously the color of title used as the operative title
has little force or power to protect the sovereign freeholder. Nor can it be said
that such a color of title is useful in the maintenance of stable and permanent
titles. The patent, in almost all cases, has been originally issued to the first
purchaser from the government [51]
Theoretically then the public policy, Congressional intent from the 1800's,
and the Congressional intent of the last few decades should protect the
sovereign in the enjoyment and possession of his freehold. This however is not
the case. Instead, vast mortgaging of the land has occurred. The agriculture
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debt alone has risen to over $220,000,000,000 in the past three decades. This
is in part due to the vast expansion of mortgaged holdings and in part due to the
rural sector's inability to repay existing loans requiring the increased mortgaging
if the land. This is in exact contradiction to the public policy and legislative
intent if maintaining stable and simplistic land records, yet marketable titles
(colors of title) were supposed to guarantee such records. Wichelman v.
Messner, 83 N.W.2d 800, 805 (1957). Colors of title are ineffective against
mortgages and promote the instability and complexity of the records of land
titles by requiring abstracts and title insurance simply to guarantee a marketable
title. Worse, a practice has prevailed in some of the states ... of permitting
actions to determine titles to be maintained upon warrants for land (warranty
deeds) and other titles not complete or legal in their character. This practice is
against the intent of the Constitution and the Acts of Congress. Bagnell v.
Broderick, 38 U.S. 438 (1839). Such lesser titles have no value in actions
brought in federal courts not with standing a State legislature which may have
provided otherwise. Hooper et. al. v. Scheimer, 64 U.S. (23 How.) 235 (1859). It
is in fact possible that the state legislatures have even violated the Supremacy
Clause of the United States Constitution. These actions are against the intent of
the founding fathers and against the legislative intent of the Congressman who
enacted the statutes at large creating the land patent or land grant This patent
or grant, since the land grant has been states to be another name for the
patent, the terms being synonymous, Nonhem Pacific Railroad Co. v. Barden,
46 F. 592, 617 (1891); prevented every problem that [52] was created by
the advent of colors of title, marketable titles, and mortgages. Therefore it is
necessary to determine the validity of returning to the patent as the operative
title.
Patents are issued (and theoretically passed) between sovereigns ... and
deeds are executed by persons and private corporations without these
sovereign powers. Leading Fighter v. County of Gregory, 230 N.W.2d 114, 116
(1975). As was stated earlier, the American people in creating the Constitution
and the government formed under it, made such a document and government as
sovereigns, retaining that status even after the creation of the government.
Chisholm v. Georgia, 2 Dall. (U.S.) 419 (1793). The government as sovereign
passes the title to the American people creating in them sovereign freeholders.
Therefore, it follows that the American people, as sovereigns, would also have
this authority to transfer the fee simple title, through the patent, to others. Cases
have been somewhat scarce in this area, but there is some case law to
reinforce this idea. In Wilcox v. Calloway, I Wash. (Va.) 38, 38-41 (1823), the
Virginia Court of Appeals heard a case where the patent was brought up or
reissued to the parties four separate times. Some patents were issued before
the creation of the Constitutional United States government, and some
occurred during the creation of that government. The courts determined the
validity of those patents, recognizing each actual acquisition as being valid, but
reconciling the differences by finding the first patent, properly secured with all
the necessary requisite acts fulfilled, carried the title. The other patents and the
necessary requisition of anew patent each time yielded the phrase "lapsed
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patent." A lapsed patent being one that must be required to perfect the title.
Id. Subsequent patentees take subject to any reservations in the original patent.
State v. Crawford, 441 P.2d 586, 590 (1968). A patent regularly issued by the
[53] government is the best and only evidence of a perfect title. The actual
patent should be secured to place at rest any question as to validity of entries
(possession under a claim and color of title). Young v. Miller, 125 So.2d 257, 258
(1960). Under the color of title act, the Secretary of Interior may be required to
issue a patent if certain conditions have been met, and the freeholder and his
predecessors in title are in peaceful, adverse possession under claim and color
of title for more than a specified period. Beaver v. United States, 350 F.2d 4,
cert. denied, 387 U.S. 937 (1965). A description which will identify the lands
(and possession) is all that is necessary for the validity of the patent, Lossing v.
Shull, 173 S.W.2d 1, I Mo. 342 (1943). A patent to two or more persons
creates presumptively a tenancy in common in the patentees. Stoll v. Gottbreht,
176 N.W. 932, 45 N.D. 158 (1920). A patent to be the original grantee or his
legal representatives embrace the representatives by contract as well as by law.
Reichert v. Jerome H. Sheip, Inc., 131 So. 229, 222 Ala. 133 (1930). A patent
has a double operation. In the first place, it is documentary evidence having the
dignity of a record of the evidence of the title or such equities respecting the
claim as to justify its recognition and later confirmation. In the second place, it is
a deed of the United States, or a title deed. As a deed, its operation is that if a
quitclaim or rather of a conveyance of such interest as the United States
possess in the land, such interest in the land passing to the people or
sovereign freeholders. 63 Am. Jur. 2d Section 97, p. 566. Finally, the United
States Supreme Court, in Summa Corporation v. California ex rel. State Lands
Commission, etc., 80 L.Ed.2d 237 (1984), made determinations as to the validity
of a patent confirmed by the United States through the Treaty of Guadalupe
Hidalgo, 9 Stat. 631 (1951). The State of California attempted to acquire land
that belonged to the corporation. The State maintained that there was a public
trust easement granting to the State [54] authority to take the land without
compensation for public use. The corporation relied in part on the intent of the
treaty, in part on the intent of the patent and the statute creating it, and in part in
the requisite challenge date of the patent expiring. The Summa Court followed
the lengthy dissertation of the dissenting judge on the California Supreme Court,
See 31 Cal. 3d 288, dissenting opinion, in determining that the patent which had
been the apparent operative title throughout the years, was paramount and the
actions by the State were against the manifest weight of the Treaty and the
legislative intent of the patent statutes. Id. at 244-46. In each of these cases it is
states that the patent, through possession, or claim and color of title, or
through the term "his heirs and assigns forever", or through the necessary
passage of title at the death of a joint tenant or tenant in common, is still the
operable title and is required to secure the peaceful control of the land. These
same ideas can also apply to state patents for lands that went to the state or
remained in the hands of the state upon admission into the Union. Oliphant v.
Frazho, 146 N.W.2d 685, 68687 (1966)Fiedier v. Pipers, 107 So.2d 409, 411-412
(1958) (Not even the State could be heard to question the validity of a patent
signed by the Governor and the Register of the State Land Office). No
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government can object to the intent and creation of a patent after such is
issued, unless issued through fraud or mistake. The patent, either federal or
state, has an intent to create sovereign freeholders in the land protected form the
speculators, (any lending institution speculates upon land), and a public
policy to maintain a simplistic, stable and permanent system if land records.
Land patents were designed to effectively insure that this intent and policy were
retained. Colors of title can not provide this type of stability, since such titles are
powerless against liens, mortgages, when the freeholder is unable to repay
principle and interest on the accompanying promissory note. Equity will
entertain jurisdiction at the instance [55] of the owner of fee of lands to
remove a cloud upon his title created by the sale of the premises and a deed
issued thereto under a decree of foreclosure of a mortgage thereon. Hodgen v.
Guttery, 58 Free. (i I 1.) 431, 438 (1871) (though this case dealt with an
improper sale of land covered by a patent, any forced sales of lands covered by
a patent is improper in view of the policy and intent of Congress). Equity
however will protect the mortgagee who stands to lose his interest in the
property, thereby requiring a trust to be created until the debt is erased, making
partners of the creditor and debtor. What then exists is a situation where the
patent should be declared (confirmed or reissued), to protect the sovereign
freeholder and to re-institute the policy and intent of Congress. The patent as
the paramount title, fee simple absolute, can not be collaterally attacked, but
when a debt can not be paid immediately placing the creditor in jeopardy, the
courts will impose a constructive trust until the new "partners" can mutually
eliminate the debt. If the debt can not be satisfactorily removed, it is still
possible, considering the present intent of the government, to maintain
sovereign freeholders on the property immune from the loss of the land, since it
is Congress' intent to keep the family farm in place. ne use of colors of title to act
as the operative title is inappropriate considering the rising number of
foreclosures and the inability of the colors of title to restrain a mortgage or lien.
However, the lending institutions, speculators on the land, maintain that the
public policy of the country includes the eradication of the sovereign
freeholders in the rural sector in an effort to implant upon the country, large
corporate holdings. This last area must be effectively met and eliminated.
[56]
To those who framed the Constitution, the rights of the States and the
fights of the people were two distinct and different things. Throughout their
debates they had two objects foremost in their minds. First, to create a strong
and effective national government, and secondly to protect the people and
their fights from usurpation and tyranny by government. The people's liberties
and individual rights and safeguards were to be kept forever beyond the
control and dominion of the legislatures of the States, whom they distrusted,
and against whom they so carefully guarded themselves. If such control and
domination and unlimited powers were given to a few legislatures they could
override every one of the reserved fights covered by the first ten Amendments
(the bill of fights); they could change the government of limited powers to one of
unlimited powers; they could declare themselves hereditary rules; they could
PAGE 273 OF 337

abolish religious freedoms, they could abolish free speech and the right of the
people to petition for redress; they could not only abolish trial by jury, but even
the rights to a day in court; and most importantly they could abolish free
sovereign ownership of the land. The whole literature of the period of the
adoption of the Constitution and the first ten amendments is one great
testimony to the insistence that the Constitution must be so amended as to
safeguard unquestionably the rights and freedoms of the people so as to secure
from any future interference by the new government, matters the people had
not already given into its control, unless by their own consent United States v.
Sprague, 282 U.S. 716, 723-726 (1930). The problem has not in the lending
institutions that simply practice good business on their part. The problem in the
loss of freedoms by this present interference with allodial sovereign ownership
lies with the state legislatures that created law, or marketable title acts, that
claimed to enact new simplistic, stable land titles and actually created a
watered-down version of the fee simple absolute that requires complicated [57]
tracing and protection, and is ineffective against mortgage foreclosures. None
of these problems would occur if the patent were the operable title again, as
long as the sovereigns recognized the powers and disabilities of their fee
simple title. The patent was meant to keep the sovereign freeholder on the land,
but the land was also to be kept free of debt, since that debt was recognized in
1820 as unrepayable, and today is unrepayable. The re-declaration of the
patent is essential in the protection of the rural sector of sovereign freeholders,
but also essential is the need to impress the state legislatures that have strayed
from their enumerated powers with the knowledge that they have enacted laws
that have defeated the intent and goal of man since the middle ages. That intent,
of course, is to own a small tract of land absolutely, whether by land-boc or
patent, on which the freeholder is beholden to no lord or superior. The patent
makes sovereign freeholders of each person who own his/her land. A return to
the patent must occur if those sovereign freeholders wish to protect that land
from the encroachment of the state legislatures and the speculators that
benefit from such legislation. [58]
Section IV - Conclusion
As has been seen, man is always striving to protect his rights, the most
dear being the absolute right to ownership of the land, This right was guaranteed
by the land patent, the public policy of the Congress, and the legislative intent
behind the Statutes at Large. Such fights must be reacquired through the re-
declaration of the patent in the color of title claimant's name, based on his color
of title and possession. With such reborn rights, the land is protected from the
forced sale because of delinquency on a promissory note and foreclosure on
the mortgage. This protected land will not eliminate the debt, a trust must be
created whereby "partners" will work together to repay it. These rights must be
recaptured from the state legislated laws, or the freedoms guaranteed in the Bill
of Rights and Constitution will be lost Once lost, those rights will be
exceedingly hard to reclaim, and quite possibly, as Thomas Jefferson said, the
PAGE 274 OF 337

children of this generation may someday wake up homeless on the land

their forefathers founded.
Notes, References, And Sources For Studies In Allodial Titles

Cases Relative to land Patents Ejectment and Estoppel.
In cases of ejectment, where the question is who has the legal title, the
patent of the government is unassailable. Sanford vs. Sanford, 139 U.S. 642,
35 L.Ed. 290.
Transfer of legal title (patent) to public domain gives the transferee the right
to possess and enjoy the land transferred: Gibson vs. Chouteau, 80 U.S. 92, 20
L. Ed. 534.
A patent for land is the highest evidence of title and is conclusive as
against the government and all claiming under junior patents or titles. U.S. v.
Stone, 2 U.S. 525, 17 L.Ed. 768.
The presumption being that it (patent) is valid and passes the legal title.
Minter v. Crommelin, 18 U.S. 87, 15 L. Ed. 279.
Estoppel has been sustained as against a municipal corporation
(county). Beadle vs. Smyser, 209 U.S. 393, 52 L. Ed. 849.
A court of law will not uphold or enforce an equitable title to land as a
defense to an action of ejectment. Johnson v. Christian, 128 U.S. 374, 32 L.Ed.
412; Doe v. Aiken, 31 Fed. 393.
When Congress has prescribed the conditions upon which portions of the
public domain may be alienated (to convey, to transfer), and has provided that
upon the fulfillment of the conditions the United States shall issue a patent to the
purchaser, then such land is not taxable by a state. Sargent v. Herrick and
Stevens, 221 U.S. 404, 55 L. Ed. 787; northern P.R. Co. v. Truitt County, 115
U.S. 600, 29 L. Ed. 477.
The patent alone passses land from the United States to the grantee and
nothing passes a perfect title to public lands but a patent. Wilcox v. Jackson,
13 Peters (U.S.) 408, 10 L. Ed. 264.
Priority in General, for liens see:
26 U.S.C.A. 6323, S. & S. Gasket Co. Inc. v U.S., 635 F.2d. 568.
Mantovani v. Fast Fuel Corp., 494 F.Supp. 72.
MDC Leasing Corp. v. New York Property Ins. Underwriting Ass'n.
450 F.Supp. 179, affirmed 603 F.2d 213.
U.S. v. Hage, 417 F.Supp. 74.
Matter of Fisher, 7 b.R. 490.
26 U.S.C.A. 7426. Peterson v. U.S., 511 F.Supp. 250.
Angelos v. Maryland Cas. Co., 380 A. 2d. 646, 38 Md. App. 265.
United States v. Champaign County, Fed. Supp. 474, 1958.
PAGE 275 OF 337

For Public Lands cases, see Cent. Dig.119, 121, 314, 316, 322, 324,
332335, 461-465, 481, 720, Northern Pipeline v. Marathon, U.S. 102 Reporter, p.
2858, 28 June, 1982. Art. I v. Art 3 usage, Does not have force of law. V 104,
Supra Reporter, 1751, April 17, 1984. 31 Cal. 3d. 288; 182 Cal. Rptr. 599, 644
P.2d. 792, 104 S.Ct. 1751 (1984).
Cases of attack on United States Land Patents and the land so covered
have been appealed to the U.S.S. Ct. 139 times and it has held each time, that if
a claim against the land is not made before the patent is issued, no claim made
thereafter may be recognized by a Court and no Act of Congress can place
such land in jeopardy to the owner. The above case cited is: Summa Corporation
v. California ex rel. State Lands Commission & City of Los Angeles.
"When Government becomes a lawbreaker, it breeds contempt for the
law, ..." Olmstead v. United States, 277 U.S. 438, 485, 48 S.Ct. 564, 575, 72
L.Ed. 944 (1928) (dissenting opinion). See also Solem v. Stumes, 465 U.S. --,
104 S.Ct. 1338, 1354, 79 L. Ed. 2d. --(1984), Stevens J., dissenting)....interests
by states must have been presented in the patent proceedings or be barred. Cf.
Barker v. Harvey, 181 U.S. 481, 21 S.CT. 690, 45 L.Ed. 963; U.S. v. Title Ins. &
Trust Co., 265 U.S. 472, 44 S.Ct. 621, 68 L. Ed. 1110; U.S. v. Coronado Beach
Co., 255 U.S. 472, 41 S.Ct. 378, 65 L. Ed. 736, Pp. 1755-1758. 31 Cal. 3d 288,
182 Cal. Rptr. 599, 644 P.2d 792, reversed and remanded.
Title 43 U.S.C. 59, establishes that duly certified copies of Federal Land
Patents shall be evidence in all cases where the originals would be evidence.
Section 83 of Title 43, covers the evidentiary effect of Certified Federal Land
Patents for all States and all the Courts in the United States must take Judicial
notice of the Federal Patents and their evidentiary effect under these Federal
Statutes. All judges in all States shall be bound as to the power and validity of
the patents.
U.S. v. Debell (1915 CA8 SD) 227 F 760.
Patent as foundation of title at law. Fenn v. Holmes, 21 Howard 481.
Immunity from collateral attack.
Collins v. Bartlett, 44 Cal 371;
Webber v. Pere Marquette Boom Co, 62 Mich. 6262, 30 NW 469;
Surget v. Doe, 24 Miss 118;
Pittsmont Copper Co. v. Vanina, 71 Mont. 44, 227 Pac. 46;
Green v. Barker, 47 Neb. 934, 66 NW 1032;
Neff v. U.S., 91 CCA 241.
Paterson v. Ogden, 74 P. 443, 141 Cal. 43, 99 Am. St. Rep. 31.
Judicial opinions of form of Declaration of Land Patent.
Wright v. Roseberry, 121 U.S. 488, 30 L.Ed. 1039 USCT;
Scheimer v. Conway, 23 How. 235, 16 L. Ed. 452 (1860) USCT;
Summa Corp. v. California Ex Rel. 104 SCt 1751 (1984) USCT;
Fiedler v. Pipes, 107 So.2d. 409 (1958) Louisiana;
Bennett v. Butterworth, 11 Howard 691.?
PAGE 276 OF 337

Land Patent as prima facie conclusive evidence of unassailable legal title.

Gibson v. Chouteau, 80 U.S. 92, 20 L.Ed. 534;
State v. Crawford, 13 Ariz. App. 225, 475 P.2d. 515.
Texas, etc. R. R. v. Smith, 159 U.S. 68, 40 L.Ed. 78, 15 S.Ct. 935.
Miller v. Grunsky, 66 P. 858, 141 Cal. 441, reversed (1903) 75 P. 48.
Filing property tax return acknowledges that State owns the property.
Sargent v. Herrick and Stevens, 221 U.S. 404, 55 L.Ed. 787;
Northern P.R. Co. v. Trail County, 115 U.S. 600, 29 L.Ed. 477.
Hooper v. Scheimer, Same v. Conway, 23 How. 235. 16 L.Ed. 452.
Ejectment against a defendant in possession cannot be maintained in
Federal court on an equitable title, gained by entry made with the register
and receiver, though the State statutes otherwise provide, p.249
Langdon v. Sherwood, 124 U.S. 83, 84. 8 S.Ct. 431;
Carter v. Ruddy, 56 Fed. 544, 15 U.S. App. 129 or 429.
Le Beau v. Armitage, 47 Mo. 139;
Johnson v. Christian, 128 U.S. 382, 33 L.Ed. 415, 9 S.Ct. 90.
Doe v. Aiken, 31 Fed. 393.
Steel v. St. Louis Smelting & Refining Co. 106 U.S. 417, 27 L.Ed. 226.
Ejectment not maintainable on State certificate of purchase.
Kircher v. Murray, 60 Fed. 52, 23 U.S. App. 214; affirming S.C. 54Fed.
626.
Harrest v. Kinney, 44 Mich. 460, 7 N.W. 64.
Moran v. Moran, 106 Mich. 12, 58 Am. St. Rep. 465, 63 N.W. 990;
Headley v. Coffman, 38 Neb. 72, 56 N.W. 702.
Clagett v. Kilbourne, 1 Black. 350, 17 L. Ed. 216.
Wilson v. Fine, 14 Sawy. 35, 36. 38 Fed. 790, 791.
Sheffield Furnace Co. v. Witherow, 149 U.S. 579, 37 L.Ed. 856, 13S.Ct.
939.
Abbott v. Union, etc., Ins. Co. 127 Ind. 73, 26 N.E. 154.
U.S. Circuit Court will enforce new equity created by State statute.
Wisconsin etc., R. R. v. Wisconsin, etc., Land Co., 71 Wis. 102, 36N.W.
841.
State v. Hewitt Land Co., 134 Pac. Rep. 474.
Hogan v. Page, 2 S.Ct. 605, 69 U.S. 605, 17 L.Ed. 854.98 Stat. 1671.
Wisconsin Central Railrod Co. v. Price County.
Bagnell et al. v. Broderick, 13 Pet. 450.
Raestle v. Whitson, 582 P.2d. 170.
Walliker v. Escott, 608 P.2d. 1272.
Litchfield v. Register and Receiver, 9 Wall. (U.S.) 575. 19 L.Ed. 681.
PAGE 277 OF 337

U. S. v. Steenerson, et al., 50 Fed. 504, 1 CCA 552, 4 USApp. 332.

Jenkins v. Gibson, 2 La. Ann. 203, Louisiana.18 How. 87.
Minter v. Crommelin, 18 U.S. 87, 15 L.Ed. 279.
King v. McAndrews, 11 F. 860, 50 C.C.A. 29.
Davis v. Fell, 211 P. 30, 59 Cal. App. 438.
Thompson v. Thompson, 155 P. 1190, 79 Or. 513.
Vanderheyden v. Crandall, 2 Denio (N.Y.) 21.
Backus v. McCoy, 3 Ohio 221, 17 Am. Dec. 585.
Tate v. Jay, 31 Ark. 579.
1 Washburn Real Prop. 16.
Wallace v. Harmstad, 44 Pa. 492.
Barker v. Dayton, 28 Wis., 367.
Wilcox v. Jackson, 13 Pet. (U.S.) 498, 10 L.Ed. 264.
Wineman v. Gastrell, 54 Fed. 819.
U.S. v. Cherokee Nations, 474 F.2d. 628 (1973).
Ruddy v. Rossi, 248 U.S. 104 (1918).
Desenroth v. Dodge, 350 Il. App. 20, 11 NE 2d. 575 (1953)
Lomax v. Pickering, 173 U.S. 26, 43 l.Ed. 601.
Estoppel has been sustained as against a municipal corporation (county).

Beadle v. Smyser, 209 U.S. 393, 52 L.Ed. 849. See Title 43, Sections 83,
and 43 USC 57-59. Diversity of Citizenship, 28 USC 1332. See also 1331, 1343.
Treaties, 8 Stat. 80, 8 Stat. 200, 8 Stat. 218, 9 Stat. 869. 10 Stat. 1031. Ware v.
Hylton, 3 U.S. 199. Lead case Louisiana Purchase States; Am.Ins.Co. v. Canter,
1 Pet.(26U.S.) 511.
On ultra vires, see 1st Nat. Bank of Tallapoosa v. Monroe, 69 SE 1123;
Norton Grocery Co. v. Peoples Nat'l. Bank, 144 SE 501; Federal Intermediate
Credit
Bank v. L. Herisson, 33 F.2d. 841; Am. Exp. Co. v. Cit. St. Bank, 194 NW
427.
Ashley v. Southwestern Bell Telephone Co. 410 F. Supp. 1389.
Blackburn v. Portland Gold Mining Co., 175 U.S. 571; 44 L.Ed; 20 S.Ct. 222.
Davidson v. Lovett, 446 F. Supp. 1171.
Florida Cent. & Pen. R.R. v. Bell, 176 U.S. 321; 44 L.Ed. 486; 20 S.Ct. 399.
Hanford v. Davies, 163 U.S. 273; 41 L.Ed. 157; 16 S.Ct. 1051 (1896).
Joy v. St. Louis, 201 U.S. 273; 50 L.Ed. 776; 26 S.Ct. 478 (1906).
Kirklin v. Ellerbe, 278 F. 168.
Shulthis v. McDougal, 225 U.S. 561;
Nolan v. Cal. Coast. Comm., 177 Cal.App.3d. 719, 722 (1986) 55 U.S.L.W.
5145.
PAGE 278 OF 337

First Eng. Evan. Luth. Church of Glendale v. Co. of L.A. 55 U.S.L.W. 4781.
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
Agins v. City of Tiburon, 24 Cal. 3d. 266.
Davis v. Pima County 590 P.2d. 459 (1978)
Corrigan v. City of Scottsdale, 720 P.2d 513 (1986)
Fred F. French Investing Co., Inc. v. City of New York, 39 N.Y.2d 587 (1976).
San Diego Gas & Electric Co. v. San Diego, 450 U.S. 621.
U.S. v. Pewee Coal Co., 341 U.S. 114.
Moore v. East Cleveland, 431 U.S. 494 (1977).
Loretta v. Teleprompter Manhattan CATV Corp. 458 U.S. 419. (1982)
Norwood v. Baker, 172 U.S. 269 (1898).
Candid Ent., Inc. v. Grossmont Union H.S. Dist., 39 Cal.3d 878, 890, (1985).
Trent Meredith, Inc. v. City of Oxnard, 114 Cal. App. 3d. 317, 325, (1981).
Selby Realty Co. v. City of San Buenaventura, 10 Cal. 3d. 110, 128, (1973).
Strumansky v. San Diego Co. Emp. Retirmnt. Assoc., 11 Cal.3d. 28, 32,
(1974)
Avco Community Dev., Inc. v. South Coast Regn'l Comm., 17 Cal. 3d 785
(1976)
Kaiser Aetna v. U.S., 444 U.S. 164, 179 (1979)
Matthews v. Eldridge, 424 U.S. 319, 334 (1976)
Pfeiffer v. City of La Mesa, 69 Cal. App. 3d. 74, 78, (1977).
Penn Central, 438 U.S. 124.
Armstrong v. U.S., 364 U.S. 40, 49 (1960).
PAGE 279 OF 337

LAND-MINE LEGISLATION
BY CLAIRE WOLFE
Let me run by you a brief list of items that are "the law" in America today. As
you read, consider what all these have in common.
1. A national database of employed people.
2. 100 pages of new "health care crimes," for which the penalty is (among
other things) seizure of assets from both doctors and patients.
3. Confiscation of assets from any American who establishes foreign
citizenship.
4. The largest gun confiscation act in U.S. history - which is also an
unconstitutional ex postfacto law and the first law ever to remove people's
constitutional rights for committing a misdemeanor.
5. A law banning guns in ill-defined school zones; random roadblocks may
be used for enforcement; gun-bearing residents could become federal criminals
just by stepping outside their doors or getting into vehicles.
6. Increased funding for the Bureau of Alcohol, Tobacco and Firearms, an
agency infamous for its brutality, dishonesty and ineptitude.
7. A law enabling the executive branch to declare various groups
"Terrorists" - without stating any reason and without the possibility of appeal.
Once a group has been so declared, its mailing and membership lists must be
turned over to the government.
8. A law authorizing secret trials with secret evidence for certain classes of
people.
9. A law requiring that all states begin issuing drivers licenses carrying
Social Security numbers and "security features" (such as magnetically coded
fingerprints and personal records) by October 1, 2000. By October 1, 2006,
"Neither the Social Security Administration or the Passport Office or any other
Federal agency or any State or local government agency may accept for any
evidentiary purpose a State driver's license or identification document in a form
other than [one issued with a verified Social Security number and 'security
features']."
10. And my personal favorite - a national database, now being constructed,
that will contain every exchange and observation that takes place in your
doctor's office. This includes records of your prescriptions, your hemorrhoids and
your mental illness. It also includes - by law - any statements you make ("Doc,
I'm worried my kid may be on drugs...... Doc, I've been so stressed out lately I
feel about ready to go postal.") and any observations your doctor makes about
your mental or physical condition, whether accurate or not, whether made with
your knowledge or not. For the time being, there will be zero (count 'em, zero)
PAGE 280 OF 337

privacy safeguards on this data. But don't worry, your government will protect
you with some undefined "privacy standards" in a few years.
All of the above items are the law of the land. Federal law. What else do
they have in common?
Well, when I ask this question to audiences, I usually get the answer,
"They're all unconstitutional." True.
My favorite answer came from an eloquent college student who blurted,
"They all SUUUCK!" Also true.
But the saddest and most telling answer is: They were all the product of the
104th Congress. Every one of the horrors above was imposed upon you by the
Congress of the Republican-Revolution -- the Congress that pledged to "get
government off your back."
Burying Time Bombs

All of the above became law by being buried in larger bills. In many cases,
they are hidden sneak attacks upon individual liberties that were neither debated
on the floor of Congress nor reported in the media. For instance, three of the
most horrific items (the health care database, asset confiscation for foreign
residency and the 100 pages of health care crimes) were hidden in the
Kennedy-Kassebaum Health Insurance Portability and Accountability Act of 1996
(HR 3103). You didn't hear about them at the time because the media was too
busy celebrating this moderate, compromise bill that "simply" ensured that no
American would ever lose insurance coverage due to a job change or a Pre-
existing condition.
Your legislator may not have heard about them, either. Because he or she
didn't care enough to do so. The fact is, most legislators don't even read the laws
they inflict upon the public. They read the title of the bill (which may be
something like "The Save the Sweet Widdle Babies from Gun Violence by
Drooling Drug Fiends Act of 1984"). They read summaries, which are often
prepared by the very agencies or groups pushing the bill. And they vote
according to various deals or pressures.
It also sometimes happens that the most horrible provisions are sneaked
into bills during conference committee negotiations, after both House and Senate
have voted on their separate versions of the bills. The conference committee
process is supposed simply to reconcile differences between two versions of a
bill. But power brokers use it for purposes of their own, adding what they wish.
Then members of the House and Senate vote on the final, unified version of the
bill, often in a great rush, and often without even having the amended text
available for review.
I have even heard (though I cannot verify) that stealth provisions were
written into some bills after all the voting has taken place. Someone with a
hidden agenda simply edits them in to suit his or her own purposes. So these
time bombs become "law" without ever having been voted on by anybody. And
who's to know? If congress people don't even read legislation before they vote
on it, why would they bother reading it afterward? Are power brokers capable of
PAGE 281 OF 337

such chicanery? Do we even need to ask? Is the computer system in which bills
are stored vulnerable to tampering by people within or outside of Congress? We
certainly should ask. Whether your legislators were ignorant of the infamy they
were perpetrating, or whether they knew, one thing is absolutely certain:
The Constitution, your legislator's oath to it, and your inalienable rights
(which precede the Constitution) never entered into anyone's consideration.
Ironically, you may recall that one of the early pledges of Newt Gingrich and
Company was to stop these stealth attacks. Very early in the 104th Congress,
the Republican leadership declared that, henceforth, all bills would deal only with
the subject matter named in the title of the bill. When, at the beginning of the first
session of the 104th, pro-gun Republicans attempted to attach a repeal of the
"assault weapons" ban to another bill, House leaders dismissed their
amendment as not being "germane." After that self-righteous and successful
attempt to prevent pro-freedom stealth legislation, Congress people turned right
around and got back to the dirty old business of practicing all the anti-freedom
stealth they were capable of.
Stealth Attacks In Broad Daylight

Three other items on my list (ATF funding, gun confiscation and school
zone roadblocks) were also buried in a big bill - HR 3610, the budget
appropriation passed near the end of the second session of the 104th Congress.
No legislator can claim to have been unaware of these three because they were
brought to public attention by gun-rights groups and hotly debated in both
Congress and the media. Yet some 90 percent of all congress people voted for
them including many who claim to be ardent protectors of the rights guaranteed
by the Second Amendment. Why?
Well, in the case of my wrapped-in-the-flag, allegedly pro-gun, Republican
congressperson: "Bill Clinton made me do it!"
Okay, I paraphrase. What she actually said was more like, "It was part of a
budget appropriations package. The public got mad at us for shutting the
government down in 1994. If we hadn't voted for this budget bill, they might have
elected a Democratic legislature in 1996 - and you wouldn't want THAT, would
you?" Oh heavens, no I'd much rather be enslaved by people who spell their
name with an R than people who spell their name with a D. Makes all the
difference in the world!
How Sneak Attacks Are Justified

The Republicans are fond of claiming that Bill Clinton "forced" them to pass
certain legislation by threatening to veto anything they sent to the White House
that didn't meet his specs. In other cases (as with the Kennedy-Kassebaum bill),
they proudly proclaim their misdeeds in the name of bipartisanship - while
carefully forgetting -to mention the true nature of what they're doing. In still
others, they trumpet their triumph over the evil Democrats and claim the mantle
of limited government while sticking it to us and to the Constitution. The national
database of workers was in the welfare reform bill they "forced" Clinton to
PAGE 282 OF 337

accept. The requirement for SS numbers and ominous "security" devices on

drivers licenses originated in their very own Immigration Control and Financial
Responsibility Act of 1996, HR 2202. Another common trick, called to my
attention by Redmon Barbry, publisher of the electronic magazine Fratricide, is to
hide duplicate or near-duplicate provisions in several bills. Then, when the
Supreme Court declares Section A of Law Z to be -unconstitutional, its kissing
cousin, Section B of Law Y, remains to rule us.
Sometimes this particular form of trickery is done even more brazenly;
when the Supreme Court, in its Lopez decision, declared federal-level school
zone gun bans unconstitutional because Congress demonstrated no jurisdiction,
Congress brassily changed a few words. They claimed that school zones fell
under the heading of "interstate commerce." Then they sneaked the provision
into HR 3610, where it became "law" once again. When angry voters upbraid
congress people about some Big Brotherish horror they've inflicted upon the
country by stealth, they claim lack of knowledge, lack of time, party pressure,
public pressure, or they justify themselves by claiming that the rest of the bill was
"good".
The simple fact is that, regardless of what reasons legislators may claim,
the U.S. Congress has passed more Big Brother legislation in the last two years
- more laws to enable tracking, spying and controlling - than any Democratic
congress ever passed. And they have done it, in large part, in secret.
Redmon Barbry put it best: "We the people have the right to expect our
elected representatives to read, comprehend and master the bills they vote on. If
this means Congress passes only 50 bills per session instead of 5,000, so be it.
As far as I am concerned, whoever subverts this process is committing treason."
By whatever means the deed is done, there is no acceptable excuse for voting
against the Constitution, voting for tyranny. And I would add to Redmon's
comments: Those who do read the bills, then knowingly vote to ravage our
liberties, are doubly guilty. But when do the treason trials begin?
Bills As Window Dressing For An Ugly Agenda

The truth is that these tiny, buried provisions are often the real intent of the
law, and that the hundreds, perhaps thousands, of pages that surround them are
sometimes nothing more than elaborate window dressing. These tiny time
bombs are placed there at the behest of federal police agencies or other power
groups whose agenda is not clearly visible to us. And their impact is felt long
after the outward intent of the bill has been forgotten.
Civil forfeiture - now one of the plagues of the nation was first introduced in
the 1970s as one of those buried, almost unnoticed provisions of a larger law.
One wonders why on earth a "health care bill" carried a provision to confiscate
the assets of people who become frightened or discouraged enough to leave the
country. (In fact, the entire bill was an amendment to the Internal Revenue Code.
Go figure.)
I think we all realize by now that that database of employed people will still
be around enabling government to track our locations (and heaven knows what
PAGE 283 OF 337

else. about us, as the database is enhanced and expanded) long after the touted
benefits of "welfare reform" have failed to materialize.
And most grimly of all, our drivers licenses will be our de facto national ID
card long after immigrants have ceased to want to come to this Land of the Once
Free.
Control Reigns
It matters not one whit whether the people controlling you call themselves
R's or D's, liberals or conservatives, socialists or even (I hate to admit it)
libertarians. It doesn't matter whether they vote for these horrors because they're
not paying attention or because they actually like such things.
What matters is that the pace of totalitarianism is increasing. And it is
coming closer to our daily lives all the time. Once your state passes the enabling
legislation (under threat of losing "federal welfare dollars"), it is YOUR name and
Social Security number that will be entered in that employee database the
moment you go to work for a new employer. It is YOU who will be unable to cash
a check, board an airplane, get a passport or be allowed any dealings with any
government agency if you refuse to give your SS number to the drivers license
bureau. It is YOU who will be endangered by driving "illegally" if you refuse to
submit to Big Brother's procedures. It is YOU whose psoriasis, manic depression
or prostate troubles will soon be the reading matter of any bureaucrat with a
computer. It is YOU who could be declared a member of a "foreign terrorist"
organization just because you bought a book or concert tickets from some group
the government doesn't like. It is YOU who could lose your home, bank account
and reputation because you made a mistake on a health insurance form. Finally,
when you become truly desperate for freedom, it is YOU whose assets will be
seized if you try to flee this increasingly insane country.
As Ayn Rand said in Atlas Shrugged, "There's no way to rule innocent men.
The only power government has is the power to crack down on criminals. Well,
when there aren't enough criminals, one makes them. One declares so many
things to be a crime that it becomes impossible for men to live without breaking
laws."
It's time to drop any pretense: We are no longer law-abiding citizens. We
have lost our law-abiding status. There are simply too many laws to abide. And
because of increasingly draconian penalties and electronic tracking
mechanisms, our "lawbreaking" places us and our families in greater jeopardy
every day.
Stopping Runaway Government

The question is: What are we going to do about it? Write a. nice, polite letter
to your congressperson? Hey, if you think that'll help, I've got a bridge you might
be interested in buying. (And it isn't your "bridge to the future," either.)
Vote "better people, into office? Oh yeah, that's what we thought we were
doing in 1994. Work to fight one bad bill or another? Okay. What will you do
about the 10 or 20 or 100 equally horrible bills that will be passed behind your
PAGE 284 OF 337

back while you were fighting that little battle? And let's say you defeat a
nightmare bill this year. What, are you going to do when they sneak it back in, at
the very last minute, in some "omnibus legislation" next year? And what about
the horrors you don't even learn about until two or three years after they become
law? Should you try fighting these laws in the courts? Where do you find the
resources? Where do you find a judge who doesn't have a vested interest in
bigger, more powerful government? And again, for every one case decided in
favor of freedom, what do you do about the 10, 20 or 100 in which the courts
decide against the Bill of Rights?
Perhaps you'd consider trying to stop the onrush of these horrors with a
constitutional amendment - maybe one that bans "omnibus" bills, requires that
every law meet a constitutional test or requires all congress people to sign
statements that they've read and understood every aspect of every bill on which
they vote. Good luck! Good luck, first, on getting such an amendment passed.
Then good luck getting our Constitution-scorning "leaders" to obey it.
It is true that the price of liberty is eternal vigilance, and part of that vigilance
has been, traditionally, keeping a watchful eye on laws and on lawbreaking
lawmakers.
But given the current pace of law spewing and unconstitutional regulation-
writing, you could watch, plead and struggle "within the system" 24 hours a day
for your entire life and end up infinitely less free than when you begin. Why throw
your life away on a futile effort?
Face it. If "working within the system" could halt tyranny, the tyrants would
outlaw it. Why do you think they encourage you to vote, to write letters, to talk to
them in public forums? It's to divert your energies. To keep you tame. 'The
system" as it presently exists is nothing but a rat maze. You run around thinking
you're getting somewhere. Your masters occasionally reward you with a little
pellet that encourages you to believe you're accomplishing something. And in
the meantime, you are as much their property and their pawn as if you were a
slave. In the effort of fighting them on their terms and with their authorized and
approved tools, you have given your life's energy to them as surely as if you
were toiling in their cotton fields, under the lash of their overseer. The only way
we're going to get off this road to Hell is if we jump off. If we, personally, as
individuals, refuse to cooperate with evil. How we do that is up to each of us. I
can't decide for you, nor you for me. (Unlike congress people, who think they
can decide for everybody.) But this totalitarian runaway truck is never going to
stop unless we stop it, in any way we can. Stopping it might include any number
of things: tax resistance; public civil disobedience; wide-scale, silent non-
cooperation; highly noisy non-cooperation; boycotts; secession efforts; monkey
wrenching; computer hacking; dirty tricks against government agents; public
shunning of employees of abusive government agencies; alternative, self-
sufficient communities that provide their own medical care and utilities.
There are thousands of avenues to take, and this is something most of us
still need to give more thought to before we can build an effective resistance. We
will each choose the courses that are right for our own circumstances,
personalities and beliefs.
PAGE 285 OF 337

Whatever we do, though, we must remember that we are all, already,

outlaws. Not one of us can be certain going through a single day without
violating some law or regulation we've never even heard of. We are all guilty in
the eyes of today's law. If someone in power chooses to target us, we can all,
already, be prosecuted for something. And I'm sure you know that your claims of
"good intentions" won't protect you, as the similar claims of politicians protect
them. Politicians are above the law. YOU are under it. Crushed under it. When
you look at it that way, we have little left to lose by breaking laws creatively and
purposefully. Yes, some of us will suffer horrible consequences for our
lawbreaking. It is very risky to actively resist unbridled power. It is especially
risky to go public with resistance (unless hundreds of thousands publicly join
us), and it becomes riskier the closer we get to tyranny. For that reason, among
many others, I would never recommend any particular course of action to
anyone - and I hope you'll think twice before taking "advice" from anybody about
things that could jeopardize your life or well-being. But if we don't resist in the
best ways we know how and if a good number of us don't resist loudly and
publicly - all of us will suffer the much worse consequences of living under total
oppression. And whatever courses of action we choose, we must remember that
this legislative "revolution" against We the People will not be stopped by
politeness. It will not be stopped by requests. It will not be stopped by "working
within a system" governed by those who regard us as nothing but cattle. It will
not be stopped by pleading for justice from those who will resort to any degree of
trickery or violence to rule us.
It will not be stopped unless we are willing to risk our lives, our fortunes and
our sacred honors to stop it. I think of the words of Winston Churchill: "If you will
not fight for the right when you can easily win without bloodshed, if you will not
fight when your victory will be sure and not so costly, you may come to the
moment when you will have to fight with all the odds against you and only a
precarious chance for survival. There may be a worse case. You may have to
fight when there is no chance of victory, because it is better to perish than to live
as slaves."
NOTES on the laws listed above:

1. (employee database) Welfare Reform Bill, HR 3734; became public law
104-193 on 8/22196; see section 453A.
2. (health care crimes) Health Insurance Portability and Accountability Act of
1996, HR 3103; became public law 104-191 on 8/21/96.
3. (asset confiscation for citizenship change) Same law as #2; see; sections
511-513.
4., 5., and 6. (anti-gun laws) Omnibus Appropriations Act, HR 3610;
became public law 104-208 on 9/30/96.
7. and 8. (terrorism & secret trials) Antiterrorism and Effective Death Penalty
Act of 1996; S 735; became public law 104-132 on 4/24/96; see all of Title III,
specifically sections 302 and 219; also see all of Tide IV, specifically sections
401, 501, 502 and 503.
PAGE 286 OF 337

9. (de facto national ID card) Began life in the Immigration Control and
Financial Responsibility Act of 1996, sections III, II 8, 119, 127 and 133; was
eventually folded into the Omnibus Appropriations Act, HR 3610 (which was itself
formerly called the Defense Appropriations Act - but we wouldn't want to confuse
anyone, here, would we?); became public law 104-208 on 9/30/96; see sections
656 and 657 among others.
10. (health care database) Health Insurance Portability and Accountability
Act of 1996, HR 3103; became public law 104-191 on 8/21/96; see sections 262,
263 and 264, among others. The various provisions that make up the full horror
of this database are scattered throughout the bill and may take hours to track
down; this one is stealth legislation at its utmost sneakiest.
And one final, final note: Although I spent aggravating hours verifying the
specifics of these bills (a task I swear I will never waste my life on again!), the
original list of bills at the top of this article was NOT the result of extensive
research. It was simply what came off the top of my head when I thought of Big
Brotherish bills from the 104th Congress. For all I know, Congress has passed
10 times more of that sort of thing. In fact, the worst "law" in the list --
#9, the de facto national ID card -- just came to my attention as I was writing
this essay, thanks to the enormous efforts of Jackie - Juntti and Ed Lyon and
others, who researched the law. Think of it: Thanks to congressional stealth
tactics, we had the long-dreaded national ID card legislation for five months,
without a whisper of discussion, before freedom activists began to find out about
it. Makes you wonder what else might be lurking out there, doesn't it?
And on that cheery note - THE END
Copyrighted by Claire Wolfe. Permission to reprint freely granted, provided
the article is reprinted in full and that any reprint is accompanied by this
copyright statement
PAGE 287 OF 337

THE OATH THAT NULLIFIES
'THE TRUTH AND NOTHING BUT THE TRUTH'
BY: THE LOCKWOOD PRESS

In America's court system, we rely on the assumption that all parties, are
telling the truth. Without the truth, justice would be impossible to obtain. Imagine
that someone taking an oath to, "tell the truth, the whole truth, and nothing but
the truth, so help me God," had previously taken another oath nullifying all of his
oaths! Bizarre concept? Read on.
Should you ever be involved in a court action, to insure justice, there may
be some additional questions you might want to add to your discovery or
deposition for the judge, attorney, parties to the action, or members of your
potential jury!
This article is not intended to be prejudicial to either the Masons or the
Jewish people, the vast majority of whom are good God-fearing people. it is
merely a comment on those of any race or religion who could be duped into
taking such a ridiculous, un-American and dangerous oath.
The following is based upon information from Robert Walker, P.O. Box 301,
East Berlin, Pennsylvania, an authority on the subject, who has used this
information to obtain the resignation of seven judges and public officials, who did
not want this made a matter of public record.
According to the American Heritage Dictionary of the American Language,
"the Kol Nidre, is the opening prayer recited on the eve of Yom Kippur, containing
a declaration of the annulment of all personal vows and oaths." It is based on the
following declaration from the Talmud;
"He who wishes that his vows and oaths shall no value shall stand up at the
beginning of the year and say: 'all vows which I shall make during the year shall
be of no value. "'
The prayer of "KOL NIDRE" is found in Vol. 8, page 539 of the Jewish
Encyclopedia. It states:
"All vows, obligations, oaths, anthems, whether called Konan, konas, or by
any other name, by which we may be bound, from this day of atonement unto
the next... we do repent. May they be deemed absolved, forgiven, annulled and
void, and made of no effect. They shall not bind us nor have any power over us.
The vows shall not be reckoned vows; the obligations shall not be obligatory, nor
the oaths be oaths."
This same prayer may also be found almost word for word in the volume of
"REVISED FESTIVAL PRAYERS," published in 1919 by the Hebrew Publishing
Company, New York.
PAGE 288 OF 337

The Mason's have a similar absurd dishonor for oaths. Page 183 of the
Masonic Handbook states: Whenever you see any of our signs made by a
brother Mason, and especially the grand hailing sign of distress, you must
always be sure to obey them, even at the risk of your life. If you're on a jury, and
the defendant is a Mason and makes the grand hailing sign, you must obey it;
you must disagree with your brother jurors, if necessary, but you must be sure
not to bring the Mason guilty, for that would bring disgrace upon our order. You
must conceal all crimes of your brother Masons except murder and treason, and
these at your own option, and should you be summoned as a witness against a
brother Mason, be always sure to shield him. Prevaricate, don't tell the truth in
this case, keep his secrets, forget the important points. It may be perjury to do
this true, but you are keeping your obligations."
In October of 1983, Roger Rush of Portland, Maine was sued by Zane's
Department Store through its assignee, the G.E. Credit Corp. Rush, who had
been researching the oaths that Mason's take, knew the judge and attorney
were Masons and utilized the information in his defense. In the deposition for the
Equity Discovery Proceeding, Rush presented a copy of the previously cited
page of the Mason's Handbook and presented the following questions to be
answered under oath:
1. Are you, Robert Cohen, a Mason?
2. Is the judge hearing this matter a Mason?
3. Is/are the owner or owners of 'G.E. Corp.' Mason's?
4. Has anyone involved in this matter taken an oath of "Kol Nidre?"
Within a few days, Mr. Rush received a terse, two sentence letter from
attorney Cohen stating, 'We have decided not to enter the complaint brought you
in regard to Zane's Department Store. There will be no court record."
Editor comment: Can you see the advantage of using this information?
Especially in the nature of 'Judicial Notice,' with a 'Motion,' supported by an
Affidavit. A partial 'sample text' for a Judicial Notice might be:
"COMES NOW THE ACCUSED, in Special Appearance and without
counsel, herein submits this JUDICIAL NOTICE to this Court Tribunal to appraise
the same, that this Accused has the 'expectation of all afforded Rights and to
Due Process of Law, to mean a FAIR TRIAL.' A fair trial, in the understanding of
this Accused, is a trial where there are NO SECRETS NO SURPRISES, NO
PREJUDICE, and NO BIAS, which would have been established by any 'secret
oaths' taken by any 'officer of the court' including the judge. Such oath(s) to
include the 'Kol Nidre' (Jewish) or the Masonic Oath.
Such 'secret oaths' would work great harm to the Accused and his Rights
by design and such 'oath(s)' are evidence and a 'device' to deny this Accused a
fair trial. See attached Memorandum of Law.
This Accused will not condone nor tolerate any such 'oath(s)' to work
against Accused's secured and protected rights, including a fair trial
PAGE 289 OF 337

This Accused expects 'all officers of the court' to be truthful as any 'oath(s)
and disclosure of same pursuant to said court officer's fiduciary responsibility
(Bruun v. Hansen, 103 F2d 685 (1939).
In the event that any court officers have taken said oath(s) and this matter
proceeds to trial, this accused will move to dismiss and reserves the right to
bring action for fraud and or in the interest of justice, this Court or prosecution
(State) may dismiss on its own motion." (Date and signature line)
The memorandum is based upon the 'article,' and motion and order are self
explanatory. Have fun!
PAGE 290 OF 337

BIG BROTHER'S CON
THE TRUTH ABOUT ID CARDS

Have you unwittingly submitted yourself to a life of servitude to Big Brother?
Donald Merle (House of Lockwood) investigates the laws of identification, and
reveals how governments re-create their citizens as fictional entities, thereby
holding power over them and their destinies. The author observes, 'In America
today [and in almost any other country], we are taxed, licensed, regulated,
monitored, attacked, robbed, jailed, and spied on more than at any time in our
history. 'The worst part is that it is all being done to us by the very government
established for our protection. The fact that nearly all of our rights, privileges, and
immunities have been gradually taken away is now self-evident. Freedom and
liberty are nothing more than illusions.' The author then suggests that the once
proud United States of America has greatly 'Altered its State', and that a more
appropriate name for it would be 'The United Slaves of Amerika' Any American
who has gone to great lengths to divorce himself and his assets from the
clutches of Big Brother, may discover that no matter how resourceful and
inventive he has been with his offshore pursuits, his identity, as recorded by his
country of birth and/or citizenship, remains his Achilles' heel until he successfully
dis-associates himself from his identity as a fictional entity.
--------------------------------------------------------------------------------
The identification of individuals has been with us for centuries. Your identity
may represent your position of honour, status, or standing among other men and
women. You can be self-identified, or identified by others. If you are self-
identified, it is usually accomplished by reputation, occupation, noble deeds,
character, etc. Being self-identified carries a natural place of honour (or
dishonour) among peers. You are either honest, trustworthy, and of good moral
character, or you are not. In other words, the reputation, honour and
identification of a good and lawful man or woman, precedes them. They are
known for who they are and what they stand for. This form of identification, at its
best, is accomplished by a lot of hard work, and by adhering to the highest
standards of ethics and moral character.
In contrast, you can be identified by others of so-called higher standing
(liege lord). To be identified by others doesn't necessarily require adhering to the
highest standards of ethics and moral character. When you are identified by
another, the one being identified usually loses their own unique identity, and
forms an adhesion (and lesser standing) with the one doing the identifying.
Identifiers can include: ID cards, brands, tattoos, badges, images, insignia,
sealed scrolls, medallions, clothing, titles, etc. A typical example of this is a
Mayor of a city appointing a Chief of Police. The one being appointed, Chief of
Police, need not be qualified or of good character. The only requirement is that it
is within the Mayor's power to do so (for whatever reason).
PAGE 291 OF 337

No Foundation In Law
The majority of the people in the world carry identification cards granted or
issued by others. This allows others to create the persona and the lawful
standing of the man or woman. It is an established fact that the 'created' can
never be greater than the 'creator.' Whatever the 'creator' creates, he controls.
Also, the 'creator' cannot elevate the 'created' above the standing of the 'creator.'
For example, a city mayor cannot appoint a state governor. Although most
people carry ID cards, they have absolutely no foundation in law whatsoever.
There is no law written that makes it mandatory for anyone to carry any type of
ID.
The only time anyone is required to have ID is to access so-called
privileges and benefits granted by the issuing party. If you have no need for
special privileges and benefits granted by others, there is no need for an ID card.
Keep in mind that the government has nothing to give. It produces nothing. In
order to bestow a special privilege or benefit on one person, the government
must take from another. All those who receive privileges, benefits and handouts
from government (money that is not earned) are doing nothing more than
robbing their neighbours by legal plunder. No matter what type of ID(s) you carry,
one thing is for sure ... you did not issue it to yourself. You wilfully applied for the
ID hoping to receive some type of special privilege or benefit granted by the
authority.
Rights And Privileges

For clarity it is necessary to define the difference between natural Rights,
which are unalienable and not within the power of government to grant, and
privileges and benefits, which clearly are. Natural Rights include (but are not
limited to) the right to: contract, work, get married, use public roads (liberty of
movement), own property, open a business, choose your own destiny, worship,
defend yourself, etc. Privileges and benefits may include any activity that gives
the beneficiary a special advantage not usually granted to the general public.
These special advantages are usually granted by way of a license or permit. A
license is defined as 'permission given by a competent authority to do something
that would otherwise be unlawful.' The question is, do you, as most people
believe, need permission (license and permit) to contract, work, get married, use
the public roads (liberty of movement), own property, open a business, choose
their own destiny, worship, defend themselves, etc.? The answer is ... you don't.
That is unless you voluntarily, by your own free will and volition, apply for, are
granted, and accept the fictitious privilege or benefit being offered. Thereby
placing youself into a state of 'voluntary servitude.'
By way of endorsing this fact, the constitution of the United States of
America clearly states that the condition of 'involuntary' servitude shall forever be
prohibited. The key word here is 'involuntary.' This means that your natural
Rights cannot be converted to privileges (without your consent), and privileges
cannot be converted to Rights (without consent of the authority).
PAGE 292 OF 337

From Fact To Fiction

Although there are many types of identification the most common are the
driver license, passport, social security card, birth certificate, and employee ID.
Lesser forms of ID may be government ID (federal; state; municipal), student
cards, credit card, military discharge/separation, selective service registration,
union memberships, professional licenses, marriage certificates, baptismal.
There are many more. Several peculiar things happen when you voluntarily
apply for and accept identifying documents from government or government
created entities. They are:
1. Name change: Your persona changes to a legal fiction with no persona
(as a man or woman) standing in judicio (in court) whatsoever. This is
accomplished by changing your lawfully 'given name' (appellation) to that of a
legal fiction. That legal fiction is represented by your name spelled in all capital
letters, and may include initials. All government and corporate entities currently
issuing ID cards today are legal fictions. They only exist on paper. They do not
die (like a man or woman), they live on in perpetuity. Therefore, when you are
identified by a 'legal fiction', you must become a legal fiction as well. Remember:
the 'created' can never be greater than the 'creator.'
2. Creates a nexus: A 'nexus' is defined as a connection; tie; link. A
connected series or group; a joining, fastening; to bind. That is, a firm legal
attachment has been made between you and the issuing party. By carrying a
state issued ID card you are placed 'within' the issuing state as a resident of the
state. Res = thing, Ident = identified. A thing identified (no longer a man or
woman).
3. Forms an adhesion contract or agreement: The distinctive feature of an
adhesion contract or agreement is that the weaker party has no realistic choice
as to the terms. An example of an adhesion contract is when you voluntarily
apply for and receive a driver license. Once the driver license has been issued,
the licensee is legally bound by the vehicle code. You, the applicant have
voluntarily converted your right to use the public roads (as a motorist) into a
privileged activity (as a driver).
Who Is The Boss?

All power rests with the People. After all, it is the People who created
government in the first place. Since the 'created' cannot be greater than the
'creator', it must follow that the government is something less that the 'creator'
and must by it's very nature be the 'creator's' servant. This is true until you
voluntarily allow the servant to be your master. Which is what most people have
done to themselves made public servants their masters. The government
cannot do anything for you or against you without your consent. Your consent is
either given in writing, by what you say (verbal consent), or by your silence
(acquiescence). A maxim of law says: 'the law does not require impossibilities.'
Another maxim is, 'where the Laws of Holy Scripture and the laws of man are at
variance, the former shall always be obeyed. A maxim of law is something that
PAGE 293 OF 337

has been ruled on so many times that it is a firmly established truth, and is no
longer up for debate.
Fiction In Action
In order to get any government privilege or benefit, you must fill out a form
and provide false (or hearsay) information. To emphasise my point, I'll share a
true story that happened in Florida to a very good friend of mine.
John was stopped by the Highway Patrol for having no license plates on his
car. After the stop it was also discovered that John did not have a driver license
as well. Attempts to interrogate John proved fruitless to the officer. John
remained silent except to answer the officer's questions with questions.
Frustrated, the officer arrested John and brought him before the local magistrate
(judge) to answer for his terrible crimes.
Before being forced to come before the judge, John managed to get some
paperwork from his car. The paperwork consisted of more than one hundred
court cites (from the supreme court on down) clearly stating that a driver license
was only required for commercial activity. That is, the transportation of 'persons'
and property 'for hire' (taxi driver, chauffeur, coachman, etc.).
The judge looked at John's paperwork, nodded in agreement, and said,
'Yes, I understand this.' The judge then wadded up all of John's papers into a ball
and threw them across the courtroom like a spoiled child. He then pointed his
finger at John and said, ' I don't care what that says, I say, you must have a
driver license and registration!' John looked at the judge, 'Judge, I don't want to
offend you or this court,' he said, 'so, exactly what is it that this court wants me to
do in order to clear up this matter?' 'Young man, I want you to get a driver license
and registration,' said the Judge. 'Fine.' said John, 'let me understand this: if I
apply for a driver license and registration, will that clear up this matter?' The
judge nodded, 'Yes it will.' 'OK Judge,' said John, 'I'll do what this court orders,
provided that I don't have to lie in order to get the license and registration.
Scriptures say that I cannot bear false witness.' 'I never asked you to lie,' said
the Judge ... 'You have ten days from today to do what this court has ordered
you to do.'
John went to the Department of Motor Vehicles and proceeded to fill out the
required forms. He crossed out 'First name', 'M.I.', and 'Last name' from the form,
and wrote, 'Given name' and 'Surname'. Then he wrote his name in proper
English (upper and lower case letters). What's your address?, asked the form,
'general delivery', wrote John. Social Security number? None. Date of birth?
Unknown. Are you a Florida resident? No. Are you a U.S. Citizen? No.
Explanation: Name: Men and women do not have first, middle, and last
names, they have 'given names' and 'surnames'. Anyone claiming to have first,
middle, and last name is a legal fiction.
Address: You cannot claim to have a street address that belongs to you.
The reason being is that when you move you cannot take the address with you.
Therefore the address must belong to someone else. The only address (Post)
that you own is 'general delivery.' general delivery is traditionally vested Right.
PAGE 294 OF 337

You can receive 'general delivery' wherever you go. The only condition is that
you must get off your lazy behind and go to the post office to pick up your 'post.'
No social security number: Even if you think that you have a social security
account number, think again. The name on the card is not yours (all capital
letters), and the number is not yours because you did not create it. You can
honestly say before any court that you have never been issued a social security
number in your name . Another way to prove that the account is not yours try
closing it. It can't be done. If the account were really yours, there would be no
problem closing the account and purging the records (like a bank account or
insurance policy).
Date of birth unknown: Were you conscious when you were born? How do
you know (from first hand knowledge) the date on which you were born? Did
your mother tell you this date? Did she ever lie to you (Easter Bunny, Santa
Clause)? How about an alleged Birth Certificate? Were you there when this
document was created? Did you sign it? The fact is that your 'date of birth' is
nothing but 'heresay.' Everything is heresay as it applies to you unless you have
first hand knowledge of it.
Not a state resident: Resident of the State. Res = thing, Ident = identified
a thing identified (no longer a man or woman). Does the term 'resident' apply to
you?
Not a U.S. citizen: The United States is defined as: District of Columbia,
Puerto Rico, Virgin Islands, American Samoa, and Northern Marianna Islands.
The United States (a corporation) is not the same as the 'United States of
America' (the fifty states). Claiming to be a U.S. citizen (voluntarily) makes you a
corporate-political 'citizen subject' and 'person' under the 14th Amendment to the
constitution of the Untied States of America.
John completed the application(s) and gave them to a clerk (clone), who
promptly told John that his application(s) had been denied. John called the
supervisor over and explained his situation. 'I have to get a driver license and
registration,' says John. 'It's a court order.' 'We'd like to comply, but you are
simply not eligible,' the supervisor replied. 'You are not a Florida resident and
you have no social security number. We cannot issue you a license.' 'I don't think
the judge will believe that I tried to get a license,' John said. 'Will you write a
short note to explain why I was denied?' The supervisor agreed and wrote a note
explaining the reasons why John was denied. John returned to the court with the
note from the DMV and his rejected application forms. 'Judge,' he said, 'I tried
my very best to comply with this court's order to get a driver license and
registration, and here are the results of my efforts.' The judge reviewed the
paperwork and said, 'Fine!, that's all I ever asked you to do... Now, get the hell
out of my court!'
Scriptures teach us that if your adversaries want you to walk one mile, walk
two, and if they want your cloak, give them your tunic as well. Remember, the
Law does not require impossibilities. You will find that no matter what your public
servants order you to do, tell the truth, and you will simply be ineligible. The law
can only mandate performance on artificial entities. If their laws apply to you
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(man or woman), then they must make a provision to make you eligible (without
telling a lie, or forcing you into a condition of peonage and involuntary servitude
which is prohibited in all the fifty states). Allowing others to identify you can be
deadly when claiming your natural Rights. If you feel that you must carry some
form of identification, then create it yourself or have it made to your
specifications. Only the 'Creator' is above the authority of a natural man. Holy
Scriptures make it very clear that you cannot serve God and mammon (two
masters).
Knowledge Is Power
Many people have asked me to detail the steps required to finally become
free again. Much prayer and thought has gone into this. It is my conviction that
the road to personal freedom can be accomplished in three easy steps:
1. Know and understand exactly who you are. Are you a legal fiction and a
franchise to be pillaged and plundered, or a man (woman)? If you are a man,
then you must allow the fictional persona to die (your name in all capital letters)
and then bury it. Never answer to, or recognise this name again. Any property
that you may have recorded or registered with your fictional name is subject to
attack. Take all steps necessary to transfer your property out of the 'fictional
name'. A good Trust is a viable option.
Author's note: All 'statutes and codes' (colored law) are applicable to
'residents' and 'persons' only. That is, artificial entities. Public Law (real Law), is
rooted in Holy scripture and applies to men and women. The legal definition of
'resident' was given earlier. The shocker comes when we define the word
'person.' According to statute and code, a 'person' is defined as: corporation;
franchise; an individual; (and sometimes) a human being (all artificial entities.)
One may argue that they are not a corporation, franchise, or individual. But
surely one must be a 'human being,' Right! For this answer, let's look to
Balentine's Law Dictionary (1930):
human being. See monster.
Ok, let's see 'monster.'
monster. A human-being by birth, but in some part resembling a lower
animal. 'A monster' hath no inheritable blood, and cannot be heir to any land'
Remember, Holy Scriptures tell us that in the beginning Yahweh (God)
created Man in His image. He did not create corporations, franchises,
individuals, human beings or monsters. These are the creations of Satan,
created in Satan's image.
2. Know what your law is. One is either under Yahweh's (God's) Laws which
stand as Eternal Truth and can never change, or, one is under the thousands of
arbitrary and conflicting man-made laws that can and will change on a political
whim. Man's laws are in direct conflict with God's Laws. Remember, it is a maxim
of law that where the laws of Holy Scripture and the laws of Man are at variance,
the former shall always be obeyed. The choice is totally yours. The government
cannot force you to violate Scriptural Law... That's a fact!
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3. Know to whom you belong and serve. Either you belong to and serve the
Creator, or, you belong to and serve the State. You cannot serve two masters.
Liberty and freedom are won on a personal level. Someone else can't do it
for you. You must take steps to gain your own freedom though personal
education and action. A famous quote says: 'The surest way for evil to prevail is
for good men to do nothing.' In doing nothing, you will have no cause to complain
when evil prevails.
Some Closing Notes

The reader must fully understand the dangers of accepting and using the
'fictional name' (name in all capital letters) given as a slave name. To drive the
point home so that you never forget it, the following questions, answers, and
explanations are given:
1. Have you ever asked yourself why it is, that you are never allowed to
enter a courtroom, as plaintiff or defendant, in 'Propria Persona?' Propria
Persona (commonly known as Pro Per) simply means that you are entering the
court as the 'person in the subject matter.' That is, in the flesh, as the man (or
woman) named in the plaint. The court may reluctantly allow you to enter the
court 'Pro Se' (representing the 'person in the subject matter'). Or, the court will
allow an attorney to represent the 'person in the subject matter'. But, never 'Pro
Per. Why is this?
The reason is because you (the Man) are not the 'person in the subject
matter.' How can a fiction appear in the flesh? The cause of action is always
against the fiction. This is evident by the way your name is spelled within the
court's documents (in all capital letters.) All courts today (in the U.S.) are legal
fictions (military courts against civilians) under the Emergency War Powers Act
of March 9, 1933. The courts of today are no longer under the judicial branch of
government. They are under the executive branch of government. This is evident
by the 'gold fringed' flag in every courtroom. A 'gold fringed' flag is a military flag
(See Title 4, USC 1). The flag serves as notice to all, that they are entering a
military court. They [the Courts] can only prosecute another legal fiction, except
in cases of Common Law crimes such as rape, murder, robbery, and other
trespasses.
Defective Service
The trick that the courts use to get you to voluntarily subject yourself to their
jurisdiction is by sending out or serving 'defective service', 'defective warrants',
'notices to appear' or similar official sounding papers. 'Defective service, simply
means that 'due process' of Law is not being followed. They are, in all actuality,
all invitations.
Defected service (usually associated with victimless crimes) becomes
perfected when one answers to the defective service, by voluntarily walking into
their court, standing behind the bar, and entering into the 'benefits of discussion'
with the court. Simply by answering when you name is called is all that it takes.
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Military courts do not recognized positive Law. Attempting to introduduce

the Constitution or Holy Scriptures into one of these Admiralty courts, will swiftly
result in being found in 'contempt of court.' This may be followed by jail time
and/or fines.
Due Process of Law

Due process is guaranteed under the Constitution for the united States of
America. In order for 'due process of Law' to take place, the court must do the
following:
a. The 'person in the subject matter' must be properly named. If you are a
Man and not a legal fiction, this means that your name CANNOT, under any
circumstances be spelled in all capital letters or contain initials.
b. The court must issue a summons for your appearance. That summons
must be under official court seal and personally signed by the presiding judge
(not a court clerk, or worse, with no signature which is common.)
c. To that summons, must be attached a sworn complaint of a 'damaged
victim' or 'injured party.' Without an injured party there can be no crime (tort,
tresspass.) Note: The State cannot claim to be an injured party. The State is a
fiction and cannot be damaged. Also, they [the State] have a vested interest in
finding you guilty of whatever violation they can dream up to raise revenue, and
are therefore biased witnesses against you. The court, State, and the police all
share in the booty (fines, taxes, so-called bail, etc.)
d. The summons must then be given to the county sheriff. Then, the sheriff
must personally handle and serve the summons upon you.
When all of the above is accomplished, then you MUST appear (you have
no choice,) or a warrant will be issued for your arrest.
2. You may also ask yourself why it is, that in order to legally change your
name, it has to be done through the court system. The reason, is because the
name that you are trying to change does not belong to you. It is the name that
the system created for you. After all is said and done, you will have
accomplished nothing more than getting another 'slave name' written in all
capital letters. Note: A man's name written in all capital letters is known in closed
circles as a 'nom de guerre', or, 'war name' as translated from its French origin.
Perhaps you may remember the TV mini-series, titled, 'Roots' by Mr. Alex
Haley. The series was about a king from Africa named, Kunt Kint (actual
spelling unknown to the author.) He was taken captive and brought to America
as a slave. His slave master didn't like Kunt Kint having the name of a king,
and was promptly given the name of "Toby" by his new master. This is
essentially what has happened to nearly everyone in America. The only
difference is that Kunt Kint did not have a choice. If you have accepted your
slave name and carry their ID to confirm it, then it was done so, voluntarily. The
fact is, you have the power to change your Lawfully 'given' name any time you
wish.
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Remember, If it looks like duck, walks like a duck, and quacks like a duck
It surely must be a duck. If you look, walk, and act as a slave the system will
treat you accordingly.
I hope that readers don't think that I am suggesting that they change their
lawfully 'given name.' As Big Brother never uses your lawfully 'given name,' a
name change would never be necessary. Each time someone shoves a piece of
paper with your name written in all capital letters under your nose, whistles,
bells, sirens, and alarms should go off. This paper should be rejected, followed
by a firm request to spell your name correctly. But of course, they can't and won't
do it. Don't believe it? Try it sometime. The government never does ANYTHING
by accident.
The information provided herein is for educational purposes. What the
reader does with this information is purely at the reader's discretion. We
encourage all reader to do their own research and reach their own conclusions.
PAGE 299 OF 337

THIS OVERVIEW OF THE INTERNATIONAL

BUSINESS COMPANY AND ASSET PROTECTION
TRUSTS IS A LARGE AND DETAILED FILE
The International Business Corporation.
In January, 1990 the Bahamian Government passed the International
Business Companies Act, one of the more innovative and flexible pieces of
corporate legislation in the world. In the last four years almost 30,000
International Business Companies (IBCs) have been registered. Their number
and popularity is steadily increasing.
The reason for this popularity is not merely that they exist in the Bahamas
one of the worlds original offshore financial centers with a history of
confidentiality, competence, stability, no direct taxation and a modern supporting
infrastructure but because the legislation recognizes modern communications
and their effect on corporate operations and the imperative need for flexibility in
organization and structure in an ever changing international environment. It is
almost the legislative equivalent to the "one size fits all" approach but with the
ability to still adapt the shape and form.
IBCs can operate, and are primarily used as, regular trading, investment
companies, and limited duration companies, but with little effort, they can be
easily adapted so that they can resemble and function as mutual funds, limited
partnerships, charitable organizations, etc. Working with a professional advisor it
is possible to produce a "designer" company which still fits within the IBC Act to
meet unusual or exotic requirements. If established as an "Unlimited Liability
Company" they may resemble a regular partnership. IBCs can be a useful tool
as an integral part of an asset protection plan or family financial plan, forming
part of an individuals personal financial planning package.
When the legislation was introduced, the then Attorney General, Sean
McWeeny, said, "the demand is now for lower costs, quick services and a
legislative framework which is accommodating, as must be fiscal policies". The
Bahamas core of professionals working in a premier offshore financial center,
with the enthusiastic co-operation of the Government, has met these standards.
The continuing demand is itself evidence that the IBC Act has filled an important
void in the tools available. Formation of an IBC with a "Standard" Memorandum
and Articles of Association can almost always be accomplished in a 24-hour time
frame, and sometimes in ten.
For those familiar with the terms used in the United States, the Charter and
By-Laws of a company are known as the Memorandum of Association and
Articles of Association in the Bahamian legal system.
THE INTERNATIONAL BUSINESS COMPANIES ACT AN
OVERVIEW
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The International Business Companies Act is divided into thirteen main

parts, each deals with a range of sub-topics, many of which will be reviewed in
more detail in other sections of this summary. However, it is advantageous to
summarize what is covered by each Part of the Act in very general terms:-
Part I covers preliminary matters, including the definition of important terms
used in the statute.
The more significant definitions include the following:-
a) "authorized capital" is the value represented by shares with a par value
and the capital represented by shares without a par value;
b) "capital" means the sum of all outstanding shares, with or without par
value, plus shares held in Treasury and amounts transferred from surplus to
capital by a resolution of the directors;
c) "securities" include shares and debt obligations, options rights and
warrants;
d) "treasury shares" are previously issued shares reacquired by the
company and not yet cancelled;
e) "resolution of directors" means a resolution approved by a simple
majority, or a larger majority if the Articles so provide, of directors or a committee
of directors present and voting who do not abstain or approved by them in
writing (multiple votes held by any one director are counted for this purpose);
f) "resolution of members" means either a simple majority of shareholders
voting and not abstaining or of each class or series of shareholders. If consented
to in writing similar requirements apply except that an absolute majority is
required for shareholders that are not members of a series or class. In either
case, the Articles may require for a larger majority.
Part II deals with the constitution of an IBC as opposed to a regular
company. It covers the general restrictions placed on the company, including the
range of permitted (prohibited) names, and the powers and minimum
requirements to be included in the Memorandum of Association amongst which
are those describing the rights and liabilities of shareholders accruing from the
class of shares owned by them.
Part III entitled "Capital and Dividends", covers matters dealing with shares,
issuance and rights of fractional shares, the amount and nature of consideration
for the acquisition of shares, payment of dividends, treasury shares, the increase
or reduction of capital and the valuation of appreciated assets.
Part IV & V respectively deals with the registered office and agent and the
rights, duties, powers and responsibilities of directors, officers, agents and
liquidators. There is some innovative legislation in this area, which will be
reviewed later in this summary.
Part VI is devoted to the protection of members and creditors. It covers
matters or involving conduct and notice of meetings, voting rights, service of
process on the company, the location(s) of books and records, rights to
inspection thereof, contracts and appointment of agents.
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Part VII covers a variety of changes in corporate structure such as merging

or consolidating IBCs with other IBCs, with regular companies or a reverse
merger with its own subsidiary. Mergers or consolidations with foreign
corporations are provided for. The rights of minority interests and dissenters are
protected and technical problems in achieving the desired result are dealt with.
Part VIII permits regular companies formed under the Companies Act to
reconstitute themselves as IBCs if they otherwise qualify. It allows foreign
qualified companies to re-register as IBCs and IBCs to be continued under a
foreign law. Continuation does not relieve an IBC of any pre-existing actions,
debts, claims, etc.
Winding-up and dissolution, whether by resolution of the company or by
order of the Court, and the circumstances in which the Registrar may remove a
company from the Registered are covered in Part IX. It deals with the
circumstances in which the Registrar nay removed may apply to be restored to
the Register. It also provides that a company unable to meet its debts and
obligations on winding up and dissolution falls under stringent provisions of the
Regular Companies Act.
Part X prescribes the fees payable to the Registrar and outlines pecuniary
penalties form compliance with payment of fees when due. It should be noted
that the annual license fees are due to the Registrar before 31 st July in any year.
If not paid by that date, a 10% penalty, by 31 st October the penalty increases to
50% of the fee payable. The Registrar may refuse to take any action required or
requested if a company is in arrears with its fees and penalties.
Part XI provides the vital exemption from all direct taxes for an IBC for a
period of 20 years from the date of incorporation. It also covers stamp duty and
exchange control exemptions.
Several subjects are covered by Part XII including the issuance of
certificates of good standing and inspection of documents in the Registrar.
The newest division, added in 1994, Part IXA (no lucky "13" in this
legislation!) deals with limited duration companies which is many respects mirror
an incorporated partnership. They may not exist for more than 30 years.
BASIC RESTRICTIONS ON IBC OPERATIONS
IBCs may not carry on business with persons deemed resident in the
Bahamas for the purposes of Exchange Control Regulations Regulation 41(2)
(N.B. this means no non-resident is affected by the regulations), neither may
they operate as banks, trust or insurance companies. They are prohibited from
providing registered office services.
An IBC may lease, but cannot own, land in the Bahamas. It cannot carry on
any business which is ultra vires (not permitted) by its Memorandum of
Association or any activity prohibited by the laws of the Bahamas.
The following basic activities are not deemed to be "carrying on business"
in the Bahamas:-
1) Operating banks accounts;
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2) Maintaining professional contact with attorneys, trust and management

companies, accountants, bookkeepers, investment advisors and other similar
persons who carry on business in the Bahamas;
3) Preparing books or records and maintaining an office in the Bahamas for
this purpose and for communicating with members;
4) Holding and maintaining securities in any other company, whether an
IBC or not.
5) Holding meetings of directors or members.
The effect of these provisions is to allow an IBC to operate effectively from
the Bahamas, provided it does not actually trade or carry on a business with
Bahamians other than those employed in a professional capacity or as staff for
its local operations defined above.
Should a company fail to comply with these restrictions and remain out of
compliance for a continuous period exceeding 30 days or more, it is obliged to
advise the registrar. Penalties are imposed on the company and any director
who knowingly fails to comply with these provisions.
FUNDAMENTAL OPERATING CHARACTERISTICS
A later section of this overview will deal with the many features of an IBC
making it an attractive vehicle for so many people using offshore services.
Before doing so it is necessary to understand the fundamental rules concerning
the routine operation of an IBC. Many of these rules do not differ substantially
from those in other jurisdictions and they may be regarded as the backbone of
corporate existence as an independent, functional legal personage. Most
readers will find relatively minor differences from the rules covering the operation
of corporations in most developed legal systems. Those differences, which do
exist, enhance flexibility and usefulness.
This section will be set out with appropriate sub-headings.
1. Shares
In addition to normal par value registered shares, an IBC may issue bearer
shares, un-numbered shares, shares without a par value and shares
underwritten by guarantee or with unlimited liability. Ownership of registered
shares passes when the name of the new owner is entered in the share register.
Bearer shares pass on physical delivery so that, at law, the person in whose
hands they are is regarded as the owner of them.
Shares previously issued by a company, which it has re-purchased,
otherwise re-acquired and not cancelled, are Treasury Shares.
These may be re-issued or re-sold any proceeds realized being added to
corporate surplus. Fractional shares may be issued and each fractional share
has the same rights, privileges and obligations as any whole share of a similar
class except that it only carries the appropriate fractional proportion thereof.
In addition to common shares, a company can create any other form of
share and may attach rights as to preference, rates of interest, limited or
extended voting or redeemability to such shares. It may also create and issue
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rights, warrants and options over shares and may determine the terms and
conditions attaching to each.
An IBC may elect not to issue share certificates. Certificates issued may
bear facsimile signatures.
The consideration (amount to be paid) for the issuance of shares is
determined by the directors.
The IBC Act prescribes that for shares with a par value, the amount of
consideration in any form or a binding obligation to contribute property to the
company. It may be in any combination of these forms.
The recent amendments limit the liability of members to amounts unpaid on
shares held by them or to such amount as they guarantee to contribute in the
event of a windup. It is also possible to have no limit on the amount to
contributed by members thus forming an "Unlimited Liability Company"
imbuing it with many of the characteristics of a partnership wrapped in a
corporate structure.
2. Shares Register.
An IBC is required to maintain one or more share registers, one copy of
which must be maintained at its registered office. The register contains the
names and addresses of all registered shareholders, the number and classes of
shares they hold, the date of entry on and removal from the register after a
person ceases to be a member. For bearer shares, the number of shares issued,
and the number of each certificate and date of issue are recorded.
The share register may be kept in any form, including electronic, provided
legible evidence of its contents can be produced. Penalties are imposed on both
the company and its directors for failure to maintain the share register properly.
3. Registered Agent and Registered Office.
Every IBC must have a registered agent and a registered office in the
Bahamas. The Registered Agent must be an attorney in public practice, an
accountant or a licensed bank or trust company or an approved management
company registered with the Registrar.
Service of any documents on a company may be made on the registered
agent or at the registered office.
A Registered Agent may resign at any time on not less than 90 days written
notice. He is obliged to serve such notice on the Company or on its officers or
directors, depending on the particular circumstances and to inform the Registrar.
Failure to appoint a replacement Registered Agent will result in the company
being struck off the Register. This would take place approximately 120 days after
the date the original notice was given by the resigning registered agent. A similar
result obtains if the Registrar suspects a Registered Agent has died or otherwise
ceased to act and he serves notice on the company to advise him of the name
and address of a new registered agent within 30 days.
In either situation, the Company, its members, officers and agents remain
liable for all legitimate claims, debts, liabilities, etc. which in existence at the time
it is struck off.
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4. Public Records.
As in most other jurisdictions, there are certain documents kept at a public
registry which are open for inspection by anybody on payment of a small fee. For
an IBC the public documents are limited to the Memorandum and Articles of
Association and the name and address of the registered office and registered
agent. The records also show whether the company is in good standing which
is whether it has paid all fees due to the Government. No public record is kept of
members, directors or officers and no accounts are required to be filed.
5. Management.
As will be discussed later, unless responsibility for certain matters is taken
over by shareholders, an IBC is controlled by its directors, who are responsible
for ensuring that it is operated in accordance with the law, that proper records
are kept and that any necessary changes in the public records are made. Their
decisions bind the company and determine the nature and direction of its
activities. They appoint the officers.
6. Merger, Consolidations, Winding Up and Continuance.
The IBC Act permits two or more IBCs to consolidate their operations and
merge provided steps are taken to protect shareholders (especially minority
shareholders), creditors or others who may be affected by this action. The
members or shareholders of each class affected by it must also approve. Once a
merger is complete the surviving IBC assumes all the rights, powers, duties,
obligations and liabilities of the merging companies. The approval of members is
not required if the merger is with a subsidiary company and the surviving entity is
an IBC.
An IBC and a company incorporated in another jurisdiction may merge
provided that the laws of the other jurisdiction permit such a merger and that, if
the merged company is a Bahamian IBC, it complies with the IBC Act. If the
merger is of a Bahamian IBC into a foreign corporation, the surviving company
must comply with the laws of the jurisdiction. The continuation on IBC under the
laws of a foreign jurisdiction is permitted and the procedure for its removal from
the Bahamian register includes obtaining an opinion from a duly qualified person
in the new jurisdiction that the laws of that jurisdiction have been complied with.
Continuance in the Bahamas or outside the Bahamas cannot be used as a
method of defeating legitimate claims, debts, actions, proceedings, etc.
The rights occupying to third parties from such a circumstance are
specifically preserved and continue until settled or satisfied.
An IBC may be wound up voluntarily or involuntarily. The later is a winding
up forced by creditors after the company has become incapable of meeting its
debts as they fall due becoming bankrupt. The laws covering such a winding
up are the same for an IBC as for a regular Bahamian company and are
designed to protect the right of creditors to be paid as much as possible. If during
the course of a voluntary winding up the directors, members or the liquidator
determine that an IBC is, or may not be able to, pay all debts, claims, etc. in full,
then the liquidation procedures change. The company is treated as being
involuntarily wound up. The net assets (if any) of the company (after paying the
PAGE 305 OF 337

costs of liquidation) are distributed amongst the creditors ratably in order of

priority.
Only after all creditors have been fully satisfied may any surplus assets be
paid or distributed to shareholders.
A voluntary winding up occurs after a company decides, of its own volition,
to go out of business. Provided there are sufficient assets to meet all known
liabilities, the company may control the process and no receiver or trustee need
be appointed. The IBC will appoint person(s) of its own choice to carry out the
liquidation. A small fee is paid to the liquidator.
A word of caution the rules for consolidation, merger and winding up are
complex. Legal advice should always be obtained.
7. Payment of Fees.
The International Business Companies Act prescribes fees, which must be
paid to the Government of the Bahamas if a company is to remain on the
Register and in good standing. The annual fee varies according to the
capitalization of the company, whether its shares have a par value or not and
whether there is a mixture of par and non-par value shares, etc. The majority of
companies are incorporated with a capital of $5,000.00 or less as this attracts
the minimum annual fee. The maximum annual fee for any company with an
authorized capital value in excess of $50,000.00 is $1,000.00.
Failure to pay fees when due (all fees being payable by 31 st July for
companies registered at the end of the preceding year) will attract penalties.
Continued failure will result in a court action for recovery of outstanding fees and
penalties.
Fees are also prescribed for mergers or consolidations, articles of
dissolution, issuance of certificates by the Registrar, etc.
8. Meetings
An IBC is required to convene shareholder meetings for specific purposes,
but unlike other companies, there are no requirements for an annual meeting.
Unless varied by the Memorandum of Articles a quorum requires more than
50%of all voting shares present in person or by proxy (all members may appoint
proxies to represent them and vote on their behalf).
When requested to do so by members holding more than 50% of the votes
(unless the Memorandum or Articles have prescribed a different percentage), the
directors shall convene a meeting to consider any matter of which the members
have given notice in their request.
Voting may be by show of hands, ballot or any other method permitted by
the Articles. For most resolutions a simple majority of members present and
entitled to vote is sufficient.
For unusual proposals, such as the distribution of assets to members or
voluntary winding-up larger percentages may be required.
9. Directors.
Usually the direction, operation and policies of an IBC are the responsibility
of its board of directors. The initial directors are appointed by the subscribers to
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the Memorandum of Association. Thereafter they are appointed either by the

members or by the other directors themselves. Minutes must be kept of all
meetings of directors and of any sub-committees they may establish. An IBC
may have a single director. No maximum number is stipulated by the Act. It is
customary for the Articles to set a maximum number of 5 or 7 directors. This
number can be varied by an amendment to the Articles.
FLEXIBILITY AND OTHER ADVANTAGES.
In this section, some of the flexibilities and unusual potential of IBCs is
reviewed. The statute encourages innovative thinking so that, with correctly
structured Memorandum and Articles of Association, an IBC can be used for a
far greater range of purposes than an ordinary company. To take advantage of
these opportunities requires professional advice.
The statute has been carefully designed to make corporate operation
easier, to take advantage of modern techniques and circumstances electronic
communication, computerization and the globalization of the world economy. In
addition, the IBC legislation ties in closely with two other Bahamian statutes to
enhance privacy and to protect assets.
This section will continue with the pattern of a series of sub-heads under
which the relevant subjects are explored.
1. Privacy of Records.
Whilst a company is required to maintain normal records and minutes, the
only records of which originals or copies must be maintained at the Registered
Office are:-
1. Share Register;
2. The Register of Officer and Directors.
On books and records (as well as copies of the above) may be maintained
anywhere in the world as permitted by the Articles, alternatively they may be
kept at such place as the directors by resolution determine. There is nothing to
prevent certain records being held in one location and others in another. The
major consideration in determining where the records are kept should be
whether the selected location would provide the degree of privacy required. In
the Bahamas, and some other major offshore jurisdictions, privacy is guaranteed
both by custom and by legislation (with very limited exceptions where criminal
activity can be proved). Tax avoidance in NOT regarded as a criminal activity.
The financial records and accounts which must be maintained by an IBC
are those which the directors "consider necessary or desirable in order to reflect
the financial condition of the company." There is no requirement regarding the
form of accounts, having them audited or for their publication.
No annual returns are filed with the Registrar giving details of shareholders,
officers, directors or financial records.
Inspection of the books and records of the company and making copies or
extracts is restricted to members and their duly authorized attorneys. Members
must specify in writing a "proper purpose" before making any inspection, copies
or extracts. The proper purpose must be reasonably referable to a persons
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interest "as a member". The directors may, by resolution, refuse to allow such
inspection and a member has 90 days in which to apply to the court to overrule
this decision.
The effect of this provision is to deny to anyone who is not a member, or
their authorized attorney, the opportunity to probe the affairs of a company.
2. The dominant position of directors Unless shareholders
unanimously decide otherwise.
Directors may be either persons or corporations and, unless the
Memorandum and Articles, their own resolutions or an unanimous shareholder
agreement stipulate otherwise, have a range of discretions and powers
extending far beyond those enjoyed by the directors of a conventional
corporation.
Directors have, and may exercise, all powers over a company and its affair
which are not expressly reserved by either the IBC Act of a companys own
Memorandum and Articles of Association for its shareholders. As the majority of
reserved powers relate to the protection of shareholders on merger,
consolidation, sale of assets, conflicts of interest, arrangements or winding up,
directors have virtually unrestricted control over a company provided it is
operating in normal mode. The absence of a formal requirement for annual or
other meetings means no ratification is required of their actions either directly or
indirectly by the approval of accounts.
At the time of formation of a company the first directors are appointed by the
subscribers to the Memorandum and Articles.
Thereafter they are elected by members. If the Memorandum and Articles
so provide the directors may elect themselves and set their own term of office.
Directors may, subject to at least 3 other directors so requesting in writing,
remove any director from office. They are empowered to fix their own
remuneration.
Directors may appoint any number of sub-committees and may delegate
virtually all or any powers to such sub-committees.
They have the right to appoint any person or persons including
themselves as officers or agents of the company and may in all respects
determine the duties and terms of office of their appointees
Directors and their appointees are required to act as honestly and with goof
faith in the best interests of the company.
The standard of competence required of directors is "the care, diligence
and skill that a reasonably prudent person would exercise in comparably
circumstances." For almost a century, there has been development in the
concept of directors and officers responsibility with some relaxation of former
rigid standards. Reasonable prudence may be fairly interpreted to mean that
unreasonable risks should not be taken. Greater difficulty comes in interpreting
"comparable circumstances."
The majority of people are not placed in the position of having to make
decisions of the nature and kind routinely required of directors, officers and
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agents. It appears to follow that the only "comparable circumstances" which

should be considered are those of other companies and directors in similar
situations.
All the shareholders (with or without a third party also joining) may enter
into (or may terminate) a written agreement which will restrict all or any of the
powers of directors to manage the business and affairs of the company. Before it
becomes effective and within 15 days of its execution or termination, the
agreement must be filed with the Registrar.
A sole shareholder making a written declaration is deemed to have made a
written agreement.
Shareholders need to exercise this power with caution, appreciating the
consequences. They immediately and personally assume rights, powers, duties
and liabilities removed from directors. Before proceeding shareholders will be
well advised to ensure they know what is transpiring in a company in detail
otherwise there is a real possibility of unpleasant and/or unexpected surprises
and the assumption of responsibilities which are unwanted.
3. The Doctrine of Ultra Vires.
The English legal systems have developed the Ultra Vires doctrine, which
has been adopted in one form, or another in all jurisdictions having a legal
system derived from the English System. The doctrine, in summary, is that a
body which is given powers by statute or by documents which are authorized by
statute (such as the Memorandum and Articles of Association of a company)
may only do those things set out in the statute or empowering document.
The Memorandum of Association in its simplest form need only describe an
IBCs objectives as any act or activity not prohibited by the law of the Bahamas.
The effect of this approach is to essentially eliminate the problems caused by the
application of the doctrine of ultra vires.
To facilitate entering into contracts or opening banking or brokerage
accounts, other main objects are frequently detailed. Provided the general
objective is included, the difficulties, which can arise under ultra vires, are
avoided.
It is worth noting that there is another important result of this very general
position privacy is enhanced and flexibility improved.
4. Protection of Assets.
An IBC has the power to protect its assets, as it thinks fit not only for the
benefit of itself, its members and creditors but also, in the discretion of the
directors, for others with direct or indirect interests in the company. A specific
provision of the act permits an IBC to transfer any or all of its assets to a trust in
order to protect them and permits persons having interests in the company to be
the beneficiaries. Such a transfer is prohibited if the result is to give a fraudulent
preference or to defraud creditors.
5. Meetings of members and directors.
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Meetings of members and directors do not need to be held in the Bahamas,

but may be held anywhere in the world at such times and places as the directors
consider necessary or desirable.
Meetings may be held in the conventional way with persons present
together or they may be held by electronic means or by telephone, in which case
it is a requirement that the participants must be able to hear and recognize each
others voice.
Members may appoint proxies to speak, represent them and vote on their
behalf.
A director may appoint an alternate to attend any meeting o his behalf and
assume his position. Such alternate permits are entitled to receive notices of
meetings, minutes, etc.
A further alternative permits the circulation of a resolution to members or
directors and the approval of that resolution has the same effect as if it were
approved at a meeting.
Circulation can be by telephonic or electronic means or by mail. For such
resolutions, there is no requirement for notice. A single director or single
shareholder may meet any requirement, for a meeting by passing a resolution in
lieu.
6. Notice of Meetings
The notice required for calling meetings is short two days for directors
meetings and seven days for general meetings.
This period may be extended by the Memorandum and Articles, but may not
be reduced. A majority of directors and not less than 90 percent of members may
waive notice. Actual physical presence of a director of member at a meeting and
participation in its proceedings is deemed waiver of notice.
Inadvertent failure to give notice or its non-receipt does not invalidate a
meeting.
For holders of bearer shares, unless the Memorandum or Articles have a
contrary provision, notice is given by publication in a newspaper circulating in
the Bahamas and it the place where the company has its principal office. No
specific period of notice is required in this case but it must be sufficient for a
bearer shareholder to secure or exercise rights and privileges, except the right
to vote (which is secured by actual attendance at the meeting in physical
possession of the shares).
7. Dividend payments.
Dividends may take several forms, the most common being a cash
payment.
One alternative is to pay a dividend by way of issue of further shares. The
cash value of such a dividend is determined by the amount, which is transferred
from the companys surplus account to its capital account. Although not specified
in the Act, it is implicit from this requirement that a company must have a surplus
account with a value at least equal to the amount of dividend being paid in
shares. For shares with a par value, the amount for transfer is the par value of
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the new shares issued. For shares without a par value it is such amount as the
directors determine.
If preference shares are issued as a dividend, the amount to be transferred
from capital to surplus must not be less than the capital amount to which the
preference shares would be entitled if the company were placed in liquidation.
In addition to paying a dividend in money or by issue of additional shares, it
may be paid in "other property". The term "other property" is not defined.
Therefore anything recognized as property in the Bahamas may be distributed.
This could cause problems if such property is subject to specific legislation
such as land, aircraft, or ships.
Further, such property must be reasonably valued by the directors and that
value must be expressed in money terms as a rate per share. The provision is
innovative in that it provides an IBC with means of distributing surplus assets to
its shareholders. The attendant conundrum is how this can be done fairly unless
all distributed assets are of the same nature and kind.
The decision of the directors as to the value of assets so distributed is final,
unless fraud can be proved or the valuation involves a question of law.
No matter the form of dividends, no distribution can be made unless
immediately after payment (or distribution) the company can satisfy its business
liabilities as they fall due (this normally means determining that cash flow is
adequate).
Additionally the net realizable assets held by the company cannot be less
than its total liabilities plus the capital value of issued and outstanding shares.
Deferred taxes are not regarded as liabilities for the purposes of this calculation.
8. Foreign Government Seizure not recognized.
A substantial protection to shareholders and others interested in the
company (including creditors) is that, if a foreign government authority to seize
shares through confiscation, nationalization, coercion, duress expropriation or
similar legislation, or in connection with tax assessments or other similar
liabilities, application may be made to court for an order disregarding the
attempted seizure and declaring the interest of shareholders and others remain
unchanged. The application may be made by the company itself, any
shareholder or other persons having an interest in the company. Such persons
could include creditors, debenture or mortgage holders and others who would
stand to lose if the company or its assets were seized. The court may grant this
application if it sees fit and may direct that a trust be established to protect the
parties at interest. Although the act does not so state, it seems reasonable to
expect that the court would use its inherent jurisdictions to direct the persons to
benefit under any such trust and, where necessary, state any particulars
conditions to be included.
This provides particular comfort to persons in countries where the
Government routinely seeks to enhance its own fiscal position by attacking the
assets of its citizens.
9.Acquisition of its own shares and capital reduction.
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Real flexibility is provided by enabling companies to vary their share capital

without substantial paper work and eliminating the need for bureaucratic
approval, always the cause of a substantial consumption of time, trouble,
expense, effort and, frequently, frazzled nerves. Capital increases are a relatively
simple matter and do not need commentary.
Acquisition by a company of its own shares and capital reduction are
somewhat more difficult as they involve dealing with an existing situation.
These two differing subjects are dealt with together because the underlying
rules regarding their effect on the capital of the company is essentially the same
and mirror the requirements already noted before dividends can be paid. The
company must, at the conclusion of the procedure, be able to meet its liabilities
and must retain assets with sufficient net realizable value to satisfy creditors and
cover issued share capital.
An IBC may purchase or redeem its own shares out of surplus or in
exchange for new shares of equal value. Re-acquired shares may either be held
as treasury shares or cancelled. Upon cancellation, the capital of the company is
reduced by an amount equal to the value of those shares.
In special circumstances an IBC may reduce its capital. These are:-
1)when it returns to members of an amount received on the issue of shares
which is surplus to its needs; 2) when its capital is not represented by assets
with realizable value equal to the amount of its capital; and 3) when capital is
transferred to surplus to permit the repurchase of its own shares.
The reduction of capital not represented by realizable value is a substantial
step forward in achieving realism in accounting when companies take advantage
of it. All balance sheets represent historic (book) values, with due allowance for
depreciation and reserves for potential losses. The net amounts frequently bear
little resemblance to true net realizable value. For IBCs taking advantage or this
provision, their balance sheets are much closer to a genuine current valuation.
When distributing a surplus, the ability to use current values is another
welcome step towards present value accounting.
9. Currencies.
The capital of an IBC may be expressed in any currency. A corollary is that
the Balance Sheet, Profit and Loss Statement and other accounting records may
be expressed or kept in the selected currency.
Because all fees are levied in dollars on dollar values, that currency must
be notionally converted Bahamian Dollars (which are on a par with the US
Dollar). Where a currency fluctuates substantially against the dollar this could
lead to an annual recalculation of capital values for fees purposes.
This may prove a disadvantage is when a currency increases in value on a
constant basis. However, once the maximum fee level of $1000 has been
reached the problem disappears.
10. Third Party Guarantees.
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An IBC may guarantee the obligations of any person and this includes
third parties not otherwise connected with the company. To secure such
guarantee, it may mortgage, pledge or otherwise encumber its assets.
This is a provision only made possibly by the absence of the ultra vires
doctrine for IBCs. Its breadth of application makes it a powerful tool.
11. Exemptions from taxes and controls.
An IBC is exempt from paying a business license fee or any direct form of
taxation (including profits, income, corporation or capital gains taxes) as well as
from estate, inheritance or gift taxes in the Bahamas. All transactions by an IBC
which would, if the company were a regular Bahamian Corporation, be subject to
Stamp Duty are exempt.
The Bahamian Exchange Control Regulations do not apply to an IBC.
All of these exemptions are guaranteed for 20 years from the date of
incorporation.
12. Certificate of Good Standing.
Provided an IBC is properly registered and all fees are up-to-date, the
Registrar will, on request and payment of the prescribed fee, issue a Certificate
of Good Standing for the company. The certificate will show if any change in the
companys status such as merger is in the public records.
13. The Limited Duration Company.
The recent amendments to the International Business Companies Act now
specifically provide for an IBC to be incorporated as a Limited Duration
Company. This is attractive not merely where a company is incorporated for a
specific project or the venture but also for tax purposes in any regime where the
taxing statutes or codes treat such a company as a partnership. In the latter
case, it becomes possible to achieve an actual or notional flow through of
revenue for tax purposes whilst maintaining the normal advantages of a
corporation.
The Major features of a Limited Duration Company are that it:-
a) requires not less than 2 members;
b) must NOT exist for a period exceeding 30 years;
c) the name must include the words "Limited Duration Company" or the
abbreviation "LDC".
d) is deemed to have commenced voluntary winding up and dissolution in
several circumstances including the expiration of its stipulated life, the passing of
a resolution that it be wound up, on the disappearance from the company for any
reason of a member or the occurrence of any event which according to the
provisions of the Memorandum or Articles shall terminate the membership of a
member. In the case of the latter two circumstances, provided there are at least
two remaining members and they take the appropriate action, the company may
be continued.
Transfer of shares may be subject to the consent of all other shareholders.
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Responsibility for managing the company is vested in the shareholders,

however they may appoint one or more managing agents.
The Registrar is empowered to issue the appropriate certificates to show
the companys status either upon its commencement as a LDC or its termination
as such. There is a fee of $200.00 charged by the Registrar for these services in
addition to any other fees which may be payable.
USE CAUTION
Whilst International Business Companies are one of the most powerful and
flexible tools for financial operations and take advantage of modern concepts
and communications, they are not without basic rules. Therefore, if it is intended
to use an IBC in an unusual manner or to be highly creative in its operation or
structuring, it is imperative to seek our advice. We have a team of experienced
legal and financial consultants at your disposal and will be pleased to assist you
in complete confidentiality.
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ASSET PROTECTION TRUSTS - THE MODERN

METHOD OF WEALTH PRESERVATION
Whether the reason may be to protect accumulated wealth from unforeseen
creditors, to avoid unwanted limitations on disposal of assets at death, to avert
the consequences of the future litigation for professionals, malpractice suits
are a major potential source of costly litigation as well as a cash drain through
insurance premiums or as simply as a component in an overall personal
planning package, Asset Protection Trusts ("APTs") have become the latest tool
to be added to the kit of anyone engaged in Financial Planning.
The Components of Planning
Every person who has been able to build up their assets to a reasonable
level or who has inherited substantial assets will wish to preserve as much of
them as is possible in the modern litigious and confiscatory society to ensure
that their standard of living is not compromised and that the maximum
achievable property passes at their death with the least possible disruption to
those they wish to benefit.
The elements to be blended to achieve this result are:
1) A financial analysis which identifies the present mix of assets and their
ability to generate required levels of income or usable capital gain after due
allowance is made for all forms of taxes which may be imposed;
2) Decisions made as to who shall inherit at death, and how much, and the
likely costs, expenses and delays which may be incurred at that time (including
inheritance or succession taxes and probate costs);
3) Development of a plan based on both of the above to best achieve the
required results, including the possibility of establishing an APT as an essential
element in the overall scheme.
Usually all assets owned by a resident in a taxing jurisdiction and this
applies in the USA including those placed in trusts where the grantor (settler)
retains or is deemed to have retained a measure of control are vulnerable to
attack from creditors and aggrieved beneficiaries (who feel they have not
received their due), use of an offshore jurisdiction where protection is available
from such consequences should be very seriously considered.
Any offshore jurisdiction considered as the situs for Asset Protection Trusts
should have the additional advantage of specifically designed legislation to
assist in achieving these ends. The Bahamas has two such pieces of legislation
The Fraudulent Dispositions Act 1991 and The Choice of Governing Law Act
1989, both of which are discussed in more detail later. Other factors affecting
offshore jurisdiction to be considered include excellent communications whether
electronic or similar, easy accessibility for travelers, a strong infrastructure
including professional support (accounting, legal, insurance, etc.), competent
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personnel, political and economic stability, no direct taxation and a long history of
Common Law. The Bahamas qualifies on all of these grounds including
accessibility to the mainland USA only 45 minutes flying time from Miami.
Florida,
2 hours from New York.
Characteristics of a Bahamian Trust.
Bahamian Trust Law developed from the English Legal system and is
generally the same as other jurisdictions with comparable origins. It has
developed some local characterization, which enhances rather than detracts
from its usefulness.
The essence of a Bahamian Trust decanting of assets into the hands of a
trustee, who then administers then according to the provisions of the document
appointing him is identical to the underlying concept in all Common Law
jurisdictions. The principle of prudent administration allied with the required that
the Trustee exhibits the utmost good faith in the performance of his duties is
fundamental. The Courts ensure that Trustees do not stray from these
requirements. Any person (or charity) may be an object that can benefit from the
trust.
Some advantages of a Bahamian Trust include:-
1) It may hold any form of property anywhere in the world which the
trustees are prepared to accept and administer;
2) Payments from it may be of capital or income or both and at fixed or
flexible intervals;
3) Beneficiaries may be fixed or may be varied at the discretion of the
trustee or some other person empowered by the deed;
4) It can last for a long time normally 80 years or more;
5) Because the deed does not require registration, and trustees are bound
by confidentiality, the terms of the trusts are not revealed to the third parties;
6) They can form a useful central control point and holding vehicle for
related structures such as International Business Companies, Limited Family
Partnerships, Limited Liability Companies, etc. located in multiple jurisdictions.
THE ASSET PROTECTION TRUST WHO, WHY, WHEN, WHERE
AND HOW
Who should consider an APT? The answer is anyone with sufficient asset
which they wish to preserve for themselves and future generations particularly
if they live in a litigious, confiscatory or highly regulated society or one where
freedom of disposition may be impaired by the rules of law.
Why would a person create an APT? The major reasons for creating one
include the one implied by its name asset protection from unwanted attack
and others too. It can, for example, be used as a living trust. The ability to
customize and the inherent flexibility of the structure can enable a settler to
remain secured by assets, enjoy their fruits to the extent he requires and yet
have them outside his legal control. The fact that the trustees are offshore and
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the trust is governed by different legal systems means that the target the
assets becomes much more difficult to "hit".
When should the APT be established? For it to be effective, the answer is
the earlier the better and, in any event, before trouble is anticipated. Once a
creditor has made a claim or legal action has been launched, it is too late. The
removal of assets at that point in time in most jurisdictions is regarded as a
criminal offence a fraud on creditors.
Where should the APT be established? It should be in jurisdiction with
which the settlor has a high level of comfort. It should be an established offshore
location with Common Law as the basis of its legal system, with a history of
economic and political stability, without language problems, with favorable tax
laws and with an excellent infrastructure. The Bahamas qualifies on all of these
points. It is an independent country ruled by a parliamentary democracy in the
British Commonwealth of Nations. It is the oldest country in the New World the
country where Columbus first landed in 1492. It has a stable economy based on
tourism and servicing the offshore financial market. The Bahamas has excellent
legal, accounting (all "Big 6" firms have are represented as well as many smaller
firms), banking (over 400 banks, including many of the worlds largest) and the
insurance services. Not only are there more than 40 connecting flights daily to
the Miami area, but also there are direct air connections to many other North
Americans cities. Telephonic communications are modern with satellite
connection into the international systems and full electronic data transmission
capacity.
How is it done? By determining which assets are to be placed in the Trust,
by deciding how the settler is to be connected and by finding a suitable trustee
(or trustees) who will accept the appointment. It is essential that the settler and
his immediate family cannot demand transfer of and trust assets to them or
direct the trustee as to whom they should be transferred. The appointment of a
Protector often, a third party familiar with your needs, who can oversee (and
sometimes direct) certain of the Trustees actions and can act as counselor to
the trust in family or business matters may be appropriate. All of these factors
(and many others) must be incorporated in a carefully drawn Deed of Trust,
which we advocate be reviewed and approved by your on-shore legal advisers.
What are the Costs?
In general, because of their more complex nature, Asset Protection Trusts
are more expensive than asset protection by way of an International Business
Corporation.
Since it is not always possible, at the outset, to envisage how much work
will be involved, it is customary to prepare an estimate of the basic costs and
establish an hourly rate for subsequent consultation.
Our Trust Officer will pleased to discuss you particular requirements in detail
and make the appropriate recommendations to ensure that your wishes are
complied with.
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Glossary
Administrative Offices:
An administrative office is frequently located in a country other than that of
the headquarters office, the parent company or a country of operation. The role
of such an administrative office may be to co-ordinate international or regional
activities, to provide particular services (such as management analysis, financial
or other related services) or to perform a given function (such as marketing).
A number of otherwise high tax jurisdictions (such as the United Kingdom,
France, Belgium and Greece) grant special tax treatment in order to attract the
administrative offices of multinationals. In the case of Monaco which has been
particularly successful in this regard, not only may the administrative office
benefit from favoured tax treatment, but its employees resident in Monaco would
not be subject to tax there.
Akte Van Opricht
Statutes of a Dutch company.
Aktiengesellschaft (AG):
German company limited by shares.
Alternate Director
A person appointed to represent and vote on behalf of a director of a
company when he is absent from a meeting of directors.
Anstalt:
Establishment, a legal entity without shares established in Liechtenstein,
with some features of a trust but with corporate personality.Do not have
shares.
Anti-Avoidance Measures:
The object of anti-avoidance measures, insofar as they relate to tax
havens, is to prevent the avoidance or reduction of tax through the displacement
of one or more connecting factors (i.e. the basis of tax liability) from the taxing
jurisdiction concerned to a tax haven jurisdiction.
Anti-avoidance measures may be of general application or may refer to
specific tax havens. Any measures usually appear in domestic tax systems; they
may however be imposed by tax treaties.
Arbitrage:
A form of hedged investment meant to capture slight differences in the
prices of two related securties.
Articles of Association (also Bye-Laws or By-Laws):
Articles of Incorporation:
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Must contain: 1) the Corporations name; 2) its registered address; 3) its

objects and aims; 4) its capitalization; 5) a statement that the company is a
limited liability organization.
Asset Protection Trust (APT):
A new type of trust which places the trusts assets beyond the reach of
potential foreign governments, litigious plaintiffs, creditors and contingent fee
lawyers.
Auditors:
The last body needed in connection with a corporation: required to inspect
the companys bookkeeping and verify the correctness of annual accounts.
Usually not employees or directors of the corporation but an outside firm.
Aussensteuergesetz:
Anti-avoidance German law whereby German citizens remain subject to the
principal German taxes for a period of ten years if they emigrate to a country
designated in the legislation (as from time to time amended) as a low tax
country.
Back-to-Back Loan:
Back-to-Back loans are matching deposit arrangements. They may be used
in order to solve a financing or exchange control problem. However, in the case
of certain tax havens, the function of back-to-back loans is to reducethe taxable
base subject to withholding taxes on interest payments, by interposing an
intermediary subsidiary company between the source of the income and the
recipient. For example, an intermediary company located in the Netherlands or
the Netherlands Antilles may be interposed so as to take advantage of a
favourable tax treaty. In such cases the authorities usually require a certain
spread or "turn" on the rates so as to create a small profit which is subject to tax
locally.
Banking:
A considerable volume of international banking takes place offshore and
many of the worlds major banks have banking and trust company operations in
one or more tax havens.
Most tax haven jurisdictions have enacted legislative provisions and set up
administrative authorities whose function it is to control banking and trust
company activities.
Bank Secrecy:
In most countries one of the terms of the relationship between banker and
customer is that the banker will keep the customers affairs secret. Staff
members are normally required to sign a declaration of secrecy as regards the
business of the banks.
Where numbered accounts are used their purpose is to limit the number of
persons who know the identity of the client. In certain countries (e.g. Switzerland
and the Cayman Islands) specific legislation makes breaches of bank secrecy
subject to criminal law sanctions. However, in all legal systems (including
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Switzerland) there are specific cases where the duty of secrecy of a banker is
discharged, e.g. where fraud, money laundering and narcotics are involved.
The exchange of information clause contained in most tax treaties may
enable the tax administration of one treaty country to obtain information
concerning bank accounts which its residents have in the other country.
Bearer Bond:
A bond issued in bearer form rather than being registered in a specific
owners name. Ownership is d determined by possession.
Bearer Shares:
Shares in the capital of a company which are transferable by delivery of the
certificate. Unlike registered shares, which are transferred by an instrument of
transfer, the name of the holder is not registered in the books of the company.
Beneficiary:
A person to whom a trusts proceeds are distributed.
Besloten Vennootschap met Beperkte aansprakelijkheid (BV):
Dutch limited company for small commercial enterprise, not required to
publish accounts; used as a Substantial Holding Company.
Big Brother:
Your (un)friendly local government watching over your shoulder.
Board of Directors:
The companys "cabinet" - as specified in the Articles of Association - is
supposed to make decisions on the issues that are too specific for the general
meeting to discuss but which are beyond the day-to-day responsibility of the
company management.
Bonds:
A bond certificate is simply an IOU. It certifies that you have loaned money
to a government or corporation and describes the terms of the loan. Only
corporations can issue stocks, but bonds can be issued by corporations or
governments.
Bye-Laws or By-Laws (also Articles of Association):
Articles of Association of a company (in certain jurisdictions).
Captive Bank:
Bank intended to provide services to the promoter and associates of the
promoter, usually an international group of companies.
Captive Insurance Company:
Insurance company established by a company or international group to
provide insurance (or reinsurance) for the promoter and associates of the
promoter.
Certificate of Incorporation:
Certificate issued to companies who have complied with all the statutory
requirements for registration.
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Charter:
Memorandum of Association.
Corporate Officers:
Another "cabinetlike" institution, sometime part of the Board of Directors:
president, secretary and treasurer etc. These individuals have the right to
represent the company to third parties, to negotiate and make commitments in
its name.
Corporation (Corp.):
The basic existence of a corporation usually derives from two documents:
the Articles of Association and the Certificate of Incorporation.
Corporation Tax Company:
A company incorporated in Jersey but not trading in Jersey and thereby
designated as non-resident for tax purposes; liable only to low fixed annual rate
of tax.
Controlled Foreign Corporation:
A company incorporated outside the United States but under control of a
United States resident and subject to the anti-tax haven measures contained in
Subpart F.
Couponsteuer:
Tax charged on distributions of certain Liechtenstein legal entities (AG and
Anstalt with share capital).
Cuba Clause:
The so-called "Cuba Clause" allows the situs and proper law of a trust to be
transferred from one jurisdiction to another.
D.E.A.
The Drug Enforcement Agency (U.S.A.).
Debenture:
An unsecured bond backed only by the general credit of the issuing
corporation.
Deelnemingsvrijstelling:
Substantial Holding Company (in the Netherlands).
Derivatives:
Financial contracts whose values are based on, or derived from, the price
of an underlying financial asset or price - for example, a stock or an interest
rate.
Dollar Premium:
See Investment Currency Premium.
Domicile:
The place where an individual has his permanent home, or to which he
intends to return, or in some cases the country of origin. In other jurisdictions the
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place where an individual has a long established residence or in relation to a

company, where it is incorporated
Dividend:
Discretionary payment by a corporation to its shareholders, usually in the
form of cash, stock, or other property.
Double Taxation Agreement (or Double Tax Treaty):
Agreement between two countries intended to relieve persons who would
otherwise be subject to tax in both countries from being taxed twice in respect of
the same transactions or events.
Emigration:
Emigration to a tax haven or to a country offering special retirement
incentives may serve to break totally or in part the link between a taxpayer and
the high tax jurisdiction from which he is emigrating. Normally, it is the change in
the place of residence which is material; however, in other cases a change in
domicile or even citizenship (in the case of the United States) may be necessary.
Anti-avoidance provisions or exchange controls may delay or render extremely
difficult the coming into effect of the fiscal advantages of the act of emigration.
Establishment:
See Anstalt.
Eurobonds:
Eurobonds are long-term loans issued in terms of the United States dollars
or other currencies or in terms of composite units of account. They may take the
form of loans, debentures or convertible debentures and are issued at a fixed
rate of interest. Eurobonds are normally issued in countries where interest
payments are not subject to withholding tax. Major issues are frequently handled
by international underwriting syndicates.
Eurourrency/-dollar:
Eurocurrencies are currencies held outside the country of origin by non-
residents of that country and made available to the Eurocurrency market for
lending. The market originally developed in Eurodollars, but other currencies,
e.g. Deutschemarks, Swiss francs and Yen, now form a major part of the market.
The market is not subject to exchange controls or other restrictions, although
investors and borrowers may be so subject in their own countries.
Exchange Control:
Regulations whereby a country controls transactions in foreign currencies
or securities. In some jurisdictions (e.g. Australia, Japan and the United
Kingdom) the regulations may render a contract void unless prior consent is
obtained.
Exempt Company:
A company exempted from tax or from compliance with specified
regulations of the country in which it is established.
Exempt Gilt:
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Security issued by the British Government with the condition that they will
be free of United Kingdom tax when beneficially owned by non-residents.
FATF:
Americas Financial Action Task Force set up in 1989.
F. B. I.:
The Federal Bureau of Investigation (U. S. A.).
FDIC:
Federal Deposit Insurance Corporation: a U.S. government-sponsored
corporation that insures accounts in national banks and other qualified
institutions.
Fiduciary:
See Trustee.
FINCEN:
Americas Financial Crimes Enforcement Network.
Flag of Convenience:
The flag of a ship is the flag of the country of its registration. The term "flag
of convenience" refers to the flag of a country (in particular Liberia and Panama)
which is chosen for ship registration in order to achieve fiscal benefits (no
income tax being levied by such countries on international shipping operations)
and other non-tax advantages relating to lower labour costs and manning
scales, officer and crew requirements, trade union practices, etc. Ownership of
the ship is normally vested in a company incorporated in the country of the
flag.
In addition to Liberia and Panama, the following countries offer or are
preparing incentives to offer flag of convenience facilities: the Cayman Islands,
Costa Rica, Cyprus, Gibraltar, Haiti, Honduras, Hong Kong, Malta, Morocco, the
Netherlands Antilles, Madeira, Vanuatu and Singapore.
Foundation:
See Stiftung.
Free Zones:
Free zones are designated areas which receive special treatment through
their exclusion from the area to which the countrys normal customs rules apply.
A free port is one at which imports may be landed without paying customs duties.
The system of free zones or free ports favours export processing, transshipment
and the entrepot trade since there is no need to pay and then reclaim customs
duties.
Though free zones are often part of a tax incentive package in what would
otherwise be a high tax jurisdiction, they may also be found in tax havens, e.g.
Freeport in the Bahamas.
G.A.O.:
General Accounting Office (U.S.A.).
Gesellschaft mit beschrnkter Haftung (GmbH):
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German private limited company without shares.

G.C.P.:
"Gross Criminal Product".
G.D.P.:
Gross Domestic Product of a country.
Gilt:
Security issued and guaranteed by the Government.
Golden Parachute:
Provisions in the employment contracts of executives guaranteeing
substantial severance benefits if they lose their position in a corporate
takeover.
Greenmail:
A company buying back its own shares for more than the going market
price to avoid a threatened hostile takeover.
G-7:
U. S. A., Canada, Australia, Japan, United Kingdom, Germany & France.
Hedge fund:
A flexible investment fund for a limited number of large investors (the
minimum investment is typically US$1 million). Hedge funds use almost all
investment techniques, including those forbidden to mutual funds, such as short-
selling and heavy leveraging.
Hedging:
Taking two positions whose gains and losses will offset each other if prices
change, in order to limit financial risk.
Holding Company:
A company whose activity is limited to holding and managing investments
or property but not having ordinary commercial or trading activities. The
requirements to achieve holding company status vary in different countries (in
particular Liechtenstein, Luxembourg, Nauru and the Netherlands).
I.D.A.:
Irish Development Authority.
I.F.C.:
International Finance Companies.
Incorporation Haven:
An incorporation haven is a country, such as Liberia and Marshall Islands,
which has no infrastructure of local attorneys or accountants. It is simply in the
business of registering corporations and ships. There are no other services
offered and the tax haven clientele never goes there. The registration of new
companies is carried out by represenative offices in New York, Zurich, Hong
Kong, Tokyo, Rotterdam and Piraeus, in the case of Liberia and Marshall
Islands.
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I.N.R.:
The State Departments Bureau of Intelligence and Research (U.S.A.).
Insider Information:
Important facts about the conditions or plans of a corporation that have not
been released to the general public.
Inter-Company Pricing:
Tax havens may be used for the purpose of inter-company pricing in a
number of ways. In the first place, a manufactoring company located in a high
tax jurisdiction could effect sales to a related company in a tax haven jurisdiction
at cost or at prices involving a very small profit margin; the tax haven company
could then in turn sell the goods to one or more related marketing companies in
high tax hurisdictions at high prices which would produce a low profit in the
hands of the latter company or companies. A variation of this technique would
involve selling to unrelated marketing companies at arms length prices, the
primary object of the exercise still being achieved since the manufacturing
company would have avoided taxation on the real profits that would otherwise
have accrued to it.
Secondly, raw materials or goods or components manufactured at a very
low cost abroad, could be purchased by a company and then sold to a related
company in a high tax jurisdiction at high prices which would give the latter
company a substantially lower profit than if purchases had been effected
directly.
Often inter-company pricing takes place by companies merely passing
invoices without the subject matter of the sale actually being transferred to or by
the intermediary company.
Interest:
The cost of borrowing money.
International Business Company (IBC):
In addition to its everyday usage, this term has a special meaning in the
legislation of Antigua, Barbados, Grenada and St. Vincent and refers to
companies which, though resident in one of these countries, do not carry on
business in goods or services originating in such country.
International Financial Centers:

The term "International Financial Center" which is occasionally used -
incorrectly - as a synonym for "tax havens", refers more correctly to centers
such as London, Luxembourg, Paris, Singapore and Zurich. One of the
important requirements of a successful international financial center is that
international financial business transacted there should not be subject to
inconvenient controls or withholding taxes.
International Tax Planning:
The object of international tax planning is to determine, from the tax point of
view, whether or not to embark on a project; and, if it is embarked upon or has
already been commenced, then to minimize or defer the imposition of the tax
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burden falling on taxable persons and events and to do so lawfully, in the

attainment of the desired business and other objectives, while taking into
consideration all relevant tax factors with particular regard to the danger of
double taxation and the advantages which may be derived from the inter-
relationship of two or more tax systems, and in the light of the material non-tax
factors.
The role of tax havens in international tax planning lies in the possibility of
situating a taxable person or a taxable event in a tax haven with a view to
displacing the connecting factor with a high tax jurisdiction and thus permitting a
modification in the incidence of tax.
Investment Bank:
A financial institution that arranges the initial issuance of stocks and bonds
and offers companies about acquisitions and divestitures.
Investment Currency Premium:
Premium payable to persons resident in the Scheduled Territories for
exchange control purposes in order to purchase investment currency, namely
foreign currency from a limited pool of such currency designated as eligible for
use for certain investments and payments abroad (in particular for portfolio or
property investment and direct investment which cannot be shown to provide
benefits over a short period to the balance of payments of countries in the
Scheduled Territories).
Investment Holding Company:
A company organized in a tax haven country by an investor which purchses
and subsequently handles for him his personal investment portfolio through the
anonymity of a nominee company. Consideration for the purchase is the
establishment on the investment companys books of a debt to the investor
equivalent to the value of the investments transferred whereby the income
generated from the investment holding companys assets are not taxable.
Investment Incentive:
Investment incentives are incentives of various linds which are granted in
order to attract local or foreign investment capital to certain activities (e.g.
exports, technological development) or particular areas (e.g. backward regions
or designated areas as part of a decentralization policy). Such incentives may be
of various types, e.g. grants, interest-free loans, factory sites, exemption from
exchange restrictions, and are frequently granted as a package together with
tax incentives.
I.O.U.:
I owe you. Signed document bearing these letters followed by specified
sum, constituting formal acknowlegdement of debt.
I.R.C.:
Inland Revenue Commissioners (United Kingdom tax authority).
I.R.S.:
Internal Revenue Service (United States tax authority).
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Joint Venture:
A type of business partnership involving joint management and the sharing
of risks and profits as between two or more enterprises based in different
countries. When the capital of the partnership is known as a joint venture.
Junk Bonds:
Bonds issued by companies with low credit ratings. They typically pay
relatively high interest rates because of fear of default.
Letter Box Company:
A corporation set up in a tax haven with nothing more than a mailing
address to take advantage of tax provisions. Severely criticized in many quarters
as an evasive measure, the company whose existence is little more than a
name-plate has been outlawed in Monaco but is allowed to function in many
other havens.
Leverage:
The extent to which a purchase was paid for with borrowed money.
Amplifies the potential gain or loss for the purchaser.
Licensing:
Technology which can be the subject-matter of licensing covers all forms of
industrial enterprise. It embraces industrial property which may be protected by
patents, trade marks, etc. As well as technology which cannot be patented.
Industrial enterprises frequently exploit their technology by transferring it to
licensing companies in tax havens so that royalties and other sums may be
received by the licensing company from related companies or third parties thus
reducing the total tax burden. The anti-avoidance provisions of most developed
countries have limited the use of tax havens for this purpose.
Limited Liability Company (LLC):
A hybrid between the partnership and the corporation (originates from the
German GmbH created by law in 1892).
Maildrops and Serviced Offices:
What is a maildrop? A mail forwarding service - maildrop - allows a person
to use their (the maildrop's) address to receive mail and then have it forwarded
to the address where the person actually wishes to receive mail. Sometimes it's
in the same city, other times in another continent. Mail is sent to the maildrop and
is then placed unopened into another envelope and mailed to its final
destination. As long as your intentions are legal there is never any problems with
authorities. A good, reliable service does not condone fraudulent business
activity. You can still use your regular address to receive most of your mail but
your confidential mail goes to the mail forwarding service and then to you.
Financial privacy is almost a thing of the past nowadays. With computers,
it's eroding rapidly, much quicker than in the past. You might say, "Who needs
Privacy? I have nothing to hide!" It seems that whenever you make a simple
purchase, they ask for your name and address. Then about a month later you
start receiving weekly catalogs, sales literature, promotions, etc. Try giving them
a name other than your own with your address. I tried John Doe (!) and sure
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enough that person started receiving catalogs. Many companies sell our names
to others and sooner or later you are getting bombarded with Investment
Schemes, Get Rich Quick Letters, Chain Letters, Miracle Health Cures, and
other distracting material.
People who use mail forwarding services are a mixed bag of individuals
and organizations. Some people have made enemies in life, ex-spouses,
business acquaintances and while they may be living in Paris, France, they
would like the other party to think they are in London, England, so they use a
mail forwarding service.
If you are going to sell a product by mail and have the best product in the
world but are located in San Salvador, El Salvador a potential buyer for your
product may be hesitant about sending money for your product. If you have a US
address, most buyers are not too worried about sending money through the
mail.
Many people, maybe they have accumulated great wealth or are celebrities,
have to worry about the press, fans and admirers, enemies, kidnappers,
robbers, and so on. With a maildrop you can keep distance bewteen you and
these people. Companies use mail forwarding services to do thing their
competition might find out about if they used their regular address. It's also a
good way to check out your competition. You can find out what they are charging
the people you are selling to. Another company ran Help Wanted Ads just to see
how loyal his employees were to him. Mailing list companies also use mail
forwarding services to salt their mailing lists to the people they are renting to,
and check to see that the lists are being used on a one time basis.
In using a maildrop try to find out beforehand how much privacy they give
you, some will give information out to anyone calling over the phone - a good
one will not as it could be just anyone calling. Try to find out how long they have
been in business and if they plan to be in business for awhile. Make sure they
don't sell your name to other people's mail order businesses as this can defeat
their purpose.
Mail forwarding service combined with serviced business offices: Business
centers particularly suit companies setting-up branch office(s) overseas. They
prefer to establish themselves before signing a lease, though some companies
that arrive intending to use a business center for a few months end up staying
with them for years - for the sake of convenience, the comfort of clean modern
offices with a prestigious address, without the hassle of maintenance and other
problems associated with a lease, becomes too difficult to give up.
Telephone services range from a basic message-taking service to the most
up-to-date call diversion system. One business center offers a diversion service
called "The London Office". This was designed with the telecommunications
company so that your own 171-telephone number is instantly diverted to a
chosen number anywhere in the world, and a programmed announcement
saying "This is a call from your London office" pre-warns whoever answers the
telephone. Of course you pay for the second leg of the call. The telephone
services available from "The London Office" link with another service called "The
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Virtual Office". This is a package offering clients the flexibility to work from
anywhere they choose; local telephone numbers are logged onto a computer
system for call diversion. The package includes use of the business center's
address, use of meeting rooms and secretarial services.
In most serviced office centers clients can buy services la carte in order to
suit their particular needs. For example, you can rent conference rooms by the
hour so as to have an office for, for example in London, when the need arises.
The main attraction of the serviced office facility is that the client has the option
to walk away when his licence expires. Business centers take the
operational headaches out of renting office space and of clients having to
employ their own staff, which leaves them free to focus their efforts entirely on
the success of their business.
Management and Control:
In certain legal systems (e.g. Ireland) which follow the former United
Kingdom law in this regard, a company is treated as being resident in the
country in which its management and control is exercised, and not in the country
of its place of registration or incorporation. The criterion of residence may be of
relevance in international arrangements in involving tax havens, and can be
material from both the fiscal and the exchange control points of view.
Management Company:
See Administrative Offices.
Margin Account:
A brokerage account that allows a person to trade securities on credit.
Margin Call:
A margin call is a demand for more collateral on a margin account.
Memorandum of Association:
See Articles of Association.
Minute Book:
Used for writing minutes in.
Minutes:
Brief summary of proceedings of a meeting/assembly/committee.
M.L.A.T.:
Mutual Legal Assisstance Treaty created by the U.S. in the hope of
accessing foreign records.
Money Laundering:
Disguising the origin of criminals cash and then transforming it into
apparently legitimate investments.
Money Trail:
The fingerprint most money transactions leave.
Mutual Fund:
Investment company usually formed in a tax haven and issuing shares to
the public.
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Naamlose Vennootschap (NV):

Limited company in the Netherlands used as a Substantial Holding
Company, required to publish its accounts.
Nominee Director:
Someone who acts on your behalf as a front director of the company. In
some jurisdictions the nominee director can also be another offshore company.
Non-Resident Company:
A company treated by the jurisdiction in which it is incorporated as non-
resident for tax purposes or exchange control purposes or both.
No-Tax Haven:
Term used by certain financial writers to refer to tax havens where there are
no relevant taxes.
O.E.C.D.
Organisation for Economic Co-operation and Development.
Offshore:
Any country other than your own.
Offshore Center:
A financial center used as a foreign base for overseas operations where the
investor may move in and out of his investment freely and which fits the needs of
the user.
Offshore Investor:
An investor who is a user of a foreign base company in an offshore center
and who may move in and out of his investment freely.
Offshore Fund:
A mutual fund offering its shares to persons resident outside the country in
which it is incorporated.
Paper Trail:
The enevitable trail that most transactions leave tracing back to its
originator.
Partnerships:
A partnership often offers useful features for the purposes of an overall tax
plan. In certain jurisdictions, a partnership may have corporate attributes and
resemble a company.However, even where a partnership does not have
corporate attributes, requirements relating to formations and registration the
nationality and/or residence of partners, limited liability, restrictions on activities,
should be examined in the context of the general law governing local
partnerships.
Permanent Establishment:
Legal concept applied by a country in order to tax commercial activities
realised in its territory by a company or person incorporated or resident outside
the jurisdiction. The expression is commonly used in double taxation agreements
and is defined in the O.E.C.D. model agreement, although in practice there is no
PAGE 330 OF 337

consistent definition adopted either in double taxation agreements or in

jurisdictions which recognise the concept under their general tax laws.
Personen- und Gesellschaftsrecht:
Law applicable to individuals and corporate bodies in Liechtenstein.
Petrodollar:
United States dollars obtained by oil exporting countries.
Protector:
An individual appointed by the settlor of a trust to ensure that the trustee(s)
administers and manages the trust assets in accordance with the trust deed and
he is often vested with the power to appoint and remove trustees.
PT - The Perpetual Traveller
A PT by definition, is a non-conformist in a highly regulated, highly taxed,
first world society. In a nutshell, a PT merely arranges his or her paperwork in
such a way that all governments consider him a tourist. A person who is just
"Passing Through". The advantage is that being thought of by government
officials as a person who is merely "Parked Temporarily", a PT is not subjected to
taxes, military service, lawsuits, or persecution for partaking in innocent but
forbidden pursuits or pleasures. Unlike most citizens or subjects, the PT will not
be persecuted for his beliefs or lack of them. PT stands for many things: a PT
can be a "Prior Taxpayer", "Perpetual Tourist", "Practically Transparent", "Privacy
Trained", or "Permanent Traveller" if he or she wants to be. The individual who is
a PT can stay in one place most of the time. Or all of the time. PT is a concept, a
way of life, a way of perceiving the universe and your place in it. One can be a
full-time PT or a part-time PT. Some may not want to break out all at once, or
become a PT at all. They just want to be aware of the possibilities, and be
prepared to modify their lifestyle in the event of a crisis. Knowledge will make
you sort of a PT. A "Possibility Thinker" who is "Prepared Thoroughly" for the
future.
Ready-Made Company:
See Shelf Company.
Real Estate:
Withholding and other taxes are frequently imposed on rental income
deriving from the holding of real estate in a foreign country; similarly, capital
gains taxes may be imposed on the profits flowing from the sale of property.
However, in exceptional cases, the provisions of a tax treaty may be of
considerable value in minimizing the total tax burden, e.g. the treaty between the
Netherlands Antilles and the United States.
Ownership of real estate by individuals may also result in liability to death
duties and similar taxes in the country in which the real estate is situated,
irrespective of the residence or domicile of the individual owner. For this reason
it is common to hold foreign reat estate through a tax haven or other company.
Registered Share:
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Share which is transferred by an instrument of transfer. The name of the

holder is registered in the books of the company.
Resident Company:
A company treated by the jurisdiction in which it is incorporated or in which
it conducts commercial activities as resident for tax purposes or exchange
control purposes or both.
Royalty:
All amounts received for the privilege of using intangibles such as patents,
copyrights, secret processes and formulae, as well as amounts received for the
privilege of exploiting mineral, oil and gas deposits.
Scheduled Territories:
Since June 1972, the United Kingdom, the Channel Islands, the Isle of Man,
the Republic of Ireland and Gibraltar.
Screen Company:
A company incorporated in a country which charges a nil or low rate of tax
on receipts or distributions of interest, dividends or royalties received from
another country, taking advantage of a favourable double taxation agreement
between two countries which reduces the tax withheld at source in the country in
which the income arises.
S.E.C.:
Securities and Exchange Commission, United States federal organisation
which supervises information provided by companies whose shares are offered
to or dealt in by the public.
Shelf Company:
A company that previously has been organized with designated capital and
registration cost paid and is placed on an inactive basis, with annual registration,
capital and stamp duty fees currently paid but shares held in bearer form and
the directors and officers substituted at the time the company is taken off the
shelf and becomes active.
Settlor:
The person who creates a trust.
Share of Stock:
Represents ownership in a corporation.There exist several different types
(common and preferred) and classes of shares with different privileges and
rights, such as registered shares (with or without par value), preference shares,
(non-)redeemable shares, shares with or without voting rights and bearer shares
etc.
Shipping:
Owing to the inate mobility of the shipping industry it is common for
shipowners and operators to have recourse to tax havens. Frequently the
ownership, operation, administration and registration are situated in carefully
chosen (and often different) jurisdictions in order to keep global tax burdens at a
low level.
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Smurfing:
Breaking large sums of money into small deposits through anonymous
bank accounts and offshore "shell" companies into order to dodge banks to
report these transactions.
Spam Blast:
The email equivalent of junk (snail) mail.
Stepping-Stone Country:
A country in which a screen company is incorporated.
Sterling Area:
The area in which the pound sterling is legal tender, namely the Scheduled
Territories. In general, the United Kingdom does not impose restrictions on
exchange transactions or payments and receipts between residents of the
United Kingdom and residents of the Scheduled Territories. Exchange control
applies mainly to transactions with residents of countries outside the Scheduled
Territories.
Stiftung:
Foundation, a legal entity established in Liechtenstein with corporate
personality and founded in order to receive a permanent transfer of assets by
way of settlement. Do not have shares.
Stockholders Annual Meeting:
"The parliament"/"ultimate authority": 1) approves annual accounts of both
profit and loss and the companys assets and liabilities; 2) makes policy
decisions on future business actions; 3) personnel decisions (president,
secretary and treasurer - to be retained or replaced - the same goes for whether
to retain or replace the auditors and directors; 4) constitutional issues: should the
Articles of Association be modified or changed?; should quorum requirements be
changed? - etc.
Subpart F Income:
The section of the American tax law of 1962 containing anti-tax haven
measures in relation to specified companies known as "controlled foreign
corporations".
Subsidiary Company:
A subsidiary company is a company under the control of another company
through stock ownership.
Substantial Holding Company:
A particular type of holding company established in the Netherlands
exempted from tax on income from investments under specified conditions.
Suffix:
The name/abbreviation of letters after the company name to denote limited
liability, for example: Limited, Corporation, Incorporated, Socit Anonyme
(France), Socit par actions (France), Sociedad Anonima, Sociedade Anonima,
Stiftung (Liechtenstein), Limitada, Aktiengesellschaft (Germany), Naamloze
Vennootschap (The Netherlands), Aktieselskab (Denmark), Sociedad Berhad
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Anonima (Western Samoa), Berhad (Labuan), Sociedad Annima de Inversin

(Uruguay), AG (Germany), ApS, A/S (Denmark), BV (The Netherlands), Corp.,
Est. (Liechtenstein), GmbH (Germany), Inc., KFT (Hungary), LDA, LLC, Ltd.,
PLC (United Kingdom), RT (Hungary), S.A., S.A.R.L. (France), S.A.F.I.
(Uruguay).
S.W.I.F.T.:
Society for Worldwide Interbank Financial Telecommunications.
Tax Avoidance:
Lawful agreement, or re-arrangement, of the affairs of an individual or
company intended to avoid liability to tax.
Tax Evasion:
Fraudulent or illegal arrangements made with the intention of evading tax,
e.g. by failure to make full disclosure to the revenue authorities.
Tax Incentives:
The term Tax Incentives is used when tax benefits are part of an economic
development programme. Most tax incentive measures fall into one or more of
the following categories: tax exemption (tax holiday); deduction from the taxable
base; reduction in the rate of tax; tax deferment.
Tax Haven:
The term Tax Haven is generally used to refer to a jurisdiction: 1) where
there are no relevant taxes; 2) where taxes are levied only on internal taxable
events, but not at all, or at low tax rates, on profits from foreign sources; or 3)
where special tax privileges are granted to certain types of taxable persons or
events. Such special tax privileges may be accorded by the domestic internal tax
system or may derive from a combination of domestic and treaty provisions.
(Where tax benefits are part of an economic development programme the term
tax incentives is usually used).
Simply stated, a tax haven is any country whose laws, regulations,
traditions, and, in some cases, treaty arrangements make it possible for one to
reduce his over all burden.The tax havens of the world broadly may be classified
into six separate categories: 1) no-tax havens (e.g., Anguilla, Bahamas,
Bermuda, Cayman Islands, Nevis, Turks and Caicos, St. Vincent and Vanuatu);
2) countries taxing only local income (e.g., Costa Rica, Liberia, Panama,
Gibraltar and Hong Kong); 3) low-tax havens with treaty benefits (e.g., the
Netherlands, the Netherlands Antilles, British Virgin Islands, Luxembourg and
Singapore); 4) countries offering special privileges (e.g., Channel Islands and
the Isle of Man); 5) tax havens for individuals (e.g., Andorra, Sark, Campione
and Monaco; 6) tax havens for International Business Companies (e.g., Antigua,
Barbados, Grenada, Jamaica and Montserrat).
Tax Holiday:
Exemption from taxation for a designated period of time.
Tax Loophole:
PAGE 334 OF 337

An unintended benefit permitted under the tax laws of a country when

previously the Government unknowingly approved legislation that encourages a
tax-payer to take advantage of a tax reduction or exemption which the legislators
had foreseen.
Tax Planning:
See International Tax Planning.
Tax Shelters:
The term "tax shelters" is sometimes employed to refer to those
jurisdictions where taxes are levied only on internal taxable events, but not at all,
or at very low rates, on profits from foreign sources.
In domestic tax law the term applies to a variety of devices which allow
taxpayers to deduct certain artificial losses, i.e. losses which are not really
economis losses but represent losses which are available as deductions under
the current tax laws. These artificial losses may be offset not only against income
from the investment out of which they arise, but also against the taxpayers other
income, usually from his regular business or professional activity.
Tax Sparing:
The sphere of application of a tax incentive may be extended by way of a
tax sparing clause in a treaty between a capital importing country and a capital
exporting country. Such clauses allow residents of the capital exporting country a
credit against domestic tax for profits or gains derived in the developing country
in respect of which all or specified taxes are subject to exemption or reduction in
the latter country.
Normally tax treaties are not concluded between high tax jurisdictions and
tax havens. In line with this approach certain tax treaties specifically exclude
from their scope entities which benefit from specially favoured tax treatment (e.g.
the exclusion of Luxembourg holding companies from the provisions of tax
treaties concluded with Luxembourg). However, certain colonies or former
colonies of the United Kingdom and the Netherlands benefit from extensions
(with or without modification) of treaties concluded respectively by the United
Kingdom and the Netherlands. The existence of such treaty links may be of
considerable value with regard to tax haven operations taking place in
jurisdictions such as the British Virgin Islands and the Netherlands Antilles.
Tax Treaties:
Tax treaties are international agreements or conventions concluded with the
object of eliminating double taxation by the contracting states. International
double taxation may be loosely defined as the imposition of comparable taxes in
two (or more) states on the same taxpayer in respect of the same subject matter
and for identical or overlapping periods. The most harmful effects of double
taxation are on the exchange of goods and services and on the movement of
capital and persons.
Treuhnderschaft:
A Liechtenstein form of a trust.
Treuunternehmung:
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Another Liechtenstein form of registered trust, designed to undertake

commercial activities.
Trust:
The concept of a trust dates back to the time when the Normans conquered
England in the middle of the 11th century. The trust concept has been developed
over the centuries, and has now become one of the most effective tax and estate
planning techniques available today.
The word "trust" refers to the duty or aggregate accumulation of obligations
that a person (known as the settlor) rest upon a person described as a trustee
by transferring his assets to this third party. The responsibilities are in relation to
property held by him or under his control. The trustee is obliged to administer the
trust property in the manner lawfully prescribed by the trust instrument (Trust or
Settlement Deed, Declaration of Trust), or in the absence of specific provision, in
accordance with equitable principles or statute law. The administration will thus
be in such a manner that the consequential benefits and advantages accrue, not
to the trustee, but to the beneficiary(ies).
There are three basic types of trust: 1) an Interest in Possession trust
allows for a particular beneficiary, often the settlor, to have a distinct right to
income from part of the trusts capital assets; 2) An Accumulation and
Maintenance trust allows for income to accumulate until a class of beneficiaries
reach a certain age; 3) A Discretionary trust vests discretion with the trustees to
decide how both income and capital are distributed.
It is also possible to appoint an individual who is known as the protector.
The protectors main function is to ensure that the trustees administers and
manages the trust assets in accordance with the trust deed and he is often
vested with the power to appoint and remove trustees.
A trust does not have shares.
Trustee:
Trustees have a fiduciary duty to act in accordance with a trust deed and for
the benefit of the beneficiary(ies). See trust.
Trust Deed (Settlement Deed, Declaration of Trust or Trust
Instrument):
The document that lays down the foundations of how the trustees are to
administer and manage the trust assets and how they are to distribute and
dispose of trust assets during the lifetime of the trust.
Trust Services:
A large number of banks located in tax havens offer trust services. In
addition there are trust companies specifically offering trust services. Most tax
haven jurisdictions have enacted legislative provisions and set up administrative
authorities to control the activities of such banks and trust companies. Services
offered by banks and trust companies normally include a fairly wide range of
trusteeship, management and related services. The trusteeship services involve
not merely acting as trustee of settlements, but many other services such as
acting as trustee for debenture holders or as custodian trustee for pension
PAGE 336 OF 337

funds, attending to statutory requirements and the maintenance of financial

records. Often nominee shareholders, directors and other officers are furnished.
Investment services are normally provided.
VAT:
Value Added Tax.
Vintage Company:
See Shelf Company.
Withholding Tax:
Tax required to be deducted at source by companies paying interest,
dividends or royalties, but which may in certain circumstances be reclaimed by
the recipient or be reduced under a double taxation agreement/tax treaties.
PAGE 337 OF 337

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COPYRIGHT AND DISCLAIMER

Top Secret Publishing

LAND PATENTS AND ALLODIAL TITLES...........................................169

NOTICE - This publication is designed to provide accurate and authoritative

Where Do Trusts Come From?

What About Here In The United States?

Edward H. Hines, a multimillionaire building supplier, established a $12

Okay, So I'll Consider A Trust, Doesn't The IRS Attack Trusts?

Couldn't I Get My Bank To Set Up My Trust And Be The Trustee?

What About An Attorney To Help Set Up The Trust?

Why Must The Trust Be Irrevocable?

How Long Would The Trust Last?

What Can I Put Into A Trust?

Who Gets Money From The Trust?

Who Handles The Trust Affairs?

Can I Retain Any Units For Myself?

Can I Add Property To The Trust Later On?

Can The Trust Property Ever End Up In Probate?

Could I Be Required To Pay Taxes On The Trust Income?

Can My Creditors Get To The Trust Property T0 Satisfy My Debts?

Can Creditors Of The Trustees Or Beneficiaries Get To Trust

Can Trustees Or Beneficiaries Be Liable For Debts Of The Trust?

Can The Trust Operate A Business?

What If I Get Sued, What Happens To The Trust Assets?

What If I Should Co Bankrupt?

What If I Should Cet A Divorce?

If A Trust Is So Good, Why Doesn't Everybody Have One?

Glossary Of Terms Commonly Used In Connection With Trusts

DECEDENT: The person who has died.

PURE TRUST: A trust arrangement which is express, active, intervivos,

CITIZENSHIP - INSIDER'S GUIDE TO INSTANT

HOW TO LEGALLY OBTAIN A SECOND FOREIGN PASSPORT

Argentina, Bolivia, Panama, Venezuela, Brazil, Uruguay, St.Kitts/Nevis, The

Some Common Questions And Answers

Question. What can I gain from second citizenship?

Question. Which countries can I visit without visas?

Answer. For St. Kitts/Nevis, a Commonwealth country, the major visa-free-

Question. Is it difficult to obtain visas?

Question. Where do I take delivery of my passport?

Answer. Delivery is normally made in Switzerland which is greatly to your

Question. Why is there an additional cost for family members?

Answer. A few countries such as Argentina and Bolivia allow additional

Question. How is payment made and is my money at risk?

Question. Are prices negotiable?

Question. I am a little skeptical. What else should I avoid?

Question. Are my affairs kept confidential?

Answer. We are professionals of many years standing. When you become

Question. Is it possible for me to obtain documents under a different name?

Question. What advantages do Latin American passports have over other

Question. Do you plan to offer any other countries in the future?

Answer. Yes. We do hope to be able to offer other countries in the future

Question. What is involved in the application process?

Question. How do I start the Process?

Question. Will your prices increase?

PERSONAL PRIVACY AND PROTECTION MAIL

Why they are an indispensable item in the Perpetual Traveler's

The worst thing about an investigation such as this, is the assumption of

quite, possibly middle-class suburb their pursuits could be considered to be

(a) Arranging a mail drop is as simple as walking or writing in and paying