Professional Documents
Culture Documents
___________________
The Court of Appeal for the Ninth Circuit as well as other federal
appellate courts have decided an important question of federal law that has
not been, but should be, settled by this Court, or has decided an important
federal question in a way that conflicts with relevant decisions of this Court.
Petitioner Reuben Nieves, a homeowner, like millions in danger of being
foreclosed non-judicially or who have been foreclosed non judicially, respectfully
prays that a writ of certiorari be issued to review the judgment of the Ninth Circuit
Court of Appeal. The issue is one of First Impression to this Court because this
court has never decided whether a federally chartered bank corporation created
under an act of Congress to provide an important governmental function could use
a non judicial procedure that allows the taking of a property interest without a
hearing thus violating the 5th Amendment. This Court has made numerous
decisions which would have been relevant in determining whether non judicial
procedures were applicable given the nature of these corporations. Specifically,
the issue involves a provision in a mortgage contract which allows the
bank( Wachovia Mortgage fsb), a corporation federally created and controlled by
the director of the Office of Thrift Supervision to use a non-judicial foreclosure
to redeem the property. It is an issue that goes to the core of the nature of federally
chartered corporations created under special law providing an important
governmental function. This case deals with the rights and obligations of these
corporations even to put such a provision in a contract. It is an issue which, in the
context of the current economic crisis and the massive foreclosures, sweeps the
breadth of this nation like a plague destroying families and communities as it
spreads, swelling the homeless population in its wake. This court is asked, as it
was asked in the case of Fidelity Federal S & L Ass’n v Reginald De La Cuesta,
458 U.S. 141 (1982) , to decide upon an issue of great importance on another
1
provision in a mortgage contract involving a right or immunity guaranteed by the
Constitution that forms an essential element of plaintiff’s claim. An issue that is
greater even than was decided in that case because it involves a constitutional right
affecting the lives of millions of families across this nation. Moreover, the
decision in the Ninth Circuit, as well as other appellate decisions regarding non
judicial foreclosures contravene several Supreme Court decisions regarding the
nature of corporations incorporated for a public purpose under an Act of Congress
which would affect whether these corporations could use a non judicial foreclosure
without violating the 5th Amendment due process clause.
OPINIONS BELOW
JURISDICTION
The Ninth Circuit entered its judgment on _________. A petition for rehearing
was denied on ___________, 2009
“No person shall be. . .deprived of life, liberty, or property, without due
process of law.”
2
AN ACT To provide emergency relief with respect to home mortgage
indebtedness, to refinance home mortgages, to extend relief to the
owners of homes occupied by them and who are unable to amortize
the debt elsewhere, to amend the Federal Home Loan Bank Act, to
increase the market the obligations of the United States and for other
purposes:
3
VI. 12 U.S.C. § 24. Corporate powers of associations
Fourth. To sue and be sued, complain and defend, in any court of law
and equity, as fully as natural persons.
Each justice or judge of the United States shall take the following
oath or affirmation before performing the duties of his office:
“I,______, do solemnly swear (or affirm) that I will administer
justice without respect to persons, and do equal right to the poor
and to the rich, and that I will faithfully and impartially discharge
and perform all the duties incumbent upon me as___under the
Constitution and laws of the United States. So help me God”
5
paying his debts. Plaintiff has been forced to seek food stamps and medi-Cal for
the first time in his life.
PROCEDURAL HISTORY
Plaintiff Reuben Nieves filed his complaint on May 7th, 2008 in the District
Court-Sacramento Division. 2:08-cv-00988-MCE-GGH. On recommendation of
the Magistrate the complaint was dismissed for “lack of subject-matter jurisdiction
on August 08, 2008 whereby plaintiff appealed to the Ninth Circuit on August 12th,
2008. All briefs were submitted by all parties by January 28th, 2009. As of
September 09th, 2009 the courts had not made any determination on the merits of
plaintiff’s complaint. On August 25th, 2009 plaintiff sought an emergency
preliminary injunction or stay pending appeal under rule 27-3 to stop a trustee sale
of his property scheduled for September 10th, 2009. On September 09, 2009 the
Ninth Circuit about 3:15 in the afternoon denied plaintiff’s motion without
comment. Justice Harry Pregerson dissented and stated he would have granted the
emergency motion for a stay of the foreclosure pending appeal.
SUMMARY OF ARGUMENT
6
Plaintiff brought this action under 28 USC 1331 alleging WACHOVIA
MORTGAGE fsb[formally World Savings fsb], a federally chartered bank,
incorporated a provision into his loan agreement which required plaintiff to
irrevocably transfer his interest to a trustee with a power of sale in favor of the
lender upon default of plaintiff’s installment payments on the loan. Plaintiff alleges
that this is a non-judicial procedure which does not allow a hearing before
plaintiff’s property interest is taken from him is a denial of procedural due process
in violation of the 5th Amendment. Plaintiff alleges that by virtue of the character
as a federally chartered corporation created under an act of Congress Home
Owner Loan Act(HOLA) to provide and important public function the
corporation is prohibited from applying this provision which would deny
procedural due process. Plaintiff alleges that the lending functions of Wachovia
Mortgage fsb are governmental and not proprietary. Furthermore, the denial of a
preliminary injunction of the trustee’s sale by the Ninth Circuit was more than
abuse of discretion and a clear indication of disparate and unfair treatment of
which indicates an animus toward pro se informa pauperis litigants.
ARGUMENT
7
On June 24th, 2008 Judge Gregory G. Hollows issued his ORDER and
FINDINGS AND RCOMMENDATIONS APPENDIX pg. 26, lns 16-22 in
which he stated:
National banks and federal savings banks are agencies of the United States
created to promote its fiscal policies. APPENDIX, p. 15, lns 6-7. National banks
and federal savings banks benefit by not paying state taxes, avoiding state
predatory lending laws through the concept of Federal preemption, allowing them
to export high interest for the credit card thus avoiding the state usury laws.
Federal Savings banks also have the same benefits and are no less
instrumentalities of the federal government than national banks whose purpose is
8
to promote its fiscal policies. Alexander Hamilton argued that the Central Bank
was necessary to the nation in cases of emergency such as the financing of war, to
extend credit for Agriculture, trade, and to support the growth of manufacturing in
the United States. Hamilton believed that there was a symbiotic relationship
between agriculture, commerce, and manufacturing, and that progress in each of
these sectors was necessary for America’s economic development. (In the Report
of Credit II, Dec. 1790)
B. A PARTY MUST STATE FACTS
SUFFICIENT TO STATE A EITHER A
5 or 14th AMENDMENT DUE PROCESS CLAIM
th
9
MUST BE CONSISTENT WITH THE
STATUTES AND THE FEDERAL
CONSTITUTION
The power of Congress is vast, but not unlimited. Congress has the power
to confer authority to provide rules and regulations on any department or officer of
the government consistent with the statutes and the Constitution and “within the
letter and spirit of the Constitution”. Boske v Comingore, 177 U.S. 459(1900)
This includes the Office of Thrift Supervision and the Office of the Comptroller of
the Currency. It follows that the powers, enumerated and incidental, conferred on
National Banks as well as Federal Savings Associations/Banks must be consistent
with the statutes and the Constitution of the United States and “with the letter and
spirit of the Constitution”. The power to foreclose is an ‘incidental” power
because it is necessary to effectuate the enumerated powers of a bank in providing
residential mortgage lending. While the power to foreclose judicially is consistent
with the Constitution the power to foreclose non judicially is not because it
does not allow a hearing. Those powers not consistent with the Constitution are
therefore--unconstitutional. In First National Bank of Bay City v. Fellows, 244
U.S. 416 pgs 419,420 (1917) CHIEF JUSTICE WHITE quoting Justice
Marshall said :
with respect to the means by which the powers it confers [to national
banks] …, let it be within the scope of the Constitution, and all
means which are appropriate, which are plainly adapted to that
end, which are not prohibited, but consistent with the letter and
spirit of the Constitution, are constitutional " [underline and bold
added]
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. . .[W]e cannot concur in the suggestions that national banks, in respect
to the powers conferred upon them, are to be viewed as solely organized
and operated for private gain.
The Court in Easton went on to say at 188 U.S. 220 at p. 230 that the
principles enunciated in McCullough v Maryland, 17 U.S. 316(1819), and in
Osborn v Bank of United States, 22 U.S.738 (1824), though expressed in respect
to banks incorporated directly by acts of Congress, were still applicable to the
later and present system of national banks. The Court cited with approval the
holding of the latter as expressed by Chief Justice Marshall:
The bank is not considered as a private corporation whose principal
object is individual trade and individual profit, but as a public
corporation created for public and national purposes. That the mere
business of banking is, in its own nature, a private business, and may be
carried on by individuals or companies having no political connection
with the government, is admitted, but the bank is not such an individual
or company. It was not created for its own sake or for private purposes.
It has never been supposed that Congress could create such a
corporation.[underline added]
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and has the sole power to regulate and control the exercise of their
operations…[bold added]
In view of the holding in Osborn which Justice Marshall held that banks
were public and not private bank corporations, which was approved and held
applicable to later national bank corporations not directly created by
Congress by the Supreme Court in Easton, why should we now consider
national banks private corporations? And why not consider them “agencies of the
Federal government” as referred to in Easton? And why should the same
reasoning not apply to federal savings banks such as WACHOVIA
MORTGAGE, fsb?
In Osborn at p. 22 U.S. 823 the court said of these national banks:
The charter of incorporation not only creates it, but gives it Every
faculty which it possesses. The power to acquire rights of any
description, to transact business of any description, to sue on those
contracts, is given and measured by its charter, and that charter is a law
of the United States. Take the case of a contract, which is put as the
strongest against the Bank. . . [H]as this being a right to make this
particular contract? .. . .[T]his question, too, depends entirely on a law
of the United States [underline added]
12
… The corporation must show that the law of its creation gave it authority to
make such contracts.” . [underline and bold added]
Did the law of its’ creation (HOMEOWNER BANK ACT [HOLA] ) give
Wachovia the right to make this contract with this particular provision? Or should
the question be: Can the law of its creation give Wachovia the right to make this
contract with this particular provision?
In an excerpt from Shoshone Mining Co. v. Rutter, 177 U.S. 505,509,510
,citing Osborn, the court said:
13
TWO TREATISE OF GOVERNMENT, BOOK II] The courts in Osborn and
Shoshone show us that the conduct of banks in pursuit of non-judicial
foreclosures must be done under the authority of the federal charter which is a
“law of the United States” and therefore “under color of federal law”.
E. CONGRESS CANNOT AUTHORIZE OR
DELEGATE A RIGHT OR POWER THAT
IT CANNOT RIGHTFULLY EXERCISE ITSELF
If all the acts, rights and obligations of corporations with federal charters
must be done under the authority of the federal charter and a law of the United
States, including rights created in contract, how can Congress authorize a
provision that it could not exercise itself? The provision can only be validated by
what it represents and the constitutional implications it may give rise to. In United
States v Grimaud, 220 U.S. 506 (1911) the Supreme Court decided that very issue
and the court citing Justice Marshall at 220 US pg. 517 said.
A similar holding was made by the Ninth Circuit in Furman Crain et al.,
v. The First National Bank of Oregon, Portland et al, 324 F. 2d 532(1963) In
that case the Court said:
While Congress cannot delegate to private corporations or anyone
else the power to enact laws, it may employ them in an administrative
capacity to carry them into effect. Berman v Parker, 348 U.S. 26, 75
S. Ct, 98, 99 L.Ed 27 (1954)
14
ULTRA VIRES PROVISION AND NULL AND VOID
As the Supreme Court said in Concord First Nat’l Bank v Hawkins 174
U.S. 364 p. 371:
The doctrine of ultra vires, by which a contract made by a
corporation beyond the scope of corporate powers is unlawful and
void and will not support an action, rests as the Court has often
recognized and affirmed, upon three distinct grounds.: the obligation
of anyone contracting with a corporation to take notice of the legal
limits of its powers, the interest of the stockholders not to be subject
risks which they have never undertaken, and above all, the interest
of the public that the corporation shall not transcend the powers
conferred upon it by law.[bold added]
In Federal Land Bank v. Bismarck Co. of St. Paul, 314 U. S. 95 (1941) the
court was faced with determining whether the lending functions were proprietary
or governmental. The court said:
The argument that the lending functions of the federal land banks are
proprietary, rather than governmental, misconceives the nature of the
federal government with respect to every function which it performs.
The federal government is one of delegated powers, and from that
it necessarily follows that any constitutional exercise of its
delegated powers is governmental. Graves v. New York ex rel.
O'Keefe, 306 U. S. 466, 306 U. S. 477. It also follows that, when
Congress constitutionally creates a corporation through which the
federal government lawfully acts, the activities of such
corporation are governmental. (cites)
15
As part of their general lending functions, the land banks are
authorized to foreclose their mortgages and to purchase the real
estate at the resulting sale. They are "instrumentalities of the federal
government, engaged in the performance of an important
governmental function."(cites)
In Federal Land Bank v. Board of Kiowa County., 368 U.S. 146 the
court said :
It is well settled that the enabling Act, Home Owner Loan Act
(HOLA) is constitutional . Pittman v. Home Owners' Loan Corp.,
308 U. S. 21. Like federal land banks, the lending functions of federal
16
savings assn’s/federal savings banks, such as Wachovia Mortgage fsb,
a federal instrumentality , should be treated as governmental, even
when the activity is in pursuit of foreclosure because foreclosure is an
essential part of the “general lending functions” which the court in
Bismarck held was “governmental” . Federal Land Bank v.
Bismarck Co. of St. Paul, 314 U. S. 95, p. 102 (1941)
A. GOVERNMENT CANNOT EVADE ITS MOST
SOLEMN CONSTITUTIONAL OBLIGATIONS BY SIMPLY
RESORTING TO THE CORPORATE FORM
Can Congress divest itself of its identity with a corporation created and
participated in for a public purpose sufficiently to allow the corporation to use a
procedure that does not allow a hearing? That question was asked and answered
in Lebron v National Railroad Passenger Corporation. 513 U.S. pgs 374, 375
when the court said:
17
(e) Amtrak is an agency or instrumentality of the United States
for the purpose of individual rights guaranteed against the
Government by the Constitution. This conclusion accords with the
public, judicial, and congressional understanding over the years that
Government-created and -controlled corporations are part of the
Government itself.(cites) ; A contrary holding would allow
government to evade its most solemn constitutional obligations by
simply resorting to the corporate form, Bank of United States v.
Planters' Bank of Georgia, 9 Wheat. 904, 907, 908 (other cites).
18
In this case control of the operations is exercised by the director of the
Office of Thrift Supervision an independent federal regulatory agency vested with
plenary authority to administer the Home Owners' Loan Act of 1933 (HOLA),
The Director of the OTS is appointed by the President, by and with the advice and
consent of the senate. (12 USC §1462c) In Fidelity Fed. S. & L. v. De la Cuesta,
458 U.S. 141 (1982) at p. 161 the court said:
The broad language of § 5(a) expresses no limits on the Board's
authority to regulate the lending practices of federal savings and
loans. As one court put it, "[I]t would have been difficult for Congress
to give the Bank Board a broader mandate." [cites] And Congress'
explicit delegation of jurisdiction over the "operation" of these
institutions must empower the Board to issue regulations
governing mortgage loan instruments.
19
preempt state law. The State would challenge that decision in court. Both Acts are
silent on the necessity of banks foreclosures to secure the residential property in
the event of default. The Acts, however, do bestow upon banks the authority to
exercise by its board of directors, or duly authorized officers or agents, subject to
law, all such incidental powers as necessary to carry on the business of
banking. . .”12 .S.C.§24(Seventh). The OTS authority to preempt state laws
affecting its lending practices lies in 12 cfr §560.2. Because these sections are not
explicit on the limits of “incidental powers”, an inquiry as to whether the NBA or
HOLA would support the use of either one or both methods of
foreclosures(Judicial foreclosures and/or non-judicial foreclosure) would be
necessary. The holding in United States v. Grimaud, 220 U.S. 506(1911) would
apply. The NBA or HOLA could authorize the former but not the latter because the
government could not exercise the power to foreclose non-judicially. Otherwise,
as Justice Scalia said in Lebron at p. 375, “...It would allow the government to
evade its’ most solemn obligations by simply resorting to the corporate form”.
C. WACHOVIA MORTGAGE FSB CAN BE
CONSIDERED AN AGENCY OF THE GOVERNMENT
Under that test Wachovia Mortgage fsb is an “agency” and, if there is any
doubt , the Supreme Court in Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141
(1982) at p. 161 settled the issue of the government control over the “operations”
of saving and loan associations as being more than custodial or incidental when
the court said:
21
Wachovia Mortgage cannot put itself beyond the reach of the constitution
and the 5th Amendment by putting a provision in a contract. Oliver Wendell
Homes stated in HUDSON COUNTY WATER CO. v. Mc CARTER, 209 U. S.
349 (1908).”One whose rights, such as they are, are subject to state restriction
cannot remove them from the power of the state by making a contract about them.
But the contract, the execution of which is sought to be prevented here was illegal
when it was made. “The contract will carry with it the infirmity of the subject
matter” [cites] The constraints of the government pass on to Wachovia Mortgage,
fsb, and cannot be avoided by putting a provision in a contract to put themselves
beyond the restrictions of the 5th Amendment.
On or about August 20th 2009, plaintiff was served with a notice of trustee
sale scheduled for September 10th, 2009. Plaintiff timely filed for an emergency
preliminary injunction or stay pending appeal but was denied on September 9th,
2009, one day before the scheduled trustee sale. Justice Harry Pregerson dissented
and stated he would have granted the preliminary injunction. The result was that
defendant was enabled to deny plaintiff due process by going through with the
22
trustee sale. The denial of the preliminary injunction therefore was an abuse of
discretion. Since the whole point of plaintiff’s appeal from the district court’s
dismissal was a determination of the constitutionality of a trustee’s sale, and all
the briefs were submitted, it was unreasonable, arbitrary, or fanciful for the court to
deny plaintiff relief before the court determined the constitutionality of the very
procedure on appeal. The result would lead to plaintiff losing his home to a
trustee’s sale and the court would have facilitated the denial of due process before
the determination of the court of the constitutionality of the trustee sale. In
Fuentes v. Shevin, 407 U.S. 67, 92 at pgs. 80-82 (1972) the court held that due
process requires notice and an opportunity to be heard prior to the deprivation of a
property interest. In Soc.sec.rep.ser. 80, et al., Plaintiffs-appellees, v. Margaret
M. Heckler, Secretary of Health and Human Services,et al. , Ninth Circuit. -
725 F.2d 1489 the court said:
It is hornbook law that "[t]he general purpose of a preliminary
injunction is to preserve the status quo pending final determination of
the action after a full hearing." 7 J. Moore & J. Lucas, Moore's
Federal Practice p 65.04 at 65-36 (2d ed. 1983). It is similarly well
accepted that "[t]he status quo is the last uncontested status which
preceded the pending controversy." Westinghouse Electric Corp. v.
Free Sewing Machine Co., 256 F.2d 806, 808 (7th Cir.1958The
purpose of a preliminary injunction is to preserve the status quo .
But the status quo was not preserved, and the constitutional promise that no
one would be deprived of property without due process was kicked to the curb.
The defendant Wachovia Mortgage fsb and its’ attorney had constructive notice of
the potential constitutional injury through plaintiff’s brief s and motion for
preliminary injunction, but chose to proceed anyway.
CONCLUSION
23
In closing, there is no law within the scope of Congress that can authorize a
federally chartered bank to foreclose on a homeowner and terminate his property
rights without allowing a judicial hearing. That is the undeniable conclusion
drawn from the Supreme Court’s decisions in Easton, Osborn, and Shoshone.
Wachovia Mortgage fsb, incorporated under the Home Owner Loan Act (HOLA)
The massive foreclosures that have occurred and will continue to occur is
the by-product of the reckless conduct of the lending industry whose
underwriting standards were compromised by their own greed. If left to continue,
it will crush the economy as it is crushing the spirit of this nation.
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violates the 5th Amendment . Constitutionally conferred powers to a bank should
not be used to produce an unconstitutional result.
In closing, there is no law within the scope of Congress that can authorize a
federally chartered bank to foreclose on a homeowner and terminate his property
rights without allowing a judicial hearing. That is the conclusion drawn from the
Supreme Court’s decisions cited by plaintiff.. Wachovia Mortgage fsb,
incorporated under the Home Owner Loan Act (HOLA) to provide an important
governmental function—residential mortgage lending, the operations of which
are controlled by the Office of Thrift Supervision whose director is an appointee
of the President of the United States. This court should declare that federally
chartered banks like Wachovia Mortgage fsb, are prohibited from using non
judicial foreclosures. The powers conferred, enumerated and incidental to
Wachovia Mortgage fsb are conferred by Congress under the authority of the
Constitution. Constitutionally conferred powers to a bank should not be used to
produce an unconstitutional result. This court should declare that the denial of
plaintiff’s emergency motion for preliminary injunction was an abuse of discretion.
Respectfully submitted,
________________ Date:___________,2009
Reuben Nieves
25
26
Statutes
12 U.S.C. § 24...........................................................................................................4
Furman Crain et al., v. The First National Bank of Oregon, Portland et al, 324
F. 2d 532(1963).....................................................................................................14
12 U.S.C. 1254..........................................................................................................2
Regulations
12 cfr § 560...............................................................................................................3
27
Constitutional Provisions
5th Amendment...........................................................................................................5
7th Amendment...........................................................................................................7
Table of Contents
PAGE
28
I. BANK’S USE OF NON-JUDICIAL FORECLOSURE AGAINST A
HOMEOWNER IS NOT WITHIN THE SCOPE OF A LAW OF CONGRESS . . 1
TABLE OF CONTENT
(CONTINUED)
29
C. THE POWER TO FORECLOSE IS AN INCIDENTAL POWER OF THE
NATIONAL BANKS AS WELL AS FEDERAL SAVINGS BANKS............ 6
CONCLUSION ....................................................................................................... 1
TABLE OF AUTHORITIES
Cases
30
Conference of Federal Savings and Loan Associations et al v. Alan L. Stein et al.
604 F.2d 1256 (9th Circuit) (1979)........................................................................16
Cybor Corp. v. FAS Technologies, Inc., 128 F.3d 1448,1460(Fed. Cir. 1998).....22
Fidelity Federal S & L Ass’n v Reginald De La Cuesta, 458 U.S. 141 (1982).1,21
First National Bank of Bay City v. Fellows, 244 U.S. 416 pgs 419,420 (1917)...10
Furman Crain et al., v. The First National Bank of Oregon, Portland et al, 324
F. 2d 532(1963).....................................................................................................14
” NationsBank of N.C.N.A. v Variable Annuity Life Ins. Co. 513 U.S. 252,
256(1995)..............................................................................................................20
Statutes
31
12 U.S.C. § 24...........................................................................................................4
12 U.S.C. 1254..........................................................................................................2
12 U.S.C. 1254(1)............................................................................................2, 5, 27
Other Authorities
32