Over the years, we have seen borrowers and guarantors defend mortgage foreclosure cases on theories that are pretty out there. The defenses asserted in Blocker v. U.S. Bank, 2013 Ind. App. LEXIS 396 (Ind. App. 2013) might take the cake.
Payment? In Blocker, following the initiation of foreclosure proceedings, a Marcus Lenton character sent a personal, non-certified check for the full amount of the debt to the lender, on behalf of the borrowers, to pay off the loan. In the endorsement box on the back of the check, Lenton wrote, “NOT FOR DEPOSIT EFT ONLY.” The lender informed the borrowers that a payoff only could occur via certified funds (money order, cashier’s check or wire transfer). Not to be denied, the borrowers next presented to the lender a “lawful order for money,” directed to the U.S. Treasury, that supposedly drew, on Lenton’s account, a sum in an amount to pay off the debt. Not surprisingly, the lender did not accept that payment either. Later, in response to the lender’s summary judgment motion, the borrowers presented a document to the lender labeled “International Promissory Note…” written for an amount sufficient to satisfy the debt. The document was not written against any bank account but rather against the Lenton Trust as Drawee with Lenton himself as the Drawer. Again, the lender refused to accept this as payment.
Borrowers’ contention. The trial court granted summary judgment in favor of the lender. On appeal, the borrowers asserted that they tendered three payments to the lender, through Lenton, which should have discharged the debt. The Indiana Court of Appeals concluded that the borrowers’ payment attempts were not done through normal banking channels but rather a “confusing” effort by Lenton to compel the U.S. Treasury Department to pay off the borrowers’ mortgage.
Redemptionist movement. The Court wrote that the borrowers’ arguments appeared to be an outgrowth of the so-called “redemptionist movement,” which has been explained as follows:
“[T]he “Redemptionist” theory…propounds that a person has a split personality: a real person and a fictional person called the “strawman.” The “strawman” purportedly came into being when the United States went off the gold standard in 1933, and, instead, pledged the strawman of its citizens as collateral for the country’s national debt. Redemptionists claim that government has power only over the strawman and not over the live person, who remains free.
Vapor money theory. The Court also identified a philosophy, closely related to the redemptionist theory, that evidently played a role in the borrowers’ arguments:
The “vapor money” (or “no money lent”) theory posits that Congress has never given banks the authority to extend credit and, thus, banks act beyond their charters when making loans. Proponents claim banks create money “out of thin air,” through ledger entries and bookkeeping tricks, by “depositing” a borrower’s promissory note without the borrower’s permission, listing the note as an “asset” on the bank’s ledger entries, and then lending a borrower back his own “money.” Since banks do not have enough “real money in their vaults” to cover the sums lent, loans are not backed by actual money--the only real money is gold or silver; paper money is worthless since it is created by an illegitimate Federal Reserve--making them invalid ab initio and creating no obligation for repayment.
Uh, no. The Court noted that both the vapor money and redemptionist theories have been “roundly rejected by courts across the nation.” Lenton’s attempts to pay off the borrowers’ mortgage debt “were not only unorthodox but also legally unacceptable.” The Court’s summary is fairly amusing:
It is unclear who Lenton is or what his relationship to the [borrowers] is and whether he represented to them that he knew the “secret formula” to accessing money locked away in a clandestine Treasury Department account but, in any event, he clearly failed to access or provide the funds needed to pay off their mortgage.
The Court affirmed the trial court’s summary judgment for the lender accordingly.