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Secret Liens and the Financial Crisis of 2008...If the debtor becomes insolvent, the doctrine of secret liens punishes secret lien holders by subordinating their claims to those of other creditors. In other words, by overriding privately negotiated payment priorities, the doctrine of secret liens creates incentives for transparency.
Bunkers being destroyed ? Not in the U.S.A!
SOLD to the the guy with the AR15 and the mask.
Quote:
Originally Posted by Chex
A link to the full article relating to their 'doctrine of secret liens' follows.
http://works.bepress.com/cgi/viewcon...chael_simkovic
This one sees this as quite a exposition on how 'notice and grace' has been devolved from its true origins and intent. Just a few quotes are shown, but there is much much more exposed in this document. This document does not 'follow the money' as much as it follows the 'title' and lawful claim to 'title.' It also shows their devolution of 'proper' 'notice and grace' to mere notice.
"Judge Gibson explained:
[A] creditor ought not to be suffered to secure himself by means that may ultimately work an injury
to third persons . . . . Where possession has been retained without any stipulation in the
conveyance, the cases have uniformly declared that to be, not only evidence of fraud, but fraud per
se. Such a case is not inconsistent with the most perfect honesty; yet a court will not stop to
inquire, whether there be actual fraud or not; the law will impute it, at all events, because it would
be dangerous to the public to countenance such a transaction under any circumstances. The parties
will not be suffered to unravel it, and show, that what seemed fraudulent, was not in fact so.14
Judge Gibson believed secret liens were too dangerous to permit under any circumstances because of
the danger that debtors would misrepresent themselves as more creditworthy than they actually were,
and so induce third parties to extend credit:
[It is] against sound policy to suffer a [debtor] to create a secret [e]ncumbrance on his personal
property, when to the world he appears to be the absolute owner, and gains credit as such. In
every case where possession is not given, 15 the [creditors] must leave nothing unperformed, within
the compass of their power, to secure third persons from the consequences of the apparent
ownership of the [debtor]…I do not suppose the parties had, in fact, a fraudulent view, but as such a
transaction might be turned to a dishonest use, it was their duty, as far as in their power, to secure
the public against it."
The decision in Clow highlights the adaptability and flexibility of the common law. Although the judges
nominally decided the case under the Statute 13 of Elizabeth, which “renders void all conveyances made
to the end, purpose, and intent of defrauding creditors,”17 the principle they articulate represents a
significant extension of fraudulent conveyance doctrine. Under secret lien doctrine, it is not fraudulent
intent that matters, but a lack of notice and meaningful disclosure.
Extending these common law principles, Judge Duncan arrived at a conclusion very similar to the thesis
of this article—that a lack of transparency threatens not only individual creditors, but the financial
system as a whole. In Judge Duncan’s view, secret liens threatened to “put an end to all credit”:
That a secret mortgage to secure a creditor…should be valid and bind the property against
creditors…would be a reproach to the law. It ought not, it cannot be so. If it were so, it would
put an end to all credit. Credit is given on…faith…I know not any doctrine that would tend to
annihilate all credit, more than the establishment of such a principle."
RThomas