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Creative Debtor Not Allowed to Finance His Appeal From U.S. Treasury

By Stephen Sather

Judge Leif Clark has authored a new opinion which belongs in a Payment Systems textbook. In re Rhett Webster Pease , No. 09-54754 (Bankr. W.D. Tex. 3/12/10) involved a debtor who filed a Notice of Appeal but neglected to include the filing fee. When informed that his appeal would be dismissed, he submitted a "Certified Money Order."

Judge Clark described the instrument submitted for payment as follows:

The document purports to be a form of money order, and states at the bottom that ?This negotiable instrument is authorized and backed by the full faith and credit of the United States Govern-ment.? The body of the document does contain negotiable instrument language -- it says ?Pay to the Order of:? However, from there on, the document is an entire work of fiction.

First, the purported negotiable instrument purports to be ?drawn on? the United States Treasury Account, ?Prepaid Account? followed by what appears to be the debtor?s social security number (not reproduced here, of course). An address follows -- 1500 Pennsylvania Avenue, NW, Washington, D.C. (that is the physical address of the Department of the Treasury).

Next, the purported negotiable instrument directs the drawee to pay to the order of ?U S Treasury.? This is similar to writing a check drawn on a bank, directing that the bank pay itself out of an account maintained by the drawer at that bank. The amount shown to be paid is, of course, $255.00.

Next, the document is signed by Rhett Webster Pease (the court recognizes his signature) beneath the legend ?Drawer as Agent for the Secretary.? It is not clear exactly what Secretary the debtor means, though one could infer that this is intended to refer to the Secretary of the Treasury. Beneath the signature line is the identifier ?Authorized Signature of Agent.?

Finally, there is a ?Certification of Signatory? executed by a notary (one Paula M. Boyd), to the effect that Mr. Webster ?acknowledged to me that he was the authorized signatory for the above mentioned account and that he executed this instrument as an agent for the Secretary under this account.?

The net effect of all of this verbiage is that Mr. Pease evidently believes that (a) he can write checks on what he claims to be his social security account, as though it were a checking account, (b) that he can issue a check right back to the treasury, since the filing fee is payable ultimately to the US government anyway, and (c) that he can act as the self-appointed agent for the Secretary of the Treasury. In this way, he claims to have satisfied his obligation to the clerk of court to pay the filing fee.

Order Dismissing Notice of Appeal, pp. 1-2.

Judge Clark patiently explained why Mr. Pease could not simply write a check upon his social security account, concluding:

Mr. Pease clearly has some strongly held beliefs about the role of government,the legitimacy of the monetary system in the United States, and perhaps even the legitimacy of government itself. The court will not waste its time attempting to dissuade Mr. Pease of his strongly held beliefs. Suffice it to say that this court does not subscribe to those beliefs.

A filing fee must be paid using the recognized currency of the United States. The ?Certified Money Order? submitted by Mr. Pease does not qualify either as recognized currency or a legal document that would result in the payment in the recognized currency of the United States. The document submitted is a complete work of fiction or fantasy at best, and a fabrication and a fraud at worst. In all events, it is ineffective as a means of payment.

Order, p. 3.

It is good to know that Judge Clark is out there policing payments to the Clerk's Office. However, you have to wonder if he has too much time on his hands.

Full post as published by A Texas Bankruptcy Lawyer's Blog on March 15, 2010 (boomark / email).