Fresno Lawyer – Randolf Krbechek

California still recognizes certain antiquated common law causes of action.  When I say antiquated, I mean that the cause of action has been known at law from longer than 600 years.

One of the common law causes of action is the “account stated.”  Here’s an explanation from Karl Llewellyn, the principal draftsman of UCC Article 2 (“Sales”) and an eminent commercial law historian, regarding the basis for an “account stated.”

“A situational concept has to do with some collection of events or people or both seen as recurring, seen as a type … We have, for instance, a situational concept of ‘account stated,’ with rules of law clustered around it which give it a peculiarly definitive character in settling up the state of obligation.

“It was built around periodic reckoning up of running accounts in a world in which book-keeping was not yet what it now is, prices for goods shipped were not reckoned by contract in advance, currencies varied from town to town, and mails were slow.

“‘Stated’ had then a punch.  It implied thoughtful, careful going over on both sides as for a grave affair, and it implied real need for getting clarity about a fresh start.

“None of this is in the flavor of the label as the conditions on which the high significance of the situation rested have moved from under.  The principle has faded out.”

As should the cause of action, which lingers on long after its purpose has faded.

Karl N. Llewellyn, The Theory of Rules, edited and with an introduction by Frederick Schauer (Univ. of Chicago Press 2011)

Today, McCulloch v. Maryland (1819) is cited for its interpretation of Congress’ powers under the Constitution.  But the case actually involved the Second Bank of the United States, a contentious period in our history.

The first Bank of the United States was established in 1791 by Congress.  It had a 20-year charter.  Hamilton was a strong proponent.  It was not rechartered at the end of its 20-year term.

Then came the War of 1812.  The war triggered additional financial obligations by the United States government.

In 1816, Congress chartered the Second Bank of the United States.  McCulloch v. Maryland was a challenge to the legality of the bank.  Chief Justice Marshall ruled in favor the bank.  Today, the case is largely known for its discussion of Congress’s ability to enact “necessary and proper” legislation in furtherance of its powers.

The specific legal issue in McCulloch v. Maryland involved a tax that the state of Maryland levied on the operations of all banks within the state, including the Second Bank of the United States.  McCulloch, head of the Baltimore Branch of the Second Bank of the United States, refused to pay the tax. McCulloch was sued by the state of Maryland, and found liable for the tax.

The Supreme Court held that the tax as levied on Second Bank of the United States was unconstitutional, using the famous phrase, “the power to tax involves the power to destroy.”  At the same time, the court upheld the constitutionality of the bank.

Then came Andrew Jackson, elected in 1828, and reelected in 1832.  Jackson was  strongly opposed to the bank.  He vetoed congressional legislation in 1832 in 1834 and would have extended the charter of the bank.  Thus, the national bank came to an end at the end of its 20-year term; the bank continued as a private corporation in Philadelphia, and was ultimately liquidated in 1841.

There is some speculation that Roger Taney wrote Jackson’s veto of the 1832 legislation.  Taney also served as Secretary of the Treasury and U.S. Attorney General.  Interestingly, Taney became Chief Justice in 1836 after Marshall’s retirement.  Taney is infamous for the Dred Scott decision.

Not that I really understand national banking law, just that I can see how some of the pieces fit together.

The High Commission was a court that existed in England for more than a century, engendering substantial political dispute.  Originally intended for ecclesiatical disputes, the spread of its jurisdiction caused major friction.  Yet its records have all disappeared, save for contemporaneous writings.  Here is some facinating history.

“Historians have seen in the High Commission’s existence and character one of the chief causes of the Revolution of 1640, one of the most cogent explanations of the popular distrust of Charles I.  They have found it the only adequate explanation of the strength of the Puritan movement, which enabled it for a time to abolish the English Church altogether, and which must have rested (it has been supposed) upon a widespread popular hatred of the institution as it then existed.

“The question, however, can never be settled beyond dispute.  The one thing indispensable to the demonstration of the truth of this difficult matter, one way or the other, is the evidence of the official records, kept (as we know) by the various Registrars of ‘the Commission’.  These would at once reveal by the presence or absence of regularity and continuity, and by the date at which they began to be regular and uniform, whether and when there were various bodies of commissioners or one Court of High Commission.

“But the records have disappeared.  That they were accidentally lost during the seventeenth and eighteenth centuries seems improbable.  Surely mere accident can scarcely account for the disappearance of registry books, act books, immense files of pleadings and lawyers’ briefs, and bales and sacks of papers similar to those which the Commissioners left at Durham; in short, of every scrap of evidence great and small connected with the Court, except a couple of volumes of the Act Books containing the cases of Bastwick and Burton – needed of course as evidence in the proceedings in the House of Commons to annul their sentences – and a few score formal papers which happened to be in the bags of miscellaneous letters and petitions at the Tower.

“So large a bulk of papers, as the records of the Commission must have been, would, if merely mislaid, hardly have escaped the notice of the Historical Manuscripts’ Commissioners in either public or private archives; and if they were hidden at any time, there would seem to be at present no reason for longer concealment.

“The Great Fire, which destroyed the documents collected at St. Paul’s Cathedral, might explain the loss of the Commission’s records if it could also account for the disappearance of the archives of the Bishop of London at Fulham Palace, which must have been extraordinarily rich in material connected with the Court.

“But the records seem to have disappeared before 1645.  Laud complained of their seizure by his enemies in 1640; at his trial he pleaded for their production and claimed that they would completely vindicate him; from that day to this they have never been heard of.  All this lends colour to the hypothesis that they were destroyed by order of the Long Parliament, together with all the papers of the High Commission that could anywhere be found.

“The Puritans and the common lawyers united in the passage of that Act not only to abolish the Court which then existed but to make impossible its revival at any future time.  They well knew that the Act of one Parliament could not bind its successor; and how could they hope to be permanently successful in securing their object, if they left behind them a voluminous series of records, showing that a law-court had been in operation for at least half a century, not only with the full approbatian of the King and of the ecclesiastics, but with the acquiescence of the common lawyers.”

Roland G. Usher, Ph.D., The Rise and Fall of the High Commission (Oxford at the Clarendon Press 1913)

Strange how an idea that was once old can become new again.  Roscoe Pound, Dean of the Harvard Law School, was a prolific legal writer in the 1920s and 1930s.  From my perspective, his best work concerned the development of the American legal system from 1850 through 1900, as America reached the end of its Western expansion.

Writing in 1938, Dean Pound discussed why legislation was not effective to address rapidly-changing areas of the law.  Here is Dean Pound’s analysis:

“It would seem that while legislation has proved an effective agency of ridding the law of particular institutions and precepts which have come down from the past and have not been adapted or were not adaptable to the needs of the time, it has not been able, in our legal system, except in rare instances, to do much of the constructive work of change in eras of growth.  So far as everyday relations and conflicts of interests are concerned, it has not been able to anticipate new demands nor to move fast enough when they made themselves felt through litigation.”  Roscoe Pound, The Formative Era of American Law (Little, Brown and Company 1938), pp. 44-45.

At the same time, I was reading a new law review article by Professor Mark Burge, discussing the future of the law of payment systems.  Once upon a time, the law of payment systems dealt principally with bank drafts, checks, and bills of exchange.  These days, the law of payment systems also encompasses credit cards, debit cards, ETF’s, Apple Pay, and Bitcoin.

As is apparent, payment systems is a rapidly developing area of the law.  In his article, Prof. Burge discusses why efforts at codification via the Uniform Commercial Code have failed, in large part because opponents of consumer protection provisions have “spiked the cannon” (my words, not his).  Note Professor Burge’s analysis of legislative action in this area:

“Public law should presumptively not be the governing device for payments, although the presumption is a rebuttable one … Experience provides three interrelated reasons to err on the side of private governance.

“First, private law is more capable of adapting to technological change in a meaningful timeframe … Public legislative or regulatory process is not nimble enough to keep up with the times. That fact is not a design flaw in deliberative democracy; it is an intentional feature where the intention dates at least as far back as the United States Constitution …

“Second, after bright-line public law protections of system users are in place, the remaining incentives will be for system operators to conduct themselves in a manner that produces the most social benefit.

“Finally, the parties operating a payment system are in the best position to determine allocation of risks unaccounted for by limited public law, and also to handle a limited collection of risks that public law should impose.”

Although separated by 80 years, Prof. Burge’s analysis is not far off the mark from Dean Pound.  Reminding us that everything old is new again.

Mark Edwin Burge, Apple Pay, Bitcoin, and Consumers: the ABCs of Future Public Payments Law, forthcoming in 67 Hastings L.J. (2016)

The “High Commission” was a court specially established by the Crown in 1535 after the founding of the Church of England.  As the head of state was also the head of the church, heresy became, in effect, an act of treason, giving the Crown a special interest in ecclesiastical matters.

The jurisdiction of the High Commission soon encroached on the jurisdiction enjoyed by the common law courts.  The complaints piled up, until the High Commission was eventually abolished by act of Parliament in 1641.  Here is a feel for litigation in England four centuries ago.

“Many abuses in the practice of the Commission arose from acts of the parties to the suit and not from those of the commissioners themselves.  The commissioners had no interest in prolonging a case, for they were always overrun with business, and the additional fees were paid into the Exchequer, and not into their own pockets.  But the litigants of the seventeenth century firmly believed that the best way to win a suit was to tire out an adversary by delays and ruin him by court charges.

“As for the procedure to which posterity has objected – the examination upon oath ex officio, the written procedure, a trial largely in private before the formal hearing – this the Commission possessed in common with the Star Chamber, the Chancery, the Admiralty, the Court of Requests, all the ecclesiastical courts, the Councils of the North and in the Marches of Wales.

“Other evils in procedure and practice were due to the propensity of men in the seventeenth century towards litigation.  It was distinctly a part of the tactics of an advocate or proctor to cause his opponent as much delay and expense as possible, to ‘vex’ him by as many frivolous suits as he could in other courts, to gain slight decisions which should entail costs upon him, to aggravate his fine so as to force him to go at least to the delay and expense of attendance at the Court of Mitigations.

“One man was prosecuted at the same time by the same parties in fifteen different suits before the Commission, the Star Chamber, and the Assizes.  Frequently such suits were brought out of malice,  in hope that the defendant would be unable to meet the expense of so much simultaneous litigation.

“It seems clear that these suits, just cited above, were not in the least based upon doubts as to the jurisdiction of any of these courts, but upon a determination to win the case at all costs, and upon the litigant’s thorough belief that, if he only persisted long enough, he would find the right writ and the right court, and would, thereupon, be infallibly awarded the decision.

“The Day of Mitigations, the last court clay of each term, became, even before 1611, an important part of the Commission’s work.  Here fines, costs, and even sentences were reduced upon petition.  The regular practice was to fine heavily in terrorem, and then, at Mitigations, when some evidence of compliance with the Court’s order had been shown, to reduce the fine by one-half, by three-fourths, or even to remit it altogether.  In the same way deprivations, suspensions, excommunications were lightened for those who showed themselves amenable and repentant.”

In 1927, Prof. William Holdsworth delivered four lectures on legal history to American audiences, which lectures were collected in Some Lessons from Our Legal History (The Macmillan Company 1928).  Holdsworth, a law professor at Oxford, held “the oldest University Chair in English law in the world,” a chair first held by William Blackstone in 1758.

Read his remarkable analysis of Lord Mansfield’s 1772 decision in Sommersett’s Case.

“As the history of the writ of Habeas Corpus shows, Parliament and the common lawyers were careful to guard the principle of the thirty-ninth clause of the Great Charter, that a man could not be imprisoned except by due process of law.  That in effect meant that any restraint of liberty must be proved to be legally justified, and that all restraints which could not be thus justified, were illegal.

“That this principle so stated, and safeguarded by the writ of Habeas Corpus, was a better protection to liberty than any number of abstract declarations of right, can be seen by the famous Sommersett’s Case in which the idea that the status of slavery was recognized by English law was finally given its quietus.

“In the eighteenth century the slave trade was a lucrative business, in which many had an interest … Lord Mansfield [ ] decided that … Harrison, in Elizabeth’s reign, had correctly stated the law when he said that ‘if any [slaves] come hither from other realms, so soon as they set foot on land they become as free in condition as their masters.’

“The fact that Lord Mansfield refused to follow the commonly received view of the merchants, and was induced to give a decision opposed to that view, after hearing an argument based mainly on the mediaeval law as to villeinage, probably surprised many of his contemporaries as much as an opposite decision would have surprised us.

“But I think the decision was largely due to maintenance of the view, that any interference with liberty must be justified by law.  There was legal warrant for recognizing the status of a villein: there was none for recognizing the status of a slave.

“As Lord Mansfield said at the close of his judgment, ‘Whatever inconveniences may follow from the decision, I cannot say this case is allowed or approved by the law of England; and therefore the black must be discharged.’”

That’s right – in 1772, Lord Mansfield declared that slavery was not recognized by English law.  Even more, the case came up on a writ of Habeas Corpus.

From Wikipedia: “Mansfield is best known for his judgment in Somersett’s Case on the legality of keeping slaves in England.  The English had been involved in the slave trade since 1553, and by 1768, ships registered in Liverpool, Bristol and London carried more than half the slaves shipped in the world.

“James Somersett was a slave owned by Charles Stewart, an American customs officer who sailed to Britain for business, landing on 10 November 1769.  A few days later Somersett attempted to escape.  He was recaptured [ ] and imprisoned on the ship Ann and Mary, owned by Captain John Knowles and bound for the British colony of Jamaica.  Stewart intended to sell him there.

“However, three people claiming to be Somersett’s godparents [ ] made an application before the Court of King’s Bench for a writ of habeas corpus, and Captain Knowles was ordered to produce Somersett before the Court of King’s Bench, which would determine whether his imprisonment was legal … As a result of Mansfield’s decision, between 14,000 and 15,000 slaves were immediately freed in England.”

Explained Holdsworth, “Sommersett’s Case, decided on a writ of Habeas Corpus, is an excellent example of the fact that the principle of personal liberty is assumed; and that, in practice, its ambit depends upon the scope and application of the remedy for its infringement.”

“In later days it has sometimes been necessary to suspend the right to get a writ of Habeas Corpus; but this can only be done by an act, not of the executive, but of the Legislature; and in England it is not possible by a single act of the executive or the Legislature to suspend all constitutional guarantees, or to proclaim a state of siege.”

William Searle Holdsworth, Some Lessons from Our Legal History (The Macmillan Company 1928)

Roscoe Pound, dean of Harvard Law School, was an influential legal scholar with a large body of writings.  Some say he later contradicted himself; perhaps, but his earlier writings offer deep insight into the American legal system.

(Pound was born in 1870, and was raised in Nebraska.  His chief academic training was as a botanist, and he received a PhD in botany.  Nebraska, and many other midwestern states, were ravaged by locusts in the late 1870s.  Consider how such events transformed the young botanist.)

Here is Pound in full power, writing in 1923:

●    On 19th Century law in America

“The truth that more and more since the sixteenth century and universally in the nineteenth century the end of law was conceived in terns of the maximum of individual self-assertion.  This end was to be attained through a politico-legal ordering of society in which coercive social control was reduced to its lowest terms.”

●    Aka, “frontier justice.”

“Self assertion is one of the fundamental instincts or, if you will, one of the fundamental desires of men … The conception of law as a necessary evil, the doctrine that each rule of law must be justified by showing that it promotes a maximum of individual self-assertion, the doctrine of a minimum of law, restricted to what is demonstrably necessary to the realization of freedom as an idea, are protests against which … eighteenth-century thinking had seemed to lead.”

●    Law and Society

“We cannot develop the utmost that is in human powers in a mad scramble in which values are lost by friction and waste.  We must have a certain ordering of human activities that puts limits to human action, that assigns each to do things in order to protect existing values and to further the creation of new ones.  How far this ordering shall go must depend on the civilization of the time and place, on the values to be conserved and the means at hand to create new ones.”

●    What is Law?

“There is no universal body of legal institutions and legal rules for all civilizations.  Instead there is a universal idea, namely, human civilization.  ‘Different in its details,’ [Kohler] says, law ‘is alike in the fundamental quest, that is, the furthering of civilization through a forcible ordering of things … a relation which takes on a different content with the infinite variety in the conditions of human cultivation’” …

“But law is not only a means toward civilization, it is a product of civilization.  We must look at it, therefore, in three ways: as to the past as a product of civilization, as to the present as a means of maintaining civilization, as to the future as a means of furthering civilization.”

●    Rural America

“In rural, pioneer, agricultural America of the forepart of the last century, there was no occasion to limit the contracts a labourer could make as to taking his pay in goods.  To have done so would have been arbitrary.

“In urban, industrial America of the twentieth century, on the other hand, a regime of abstract freedom of contract between employer and employee often led to a destruction of values.  It led to sacrifice of the social interest in the human life of the individual worker.  Hence it was not unreasonable to put limits upon what employer and employee might contract.”

●    How Society Maintains Order

“There must be some system that does this.  It may be done by political or politico military machinery, as in the extreme case of Sparta; by tradition and stratified society resting on authority, as in the Middle Ages; by free competition, as we sought to do in the nineteenth century, or by an economic regime, as today.”

“In any event it is the place of the law to uphold that system so that civilization may he maintained  … A change of attitude in legal thinking throughout the world, which marks twentieth century jurisprudence, rests on recognition of the social interest in the individual life as something broader and more inclusive than individual self-assertion.”

Roscoe Pound, Interpretations of Legal History (Macmillan Company 1923)

The Uniform Commercial Code covers a wide scope of commercial transactions, from the sale of goods to warehouse receipts to secured transactions.  Article 3 deals with promissory notes, sometimes referred to as negotiable instruments.

In his 2012 book,  The End of Negotiable Instruments, James Steven Rogers argued that most of the law contained in Article 3 of the Uniform Commercial Code lost real-world relevance long ago.

Rogers echoed Grant Gilmore, who famously described Article 3 as “museum of antiquities – a treasure house crammed full of ancient artifacts whose use and function have long since been forgotten.”  Grant Gilmore, Formalism and the Law of Negotiable Instruments, 13 Creighton L. Rev. 441, 461 (1979).

Gilmore had a brilliant mind, and glib turn of phrase.  His quote is often-repeated:  “Codification … preserve[d] the past like a fly in amber.”

Not so fast.  Article 3 continues to provide useful guidance, right through the mortgage crisis.  One of the pre-eminent scholars of commercial law is Alvin C. Harrell, a Professor of Law at Oklahoma City University School of Law.  Prof. Harrell is the Executive Director of the Conference on Consumer Finance Law; a member of the American Law Institute (ALI); and a member of the American College of Commercial Finance Lawyers.

Heed carefully Prof. Harrell’s following comments on the Uniform Commercial Code.

“These cases reinforce the observation that the UCC is the most carefully-drafted statute in history.  It can be noted that UCC Articles 3 and 4 are written in relatively clear and simple terms and yet answer most of the legal questions that arise within their scope.  It is rare for a modern statute to do this, but the UCC does so on a regular, even continual basis.

“The result is exceptional legal clarity as to important yet routine transactions.  Those of us who conduct these transactions should not fail to appreciate the benefits of this legal environment.  It is surely a key factor in the continuing prosperity that we often take for granted.

“Obviously, and as noted by others, it is easier to disrupt such a structure than to create or preserve it.  The UCC was one of the great achievements of the Twentieth Century.  Keeping it may be one of the great challenges of the Twenty-first.”

Alvin C. Harrell, “2014 UCC Articles 3 and 4 Update,” in Consumer Finance Law Quarterly, Vol. 68, No. 3 (2014)

Sir Edward Coke was born in 1552.  He was regarded as a great lawyer.  He was twice married, his domestic life being full of quarrels.  Coke was one of the most truculent of English lawyers, and an arch-rival of Francis Bacon.  “He was a potent element in Francis Bacon’s ruin,” says Dean Church.

On the study of law, Coke said the following, true now for many centuries:

“Our student shall observe, that the knowledge of the law is like a deepe well, out of which each man draweth according to the strength of his understanding.  He that reacheth deepest, he seeth the amiable and admirable secrets of the law, wherein I assure you the sages of the law in former times (whereof sir William Herle was a principal one) have had the deepest reach.

“And as the bucket in the depth is easily drawn to the uppermost part of the water, (for nullum elementum in suo propio loco est grave) but take it from the water, it cannot be drawne up but with great difficultie; so albeit beginnings of this study seem difficult, yet when the professor of the law can dive into the depth, it is delightfull easie and without any heavy burthen so long as he keepe himselfe in his own proper element.”

Roscoe Pound, Dean of Harvard Law from 1916 to 1936, was a prolific writer in 1920s and 1930s regarding jurisprudence.  Here is Dean Pound’s description – both succinct and accurate – regarding the path of the law.

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“The historical school thought of each in terms of the growth of an organism, in terms of a development by the force of something working from within, wholly apart from human activity.  Blackstone’s analogy of an English castle made into a modern house, of something made over by men for their needs, by constant adaptations of and addings to the old materials, is quite as well taken.

“Indeed we might well compare these systems of law to one of the old churches in Rome.  Perhaps the Servian wall is in its foundations and an old pre-Christian basilica was the first edifice.  It was made over into a church in the fourth century.

“Perhaps in the ninth century a new church was built on the foundations and with part of the walls.

“It was rebuilt in the twelfth century and many stones and ornaments and some of the old mosaics and paintings were incorporated.

“It was restored frequently in later centuries and overhauled thoroughly in an eighteenth-century restoration in the baroque style of the time.

“The nineteenth century has added new chapels and monuments and has sought sometimes to bring to light some fragments of antiquity.

“How much of what men use today is the Servian wall or the Roman basilica, or the church in which the fifth-century council sat, or the church of the twelfth century or even the church of the Renaissance?  Such a picture is much nearer the truth than the picture of organic evolution and continuous identity with which the historical school made us familiar.”

Roscoe Pound, Interpretations of Legal History (Macmillan Company 1923)