Opposition Brief — Virginia Mortgage Co. v. United States

NO. 99-178 | OTRIOR @& THE GLERM

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1998

VIRGINIA MORTGAGE CoO.,

Petitioner,

Vs.

UNITED STATES OF AMERICA

And HAROLD MILHOLEN

D/b/a/ THE BASIC GROUP

Respondents.

On Petition for Writ of Certioari

To The United States Supreme Court

RESPONDENTS BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

Benjamin Spence Albright

101 Weatherly Square

Ramseur, N.C. 27316

(336) 824-4802

Attomey for

Respondent Milholen

QUESTIONS PRESENTED

I. Can a Citizen unilaterally file what is purported to be a

“Federal Common Law Lien and Writ of Attachment” with the

Register of Deeds and obtain an interest in the real property of

another sufficient to withstand a motion for summary judgment in

any action that requires an ownership or lien interest to have

standing?

If. Can “Temporary Staff Shortages” constitute “Excusible

Neglect under Federal Rule of Civil Procedure 6(b)(2)?

Il. Can a District Court grant a Motion to Dismiss for Lack of

Jurisdiction against petitioners who lack standing for failure to

have an ownership interest in the property that is subject of the

litigation.?

LIST OF PARTIES

All parties are listed in the caption on the cover page. The writer

of this brief must point out that the petitioner has failed to join the

owner of a '4 undivided interest in the subject property.

TABLE OF CONTENTS

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Table of Authorities.......... Se a 4

Opinions Below... .0sccccccccesscesccvevevececevevessoees 6

Beg EE RPC Oe On en ea 6

Statutes and Rules Involved.....................0cee eee eens 6

I os cc eestuensoobenesteccubaus 10

ALBUMERE.......0.cccccccccvcvecrecccerccrerereeeesesveseeesers 13

Petitioners Ownership Interest.................++. 13

Statute of Frauds...............ccceeeeeeees 14

Requirement of a Seal................66 16

The Connor Act and Notice.............. 16

ee te ee dus mbeeenaueeuts 17

Lack of Jurisdiction for failure.......... 18

To file a Certificate of Assumed

Name

DORIAR,. «0 cccvcesccevcccsvscescccesceseseeseseeesosees 19

soos eesnaweeuuled EE Dee 20

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TABLE OF AUTHORITIES

CASES

Bank v. Wimbish, 192 N.C. 552, 135 S.E. 452 (1926)............4 15

Bourne v. Lay & Co., 264 N.C. 33, 140 S.E. 2d. 769 (1965). ..... 16

Cherokee Home Demonstration Club. V. Oxendine 100 N.C. App.

622, 397 S.E. 2d G43 (1990).....ceccerccorvercsscroeersresevseeresersssessesesees 18

Daniel Boone Complex, Inc., v. Furst, 43 N.C. App. 95, 258 S.E.

Dd 379 (1G TO). cxvacssesscrossesestesncesernscsncszsestioneonsenveessovenenssenssosenntanes 18

Davis v. Lovick, 226 N.C. 252, 37 S.E. 2d 680 (1946) (rev. on

other grounds, by Kent v. Humphries, 303 N.C. 675, 281 S.E.

DA 43 (19BY) ncecerecceccovresorecseersnosenssaevsnseseneeseceesorerecoesonesosenssnes 15

Devereaux v. McMahon, 108 N.C.134, 12 S.E. 735 (1888). ....... 15

Falkner Advertising Associates v. Nissan Motor Corp,. 945 F. 2d

694 (1991 CA 4 MD).........ccccscseserseresreenserssecsesssenenessessesersneenees 20

Federal Rule of Civil Procedure 6(b)(2) ........::cccccccceeseeesreeeeeeeeeeees ]

G.D. Searle & Co. v. Chas. Pfizer & Co., 231 F2d 316 (1956

COAT) .ncovsstineceonsnnsecnvsssecenscaseoteaveoesntiertnwatvencesceiemeetassnstestinnineennen 13

Harper v. U.S., 423 F. Supp. 192 (DC SC 1976). ......:cccceseeeeeeeees 20

Hathaway Motors, Inc., v. General Motors Corp., 18 FRD 283

(1955 DC Comm) ...........ecesorsssseceseececerenessensnesesorsssesesssnssersssoresees 20

Hi-Fort Inc., v. Burnette, 42 N.C. App. 428, 257 S.E. 2d 85

NDT DD. ceceoreeserecsoosserersseenresreseesersusecsoosonteseresenescorvenesansnsseuseeneonstes 17

Highlands Township Taxpayers Association v. Highlands, 62

N.C. App. 537, 303 S.E. 2d 234 (1983)......:ceccseseseseeseeseseneneees 18

Investors Corp. v. Field Financial Corp, 5, N.C. App. 156, 167

BBE Dd B52 CIDGID. cecccccsecsnereevsvenceencvsversconsesnvsevsnesnnenanovaceoonscnts 16

Kime v. Brooks, 31 N.C. 218 (1848) ..........::scccccsssscessererereeessesenes 15

King v. McRackan, 168 N.C. 621, 84 S.E. 1027 (1915)............ 17

Moore v. Small, 19 Pa. St. 461 (1852).......cccccccccceeesssserteeeeeeeeeenees 14

Nolan v. Meyer 520 F.2d 1276, cert den. 423 US 1034, 46 L.E. 2d

408 (1975, CA2 NY). .....c.ecccccscsssecceccercsncercerserssesecssesersnssnsenenses 19

Strain v. Fitzgerald, 128 N.C. 396, 38 S.E. 929 (1901). ............ 16

United Sand and Gravel v. US, 624 F.2d 733 (Sth Cir. 1980).....19

Winebrenner v. U.S., 924 F.2d 851 (1991 CA-9-Cal) ........:cs000 19

STATUTES

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Fe RTE, FIG cccccoccsciiaticssertovssvcniteumintinieiiaaemamaenia 11, 15, 19

De CE FEOF .....cccssstinccsetinncindeestiabinntscladiemaneeniminasaats 10

BD CII BO 0G CP scene cccccsecsecconesconntncisesisecscentenonnmmaneieomeniants 10

oe ice... cosspessocenononvcennnsennsentsunsseanneceartapmnacnniaannaniaed 14, 15

C9 GGnOU........., .. cscssssssecosecseccasesonicestonsensstiestdeenatsessanssnanennennianes 17

CEO GOMOD. csceccscetecernetmnsssnevesimnntscaenamemanennemadin 17

C0 De BREE... nccnuniscscccisscdeesisesonnenssenssecisuccsetationsunnnnts sainaninlanasiatanbeanien 16

ChB BTLG 6 _. ...cssesissermnansemscionionsoepmmmaaamaamcaite 16

Ch Occ ccccencassossscnniavandsnsenmsenesenmemnaseetaneniimaaamenteinn 18

CFB BT 0 1B. ccoccccccvcccccscosccecasnoceconespvscessesnvensocossebavsesovaveosnsepncssassesions 16

CAE BT cD ........ncusneccovneccnccenoctersduecsessencnbesccsentnveansianibinommeminanennn 16

Rule 12(ON6)....cccccceccsrssecccorcsvecorsseseresscssereorssessocessesccserenossnseonessess 20

Rishe SG(E) ...ccccseccecreecssersovsercesvcesesersecsensesosssesnssseesessnsoscsoossnesers 12, 13

Rule 56(e) of the Federal Rules of Civil Procedure. .............::0++ 13

ewer

OPINIONS BELOW

The opinion of the Court of Appeals issued in support of its

judgment is unpublished, per curiam, but reported as Virginia

Mortgage Company v. United States of America; Harold

Milholen, a/k/a The Basic Group, 1999 US App. LEXIS 4809

(March 22, 1999) and is reprinted in the Petition for Writ of

Certiorari.

The Opinion of the District Court is reported as Virginia

Mortgage Co., v. United States of America, and Harold Milholen,

d/b/a/ The Basic Group, 1998 U.S. Dist. LEXIS 13359, 82

A.F.T.R. 2d (RIA) 6036 (August 12, 1998) and is reprinted in the

Petition for Writ of Certiorari

JURISDICTION

The opinion of the Court of Appeals in this case was filed on

March 22. 1999. Although this respondent was not timely served

with the filing to the US Supreme Court, upon inquiry with the

Court Clerk, this respondent believes the petition was timely and

that the Court has jurisdiction to review this matter. This

respondent does not believe that the United States Courts have

jurisdiction of the Petitioners claim as the petitioner lacks any

ownership interest and therefore lacks standing.

STATUTES AND RULES INVOLVED

This case involves application of the following statutes and rule

all of which are set out in the Petition for Certiorari except 28

USC 2410 and the relevant NC Statutes, which are set out below:

26 USC Sec. 6321; 26 USC Sec. 6322(a) and (b); 26 USC Sec.

eel

6335; 28 USC 2410; G.S. 22-2; G.S. 44-38; G.S. 44A-12; G. S.

47-18; G. S. 47-20; G.S. 47-20.1; G.S. 66-68; and Fed R. Civ. P.

6(b)(2).

28 USCS 2410(a).

Under the conditions prescribed in this section

and section 1444 of this title for the protectio of

the United States, the United States may be

named a party in any civil action or suit in any

district court or in any state court having

jurisdiction of the subject matter --

(1) to quiet title to,

(2) to forclose a mortgage or lien upon,

(3) to partition,

(4) to condem, or

(5) of interpleader or in the nature of

interpleader with respect to,

real or personal property on which the United

States has or claims a mortgage or other lien.

G.S. 22-2. Contract for sale of land; leases.

All contracts to sell or convey any lands,

tenements or hereditaments, or any interest in or

concerning them, and all leases and contracts for

leasing land for the purpose of digging for gold or

other minerals, or for mining generally, of

. whatever duration; and all other leases and

contracts for leasing lands exceeding in duration

three years from the making thereof, shall be void

unless said contract, or some memorandum or

note thereof, be put in writing and signed by the

party to be charged therewith, or by some other

person by him thereto lawfully authorized.

G.S. 44-38 Claim of lien to be filed; place of filing.

a

All claims shall be filed in the office of the clerk

of superior court in the county where the labor

has been performed or the materials furnished,

specifying in detail the materials furnished or the

labor performed, and the time thereof. If the

parties interested make a special contract for such

labor performed, or if such material and labor are

specified in writing, in such cases it shall be

decided agreeably to the terms of the contract,

provided the terms of such contract do not affect '

the lien for such labor performed or materials

furnished.

G.S. 44A-12 Filing Claim of Lien

(a) Place of Filing. - All claims of lien against

any real property must be filed in the office

of the clerk of superior court in each county

wherein the real property subject to the claim

of lien is located. The clerk of superior court

shall note the claim of lien on the judgment

docket and index the same under the name of

the record owner of the real property at the

time the claim of lien is filed. An additional

copy of the claim of lien may also be filed

with any receiver, referee in bankruptcy or

assignee for benefit of creditors who obtains

legal authority over the real property.

G.S. 47-18(a) Conveyances, contracts to convey, options and

leases of land.

(a) No (I) conveyance of land, or (ii) contract to

convey, or (iii) option to convey, or (iv) lease

of land for more than three years shall be

valid to pass any property interest as against

lien creditors or purchasers for a valuable

consideration from the donor, bargainor or

lessor but fro the time of registration thereof

in the county where the land lies, or if the

land is located in more than one county, then

in each county where any portion of the land

lies to be effective as to the land in that

county.

GS 47-20 Deeds of trust, mortgages and conditional sales

contracts, effect of registration.

No deed of trust or mortgage of real or personal

property, or of a leasehold interest or other chattel

real, or conditional sales contract of personal

property in which the title is retained by the

vendor, shall be valid to pass any property as

against lien creditors or purchasers for a valuable

consideration from the grantor, mortgagor or

conditional sales vendee, but from the time of

registration thereof as provided in this Article;

provided however that any transaction subject to

the provisions of the Uniform Commercial Code

is controlled by the provisions of that act and not

by this section. 7

GS 47-20.1 Place of registration; real property. a

To be validly registered pursuant to G.S. 47-20, a

deed of trust or mortgage of real property must be

registered in the county where the land lies, or if

the land is located in more than one county, then

the deed of trust or mortgage must be registered

in each county where any portion of the land lies

in order to be effective as to the land in that

county.

GS 66-68 (a)

Unless exempt under subsection (e) hereof, before

any person or partnership engages in business in

10

any county in this State under an assumed name |

or under any designation, name or style other than |

the real name of the owner or owners thereof,

before any limited partnership engaged in

business any county in this State other than under

the name set out in the Certificate filed with the

Office of the Secretary of State or before a

corporation engages in business in any county

other than under its corporate name, such person,

partnership, limited partnership, or corporation |

must file in the office of the register of deeds of '

such county a certificate giving the following

information: (1) The name under which the

business is to be conducted; (2) The name and

address of the owner, of if there is more than one

owner, the name and address of each.

This is an action filed by the petitioner on October 24, 1997

(Record, Doc. 1) in what is purported to be a Quiet Title Action

pursuant to 28 USC 2410 (a) and for damages pursuant to 26 USC

7433. For the first time through its statements in its Petition for

Writ of Certiorari, Petitioner seeks to bring this action under the

guise of 26 USC 7426. Respondent has maintained from his

beginning brief’s that an action brought under 28 USC 2410 (a)

was for the taxpayer and that the case was brought under the

wrong section of the code. The real crux of this case was not

whether Petitioner had an ownership interest in the property (it is

clear it did not) but whether Petitioner could unilaterally file what

is purported to be a “Federal Common Law Lien and Writ of

Attachment” that was not signed by the property owner and was

not perfected or adjudged by any judicial official to obtain a lien

holder interest in the property that would allow an action for

proceeds under 26 USC Sec. 7426.

STATEMENT OF THE CASE

In its unverified complaint, petitioner contends to have an

“ownership interest” in the Real Property and to have “purchased”

10

1]

the Real Property that is a subject of this action on August 5,

1996. (Comp. Sec. IX (a) and (b) Page 5) (Record Doc. 1). The

property that is subject to this action was originally owned by N

& S Vending Service, Inc., and was seized by the Internal

Revenue Service and sold on May 29, 1997 to Basic Machinery

Company, Inc. as is shown by the exhibit attached to the affidavit

of William Milholen. (Record Doc. 9) Defendant Milholen has

made a diligent search of the Records of Chatham County, N.C.

and has found only one document on record between the

petitioner and N &S Vending Service, Inc., prior to and after the

seizure by the Internal Revenue Service. The document entitled

“Federal Common Law Lien and Writ of Attachment” is dated

August 5, 1996, the same date that petitioner alleged it purchased

the property and is attached to the affidavit of Wade H. Paschal.

(Record Doc. 8) This document is not signed by any officer or

employee of N& S Vending Service, Inc. The document purports

to be “To secure Investment and Repayment of Loan.” The

document is not under seal. If the document is a lien, the lien was

not perfected by bringing an action to enforce the lien under G. S.

44A-13 within the time required by said Statute. (Paschal

Affidavit Attachment, Record Doc 8) If the document is a

Mortgage, the petitioner has not brought this procedure in accord

with 26 USC 7426 giving a right to a civil action by a person

other than the taxpayer. (Although it is now attempting for the

first time to propound this theory.)

The action filed by the petitioner in this matter is a result of what

is purported to be a federal common law lien and writ of

attachment. (Paschal Affidavit Attachment, (Record Doc. 8). This

document is a concept of the anti government group known as the

FREEMEN and is circulating among various persons and on the

internet end has been filed in several North Carolina counties

(including Chatham and Randolph) in the identical form as that

attached to the affidavit of Wade H. Paschal. The writer of this

brief believes that the document is being used Nationwide. The

document carries only the signature of the petitioner and no

signature of any property owner. There is no basis in law or

equity for petitioner to claim an ownership interest in the property

and no other documents are of record giving petitioner any

11

12

ownership interest in the subject property. Without an ownership

interest in the property, petitioner has no standing to bring this

action under 28 USC 2410 (a)

Procedurally, the defendant Milholen filed various motions to

dismiss on 12/24/97. District Court Opin. P. 2, (Record Doc. 5)

Petitioner failed to file any response to the motions by defendant ,

Milholen and the court could have decided these motions as |

unopposed motions pursuant to local rules but on February 26,

1998, the Court converted the motion of defendant Milholen to -

one for summary judgment and allowed Petitioner until April |,

1998 to respond with evidence of its ownership interest in the

property. District Court Opin. p. 2 (Record Doc. 12). On April },

1998 Petitioner filed its first response to the motions of 12/24/97

(Record Doc. 18). Attached to this response was a “Declaration”

by Thomas E. Tilley that did not meet the requirements of a sworn

document pursuant to Rule 56(e) of the Federal Rules of Civil

Procedure. On April 9, 1998, Defendant Milholen filed a reply

brief. (Document Doc. 19).

On August 12, 1998, the district court granted Defendant

Milholen’s motion after determining that no admissible evidence

was offered by Petitioner to support an ownership interest in the

property and that Petitioner had no standing to bring this action

without an ownership interest. (District Court Opin. P. 2-6, 10).

The matter was timely appealed by the Petitioner to the Fourth

Circuit Court of Appeals and the matter was affirmed by the

Fourth Circuit Court of Appeals in an unpublished, per curium

decision stating that summary judgment was properly granted

against the petitioner in favor of Milholen as the Petitioner had

failed to show an ownership interest in the property and that the

action against the United States of America was properly

dismissed as an unopposed motion. (Court of Appeals Decision

Appendix A of Petitioner)

12

ARGUMENT

THE DISTRICT COURT PROPERLY GRANTED

SUMMARY JUDGMENT TO DEFENDANT

MILHOLEN.

The district court granted summary judgment for Milholen due to

petitioners failure to bring forth any evidence recognized under

N.C. Law to indicate an ownership interest in the property.

(District Court Opinion, p. 6) After converting Milholen’s

12(b)(6) motion to dismiss to one for summary judgment,

petitioner offered no admissible evidence that conformed to the

requirements of Rule 56(e) of the Federal Rules of Civil

Procedure. (Record Doc. 18) Milholen produced evidence

attached to his motion to dismiss that indicated that the only

document of public record in Chatham County regarding this

action was a document purporting to be a “Federal Common Law

Lien and Writ of Attachment” (Paschall, Record Doc 8) The court

made its decision upon review of the file and the lack of any

evidence produced on the part of the petitioner to support its

ownership interest in the property. Petitioner's sole assertions

include an unverified complaint and unsworn declaration that it

purchased the property and funds were tendered. Affidavits

which are inadequate under Rule 56(e) must be disregarded. G.D.

Searle & Co. v. Chas. Pfizer & Co., 231 F2d 316 (1956 CA7) Asa

matter of law, and upon the evidence produced, petitioner

produced no admissible evidence to withstand summary

judgment.

PETITIONER’S OWNERSHIP INTEREST

Even if the Court allowed the Tilley Declaration, the petitioner

could not have prevailed as petitioner had no interest in the

subject property.

There is no non-possessory interest in real property in North

Carolina that can be held absent a writing signed, sealed, and

13

14

delivered by the transferor, a probated testamentary transfer,

acquisition by and through intestate succession, or a judicially or

statutorily declared and perfected lien. (Since petitioner has

provided no evidence of any possessory interest nor alleged any

possessory interest, and this matter does not involve a

testamentary transfer or intestate succession, this discussion will

not include possessory leasehold interests or transfers upon

death.) Any interest that petitioner could have in the subject

property must be derived from a writing signed, sealed and

delivered by the property owner or a judicially or statutorily )

perfected lien claimant.

The document of title that was recorded on August 5, 1996 does

not comply with any of the prerequisite laws of North Carolina to

allow petitioner to acquire any property interest. Discussion will

need to follow distinct principals of North Carolina Real Property

law and Lien Law and the petitioner's lack of compliance as

follows:

1) The Statute of Frauds, G.S. 22-2. It has been said

“There is no stake for which men will play so

desperately. In man and nations there is an

insatiable appetite for lands, for the defence or

acquisition of which money, and even blood,

sometimes are poured out like water. The

evidence of land title ought to be as sure as

human ingenuity can make it. But if left in parol,

nothing is more uncertain. Whilst the temptations

to perjury are proportioned to the magnitude of

the interest. The infirmity of memory, the honest

mistakes of witnesses, and the misunderstanding

of parties, these are all elements of confusion and

discord which ought to be excluded.” Woodward,

J. in Moore v. Small, 19 Pa. St. 461 (1852).

The Statute of Frauds in North Carolina requires that instruments

conveying lands shall be void unless in writing and signed by the

party to be charged therewith or by some other person by him

14

15

thereto lawfully authorized. G.S. 22-2. The signature may be

that of the grantor himself or it may be written by his agent in his

presence or under his direction. Devereaux v. McMahon, 108

N.C.134, 12 S.E. 735 (1888). If an agent, however, signs or

executes a deed for his principal who is not present, such agent’s

deed or signature on behalf of his principal is not valid to pass

title to real property purportedly conveyed unless the agent has

been given authority under seal to act for his absent principal.

Kime v. Brooks, 31 N.C. 218 (1848) Bank v. Wimbish, 192 N.C.

§52, 135 S.E. 452 (1926). In this matter, the only document of

record is a purported “Notice of Federal Common Law Lien Writ

of Attachment on Real & Personal Property.” (Paschal Affidavit

Record Doc 8) This instrument is not signed by the then owner of

the property, N & S Vending Service, Inc. and in accord with the

affidavit of Wade H. Paschal, Jr. attached to defendants motions,

there were no other documents on record with the register of

deeds of Chatham County that would give petitioner authority

under seal to sign the name of N & S Vending Service, Inc.

Defendant Milholen is unsure what significance this document

has as it is certainly not a deed, does not meet the requirements of

any conveyance of interest in real property, and even purports to

be “To secure investment & Repayment of Loan.” At best it is

some type of improperly executed mortgage on the property

which is the premise for the procedure under 26 USC 7426 giving

a right of action to other than the taxpayer. (Petitioner now

attempts to convert its action to one under 26 USC 7426 but an

examination of the pleadings will indicate this has first appeared

in the Petition for Writ of Certiorari)

Defendant Milholen respectfully suggest that the Court was in

error in its statement (District Court Opinion p. 6, fn. 2) that the

Statute of Frauds is unavailable as a defense to a litigant who was

not a party to the contract in question. Normally the defense of

the Statute of Frauds is personal to the parties of the contract and

is not available to stangers to the agreement; however, any person

against whom enforcement of the contract is sought may plead the

statute of frauds against a contract voidable under the statute of

frauds. Davis v. Lovick, 226 N.C. 252, 37 S.E. 2d 680 (1946)

(rev. on other grounds, by Kent v. Humphries, 303 N.C. 675, 281

S.E. 2d 43 (1981). Just as an assignee of any contract can

16

generally plead the defenses of his assignor, the successor in

interest in any transferred interest should be able to plead the

defenses of his predecessor. In this instance, petitioner seeks to

plead some unknown oral transaction or the document dated

August 5, 1996 (Paschal Affidavit, Record Doc. 8) to defeat the

title to real property conveyed to Milholen. Milholen qualifies as

“any person to whom enforcement of a purchase contact is

sought” and ought to be allowed to plead the defense in his own

right or as a successor in interest to the rights of N & S Vending

Service, Inc.

2). Requirement of a Seal: A seal is absolutely essential to the

validity of an instrument to convey title to real property in North

Carolina. Strain v. Fitzgerald, 128 N.C. 396, 38 S.E. 929 (1901).

A corporate seal is a necessary prerequisite to a valid conveyance

of real estate by a corporation. Investors Corp. v. Field Financial

Corp, 5, N.C. App. 156, 167 S.E. 2d. 852 (1969). The document

“Notice of Federal Common Law Lien Writ of Attachment on

Real & Personal Property.” Paschal Affidavit, Doc. 8) contains

no seal whatsoever for either Virginia Mortgage Company or for

N & S. Vending Service, Inc.. As a consequence, there is no

conveyance of title by this instrument. There is no other

instrument of record to evidence Petitioner’s “Purchase” of the

property.

3). The Connor Act and Notice: At common law, priorities as

between successive claimants of real property was that prior in

time was prior in right. In 1885, North Carolina enacted its

recording statutes known as the Connor Act. GS 47-18, GS 47-20.

These statutes, known as “pure race statutes” protect any

purchaser for value of specific land who records first, whether he

has notice of a prior unrecorded conveyance or not, and

irrespective of whether he is a prior or subsequent purchaser.

Bourne v. Lay & Co., 264 N.C. 33, 140 S.E. 2d. 769 (1965). To

be validly recorded, deeds, deeds of trust, mortgages, and

contracts relating to real property must be registered in the office

of the Register of Deeds in the county where the land lies. G.S.

47-18, G.S. 47-20.1. In other words, if a conveyance is not

recorded in the office of the Register of Deeds of the County

16

17

where the land is located by a grantee, it is considered absolutely

void with respect to purchasers for value, such as defendant

Milholen, who record their conveyances. The famous quote from

Bourne v. Lay & Co., id, is “No notice, however full and formal,

will supply the want of registration of a deed.” Of course, a

purchaser for value is one who pays consideration that is more

than merely nominal. King v. McRackan, 168 N.C. 621, 84 S.E.

1027 (1915). Defendant Milholen derived his 4 undivided

interest from Basic Machinery Company, Inc. A copy of the Deed

from the IRS was attached to the Affidavit of William Milholen

(Record Doc. 6) indicates value paid to the IRS in the sum of

$361,000.00. It is clear that the predecessor in title to Defendant

Harold Milholen was a purchaser for value. Of course, petitioner

has still not produced any valid document of title from N & S

Vending Service, Inc., thus making this argument merely

academic. It is further clear that a defective instrument, even if

recorded, imparts no constructive notice to a prospective

purchaser. Hi-Fort Inc., v. Bumette, 42 N.C. App. 428, 257 S.E.

2d 85 (1979).

4). Leins: In North Carolina, liens in the property of others may

be acquired by Judgment Lien, Statutory Lien or by Contract.

There is no such thing in N.C. or anywhere else as a Common law

Lien. In this matter, there is no indication that Petitioner claims a

Judgment Lien or that a Judgment lien is filed with the Clerk of

Court in Chatham County. (Paschal Affidavit Record Doc. 8).

There is also no indication that any action has been filed to claim

a statutory lien or that any action has been filed to perfect any

statutory lien. (Paschal Affidavit Doc. 8) In North Carolina,

Statutory liens are contained in G.S. Chapters 44 and 44A. Both

Chapters require that any claimed statutory lien be filed with the

Clerk of Court. G.S. 44-38 and G.S. 44A-12. Both Chapters also

require the claimant to bring judicial action to perfect the lien

within 180 days or 6 months depending on the Chapter. G.S. 44-

48(4) and G.S. 44A-13.

The creation of a lien by contract (deed of trust or mortgage) on

real property is a conveyance and must meet all of the

requirements for transferring of land. Daniel Boone Complex,

18

Inc., v. Furst, 43 N.C. App. 95, 258 S.E. 2d 379 (1979). Just as

the document involved does not qualify as a deed, it similarly

does not qualify as a mortgage lien or deed of trust. The

document is not sealed or signed by the owner of the property.

There is some evidence that the document is an unperfected lien

in that the document states it is “to secure investment and

repayment of loan.” (Paschal Affidavit, Record Doc. 8) If this is

the case, both defendants were entitled to ignore the document.

PETITIONER HAS NOT COMPLIED WITH NORTH

CAROLINA LAW BY FILING OF A CERTIFICATE OF

ASSUMED NAME WHICH IS A PREREQUISITE TO

JURISDICTION IN THIS MATTER.

North Carolina Law requires an unincorporated association, prior

to gaining the privilege of instituting a legal action in its common

name to record the necessary information required by G.S. 66-68

and then it must allege the specific location of such recordation.

In this matter, Virginia Mortgage Company is not a Corporation

and according to the complaint is a common law trust. No such

document is filed and this action should be dismissed for lack of

jurisdiction. (Paschal Affidavit, Record Doc. 8) See Cherokee

Home Demonstration Club. V. Oxendine 100 N.C. App. 622, 397

S.E. 2d 643 (1990), and Highlands Township Taxpayers

Association v. Highlands, 62 N.C. App. 537, 303 S.E. 2d 234

(1983).

Petitioner alleges that it has pendant or supplemental jurisdiction

on its claim against the United States of America to bring in

Defendant Milholen. Defendant Milholen questions the standing

and thus the jurisdiction of the court for petitioner to bring its

action against the USA under 28 USC 2410 due to no ownership

interest in the subject property. Defendant Milholen further states

that even if supplemental jurisdiction allows a claim against him,

that any claim against him does not involve a “substantial right

existing under the Constitution or laws of the United States.”

Therefore, compliance with G.S. 66-68 is mandatory prior to any

action against the defendant Milhollen. Defendant Milholen will

bring a counterclaim for slander of title against the persons who

19

comprise Virginia Mortgage Company if this action is not upheld.

Without being able to determine who Virginia Mortgage

Company is, the efforts and relief of defendant Milhollen could be

frustrated as a judgment would be unenforceable against the

unknown persons who make up the association.

PETITIONERS STANDING TO CHALLENGE THE USA

When someone other than the taxpayer claims an interest in

property or rights to property which the United States has levied

upon, his exclusive remedy against the United States is a wrongful

levy action under 26 USC 7426. United Sand and Gravel v. US,

624 F.2d 733 (Sth Cir. 1980).

The petitioner is not an owner of the property and does not have

any standing to bring an action under 28 USC 2410. In the case

of Winebrenner v. U.S., 924 F.2d 851 (1991 CA-9-Cal), the court

held that when the IRS levies upon property to satisfy unpaid tax

liabilities and a non-taxpayer claims he has an interest in the

property superior to the IRS, 28 USC 2410 is subordinate to 26

USC 7426; therefore, the third party must bring a wrongful levy

action and may not file suit seeking a quiet title order.

Based upon the documents of record, Petitioner has no ownership

interest whatsoever in the property and ne lien or perfected lien on

the property. If a claim is obviously without merit, the court may

dismiss for want of jurisdiction. Nolan v. Meyer 520 F.2d 1276,

cert den. 423 US 1034, 46 L.E. 2d 408 (1975, CA2 NY).

The very essence of the petitioner’s complaint is that petitioner

has some ownership interest in the land that is the subject of this

complaint. Petitioner contends that it “purchased” the property on

August 5, 1996 from N & S Vending Service, Inc. The only

document on the public record in the Register of Deeds from

Chatham County is the document entitled “Notice of Federal

Common Law Lien and Writ of Attachment”,(Paschal Affidavit,

Record Doc. 8). As a matter of law, this document is not

sufficient to bestow to petitioner any ownership interest in the

property as it is not signed by the prior owner. In addition, there

20

have been no proceedings in the Courts for Chatham County

regarding this property as between the petitioner and N & S

Vending Service, Inc. Without any documents of title, petitioner

has no standing to complain of the procedural requirements of 26

USC 0335 et. seq.

CONCLUSION

Whatever petitioner has, it clearly is not any perfected or

enforceable interest in the subject property. Petitioner's own

pleadings assert different positions:

a) “Purchased” Complaint, Record Doc. 1)(Petition p 4.)

b) “Purchased ...... and funds were tendered” (Record Doc.

18)

c) Discussion of Judgment Lien and Second Mortgages

“intangible non-possessory interest” (Appellants Brief,

Page 110, Petition p. 9)

d) “Petitioner's lien was a property interest” (Appellants

Brief, Page 26)

General conclusory allegations unsupported by facts are

insufficient to constitute a cause of action and where claims in the

complaint are insufficiently supported by factual allegations, these

claims may be properly disposed of by summary dismissal.

Harper v. U.S., 423 F Supp. 192 (DC SC 1976). Where it appears

that the petitioner would not be entitled to relief under any set of

facts which could be proved in support of the claim, the claim

should be dismissed. Hathaway Motors, Inc., v. General Motors

Corp., 18 FRD 283 (1955 DC Conn). Since the purpose of Rule

| 2(b)(6) is to provide defendant with a mechanism for testing the

legal sufficiency of the complaint, self-serving, inaccurate lega!

conclusions cannot rescue a factually deficient complaint from

dismissal. Falkner Advertising Associates v. Nissan Motor Corp,

945 F. 2d 694 (1991 CA 4 MD).

In this instance, the complaint refers to a purchase on August 5,

1996 and the affidavit of Wade Paschal provides the only

document on record in the Registry of Chatham County, the

20

21

—

location of the property, which also happens to have a date of

August 5, 1996. The court on examination of this document can

conclude that the petitioner can not prove his case under any set

of circumstances and that under this document petitioner has no

ownership interest of any kind that is recognized under the laws of

this State. Without any ownership interest, petitioner's claim is

defective and should be dismissed.

The bottom line is that petitioner has no ownership interest

recognized under N.C. Law and as such lacks standing to bring

this action. Only the taxpayer may bring the action petitioner

seeks to bring. Having produced no evidence of ownership other

that a broad allegation that it “purchased” the property, summary

judgment was properly granted in favor of the defendant

Milhollen.

Should the Court Grant a Writ of Certiorari for this case?

There is great need to have a Court of your stature declare that

there is no such thing as a Federal Common Law Lien and that the

filing of such a docuntent is tortuous as a slander on the title to

real property. When a person or entity can unilaterally file a

document against another citizen and effectively “lock up” all of

the real property owned by the person (title companies will not

insure and banks will not loan), all without resorting to any right

to be heard or object to the same, then there could be great

disruption in our society involving the sale of real property and

the use of the property for collateral. Such tactics and concepts

are being promoted by those known as the Freemen. There is no

law on the subject and each time the tactic ts used, innocent

property owners could be subjected to great amounts of judicial

process to remove a cloud on real estate titles. While this author

believes the law is abundantly clear and that you should not allow

Certiorari in this instance, the impact of these tactics will at some

point need to be addressed by the judiciary

ho

No

Respectively Submitted this -~ © day of August, 1999.

~

_

Benjamin Spence Albright

101 Weatherly Square

Ramseur, N.C. 27316

(336) 824-4802

Attorney for Defendant

Respondent Milholen

CERTIFICATE OF SERVICE

IT IS HEREBY CERTIFIED that two true and correct copies of

the foregoing document was placed in the United States Mail,

postage prepaid, on this the « § day of August, 1999, and

addressed as follows:

Norman B. Smith

Attorney for Petitioner

101 South Elm Street

Greensboro, N.C. 27402

Janet A. Bradley

U.S. Department of Justice

lax Division

oth & Cojnstitution Avenue. NW

POB 502

Washington, DC 20044

Benjamin Spence Albright