Category Archives: Lawyering

And Here You Thought Hooters Was Tacky

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Dear Leader’s signature campaign tactic:  Go rooting through someone else’s divorce files, and splash them across the front pages.  It is, in fact, how he got to be a U.S. senator.

Unless you’re a lawyer representing one of the parties, there is just something irredeemably tacky about sifting through the legal fall-out of others’ domestic problems.  It’s the sort of thing indulged in by “oppo researchers” and others who wear hats indoors.  They probably drink their beer from a can in a sack, too.

And here we’ve got one of them in the Oval Office, where he can put his feet up on the Resolute desk, a gift from Queen Victoria to the American people.  Kindly spare me any assertion that the campaign is not behind this maneuver.  I’m not the brightest bulb in the fixture, but to ask me to believe at face value that Gloria Allred just happens to have hooked up with a woman whose divorce lies buried under decades’ worth of archival dust, and who doesn’t appear to have done too shabbily out of the thing in the first place — that’s insulting to the meanest of intelligence.

A few things strike me about the people I’ve heard this Allred (how appropriate) woman “representing.”  The initial thing is that the client is never, ever the sole interest benefitted by Allred’s actions on behalf of her client, or in fact the chief interest benefitted.  There’s someone or something else behind the scenes, never mentioned of course in the news reports, who stands to benefit from her doings much, much more than her nominal client.  Like the illegal alien whom she “represented” against Meg Whitman.  Allred exposed her nominal client to a risk of deportation (or maybe she’d already been assured by the INS that that flank was covered?  maybe?) in order to embarrass a political opponent of her . . . well, let’s just call them the people who benefitted most from what she did.  Ditto this new “client.”  What purpose, exactly, is being served for her by unsealing divorce records from years ago?  She went through an ugly divorce.  OK, that only happens several hundred thousand times a year.  Is she going to experience some great epiphany of healing by seeing it all played out on national television?  We can’t say; maybe she really craves her few moments of fame.

Maybe she also craves being one more exploited woman, one more time.  Because that’s another thing that’s struck me about the people “represented” by Gloria Allred:  the ones we hear about are all women, who are all transparently allowing themselves, their lives, their misfortunes, to be used by strangers, invariably men it seems, and then put back on the curb, precisely as one would do with a street-walker one had picked up.  I mean, seriously, has anyone done any follow-up story on Whitman’s poor o-pressed illegal alien housekeeper (or whatever it was she did)?  Anyone check to see if she’s got a green card (or for that matter, how soon after she allowed Allred to “represent” her she had one miraculously issued) or health insurance, or where she lives?  Is anyone going to check on this newest “client” five years from now to see how she’s doing after having what we must assume to be intimate details about a decades-in-the-past existence spelled out in nice, gentle, legalistic language for 300+ million people’s salacious gratification?

Maybe I really am just a stoopid country lawyer.  OK; I very likely am just such and no more.  But a lawyer has no ethical duty I am aware of to participate in a course of action obviously contrary to the client’s actual interests, especially where that client is being used by other clients of the lawyer.  May a lawyer ethically do so, after full disclosure of all <ahem!> conflicts of interest the lawyer may have?  Yes, she can.  Ought she do so, as someone supposedly practicing a learned and noble profession?  Well, she’s the one who’s got to brush her own teeth in the morning.

“Victors’ Justice”; But Was It?

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Today we celebrate – yes, “celebrate” is preciselythe word I want – the hanging of ten as wicked men as humanity has cast up on the shore in the past several hundred years.

They’d been riding high, these lawyers, engineers, architects, doctors of philosophy, journalists, when they had the lives of millions in their filthy hands. They’d erected elaborate administrative structures where memoranda silently wafted through the chancelleries, drifted across desks, being initialed, stamped, counter-signed, and on and on, before a background of towers of smoke belching from the ovens, day in and day out. And through it all the relentless clanking of cattle wagons coupling in the switching yard, the rhythmic beat of steel wheels over rails of even length, each clack! bearing the human cargo within that many meters closer to a yard where those marked for immediate death were sent to one side – the vast majority of them – and those to be preserved for a lingering, gnawing, terrified, starving, vermin-infested, beaten-bloody deathly labor were sent to the other.

These men and their underlings occupied blocks on hell’s own organizational chart, blocks labeled things like “Referat VIIa – Ausland” and similarly bland titles. What they did was set out to slaughter an entire people, to enslave an entire ethnic group, to purge by starvation vast territories that they might be settled by Volksgenossen – racial comrades. 

We caught them, we and our allies did. The big fish, the guys who did shit like decree that a conference would be held at some forgettable suburb called Wannsee to discuss the Endlösung der Judenfrage in Europa, the final solution to the Jewish question in Europe, we carted them to a place called Nuremberg, convened a body called the International Military Tribunal (to all the hyperventilators about Guantanamo Bay and the trials there: yes, Nuremberg was not a civilian tribunal). And we made them answer for what they’d done. At least we made some of them answer, to some extent; some got off with a fraction of what they’d deserved. Some of the most culpable got in effect a walk. The Allies’ objectives were three-fold: (i) to punish behavior which few outside the Soviet Union even understood that humans could be capable of (the Soviets understood it all too well, on which more later); (ii) to document for the world that all this really had happened; and (iii) to establish a principle that such behavior was once and forever more beyond that which civilized humanity was willing to tolerate. All of that was to be accomplished within a framework of law. 

Pretty high-falutin’ stuff, when you think about it. 

I want to poke a couple of holes in what happened at Nuremberg. Not in respect of the bastards we hanged; we should have hanged more of them. In fact, my standard response to the hand-wringers who moan that the death penalty is “inherently” cruel and unusual is to ask them if they are prepared to stand atop their dunghill and crow that the Nuremberg defendants ought to have lived. Ummmmm . . . silence. So shut up, please. Where I beg leave to depart from history, and from the tenets of what I do for a living, is in the effort to characterize what happened at Nuremberg as “justice” in any legal sense, and how mistaken it was to call it “law.” 

Allow me also to make absolutely clear up front that I draw a clear distinction between “justice” and “what happens in a court room.” Sometimes the latter results in the former, but generally not. It’s why I do not refer to “the justice system,” but rather to “the legal system.” It’s why I want to throw up in my mouth when I hear the Learned Colleagues or our judiciary bloviating about “administering justice.” Bullshit, with all due respect. Your task, if you’d bother reading the constitutional documents which create you, is to determine cases and controversies according to law. You can leave justice to those cosmic wheels which were grinding slowly before your grandfather’s grandfather was a gleam in his daddy’s eye. 

It was the IMT’s tragic flaw that it conflated “justice” with “law.” The main trial defendants were charged with four counts, for each of which the penalty of death was sought: 

(i) engaging in a common plan or conspiracy to commit a crime against peace; 

(ii) planning, initiating, and waging wars of aggression and other crimes against peace; 

(iii) war crimes; and, 

(iv) crimes against humanity. 

We had in the dock everyone from the guy who ran the Reichsbank until he was fired well before war ever broke out (Hjalmar Horace Greeley Schacht; he ended the war in a concentration camp himself) to the guy whose voice sounded sufficiently like Joseph Goebbels’s that he was used as a radio stand-in (Hans Fritzsche) to the guy who ran the Hitlerjugend (Baldur von Schirach). We had Fritz Sauckel, who was the Germans’ chief slave-catcher, and Albert Speer, who allocated the slaves so caught among the manpower-starved war industries, and Robert Ley, who was in actual charge of employing the slaves allocated. We had Joachim von Ribbentrop, the foreign minister who flew to Moscow on a warm summer evening in August, 1939 and with his Soviet counterpart Molotov carved up Poland and consigned Latvia, Estonia, and Lithuania to decades of Soviet depredation and slaughter. We had Wilhelm Keitel, the “nodding donkey” as he was known around the Führer’s headquarters, who had signed the Kommissarbefehl, under which party commissars attached to every Red Army unit were to be summarily shot upon capture – and were; we had Alfred Jodl, under whose command that order was implemented. We also had men of almost truly psychotic sadism, such as Julius Streicher, who stalked his bailiwick literally carrying a riding whip in his hand, and Ernst Kaltenbrunner, who ran the Gestapo and the Sicherheitsdienst (SD) of the SS, to the lunatic fringe element like Alfred Rosenberg, the national socialist chief ideologue, to the actually driveling lunatic, like Rudolf Heß, once the Number 2 man in the party, but who’d been pretty much emasculated as a power player well before fighting broke out. We had Admiral Erich Raeder, commanding admiral of the bastard step-sister of the German military, and his immediate subordinate, Karl Dönitz, who came within an ace of starving a country into submission, then got fleeted up to command the navy and eventually, in the mad-hatter days of May, 1945 succeeded his dead-and-burned Führer.

 The problem, from a purely legalistic stand-point, is that what these men were accused of doing had never been defined as a crime. Now, from the Soviet stand-point that was no hindrance at all. If they thought you needed to be shot, why, they’d just march you down to the execution cellar (or out to a trench in the woods, as they did with 14,000-odd Polish officers, during that period when they were the Nazis’ allies). But the Americans and British had this curious tradition that without a pre-defined crime there could be no criminal offense. 

When had there ever been a “crime against humanity?” When had there ever been something like the Holocaust? Oh, well, other than the Holodomor, which netted seven million Ukrainians in less than two years, versus six million Jews in twelve; and other than the Red Terror, when anyone with more than two shoelaces was likely to be denounced to a Chekist troika, hauled in by sundown and dead with a bullet hole in the base of the skull by morning; and other than the “liquidation of the kulaks as a class,” during which hundreds of thousands of “special exiles” were given as little as ten minutes to be gone from their villages with what they could carry in their hands, and then dumped out without any tools, seeds, or shelter north of the Arctic circle. 

“War crimes” was a concept at least not completely foreign to the people in that courtroom. Of course, if by “war crime” you mean the wholesale shooting of prisoners . . . well, you’ve still got that Soviet problem. If you mean the wanton destruction of cities, with no effort even mildly to target genuinely “military” objectives within them, then the fly in your particular ointment is Air Marshall Sir Arthur “Bomber” Harris, who set out to “de-house” the German civilian population. If you mean systematically starving entire peoples, as was done on the Eastern front, well, you’ve got several hundred thousand emaciated corpses from 1914-18 in Germany, victims of a highly successful blockade the principal intent and effect of which was to starve Germany into defeat. Furthermore, the slaughter of civilians in consequence of direct military action was accepted practice as late as the Duke of Wellington’s Peninsular War. 

“Conspiring to wage aggressive war”? Huh? Since when was war something that a nation just sort of ambled into, without any planning or coordination among the various officials within its government? Well into the 1930s the United States maintained plans or at least the outlines of plans to invade pretty much every single possible country we might get to, including Britain and western Europe. Were we “conspiring to wage aggressive war?” France in 1914 went to war with Germany because of her treaty obligations with Russia. Germany went to war with Russia because of her treaty obligations with Austria-Hungary. Britain went to war in 1914 because of an 75-odd year-old treaty about Belgium, one of the signatories to which was Prussia. In 1939 Britain and France went to war with Germany by reason of unilateral guaranty given to Poland by those countries, which Poland had not asked for. Was that a “conspiracy” to wage “aggressive war”? In any of the foregoing I am not arguing the morality or immorality of what the belligerents did. What I am doing is pointing out how empty of meaning “conspiring to wage aggressive war” is as a specifically legal concept. For that matter, how do you define “aggressive” war? If the answer is that the “people who started the war” are necessarily the “aggressors,” do try to recall that from August, 1914 to this date historians still argue over “who started the war,” or whose “fault” was it that Europe exploded. I’m going to suggest that, again, as a legal concept, something that open to good-faith disagreement cannot form the basis for the definition of a crime, at least not consistently with any Anglo-American legal tradition.

A “crime against peace”? When the hell exactly did “peace” become something injurable by an individual’s action? A crime against peace must necessarily occur during peace, for during war there is no peace which may be disturbed. How do you know when a particular act of state crosses the line from recourse to violence, which so far as I’m aware no sovereign state has ever abjured in any enforceable sense, to a “crime against peace”? Either a sovereign reserves to itself every mechanism of compulsion on which it can lay hands, or it does not. War is of course the ultimate mechanism of compulsion. The United States had recourse to it in 1846 to enforce a somewhat dubious claim, inherited from Texas, to a boundary located on the Rio Grande. Britain had recourse to it in the 1820s when it desired that Turkey should no longer rule Greece. Prussia had recourse to it in 1866 when it desired to exclude Austria-Hungary from further involvement in northern European German politics. Russia had recourse when the Ottomans were alleged to have misbehaved themselves in Jerusalem, a place which then lay within their domains. Were all these “crimes against peace”? The situations from which they grew sure as billy-o had no implications for the several nations’ national security or other vital interests. 

All of which is to illustrate a principle that is fairly well-established in Anglo-American law, viz. unless you can plainly point to a specific behavior and say up front whether that is or is not within the scope of a criminal proscription, then you cannot, consistently with due process of law, make a crime of that behavior. Every person is entitled to know whether his conduct in any particular respect does or does not constitute a crime; ergo, the constitutional bar on ex post facto criminal laws. 

With all possible condemnation of the depravity of what the Nuremberg defendants (and millions more like them, every one of whom likewise deserved to hang) did, the charges of the IMT were brazenly ex post facto. And hopelessly vague. And let’s not forget that little matter of hypocrisy. The elephant in the room in that respect was of course the Soviet Union, which had waged absolutely unprovoked, undeniably aggressive wars of conquest against Latvia, Lithuania, Estonia, and Finland. In the former Baltic republics they immediately upon winning them embarked on their trademark bloodshed, in exactly the same fashion as Stalin had attempted to decapitate Polish society from September, 1939 through June, 1941. But it gets better. We charged Karl Dönitz with war crimes for waging unrestricted submarine warfare. Which he had. But then he offered the affidavit of Fleet Admiral Nimitz, who informed the IMT that the U.S. submarine fleet had operated under orders substantially identical to those of the U-boats. Oh. We convicted him anyway. 

I must say that I’m certainly not the first person to notice the above “discrepancies,” as Twain would call them. No less a personage than the then chief justice of the United States, Harlan Fiske Stone, termed the IMT proceedings a “high-grade lynching party.” “I don’t mind what he [chief U.S. prosecutor Robert Jackson, a colleague on the Supreme Court] does to the Nazis, but I hate to see the pretense that he is running a court and proceeding according to common law. This is a little too sanctimonious a fraud to meet my old-fashioned ideas.”  Jackson himself observed to Truman in 1945 that the Allies “have done or are doing some of the very things we are prosecuting the Germans for. The French are so violating the Geneva Convention in the treatment of prisoners of war that our command is taking back prisoners sent to them. We are prosecuting plunder and our Allies are practicing it. We say aggressive war is a crime and one of our allies asserts sovereignty over the Baltic States based on no title except conquest.” 

But here’s where things really went off the rails with the whole concept of legalistic punishment for what Nazi Germany did, and why I say it was above all a mistake to call it “law”: We stopped. Way too soon. Every hack of a district attorney general knows that you either enforce a law whenever someone breaks it, or that law in fact does not exist, and everyone knows it. There were trials after the major war criminals’ trial. There were trials of the concentration camp doctors and commandants. There were trials of military commanders. There was a mish-mash of a trial starring Ernst von Weiszäcker and a couple of others from the Foreign Office, and a gaggle of other functionaries. The later trials were catch-as-catch-can affairs in large measure because the prosecution by that time was pretty much starved for staff and resources. They even had trouble rustling up enough judges to hear the later cases. 

The inevitable result was that in the western zones at least, trials subsequent to the main IMT trial became farcical in their outcomes. Just for example, we tried the commanders of the Einsatzgruppen and their immediate subordinates, the commanders of the Einsatzkommandos. There were four Gruppen, lettered A through D. Each Gruppe had several Kommandos beneath it. They were roving death squads. They were what the Germans did before they hit on the notion of the gas chambers. They killed retail, by gunfire, which means that a specific person had to point a tangible object – a muzzle – at each individual, and squeeze the trigger. Thousands upon thousands of times. At Babi Yar outside Kiev, from September 29-30, 1941, they shot not quite 34,000 Jews in this fashion. Other Aktionen were smaller, but likewise just as individualized. 

The Soviets, bless their blood-thirsty little hearts, shot everyone they could find who had anything to do with the Einsatzgruppen. The western Allies had a separate trial; no defendant was more junior than commander of an Einsatzkommando. Apparently all those guns went off at the command of some officer but without other human intervention. There were fourteen death sentences handed down (not even every defendant got one). Only four actually danced at the rope’s end. The others all had their sentences commuted in 1951 to terms of varying lengths. By 1958 all had been released. Let’s be absolutely clear about this: This were the bastards who actually gave orders to aim and shoot at mothers holding their infant children, cooing to them so their last moments on earth would not be fearful, to see one last time their baby’s smile just before the machine guns barked. And by 13 years after the war they were all free. All. 

The Foreign Office was hip-deep in the Final Solution. Its emissaries, ambassadors, and bureaucrats knew what was going on, volunteered to assist the SS, the SD, and the military authorities, and enthusiastically pitched in when it came to compiling the lists of places from which deportations were to be made and the people to be deported. They hectored, cajoled, and threatened nominal allies, nominal neutrals, and of course the authorities of whatever stripe existed in occupied lands. In Das Amt und die Vergangenheit: Deutsche Diplomaten im Dritten Reich und in der Bundesrepublik, a book written and published in 2010 pursuant to a 2004 mandate from the German government, the history of the ideological penetration of the Amt before the war and its seamier activities during the war are spelled out in painstaking detail. But most of the book deals with the largely successful whitewashing operation of the post-war period. Numerous – I mean numerous – men with blood up to their shoulders retired, with full pensions, honors, and dignities. Oh sure, there were certain places where certain officials could not be posted, but that was a comparatively small inconvenience. 

Which is to say that for the most part, the bastards got away with it. Alfried Krupp von Bohlen und Halbach, better known just as Alfried Krupp, so abused his slave laborers in Essen that even the SS complained about it. William Manchester’s damning book, The Arms of Krupp, contain descriptions of Krupp’s activities during the war that are beyond sickening. We attempted to try his father, Gustav, at the main IMT trial, but by that time daddy was too gibbering even by comparison with Heß. The only problem is that as of 1943 little Alfried was the legal owner of the whole cheese and been in actual command of running it for some time before then. He was the one who ought to have stood in the dock with Fritz Sauckel, Robert Ley, and Albert Speer. Oh, we tried him, eventually, and even nominally took all his property away. That lasted until the mid-1950s, by which time we needed him and his cannons again, and so by 1957 Alfried Krupp von Bohlen und Halbach was once again free as the wind and the wealthiest private person in Europe. 

By trying to shoe-horn “justice” into “law,” all we did was make a mockery of both. We hadn’t the time, the people, the money, or the psychic energy left to dispense justice to all who needed it through the mechanism of legalistic procedures. So we laid down and let them get away with it. Churchill had wanted simply to shoot them as and when found. That would have been more honest, and less morally ambiguous. Certainly, we could have and ought to have put them in a setting in which we could spread before the world the documentary, film, and living evidence of their actions. And then taken them out and hanged them, not bothering to characterize what they did as a “crime” against anything. We would have saved ourselves having to go through the repeated theatrics of the subsequent trials. Tie the prisoner to actions x, y, and z, and if the supervising officer finds it has been done, stretch that boy’s neck a few inches for him. 

In the end we come back to the point that if you march a column of defenseless people, including literally babies in arms, to the edge of a trench in the forest, and give or follow the order to fire, you deserve to die of a broken neck occasioned by your plummeting from a scaffold with a rope knotted about it. Basta! 

Nuremberg’s unfortunate precedent endures to this day, with International Courts for this-that-and-the-other dotting the landscape, none of them capable of dealing with a monster. Will anyone dance on a rope for what happened in the Balkans in the 1990s? For all those mass graves, which they’re still digging up from time to time? Nope. How about the Iraqis who worked for Saddam? They’re still alive, most of them. For the men who organized the genocide in Rwanda in 1994? Don’t count on it. For the Khmer Rouge? Not a chance; Pol Pot himself died peacefully in bed, decades after he killed almost 25% of the population of his country. An impartial observer is entitled to ask exactly what the hell good is law if it cannot mete out any sort of “punishment” other that confinement in pleasant conditions, with “three hots and a cot,” and that only after decades of grinding procedure? If law is not feared, it is not worthy of respect. If it is unworthy of respect, it is not respected, in small things as well as large. We did the law no favor at all when we so over-tasked it at Nuremberg in 1946.

And this is where I depart from the tenets of my occupation: There are potentialities for wickedness, for depravity, for barbarity, within the human heart and mind and which are simply beyond the law’s ability to define them, to address them, to bound them with comprehensible intellectual frameworks, and to achieve justice commensurate with their nature. Those actions – so monstrous that their only claim to human status is that humans commit them – are in every meaningful sense outside the law. Those who actualize those potentialities place themselves beyond the law’s protection. They make themselves enemies of the human race, as pirates were once recognized to be, and liable to public justice upon sight. So ought the Allies have proceeded after the war. It would have entailed many thousands of executions, but in the end justice might have been done, and the commanding officers of the Einsatzkommandos would not have died free men.

 

Which is It? You Decide; I Can’t

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I think that’s a fairly close paraphrase of an entry in Harry Truman’s diary, in which he agonized whether to overlook several thousands of dollars of fraudulent contracting in building the new courthouse . . . in order to save several tens of thousands of dollars in the overall project cost.  He couldn’t decide which to call it.

So also with one of the most famous photographs of the entire 20th Century, at least here in the U.S.  It’s the photograph of a sailor in Times Square when the surrender was announced.  Carried away by the euphoria of the moment, he reached for — well, we don’t know if she was the first he saw, or the most likely-appearing, or what it was that attracted his attention.  But she was a nurse, a total stranger, and like him she was in the streets when they announced the end of four years of killing and dying.  Who knows whether or if so how many wounded or maimed boys she had seen?  Maybe none.  Maybe some.  Maybe more than she’d ever known could exist.

And he grabbed her and laid on the Kiss of the Century.

This moment has lately become the subject of a bit of a fire storm.  The “feminists” of today, apparently with not enough to occupy their thoughts what with 750,000 more women unemployed now than in January, 2009, with small businesses collapsing wherever one looks — small businesses owned by husband-and-wife teams, or by single women who’ve got children to raise and can’t accommodate a 9-to-5, punch-the-man’s-clock job, or whatever — have decided that The Kiss was actually a sexual assault, possibly a rape, and the complete lack of public outrage (including by the “victim” herself, who stayed in touch with her “attacker” and even re-enacted the scene, publicly, with him decades later) evidence of a pervasive “rape culture.”

Crates and Ribbons (the subtitle of which is “In pursuit of gender equality”) weighs in.  Here’s the money quote: 

“The articles even give us Greta’s own words:

‘It wasn’t my choice to be kissed. The guy just came over and grabbed!’

‘I did not see him approaching, and before I knew it, I was in this vice grip. [sic]’

‘You don’t forget this guy grabbing you.’

‘That man was very strong. I wasn’t kissing him. He was kissing me.’

“It seems pretty clear, then, that what George had committed would be considered sexual assault by modern standards. Yet, in an amazing feat of willful blindness, none of the articles comment on this, even as they reproduce Greta’s words for us. Without a single acknowledgement of the problematic nature of the photo that her comments reveal, they continue to talk about the picture in a whimsical, reverent manner, ‘still mesmerized by his timeless kiss.’ George’s actions are romanticized and glorified; it is almost as if Greta had never spoken.

“In a way, I understand this. The end of war is a big deal, and the euphoria felt throughout the nation on that day is an important part of American history.”

And in the other corner, we have Victory Girls, whose wrap-up runs —

“So nowhere does Friedman actually call it assault. After the fact, she went back to work proclaiming that the war was over. And in the decades after that iconic moment, she repeatedly took the time to meet up with the sailor in the photograph.

“But the woman ‘assaulted’ doesn’t get to say whether or not she was assaulted, right? That’s up for the feminazis to decide, because clearly, women are too dumb to make those kinds of judgements for themselves.

“This photo wasn’t an example of sexual assault. It was an example of the exuberance of a nation exhausted by war, having millions of the best and brightest among them either be killed or injured. The photo captures that moment, the emotions behind it and the excitement, relief, and enthusiasm of the day, perfectly.”

 I think the key phrase in Crates and Ribbons is “by modern standards.”  The author is more than just a little bit falling into the same error as those who want to read the 14th Amendment back into the Pilgrims’ dealings with the locals they found in 1620.  People have not always dealt with each other the way we do now; they have not thought of each other in the same ways.  Things that we just laugh off now would have destroyed a person’s position in whatever society that person moved in — think Lydia’s escapade with Wickham.  Things we might view as at least questionable (such as grabbing a perfect stranger on the streets of New York in front of God and everybody and laying a lip-lock on her) or worse just don’t seem from the participants’ recollections and contemporaneous statements to have been that big a deal. 

Recall that all across Western Europe for the year-plus preceding this photo’s date, perfect strangers, both men and women, had been grabbing each other and kissing, as for them nearly six years of slaughter passed from their lives.  Maybe in the relief that they or their family members weren’t to be hauled in by the Gestapo after all, and “disappeared” into Nacht und Nebel (“night and fog”; the program involved snatching people, shipping them off for “Sonderbehandlung” — “special handling,” i.e., killing them — but denying their families all information of their fate; it was adopted specifically as a terror mechanism for the occupied countries), maybe, just perhaps, they overlooked the pervasiveness of the rape culture for a few moments.  Poor deluded Europeans; what a good thing Crates and Ribbons has come along, all these years later, to clear up the real issues for them.

The pictures from Europe had been in the papers, the newsreel footage splashed across screens everywhere there was a roof over the theater to run it in.  Is it remotely plausible to suppose that the people in Times Square that day had no idea what kind of celebrating took place at war’s end?

Context is not irrelevant.  Want to bet any strangers grabbed each other and kissed the night Dear Leader won the election?  Is this euphoria that, 54 years after Brown v. Board of Education of Topeka, Kansas we elected president a fellow who, had he been alive then, would have been unwelcome at diners across the nation, and in certain areas would have risked a beating or worse had he defied the prevailing norms, irrelevant to what happened that night?  Say I’m minding my business on a sidewalk and without warning I’m dashed to the ground by a blind-side flying tackle from someone out-weighing me by 100 pounds (hard to imagine that; I’m what they call a “big ol’ boy” around here), breaking my arm in two places and maybe knocking out a tooth or two.  Now, all the elements of a battery are present: (i) intent to cause the contact; (ii) no consent to the contact; (iii) no reasonable belief that I have consented to the contact; (iv) an “objectively” offensive nature of the contact; and (v) actual physical injury resulting from the contact (actually, that last element is not strictly speaking necessary, except to prove up damages).  Now let’s say that I’m tackled because the chap who takes me down sees the runaway truck and sees that I don’t.  Is his benign — charitable, really — motive irrelevant to whether as a moral proposition I should be exercised about my broken arm and missing teeth?  Would I be a thankless wretch to be upset at him?

I wasn’t Greta.  For that matter neither were the authors at Crates and Ribbons or Victory Girls.  Me, I’m going to reserve judgment, which means that I’m not going to get either all misty-eyed about it, or pop-veined splenetic either.  Once upon a time the Reverend Mr. Brontë (Charlotte’s and Emily’s daddy; he’d changed his name in honor of Lord Nelson, whose Sicilian title, bestowed after his victory at Aboukir Bay in 1798, was Duke of Brontë) sent the Duke of Wellington some drawings of what he believed to be an improved musket lock for the British infantryman.  The reverend was an amateur inventor and the Iron Duke the Master of Ordnance at the time.  The Duke returned, “FM the Duke of Wellington presents his compliments to Mr. Brontë.  The Duke believes it to be his duty to refrain from interfering in duties over which he has no controul.  Much time would be saved if others were to follow the Duke’s example.” (emphasis mine)

 Much time would be saved if the well-meaning folks at Crates and Ribbons would refrain from involving themselves in duties over which they have no controul.

In closing, however, I must also take exception to the condescension that oozes from the Crates and Ribbons comment that, “In a way, I understand this. The end of war is a big deal, and the euphoria felt throughout the nation on that day is an important part of American history.”  Very respectfully, and with all possible charity and Christian love for you as a fellow pilgrim, you don’t understand one f*****g thing about that picture’s background, or the world which those two people had just escaped.  Not.  One.  F*****g.  Thing.

Let’s hear, just for contrast, from someone who did understand it.  Paul Fussell was an infantry lieutenant who’d been wounded in Europe.  He stopped a shell splinter with his leg.  The sergeant lying in arm’s-reach beside him that day . . . ummmm . . . he’s still in France.  I hear they mow the grass over his head real nice every so often.  Still, Fussell had been patched up and was on his way to Olympic, the planned invasion of the Japanese home islands.  And then we dropped the bombs.  In his 1981 essay “Thank God for the Atom Bomb,” he recounts what it was like to be a young male, in the ground forces of the combat branches, and alive when Hirohito put his foot down and said enough was enough, finally:

“But even if my leg buckled and I fell to the ground whenever I jumped out of the back of a truck, and even if the very idea of more combat made me breathe in gasps and shake all over, my condition was held to be adequate for the next act. When the atom bombs were dropped and news began to circulate that ‘Operation Olympic’ would not, after all, be necessary, when we learned to our astonishment that we would not be obliged in a few months to rush up the beaches near Tokyo assault-firing while being machine-gunned, mortared, and shelled, for all the practiced phlegm of our tough facades we broke down and cried with relief and joy. We were going to live. We were going to grow to adulthood after all. The killing was all going to be over, and peace was actually going to be the state of things.”

I tell you what, Crates and Ribbons:  Go find you a jury box of twelve gold-star mothers (or their daughters, if you please) from World War II, or any other American war since then, and see if you get you a conviction of the man who kissed Greta, that summer day in 1945.

If not, go save some time.

Boondoggles, Hidden Giveaways, and “The Chicago Way”

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Everyone remembers the fall of 2008, when Everything More or Less Came Unstuck, right? When the chickens began coming home to roost, and everyone standing under the tree branches found out what was in them? What isn’t as widely known, but ought to be, is how a technical feature of the Internal Revenue Code was the subject of a sordid sequence of jiggery-pokery, resulting in a $16 billion give-away to the new president’s supporters. It’s also the story of how a crew of Wall Streeters just decided to hook up their own, bugger all to what the law says, and how that decision got validated by the same bunch who then spent the next four years excoriating all them fat cats.

But first, a bit of background. Taxpayers which have an operating loss that exceeds their income are said to have a “net operating loss” – an “NOL” – for that year. Section 172 of the Revenue Code permits them to apply that unused NOL against up to two preceding years of the taxpayer’s positive net operating income (it’s called an “NOL carry-back” in that case and involves filing an amended tax return for the years), or alternatively carrying it forward for up to 20 years (an “NOL carryforward”). The idea is to permit taxpayers to level out their taxable income and therefore their tax obligations over a period of years. Makes sense, certainly from a tax planning perspective but even more importantly from an entrepreneurial perspective. In early years of a start-up’s life it is likely to have little but net operating losses as it builds itself. Permitting those net losses to be carried forward and applied against a year with positive income advances the point in time at which the enterprise gets off the ground. 

For a taxpayer that is not a “pass-through” taxpayer – one that pays its own taxes at the entity level – that accumulated ability to offset future years’ income is an economic asset. Since an entity can be sold (unlike Aunt Sally), having a built-up ability to offset future years’ income makes that taxpayer a much more attractive object of a suitor’s affections. And sure enough, companies in the market to acquire other companies were powerfully attracted by such assets. Until 1986 so long as the loss company either maintained its legal identity or underwent a tax-free reorganization, the acquiring corporation could derive the benefit of its target’s prior accumulated NOLs. 

Well. Heaven forfend that anyone salvage some benefit from prior misfortune. Apparently there grew the thought that the “policy” (whence the logic supporting it derives is not terribly clear) of Section 172 is only to permit losses and income to offset each other when it’s the same taxpayer realizing both. There is of course no inherent such policy. The Deep Thinkers overlooked the fact that a target corporation with a significant accumulated NOL carryforward has accumulated it for a reason – it has been losing significant money for some period of time – and one of the many other implications of that reason is that the corporation is not likely to survive. It will generally either collapse or get sold. In either event it will be sold at fire-sale prices, the shareholders will take a bath, the employees will lose their jobs, the vendors will take it on the chin, and in short the potential wealth represented by that enterprise will vanish. The notion that the increased price an acquirer could pay and still make money on the deal (boo! hiss!) if it could enjoy the benefit of that NOL carryforward is in fact a benefit flowing to the taxpayer who has accumulated the loss, apparently did not make too deep an impression on the Deep Thinkers. They would rather preserve the purity of their Tax Policy than see an economic enterprise survive (private people making money=bad; drawing a government check for “public service”=good). 

Thus came to pass (pun intended) Section 382, which severely limits the acquiring taxpayer’s ability to recognize its target’s built-up NOL carryforward. Subsection 382(m) grants the Secretary of the Treasury the authority to make such regulations as may be necessary to implement the purposes of Section 382. 

2008. Comes the crash. Banks are failing; banks are tottering; thanks to the intertwinedness of the financial system, their losses are mounting rapidly, and spreading as fast as socially awkward pathogens among a crowd of high schoolers. The “healthy” banks had a problem, though: Why on earth should they pony up the money to buy a bunch of losses they could never derive any benefit from; why should they pay “sticker” price for such turkeys? More to the point, how could the boards of the healthy banks justify to their shareholders pouring sand down those rat-holes of banks when no one – literally no one – could be sure what the value of the targets’ paper was? 

Along comes the Treasury department. On September 30, 2008, it issues Notice 2008-83, which exempted financial institutions from the constraints of Section 382. What?? For starts, a “notice” is not a “regulation”; the process for adoption of the twain are quite distinct. Second, how can the purpose of Section 382 – limiting taxpayers’ ability to buy and then use someone else’s accumulated NOLs – be implemented by an ad hoc exemption from the section’s provisions? Finally, precisely what authority is there in the Revenue Code for exempting some corporate taxpayers but not others from black-and-white provisions of the Revenue Code which apply to all corporate taxpayers equally? The long and short was that Notice 2008-83 was illegal as hell. Pretty much everyone knew it (but wait, it gets better, as it usually does in Washington). 

To get an idea of just how big a boondoggle this was, before Notice 2008-83 was issued Wachovia was looking seriously at an offer from Citibank for $2.16 billion. After the notice? Well, after Wachovia’s losses got put on the table, Wachovia sold to Wells Fargo for $16 billion, a nearly 700% increase in value. Wachovia’s $70+ billion in losses will, if fully used to offset its purchaser’s subsequent income, generate a $25± billion boost to the bottom line (over up to 20 years, of course, and one needs to work the present value of that to get a more relevant number). By the way, I refer the gentle reader to my point made above that this additional almost $14 billion in fact does represent the recapture on the back end by the loss-maker. 

Congress – you may remember them: they’re the folks who decided Section 382 was the law of the land subject, apparently, to whatever the hell the Secretary of the Treasury feels like doing on any particular day – immediately leapt in to cut Treasury off at the knees by legislatively repealing Notice 2008-83. Which it did, in February, 2009, by which time of course we had a new administration in the White House, backed by massive legislative majorities in both houses. Standing up for fairness, the little guy, and punishing them dam’ fat cats on Wall Street, Congress showed the world that carving out exceptions from the law to favor pet constituencies who had dumped untold money in to polluting the political process (well, we won’t mention that Wall Street backed by an overwhelming margin the fellow who Won and his party; that doesn’t fit what the media calls “the narrative” these days) was not the American way any more. No; the open hand to the oligarchs of the counting house was withdrawn, and Congress broke it off in Treasury . . . prospectively only. The repeal not only was made not retroactive to September 30, 2008; it was not made applicable to any bank merger that occurred before that date (and of course those banks cannot claim to have relied on an illegal notice – which their inside and outside counsel would have in any event told them was flagrantly illegal in the first place – that had not been put out yet). Congress and the White House, in other words, made a Great Big Show of slamming the barn door shut, long after all the big horses had marched out of the barn, caparisoned, groomed, and starving to browse at the public fisc. Way to look out for the little guy, fellers!! 

It gets better (didn’t I promise you that?): Congress in the same enactment – the $780+ billion Porkulus Bill – created what is known in the land of tax-geekdom as a “rifle shot.” A rifle shot is a provision that is shoved in to a tax law on the sly and that is so narrowly crafted that, while blandly neutral on its face, it applies and can apply to exactly a single taxpayer. As one might think from the fact that the practice has a nickname in the first place, they’ve been around a while. But most of them were penny-ante things, bought of famously corrupt legislators like John Murtha and Robert Byrd. But this rifle shot was . . . well, let’s just say that the main battery on the Iowa-class battleships is generally described as 16″/50-caliber “naval rifles” (by the way, for bore diameter >1″, “caliber” is an expression of barrel length as a multiple of bore; thus each of Iowa’s nine main guns are 50 times a 1.33-foot bore, or roughly – I’m doin’ this math in my head, folks – 66 feet long; they’ll toss a shell that weighs over 2,300 pounds over 20 miles, and put in on a target measured in square yards). If we include those tubes o’ doom in the definition of “rifle,” why then yes, my chickabiddies, Section 382(n) was a “rifle shot.” 

What Section 382(n) did was exempt from the provisions of the rest of the section one and only one taxpayer: General Motors, by that time known as “Government Motors,” a large chunk of which was owned by Uncle Sugar himself, but another large chunk of which was owned by the labor union which had donated millions of dollars in cash to the recent congressional and presidential candidates of a specific political party, and whose members had donated further millions upon millions of dollars of man-hours to canvassing for them (anyone want to bet whether any of those man-hours in fact showed up on someone’s time card as having been spent at work? anyone? Bueller? anyone?). The tax-forgiveness value to “New” GM of being able to use “Old” GM’s accumulated NOLs? Roughly $16 billion. That’s $16 billion that GM will be able to use, if and when it makes it. Ford won’t have that round in the magazine, nor will Toyota, Nissan, Volkswagen, BMW, or Mercedes.  All those corporations have U.S. based manufacturing subsidiaries, employ U.S. citizens. The only difference is that they’re not owned by a labor union and its bed-mates. 

What happened with the NOL rules between fall, 2008 and February, 2009 is wrong on so many levels it’s hard to keep them all straight in one’s head. The easy part is the sheer unfairness of it. How many companies haven’t been bought out in the last four years because their purchasers couldn’t use the accumulated NOLs? How many families are now on food stamps because the parents’ employers didn’t have the suck to get their very own Notice 2008-83 or Section 382(n)? How much wealth has simply been destroyed that might have been salvaged, even at pennies on the dollar? But now it’s gone. Hey!! At least our Tax Policy is once again pure, though. I can sleep at night, now, I suppose. 

The worse part is the transparent buying and selling not only of legislators – that’s been going on since, in round numbers, 1789 – but also of one of the statutes which forms the framework on which hangs the rest of our society and economy. Go as far back as you please in history and you’ll find oppressive, unfair tax laws as the tinder boxes which set societies alight. Preferential tax policy – from the latifundia enjoying tax benefits denied to the peasant farmer down the valley to aristocratic tax exemption to Established Churches owning enormous swathes of nations and paying no tax – has been at the core of every failed society, collapsed nation, vanished culture in Western civilization. 

Once a people begins engaging in tax corruption on this scale, a corner has been turned. It’s no longer unspeakable. Someone once asked Twain whether he “believed in infant baptism.” “Believe in it? I’ve seen it done!” was his response. When will the next batch of political contributors decide that (i) they’d like the government to hand them someone else’s company, and (ii) while they’re at it, they’d like to play by majorly distinct tax laws that give them a leg up on their fellows? 

Michael Barone I believe it was used the expression “gangster government” to describe how this administration does business. He’s right, of course; this troupe has proudly flaunted that it does business “the Chicago Way.” But the fact remains that the above squalid tale involves (i) a Republican treasury secretary; (ii) two Congresses, both dominated by Democrats; (iii) a lame-duck Republican administration; and, (iv) a new Democrat administration that has demonstrated nothing if not its commitment to reward – handsomely – its donors, and punish severely its “enemies.” 

We’ve seen it done, folks. In the phrasing of Billy Yank and Johnny Reb, who had been eager to see combat for the first time, we’ve “seen the elephant.” We’re likely to see him again. Who gets trampled next time? 

I am, by the way, more than just a bit indebted in the above to a Comment by Matthew Cline in The Tax Lawyer, Vol. 65 No. 2 (Winter 2012), “The Economics and Politics of Tax Loss Carryforwards in the Great Recession: Why GM Gets a $16 Billion Subsidy”. His analysis of the technicalities, history, and legal/theoretical framework of the story is excellent. I’d known of the existence of the GM “rifle shot” for some time, but had not been aware of the, shall we say? peculiarities of Notice 2008-83, and could not have written this post without large reliance on Mr. Cline’s heavy lifting.

Update (08 Oct 12):  This doesn’t exactly have to do with the Section 382 giveaway to the UAW GM, but it does have to do with what appears to be a very real risk of the entire bail-out flying apart.  It seems that Dear Leader’s administration and his car czar might have been less than entirely candid with the judge they duped into approving the deal.  And judges, no less than Mother Nature, don’t enjoy finding out they’ve been lied to.

 

Fannie Mae Needs a New Day Job

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Within the past few days I’ve come to understand something more about exactly how Fannie Mae managed to blow a whacking great hole in the American housing market and crash the world’s largest economy into the bargain.

Our firm has run a title company since the mid-1960s. Knock on wood, but not a single policy we’ve ever written has had to pay or defend a claim. A large measure of that is attributable to the fact that we’ve always done our searching in-house, and for 38 or so years we had a title searcher with a nearly photographic memory for deeds, titles, and people. She also had the kind of personality that is nearly impervious to tedium. A further reason is that our philosophy has always been that land titles must be like Caesar’s wife; “Oh let’s get it closed and we can take care of that later,” as a point of departure has been a non-starter in our office (and yes, it’s lost us a lot of business over the years, but either you do your job right or you’re an ass-hat). All of which is to say that, very humbly, I submit that we in our office know just a bit about land titles in our state and how to convey them correctly so everyone knows what he’s getting and gets what he’s been wanting. 

A few years ago two things happened, more or less simultaneously. 

The first things was that some bureaucrat at HUD who had obviously never practiced law – and more to the point, never searched a title anywhere outside the cookie-cutter subdivisions of northern Virginia – decided that he knew how to set up and close a residential real estate transaction better than the people who’d been doing it for several generations. The upshot was new regulations for closing real estate transactions subject to the Real Estate Settlement Procedures Act (RESPA), which if anything made the process less transparent for the borrower/buyer, provided an incentive for everyone to mark up his prices and generally put his thumb on the scale, and slowed down the loan approval process measurably. Whoever this pin-head of a government employee was required a bank to promise a hard number for “title services” within 72 hours of loan application. “Title services” was to include title examination, title insurance, closing agent’s fees, document preparation, and several other things that should never have been lumped together, and which in fact the “old” Form HUD-1 – the settlement statement – broke out, so that you could actually tell, you know, what you were paying for. The new HUD-1 required it all to be lumped in together and forbade anyone to break it out. 

Now, maybe you can reliably get a good title examination back on a cookie-cutter subdivision in northern Virginia in less than 72 hours. Folks, outside those sorts of environments that just doesn’t happen. You get all manner of cock-eyed legal descriptions, estates that either were never opened or nor properly administered (like having a personal representative without authority executing a deed), multiple chains of title that split, join, and split again, minors’ interests, gores in multi-tract parcels, unrecorded conveyances . . . just all kinds of stuff that can take days to do, if you do the work correctly. And of course until you know what’s out there you can’t quote a fee for what it’s going to cost. You just can’t assume that every title search will take your searcher 45 minutes. But that’s what the new RESPA rules required the bank to state to the borrower. Oh, if you discovered something in the search you could drag the borrower back to get a new good faith estimate, but then your borrower begins to get cold feet. So the situation HUD created was to pit lenders against title service providers, with the lenders having an incentive to low-ball and lean on the service providers to cut every corner they could to get it done as cheaply as possible. How’s that likely to work out? 

The second thing that happened was that our three senior staffers took one look at the new RESPA regulations and retired. As in we all attended a seminar on the new rules and within three weeks we had their letters on our desks. They took 45, 40, and 38 years experience with our firm out the door and left us majorly under-staffed. 

So we quit doing RESPA closings for a while until the dust settled (HUD kept changing the RESPA rules and the HUD-1 rules for months after they were supposed to have taken effect). But now we’re doing them again and finding out what’s changed while we were out. 

Fannie Mae, the clowns who brought you the sub-prime crisis, have a set of uniform instruments which it promulgates and requires be used for loan transactions in which it is buying or guaranteeing the paper. Those instruments vary by state, but the whole idea is that someone can buy several billion dollars of bond backed by thousands of these notes and deeds of trust (or mortgages, if your state rolls that way), and every note and security document in the package that backs those bonds will grant to the beneficiary of the note and security documents rights which are in all material respects uniform, no matter in which state the land happens to lie. Makes a great deal of sense, and in fact if were it not for the uniform instruments, the secondary market for residential loans would not exist, meaning much, much, much less home mortgage lending could occur. The secondary market is, after all, a good part of how the money gets into the system. 

Life is simple as long as you have married couples who both own the property and who both sign the note. Drop out one or the other and things get interesting. 

The instructions for our state-specific Fannie Mae uniform instrument set out those local alterations to the form document that must be made or that may be made, each depending on the precise circumstances. F’rinstance, if the trustee(s) of a “living trust” is to be the property owner, Fannie Mae wants certain portions of the document phrased certain ways. Again, makes sense. But their instructions contain no guidance at all to the situation in which both spouses are owners, but only one is the borrower (happens all the time, too). 

The instructions do contain language that applies when you have only one borrower spouse and one owner spouse (presumably the same spouse, but that’s not necessarily the case, is it?). The instructions tell you to provide that the non-debtor spouse “signs as Borrower solely for the purpose of waiving dower rights without personal obligation for payment of any sums secured by this Security Instrument.” There are several things wrong there. For starts, one does not “sign as Borrower” unless one is actually the borrower (I cannot sign “as” the president of a corporation if I am actually the janitor). Secondly, the uniform instrument contains a raft of affirmative obligations, many of them requiring financial imposition, but which are completely extrinsic to and unrelated to paying “any sums secured by” the instrument. The only sums “secured by” the instrument are those payable under the promissory note. Thus, the non-debtor spouse who “signs as Borrower” is in fact signing up for all manner of personal obligation. You as a closing agent dare not tell that non-debtor spouse that “Oh, honey, you’re not signing up to pay any money; they just need you to sign here to make sure the bank gets a good lien on the property.” Can you say, “consumer fraud,” anyone? 

But the most hilarious thing about this form document and its instructions is that “dower” as an estate in property was abolished in our state . . . in the spring of 1977. And by the way, males had “curtesy,” not “dower.” We now have “marital rights” in property, including especially property used as one’s principal residence, but those rights are very much distinct from the rights an owner has in that property (e.g., an owner has her own homestead exemption; a non-owner has only the inchoate right to her husband’s homestead exemption, should he die first). 

So if you have a non-debtor owner spouse sign the Fannie Mae uniform instrument, using the language they provide, you’ve just created an invalid lien on the property, and one which can’t be insured. The non-debtor spouse may have waived, for example, the right to claim the deceased spouse’s homestead exemption in the property, and waived the right to an elective share in the property on the first spouse’s death, and waived any right to participate in the property’s division in divorce (that, too, is a marital right against the property). But actual ownership as a cotenant far exceeds any of those inchoate interests – the tenant by the entireties owns an undivided whole interest in the entire property. 

So Fannie is only about 35 years behind the power curve, and of course does not understand the distinction between marital rights and ownership rights, it seems, at all. 

Is anyone still wondering how these muddle-headed imbeciles managed to get the housing market so wrong?

 

Title Insurance is a Rip-Off, Right?

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Some years ago I read an article in Forbes magazine. It must have been eight or ten years ago, now, and while I seldom read the magazine itself, the title of the article caught my eye because it related to title insurance and the title insurance industry, and I happen to wear, among other hats, that of a title insurance agent. So on I read.

The thesis of the article in plain English was that title insurance was just the world’s biggest scam, the insurance companies were no more than rent-seekers, and in any sane world everyone would just rely on the government to insure land titles and cut them awful rip-off artists out of the loop and there that will show them. Alternatively, all you need is a title opinion and there’s no reason to pay much for one of those, is there? In partial support of the author’s thesis he trots out the example of some mid-West state, Iowa I seem to recollect (I’ve slept since then, so don’t hold me to too high a degree of accuracy), in which the state guarantees, through its land registration system, that the record state of title as revealed in their indices will match the actual state of title. Can’t recall whether or not the government charged extra for the service or not.

I have a number of issues with the argument, but for the nonce let’s confine ourselves to some simple practicalities. The land registration systems in effect about the country are, to put it mildly, not uniform. The single biggest distinction is between those states on the one hand which were surveyed out under the Northwest Ordinance, and those which weren’t. For those not familiar with the story I refer you to a fascinating book, The Point of Beginning, which starts with a description of the evolution of the land surveyor’s art (there is, apparently, no coincidence in the fact that an acre is 43,560 square feet and not some other number) and then segues into a history of how the land that became the United States of America north of the Ohio and west of the Mississippi was surveyed out into parallelograms of various sizes. The book’s title refers to the actual point of beginning for the whole shebang. That’s right: There is a single remote point of beginning for every survey outside the original 13 states and the Old Southwest. It’s on the Ohio river, where a particular U.S. highway crosses the river; there’s an historical marker beside the road.

For land surveyed under that law, the government sent official survey teams into the wilderness with instructions to cut the thing into squares, more or less. Only once the land was completely surveyed off was it put out for sale, or given to the states to sell for their own purposes (when you hear of a “land grant university,” you’ve met one the founding of which was paid for with sales of that land). You could go to the federal land office in any particular area and tell exactly what land remained ready for sale, and what wasn’t on the market yet.

All well and good, but I happen to live in an area in which every one-eyed drunk with the delirium tremens and a transit strapped to his mule dragged a chain out of his tool chest and called himself a surveyor. With predictable results. How that system worked was the holder of a land warrant issued by some government (such as those issued to Revolutionary War veterans) went off into the woods and scouted around until he found him some land he wanted. He then hired him one of the aforesaid dipsomaniacs to survey it off, and then he went and registered his survey at the land office, heading back into the woods to work his land. I once saw a plat of the surveys that had been made of what was essentially the same land, superimposed on each other. It looked like one of those Spirograph drawings we made when we were kids. An absolute ball of hair, all laid out on paper by metes and bounds.

That system of land registration is why Abraham Lincoln grew up in Indiana and not Kentucky. His father couldn’t get clear title to the Knob Creek farm. Across the river the land was all laid out nice and neatly in squares and hey presto! problem solved.

The point of the above is that those lands not surveyed under the Northwest Ordinance do not come in tidy little polygons, with legal descriptions like “range such-and-so of section thus-and-such of This-and-That Township in Mulligatawny County, Illinois.” No; we get to ponder legal descriptions like, “thence in a northerly direction some 84 poles, more or less, to a rotten stump, apple tree marker.” Bear in mind that these legal descriptions are invariably found originating in deeds from 1923 and give no indication of whose memory to damn for their genesis. A pole, by the way, is 16.5 feet, and “in a northerly direction” narrows it right on down to just about 180 degrees of the compass. In other words somewhere out there you’ve got a corner. “To where the road used to be” is also an old chestnut. Or my personal favorite, “bounded on the north by the lands of Petty, on the east by the lands of Smith, and on the south by the lands of Jimson.” Bounded on the west by the Pacific Ocean, presumably. Mind you, Petty, Smith, and Jimson may or may not have been the adjoining owners at the time that legal description was put together; the surveyor may have been relying on other, even older surveys which simply designated those lands thusly.

But it gets better. Land title can be affected by all manner of things, from bankruptcy proceedings to the provisions of wills to divorce decrees to liens and encumbrances not appearing of record, but which will appear to a competent title examiner (like comparing legal descriptions to tax parcel information, or to aerial imagery of the land in question, available from Google Earth or from other public agencies). How about missing heirs’ signatures? A competent title examiner will frequently, in the course of doing a “forward search” (that is, looking for out-conveyances by the grantees identified in the “reverse search”) notice references in instruments outside the chain of title to the subject property references to siblings, other heirs, spouses, and so forth. That examiner will then look for the implications, if any, of those persons’ existence within the chain of title that’s being searched. What if the title examiner overlooks it? A title insurance policy will insure that risk; is it desirable that a government agency likewise guaranty that everyone who needed to execute an instrument in fact did so? Forty years ago?

In short about all that the land title office ought to be asked to guaranty, and all that it can practically guarantee, is that their own records correctly index the documents they have in their office. If all your local land title office is going to guaranty is the accuracy of its own records then you’ve really not got a great deal of assurance, do you?

When the government guarantees land title to be as reflected in the indices, what it’s guaranteeing are land titles the actuality of which is determined by the sorts of land surveying practices described above, and as affected by the kinds of documents and actions outside the scope of that agency’s records as described. Which is to say, the government is guaranteeing a risk the size of which it has really no effective method of even knowing, let alone controlling. Recall that the loss exposure on any title is a function of the price paid or the money loaned. Either the government will have to price its services based on actuarial risk (sort of like, you know, a title insurance underwriter), or it will have to eat that risk, or it will have to over-charge for that risk. Observation: Government agencies are not widely famed for their ability accurately to price risk and evaluate financial exposures (<cough> Fannie Mae, anyone? <cough, cough> Solyndra and $535 million out the door?).

Title insurance companies spend an enormous amount their revenue in the form of commission to their agents. Why? Because it’s the agent who is the company’s first line of loss control. A competent agent will identify title problems before they’re ever insured. Either the problem is then corrected, pre-closing, or the prospective buyer/borrower decides he’s not willing to accept the title in that condition, insurance or no, or alternatively the company makes a decision that it will “insure over” the defect. But this is the key: Eventually it’s the consumer’s choice to accept the title or no. If a title company makes a bone-headed underwriting decision, or keeps incompetent or dishonest title agents on its rolls, guess who pays? The company. In a government-underwritten system, guess who bears the loss? You and I, friend.

While we’re on the subject of governments getting into the title insurance business, let’s not kid ourselves who will be on the front lines of loss control: The people hired by local governments, or (gulp!) popularly elected, and who will be almost assuredly hired with reference to criteria having at least in part nothing to do with how reliably they can do their jobs. Oh sure, they’ll be well-enough meaning, but in all honesty, there is a reason that the IRS takes – successfully by the way – the position that a taxpayer may not rely on advice and opinions given to him by the United States government employees hired by the IRS for the specific purpose of giving advice and opinions of the kind reliance upon which may not be asserted. I assert that the same dynamics which have lead the IRS to take that position will apply in the staffing of the land registration system.

Well, the argument can be made, what the government will guarantee is the actual state of the title, so no one recovers unless he actually doesn’t own the title he thought he did. This would certainly address part of the loss-control issue. But here’s the problem with that from the insured’s standpoint: There is a difference, a radical difference, between good title and marketable title. “Good title” refers you back to the actual state of title; “marketable title” refers to a title that is sufficiently unimpeachable that you can actually find someone willing to buy or lend money on it.

Good title and marketable title are emphatically not the same thing. No one wants to buy a lawsuit, especially not a lawsuit to quiet title to land, which can be among the most expensive litigation outside Wall Street. Merely being confident that you’re going to win the thing will not change your mind, unless you’re the kind of feller who doesn’t mind adding tens of thousands of dollars to the cost of the property, as well as adding three to five years to whatever you wanted to do with it while your suit grinds its way up to the appellate court and back down (and God forbid your suit is remanded for a new trial or otherwise unspecified “further proceedings not inconsistent with this opinion”). Let’s throw in the fact that land title lawyers seldom end up either on trial or appellate benches, with all the implications of that fact for competent jurisprudence on the subject, and either you buy a title that is like Caesar’s wife – above question – or you find someone to accept the risk that she Got Around back in the day. That someone is a title insurer. As a taxpayer, do you want the person accepting that risk to be the taxpayer? You? If you wanted to be in the title insurance business, wouldn’t you just buy some shares in Old Republic, or LandAmerica, or Stewart Title? Because there’s no such thing as “the government”; it’s you and I, ol’ sport, together in the risk management business. Still sound like a good idea?

So much for why it’s a bad idea from a government’s perspective. Let’s talk about the Little Man (that’s you, gentle reader). As mentioned, the standard American Land Title Association (ALTA) title insurance policy insures, among other things, good and marketable title, of the estate described in the policy (ownership in fee or cotenancy, leasehold, or mortgagee), in a named person. It’s a contract of indemnity. That’s important, because to recover on a contract of indemnity the plaintiff need not show fault in anyone. “You promised me that X was the state of the universe. The state of the universe is in fact not-quite-X. I’ve suffered loss by the discrepancy. Please send money.” That’s the bare-bones structure of a claim under an contract of indemnity.

Let’s say I have my ALTA owner’s policy that insures to me marketable title, and I go to sell my property and my prospective buyer’s title examiner catches a problem or potential problem with my title that was not caught when I bought the property. My would-be buyer backs out of the deal. I’ve now lost a sale by reason of a possible title defect. So I make a claim under the policy. Assuming it’s within the scope of coverage my insurer can either buy my land for up to my limits of coverage, or it can bear the expense of establishing that my title is not in fact defective, or it can pay to fix my problem. Whichever is cheapest under the circumstances then existing. And if my insurer buggers me around on acting, most states have bad faith failure-to-pay statutes which provide for enhanced relief, as well as general consumer protection statutory framework that frequently also applies to insurance companies’ relationships with their insureds. Anyone want to wager on a government willingly exposing itself to liability under similar circumstances?

May as well ask when was the last time we heard of a government agency deciding among a range of responses which was the overall least expensive way fully to remedy a problem. In contrast, when was the last time we heard of a government agency pushing someone’s problem to the back burner, either because someone with more political suck or from a pet constituency got in line ahead, or just because the person dealing with the matter was a government worker and knew he couldn’t be fired? Does government customer service still sound like a good notion for the homeowner who’s discovered that he’s got a forged signature on a deed in his chain of title?

By like token, assume my neighbor sues me alleging that he owns at least some of the land within my policy’s coverage. My title insurer pays my lawyer to defend me (and in truth that expense of defense can be the principal economic benefit to me of having the policy in the first place).

But title insurance costs money, doesn’t it? Why, if you have to buy an owner’s policy on a $1.6 million purchase, you may have to pay as much as $5,000± for the policy, maybe more if you buy additional endorsements. Let’s see, that’s 0.3% of the deal; three-tenths of a whole percent. If I’m buying my house for $95,000 I may have to pay as much as $1,000 or so, a bit over one percent of the deal. Bear in mind that a good portion of that money is going to the title agent who’s the principal fellow standing between you and losing your house, and 1.05% on top of the deal doesn’t sound like too bad a bargain, does it? But why should the title agent get that big a slice? Well, because if the company has to pay a loss, guess to whom it looks to get well, kiddoes?

Can’t you just go and get a title opinion and get out of it even more cheaply? Well, for starts expressing an opinion as to land title is the practice of law, which means you will have to pay a lawyer for that. And of course you will have to select your lawyer yourself (title insurance companies keep a pretty tight rein on their agents; they do most of your due diligence for you in weeding out the charlatans and the fools). No lawyer smart enough to know how to search a land title is going to offer you an indemnity. He’s a lawyer, not an insurance company. If he were an insurance company he’d charge you what a title insurance company charges you. What you’ll get from your lawyer is an expression of opinion that is subject to all the caveats that your lawyer can think of.

If your lawyer’s opinion turns out to be incorrect (and not just possibly incorrect, but actuallywrong), you have an action against him, not in contract (an indemnity), but for professional negligence. Let’s ignore for the moment that the universe of lawyers who practice in the area is tiny indeed. Let’s assume you find one and he’s willing to file a suit against the guy who issued your title opinion. The burden of proof is on you to prove – for which read: you must pay to prove – that (i) his opinion was in fact incorrect (in other words, you’ve got to prove your own title to be defective, as opposed to merely possibly defective),and (ii) by the prevailing standards of professional care he ought to have caught the problem but didn’t, and (iii) that you have actually suffered a loss. But you don’t get to recover your expenses of proving up the state of your title, or of that standard of care, or of proving your lawyer’s failure to live up to that standard of care, or of the extent of your loss. Can you say, “expert witness fees,” anyone?

There aren’t any bad faith failure-to-pay statutes that apply to defending oneself from a malpractice claim. Nor will your typical consumer protection statute prevent your lawyer from defending himself. Barring truly egregious conduct, professional malpractice claims don’t get resolved in the plaintiff’s favor on summary proceedings. If they don’t settle they go to trial, and then to appeal. Your lawyer of course will be defended by his professional liability insurance carrier. Your lawyer will be paid by you, and a claim involving a claim for professional negligence on something as esoteric as a title examination is not one you’re likely to find anyone competent to represent you on a contingency fee. And in the meantime of course your title to your land is all screwed up and you can’t safely dispose of it or borrow money against it, and you’d be foolish to put any of your own money into keeping it up, lest you lose your suit.

All of which is to say that that Forbes article was one of the most foolish loads of bilge water I believe I’ve ever read, Justice Brennan’s opinions not excepted.