In considering the actions of the Federal District Court Judge and Trustee below, the 9th Circuit Federal Court of appeals made short shrift of the shell game of the players in the securitization game. In a word, they declared the mortgage invalid. While the facts are different than the home mortgage foreclosure the legal theory is the same. Some excerpts:

Aerocolor, Inc., was in bankruptcy in the United States District Court for the Southern District of California. The appellee herein, Crocker-Citizens National Bank, applied to the referee in bankruptcy for leave to exercise the bank’s power of sale under a chattel mortgage which the bank claimed to have received from Aerocolor before Aerocolor became bankrupt. The referee in bankruptcy denied the bank’s application, stating several reasons for the denial. We shall discuss only one of those reasons, the failure of the officers of Aerocolor to acknowledge, in the presence of the notary public who attached his certificate to the document, their signatures to the chattel mortgage.

Our problem, then, is to determine whether, under California law, the bank’s chattel mortgage was valid as against Aerocolor’s creditors. California Civil Code 2957 provides:

A mortgage of personal property or crops is void as against creditors of the mortgagor and subsequent purchasers and encumbrancers of the property in good faith and for value, unless:

1. It is acknowledged, or proved and certified, in like manner as grants of real property;

4. The mortgage * * * is recorded in the office of the recorder * * *.

California Civil Code 1185 provides that the acknowledgment of an instrument must not be taken unless the officer taking it knows, or is furnished evidence, that the person making the acknowledgment is the person described in the instrument. Sections 1188 and 1190 provide a form of words which the officer must indorse on or attach to the instrument acknowledged. That form states that the person making the acknowledgment personally appeared before the officer who took the acknowledgment. California Government Code 6203 provides:

Every officer authorized by law to make or give any certificate or other writing is guilty of a misdemeanor if he makes and delivers as true any certificate or writing containing statements which he knows to be false * * *.

California Government Code 8214 makes a notary public and his sureties liable to any person injured by the notary’s official misconduct or neglect.

In the instant case the chattel mortgage was not acknowledged. The California statute says that such a mortgage shall be void as against creditors of the mortgagor. At least as to existing creditors of the mortgagor, the purpose of the legislature in requiring acknowledgment, and recordation, to which acknowledgment is a prerequisite, could not have been the giving of notice, since such a creditor would have already parted with his money or his goods or his labor, and the only benefit which would accrue to him from a recordation which might come to his notice would be the warning that he had better not part with any more of his money or his goods or his labor on the assumption that because his debtor was in possession of many chattels he would probably pay his debts. The legislators’ view may well have been that if a person had many chattels in his possession, and many debts, some one of his many creditors ought not to be allowed the advantage of a secret, non-possessory lien upon the debtor’s apparent chattel riches, which advantage the favored creditor would disclose when the debtor’s financial structure was about to collapse. The legislature may well have thought that if one creditor is to be permitted to gain such an advantage over others, he should at least take certain prescribed steps in order to accomplish that purpose. As we have said, the notice given by recordation would have come too late to be of use to existing creditors.

We think, then, that at least as to existing creditors, the requirement of Civil Code 2957 that chattel mortgages be acknowledged in order to be valid prescribes a necessary step in the creation of the lien of the chattel mortgage itself, and not a method of giving constructive notice of an otherwise valid lien.

In the instant case, although the chattel mortgage was not acknowledged, the notary public certified that it had been acknowledged. On its face, then, when it was presented by the bank to the recorder there was no reason why the recorder should not record it, and he did record it. In such a situation, there are obvious possibilities of great inequities. If someone had bought Aerocolor’s note from the bank and had sought to enforce the chattel mortgage against Aerocolor, which for the purpose of the illustration we will assume was still in business, it would be difficult to see any equity in a defense by Aerocolor that its officers had not acknowledged the chattel mortgage.

We suggest, with deference, that the patent-latent dichotomy has no application to the instant case. It is for the protection of persons who rely upon what appears fair on the record, and as to whom it would be inequitable to assert defects in the acknowledgment which they had no reason to suspect. In the instant case the defect was created by the chattel mortgagee itself, the bank. On its premises, and under the supervision of its agents, the officers of the mortgagor signed the mortgage, and were allowed to depart without having acknowledged their signatures. Under the supervision of the bank’s agents, a notary later made a false certification that the mortgagor’s officers had acknowledged their execution of the instrument. If such a complete disregard of the provisions of the California statutes is to be treated as irrelevant, not for the protection of an innocent third person but for the benefit of the party who so disregarded the statutes, it should be the California courts, not a court of another sovereign, which should announce that doctrine.

In view of our conclusion that the acknowledgment of the chattel mortgage was invalid and the mortgage was therefore invalid as against the trustee in bankruptcy, we have not considered the other asserted grounds of invalidity of the chattel mortgage.

The judgment of the District Court is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.

18 Responses

  1. y Shelton, on August 10, 2012 at 3:51 pm said:

    Ok People, Re: A very brilliant Attorney, Jeff Barnes. Like the guy above I was duped by other attorneys too. They bragged about how many clients they had just to get us to sign up but once signed they just avoided us like we had a death wish. Just try to get one of your past attorneys to send your file to a new attorney, that’s impossible. Our Florida bar will go after them but will they slap the hand that feeds them? Yea right, good luck with that complaint. Then one day as I started to give up hope I found a fighting Pit Bull needed to do battle against the big boys, and he is wining Federal Cases all across our great country. It took some time to get this man on board because he doesn’t want long winded stories or clients who truly have no case. He is also very tough on the money issues. After 6 months of saving and borrowing every penny to hire him, I headed out from Florida to meet him in person in Beverly Hills, California. Turns out that I was very lucky to meet him because he spends most of his time at 40.000 feet traveling to his next case or conducting seminars for other attorneys on how to win their foreclosure cases . I called as soon as I arrived, he said come over. I entered a plain office on the corner of Wilsher Blvd and Rodeo Dr and I found Jeff to be a very warm and personalble man. He was not all lawyer talk but he did have a clear understanding of the law and how Americans have been raped by the banksters and servicers. He did give me a mouth full of all the technical and legal issues that pertained to our case and for the first time I really believe that we were going to win this battle. Now after several months of him being on board I have come to really appreciate who I have as a defense team. I do think Jeff Barnes including his nationwide defense team are going to be a hero to many families who have been victimized by the banks. I also feel that they are going to make a big different in all the courts across this land, Just read about his wins on the Internet.
    We always believed that the banksters had no standing, because of the securitization issues, the mortgage companies and servicers bankruptcy’s, but at this point I can only have faith in Jeff and my own case because we are just now realizing that all the documents that were submitted by Golson’s firm were possibly fake and forged by some very complex machinery that forged our names. We are going to find out who did this. But we have the proof now and Jeff has presented it to the court, will our Judge rule on the truth now?
    If not Jeff will appeal imidiatlely. My biggest consern now is that some judges still dont get it and many peoplel feel that some judges are acting like collectors for the big banks.
    If we are right about the fraud on the court then when will these people go to jail? I believe that the board of directors of US Bank and SN Servicing may be Criminals involved in Racketeering and Corruption at its highest level but are they being shielded by the system to prevent the truth from coming out and the collapse of their profits?
    US Bank and SN Servicing has hired new attorneys now, then they too dropped out, begging the court to let them out of any liability ( we said no way and won that motion ) Did they probably realized that the doc’s were fraud on the court and wanted no part of it? Now a new law firm has been hired but guess what? These guys have a background in Criminal Defense. Is this to provide legal advice to keep the banksters and servicers out of jail as they continue to try and foreclose on us with possibly forged documents? Who really knows for sure. Soooo If you can, hire Jeff Barnes do it no matter what it takes because he is the best you are going to find when it comes to fighting the banksters. He trains other attornies on how to fight with the right tools in court and now many of them are winning too. Good Luck People and May God Bless You, Yours and Jeff Barnes.
    Thanks, Ray Shelton

  2. I refinanced with a Florida mortgage broker/lender in CT. Application for license to operate in CT was submitted 2 months after I signed loan documents and was funded. Release of mortgage recorded on CT Land Records. I requested the line entry in the notary’s journal and recieved a response that there is no line entry acknowledging Tonya Marshall (attorney-in-fact) VP Loan Documentation WF on August 10, 2006. The notary’s signature on the Release compared to her letter to me are totally different. I don’t know where to turn!? Definite fraud … WF Allonge is signed by Matthew Richards VP Challenge Financial Investos Corp but I requested all documents from FL and CT Secretary of states and this person was never noted in such a position. His signature on the alleged Allonge isn’t even notarized. WF keeps dodging requested information and documentation. Note with Citibank, Mortgage with WF but I never contracted with WF on 6/6/06 and they pulled my credit report 5/12/06 (I save everything for years) without my permission

    I’m so stressed out due to all this. Exasperation of already delicate mental health issues!

  3. Sir:
    My house was foreclosed with Note & Deed notarized on Sept. 2 and signed by us on Sept. 3, 2006. The 9th only denied judicial notice of their document but did not pass judgment on improper notary. What can I do? Please help.

  4. To KJP2U

    You know Stewart Title Company also closed my loan however their was no lender at my closing no one signed the note with me I have just discovered that two other parties are now on my note and they added another condition for which I knew nothing about which states I am an unmarried person which is not true


  5. We signed our loan documents with a “lender” who was supposedly a subsidiary of Guaranty Bank. Prior to Stewart Title Recording the docs with the County Recorder, someone stamped Wells Fargo Bank , NA on a “Pay to the Order Of” line. Is this a legal transfer or assignment?

    It went into the Trust with Guaranty Bank being a Wells Fargo “Correspondent.”

    Throughout the process, we thought that our lender was GN Mortgage, LLC who, as it turns out, was not a licensed lender in Californa at the time of signing.


    UCC ARTICLE 9 9-301; FAS 140-3 (what is a true sale); and FIRST AMERICAN TITLE EAGLE 9 POLICY (when it’s insured, why care about foreclosure forbearance or modifications?)


    Steven K. Kop
    Attorney at Law
    (310) 721-8557

  7. Linda,

    Have you tried this:

    There are 4 postings……..
    site:http://livinglies.wordpress.com/ DOCX assignment “fraud”

    Tracee Beecroft, on October 29th, 2009 at 1:30 pm Said:


    You will find multiple assignments when you go to http://www.google.com and put “DOCX” and “Linda Green” in your search or “DOCX” “Ron Meharg” or also “DOCX” “Tywanna Thomas” or “DOCX” “Assignment”

    We are currently in litigation for the Quiet Title portion as well so everything is with our Attorney…

    I hope this helps!!!



  8. David, Do you have any facts to back up DOCX assignment “fraud”–I am building my case and would really appreciate the info–anything you have–thanks

  9. Cindy, I am a writer for BusinessWeek. I am doing research on Fidelity. Can you give me a call at 312-451-7149 or email me at robert_berner@businessweek.com. rgds, Robert Berner

  10. This is a great case–applies to all DOCX/LPS releases and Asignments of Mortgage-they operate a “stamp and sign ” department in Alpharetta georgia that churns out instruments in the names of many companies with the signers being persons whose handwriting varies dramatically from one signing to the next. If you have an assignment of mortgage used to support a complaint to establish one of these securitization trustees or worse for you, a “release”, then you have a fair chance the document was “prepared by Ron Meharg” and could well suffer from the notary defects in this old case—or much worse—there is a real question here as to whether the actual trustees even know these actions are being taken in their names —there are precise rules that the foreclosing srvicer must follow laid out in the servicingand indenture and trust agreements–not including unverified stamp and signs

  11. Yes, the notary issue is a problem but please don’t group ALL the same. When I conduct a closing, I take ID, put the client under oath then have the client sign my journal. Once this step is completed, as each document is reviewed, the notary certificate is completed, signed and sealed at the table in front of the client.

    One thing that amazes me is the comments I receive from Real Estate Brokers stating to me that they have NEVER witnessed anyone administer an oath at the table for a closing.

    Why doesn’t the Broker question WHY an oath is NOT being administered at the closing table? I have yet seen a mortgage loan package NOT have at least one document in it that has a jurat certificate attached. Every affidavit by virture of the fact that it is an affidavit MUST be sworn and subscribed.

    The other thing that amazes me is when someone states “Oh, you are just a notary”. The notary public is has a vital role in the closing during the signing of the documents.

    What is even more amazing is when illegal notarial acts of back dating, post dating or signing and sealing a document with no notarial wording is requested with the threat that the notary’s services will be greatly diminished if we don’t perform the said illegal act. Title companies and lenders have no problem requesting illegal acts with no thought to fact that the particular act could potentially cause the sort of ramifications being seen now in this climate of so many trying to void the loan.

    When the bottom line becomes more important than the task being performed professionally and competently, this is what happens.

  12. Wamu sells the loans to Washington mutual acceptance corp without recording the assignment usually. WAMUAAC than is the depositor into the trust.
    From there the deed assignments are not recorded either. If someone checks their assignment recordation they may find a recorded deed from WAMU to La Salle Bank signed in a state other than the one they reside in and recorded in their state against their property. The problem is usually that at the time WAMU records the deed they no longer own it…it is in the trust at this point and the deed may be invalid. Some even have the investor number, and foreclosure number on them. No trust will take a deed for a property in foreclosure, and the fact that there is an investor number which corresponds to the trust investor number assigned to that particular piece of property makes the deed given by WAMU not valid, since the trust already owns title. Check with your lawyer. In states like California, where a financial instrument must be recorded to be used in foreclosure, you may find that the deed assignment was not valid. If someone is in bankruptcy, the automatic stay prevents the bank from making a proper recordation. Check with your lawyer.
    Good Luck

  13. Any direction on where to find this information would really be of immediate benefit.

    1. I need a quick detailed brain wash on the “strict” requirements of the foreclosure process in California.
    Meaning, every single step in the process from the ordering of the foreclosure, each persons role in the process in the sequence requirement, the step-by-step process of the title company and all the personnel involved and their statutory legal actions (i.e., order warranty, record the something, notify the stakeholders… (who are the stake holders).

    I don’t have the time to read all the laws and the laws don’t necessarily define every single step by each of the parties involved, every signature and it’s corresponding date requirement, and the coordination of parties, etc………..

    2. Can you also point me to a quick and comprehensive reading to understand the lien priorities and how they work in a foreclosure.

    Thank you so much.

  14. Wamu sent me a assignment with a out of state notary with an in state (calif) signature. Is this wrong?

    I’ve listed the multiple entities involved in my foreclosure. I was not notified of these parties.

    – Wamu serviced my home loan for 10 years
    – Wamu hired Quality Loan Services to handle my foreclosure.
    – Wamu hired Fidelity Title for the title workup/foreclosure tasks (?).
    – JPMorgan Chase sent me a letter, extending an offer to help me and a notice of the merge of Chase/Wamu.
    – Fidelity Title hired First American Title to do the title work.
    – The foreclosure auctioner is the owner of a Real Estate Publication of Deeds Company. (she is not an employee of First American or Fidelity or the bank)

    Who signs the Trustee’s Deed?
    Is each entity required to have a notorized signature on a form disclosing their responsibility?

    I look urgently forward to clarity. Thank you.

  15. Sir: what is the citation for this case?

  16. When an attorney tells a plaintiff: “I will take your case…” he is thinking in his head: “I will take your case-full of money and keep you stuck like an addict who thinks I am his only way to …”

    When an attorney tells a defendant the same he is thinking: “You can’t imagine how I can lie to a court to get you out of this trouble. I can buy the judge, fool the jury, by any witness to perjury declarations, it all depends on how much you can pay me in advance, and NON-REFUNDABLE even if you’re off the hook tomorrow for no reason at all…”

  17. Neil
    Thank You
    Till this day I have not located an attorney that is well prepared to take my case. I have email many asking them if they are familiar or deal with TILA and have not received a response. I don’t know if my asking is to direct and offensive. But I would hate to walk into an Attorneys office sign a check or contract for that matter and watch them sit back. I know that attorneys are suppose to work in representing you but now a days it’s hard to know who to trust. I feel butter taking in your feedback being that you are providing my self and others a service yet you are not asking me for money upfront.

    In all my questions or posting I take from your response a bit here and there. With that knowing it comes handy in trying to build a case for myself. If by Wednesday I have not received a response from any of the attorneys I have tried making contact with I may have to file quiet title lawsuit my sell and put Pro Se to the test. I know that giving me direct advice may or may not cause a direct problem as you are retired. But I have to say thank you for your work and the interpretation to the posting listed above. Although I have to search you blog in the many pages that exist I have been able to find some answers.

    Thank You Again,

  18. I have been asking the local lawyers about this issue for some time. In the 15 years I worked as a Principal Real Estate Broker, I never saw a single settlement where there was a Notary present, most documents were and I witnessed this, notarized after the fact. The seller,purchaser and agents never saw the notary witness the act of signing.

    The same is happening now with all the power of attorneys being shipped all over the country and all the lost note, and note ownership affidavits. They are allegedly signed in one state and then notarized 2,000 miles away.

    This details are relevant. We have case in which the secretary of th foreclosure attorneys signed as the vice president of MERS, and the document was notarized 500 miles away.

    Thanks for this info.

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