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Chapter 10:
The Fundamental Law
The law of presumption is in the class of laws akin to
esoteric technicalities. It is quite possible that we could get
along quite well without it. The fundamental law, on the other
hand, is just what it says. It is a law that is essential, of
central importance. We could not get along without it. It
determines the essential structure and function of our society.
It serves as an original and generating source. A fundamental
right, for example, is one which is innate to all free people.
When used as a noun, the term "fundamental" refers to one of the
minimum constituents, without which a system would not be what it
is. In Latin, it is the sine qua non, without which there is
nothing. What, then, is the fundamental law in our country?
The fundamental law in America is the Constitution for the
United States of America. Black's Law Dictionary, Sixth Edition,
contains a definition of "fundamental law" as follows:
Fundamental law. The law which determines the constitution
of government in a nation or state, and prescribes and
regulates the manner of its exercise. The organic law of a
nation or state; its constitution.
The Constitution is a contract of delegated powers. These
powers flow downhill, like water down a mountain stream. The
ultimate source of all power is the Creator, who endowed His
creations with certain unalienable rights. You and I are His
creations, and we receive our power directly from the Creator;
there is nothing standing between us and the Creator. We the
people, in turn, delegate some of our powers to the States of the
Union. We do not relinquish our powers; we delegate them. The
50 States exist to defend our rights in ways which are difficult
if not impossible for individuals to defend those rights alone.
Power from the 50 States continues to flow downhill in the
form of a contract to the federal government. The Constitution
for the United States is a contract of powers delegated to the
federal government by the 50 States, to perform specific
enumerated services which are difficult if not impossible for
individual States to provide for themselves. The fundamental law
is, therefore, a "law of agency" whereby the 50 States created an
agent in the federal government to exercise a limited set of
government services on behalf of the 50 States. These States in
turn perform a limited set of services for their creators, the
people, above whom there is nothing but the Creator.
The fundamental law is the foundation of our society. In
the United States of America, it is the Constitution. Through
this document, our fundamental rights are secured and protected
Page 10 - 1 of 14
The Federal Zone:
against infringement by the federal government and by the State
governments, because the States are also parties to this
contract. To paraphrase the Declaration of Independence, we hold
these truths to be self-evident: that all of us are created
equal; that we are endowed by our Creator with certain
unalienable rights; that among these are the rights to life,
liberty, and the pursuit of happiness; that to secure these
rights, governments are instituted among us, deriving their just
power from our consent. These rights are unalienable,
fundamental, and inherent.
The fundamental law is intimately connected with fundamental
rights, because the ultimate purpose of that law is to protect
and defend the fundamental rights of Sovereign individuals. The
Supreme Court of the United States put it very eloquently when it
said:
Sovereignty itself is, of course, not subject to law, for it
is the author and source of law; but in our system, while
sovereign powers are delegated to the agencies of
government, sovereignty itself remains with the people, by
whom and for whom all government exists and acts. And the
law is the definition and limitation of power.
[Yick Wo vs Hopkins, 118 U.S. 356, 370 (1886)]
[emphasis added]
Every Sovereign State Citizen is endowed with certain
unalienable rights, for the enjoyment of which no written law or
statute is required. "These are fundamental or natural rights,
recognized among all free people," wrote Chancellor Kent in the
case of United States vs Morris. What are the fundamental or
natural rights recognized among all free people? Chancellor Kent
answered as follows:
That the rights to lease land and to accept employment as a
laborer for hire are fundamental rights, inherent in every
free citizen, is indisputable.
[United States vs Morris, 125 F.Rept. 322, 331 (1903)]
One of the most precious of fundamental rights is the
natural right to enjoy the fruits of our own labor, our own
"industry". In the year 1919, the Secretary of the Treasury
recognized as "fundamental" the right of Sovereign State Citizens
to accept employment as laborers for hire, and to enjoy the
fruits of their own labor:
Gross income excludes the items of income specifically
exempt by ... fundamental law free from such tax.
[Treasury Decisions under Internal Revenue Laws
of the United States, Vol. 21, Article 71]
Page 10 - 2 of 14
The Fundamental Law
In the year 1921, the Secretary of the Treasury reiterated this
statement concerning the fundamental law:
Gross income excludes the items of income specifically
exempted by the statute and also certain other kinds of
income by statute or fundamental law free from tax.
[Treasury Decision 3146, Vol. 23, page 376]
And again in the year 1924, the identical statement was published
concerning the fundamental law:
Gross income excludes the items of income specifically
exempted by the statute and also certain other kinds of
income by statute or fundamental law free from tax.
[Treasury Decision 3640, Vol. 26, page 769]
The Constitution is, therefore, the fundamental law. Within
the 50 States where Congress is restrained by the Constitution,
"gross income" excludes certain kinds of income which are free
from tax under the fundamental law. Labor is personal property.
The fruits of labor are personal property. A tax on personal
property is a direct tax, or "capitation" tax. Outside the
federal zone, Congress is restrained from imposing a direct tax
on Sovereign Citizens within the 50 States, unless that tax is
apportioned (see 1:9:4 and 1:2:3). Apportionment is a very
simple concept. If California has 10 percent of the nation's
population, then California's "portion" would be 10 percent of
any direct tax levied by Congress (see Appendix Q). Thus, the
income from labor is personal property, which is free from direct
taxation by Congress, unless that tax is apportioned among the 50
States of the Union. In the year 1895, the Supreme Court
overturned an Act of Congress precisely because it levied a
direct tax without apportionment:
First. We adhere to the opinion already announced, that,
taxes on real estate being indisputably direct taxes, taxes
on the rents or income of real estate are equally direct
taxes.
Second. We are of the opinion that taxes on personal
property, or on the income of personal property, are
likewise direct taxes.
Third. The tax imposed by sections twenty-seven to thirty-
seven, inclusive, of the act of 1894, so far as it falls on
the income of real estate and of personal property, being a
direct tax within the meaning of the Constitution, and
therefore, unconstitutional and void because not apportioned
according to representation, all those sections, consisting
of one entire scheme of taxation, are necessarily invalid.
[Pollock vs Farmers' Loan & Trust Co., 158 U.S. 601 (1895)]
Page 10 - 3 of 14
The Federal Zone:
The Pollock case has never been overturned and is still the
holding case law on direct taxes. In light of some 17,000 State-
certified documents which prove that the so-called 16th Amendment
never became law, the importance of the Pollock ruling is vastly
enhanced. All direct taxes levied inside the 50 States must be
apportioned, as required by the Constitution.
The situation within the federal zone is entirely different.
Remember that Congress has exclusive legislative authority within
the federal zone. This means that Congress is not restrained by
the Constitution within this zone. Therefore, Congress is not
required to apportion a direct tax within the federal zone. When
it comes to law, the areas inside and outside the federal zone
are heterogeneous with respect to each other, resulting in a
principle of territorial heterogeneity. This principle states
that areas within the federal zone are subject to one set of
rules; the areas without the federal zone are subject to a
different set of rules. The Constitution rules outside the zone;
the acts of Congress rule inside the zone. (See Appendix W for a
summary of Downes vs Bidwell, the pivotal case on this question.)
In describing the powers delegated to Congress by Article 1,
Section 8, Clause 17 and by Article 4, Section 3, Clause 2 of the
Constitution, the Supreme Court has explained this principle as
follows:
In exercising this power, Congress is not subject to the
same constitutional limitations, as when it is legislating
for the United States***. ... And in general the guarantees
of the Constitution, save as they are limitations upon the
exercise of executive and legislative power when exerted for
or over our insular possessions, extend to them only as
Congress, in the exercise of its legislative power over
territory belonging to the United States**, has made those
guarantees applicable.
[Hooven & Allison Co. vs Evatt, 324 U.S. 653 (1945)]
[emphasis added]
Without referring to it as such, author Lori Jacques describes
the principle of territorial heterogeneity as follows:
The "graduated income tax" is not a constitutionally
authorized tax within the several states; however, Congress
is apparently not prohibited from levying that type of tax
upon the "subjects of the sovereign" in the Possessions and
Territories. The definitions of "United States" and "State"
are stated "geographically to include" only those areas
constitutionally within congress' exclusive legislative
jurisdiction upon whom a graduated tax can be imposed.
[A Ticket to Liberty, November 1990 edition, page 54]
[emphasis added]
Page 10 - 4 of 14
The Fundamental Law
The limitation against direct taxes without apportionment is
not the only limitation on Congress outside the federal zone.
There are many other limitations. The most famous of these is
the Bill of Rights, which recently celebrated its 200th
Anniversary (with little if any fanfare by federal government
officials). The Bill of Rights is the first 10 amendments to the
U.S. Constitution. There is a widespread misunderstanding that
the Constitution, as amended by the Bill of Rights, is the source
of those rights which are enumerated in the first 10 amendments.
Even Black's Law Dictionary makes this "fundamental" error as
follows:
Fundamental rights. Those rights which have their source,
and are explicitly or implicitly guaranteed, in the federal
constitution.
The rights enumerated in the Bill of Rights did not have
their source in the federal Constitution. If this were the case,
then our unalienable rights would not have existed before that
Constitution was written. Of course, this is nonsense. The
Declaration of Independence existed long before the U.S.
Constitution. One has only to read that Declaration carefully to
appreciate the source of our fundamental, unalienable rights. We
are endowed "by our Creator with certain unalienable rights".
These rights are not endowed by the Constitution. They are
inherent rights which exist quite independently of any form of
government we might invent to secure those rights. We relinquish
our rights if and only if we waive those rights knowingly,
intentionally and voluntarily, or act in such a way as to
infringe on the rights of others. As the Supreme Court has said:
... [A]cquiescence in loss of fundamental rights will not be
presumed.
[Ohio Bell vs Public Utilities Commission]
[301 U.S. 292]
Unfortunately, public awareness of the Bill of Rights is in
a sorry state. The following article was published in the San
Francisco Chronicle on the 200th Anniversary of the signing of
the Bill of Rights:
The right to be ignorant
A new survey shows most Americans don't know much about
James Madison's handiwork or the legacy he left them.
The poll, commissioned by the American Bar Association
in honor of the Bill of Rights' 200th birthday, found that:
Page 10 - 5 of 14
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> Sixty-seven percent of those surveyed don't know the
Bill of Rights is the first 10 amendments to the
Constitution. That's worse than the 59 percent found in a
similar survey in 1987, when the five-year celebration of
the Constitution's bicentennial started.
> Only 10 percent know the Bill of Rights was approved
to protect individuals and states against the power of the
federal government.
> More than half are willing to give up some of their
Fourth Amendment protections against search and seizure to
help win the war on drugs.
> 51 percent believe government should prohibit hate
speech that demeans someone's race, sex, national origin or
religion, despite First Amendment free-speech protections.
> Forty-six percent think Congress should be able to
ban media coverage of any national security issue unless
government gives its prior approval, despite the First
Amendment's free-press guarantee.
[San Francisco Chronicle]
[December 16, 1991, page A-20]
The Bill of Rights must be viewed as a set of rules which
constrain Congress from passing laws which infringe on our
unalienable rights. The Bill of Rights does not say that the
Constitution endows us with the right to freedom of speech. It
does say that "Congress shall make no law ... abridging the
freedom of speech, or of the press." There is a world of
difference between these two views. Similarly, it is a common
mistake to believe that we enjoy only those rights which are
enumerated in the Bill of Rights. This is also a fundamental
error. The rights which are enumerated in the Bill of Rights are
not the only rights which we enjoy. This is clearly expressed by
the 9th and 10th Amendments:
The enumeration in the Constitution, of certain rights,
shall not be construed to deny or disparage others retained
by the people.
[Constitution for the United States of America]
[Ninth Amendment]
The powers not delegated to the United States by the
Constitution, nor prohibited by it to the States, are
reserved to the States respectively, or to the people.
[Constitution for the United States of America]
[Tenth Amendment]
Page 10 - 6 of 14
The Fundamental Law
With this in mind, it is important to appreciate how the
Bill of Rights can be utilized to restrain federal government
agents outside the federal zone. The IRS does operate as an
"agency" of the federal government. The right to be secure in
our persons, houses, papers and effects is guaranteed by the 4th
Amendment:
The right of the people to be secure in their persons,
houses, papers, and effects, against unreasonable searches
and seizures, shall not be violated, and no Warrants shall
issue, but upon probable cause, supported by Oath or
affirmation, and particularly describing the place to be
searched, and the persons or things to be seized.
[Constitution for the United States of America]
[Fourth Amendment]
Similarly, the rights against self-incrimination and of due
process of law are also guaranteed by the 5th Amendment:
... [N]or shall any person be subject for the same offense
to be twice put in jeopardy of life or limb; nor shall be
compelled in any criminal case to be a witness against
himself, nor be deprived of life, liberty, or property,
without due process of law; nor shall private property be
taken for public use without just compensation.
[Constitution for the United States of America]
[Fifth Amendment]
The Internal Revenue Service is well aware of these
amendments to the U.S. Constitution. For example, many persons
are incorrect to believe that the IRS has authority to force
disclosure of private books and records. Even though the IRS may
have authority to issue a summons in certain circumstances, it
has absolutely no authority to compel disclosure of private books
and records. This means that you must bring your books and
records to an audit, if lawfully summoned to do so, but you are
under no obligation to open those books and records, or to submit
them to the Internal Revenue Service. As amazing as this may
seem, this restraint is documented in the official IRS Tax Audit
Guidelines (IR Manual MT 9900-26, 1-29-75), as follows:
242.12 Books and Records of An Individual
(1) An individual taxpayer may refuse to exhibit his books
and records for examination on the ground that
compelling him to do so might violate his right against
self-incrimination under the Fifth Amendment and
constitute an illegal search and seizure under the
Fourth Amendment. However, in the absence of such
claims, it is not error for a court to charge the jury
that it may consider the refusal to produce books and
records, in determining willfulness.
Page 10 - 7 of 14
The Federal Zone:
(2) The privilege against self-incrimination does not
permit a taxpayer to refuse to obey a summons issued
under IRC 7602 or a court order directing his
appearance. He is required to appear and cannot use
the Fifth Amendment as an excuse for failure to do so,
although he may exercise it in connection with specific
questions. He cannot refuse to bring his records, but
may decline to submit them for inspection on
Constitutional grounds. In the Vader case [U.S. vs
Vader, 119 F.Supp. 330], the Government moved to hold a
taxpayer in contempt of court for refusal to obey a
court order to produce his books and records. He
refused to submit them for inspection by the
Government, basing his refusal on the Fifth Amendment.
The court denied the motion to hold him in contempt,
holding that disclosure of his assets would provide a
starting point for a tax evasion case.
[emphasis added]
Note, in particular, where this IR Manual uses the phrase
"in the absence of such claims". In general if you do not assert
your rights, explicitly and in a timely fashion, then you can be
presumed to have waived them. There's the "law of presumption"
again. You can, therefore, assert your rights under the Fourth
and Fifth Amendments to the Constitution, by refusing to submit
your books and records for inspection, even though you cannot
refuse to bring those books and records to an audit. This may
seem like splitting hairs. However, if the federal government
could compel your submission of books and records to IRS agents,
then the federal government could compel persons to be witnesses
against themselves. This would violate the Fifth Amendment.
Similarly, the federal government could compel the search and
seizure of books and records without a warrant issued upon
probable cause and describing the place to be searched and the
persons or things to be seized. This would violate the Fourth
Amendment. Agencies of the federal government are constrained by
law to avoid infringing upon the rights guaranteed by the Fourth
and Fifth Amendments to the U.S. Constitution.
How do you assert your rights in a polite yet convincing
way, so that everyone who needs to know is placed on notice that
you have done so? One of the most effective ways of asserting
your rights is to become totally alert to every document which
bears your signature, past, present and future. Know that your
signature is the touch which magically transforms common pieces
of paper into commercial contracts, or "commercial agreements" as
they are called in the Uniform Commercial Code. Always sign your
name with the following phrase immediately above your signature:
With Explicit Reservation of All My Rights
and Without Prejudice U.C.C. 1-207
Page 10 - 8 of 14
The Fundamental Law
The use of this phrase above your signature on any document
indicates that you have exercised the "Remedy" provided for you
in the Uniform Commercial Code (UCC) in Article 1 at Section 207.
This "Remedy" provides a valid legal mechanism to reserve a
fundamental, common law right which you possess. Under the
common law, you enjoy the right not to be compelled to perform
under any contract or commercial agreement which you did not
enter knowingly, intentionally and voluntarily.
Moreover, your explicit reservation of rights serves notice
upon all administrative agencies of government, whether
international, national, state, or local, that you do not, and
will not accept the liability associated with the "compelled"
benefit of any unrevealed commercial agreements. As you now know
from reading previous chapters, the federal government is famous
for making presumptions about you, because your signature is on
documents which bind you to "commercial agreements" with tons of
unrevealed terms and conditions. Think back to the terms and
conditions attached to the bank signature card, for example. An
unrevealed term is proof of constructive fraud, and constructive
fraud is a legal basis for cancelling any written instrument.
Last but not least, your valid reservation of rights results
in preserving all your rights, and prevents the loss of any such
rights by application of the concepts of waiver or estoppel. A
"waiver" has occurred when you sign your name on an agreement
which states that you knowingly, intentionally and voluntarily
waive one of your fundamental rights. Kiss it goodbye. As long
as you are not infringing on the rights of others, only you can
waive one or more of your fundamental rights. In law, "estoppel"
means that a party is prevented by his own acts from claiming a
right, to the detriment of another party who was entitled to rely
on such conduct and who has acted accordingly. If all parties
were acting in good faith, for example, estoppel prevents you
from changing your mind and claiming a right after the fact, in
order to get out of an otherwise valid contract. The doctrine of
estoppel holds that an inconsistent position or course of conduct
may not be adopted to the loss or injury of another. However, if
the other party has been responsible for actual fraud,
constructive fraud or deliberate misrepresentation, then the
estoppel doctrine goes out the window and the contract is
necessarily null and void. And there is no statute of
limitations on fraud.
The remedy provided for us in the Uniform Commercial Code
was first brought to my attention by a Patriot named Howard
Freeman, who has written a classic essay entitled "The Two United
States and the Law". This essay does an excellent job of
describing the tangled legal mess that has resulted from the
bankruptcy of the federal government in the year 1933.
Specifically, the Supreme Court decision of Erie Railroad vs
Thompkins in 1938 changed our entire legal system in this country
from public law to private commercial law. Prior to 1938, all
Supreme Court decisions were based upon public law, i.e., the
Page 10 - 9 of 14
The Federal Zone:
system of law that was controlled by Constitutional limitations.
Ever since the Erie decision in 1938, all Supreme Court decisions
have been based upon what is termed "public policy". Public
policy concerns commercial transactions made under the Uniform
Commercial Code (U.C.C.). Freeman describes the overall
consequences for our system of government as follows:
Our national Congress works for two nations foreign to each
other, and by legal cunning both are called The United
States. One is the Union of Sovereign States, under the
Constitution, termed in this article the Continental United
States***. The other is a Legislative Democracy which has
its origin in Article I, Section 8, Clause 17 of the
Constitution, here termed the Federal United States**. Very
few people, when they see some "law" passed by Congress, ask
themselves, "Which nation was Congress working for when it
passed this or that so-called law?" Or, few ask, "Does this
particular law apply only to residents of the District of
Columbia and other named enclaves, or territories, of the
Democracy called the Federal United States**?"
[emphasis in original]
The "Federal United States**" to which Freeman refers is the
federal zone. Because of its sweetheart deal with the Federal
Reserve, Congress deliberately failed in its duty to provide a
constitutional medium of exchange for the Citizens of the 50
States. Instead of real money, Congress created a "wealth" of
commercial credit for the federal zone, where it is not bound by
constitutional limitations. After the tremendous depression that
began in 1929, Congress used its emergency authority to remove
the remaining real money (gold and silver) from circulation
inside the 50 States, and made the commercial paper of the
federal zone a legal tender for all Citizens of the 50 States to
use in discharging their debts. Freeman goes on to describe the
"privilege" we now enjoy for being able to discharge our debts
with limited liability, that is, by using worthless commercial
paper instead of intrinsically valuable gold and silver:
... Congress granted the entire citizenry of the two nations
the "benefit" of limited liability in the discharge of all
debts by telling the citizenry that the gold and silver
coins of the Republic were out of date and cumbersome. The
citizens were told that gold and silver (substance) was no
longer needed to pay their debts, that they were now
"privileged" to discharge debt with this more "convenient"
currency, issued by the Federal United States**.
Consequently, everyone was forced to "go modern," and to
turn in their gold as a patriotic gesture. The entire news
media complex went along with the scam and declared it to be
a forward step for our democracy, no longer referring to
America as a Republic.
Page 10 - 10 of 14
The Fundamental Law
You are strongly encouraged to read and study Freeman's
entire essay, which can be obtained by writing Howard Freeman,
c/o P. O. Box 364, Lusk, Wyoming. A copy of this essay can also
be obtained from the Account for Better Citizenship. The
compound metaphor of "Two United States" is rich in meanings and
long on prophetic insight.
America is now submerged in a tangled legal mess which began
in 1901 and reached critical mass in 1913. This mess is due, in
large part, to systematic efforts to destroy the Constitution as
the fundamental law in this country, and to devolve the nation
from a Republic into a Democracy (mob rule) and eventually a
socialist dictatorship. The Supreme Court gave its official
blessing to the dubious principle of territorial heterogeneity in
the Insular Cases. These controversial precedents then paved the
way for unrestricted monetary devolution under a private credit
monopoly created by the Federal Reserve Act; this Act followed
closely behind the fraudulent 16th Amendment in order to justify
"municipal" income taxation (two pumps, working in tandem). The
Supreme Court stepped into line once again when their Erie
decision threw out almost 100 years of common law precedent.
Echoing Justice Harlan's eloquent dissent in Downes vs Bidwell,
author Lori Jacques identifies territorial heterogeneity as a
root cause of the disease she calls "governmental absolutism":
There has been no cure for the disease of governmental
absolutism introduced into our body politic by the
acquisition of Dependencies and the subsequent alleged
Sixteenth Amendment. ... [T]hrough Rules and Regulations
meant for the Territories and insular Possessions, which are
not limited by the Constitution, Congress has extended this
limited legislative power into the several states by clever
design thereby usurping the states' right to a republican
form of Government and virtually destroying the concept of
Liberty of the individual. ...
Until the person who receives benefits from the Government
is not permitted to vote, or buy himself benefits to the
detriment of another, the Liberty of the Individual will be
denied. "Benefits" granted by the Government are the rights
transferred by the Individual to the Government and then
returned as "privileges" by its formula of felicific
calculus.
[A Ticket to Liberty, November 1990 edition, pages 145-146]
These efforts to destroy the Constitution have not been entirely
successful, however. Due to the concerted efforts of many
courageous Americans like Howard Freeman, the United States
Constitution is alive, if not well, and remains the Supreme Law
of the Land even today. Any statute, to be valid, must be in
agreement with the Constitution and, therefore, with all relevant
Page 10 - 11 of 14
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provisions for amending it. It is impossible for both the
Constitution and a law violating it to be valid; one must
prevail. That "one" is the Constitution, the fundamental law in
these United States. This is succinctly stated as follows:
The general rule is that an unconstitutional statute, though
having the form and name of law, is in reality no law, but
is wholly void and ineffective for any purpose; since
unconstitutionality dates from the time of its enactment,
and not merely from the date of the decision so branding it.
An unconstitutional law, in legal contemplation, is as
inoperative as if it had never been passed. Such a statute
leaves the question that it purports to settle just as it
would be[,] had the statute not been enacted.
Since an unconstitutional law is void, the general
principles follow that it imposes no duties, confers no
rights, creates no office, bestows no power or authority on
anyone, affords no protection, and justifies no acts
performed under it ....
A void act cannot be legally consistent with a valid one.
An unconstitutional law cannot operate to supersede any
existing valid law. Indeed, insofar as a statute runs
counter to the fundamental law of the land, it is superseded
thereby.
No one is bound to obey an unconstitutional law, and no
courts are bound to enforce it.
[Sixteenth American Jurisprudence]
[Second Edition, Section 177]
[emphasis added]
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The Fundamental Law
Reader's Notes:
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The Federal Zone:
Reader's Notes:
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