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Profile: First National Bank of Montgomery
First National Bank of Montgomery was a participant or observer in the following events:
Minnesota attorney Jerome Daly defends himself in a lawsuit filed by the First National Bank of Montgomery, in a case later cited as First National Bank of Montgomery v. Daly. The bank sues Daly in Credit River Township, Minnesota, after foreclosing on his property for nonpayment of his mortgage, and seeks to evict Daly. Daly, a well-known anti-tax protester who has filed “protest” tax returns in the past (see 1951-1967), argues that the bank never actually loaned him any money, but merely created credit on its books. Since the bank did not give him anything of tangible value, he argues, the bank has no right to his property. Both the jury and the Justice of the Peace presiding over the case, Martin V. Mahoney, agree, and declare the mortgage “null and void.” In his ruling, Mahoney admits that the verdict runs counter to provisions in the Minnesota Constitution and some Minnesota statutes, but contends that such provisions are “repugnant” to the Constitution of the United States and the Bill of Rights in the Minnesota Constitution. Mahoney finds in his ruling that all Federal Reserve paper money has no intrinsic value. Initially, Daly retains his right to the property and has his mortgage revoked, but the bank appeals the case and the verdict favoring Daly is reversed, as is a similar lawsuit brought by Daly against another bank. The Minnesota Supreme Court begins proceedings against Mahoney and Daly for “constructive contempt” of the law. Mahoney’s death in 1969 voids the proceedings against him, but Daly is subsequently disbarred for his arguments, which the Minnesota Supreme Court finds entirely fraudulent, “unprofessional,” and “reprehensible.” The case and its reasoning will be frequently cited in lawsuits challenging the US banking system, particularly the practice of “fractional reserve banking.” The case has no value as precedent, but will often be cited by groups supporting a government-owned central bank or opposing the Federal Reserve system. [State of Minnesota, County of Scott, First National Bank of Montgomery v. Daly, 12/9/1968 ; State of Minnesota, County of Scott, First National Bank of Montgomery v. Daly, 1/12/1969 ; US District Court for the District of Utah, 10/28/2008; Minnesota State Law Library, 5/27/2010]
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