Why I Believe in the Common Law

By Drew Thompson

First, what is “Common Law”? Black’s Law Dictionary has defined Common Law as the body of law derived from judicial decisions rather than statutes or Constitutional law. In other words, it is the law decided by judges without reference to anything else than other decisions by judges.

There are three reasons I’m a fan of the common law:

  1. there’s too much legislation, and it’s too burdensome on the people it applies to;
  2. the Constitution is just a framework rather than a system of laws to govern individual disputes in all kids of circumstances; and
  3. government can exist at the most minimum levels with common law.

As a Libertarian, I’m surrounded by other people in my party who consider themselves either anarchists or Constitutionalists. I’m neither. I don’t really believe anyone else is either. Here’s why.

While we could give lots of examples of why “I’m thankful government is there for…”, nearly every one of them can be denied and refuted except this: what do you do without courts in a contract dispute between people? Who decides if property boundaries are crossed? Was there an assault or self-defense?

Maybe you prefer the idea that the offended party would go out and hire a private judge to decide. OK. What if the other party won’t agree to let that judge decide – now what?

Other than the protection of life from human violence, the best reason I can think of for the existence of government is the ability to construct a near neutrality of judges when people have disputes between them. Coupled with the assurance that a jury, rather than judge alone, will decide the outcome – the common law, passed down and evolving through generations and centuries, is the best protection I believe we have for our own human interests in life, liberty and property.

It takes a lot of study over a long time to understand the path toward (but never reaching) perfection the common law offers, but it is our best and wisest use of government in my opinion.

What about the Constitution? First, I love our Bill of Rights. It says freedom comes first in America. I also love the 13th, 14th and 15th Amendments as they extend freedom equally to everyone in the United States.

The main body of the Constitution is a good body of work as well, especially regarding the separation of powers it creates between the various branches of government. Of course, I do like the reference to incorporation of the common law too.

After that though, the Constitution, as written, is largely a tool for manipulation by statist legislators and executive branch agencies to expand the power and control the federal government has over private individuals’ lives.

Every judge, legislator and President (before the 22nd Amendment) could stay in office for life, be treated as royalty, spending taxpayers’ and the public treasury into oblivion. Sound a lot like what has happened? Guess what? Nearly all of it was done within the Constitutional framework.

If you tell me it would not have happened but for the unconstitutional wars we have fought. I say it only took one difference to make it what it is now. All Congress has to do was to write it’s blank check under war declarations instead of “resolutions” and other watered down legislation, and we would have exactly the same, perhaps an even great mess than we have now.

The Constitution was laid out to support a future empire. The reason we did not get there for as long as we did is that it took generations for us to get big enough and strong enough to make that happen. Today, here we are!

If we really want minimum government and maximum freedom, the best way back to where we started is to return to the system of common law and juries. At the same time, preserve the Bill of Rights and  otherwise, it would be wise to retool our Constitution to provide for a framework that fits the new millennium rather than 3/4 of the way through the old.

These are goals the coming generation should wholeheartedly embrace – make America the America you want it to be! Embrace freedom and limit the power of the law in your life!

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Setting Goals for the New Year

Thompson Law Indiana Blog

“If I could cha-a-a-a-nge the world…” chants Eric Clapton. Sometimes I wonder if he or another singer of his stature recognizes how much they may actually havechanged the world. Then again, I believe we all have it in us to impact the world if we set our sights on big visions and work to see them come true. The outcomes never look the same in the end as the dreams did in the beginning, but sometimes it’s amazing to see how the change we set out to make can actually become reality – if we just plan, work and stay faithful.

This year, I’ve taken five areas I am passionate about and decided to share and to concentrate on their success – with my time, energy and by sharing the vision with others. Here’s a thumbnail of what this looks like from my vantage point:

1. Not Too Small…

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Setting Goals for the New Year

“If I could cha-a-a-a-nge the world…” chants Eric Clapton. Sometimes I wonder if he or another singer of his stature recognizes how much they may actually havechanged the world. Then again, I believe we all have it in us to impact the world if we set our sights on big visions and work to see them come true. The outcomes never look the same in the end as the dreams did in the beginning, but sometimes it’s amazing to see how the change we set out to make can actually become reality – if we just plan, work and stay faithful.

This year, I’ve taken five areas I am passionate about and decided to share and to concentrate on their success – with my time, energy and by sharing the vision with others. Here’s a thumbnail of what this looks like from my vantage point:

1. Not Too Small to Succeed

Whatever the hopes and challenges were for small business before 2008, the world is a different place today. Younger professionals have little or no guarantees of employment, no matter how good their credentials, and it has become more attractive to employers to hire someone who has experience with multiple companies in a shorter period of time than with one employer over a longer period of time.

Parallel to the employment environment stand regulatory and financial considerations for small businesses, and perhaps more importantly, people’s motivations around work and business have shifted dramatically over the past ten to twenty years.

Funding option from private lending to crowdfunding and seller financing of existing companies have become common. These serve as an inducement to the independent business owner to persevere in pursuing their own business dreams. In 2015, I’m working to help fund 12 startups in Indiana, chosen for a combination of the potential for success, the accretive value of their services and products, and the intangible passion of their founders.

2. Not Too Big to be Accountable

At the other end of the spectrum lies the multinational behemoth, roaming about to devour the unsuspecting consumer or small business owner. For the most part to me, this means the mega banks that dominate credit markets, home and business lending.

As long as the upper tiers of management in these conglomerates can appease the federal and international regulators, they have been basically free to do as they please. But these entities are no more fail safe than the oil markets.

Andrew Sorkin’s theme of “Not to Big to Fail” was directed at how our federal government would do anything to keep them from going under – in fear of economic collapse. Today, not only is economic collapse a highly remote possibility, with the rise of the small, self-sufficient entrepreneur, but the misdeeds of the largest players in the marketplace have made them both more unpopular and less necessary.

But there needs to be some real accounting for the harm that has been caused. If an enterprise is so large that it makes all the rules, and yet feels no compulsion to follow their own rules, the scales of justice need to be balanced in a way that the people who do business with them can actually carry out the business they intended in the first place. Many borrowers have been effectively denied this opportunity.

In 2015, my law firm intends to challenge four of the biggest offenders on their own turf at their own game. Whether this effort matures into a burgeoning class action effort remains to be seen, but we will be pro-active in the cause regardless of where it ultimately leads.

3. Family Matters

This theme is built on the obvious. But the goals and the work behind it engage the not so obvious. For at least twenty years now, as if we didn’t already know, we have had political and popular leaders telling us how important fathers are to families. Nonetheless, during that same twenty years, illegitimacy, fatherhood alienation, and childhood poverty have continued to increase, and in the case of illegitimacy – increasing at staggering rates.

Like every other problem we face, however, whatever the present outlook, there is cause to hope, and there are means to help make things better. While there is much more illegitimacy, there are also many more young people choose to remain childless for longer periods of their lives. I’m not suggesting this is an ultimate solution. But the thoughtfulness of the young person who would prioritize her work life over family until she is ready to raise in a family in a marriage environment will ultimately help improve the situation tremendously.

Even where the problems already exist, there is hope for a brighter future. Efforts in the judicial system and among the family law bar to advance corroborative solutions and automate shared custody are just now beginning to yield results we can see – lowering dropout rates, higher compliance with child support orders, etc.

My firm will continue and extend our work in the area of reducing conflict in custody matters in 2015, and we have plans to host a first conference on Family Law Reform some time this year.

4. Place Matters

Alongside the movement to “fight for small”, comes the influence of groups who are pushing to support all things local. It is truly a wonderful movement that has reason to be embraced by people on all ends of the political spectrum.

Our firm’s home in Indianapolis is the core of place for me. We can have an impact right from where we are. But just because we live or work in one place, by no means does this mean we cannot have an impact around the entire world. Internet technology is such that it is just as possible for the next reader of this post to live in New Zealand as it is to live next door.

That said, continuing to make the precise place we call home a better place is a vital priority. In 2015, we are committed to helping the community surrounding us. Local artists, restaurants, other businesses, neighbors, the homeless population, they are all part of the place where we live.

5. Practicing Hospitality

This is somewhat an extension of #4, but I want it to be an extension of 1,2, and 3 as well. Hosting a conference, networking opportunities and other events, including home concerts, events for artists, etc., are all part of the plan.

Another year is on its way in, whether or not we are ready! Big plans beget big opportunities and greater success. The joy and fun in doing it is often in doing those things you deeply believe in. That is our focus for 2015.

We wish you the best in yours and would love to partner with you in any way we can add to what you are doing!

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Not Too Big To Fail

By Andrew J Thompson

Wells Fargo, Bank of America, Citibank, HSBCGMACUS Bank – six of the most involved and profitable banks in the nation, particularly when it comes to the home mortgage industry.

These six major players own the vast majority of the business and profits that are made each from the interest on home mortgages from home borrowers.  And while the problems that abound in the areas of predatory lending, defense of foreclosures, and even mortgage fraud, are widely and intensively documented and published, these six major mortgage players continue on in their quest for ever expanding profits on home mortgages, while homeowners themselves continue to face unreasonable or even inconceivable hurdles to paying the actual, fair and reasonable terms of the deal they entered into.

Problems homeowners face include:

  1. Real Party in Interest: knowing who is truly the right party to pay for the loan,
  2. Loan Documentation: having documents (the mortgage, promissory note, HUD-1) that are consistent, match up and available.  Many times the originals are either unavailable, or even if they are  available, they have been copied or had stamps or other marks added to them subsequent to an actual change in the status of the holder of the document or a party claiming a right to enforce obligations stated within the terms of the document.  The Best Evidence Rule, properly applied, calls into question any document that is altered in anyway after the evidence on the document is relied upon for enforcement, or after the evidence relied upon is visible to the party who would challenge it.   This is explained in more detail in examples we will consider in other articles.
  3. Calculation of Amounts Due: the proper calculation of what is due on a loan, especially after compounding interest, adding in late charges, attorney fees and other penalties, can be an incredible mystery.  I have had many homeowners come to me and inform me they have actually made payments that are greater than the original loan value, yet they are in foreclosure nonetheless.  With the accumulation of years of interest, of course, it is possible for this to occur, but when you see loan balances that exceed the original balance in spite of hundreds of thousands of dollars in payments to the lender, the situation wreaks of error along the way – and the error must be on the one calculating the amount due – the lender.

There are numerous other problems facing the homeowner as well.   But the bottom line is that the mortgage world is filled with situations where a simple homeowner is tasked with dealing with an enormous financial entity, any one of the “Gang of Six” cited above, and never really even has a chance to deal with an individual or other person who can help you identify an actual resolution to your problem.

If you’re a homeowner facing these kinds of problems, The Thompson Law Office can help.  If any of the above or something similar resembles your own predicament, please call us today, at (317) 564-4976 for a free consultation.

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Crowdfunding: Supporting Causes and New Investment Opportunities

By Andrew J Thompson

The crowdfunding craze of the last few years was initiated by groups like Kickstarter, Indiegogo, and GoFundMe.  Each of these platforms offer the means for cause oriented funding of projects reaching millions of interested contributors.  But none of these exist in such a way as to offer anyone who invests in a project or cause to obtain or receive any profit or continuing return on investment.  You may receive coupons, event invitations or other opportunities to engage with the cause you are supporting, but you will never receive a dividend, or other income or gains from the money you contribute via these platforms.

The JOBS Act, and particularly Title III of that Act, was passed and signed into law in 2012, expressly purposed to enable small businesses to attract investments from “small investors” by authorizing the creation of small scale, intermediaries, i.e. broker/dealers, and exchanges, that function to place small business investors into investment opportunities with businesses raising no more than $1,000,000 per year.

The problem is that over two years have passed and the SEC has failed to promulgate anything more than a proposal for the regulations required under the Act for the intermediaries to exist, and be excepted from the more intensive, existing SEC filing requirements.

This creates an enormous market gap for quality, small startups, and hungry entrepreneurs seeking capital for their businesses.  A number of states, Michigan, Indiana Georgia, and Kansas among them, have created a simplified form of state based crowdfunding exemption that augments that already existing SEC exemption for intrastate securities offerings.

These new laws and those proposed in other states may actualize the visions and work of small businesses seeking capital they are unable to attain from traditional, bank sources, as well as the networks and promoters of small business opportunities like the Silicon Valley’s Hackers and Founders or Midwestern startup networking group, The Verge.

But while the investment world and small businesses await final SEC approval of long overdue regulations, small businesses continue to struggle to obtain funding and are forced to rely on intrastate offerings if they seek to go beyond the limitations of bank funding or the heavy restrictions of Regulation D offerings (which are designed for a limited number of high net worth investors).

The Thompson Law Office is initiating a concerted effort to bring together small business owners needing non-traditional sources of investment capital to accomplish their short- and intermediate-term business objectives.  If you are an Indiana business owner who wants to enhance your growth potential by attracting important business capital that is currently beyond your reach, please contact the Thompson Law Office at andrew@thompsonlawindiana.com or calling us at (317) 564-4976 today.

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Great Real Estate Opportunities in Indianapolis Fit Friendly Legal Environment for Investing

By Andrew J Thompson

At this morning’s IBJ Power Breakfast, a panel of Indy’s Best in real estate development shared the news that our market is unique, strong and poised for very interesting changes in the next few years.  The panel of experts included Rich Forslund of Summit Realty, who brought to light that Indianapolis had experienced growth in its commercial sector similar to other cities its size and larger, but the uniqueness of the Millennial economy has dramatically changed the structure of the development landscape going forward.

As the news emerges of the transition in ownership of two of the largest towers in the city, Rich pointed out that vacancy rates have reached 20% and higher in these and similar properties even while occupancy is soaring in many pockets of the city, and there are several sub-sectors that are thriving tremendously.   With the advent of so many successful startups and other companies seeking more creative office environments than they have made available in the past, smaller buildings have become more attractive and investors recognize that it is also easier to fill them.  Similarly, Indy’s natural geographic advantage and zeal to expand its base as a national distribution hub, makes it a ripe home for large retailers like Amazon who want to reach as many customers as possible within a day or so of an order being placed.

The above factors combine nicely with the friendly, comparative tax structures, and regulatory and legal environment offered by the city and state to attract investment from across the country and around the globe.  The multi-family residential rental market here, for example, is attracting outside investment at record levels.  Of course, the relative cost of real estate here compared with either coast, Chicago, or even more comparable cities like St. Louis and Cincinnati, make Indianapolis an attractive investment for value oriented investors who see a diverse urban economy, easy access by land or air to other cities and a labor market that is very favorable to that of competing markets.

The next decade appears to be very bright for Indianapolis and its suburbs and nearby neighbors.  Watching as trends continue to develop and emerge will provide a helpful gauge concerning the future of our city’ commercial real estate markets.

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The Law, Family Farms and Farmers’ Families

By Andrew J Thompson, Esq.

If your family has been in the farming business for many years, you know the “simple life” on the farm can produce many complexities in the families’ finances that don’t present themselves to the rest of the population.  The phrase “land rich and cash poor” is widely used in reference to family farms where land values may have appreciated significantly over the years but liquidity within the family balance sheet is disproportionately low when compared to virtually any other kind of business.

Because farmers that manage their businesses for a generation or more have learned to manage cash flow in a manner that enables them to keep their business and personal interests ongoing in a functional way, the disparity between total assets available and cash on hand doesn’t produce a crisis for most farm families until a major “liquidity event” arises, i.e. the death or disability of the family patriarch or farm manager,  the sale of all or part of farm property, or a conversion of the business interest in the property to a use that generates immediate cash.

Another major event, but that does not necessarily generate liquidity for the family, is the split of the interest in the farming business – usually between siblings.  It is not unusual in the farming business for the male children to continue to operate the family farm professionally, while the female children pursue raising a family or off-farm careers.  But it is also very common for one sibling to take charge of the farming operations after Dad is no longer involved, and to buy or actually squeeze out the other brothers or siblings without first determining the actual market value that reflects the true economic benefit conferred upon the continuing owner-operator in the business.

Quite often an LLC or corporation was set up at some point in time with family members granted units or shares in the business, but with the operating sibling holding a controlling interest, either through actual equity in the entity, through voting rights, or just in a controlling position by proxy from other stakeholders in the operating business entity.  At some point, interests get divided further – and in a farming business, that point is usually when one owner dies or becomes incapacitated.  When that occurs, his or her descendants then want to pursue their equity shares in the business, but that may be challenging.  If another sibling holds a controlling interest in the business responsible for the farm operations and/or the real estate that is farmed, he may make any vote or opportunity to liquidate a share of the family’s interest difficult or virtually impossible to accomplish.

If you hold the controlling interest, this is very much to your advantage.  But to all of the other siblings and beneficiaries of the family business, it may be very disenfranchising.  The best way to deal with something like this is to address it on the front end, i.e. when the business entity is first established.  At that point in time, buy-sell and other liquidation event provisions can be drafted in a way that will be fair to all parties when the time comes.  The key in drafting such provisions is to make sure that on the one hand, no heir is left in a position where he or she won’t be able to access what is rightfully his or hers, and on the other hand, that no impediments are created to the continuing operation of the farming business.

Given the nature of farming, however, it is very unlikely that the continuing operations will be jeopardized by protecting the rights of sibling-heirs and other beneficiaries.  But the rights of the non-operating heirs can slip away over time if safeguards are not built in to the original framework of the succession plans and operating agreements of the farming business and its governing organizational documents.

Even if the protections are not put into place at the outset, there are always ways to protect the same interests of heirs further down the road.  For example, if no operating entity is created, there is no Will or Trust in place and no other governing, operating document, legally, all heirs will maintain their stake in the ultimate distribution of an estate. This may or may not be equitable, however, in the case of an heir who operates and profits from the business of the farm, if entirely equal distributions to siblings is the result upon the death of the founding farm operator, will generally protect those other siblings as their parents would have intended, even without a Will or a Trust.

That statement, however, begs the essential question – what actually is the intent of the senior generation with respect to their own children, i.e. their intended heirs.  There are a few common approaches to the issue:

  1. Complete Equality in Distributions – all income and asset distributions are shared equally by all heirs
  2. Equal Distributions Adjusted for Income to Child-Farmer
    1. Child-Farmer Keeps Beneficial Income from Farming (Profits Reaped Approach)
    2. Reallocate Asset distribution as an Offset to Farm Income (Talents Distribution Approach)
  3. Greater Distribution for Child-Farmer(s) (Sweat Equity Approach)
  4. Unique Allocations Approach – parents allocate income and assets to children based on their unique lie positions and their relationship with the parents.

Regardless which approach is employed, a sound valuation of the farm assets (both real property and operational assets) is vital to an efficient and effective transition when the time comes for the property to be distributed among the next generation.

Painful litigation or tedious issues often arise at the time of this transition if comprehensive planning has not been accomplished beforehand.

If you need assistance with planning or addressing issues related to a family farm and its succession to the next family generation, please contact the Thompson Law Office at (317) 564-4976

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