What it do what it do everybody welcome back this is Tex Masson we are here with another episode thctrust.org we're going to just pick up where we left off the last time we did the video on the bankers acceptance and we talked briefly about the notary protest we're just going to go a little bit further into the notary protest in this video um But this is just a concept, an idea, an expression. It's not legal advice. But I, you know, through my years of research, I would think if one was going to put forth a real effort to discharge a debt, some of the most critical pieces that's necessary for different parts of the process is request a payoff statement or some form of certified record of the debt. Tender your instrument, banker's acceptance or draft or something to the effect.
If you can get a medallion stamp on it because you're a secured party creditor and you want to transfer the funds from your master discharge indemnity bond for the purposes of discharging the debt, then the medallion stamp would be great. So you got a medallion stamp instrument, notary protest to certify the dishonor if they don't accept the instrument, and there may be some 1099 reportings. 1099-C cancellation for debt, which is consistent with discharge, the discharge of the obligation to the extent of the tender when the tender is refused.
So perhaps a 1099-C and perhaps a 1099-INT at the time that you tender the instrument because you're tendering a cash item and it's reportable. Again how you fill out these 1099 ints I haven't covered them I probably won't cover them because I'm not the expert on it, and I'm still studying this 1099 int But I'm just from my research. It seems like that absolutely would be the form to report Before we get into the content today, I want to touch on one other thing from the last video So first let's go to THC trust org if you don't already have an account Click this button right here at the bottom where you see create an account you have an account go ahead and login now if you would like a coaching session I do coaching sessions there's $75 per session they're usually around an hour I don't like to go beyond an hour but there's no specific time I like to make sure that you get your questions answered to the best that I can you can click this link right here for the coaching session or check the information below this video you can also establish a membership plan to have access to all of the templates regarding the discussions like the one that we're going through today.
So before we get into further talking about the notary protest, the last time we talked about the banker's acceptance is under advanced topics down here under discharging the obligation. They're discharging the charges. That's where we talked about tendering the bond in court.
This, I would say discharging, this one I would say is probably more precise research. I like how this one came out better. This is a But this is click this menu down here.
This was the last video we did over the bankers acceptance with the medallion stamp. Here's the templates below the video and the video that I'm doing now of the notary protest will be right in here. And here's the templates for the notary protest.
But first, let's look at the bankers acceptance. One last time. I wanted to mention in here, as I stated in the last video, some people may have a difficult time obtaining this medallion stamp signature guarantee.
If it were me and that was the case, what I would do is I would take this piece right here and I would make it a notary verification or something to the effect. And that way the net or and there's also another thing called a signature guarantee. That's not necessarily a medallion stamp. You may want to inquire with your bank to see if you could just get a signature verification or something else. They have it.
But if not, I would put a notary on here. to verify the signature as a witness, which is a voucher, like, you know, the term voucher, meaning a witness, but it's also a financial instrument. So the notary also gives credit to the instrument per se, right? So it accredits the interest, it accredits the instrument through being a witness to your signature, if that makes sense.
So that's just something I would do. you know what i'm saying then you have the instrument counter sign if i couldn't get the medallion stamp all right so that being said let's go ahead and get into this topic of the notary Presentment so right here. You can click the PDF see if we can keep this kind of quick here What you see here in this notary presentment, we start off with a cover letter. This cover letter is not a requirement for a notary presentment. There is no need to let the person know that you're doing a notary presentment.
And technically, the notary does not have to present the banker. Excuse me, I'm saying notary presentment. What I should be saying is notary protest. There is no requirement to have a cover letter when you do a notary protest.
However, I would suggest that you do a cover letter when you do the notary protest. But we see here this is a cover letter. We're letting them know that we're doing a protest. Doesn't have to let them know.
Down here what we have is the actual certificate of dishonor. This is the protest. And we're going to go through it in a little bit.
Foremost, I want to... Draw your attention to See if I can click this here. This is the federal rules of evidence rule 902 evidence that is self-authenticating this here specifically, I want to go down here so you can see the following items of Evidence right are self-authenticating They require no extrinsic evidence of authenticity in order to be submitted. Document, excuse me, domestic public documents that are sealed and signed. For example, the notary certificate of protest that we just discussed is a domestic public document and is sealed by the notary, signed by the notary.
The signature purporting to be an execution or attestation. So let's very briefly. Let's look up what an attestation is because basically This notary certificate of protest that you see right here.
It's an attestation But I want you to see it so that you can understand why we do the notary presentment and the notary protest So we're down here. Let's find the attestation If you want to find this Bouvier's Law Dictionary online, go to Google, type 1215.org, Bouvier's Law Dictionary, and it'll pop right up. So I'm just going to go through some of these real quick.
Contracts and evidence. So we're already seeing when we're talking about attestation, we're talking about evidence again. The act of witnessing an instrument.
of writing at the request of a party. We're going to see that, right? The maker of the instrument requests the notary to provide as a witness a certification of the acceptance or non-acceptance.
So that's an attestation. The attestation should be made in the case of wills agreeably to the discretion of the statute. A person who sees an instrument executed but is not desired by the parties to attest it is not their for an attesting witness, although he afterwards subscribes it as such. So they're basically saying just because, you know, I get what they're saying, but that's not really, we don't have to go into that.
So we see what an attestation is. There's another definition I've seen. It doesn't show up in here, but it talks about attestations and government officers, etc. So A signature purporting to be an execution or attestation, self-authenticating evidence. If you notice on our certificate of protest down here.
There's an attestation. I hereby certify and affirm that this information is true, accurate, and complete to the best of my knowledge. The notary, and it says, thus done protested in the presence of two witnesses. So that's what this thing was saying earlier. These two witnesses, they're here after the fact.
They are not actually the ones attesting. But, you know, it doesn't matter as far as this instrument. The one who's attesting is the notary.
Again, the notary seal must be on here because an attested document by a governing official with the seal is admissible as evidence. Right. So I kind of beat that into the ground, but I just really want you to understand why we are doing this. And then there's also UCC 3-505.
Let's go look at that. Now, by the way, before before you do a notary protest, it is imperative. that you look up what the requirements are for a notary protest in your state. Uniform Commercial Code section here, 3-505, explains to you that a notary protest is evidence of dishonor.
Let's look at it again real quick, just so you understand. I'm not making this up. Get my firewall. started to while we do this got it so ucc3 evidence ucc3-505 evidence of dishonor we'll go right here to the first one a1 a document regular inform as provided in section b which purports to be a protest right we just looked up what a protest was but let's look up what a protest is in accordance with the uniform commercial code you A protest is a certificate of dishonor made by the United States Council, Vice Council, or a notary public or other person authorized to administer oaths by the law of the place where the dishonor occurs.
It may be made upon information satisfactory to that person, right? That's important to know. The notary protest or the certification of dishonor can simply be made upon information satisfactory to the notary. That could be the notary makes a telephone call. That can be the notary realizes that the time to expire has responded.
The notary could deliver the instrument themselves and have the verbal conversation. But the notary should take a mental note or a written note of their firsthand knowledge of the dishonor so they can write the basis for that in the notary protest. We're going to see that when we actually read through the notary protest. But I'm going to point it out real here because I want you to know that we've created this certificate of dishonor slash certificate of protest specifically off of the requisite so that it won't be invalidated later on.
So we started by saying UCC 3-505 is evidence of dishonor, as it says right here. Certificate of dishonor, as we have right here. The following are admissible as evidence, a document regularly informed as provided in Section B, which purports to be a protest.
Not only is this a certificate of honor, it's a certificate of protest, so it purports to be a protest. We seen earlier under the rules of evidence that attestation. This protest is also an attestation. So this is just evidence that we are creating to support our presentment. The protest must identify the instrument and certify either that presentment has been made or if not made the reason why it was not made.
In our case the instrument is the banker's acceptance we looked at it in the last video. And so all these things are key though you don't want to leave any things out of the protest and that the instrument has been dishonored by non-acceptance or non-payment. In our case it's going to be non-acceptance because The person who accepts the instrument has the obligation to present it to the treasury or wherever it's supposed to go for payment. And then if it's dishonor, their remedy is to get their protest or their evidence of nonpayment. But if they just ignore everything as they usually do, then that's nonacceptance and we have to get the evidence of nonacceptance.
The protest may also certify that notice of dishonor has been given to some or all parties. It didn't say that it must. But it said it may also certify that the notice of dishonor has been given to some or all parties.
If you look up here, it says the protest must identify. So some things it says must be in the protest. Other things say it says may be in the protest. But when I look these protests up, trust me, if you do a protest, that's a pretty much like a judgment. It's an adjudicated fact.
So people will try to invalidate these. And I've seen. courts have split opinions on whether a notary protest is not valid because the notary failed to give notice of the dishonor to some or all the parties. So we make sure, as you see here, a copy of this notice has been sent to the maker and a copy of this notice has been sent to the acceptor. When you look at these old Notary protests you can go online and look them up and get you some templates to see what the verbiage looks like You'll never see a copy has been sent to this party by certified mail because most of these examples are from the late 1800s early 1900s and I don't believe they were using certified or trackable mail at the time So maybe this just represents a little bit of an advance in technology all right so now that we just kind of looked at some basic elements that need to be in there we're going to go over we're going to read this thing from top to the bottom um let's see did i forget to is something else i was going to mention but it kind of eludes my mind at this moment all right so starting at the top Remember, we have this cover letter that's not necessary.
Now, this cover letter actually does not go with the notary certificate of dishonor or the certificate of protest, not the fully executed certificate of protest. The certificate as a part of the process, the certificate of dishonor, obviously doesn't go with the original presentment because you have to present them the instrument first and give them the time to accept it or dishonor it. However, this cover letter, which is not required, can go along with the instrument. If now the note, this is the notary's cover letter.
The notary cannot get personally involved. So you have to be very careful of what is stated as we're going to go through here. I personally would not put the notary seal on the cover letter because the cover letter is not an official notary act. It's just. information, give a notice.
So me personally, I wouldn't put it on there. I've seen people do it. I would just sign it because I think you would be potentially creating a dangerous situation for the notary.
You don't want to do anything that's unnecessary when it comes to using a notary for these processes. Also, as I would state, this is what I wanted to mention before we read through this. We just looked up the uniform commercial code 3-505, but when you do these notary presentments, you have to look up.
Excuse me, when you do a notary protest, you must look up the equivalent to UCC3-505 in the commercial code of your state. For example, what we're looking at here is Ohio. There's Georgia.
There's New Jersey. But and not all states are exactly the same. A lot of states have adopted the uniform commercial code.
In all parts, some have left out certain parts. And this is why you must look up the requisites of your state. Because if you just go online and you just grab a notary protest presentment or template and you attempt to do a notary protest, you may have done an invalid document because your state has one small little requirement that you didn't do any research on. And now your whole notary protest is invalid for the purpose that you created it.
So it's not a lot of research, but just familiarize yourself. Don't. Don't just go off the UCC, look up what the commercial code is in your state.
Some states like California are not going to authorize the notary to do a protest. So you have to find a whole nother different area of how to do that. And there is another area or workaround. Actually, what California says is that a notary cannot do a protest unless they are in the capacity of employment working for a bank. Some people technically can probably you can probably technically make that off that argument that you are a private bank in trust and that you've hired the notary to do a presentment and the notary is employed by the bank.
Right. You can adjust your situation like that so that a notary protest becomes valid in California. Actually, I don't know if you can.
I'm not giving legal advice or anything like that, but I'm just saying that would be a potential workaround. But really, it's probably not feasible because I highly doubt you're going to find any notaries in California that do not work for a bank who are going to be willing to do a protest just because they may not understand this stuff to that extent and it seems risky to them. So just be sure.
that you look at your state code where the notary is make sure you understand everything about the protest before you attempt to do it so that you cross all t's and dot all i's um let's see okay so Here, let's click this right here. This is Ohio. Same thing we looked at under UCC 3-505.
They have it right here. Ohio Revised Code 1303.65. In your state, it's going to be something different. How would you find it?
Google your state, commercial code, evidence of dishonor, notary protest, and it should come up. Equivalent to UCC 3505. This pretty much says the same thing. The following is admissible as evidence.
And creates the presumption of dishonor. We're talking about evidence again, a document in regular form provided in Division B of this section, which purports to be a protest. There's no really need to go through this because it says the exact same thing as the uniform commercial code.
Huh. It's something interesting. I'm just now seeing this. Protest is no longer mandatory and must be requested by the holder.
Even if requested, protest is not a condition to the liability of endorsers or drawers. Protest is a service provided by the banking system to establish the dishonor has occurred. Like other services provided by the banking system, it will be available if market incentives, interbank agreements, or government regulations require it. But liabilities of parties no longer rest on it.
Protests may be a requirement for liability on international drafts governed by foreign law, which this article cannot affect. So something to note there. It's not a requisite. You're definitely going to have to request it. Some notaries aren't going to do it.
OK, so again, I was stressing it's very important to just do some basic research to make sure that you. Meet all the specific requisites, if there's any, in your state so that your certificate of protest will be a valid piece of evidence for what you're trying to use it for. Let's read the cover letter.
Okay, beginning with, start at the top, the date. Service by registered mail. Where is the notary going to get this registered mail number?
It's going to come from you. It's going to be the same registered mail number that's tied to your banker's acceptance or whatever other instrument. You're going to have to prepare everything, including this cover letter.
Bring it to the notary and let's read the cover letter. The notary would be sending this to the person who has to receive the instrument on your behalf. Let's listen to the cover letter. Listen how the notary is not getting directly involved and is staying outside as a witness.
Dear Mr. Jensen, that's the CFO of the place receiving the instrument or the other financial officer. I have been contacted by John Doe L., trustee for ABC Trust, for the purposes of presenting the enclosed tender of payment and demand for acceptance under notary seal. Why are we saying tender for payment?
Because we looked at the UCC3 that says if tender of payment is refused, there's discharge to the extent of that tender. So we're using the specific term. I've been contacted for the purposes of presenting the enclosed tender of payment. and demand for acceptance under notary seal.
Mr. Doe has requested that I provide as a witness a notary certificate of protest or other record certifying your acceptance or non-acceptance of the instrument. I am authorized to issue such certificate under Ohio Revised Code 1303.65 or whatever your state is. Letting them know, hey, I'm not involved. I'm authorized to do this under this state statute. Mr. Doe has also requested, excuse me, Mr. Doe also requests that you provide verification of your acceptance in the form of an adjusted statement of account demonstrating that payment has been credited to the related account.
Please take notice that failure to respond in a timely manner without good cause will result in a protest or other record verifying your non-acceptance. Your acceptance or dishonor, including all communications regarding this presentment, must be delivered through me at the address indicated above no later than 10 days from the postmarked date of delivery of this notice to prevent the issuance of the attached certificate of protest pursuant to my statutory authority. Again, you can you don't have to say attached certificate. You could just say to prevent the issuance of a certificate of protest.
This is just because you want to be very careful again, and you don't want to get the notary involved. So the notary doesn't need to sound like they're taking a position. But if you wanted to attach the certificate to show them of what things are to come so they would understand the severity of it, they make sure you don't fill out the values and all this thing.
Just make it a standard kind of a blank certificate that's not complete. It's definitely not executed in sign because this only. happens the certificate gets issued after the default occurs right so that's you don't want to make threats but it's kind of like a hey this is what i'm gonna this is what's gonna happen you're gonna get the same instrument but it's gonna be all inked up and stamped and executed and it's gonna serve as evidence so that's the cover letter and let's say that that happens and then there's dishonor so let's go through the certificate It's a one-page certificate. We want it very clean because it's going to enter into a court record as evidence, perhaps.
Now, the thing is, if you ever have to enforce a banker's acceptance, that's going to be something that's probably going to be done in a federal court because there's a national and banking emergency that kind of ties to that instrument, but it also may be a bill of complaint for equitable relief. which may still be something that goes in the United States District Court, and even the certificate of protest. You know, all these things, they just seem like they would be subject matter for that court.
So I would say make sure that the instrument is clean, certificate of dishonor, certificate of protest at the top. Be it known that the undersigned notary public of Middlesex County, Ohio, at the request of the maker, John Doe of 123 Private Address, hereby certifies that presentment has been made of one original banker's acceptance, number JAD123, dated January 1st, 2024, via registered mail, RR123456789, a copy attached here too, for tender to Capital Source 1 of 1234 Phoenix Road on January... And that's the acceptor on January 20th, 2024 for deposit to the United States Treasury at 1500 Pennsylvania Avenue.
And whereas said instrument has been dishonored by refusal, non-acceptance and non-performance of capital source one, the person entitled to enforce the instrument. And then we have this section in red where you can write. Here's where you would write more detail. with regard to your firsthand knowledge of why there was non-acceptance. So all this first part that we just read is basically restating the basic facts, who the maker is, who the drawer is, identifying the draft or the instrument that's being protested, and identifying the basis upon which the dishonor occurred.
Once you have recited all of those facts in this attestation, then we say, Wherefore, by these presents, I hereby publicly and solemnly protest the maker and acceptor of said instrument against all and against all others who whom it doeth or may concern and declare that they will be held responsible for all loss, damages, tax interest arising from its dishonor. Now we put an accounting here. I've seen a lot of these notary protests and I thought it would be wiser to put the face of the. you know, the value of the instrument that's being dishonored. I could have named the value in here and what's being recited, but no, this is an accounting, the notarization fee, make sure you don't, make sure, you know, the maximum amount.
that a notary can charge for any particular notary act or notary service. You don't want to invalidate your certificate of protest by having a value on here. And then somebody says, well, the notary couldn't have legally charged that because the law doesn't give the authority to charge $15. So just make sure that you're familiar with those. Postage lines up.
In this example, I have $2.64. I was saying three notices, three forever stamps. And that's the postage.
But really, you're going to calculate the postage of whatever, because if you're using certified mail, the postage is going to be different. But if you're going to put the postage here, make sure it matches up precisely with what's on your approach, your receipts, or make sure you have evidence of it, because this is official record. And now it connects and ties into the government postal records.
And now we have the total here. $602,000 in this example. Now, I think this accounting is really important on this particular instrument of protest because this instrument is now a debt instrument with a value.
So this is actually evidence that may support the 1099-C cancellation of debt. So this is actually an accounting for that, and I would make sure that it matches up. Because this is a leanable. This is a, you know, basically it's basically as good as money, as good as a check, as good as the draft that you submitted.
It's an evidentiary document. It would be very good. It's not required, but just to make sure that you have the strongest protest instrument possible so that there's not any one small thing that's going to invalidate it. I would suggest that you execute this protest in the presence of two witnesses. And once again, the notary must sign and seal the protest instrument, not the cover letter, but the protest instrument.
All right. I think I covered everything. Of the most importance. So I hope you enjoyed the video.
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