A Citizen's Guide to Indiana

Masson's Blog

Random Notes on Mortgage Issues

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Some random notes (taken during the Indiana Law Update) from mortgage section, in no particular order or emphasis on importance:

-Indiana doesn’t have a good process for liquidating mixed collateral — realty and personalty.

-Home equity line of credit as second mortgage often doesn’t get extinguished when its paid off to zero. There has to be notice. Typically, if the second mortgage holder starts advancing money again, it doesn’t lose its priority. (However, sometimes it does.)

-Credit bid of mortgage holder foreclosing establishes the amount of credit a debtor is entitled to on their overall debt. So, if a creditor obtains title at Sheriff’s sale by bidding in a judgment of $1 million, turns around and finds it can only sell the property for $500k; it doesn’t matter. The debtor still gets a $1 M credit. (Goes the other way too – if the creditor sells the property for a profit over the credit bid, the debtor doesn’t get extra money credited against its overall debt.)

Maintaining the Corporate Form and Its Protections

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I’m getting my annual continuing legal education credits at the Indiana Law Update. An item that just got mentioned is nothing new, but worth knowing for many people are the factors that will be considered when a court determines whether or not to shield an individual from liability for actions taken, at least ostensibly, as part of a corporation.

Just a brief aside – I’ve long been skeptical of the compatibility of the corporate form with libertarianism and with conservatism where principles of personal responsibility and small government figure prominently. The corporate form is a government construct that exists primarily to shield individuals from liability for the consequences taken by them or on their behalf.

Anyway, the factors a court will consider when determining whether to “pierce the corporate veil” — in other words, expose the individual to liability for actions taken under cover of the corporate form:

1. Under capitalization.
2. Absence of corporate records.
3. Fraudulent representation by the corporation, shareholders, or directors.
4. Use of the corporation to promote fraud, injustice, or illegal activities.
5. Payment by the corporation of individual obligations.
6. Co-mingling of assets and affairs.
7. Failure to observe required corporate formalities; and/or
8. Other shareholder acts or conduct ignoring, controlling, or manipulating the corporate form.

The ones I’ve put in bold are the ones that, in my judgment, can be relatively common – particularly among small corporations, LLCs and the like. So, pro-tip: f you do business under a corporate form and want to keep your individual assets protected if a business activity goes south, you want to keep your personal finances separate from your corporate finances, and you want to keep records.

Filed Under: Law

Abdul Makes the Washington Post (And Lugar Won’t Campaign for Mourdock)

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Kudos to Abdul Hakim Shabazz for breaking a national story. Being the master of self-promotion that he is, I tried to craft my headline in the appropriate spirit. The AP picked it up (linked here in the Washington Post).

The upshot is that Senator Lugar will not be campaigning for Republican Senate nominee Richard Mourdock who beat him in a primary. Some could see this as nothing more than sour grapes, but I’m not sure I see it that way. I’ve had my differences with Sen. Lugar but have generally voted for him. One of his strengths – a more or less statesmanlike approach to solving problems and not, generally, being a bridge burning bomb thrower – was used against him in the primary by Mr. Mourdock.

Mourdock, who has insisted policy-making means forcing Democrats to bend to conservative ideas, has had trouble translating his win over Lugar into a muscular general election campaign against Donnelly.

I think Mourdock’s influence on the Republican Party is as salutary as his plans for dealing with Chrysler. He’s liquidating, at a loss, the value built up by those who came before him. The Republican Party has enjoyed a good reputation, particularly in Indiana, because of guys like Lugar. Hoosiers are conservative, no doubt; but, by and large, they aren’t ideologues. Traditionally, they have valued civility, work, and problem solving.

Mourdock’s rigidity was demonstrated in his approach to the Chrysler affair. He wanted to insist on liquidation rather than a restructuring deal because he couldn’t abide a plan that gave his opponents (as I believe he sees them) – the unions – anything, even if it meant that Indiana also got more out of the deal and, long term, everyone was in a better position. Reminds me of Rorschach from the Watchmen:

No. Not even in the face of Armageddon. Never compromise.

That wasn’t Lugar’s approach. Recent history notwithstanding, that hasn’t been the Republican approach. And, it’s not an American approach. If you are a Lugar supporter and can’t abide Democrats generally or Joe Donnelly specifically, you might consider Andy Horning who is also running for the Senate.

Federal Income Tax: A Real Tax for Real Americans

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I have posted about this before, but I just don’t get the fetish some people have for the federal income tax where paying it magically makes you an upstanding citizen in a way that other kinds of taxes don’t. You hear a lot of rhetoric about how many people “don’t pay taxes,” but when you look at the stats, what they’re referring to is federal income tax. Most folks are paying other kinds of taxes: prominently – sales taxes, payroll taxes.

Romney has taken that a step further, apparently. Saying that 47% of Americans don’t pay federal income tax and, therefore, they are “dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.”

To state the obvious, lots of people don’t pay federal income taxes because they don’t have much money. More interesting is the question of why they don’t have much money. This Romney quote gives us insight into why he thinks 47% of the population doesn’t make enough money. They’re lazy and dependent on the government.

You know what? There are lazy people out there. I’ve seen them. Able bodied deadbeats who just can’t be bothered to work and who aren’t dead because they mooch off of family, the government, whoever is stupid enough to give to them. But, you know what else? Nowhere near 47% of the American population is like that. Most folks either bust their ass or are willing to bust their ass to provide for themselves and their families. However, our national mythology notwithstanding, hard work is no guarantee of prosperity.

But, just because a person’s work or willingness to work hasn’t made them rich doesn’t mean they ought to be denigrated as a moocher who casts a vote based on a calculation about who is most likely to give them a handout.

Sesquicentennial of Antietam

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Today is the 150th Anniversary of the Battle of Antietam. In their effort to split apart the Union to preserve their right to own other people, the rebel forces, fighting in Maryland, killed approximately 2,108 American soldiers and wounded approximately 10,000 more. The rebels themselves had casualties of 10,318 with 1,546 dead.

The battle was a tactical stalemate – in no small part because of Union General McClellan’s extreme cautiousness – but forced the rebels out of Maryland and gave President Lincoln sufficient political cover to issue the Emancipation Proclamation five days later. That Proclamation did not, technically, free very many people because it applied mainly to areas in rebellion and not under the control of the U.S. government. But, as the Union re-gained control of the territory in rebellion, the slaves in those areas were freed. This also had the strategic effect of dissuading France and England from recognizing the Confederates. With the Union having won at least a nominal victory and explicitly tied its efforts to ending slavery, France and England couldn’t support the Confederacy. Far from seeing it as a positive good worth committing treason over – as the officials in the state governments of the South had done – France and England had abolished the practice.

The Confederates were on their own. They were weaker and in the wrong. Eventually, the United States would win and preserve our country.

More on Morris Sadek and his anti-Islamic video

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Nancy A. Youssef and Amina Ismail, writing for McClatchy Newspapers,
have a good play-by-play on how a poorly made, intentionally offensive video clip went from being pimped by its anti-Muslim zealot creator to a reporter to being the ostensible focal point of the latest round of violence and protest in the Middle East. (Our old friend Terry Jones, the grand standing, Koran burning Florida preacher makes an appearance).

Part of the problem seems to be, culturally, a lack of understanding and appreciation for our First Amendment. The Middle East is full of places where government can and does suppress speech it deems troublesome. When the U.S. doesn’t suppress something here, it probably looks to them like an endorsement on some level. In addition, our exposure to so much garbage because of the First Amendment gives us a sort of strengthened immune system we take for granted. Getting violently angry just because someone said something deliberately obnoxious strikes us a bizarre.

Urbanophile Compares Mike Pence’s Economic Goals to Mitch Daniels’

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Good post by the Urbanophile, entitled Mike Pence vs. Mitch Daniels. Gov. Daniels’ had a goal, not necessarily attained, of raising Hoosier incomes. Pence’s economic plan apparently abandons that goal, focusing solely on the number of jobs.

Using hyperbole to make a point – a slave economy tends to provide abundant and secure employment. But, of course, there is more to a job than just having work to do. You work to live; you shouldn’t live to work.

In the blog post, I liked the comparison of designing the economic conditions of a state to designing a neighborhood:

While everyone knows price matters when shopping for a house, I suspect few people live in the cheapest house or apartment they could find. Rather, they are more likely to live in the nicest house they could afford, in the best neighborhood, with the best schools, the nicest amenities, etc. Cost is a factor, but it’s not the only factor.

If your economic plan is designed to cater to those employers that are extremely cost sensitive, who won’t move in unless property taxes are rock bottom, for example; you aren’t likely to attract the types of employers that are able or willing to pay their employees very much.

Anger Makes Them Strong

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The story of that anti-Islam “film” that is the subject of a lot of anger in the Middle East is weird. The purported filmmaker is, at best, a pseudonym. It might just be some poorly spliced clips jammed together to piss people off. It was posted on Youtube and nobody seemed to notice until:

Spreading the word about the film were two men, an Egyptian-born Christian activist in Washington, D.C., named Morris Sadek and his friend Terry Jones, pastor of a church in Florida who made headlines last year when he burned a Quran. Terry Jones says he hasn’t seen the full two-hour film but he liked what he saw in the preview.

Now, it appears, that al Qaeda used protests as a smoke screen for an attack on the Libyan embassy.

For all guys like Jones and organizations like al Qaeda probably actually hate each other, they certainly have common ground. Leaders of Christian and Muslim extremists alike have a joint interest in having their followers angry at one another. It makes the leaders strong.

It’ll Be Nothing But Pride That Kills Him

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Seems like the period just before a Presidential election is the most fraught with danger for American foreign policy. There has to be a great temptation among the candidates to make policy statements based on the lowest common denominator of the electorate instead of what might be in the country’s best long-term interests. “Vote for me! I’m manlier! The other guy is a wimp!” Don’t get me wrong; there is a certain amount of that all year, every year. But, just before an election, when so much is at stake and when such declarations might actually motivate enough low-information American voters to make a difference; that’s dangerous timing.

We’ll see how this dynamic plays out with the attack on the Libyan consulate and the saber rattling of Israel toward Iran and attempts to lock the U.S. into Israeli policy decisions.

For only minimally coherent reasons, the dynamic reminds me of the Dropkick Murphys epic tune, “Barroom Hero”:

Face down in the gutter won’t admit defeat though his clothes are soiled and black,
He’s a big, strong man with a childs mind, don’t you take his booze away!

He’s been at it for years drinking balls and beer he’s a hero to most he meets,
But inside he cries black swollen eyes, this man he sheds no tears!

Now his wife and kids sing a different tune as they worry about their daddy dying,
But this arrogant fool breaks every rule it’ll be nothing but pride that kills him.

Could he listen no he won’t that’s all she wrote he’ll be dead before the daylight shines,
But the thoughts and prayers of a million strong might keep this fool from dying.

He’s a legend in the bar with every scar fights a thousand bigger men,
But now he fights and loses got all the bruises will someone please step in?

Cause this Irish fools got a great big heart he keeps climbing back in to the ring
In the low down circles where he holds his court this man he once was king.

I guess it’s the juxtaposition of being stupid, drunk, brave, and a hero to the folks at the bar; meanwhile the family is worried about their daddy dying.

Indiana Abortion Clinic Licensure Requirements

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There is a brouhaha afoot in Lafayette with respect to the local Planned Parenthood which apparently dispenses RU-486 pill (Mifepristone). The pill is USFDA approved to terminate pregnancies of up to 49 days gestation. Per Wikipedia:

Mifepristone was approved for abortion in the U.S. by the FDA, in September 2000.[46] It is legal and available in all 50 states, Washington, D.C., Guam and Puerto Rico.[47] It is a prescription drug, but it is not available to the public through pharmacies; its distribution is restricted to specially qualified licensed physicians, sold by Danco Laboratories under the tradename Mifeprex.

I haven’t read a legal brief or anything by Indiana Right to Life which is raising this issue, so I can’t conclude from the J&C story the precise contours of its legal position, if it is taking one, but generally speaking, they complain that Planned Parenthood is providing the pill without being licensed as an abortion facility. IC 16-21-2-2.5 speaks to the State Department of Health’s development of rules for licensure of abortion clinics. However, “abortion clinic” is a term defined by the Indiana Code under IC 16-18-2-1.5:

Abortion clinic
Sec. 1.5. (a) “Abortion clinic”, for purposes of IC 16-21-2, means a freestanding entity that performs surgical abortion procedures.
(b) The term does not include the following:
(1) A hospital that is licensed as a hospital under IC 16-21-2.
(2) An ambulatory outpatient surgical center that is licensed as an ambulatory outpatient surgical center under IC 16-21-2.
(3) A physician’s office as long as the surgical procedures performed at the physician’s office are not primarily surgical abortion procedures.
As added by P.L.96-2005, SEC.2.

Under that definition, a facility would not become an “abortion clinic” by virtue of giving a pill that induces abortion because providing that pill does not constitute a “surgical abortion procedure.”

Indiana Right to Life’s letter to Attorney General Zoeller is here (pdf).

Our request stems from concern that women’s health and safety may be in jeopardy due to the fact that these abortions are occurring in a facility that is not inspected or licensed as other abortion clinics are required to do by law.

So, their concern does appear to be directed at Indiana’s abortion clinic licensure requirements; but, as I say, it looks fairly clear that the definition of “abortion clinic” under the Department of Health licensure provisions concerns itself with facilities that provide surgical abortions.