Santiago V. Marques and Carey Portman v. Federal Reserve Bank of Chicago

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-2522
Santiago V. Marques and Carey Portman,
Plaintiffs-Appellants,
v.
Federal Reserve Bank of Chicago
and Unknown Shareholders of the
Federal Reserve Bank of Chicago,
Defendants-Appellees,
and
Federal Deposit Insurance Corporation,
Defendant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 C 5646--Harry D. Leinenweber, Judge.
Argued March 6, 2002--Decided April 16, 2002
Before Posner, Evans, and Williams, Circuit
Judges.
Posner, Circuit Judge. The plaintiffs
brought suit against the Federal Reserve
Bank of Chicago and the Federal Deposit
Insurance Corporation, plus the
shareholders of the federal reserve bank
(the other national banks in the bank’s
federal reserve district, 12 U.S.C.
sec.sec. 222, 282; Lewis v. United
States, 680 F.2d 1239, 1241 (9th Cir.
1982)), which are individually liable for
the bank’s debts "to the extent of the
amount of their subscriptions to [the
bank’s] stock at the par value thereof in
addition to the amount subscribed." 12
U.S.C. sec. 502. The plaintiffs claim to
be the agents for the owners of $25
billion in bearer bonds that the bank had
issued back in 1934 in exchange for 1665
metric tons of gold. They want the bank
ordered to redeem the bonds for face
value plus simple interest at 4 percent
since 1934 (although the bonds matured in
1965); the total amount of money they are
seeking is thus close to $100 billion.

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The suit is preposterous. There is no
record of any such bond issue, and as the
national debt of the United States was
only $28 billion in 1934, as a year later
the entire stock of gold owned by the
United States had a value of only $9
billion, and as no securities issue by a
U.S. government entity exceeded $100
million before 1940, the claim that in
1934 a federal reserve bank issued bonds
that virtually doubled the national debt
and added $25 billion in gold to the
government’s gold holdings can only cause
one to laugh. What is more (not that more
is needed), although the price at which
the government bought gold was fixed at
$35 an ounce effective at the beginning
of that year, the plaintiffs are claiming
that the federal reserve bank bought gold
from their predecessors at a price of
$467.02 an ounce. The plaintiffs further
undermine their case by arguing that
there is an international conspiracy to
deny the validity of these bonds, a
conspiracy pursuant to which the
plaintiffs’ documents expert, who
certified the genuineness of the bonds
(in an unsworn and evasive report), has
been repeatedly arrested and then
released without charges being filed.
The bank’s lawyer told us without being
contradicted that the Department of
Justice has declined to prosecute
thepersons involved in the fraud because
no one could possibly be deceived by such
obvious nonsense. We are puzzled by this
suggestion. The Treasury has established
a Website warning the public against the
class of frauds (called "Morgenthaus,"
after Henry Morgenthau, Jr., the
Secretary of the Treasury in 1934) of
which the bond issue alleged in this suit
is one (the others also involve supposed
$25 billion bond issues). See
http://www.publicdebt.treas.gov/cc/
ccphony3.htm. There is no ceiling on
gullibility. Mr. Portman, the plaintiff
who argued the appeal pro se, is one of
the deceived--if he is not one of the
deceivers, another and perhaps more
plausible possibility, Portman having re
cently submitted a demand to the Federal
Reserve Bank of Cleveland that it pay
him $125 billion to redeem a similar set
of fictitious 1934-vintage "Federal
Reserve Bonds." We are sending this
opinion to the Justice Department for
whatever further consideration the

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Department may wish to give the fraud.
But though the suit is absurd, the
appeal, from the denial of the
plaintiffs’ Rule 60(b) motion to vacate
the judgment that the district court
entered in response to the bank’s motion
for summary judgment, is not. The
plaintiffs attempted to dismiss their
suit voluntarily under Fed. R. Civ. P.
41(a)(1). Had they succeeded in their
attempt, the dismissal would have been
without prejudice, and so they could
reinstate the suit without facing the bar
of res judicata. They can’t do that if
the judgment granting the bank’s motion
for summary judgment--a judgment on the
merits and therefore with prejudice--
stands.
The reason they give for having wanted
to dismiss their suit is, naturally,
preposterous--that they were in serious
negotiations in Spain with the U.S.
Government and hoped that the government
would acknowledge the legitimacy of their
claim so that they could sell the bonds
to Russia. But one doesn’t need a good
reason, or even a sane or any reason, to
dismiss a suit voluntarily. The right is
absolute, as Rule 41(a)(1) and the cases
interpreting it make clear, Commercial
Space Mgmt. Co. v. Boeing Co., 193 F.3d
1074, 1077 (9th Cir. 1999); Marex
Titanic, Inc. v. The Wrecked & Abandoned
Vessel, 2 F.3d 544, 546 (4th Cir. 1993);
Eastalco Aluminum Co. v. United States,
995 F.2d 201, 204 (Fed. Cir. 1993);
Matthews v. Gaither, 902 F.2d 877, 880
(11th Cir. 1990) (per curiam), until, as
the rule states, the defendant serves an
answer or a motion for summary judgment.
The plaintiffs filed their notice of
voluntary dismissal, and the bank served
a motion to dismiss the suit under Rule
12(b)(6), on the same day. A motion under
Rule 12(b)(6) becomes a motion for
summary judgment when the defendant
attaches materials outside the complaint,
as the bank did, and the court "actually
considers" some or all of those
materials. Berthold Types Ltd. v. Adobe
Systems Inc., 242 F.3d 772, 775-76 (7th
Cir. 2001); see also State ex rel. Nixon
v. Coeur D’Alene Tribe, 164 F.3d 1102,
1107 (8th Cir. 1999); Finley Lines Joint
Protective Bd. Unit 200 v. Norfolk
Southern Corp., 109 F.3d 993, 997 (4th
Cir. 1997); Aamot v. Kassel, 1 F.3d 441,
444 (6th Cir. 1993) ("conversion [from a

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Rule 12(b)(6) motion to a summary
judgment motion] takes place at the
discretion of the court, and at the time
the court affirmatively decides not to
exclude the extraneous matters"); Garita
Hotel Limited Partnership v. Ponce
Federal Bank, F.S.B., 958 F.2d 15, 18
(1st Cir. 1992); 9 Charles Alan Wright &
Arthur R. Miller, Federal Practice and
Procedure sec. 2363 (2d ed. 1995). But
the judge did not convert the bank’s
motion to a motion for summary judgment
until later.
And anyway we do not know which
document, the plaintiffs’ notice of
voluntary dismissal or the defendant’s
motion to dismiss, was filed first. The
plaintiffs argue that the bank
acknowledged in the district court that
the notice of voluntary dismissal was
filed before the motion for summary
judgment was served, but the only record
of this acknowledgment is a transcript
that the parties neglected to make a part
of the appellate record. However, the
district judge, rather than make a
finding on which document came first,
appears to have believed that as long as
they were on the same day, it didn’t
matter which came first. (It is
unquestioned that the plaintiffs did
succeed in dismissing the FDIC as a
defendant under Rule 41(a)(1), and it is
not a party to this appeal.) We cannot
find an appellate case on who has the
burden of proving the sequence of the
filings, but Keal v. Monarch Life Ins.
Co., 126 F.R.D. 567 (D. Kan. 1989),
places the burden on the defendant,
sensibly, as it seems to us, since it is
the defendant that is asserting the right
to prevent the plaintiff from dismissing
the suit.
Both because the district judge did not
convert the motion to dismiss to a motion
for summary judgment before the
plaintiffs filed their Rule 41(a)(1)
notice and because the defendant failed
to show that its motion was served before
the plaintiffs’ notice, were the appeal
from the judgment in favor of the bank it
would be clear that we would have to
vacate the judgment and remand the case
to the district court with directions to
permit dismissal under that rule. But we
must consider the bearing of the fact
that the appeal is not from the judgment,
but rather from the denial of a Rule

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60(b) motion to vacate the judgment. A
legal error by the district court is not
one of the specified grounds for such a
motion. In fact it is a forbidden ground,
Russell v. Delco Remy Division, 51 F.3d
746, 749 (7th Cir. 1995), because if
permitted it would enable a losing party
to appeal outside the time limits for
appeals without excuse, since the
existence of the error would be apparent
from the district court’s judgment and
thus could be corrected on appeal within
the time allowed for taking an appeal.
Bell v. Eastman Kodak Co., 214 F.3d 798,
801 (7th Cir. 2000); Neuberg v. Michael
Reese Hospital Foundation, 123 F.3d 951,
955 (7th Cir. 1997); Bank of California,
N.A. v. Arthur Andersen & Co., 709 F.2d
1174, 1176-77 (7th Cir. 1983); Hess v.
Cockrell, 281 F.3d 212, 216 (5th Cir.
2002); Plotkin v. Pacific Telephone &
Telegraph Co., 688 F.2d 1291, 1293 (9th
Cir. 1982).
However, the fourth subsection of Rule
60(b) authorizes a void judgment to be
vacated. As an original matter, we might
doubt whether an error that results in
denying a plaintiff his right of
voluntary dismissal is so fundamental or
grave that it should be treated as void,
implying that the judgment could be
vacated many years after it had been
entered even though the error that had
made it invalid when entered had not been
called to the judge’s attention in a
timely fashion. Rule 60(b)(4) is
primarily intended for cases where the
suit in which the judgment sought to be
vacated was entered was outside the
jurisdiction of the district court, as in
Pacurar v. Hernly, 611 F.2d 179 (7th Cir.
1979); see also United States v. Zima,
766 F.2d 1153, 1159 (7th Cir. 1985),
which this suit was not.
There is, however, considerable and
unchallenged case authority (including
decisions by this court) that a judgment
on the merits that is entered after the
plaintiff has filed a proper Rule
41(a)(1) notice of dismissal is indeed
void. E.g., Beck v. Caterpillar Inc., 50
F.3d 405, 407 (7th Cir. 1995); Bryan v.
Smith, 174 F.2d 212, 214-15 (7th Cir.
1949); Duke Energy Trading & Marketing,
L.L.C. v. Davis, 267 F.3d 1042, 1049 (9th
Cir. 2001); American Soccer Co. v. Score
First Enterprises, 187 F.3d 1108, 1112
(9th Cir. 1999); Bonneville Associates,

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Limited Partnership v. Barram, 165 F.3d
1360, 1364 (Fed. Cir. 1999); Meinecke v.
H & R Block, 66 F.3d 77, 82 (5th Cir.
1995) (per curiam); Safeguard Business
Systems, Inc. v. Hoeffel, 907 F.2d 861,
864 (8th Cir. 1990); Foss v. Federal
Intermediate Credit Bank, 808 F.2d 657,
660 (8th Cir. 1986); Williams v. Ezell,
531 F.2d 1261, 1264 (5th Cir. 1976). The
cases further make clear that although
not every "void" judgment is subject to
collateral attack, only those where the
voidness is unarguable, In re Edwards,
962 F.2d 641, 644 (7th Cir. 1992), the
refusal to vacate under Rule 60(b)(4) an
unarguably void judgment is an abuse of
discretion. Robinson Engineering Co.,
Ltd. Pension Plan & Trust v. George, 223
F.3d 445, 448 (7th Cir. 2000); Blaney v.
West, 209 F.3d 1027, 1031 (7th Cir.
2000); United States v. Indoor
Cultivation Equipment From High Tech
Indoor Garden Supply, 55 F.3d 1311, 1317
(7th Cir. 1995); see generally Hertz
Corp. v. Alamo Rent-A-Car, Inc., 16 F.3d
1126, 1130 (11th Cir. 1994); Williams v.
Brooks, 996 F.2d 728, 730 (5th Cir. 1993)
(per curiam); Jalapeno Property
Management, LLC v. Dukas, 265 F.3d 506,
515-16 (6th Cir. 2001) (concurring
opinion).
We are therefore compelled to reverse
the judgment and direct the dismissal of
the suit, without prejudice, under Rule
41(a)(1). Should the plaintiffs attempt
to bring a new suit similar to the one
they are dismissing, namely a fraudulent
and possibly a criminal suit, they will
be subject to appropriate sanctions.
Reversed.

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