Unjust Enrichment: Explanation, Application, and Case Law Review

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Unjust Enrichment: Overview

Unjust enrichment is a legal doctrine asserting that one party should not be allowed to unfairly benefit at another’s expense without a legal justification. It is based on principles of equity and fairness, often invoked in cases where no formal contract exists or when an existing agreement is invalid or unenforceable.

To prove unjust enrichment, three elements generally must be established:

  1. Enrichment of the defendant: The defendant received a benefit.
  2. At the plaintiff’s expense: The plaintiff suffered a loss or provided the benefit.
  3. Unjust retention of the benefit: It would be inequitable for the defendant to retain the benefit without compensating the plaintiff.

Unjust Enrichment Applied to Mr. Moore’s Case

In Mr. Moore’s case, the doctrine of unjust enrichment is directly relevant to his allegations of fraud in the foreclosure and the underlying mortgage agreement. He argues that:

  • The loan was based on fiat currency, which he contends lacks valid consideration.
  • Foreclosure and subsequent eviction unjustly enrich the lender (Alliant Credit Union) at his expense, as the bank benefits from the property without providing equitable value in return.

Key Elements of Unjust Enrichment in Mr. Moore’s Case

  1. Enrichment of Alliant Credit Union:

    • By foreclosing on Mr. Moore’s property, Alliant Credit Union gains ownership of an asset with tangible value (his home) while providing only fiat currency, which he argues is inherently valueless.

  2. At Mr. Moore’s Expense:

    • Mr. Moore stands to lose his home, an asset of substantial personal and financial importance, as a result of this foreclosure.

  3. Unjust Retention of Benefit:

    • The enrichment is unjust because the mortgage was allegedly based on invalid consideration (fiat currency), and enforcing foreclosure perpetuates a system that unfairly transfers wealth from borrowers to lenders.

Case Law Supporting Unjust Enrichment

1. Jerome Daly v. First National Bank of Montgomery (1969)

  • Summary: Known as the “Credit River Case,” this Minnesota Justice Court ruling invalidated a foreclosure because the loan was based on fiat currency. The court held that since the bank created the money out of nothing, there was no valid consideration to support the mortgage contract.
  • Relevance: This case supports Mr. Moore’s argument that fiat currency lacks the valid consideration necessary to enforce a mortgage. If the underlying loan is invalid, foreclosure and eviction unjustly enrich the lender.

2. Carpenter v. Longan (1872)

  • Summary: The U.S. Supreme Court held that a mortgage is inseparable from the promissory note it secures. If the note is invalid, the mortgage is also invalid.
  • Relevance: If Alliant Credit Union cannot demonstrate valid consideration for the promissory note, the mortgage and subsequent foreclosure are unenforceable. Foreclosing on an invalid mortgage would unjustly enrich the lender at Mr. Moore’s expense.

3. Bailey v. Alabama (1911)

  • Summary: The Supreme Court invalidated a law penalizing workers for breach of labor contracts, ruling that such coercion constituted involuntary servitude. The court emphasized that forcing individuals into obligations without fair terms is inherently unjust.
  • Relevance: Mr. Moore’s argument that the fiat currency system forces borrowers into perpetual debt cycles resonates with the Bailey principle: individuals should not be coerced into obligations that unfairly benefit another party.

4. Moses v. Macferlan (1760)

  • Summary: An English case often cited as the foundation of the unjust enrichment doctrine. The court ruled that a party who receives money or benefits under circumstances that make it inequitable to retain them must repay the other party.
  • Relevance: The principle that one cannot retain benefits obtained through inequitable means applies directly to Mr. Moore’s claim that the foreclosure is unjustly enriching Alliant Credit Union.

5. Restatement (First) of Restitution § 1 (1937)

  • Summary: The Restatement defines unjust enrichment and provides the framework for analyzing cases involving inequitable benefits.
  • Relevance: Mr. Moore’s case aligns with the Restatement’s definition, as the foreclosure enriches Alliant Credit Union through questionable means (a loan he argues is invalid).

Unjust Enrichment in the Context of Foreclosure

Foreclosure is a process where lenders reclaim property when borrowers default on loans. However, if the underlying loan contract is invalid (e.g., due to lack of consideration), the foreclosure becomes an act of unjust enrichment:

  • No Basis for Benefit: If fiat currency is not valid consideration, the lender has no legitimate claim to the property.
  • Unjust Transfer of Wealth: The lender receives a high-value asset (the property) while the borrower loses equity and security, perpetuating systemic inequality.

Legal Remedies for Unjust Enrichment

If Mr. Moore successfully demonstrates unjust enrichment, potential remedies include:

  1. Rescission of the Mortgage Contract:
    • The court may declare the mortgage void if it is based on invalid consideration.
  2. Restitution:
    • Alliant Credit Union may be required to return any unjustly obtained benefits, such as the property or payments made under the mortgage.
  3. Injunction Against Foreclosure:
    • The court may issue an injunction to stop the foreclosure until the validity of the mortgage is resolved.

Conclusion

Unjust enrichment provides a strong equitable argument for Mr. Moore’s defense against foreclosure and eviction. By invoking this doctrine, he can assert that Alliant Credit Union’s actions:

  • Enrich the lender at his expense without legal justification.
  • Violate the principles of fairness and equity underpinning the law.

With supportive case law such as Jerome Daly, Carpenter v. Longan, and Moses v. Macferlan, Mr. Moore has a credible basis to argue that enforcing the foreclosure would perpetuate unjust enrichment and systemic exploitation. This doctrine underscores the need for equitable remedies to protect his property and constitutional rights.

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