## Facts

- Donald and Gloria Beaner borrowed money through a rural housing loan made by the federal Farmers Home Administration (FmHA), secured by a mortgage on their real property.
- The Beaners did not repay the loan, and the United States began foreclosure proceedings on the mortgaged property.
- The Beaners filed suit against the United States in the District of South Dakota, claiming the mortgage was fraudulent and the foreclosure was unlawful.
- The Beaners’ central theory was that the loan and related debt were invalid because the government did not disburse the loan proceeds in gold or silver coin.
- Relying on their reading of the U.S. Constitution, the Beaners asserted that only gold and silver are lawful money and that Congress acted unconstitutionally by treating U.S. currency (cash and cash-denominated instruments) as legal tender.
- Among other relief, the Beaners sought a declaratory judgment that Congress violated the Constitution in establishing U.S. currency as legal tender.
- The Beaners had previously raised essentially the same “gold and silver only” legal-tender theory in an earlier case in the U.S. District Court for the District of Columbia, where the claim was treated as frivolous and the Beaners were warned about possible sanctions.
- In the South Dakota case, the court again warned the Beaners that their legal-tender theory appeared frivolous and gave them an opportunity to voluntarily dismiss their complaint to avoid potential sanctions.
- The Beaners refused to withdraw their filing, and the United States moved for sanctions under Federal Rule of Civil Procedure 11.

## Issues

1. Whether Rule 11 sanctions were warranted because the Beaners’ “gold and silver only” legal-tender challenge and related attack on the mortgage and foreclosure were frivolous and not supported by existing law or a nonfrivolous argument for changing the law.
2. Whether the Beaners’ prior litigation history and the court’s warning and opportunity to dismiss supported sanctions when they continued to press the same theory.

## Decision

- The court granted the United States’ motion for sanctions under Rule 11.
- The court found the Beaners’ legal-tender theory frivolous and foreclosed by settled federal law recognizing Congress’s authority to establish legal tender beyond gold and silver coin.
- The court determined that the Beaners’ continued pursuit of the same theory—after prior rejection in another federal court and after an explicit warning and chance to dismiss in this case—supported imposing sanctions.
- The court imposed monetary sanctions intended to compensate the government for expenses caused by the frivolous filing and to deter repetition.

## Legal Principles

- Rule 11 permits sanctions when a filing is not well grounded in fact, is not warranted by existing law (and lacks a nonfrivolous argument for changing the law), or is submitted for an improper purpose such as delay or needless cost.
- The Rule 11 inquiry is objective and asks whether a reasonable litigant would have concluded, after reasonable inquiry, that the legal and factual contentions were justified.
- Pro se litigants are subject to Rule 11; self-representation does not excuse pursuing claims that have no legal basis, especially after a clear judicial warning.
- Courts may consider prior rejections of the same theory and explicit notice to the filer when deciding whether sanctions are appropriate and what amount is sufficient to deter repeat conduct.
- Arguments asserting that U.S. currency is unconstitutional legal tender and that obligations are invalid unless paid in gold or silver are routinely treated as meritless under controlling authority, making their continued assertion sanctionable in appropriate circumstances.

## Conclusion

Beaner v. United States upheld Rule 11 sanctions against pro se borrowers who sued the federal government to stop foreclosure by claiming their mortgage was invalid because they did not receive loan proceeds in gold or silver and because Congress allegedly lacked power to make U.S. currency legal tender; given settled law rejecting that theory and the Beaners’ refusal to dismiss even after warnings and prior rejection in earlier litigation, the court ordered monetary sanctions to cover the government’s costs and deter similar filings.


Beaner v. United States, 361 F. Supp. 2d 1063 (2005)