Wolak v. United States

• Decision Date: 09 November 1973
• Docket Number: Civ. No. 13041.
• Citation: 366 F. Supp. 1106
• Court: U.S. District Court — District of Connecticut
• Parties: Albert WOLAK v. UNITED STATES of America et al. v. Walter PIORKOWSKI.

366 F. Supp. 1106

Albert WOLAK v. UNITED STATES of America et al. v. Walter PIORKOWSKI.

Civ. No. 13041.

United States District Court, D. Connecticut.

November 9, 1973.

COPYRIGHT MATERIAL OMITTED

William Singer, Hartford, Conn., for plaintiff.

Stewart H. Jones, U. S. Atty.; Henry S. Cohn, Asst. U. S. Atty., Hartford, Conn., for defendants.

No appearance made for third-party defendant, Walter Piorkowski.

MEMORANDUM OF DECISION

BLUMENFELD, Chief Judge.

This case presents the questions whether the United States has made an implied promise to owners of United States Savings Bonds to redeem such bonds only in accordance with pertinent federal regulations, and whether an owner's lack of due care in the safekeeping of United States Savings Bonds necessarily relieves the United States from any liability to such owner for losses resulting from redemption of the bonds and payment therefor to a person other than the owner, which acts of redemption and payment were performed by an agent of the United States in contravention of applicable federal regulations.

Facts

Plaintiff is an elderly man of Polish descent with little understanding of the English language. Plaintiff contemplated going into business with cross-defendant Walter Piorkowski, and the two men met with an attorney to discuss this possible venture. This discussion was conducted partially in Polish. At plaintiff and Piorkowski's suggestion a document was drafted which would vest a power of attorney in Piorkowski to manage plaintiff's affairs. On or about April 6, 1961, plaintiff signed an undated, unwitnessed, unnotarized draft of such power of attorney. Soon after April 6, 1961, Piorkowski began making withdrawals from plaintiff's savings account in order to purchase in plaintiff's name a total of $10,800 in face value United States Series E Savings Bonds.¹ Plaintiff informed the president of the bank from which the withdrawals were made and the bonds purchased that he was aware of and had authorized these transactions. Of the $10,800 in bonds, $9,000 were purchased in April, 1961, and of the remainder all but $300 (purchased in January, 1964) were purchased throughout the balance of 1961.

Beginning in June, 1961, Piorkowski began forging plaintiff's name to these bonds and redeeming them for cash paid to Piorkowski personally. Eventually Piorkowski effected the forged redemption of all $10,800 in bonds. All of these redemptions were made by one bank, which was not the bank at which the bonds had been purchased.² While plaintiff had signed the draft power of attorney mentioned above, he did not authorize or intend to authorize Piorkowski's redemption of these bonds, nor did he sign any document (other than the draft power of attorney) which might be construed to authorize redemption of the bonds.

By complaint dated on its face September 27, 1967, Piorkowski was sued by plaintiff for damages suffered through various fraudulent acts, including Piorkowski's conversion of plaintiff's savings bonds. Service was made on this complaint on October 4, 1967, and it was made returnable in November, 1967, in the Superior Court for Hartford County, Connecticut. On September 28, 1967, plaintiff made formal demand on the Department of the Treasury for replacement of the forged bonds or payment therefor.³ Following the Treasury's refusal to meet this demand, plaintiff filed suit in this Court against the United States in March, 1969. The United States subsequently cross-complained against Piorkowski for indemnity should it be held liable to plaintiff, on the basis of Piorkowski's alleged breach of his warranty that he had authority to act as plaintiff's agent. Piorkowski was served but made no appearance before the Court. Trial was to the Court on May 22, 1973.

Jurisdiction

Plaintiff's original prayer was for $8,000 "damages," which was changed to $20,000 "damages" in his amended complaint after discovery of additional redemptions of forged bonds (see n. 3, supra). Plaintiff's increase in his prayer to more than $10,000 would ordinarily place his claim against the United States within the exclusive jurisdiction of the Court of Claims. 28 U.S. C. § 1491; Myers v. United States, 323 F.2d 580, 583 (9th Cir. 1963); Nehf v. United States, 278 F.Supp. 444, 446 (N. D.Ill.1967). See also United States v. Shaw, 309 U.S. 495, 500-501, 60 S.Ct. 659, 84 L.Ed. 888 (1940). Under the Tucker Act, 28 U.S.C. § 1346(a)(2), this Court has concurrent jurisdiction with the Court of Claims over claims arising under federal statutes, regulations, or contracts against the United States, but only when such claims do not exceed $10,000. It has been held, however, that the district court's Tucker Act jurisdiction is retained if a plaintiff alleging more than $10,000 damages nevertheless waives any right of recovery in excess of $10,000. United States v. Johnson, 153 F.2d 846, 848 (9th Cir. 1946); Perry v. United States, 308 F.Supp. 245, 247 (D.Colo.1970).⁴ Throughout this action both parties have treated it as a Tucker Act case, and the Government has not challenged this Court's jurisdiction. In his Pretrial Order, the Magistrate asserted this Court's Tucker Act jurisdiction, and this assertion was not objected to by either party. Accordingly, I find that plaintiff has waived recovery in excess of $10,000.

In claims against the Government, the statute of limitations is part of the Government's consent to suit and cannot be waived. A claim filed after the running of the statute is beyond the jurisdiction of the Court. Thus it is the duty of the Court to consider the statute of limitations even when, as in the instant case, it has not been put in issue by the Government. Finn v. United States, 123 U.S. 227, 232, 8 S.Ct. 82, 31 L.Ed. 128 (1887); Christian Beacon v. United States, 322 F.2d 512, 514 (3rd Cir. 1963); Crown Coat Front Co. v. United States II, 275 F.Supp. 10, 15 (S.D.N.Y.1967), aff'd 395 F.2d 160 (2d Cir. 1968), cert. denied 393 U.S. 853, 89 S.Ct. 123, 21 L.Ed.2d 122 (1968).

The applicable statute of limitations provides: "Every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues." 28 U.S.C. § 2401(a). Whether a plaintiff's pursuit of administrative remedies necessarily tolls the statute in a contract action has proved a troublesome and as yet not conclusively resolved question. It has been held, however, that where "the completion of . . . administrative proceedings is contemplated and required by the provisions of the contract," as under the "disputes clause" of the typical Government procurement contract, no right of action in the courts accrues until a final administrative determination of the claim has been made. Crown Coat Front Co. v. United States I, 386 U.S. 503, 511, 87 S.Ct. 1177, 18 L.Ed.2d 256 (1967).

In discussing the merits of plaintiff's claim, infra, I note that pertinent federal regulations are an implied part of the contract between the Government and a purchaser of savings bonds, and hold that the Government has a consequent contractual duty to comply with its regulations in redeeming savings bonds. Since these regulations also provide for administrative relief for owners of lost or stolen bonds, see infra, I hereby hold that such owners have a parallel contractual duty to seek administrative relief from the Government before seeking recovery in court for damages suffered through the Government's breach of its implied promise to comply with its regulations in redeeming savings bonds. In the instant case, the Government denied plaintiff's claim for administrative relief on December 10, 1968, and plaintiff's suit filed in this Court on March 20, 1969, was well within the statute of limitations.

Plaintiff's action is timely, and this Court has jurisdiction over it under 28 U.S.C. § 1346(a)(2).

Federal Regulations on Redemption of Savings Bonds

Each Federal Reserve Bank has the power to qualify financial institutions within its jurisdiction as paying agents of United States Savings Bonds. 31 C. F.R. § 321.3. Such paying agents "are authorized to make payments in connection with the redemption of savings bonds and savings notes, but only in accordance with the provisions of this circular, and any memorandum of instructions, guides, notices, etc., issued by the Department of the Treasury relating to such authorization." 31 C.F.R. § 321.2. A paying agent "may make payment of any savings bonds of Series . . . E . . . upon presentation and surrender by the individual whose name is inscribed as the owner or coowner of the security." 31 C.F.R. § 321.8. "An agent is not authorized to pay a bond or note: . . . (b) If the agent does not know or cannot establish the identity of the person requesting payment as the owner of the security . . . ." 31 C.F.R. § 321.10. The Memorandum of Instructions issued to paying agents, see 31 C.F.R. § 321.18, states that its purpose "is to provide (a) information to supplement the regulations contained in the circular, and (b) specific instructions for processing redemption and redemption-exchange transactions." Among these specific instructions are "7. Examination of security. Upon its presentation for redemption or for redemption-exchange, each agent should examine the security to establish the following: . . . (iv) It is not presented by anyone acting under a power of attorney." These regulations and instructions for paying agents reflect the regulations setting forth general provisions governing payment and redemption of savings bonds. These general regulations provide that "the owner or a coowner whose name is inscribed on the bond . . . must appear before and establish his identity to an officer authorized to certify requests for payment . . ., and in the presence of such officer sign the request for payment in ink . . . . No request signed in behalf of the owner, a coowner, or person entitled to payment by an agent or a...