Brown v. Vinson

• Decision Date: 17 January 1949
• Citation: 216 S.W.2d 748,188 Tenn. 120
• Parties: BROWN v. VINSON et al.
• Court: Tennessee Supreme Court

216 S.W.2d 748

188 Tenn. 120

BROWN v. VINSON et al.

Supreme Court of Tennessee.

January 17, 1949

Appeal from Chancery Court, Cannon County; A. F. Officer Chancellor.

Suit by John A. Brown, administrator of the estate of Bob Brown deceased, against Ike Vinson and another in replevin to recover certain United States Treasury Series E Bonds. From a decree for the plaintiff, defendants appeal.

Affirmed.

Hoyt Bryson and Marshall E. Duggin, both of Woodbury, for appellants.

James H. Cummings and J. Barrett Melton, both of Woodbury, for appellee.

TOMLINSON Justice.

This is a suit between the administrator of Bob Brown's estate and Letha and Oik Vinson as to which is the owner of four United States War Savings Bonds (Series E) purchased by and registered in the name of the intestate, Bob Brown. He folded these bonds one over the other and on the outside bond penciled the following: 'To Letha Vinson and (Oik) Vinson. Bob Brown,' and thereupon delivered them to Vinson and wife as a gift inter vivos. Brown died a few weeks later.

The administrator instituted this replevin suit for recovery of the bonds on the theory that they cannot legally be the subject of a gift inter vivos by mere physical delivery accompanied with words evidencing a gift. The administrator's insistence is that the terms of these bonds and the regulations of the United States Treasury Department with reference to transfer prevent them from being the subject of a gift inter vivos in any manner other than by registration in the name of the donee, or designation as beneficiary in the face of the bond.

The Chancellor sustained the bill of the administrator. Mr. and Mrs. Vinson have appealed and by appropriate assignment of error present for our determination the question stated. The very thorough briefs submitted in behalf of the parties refer to about all the cases we have been able to find upon this question.

It is provided upon the face of each bond that:

'This bond is issued pursuant to Treasury Department Circular No. 653, second revision, * * *. This bond is not transferable; and, except as provided in said regulations, it is payable only to the registered owner.'

The circular referred to in the above quotation contains the following provision:

'3. Bonds of Series E will not be transferable, and will be payable only to the owner named thereon, except in case of death or disability of the owner or as otherwise specifically provided in the regulations governing savings bonds, and in any event only in accordance with said regulations. Accordingly, after they are duly issued they may not be sold, discounted, hypothecated as collateral for a loan or the performance of service, or disposed of in any manner other than as provided in the regulations governing savings bonds, and, except as provided in said regulations, the Treasury Department will recognize only the inscribed owner, during his lifetime, and thereafter his estate or heirs.'

A gift inter vivos is not effective unless the complete dominion and control of the gift is surrendered by the donor and acquired by the donee. Figuers v. Sherrell, 181 Tenn. 87, 96, 178 S.W.2d 629, 152 A.L.R. 420. Stated in the alternative, the question here is whether all that which was done between Brown and the Vinsons is sufficient to meet the requirements of this rule, in view of the provisions and regulations stated. The exact question has not been determined in this jurisdiction.

In considering what is the correct answer to the question stated, it is of some importance to note that the donor by request in the manner provided by the regulations had it within his power during his life to cause the re-issuance of these bonds with these donees named as beneficiaries, or in their names. The donor had not, therefore, done all that he could to make the gift inter vivos effective.

It is important also that this particular type bond matures ten years from date of issuance. No interest is paid until the maturity date unless the bond is surrendered. The rate of interest for the entire period increases the longer it is kept. The amount of such bonds which may be purchased in any one year by one person is limited by the regulations of the Treasury Department. These characteristics of this type bond make it apparent, as the Courts have observed, that the purpose of the issuance of such bond and its controlling regulations is to attract people of moderate means and thereby facilitate and increase the sale of these bonds, and also to encourage thrift.

In the New Jersey case of Fidelity Union Trust Co. v. Tezyk, 140 N.J.Eq. 474, 55 A.2d 26, 27, 173 A.L.R. 546, it is said that the Courts of various jurisdictions are consistent in holding that the regulations of the Treasury Department with reference to such bonds 'must be recognized and given the force of federal law by the courts of the various states', citing authorities. It was then pointed out in that case that:

'The purport of the regulations indicates a clear intention that 'E' Savings Bonds shall not be transferable except by the prescribed processes of registration'. 140 N.J.Eq. 474, 55 A.2d at page 27, 173 A.L.R. at page 548.

The Court observed that these conditions were imposed 'to enhance the borrowing power of the federal government.' It was held in that case that because of the regulations mentioned such bonds were not the subject of a gift causa mortis in the absence of registration in the name of the donee. That opinion concluded with this statement:

'It seems quite clear that the conditions under which these bonds were issued make registration the sole evidence of ownership with the one necessary exception of recognizing formal procedures for the administration of estates. If any further exception is to be made for gifts causa mortis, then this action should be taken by the federal government, so that there might be a consistency in the terms of these obligations throughout the...