Ex parte Little

• Citation: 67 So.2d 818,259 Ala. 532
• Decision Date: 29 October 1953
• Docket Number: 7 Div. 176
• Parties: Ex parte LITTLE.
• Court: Alabama Supreme Court

Page 818

67 So.2d 818

259 Ala. 532

Ex parte LITTLE.

7 Div. 176.

Supreme Court of Alabama.

Oct. 29, 1953.

Chas. Douglas, Anniston, for petitioner.

Merrill, Merrill, Vardaman & Matthews, Anniston, for respondent.

GOODWYN, Justice.

Mrs. Rose Little, petitioner herein and widow of the decedent, Forney L. Little claims title to sixteen United States savings bonds, of a total face value of Fifteen Hundred Twenty-Five Dollars ($1,525.00) registered in the name of 'Forney L. Little or Willard Little,' Willard Little being the brother of Forney L. Little. The bonds were issued prior to the marriage of petitioner to Forney L. Little, and, as alleged by petitioner, she married the decedent upon consideration of his promise to give the bonds to her. After the marriage, decedent consummated his promise and delivered the bonds to his wife. In less than two years after the marriage, Forney L. Little died, and by his will provided:

'I give, devise and bequeath all my property, both real and personal which I may own or be entitled to at the time of my death, to my wife, Rose Little.'

After the death of Forney L. Little, his brother, and the registered co-owner of the bonds in question, Willard Little, brought an action of detinue against petitioner seeking recovery of the bonds. Petitioner then filed a motion to have the case transferred to equity. Demurrer to the petition taking the point that petitioner is not shown to have an equitable right in or defense to the detinue action, was sustained. This is a petition for mandamus to compel transfer of the case from the law side to the equity side of the court.

To dispose of this case it is necessary to determine whether the purchaser of co-ownership United States savings bonds can transfer the bonds by (1) will or (2) by contract. Such bonds are authorized under the Second Liberty Bond Act, as amended by the Public Debt Act of 1941, 31 U.S.C.A. §§ 757b, 757c. Sect. 757c provides as follows:

'(a) The Secretary of the Treasury, with the approval of the President, is authorized to issue, from time to time, through the Postal Service or otherwise, United States savings bonds and United States Treasury savings certificates, the proceeds of which shall be available to meet any public expenditures authorized by law, and to retire any outstanding obligations of the United States bearing interest or issued on a discount basis. The various issues and series of the savings bonds and the savings certificates shall be in such forms, shall be offered in such amounts, subject to the limitation imposed by section 757b of this title, and shall be issued in such manner and subject to such terms and conditions consistent with subsections (b), (c), and (d) hereof, and including any restrictions on their transfer, as the Secretary of the Treasury may from time to time prescribe.'

All of the bonds are of Series E. Each contains a provision that it is issued 'pursuant to Treasury Department Circular No. 653, second revision, and is subject to the terms and conditions thereof and the regulations prescribed thereunder as fully as if herein set forth,' and, further, that 'This bond is not transferable; and, except as provided in said regulations, it is payable only to the registered owner.'

Treasury Department Circular No. 653 provides as follows:

'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 a 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.'

Pursuant to the authority given him, 31 U.S.C.A. § 757c, supra, the Secretary of the Treasury has promulgated regulations governing the transfer and payment of United States savings bonds. Treasury Department Circular 530, Sixth Revision, 31 C.F.R. Sect. 315. As regards the payment and ownership of co-ownership bonds when one co-owner dies, Sect. 315.45 of Circular 530, 31 C.F.R., supra, provides as follows:

' § 315.45 Payment or reissue. A savings bond registered in the names of two persons as coowners in the form, for example, 'John A. Jones or Mrs. Mary C. Jones,' will be paid or reissued as follows:

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'(c) If either coowner dies without having presented and surrendered the bond for payment or authorized reissue, the surviving coowner will be recognized as the sole and absolute owner of the bond and payment or reissue, as though the bond were registered in his name alone, will be made only to such survivor.' [Emphasis supplied.]

It appears to be clearly established that a savings bond is a contract between the federal government and the purchasers, U.S. v. Dauphin Deposit Trust Co., D.C., 50 F.Supp. 73, Succession of Tanner, La.App., 24 So.2d 642; Ervin v. Conn, 225 N.C. 267, 34 S.E.2d 402, and that the rights of the survivor of the co-owners of a bond arise solely from contract. Chambless v. Black, 250 Ala. 604, 35 So.2d 348. It is also clear that the Treasury regulations are incorporated into such contract by reference, and are beyond reach of state law to modify or destroy. Davies v. Beach, 74 Cal.App.2d 304, 168 P.2d 452; Ervin v. Conn, supra; In re Briley's Estate, 155 Fla. 798, 21 So.2d 595.

The position taken by the Federal government with respect to the statutes and regulations referred to is shown in the case of In re Murray's Estate, 236 Iowa 807, 20 N.W.2d 49. That case was later quoted extensively and approvingly by this court in Chambless v. Black, supra. In both cases the question was whether savings bonds payable to the decedent or his widow were part of decedent's estate or were part of the widow's separate estate. In the Murray case the court allowed the federal government to intervene (see suggestion of interest of the United States filed in the Murray case and quoted in the Chambless case, supra, 250 Ala. 607, 35 So.2d 350, 352), and held that the widow was entitled to the bonds as a part of her separate estate. In approving the Murray case, this court, in the Chambless case, stated:

'We are in accord with the conclusion reached by the Supreme Court of Iowa in Re Murray's Estate, supra, and hold that the trial court correctly held that the bonds here in question were a part of the widow's statutory estate, even though such bonds may have been purchased by Mr. Chambless, the decedent, with his own funds during his lifetime. Her title was derived from contractual rights and hence the bonds were properly considered as a part of her separate estate.'

The effect of the holding in the Chambless case is that a surviving co-owner of savings bonds takes title thereto as the sole owner by reason of the Treasury regulations incorporated into the contract between the Federal government and the purchaser of the bonds.

The petitioner, however, contends that the restrictions on transfer of...