Franklin Wash. Trust Co. v. Beltram

• Citation: 133 N.J.Eq. 11,29 A.2d 854
• Decision Date: 28 January 1943
• Docket Number: 149/147.
• Parties: FRANKLIN WASHINGTON TRUST CO. et al. v. BELTRAM et al.
• Court: New Jersey Court of Chancery

29 A.2d 854

133 N.J.Eq. 11

FRANKLIN WASHINGTON TRUST CO. et al.

v. BELTRAM et al.

149/147.

Court of Chancery of New Jersey.

Jan. 28, 1943.

Syllabus by the Court.

Suit by the Franklin Washington Trust Company and others against Quirino Beltram and others, to determine whether United States Savings Bonds were the property of deceased's minor children, or whether they were part of deceased's estate.

Bonds held to belong to the minor children.

Milton M. Unger, of Newark, for complainant.

Julius Stein, of Newark, guardian ad litem for infant defendants.

Paul J. Mulcahy, Asst. U. S. Atty, of Newark, and Martin Norr, of Washington, D. C, for the United States.

BIGELOW, Vice Chancellor.

Mrs. Josephine Beltram, since deceased, purchased United States Savings Bonds in 1937 and in 1939. All were registered in her name as sole owner. In September, 1941, she presented the bonds to the Treasury Department with the request that they be reissued in her name as owner, payable on death to certain named beneficiaries. Accordingly, half of the bonds were reissued, inscribed and registered: "The United States of America, for value received, promises to pay to Mrs. Josephine Beltram, payable on death to Mr. Joachim Richard Beltram, address * * * one thousand dollars, without interest, ten years from the date as of which this bond is issued." The remaining bonds were reissued to Mrs. Beltram "payable on death to Miss Marie I. Beltram." Joachim and Marie are minor children of Mrs. Beltram, who died on January 28, 1942. No delivery of the bonds was made to them in Mrs. Beltram's lifetime, and the bonds were in her possession when she died. The question is whether the bonds are the property of the children, or whether they are part of the decedent's estate.

Savings Bonds are issued under the authority of Section 22 of the Second Liberty Bond Act, as amended in 1935, 31 U.S. C.A. § 757c. The act provides that the various issues of Savings Bonds "shall be in such forms * * * and shall be issued in such manner and subject to such terms and conditions * * * and including any restriction on their transfer as the Secretary of the Treasury may from time to time prescribe." Savings bonds are not transferable and are sold only in registered form. From the time of the original issuance of bonds in 1935 the Treasury regulations have provided for bonds in the beneficiary form here involved. The Treasury regulations in force when Mrs. Beltram's bonds were reissued and in January, 1942, when she died, provided in part as follows :

"(c) Payment or reissue to beneficiary. —If the registered owner dies without having presented and surrendered the bond for payment to a Federal Reserve Bank or the Treasury Department, and is survived by the beneficiary, upon proof of such death and survivorship, the beneficiary will be recognized by the Treasury Department as the sole and absolute owner of the bond, and payment will be made only to him, or, upon appropriate request by the beneficiary the bond may be reissued in his name or (if not a minor or under any other legal disability) in his name payable on death to a single designated beneficiary; * * *."

"(e) Reissue to add a beneficiary.—A savings bond registered in the name of one person in his own right or to which one person is shown to be entitled in his own right under these regulations, upon appropriate request by such person (if not a minor or under any other legal disability) may be reissued in whole or in part, in his name payable on death to a single designated beneficiary."

The statute authorizing the Secretary of the Treasury to issue Savings Bonds subject to such terms and conditions, as he may prescribe, is a valid exercise of the constitutional power "To borrow Money on the credit of the United States." Art. I, Sec. 8, Cl. 2. The borrowing power necessarily includes the power to fix the terms of the Government's obligation. Perry v. United States, 294 U. S. 330, 351, 55 S.Ct. 432, 79 L.Ed. 912, 95 A.L.R. 1335; Legal Tender Cases, 110 U.S. 421, 444, 4 S.Ct. 122, 28 L.Ed. 204. The Treasury regulations under which the bonds were issued and reissued are within the authority given the Secretary by the Congress...