Union Nat. Bank v. Jessell

• Citation: 215 S.W.2d 474,358 Mo. 467
• Decision Date: 13 December 1948
• Docket Number: 40672
• Parties: Union National Bank, Executor of the Estate of Charles W. H'Doubler, Deceased, Plaintiff-Respondent, v. Pearle M. Jessell, Francis T. H'Doubler and Margaret N. Claxton, Defendants-Appellants, the United States of America, Intervenor-Amicus Curiae
• Court: United States State Supreme Court of Missouri

215 S.W.2d 474

358 Mo. 467

Union National Bank, Executor of the Estate of Charles W. H'Doubler, Deceased, Plaintiff-Respondent, v. Pearle M. Jessell, Francis T. H'Doubler and Margaret N. Claxton, Defendants-Appellants, the United States of America, Intervenor-Amicus Curiae

No. 40672

Supreme Court of Missouri

December 13, 1948

Appeal from Greene Circuit Court; Hon. Hiram F. McLaughlin Judge.

Affirmed.

Linton & Hader and William R. Collinson for appellants; Guy W Green, Jr., of counsel.

(1) The trial court erred in taking jurisdiction of the action as a will construction suit. No facts to sustain an action for a construction of the will of Charles W. H'Doubler were alleged in the petition. The will of Sarah E. H'Doubler was not before the court for purposes of construction. 1 Page on Wills, sec. 102, p. 218; Plemmons v. Plemmons, 139 S.W.2d 910; Stolle v. Stolle, 66 S.W.2d 912; Legg v. Wagner, 155 S.W.2d 146. (2) The purchase of the government bonds and their registration in the name of testator, payable on death to his children was not a testamentary disposition. Matter of Deyo, 180 Misc 32, 42 N.Y.S. (2d) 379; In re Kalina's Will, 184 Misc. 367, 53 N.Y.S. (2d) 775; United States v. Dauphin Deposit Trust Co., etc., 50 F.Supp. 73; Edds v. Mitchell, 184 S.W.2d 823; Franklin Washington Trust Co. v. Beltram, 29 A.2d 854; 186 A.L.R. 245 et seq. (3) The court erred in holding that the testator did not have a right to invest his money in the bonds, because testator had a right to dispose of his own separate estate as he saw fit during his lifetime. 68 C.J., pp. 490, 501, secs. 101, 117; Page on Wills, sec. 197, p. 398; Clark v. Clark, 4 S.W.2d 807. (4) The court erred in holding that the money invested in the bonds was part of the estate of Charles W. H'Doubler and that they must be sold and the proceeds turned over to the estate, because the action is purely one to determine the legal title to the bonds in question. Plemmons v. Pemberton, 139 S.W.2d 910; In re Murray's Estate, 20 N.W.2d 49. (5) Defendants Margaret N. Claxton, Frances H'Doubler and Pearle M. Jessell are entitled to the bonds as beneficiaries of a valid contract made for their benefit. Crow v. Kaupp, 50 S.W.2d 995; Secs. 7996, 8070, Mo. R.S.A.; Borden v. Erickson, 201 S.W.2d 404; Ball v. Mercantile Trust Co., 297 S.W. 415; Melinik v. Meier, 124 S.W.2d 594; In re Kalina's Will, 184 Misc. 367, 53 N.Y.S. (2d) 775; In re Deyo, 180 Misc. 32, 42 N.Y.S. (2d) 379; U.S. v. Dauphin Deposit Trust Co., 50 F.Supp. 73; Franklin Washington Trust Co. v. Beltram, 29 A.2d 854; In re Murray's Estate, 20 N.W.2d 49; In re Di Santos' Estate, 142 Ohio St. 223, 51 N.E.2d 639; Conrad v. Conrad, 152 P.2d 221; Edds v. Mitchell, (Tex.), 184 S.W. (2) 823; 168 A.L.R. 245 et seq. (6) The beneficiaries are entitled to the bonds by virtue of the supremacy clause of the Federal Constitution. In re Briley, 155 Fla. 798, 21 So. (2) 595; Harvey v. Rockliffe, 141 Me. 169, 41 A.2d 455; In re Stanley's Estate, 102 Colo. 422, 82 P.2d 332; Succession of Tanner, 24 So.2d 642; Myers v. Hardin, 186 S.W.2d 925; In re Murray's Estate, 20 N.W.2d 49; In re Di Santos' Estate, 142 Ohio St. 223, 51 N.E.2d 639; Conrad v. Conrad, 152 P.2d 221; Franklin Washington Trust Co. v. Beltram, 29 A.2d 854.

Schwab & Carr and Farrington & Curtis for respondent.

(1) The circuit court as a court of equity had the right to construe the will and render a declaratory judgment adjudicating the ownership of the proceeds in the bonds when paid. Stewart v. Shelton, 201 S.W.2d 395; Laws 1943, pp. 375, 378; First Baptist Church v. Robberson, 71 Mo. 326; Clark v. Carter, 200 Mo. 515, 98 S.W. 594; Haugh v. Bokern, 30 S.W.2d 47, 325 Mo. 1143; State ex rel. and to Use of Clay County State Bank v. Waltner, 145 S.W.2d 152; Rawlings v. Rawlings, 332 Mo. 503, 58 S.W.2d 735; Secs. 1126, 1127, 1129, R.S. 1939. (2) In the joint and mutual will of the spouses, they contracted that, if the husband survived the wife, he should have all property presently owned and subsequently acquired, but at his death said property, together with any property which the husband might thereafter acquire, was expressly made the property of the testamentary trust and subject to its terms. Bower v. Daniel, 198 Mo. 289, 95 S.W. 347. (3) Where provision is made for property remaining after first taker's death, a life estate is created, and a life tenant, even having power under will to sell and dispose of property, can make disposition only for a valuable consideration. Shelton v. Shelton, 348 Mo. 820, 155 S.W.2d 187; Masterson v. Masterson, 130 S.W.2d 629; Graham v. Stroh, 342 Mo. 686, 117 S.W.2d 258. (4) The donee of a life tenant cannot retain the gift. Restatement of Laws -- "Restitution", sec. 168, p. 684; 65 C.J. 986, sec. 910; 21 C.J. 941, sec. 73. (5) Change of condition or circumstance between date of will and death of testator was immaterial. Hannibal Trust Co. v. Elzea, 315 Mo. 485, 286 S.W. 371. (6) When spouses hold joint property neither may defeat the right of the other to take as survivor, but, by agreement, both by will may devise a remainder after life enjoyment by the surviving spouse. Stewart v. Shelton, 201 S.W.2d 395; Plemmons v. Pemberton, 346 Mo. 45, 139 S.W.2d 910. (7) The Regulations of the United States Treasury Department governing United States Savings Bonds are not involved in this case. Treasury Regulations, Department Circular No. 530, Fourth Revision, Secs. 315.3 and 315.17; 31 U.S.C.A. 757C; Perry v. Strawbridge, 209 Mo. 621, 108 S.W. 641, 16 L.R.A. (N.S.) 244, 123 Am. St. Rep. 510; 14 Ann. Cas. 92; Eisenhardt v. Siegel, 119 S.W.2d 810; Barnett v. Coney, 27 S.W.2d 757.

Sam M. Wear, United States Attorney, by Earl A. Grimes, Assistant United States Attorney, amicus curiae.

(1) On the basis of the applicable treasury regulations, the plaintiff, as the surviving designated beneficiary, is the sole and absolute owner of the United States Savings Bonds in question. The Treasury regulations applicable to the savings bonds involved are contained in Department Circular No. 530 Fourth Revision. (2) The treasury regulations are valid and have the force and effect of Federal Law. The ultimate source of the Federal power to issue United States Savings Bonds and to promulgate regulations governing their ownership, transfer, and payment is Article I, Section 8, Clause 2, of the Constitution of the United States which provides in part as follows: "The Congress shall have Power . . . To borrow Money on the credit of the United States."

By Article I, Section 8, Clause 18, of the Constitution Congress is given the power: "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or office thereof." (3) The Federal borrowing power has been held to include the power to issue bonds, as obligations of the United States, in any appropriate form in return for the money borrowed. Legal Tender Case, 110 U.S. 421, 444. (4) And to fix the amount to be borrowed and the terms of payment. Perry v. United States, 294 U.S. 330, 351. (5) In exercise of its constitutional power to borrow money on the credit of the United States, Congress enacted Section 22 of the Second Liberty Bond Act, as amended, providing as follows: "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, bonds of the United States to be known as 'United States Savings Bonds.' The proceeds of the Savings Bonds 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 shall be in such forms, shall be offered in such amounts within the limits of Section 752 of this title and shall be issued in such manner and subject to such terms and conditions consistent with subsections (b) and (c) hereof, and including any restriction on their transfer, as the Secretary of the Treasury may from time to time prescribe" Act of Sept. 24, 1917, Ch. 56, Sec. 22, as added by Act of Feb. 4, 1935, Ch. 5, Sec. 6; 49 Stat. 21; 31 U.S.C., Sec. 757c. Pursuant to the authority conferred upon him by the foregoing legislation, the Secretary of the Treasury issued regulations governing the issuance, transfer, ownership, and payment of United States Savings Bonds, the pertinent provisions of said regulations having already been set forth above. (6) The power given to the Secretary of the Treasury to make regulations governing the issuance and transfer of savings bonds was properly delegated by Congress. Hampton v. United States, 276 U.S. 394; Buttfield v. Stranahan, 192 U.S. 472; United States v. Grimaud, 220 U.S. 506. (7) The power was properly exercised because the regulations issued by the Secretary were reasonably adapted to the execution of the legislative purpose. Hence, the Treasury regulations are clearly valid. McCulloch v. Maryland, 4 Wheat. 316, 421. (8) And have the force and effect of Federal law. United States v. Birdsall, 233 U.S. 223; Maryland Casualty Co. v. United States, 251 U.S. 342; United States v. Sacks, 257 U.S. 37; United States v. Janovitz, 257 U.S. 42. (9) The treasury regulations, having the force of Federal Law, must be held to supersede inconsistent state law by virtue of the "Supremacy Clause" of the Constitution. Art. VI, Clause 2, of the Constitution. Farmers Bank v. Minnesota, 232 U.S. 516; Missouri v. Gehner, 281 U.S. 313. (10) The form in which the State burden is sought to be imposed is immaterial. Hence, it has been held that the transactions of the Federal Government are as free from...