Wachovia Bank & Trust Co. v. Wilder, 525

• Citation: 120 S.E.2d 404,255 N.C. 114
• Decision Date: 16 June 1961
• Docket Number: No. 525,525
• Court: United States State Supreme Court of North Carolina
• Parties: WACHOVIA BANK AND TRUST COMPANY, Executor and Trustee Under Last Will and Testament of H. C. Cameron, Deceased, v. William A. WILDER and Henry Wilder, Administrators, Estate of Ruth Wilder Cameron, and Margaret C. Tempest.

Page 404

120 S.E.2d 404

255 N.C. 114

WACHOVIA BANK AND TRUST COMPANY, Executor and Trustee Under

Last Will and Testament of H. C. Cameron, Deceased, v. William A. WILDER and Henry Wilder, Administrators, Estate

of Ruth Wilder Cameron, and Margaret C. Tempest.

No. 525

Supreme Court of North Carolina.

June 16, 1961

D. B. Teague and Hoyle & Hoyle, Sanford, for plaintiff, appellee.

James R. Farlow, Chapel Hill, for defendant Margaret C. Tempest, appellee.

Mordecai, Mills & Parker, Raleigh, for defendants Wilder, administrators, appellants.

MOORE, Justice.

It is stipulated by all parties that the United States Savings Bonds, Series G, here involved, were issued under and subject to the Code of Federal Regulations, Cumualtive Supplement, Book 6, 1944, Title 31, Chapter II, Part 315, Sub-part K, s. 315.32. The effect of these regulations in relation to the title and ownership of such and similar bonds has been the subject of discussion and decision in a number of cases in this jurisdiction. Tanner v. Ervin, 250 N.C. 602, 109 S.E.2d 460; Wright v. McMullan (Wright v. Wright), 249 N.C. 591, 107 S.E.2d 98; Jones v. Callahan, 242 N.C. 566, 89 S.E.2d 111; Watkins v. Shaw, 234 N.C. 96, 65 S.E.2d 881; Ervin v. Conn (Commercial Nat. Bank of Charlotte v. Frederickson), 225 N.C. 267, 34 S.E.2d 402. In the opinions in these cases the decisions in this and other jurisdictions are cited and discussed and explanations of the principles applied are fully set out. Explanative and extended discussion of the subject would be unnecessarily repetitious in the instant case. Here we merely summarize the applicable and controlling principles already established.

'United States Savings Bonds are not transferable and are payable only to the owners named thereon. * * * Accordingly, savings bonds may not be sold or hypothecated as collateral for a loan and may not be used as security for the performance of an obligation. * * *' Fed.Regs., Title 31, C. II, Part 315, Sub-part C, s. 315.8.

'The regulations by clear and unmistakable language fix ownership by the form of registration. These bonds could not be the subject of a gift inter vivos or causa mortis. State laws fixing the requirements for a valid gift have no application to these bonds.' Wright v. McMullan (Wright v. Wright), supra [249 N.C. 591, 107 S.E. 2d 101].

Section 315.32 of the above Regulations provides: 'A savings bond registered in the names of two persons as coowners in the form 'John A. Jones or Mrs. Mary C. Jones,' will be paid or reissued as follows: (a) * * * (b) After the death of one coowner. If either coowner dies without having presented and surrendered the bond for payment * * * the surviving coowner will be recognized as the sole and absolute owner of the bond, and payment will be made only to him.'

'The rule followed by a majority of the Courts, including North Carolina, frequently called the 'majority rule,' with respect to rights in United States Savings Bonds registered * * * in the names of two individual co-owners in the alternative, is that, upon the death of one of the co-owners, the surviving co-owner is vested with the sole ownership in such bonds, at least in the absence of fraud or other inequitable conduct on the part of the survivor.' Tanner v. Ervin, supra [250 N.C. 602, 109 S.E.2d 463].

'The principal basis for the majority view is that solution of the question as to the property rights of the surviving co-owner in a * * * Bond is one of contract, and that the Treasury Regulations having the force and effect of federal law, become a part of the bond as a contract between the purchaser and the federal government, and fix legal title to the bond, and are determinative of the property rights of the parties to the bond.' Ibid. Accord: Ervin v. Conn (Commercial Nat. Bank of Charlotte v. Frederickson), supra, 225 N.C. at page 274, 34 S.E.2d at page 406.

Where a co-owner dies testate, the title to the bond passes not by virtue of anything contained in the will, but by right of survivorship under the terms of the bond itself. Jones v. Callahan, supra.

Where a husband and wife purchased United States Savings Bonds with money owned jointly by them, the bonds being issued in their names in the alternative, and they thereafter entered into a separation agreement in which it was provided that the husband should have and own the bonds, he having given valuable consideration therefor and having failed to present the bonds for payment during his lifetime, this Court held that the proceeds of the bonds were impressed with a resulting trust in favor of the husband's executor by reason of the separation agreement and the unjust enrichment of the wife should she be permitted to retain the proceeds. Tanner v. Ervin, supra.

In the case at bar defendants Wilder contend that, as evidenced by letter attached to the bonds, H. C. Cameron paid to Margaret C. Tempest $10,000, in consideration of which Margaret C. Tempest surrendered and conveyed to Cameron all beneficial interest in the bonds and now has only the bare right to present the bonds for payment and to collect the principal and interest, and must hold the proceeds in trust for the person entitled to the beneficial interest. They contend further that the beneficial interest passed to Ruth Wilder Cameron under the will of H. C. Cameron.

The decisive question in this case is: What weight and effect must be given by the court to the letter which was attached to the bonds by H. C. Cameron? The court below gave it no effect and thereby eliminated the crucial evidence upon which the claim of defendants Wilder depends.

The letter was included in the stipulations of counsel. Had it been offered in evidence upon trial, its admission, over objection, would have been error. It is hearsay evidence. The fact that it was admitted by stipulation does not require the judge to give it legal effect, although exceptions to a judgment on the ground that it is based on incompetent evidence have been held untenable when the evidence is admitted without objection. Poole v. Gentry, ...