195 Misc. 754 | N.Y. Sur. Ct. | 1949
William J. Lanndree purchased United States Savings Bonds, Series E, of the maturity value of $1,950, which he had registered in his name as owner and made payable on his death to his brother. He died on November 17, 1946, intestate and was survived by his widow and a daughter. At his death three of the bonds, of the face value of $150, were in the posses
United States Savings Bonds are issued under the authority of section 22 of the Second Liberty Bond Act, as amended (U. S. Code, tit. 31, § 757c.). It is therein provided that “ (a) The Secretary of the Treasury, with the approval of the President, is authorized to issue, * * * United States savings bonds * * *. The various issues and series * * * shall be issued in such manner and subject to such terms and conditions * * * as the Secretary of the Treasury may from time to time prescribe.” Pursuant to this statutory authority the Secretary of the Treasury has promulgated certain regulations governing the registration, transfer, payment, and redemption of such bonds. (Code of Fed. Reg., 1945 Supp. tit. 31, §§ 315.1-315.63.) The general regulations as to all United States bonds are contained in Department Circular No. 530, Sixth Bevision, dated February 13, 1945. Savings bonds are. issued only in registered form, and the form of registration is considered to be conclusive of the ownership and interest therein, except as otherwise specifically provided by the regulations (§ 315.2). A purchaser of Series E bonds
In the initial consideration had in this State of the nature of the legal interest created in bonds in the beneficiary form it was held that the proceeds of the bonds belonged to the estate of the deceased owner for the reason that the transaction was invalid as a gift and as a disposition of property to take effect after death, and that the regulations concerning the manner of issue and payment of the bonds did not preclude the application of the laws of this State determining the validity of the devolution of property. (Deyo v. Adams, 178 Misc. 859.) Subsequent to this decision there was added by chapter 632 of the Laws of 1943, effective April 19,1943, section 24 to the Personal Property Law which provides as follows: ‘ ‘ Where any United States savings bond is payable to a designated person, whether as owner, co-owner or beneficiary, and such bond is not transferable, the right of such person to receive payment of such bond according to its terms, and the ownership of the money so received, shall not be defeated or impaired by any statute or rule of law governing transfer of property by will or gift or an intestacy, provided, however, that nothing herein shall limit article ten of the debtor and creditor law or section one hundred twenty-four of the decedent estate law. ’ ’ The section was recommended by the Law Revision Commission. A legislative note annexed to the bill states that “ Its purpose is to remove doubts, resulting from the decision in Deyo v. Adams, (178 Misc. 859 (1942) as to the rights of owners, co-owners and beneficiaries designated in nontransferable United States Savings Bonds. The removal of these doubts will assure purchasers of such bonds that the persons designated by them as payees will receive the money.” (N. Y.
None of the cited cases deals with the rights of creditors where the purchaser dies insolvent. The Law Bevision Commission in recommending the enactment of section 24 of the Personal Property Law stated: ‘ However, in any legislation designed to protect the payees’ rights, it should be made clear that any rights against fraudulent conveyances, which the creditors of the buyer may, have, are not affected.” (N. Y. Legis. Doc., 1943, No. 65 [M], p. 6.) This recommendation is reflected in the final clause of the statute which provides, “ * * * that nothing herein shall limit article ten of the debtor and creditor law * * * 99
The only case in this State considering the rights of creditors and those of the beneficiary where the purchaser died insolvent is Jacoby v. Loewenberg (N. Y. L. J., Feb. 13, 1947, p. 590, col. 3). There the widow brought an action on a separation agreement against the executor of her deceased husband and her son as the recipient of certain property which she claims was fraudulently transferred. The complaint contained three causes of action. The first cause of action was to recover the sum of $30,500 for unpaid installments under the separation agreement. The plaintiff was awarded judgment thereon and thereby established her
owner of the bonds in question, his title as such owner terminated on his death and the defendant, as the beneficiary named in the respective bonds, thereupon became the sole and absolute owner.” While the Surrogate agrees with the court’s analysis of the rights of the purchaser in his lifetime, he cannot agree that there was no transfer or that actual fraud must be proved. In view of the fact that the purchaser can redeem the bonds in his lifetime without the consent of the beneficiary it may be said that he remains the owner thereof. A creditor who has reduced his claim to judgment may, through the intervention of a receiver and during the lifetime of his debtor, enforce the latter’s right to receive payment. (Cf. Iowa Methodist Hosp. v. Long, 234 Iowa 843.) The owner of a bond in beneficiary form, in the event of his bankruptcy, can be compelled to surrender the same to his trustee. (Matter of Bartlett, 71F. Supp. 514.) The fact that the purchase of the bonds produced no diminution of the debtor’s assets or affected the creditor’s resort thereto does not establish that there was no transfer. The incorporation of the name of the beneficiary in the bond was the act of the purchaser and conferred a right on him. This right, in view of the power of the purchaser to redeem, was destructible and not enforcible until his death. Viewed in the light of the relative rights of the purchaser and the beneficiary it seems to me that there could be no effective or operative transfer of title to the bonds until the death of the purchaser. Up and until that time the transaction was ambulatory. Thus, at the time when he intended the transfer should and did become effective the transferor had thereby rendered himslf insolvent. Where a debtor makes a voluntary conveyance of property without fair consideration while an indebtedness is outstanding, the presumption arises that he was insolvent at the time of the transfer. (Cohen v. Benjamin, 246 App. Div. 866; Campbell v. Brown, 268 App. Div. 324, appeal dismissed 294 N. Y. 702; Debtor and Creditor Law, §§ 270, 271, subd. 1; §§ 272, 273.) Such a conveyance is fraudulent as to creditors without regard to actual intent. (Kerker v. Levy, 206 N. Y. 109; Chase Nat. Bank v. United States Trust Co., 236 App. Div. 500; Horowitz v. Weinberg, 156 Misc. 629, affd. 246 App. Div. 701.) The rule is that a transfer without consideration by one who is then a debtor raises a presumption of fraud. The creditor may stand upon that presumption until it is repelled. (Ga Nun v. Palmer, 216 Ñ. Y. 603, 611.) In Hearn 45 St. Corp. v. Jano (283 N. Y. 139, 142), the court, in discussing the Uniform Fraudulent Conveyance Act as enacted in article 10 of the Debtor and Creditor Law, said:
In the Briley case (155 Fla. 798, supra), the court held that the donee provision was valid against creditors of the deceased purchaser’s estate upon the ground, among others, that the bond constituted a contract for the beneficiary and was enforcible by Mm irrespective of State law governing the distribution of estates. The court did not discuss the question whether or not there was a fraudulent transfer. The Treasury regulations, as heretofore stated, provide that the surviving beneficiary will be recognized as the sole and absolute owner of the bond. It does not seem to me that the regulations were intended to prevent a legal representative from pursuing, in the interests of creditors, the proceeds of bonds fraudulently transferred to a beneficiary without consider
“ These laws and regulations are not intended to confer on the beneficiary the right to retain permanently the proceeds from the bonds irrespective of fraud or any illegality in the manner in which the bonds were obtained. To hold otherwise would, in effect, say that the treasury regulations not only guarantee payment to the named beneficiary, but, thereafter, when he receives the proceeds, follow him around indefinitely, and, like a protective halo, render him completely immune from any ordinarily legitimate claims thereto. For the purpose of payment and performance of the government’s contract obligation, the beneficiary is recognized as the ‘ sole and absolute ’ owner. But the rights of survivorship conferred by these [treasury] regulations upon a surviving coowner or beneficiary (§ 315.13 (1)) terminate there.” At pages 320-321 the court also said: “ Even in the case of fraud, the contract made by the government with the bond purchaser to pay his survivor cannot be changed or interfered with, but principles of equity and fair dealing require that the person benefiting by such fraud may be required to disgorge the proceeds of such fraud independently of the contract between him and the federal government, and without interference in its performance.” I am in accord with the views thus expressed. I, therefore, find and determine that the bonds in controversy were fraudulently transferred by the decedent to the respondent without consideration and accordingly direct that respondent execute within ten days the required instruments to redeem same and surrender the proceeds thereof to the petitioner within five days of the receipt thereof. (See Union Nat. Bank v. Jessell, 215 S. W. 2d 474 [Mo.].) The administratrix is directed to retain the proceeds pending the settlement of her account and to cite the respondent and all other persons interested therein. Proceed accordingly.