Hillel Bodek, Plaintiff-appellant, v. the Department of the Treasury, Bureau of the Public Debt,defendant-appellee, 532 F.2d 277 (2d Cir. 1976)

Appellant challenges the district court's dismissal of his complaint on the grounds that the district judge erroneously concluded that certain United States Savings Bonds, which were registered to him but were not in his physical possession, had not been "stolen" from him within the meaning of 31 U.S.C. § 738a¹  and 31 CFR § 315.25.²  We affirm the lower court's decision for the reasons which follow.

FACTUAL SETTING

The facts are substantially undis- puted³  and may be briefly summarized. Between April and July of 1966, twelve United States Series "E" Savings Bonds (the Bonds) were issued, each of which bore a face amount of $25.00. Nine of the Bonds were issued to appellant individually; the remaining three were issued to appellant and his mother as co-owners. The Bonds were gifts to appellant on the occasion of appellant's thirteenth birthday and accompanying Bar Mitzvah (April 21, 1966). Appellant's parents, both of the Jewish faith, his father being an Orthodox rabbi, retained physical custody of the Bonds from the time of their original receipt. In 1971 appellant converted to Catholicism. When in 1971 appellant asked that the Bonds be given to him,⁴  his parents refused to relinquish the Bonds, claiming that they and not appellant were the Bonds' rightful owners.

Appellant contacted the Department of the Treasury (Department) in 1974⁵  and requested that the Department issue duplicate bonds to him on the grounds that the originals had been stolen from him. The Department declined to do so because, in its view, the Bonds were being held by appellant's parents under a claim of right and hence could not be regarded as stolen for purposes of issuing duplicates.⁶  Thereafter, appellant sought relief in the federal district court.⁷  The district court initially dismissed only that portion of appellant's complaint relating to the three bonds held jointly by appellant and his mother for failure to state a claim on which relief could be granted.⁸  Subsequently the court, after hearing oral argument on appellant's motion for summary judgment, ruled in favor of the Department on the merits and, accordingly, dismissed the remainder of appellant's complaint.

APPLICABLE LAW

Owners of United States securities, including savings bonds,⁹  may obtain either duplicate bonds or payment if they can prove to the Secretary of the Treasury's satisfaction that the originals have been lost, stolen, defaced, or destroyed. 31 U.S.C. § 738a; 31 CFR § 315.25. The issuance of duplicate bonds by the Department eliminates forfeiture of the debt due to irreparable defacement or irretrievable loss. The statute deliberately restricts the circumstances under which duplicates will be issued to those in which the Department will not consequently be faced with valid claims for payment on both the original and duplicate bond. See Wolak v. United States,366 F. Supp. 1106, 1112-3 (D. Conn. 1973). The more elaborate language of § 738a prior to its amendment in 1971 expressed this as a requirement that the bonds "not (be) held by any person as his own property";¹⁰  Congressional intent to incorporate this requirement under the current, streamlined version of § 738a is evident from the legislative history of the 1971 amendment. See 1971 U.S.Code Cong. and Admin.News at 1065-6.

Appellant readily concedes that the bonds in question are being held by his parents under a claim of right and as their own property, and that it is not the whereabouts or condition of the Bonds which is of concern to him but rather his parents' conflicting claim to them.¹¹  Any dispute between appellant and his parents over the ownership of the Bonds is a matter to be settled among themselves, either privately or in the appropriate state court.¹²  Until the question of ownership is settled, the Department would obviously be subject to conflicting claims, a possibility which would become a likelihood were the Department to issue duplicate bonds to appellant while his parents are holding the original bonds under a claim of rightful ownership.

The provision in § 738a for replacement of lost, stolen, or damaged bonds insures owners against loss in those circumstances in which the owner is obviously helpless to remedy the situation. It does not constitute an invitation to litigate ownership disputes in the federal courts.¹³  Appellant's quarrel with his parents is a dispute as to the ownership of the bonds and does not fall within the category of "loss, theft, destruction, mutilation, or defacement" covered under § 738a; accordingly, appellant cannot compel the Department to issue duplicate bonds to him.

The judgment of the district court dismissing appellant's complaint is affirmed.