LOCATION: United States Court of Appeals District of Columbia Circuit
DOCKET NO.: 205
DECIDED BY: Warren Court (1962)
LOWER COURT: Supreme Court of Texas
CITATION: 369 US 663 (1962)
ARGUED: Mar 21, 1962
DECIDED: May 21, 1962
Facts of the case
Media for Free v. Bland
Audio Transcription for Oral Argument - March 21, 1962 in Free v. Bland
Number 205, J.W. Free, Petitioner, versus James F. Bland.
W. Graham Claytor, Jr.:
Mr. Chief Justice, may it please the Court.
This seems to be lone start state day here.
This case is also here on writ of certiorari to the Supreme Court of Texas.
Treasury Regulations which are incorporated in and made a part of United States Savings Bonds provide that where one of two co-owners of the bonds die.
The survivor will be recognized as the sole in absolute owner of the bond.
The question presented here is whether the provisions of this regulation shall control inconsistent state property law in a case in which the bonds were purchased with the community property of the two co-owners in whose name, they were registered.
Now, I'd like to state the facts and the procedural posture of the case in some detail in order to show just how the question is brought here.
Between 1941 and 1945, the petitioner here, Mr. J.W. Free, purchased some $86,000 of United States Savings Bonds using for this purpose, the funds which constituted under the Laws of Texas, the community property of himself and his wife.
He registered these bonds in the joint names of himself and his wife in the only form of co-owner registration that is provided for, for United States Savings Bonds.
About 12 years after the last of the bonds were purchased, Mrs. Free died.
She left a will in which the respondent here Mr. James Bland, her son by a fall of marriage, was named executor and residuary legatee.
The controversy then, arose between her husband, Mr. Free petitioner, and his step son Bland, over the ownership of the bonds.
Mr. Bland contended that under applicable Texas property law, the bonds constituted the community property of the family and that half of the value of the bonds descended to Mrs. Free's estate.
The petitioner contended that under the Treasury Regulations, he was entitled to all of the bonds as the survivor of the two co-owners.
The parties stipulated that the bonds should be held in escrow until this could be determined and the petitioner promptly brought suit in the state court in Texas asking for a determination that he owned all of the bonds.
Motion for summary judgment and supporting affidavits was filed.
The facts had been stated in the pleadings and affidavits substantially as I've given them.
Respondent then filed an amended answer and a cross action in which he asked that half the bonds be a judged to belong to him or at least that he should have equitable ownership of half the bond.
And in this cross action, he made the same allegations of fact with one addition.
The addition being, that the bonds had been purchased by Mr. Free without the knowledge or consent of his wife.
This additional allegation was then denied in a pleading and answer to the cross action which petitioner Free subsequently filed.
On this state of the record, the summary judgment motion came on to be heard.
The state trial court granted summary judgment for Mr. Bland, the respondent here.
The court holding that while petitioner Free was entitled to the bonds, he was entitled to them on condition that, they'd be subjected inter alia, in favor of Mr. Bland for half their value, since Mr. Bland in fact had the beneficial ownership of half the bonds through descent from Mrs. Free's estate.
This was promptly appealed to the Texas Court of Civil Appeals.
The Texas Court of Civil appeals reversed and ordered summary judgment and it for petitioner here.
That court held that the Treasury Regulations controlled and were intended to control beneficial ownership that they so preceded inconsistent provision of state property law that the Supreme Court of Texas in the 1958 case had so applied the Treasury Regulations to Texas property law.
And that at least in the absence of fraud or unconscionable or unfair dealing that there was no question but that title of the bonds was entirely in the husband of the survivor.