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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 93-1416
VICTOR ZELMAN and BETTY ZELMAN,
Plaintiffs, Appellants,
v.
RICHARD L. GREGG, COMMISSIONER OF THE PUBLIC DEPT., ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
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Before
Cyr, Boudin and Stahl,
Circuit Judges.
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Victor Zelman and Betty Zelman on brief pro se.
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Stuart E. Schiffer, Acting Assistant Attorney General, Jay P.
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McCloskey, United States Attorney, Barbara C. Biddle and Deborah Ruth
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Kant on brief for appellees.
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February 17, 1994
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BOUDIN, Circuit Judge. This is a suit by the owners of
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federal savings bonds that were allegedly stolen and redeemed
without the owners' permission. The district court dismissed
the suit on the ground that it had been brought in the wrong
court. With certain clarifications, we affirm.
I.
In this case Victor and Betty Zelman, a husband and wife
residing in Maine, brought suit pro se in district court
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against the Secretary of the Treasury and the Commissioner of
the Public Debt. Their complaint alleged that six series E
bonds issued to one or both of the Zelmans, currently worth
(in total) more than $10,000, had been stolen from them and
that the government was now refusing to issue replacements.1
Claiming that the government had breached the contractual
rights reflected in the bonds, the Zelmans sought an
injunction to require the issuance of replacements.
Prior to bringing suit, the Zelmans had requested
replacements from the Bureau of Public Debt which administers
the savings bond program for the Treasury. In reply the
Bureau told the Zelmans the following: first, government
records showed the bonds to have been redeemed more than ten
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1The series E bonds assertedly stolen from the Zelmans
appear to have been registered bonds rather than bearer
bonds. See 31 C.F.R. 315.5 ("Savings bonds are issued only
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in registered form. . . . The registration is conclusive of
ownership, except as provided in 315.49 [relating to
correction of error in registration].").
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years ago; second, government regulations create a
presumption that redeemed bonds have been properly paid if no
claims have been filed within ten years of redemption; and
third, since the government now retains no other records
after ten years has elapsed following redemption, "no details
regarding . . . redemption [of the Zelmans' bonds] can be
furnished."
Broadly speaking and with certain qualifications,
government bonds are viewed as contracts between the
government and the owners, whose terms are fixed by statutes,
regulations and offering circulars. Estate of Curry v.
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United States, 409 F.2d 671, 675 (6th Cir. 1969); Wolak v.
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United States, 366 F. Supp. 1106, 1111-12 (D. Conn. 1973)
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(collecting and quoting numerous cases). In response to the
Zelmans' suit, which explicitly alleged a breach of contract,
the U.S. Attorney asserted that the district court lacked
subject matter jurisdiction over the suit. This is so, the
U.S. Attorney argued in a motion to dismiss, because contract
claims against the United States for amounts of over $10,000
may be brought only in the Claims Court. 28 U.S.C.
1346(a)(1), 1491(a)(1).
The district court agreed with the government, stating
that "since this is an action for breach of contract and more
than $10,000 is at stake, the Tucker Act provides that
jurisdiction exists only in the . . . Claims Court . . . ."
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Noting that no request for such a transfer had been made, see
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28 U.S.C. 1631, the district court dismissed the case for
want of jurisdiction and without prejudice to a new action in
a court with jurisdiction. The Zelmans have sought review in
this court, arguing that the dismissal was improper and that
redress apart from damages should be afforded to them.
II.
On appeal, the Zelmans first argue that each bond should
be treated as a separate contract and that, individually,
each such claim in this case is under $10,000 and within the
jurisdiction of the district court. The government responds
that there is "some authority" for the proposition that
separate claims for under $10,000 should not be aggregated;2
but it says that the district court still "lacked
jurisdiction" to afford the only remedy sought by the Zelmans
in this case, namely, an injunction directing re-issuance of
the bonds. Indeed, we have held that "[f]ederal courts do
not have the power to order specific performance by the
United States of its alleged contractual obligations."
Coggeshall Development Corp. v. Diamond, 884 F.2d 1, 3 (1st
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Cir. 1989).
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2See e.g., Baker v. United States, 722 F.2d 517, 518
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(9th Cir. 1983); United States v. Louisville & Nashville
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R.R., 221 F.2d 698, 701-03 (6th Cir. 1955); Sutcliffe Storage
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& Warehouse Co. v. United States, 162 F.2d 849, 851-52 (1st
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Cir. 1947); see also 14 C. Wright, A. Miller & E. Cooper,
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Federal Practice and Procedure, 3647 at 287 (2d ed. 1985).
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One could argue about whether "jurisdiction"--a term
with many shades of meaning--is lacking if the complaint has
asserted a colorable claim (in this case, for breach of
contract) but named an unavailable remedy. But the Zelmans
did not argue to the district court that the claims may be
disaggregated (although two sentences in their memorandum
hinted at such an argument) and even now the government does
not quite concede the point. We are reluctant to overturn
the district court in a civil suit based on a disaggregation
theory not raised in that court. Indeed, the government does
not confess error on this issue and may dispute or hope to
distinguish the disaggregation precedents.
Accordingly, we are disposed to affirm the district
court but without prejudice to the Zelmans' filing of a new
suit in the same district court if they wish to pursue their
disaggregation theory. We say "if" because the Claims Court
has unquestioned jurisdiction, assuming that the Zelmans are
now prepared to accept damages as their relief. The Zelmans
might prefer to refile their suit in the Maine district court
or they might conclude that the Claims Court, although more
distant, is a preferable forum in order to avoid another
possible round of jurisdictional controversy. The initial
choice is theirs.
But we have something more to say about the course of
this matter. The pages of correspondence between the Zelmans
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and the Treasury's Bureau of the Public Debt will be
familiar, at least as a prototype, to anyone who has ventured
to assert a money claim against a public body. Although the
Bureau's letters to the Zelmans (and later to their senator)
may well be accurate in a literal sense, most lay readers
would likely believe that the Bureau had determined the
Zelmans' claim to be without merit. The critical sentences,
repeated in several of the letters, are these:
[T]he regulations governing savings bonds
provide that bonds for which no claim has
been filed within 10 years of the
recorded date of redemption will be
presumed to have been properly paid. At
that time, the payment records of such
bonds are destroyed and from then on
there is no data available from which
photographs or other details regarding
the redemption can be obtained.
The critical phrase, "presumed to have been properly
paid," is taken verbatim from the current Treasury
regulations, 31 C.F.R. 315.29(b), although the regulation
in question is not cited in the letters. The word "presumed"
has more than one meaning but it quite often refers to a
rebuttable presumption; that is, when the predicate fact is
proved (here, that the bonds were redeemed by someone over
ten years ago), then some other "presumed" fact (here, that
the bonds were redeemed by their real owners) will be taken
to be true--unless and until the party disputing the presumed
fact offers substantial countervailing evidence. See Fed. R.
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Evid. 301; 2 J. Strong, McCormick on Evidence 342 (4th Ed.
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1992).3
Assuming for purposes of discussion that the regulation
refers to a rebuttable presumption, then quite likely the
Zelmans have the burden of offering evidence to establish
that the bonds were stolen from them and if redeemed were
redeemed without their permission. They might have such a
burden even without the presumption. The Zelmans may be
hindered because the Bureau has apparently disposed of the
records of redemption apart from recording the fact of
redemption. Still, a factfinder might well believe the
Zelmans, especially if they can corroborate the theft of the
bonds. Stolen bonds are unlikely to have been redeemed by
their rightful owner.
If the Bureau regards the presumption as rebuttable, one
might expect at least one of its letters to say this to the
Zelmans in plain language and, further, to tell them what
process (a review board, a court) is available to get a
decision on the factual issue. If instead the Bureau thinks
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3Occasionally the term "presumption" is used to indicate
that the presumed fact is conclusively or irrebuttably
presumed and the opponent will not be allowed to show the
contrary. See e.g., Stanley v. Illinois, 405 U.S. 645, 656-
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57 (1972) (voiding irrebuttable statutory presumption); 2
McCormick at 451. And, to make matters even more confusing,
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the term is sometimes used to refer to a mere permissible
inference. See County Court of Ulster County v. Allen, 442
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U.S. 140, 157 (1979) (referring to "an entirely permissive
inference or presumption, which allows--but does not
require"--an inference of one fact from proof of another).
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that the regulation creates an irrebuttable presumption--a
kind of mini-statute of limitations--then it ought to have
said so plainly to the Zelmans. To leave the matter in a
state of confusion is not an attractive posture for an agency
that must face this very issue with some frequency.
The government is a huge body employing millions of
people, and needs to use regulations, routines and form
letters. It is also right that its servants should be chary
about claims against the Treasury, claims that are often ill-
founded and sometimes dishonest. But it is not too much to
ask that the Bureau of the Public Debt give a plain statement
of its position--and even useful directions--to those
citizens who have lent the government money, seek repayment,
and have very little idea how to navigate through the forest
of rules and procedures.
III.
The Zelmans' filings, both in the district court and in
this court, argue variously that case law supports equitable
relief; that it is a violation of the due process clause to
apply regulation 315.29(b) as a statute of limitations to
bonds sold before the regulation was promulgated; and that
the records concerning the redemption should not have been
destroyed since without them the Zelmans cannot prove their
case. These arguments do not alter our view that the
district court should be affirmed.
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The Zelmans' argument for equitable relief rests on the
ground that the government had an obligation, under the law
as it existed when the bonds were purchased, to replace
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stolen bonds that have been improperly redeemed. This
argument is difficult to appraise because the text of the
provisions relied upon by the Zelmans is not quoted by the
Zelmans, and the statutes and regulations to which the
Zelmans cite do not clearly set forth the obligation that the
Zelmans impute.4 Whether such an obligation might be made
out, however, is an issue we need not determine.
On the Zelmans' own version of the matter, the
obligation on which they rely existed under statutory or
regulatory language that has since been repealed. Although
their position is not clearly explained, they may be arguing
that the procedures and remedies that applied in 1968 and
1969 were incorporated into the bond contracts by implication
or by the offering circular (which is not, however, quoted or
cited). See generally Wolak, 366 F. Supp. at 1113-14. If
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this is their argument, then the Zelmans are back to arguing
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4Former 31 U.S.C. 738a(a) provided that the Secretary
of the Treasury, when it is "clearly proved to the
satisfaction of the Secretary" that non-bearer securities of
the United States have been lost or stolen, "shall" re-issue
a security "which has not matured or become redeemable" and
shall make payment on one that "has matured or become
redeemable." This section was supplanted in 1971 by one that
said that the Secretary had authority to grant relief for
loss or theft of government securities, 85 Stat. 74; the
current comparable version is 31 U.S.C. 3125(a) (The
Secretary . . . may provide relief . . .)".
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that the government has breached its contract and that
equitable relief should be afforded for this breach.
The difficulty is that it is settled in this circuit
that equitable relief cannot be obtained on contract claims
against the government, Coggeshall, 884 F.2d at 3, with very
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narrow statutory exceptions that are not here relevant. 28
U.S.C. 1491(a)(2), (3). This rule may not be followed
everywhere and it can be especially hard to apply where
contract claims are mingled with other claims not dependent
on contract. See, e.g., Transohio Savings Bank v. Director,
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Office of Thrift Supervision, 967 F.2d 598 (D.C. Cir. 1992).
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However, the rule remains the law of this circuit and may not
normally be reconsidered except by the court en banc.5
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The Zelmans' next argument is that it violates due
process for the government to impose, through regulation
315.29, a ten-year statute of limitations (measured from an
illegal redemption) on requests by rightful owners for
replacement or payment of their stolen bonds. No such
regulation existed, say the Zelmans, when their bonds were
purchased; and (they say) their bonds have been extended by
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5As already noted, the Zelmans have not pointed to any
law currently in force that gives them a statutory right to
re-issuance of the bonds (as opposed to damages based on
breach of contract). Thus we have no occasion to consider
whether or when--despite the Tucker Act--a district court
might be able to grant injunctive relief, with monetary
implications, based on statute rather than contract. Compare
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Esch v. Yeutter, 876 F.2d 976 (D.C. Cir. 1989); Hahn v.
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United States, 787 F.2d 581 (3d Cir. 1985).
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the Treasury for thirty years past their original maturity so
the Zelmans had no earlier reason to inquire into their theft
or illegal redemption.
It will be time enough for the courts to consider such a
constitutional attack on the regulation if and when the
government endorses the reading of the regulation as a
statute of limitations and if and when the courts accept that
reading. As we have already noted, the regulation on its
face is susceptible to a quite different reading, namely,
that it creates a rebuttable presumption (starting ten years
after a redemption) that the bonds were lawfully redeemed.
This in turn would leave it open to the rightful owner to
show that the bonds were lost or stolen and were not redeemed
by the rightful owner.
The Zelmans, appearing pro se, may misunderstand what is
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entailed in a showing of this kind. It would not be their
automatic obligation to establish the details of the theft or
identify the party who wrongfully redeemed the bonds. One
might expect them to shed some light on where the bonds were
kept, how they might have been purloined, why it took so long
to discover the loss, whether the loss was reported to the
police, and what investigations were made; but these are
matters that go to plausibility and corroboration. If the
Zelmans tell a plausible story, nothing prevents the trier of
fact from accepting it.
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As for the details of the redemption, all that a trier
of fact would likely demand from the Zelmans is testimony
that they did not redeem the bonds, did not authorize anyone
to do so, and have no idea who did redeem the bonds. The
fact that the government has destroyed the records is more
likely to inconvenience it rather than the Zelmans, assuming
that they have a plausible story to tell. Of course, we are
proceeding on the arguendo premise that the regulation is not
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a statute of limitations; but if it is a statute of
limitations, the destruction of the records is probably
irrelevant anyway.
We do not know whether the Zelmans will refile their
contract claim lawsuit in the district court or in the Claims
Court. But we trust that, once a forum with jurisdiction is
chosen, government counsel will pay some mind to the question
whether the Zelmans have a valid claim against the government
or how to get this issue decided at minimum expense and
without further delay. Thus far, this case is not much of an
advertisement for savings bonds.
The judgment of the district court is affirmed without
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prejudice to the filing of a new suit for damages either in
the Claims Court or in the district court (subject to
resolution of the disaggregation issue). No costs.
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Document Info
Docket Number： 93-1416
Filed Date： 2/18/1994
Precedential Status： Precedential
Modified Date： 9/21/2015