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31 CFR § 363.6 – What special terms do I need to know to understand this part?
Account means a #TreasuryDirect ® account as described in § 363.10.
Person. An individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities.
Automated Clearing House (ACH) means a funds transfer system governed by the Rules of the National Automated Clearing House Association (NACHA). NACHA provides for the interbank clearing of electronic entries for participating financial institutions.
Beneficiary refers to the second individual named in the registration of a definitive savings bond, a converted definitive savings bond, or a book-entry security purchased through the TreasuryDirect system, registered, e.g., “John Doe SSN 123-45-6789 POD (payable on death to) Joseph Doe SSN 987-65-4321.
Book-entry security means a Treasury security maintained by us in electronic or paperless form as a computer record.
Business day means any day that funds may be settled through ACH.
Closed book period means a period of four business days prior to the date a scheduled marketable security interest and/or maturity payment is made, during which time certain transactions will be delayed until after the closed book period is completed. (See § 363.210.)
Commercial book-entry system refers to the book-entry system in which you hold your Treasury securities in a tiered system through securities intermediaries such as financial institutions or brokerage firms. (See § 363.4.)
Court means a court of law with jurisdiction over the parties and the subject matter.
Conversion account means a linked account in TreasuryDirect that contains only savings bonds that have been converted from definitive bonds to book-entry bonds.
Converted savings bond means a savings bond originally issued as a definitive bond that has been surrendered to us and converted to a book-entry savings bond to be maintained by Treasury solely as a computer record.
Converting coowner is the coowner who initiates and completes the transaction to convert a definitive savings bond to a book-entry bond through his or her TreasuryDirect account.
Coowner means either of the persons named in the registration of a definitive or a converted definitive savings bond, registered, e.g., “John Doe SSN 123-45-6789 or Joseph Doe.”
Custodian of a minor account means a person who opens an account on behalf of the minor. (See § 363.27 for more information about minor accounts.)
Custom account means an account that you establish for a specific purpose that is linked to your primary account. You use your primary account as the portal to open and access your custom linked account. (See § 363.10 for more information about custom accounts.)
Definitive security means a Treasury security held in paper form.
De-link means the online process by which all securities contained within the minor linked account are moved to the minor’s primary TreasuryDirect account and the linked account is deactivated.
Delivery means moving a minimum amount of $25 (consisting of principal and proportionate interest) of a security held as a gift from the account of the purchaser to the account of the recipient.
Entity means any owner of a TreasuryDirect account that is not an individual. Entity is a sole proprietorship, partnership, corporation, limited liability company or professional limited liability company, trust, the estate of a decedent, or the estate of a living person such as an incompetent or a minor.
Entity account manager is the individual who initially opens the TreasuryDirect account for an entity, or his or her replacement; who is authorized by the entity to act alone on its behalf to open, access, and conduct transactions with respect to the account; and who certifies that he or she is so authorized.
Federal Reserve Bank (Reserve Bank) means a Federal Reserve Bank or Branch.
Final maturity of a savings bond means the date beyond which an unredeemed savings bond no longer earns interest. 1
1 Series EE and Series I savings bonds currently have an original maturity period of 20 years and an extended maturity period of 10 years beyond original maturity during which the bonds continue to earn interest.
Financial institution, or depository financial institution, means an entity described in 12 U.S.C. 461 (b)(1)(A)(i)-(vi).
Gift means a Treasury security purchased for or transferred to an intended recipient, without consideration.
Incompetent individual or incompetent person means an individual who has been declared by a court to be legally incompetent, incapacitated, or otherwise unable to manage his or her financial affairs.
Individual means a natural person.
Interest on a savings bond means the difference between the purchase price and the redemption value of the bond.
Legacy Treasury Direct® system is a non-Internet-based book-entry system maintained by Treasury since 1986 for holding and conducting permitted transactions in marketable Treasury securities directly with Treasury as book-entry products. (See § 363.4.)
Legal guardian of a minor or incompetent person refers to the court-appointed or otherwise qualified person, regardless of title, who is legally authorized to act for the minor or incompetent individual.
Legal representative refers to the court-appointed or otherwise qualified person, regardless of title, who is legally authorized to manage and settle the estate of a decedent. The term includes an executor and an administrator.
Legally incompetent means a court has declared an individual to be incapable of handling his or her business affairs.
Linked account means an account that is a separate account from your primary account, but connected to your primary account. You use your primary account as a portal to open and access the linked account. (See § 363.10 for more information about linked accounts.)
Marketable Treasury security refers to a Treasury bill, note, or bond that is negotiable and transferable, that is, may be bought and sold in the secondary market.
Minor means an individual under the age of 18 years. The term minor is also used to refer to an individual who has attained the age of 18 years but has not yet taken control of the securities contained in his or her minor account.
Minor account means an account that a custodian controls on behalf of a minor, that is linked to the custodian’s primary account. (See §§ 363.10 and 363.27 for more information about minor accounts.)
Non-converting coowner is the coowner who does not participate in the transaction to convert a definitive savings bond to a book-entry bond.
Online means use of the Internet.
Owner when referring to an individual, is either the single individual named in the registration of a security held in the single owner form of registration, the first individual named on a security held in the owner with beneficiary form of registration, the first individual named on a security held in the primary owner with secondary owner form of registration, or either individual named on a converted savings bond held in the coowner form of registration; when referring to a minor linked account, the owner is the minor; when referring to an entity, the owner is the entity.
Payroll savings plan is a method for the purchase of savings bonds using periodic ACH credits from your employer or financial institution to purchase a payroll zero-percent certificate of indebtedness until a sufficient amount of payroll zero-percent certificate of indebtedness is accumulated to enable the purchase of a savings bond in an amount, series, and registration that you previously selected using functionality in your TreasuryDirect account. (See also the definition of payroll zero-percent certificate of indebtedness.)
Payroll zero-percent certificate of indebtedness is a restricted form of the zero-percent certificate of indebtedness that is held separately from the zero-percent certificate of indebtedness and used only for purchases made through the payroll savings plan. (See also the definition for zero-percent certificate of indebtedness.)
Person means an individual or an entity.
Primary account means the account that you establish when you first open your TreasuryDirect account; your primary account is the portal used to open and access all your linked accounts. (See § 363.10 for more information about primary accounts.)
Primary owner means the first person named in the registration of a security held in TreasuryDirect registered, e.g., “John Doe SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.” In this example, John Doe is the primary owner.
Principal amount means the amount of the original investment. Principal amount does not include any interest earned.
Recipient means the person to whom a gift is given.
Redemption of a savings bond refers to the payment of principal and interest at final maturity, or prior to final maturity at the option of the owner. The owner may redeem all principal and interest or a portion of the principal and the proportionate amount of interest.
Redemption value means principal plus accrued interest of a bond, or a portion of the principal plus a proportionate amount of accrued interest on the bond, as of the date of redemption.
Registration or Registered means that the name and taxpayer identification number(s) (TIN) of the person(s) named on the security are maintained on our records.
Reinvestment means using the redemption proceeds of a maturing marketable security to purchase a new marketable security of the same type and term, using the automatic reinvestment option available in TreasuryDirect.
Secondary owner means the second person named in the registration of a book-entry security held in TreasuryDirect registered, e.g. “John Doe SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.” In this example, Joseph Doe is the secondary owner.
Security, or Treasury security, as used in this part, means an obligation issued by Treasury that may be held in TreasuryDirect.
Series EE savings bond is an accrual-type savings bond, issued either in definitive (paper) form or in book-entry form, that accrues interest on the principal based on rates determined by Treasury.
Series I savings bond is a savings bond, issued either in definitive (paper) form or in book-entry form, that accrues interest in accordance with a formula that includes a fixed component and a component indexed to the rate of inflation.
Signature guarantee program means a signature guarantee program established under 17 CFR 240.17Ad-15, issued under authority of the Securities Exchange Act of 1934. For the purpose of this part, we recognize the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), and the New York Stock Exchange, Inc., Medallion Signature Program (MSP). These certifications are acceptable for transfers of securities, but are not acceptable for offline account establishment.
Single owner means the individual named in the registration of a book-entry Treasury security or a converted savings bond without a beneficiary, secondary owner, or coowner.
Social security account number or social security number (SSN) means the identifying number required on tax returns and other documents submitted to the Internal Revenue Service by an individual. A SSN is composed of nine digits separated by two hyphens, for example, 123-45-6789.
Taxpayer identification number (TIN) means the identifying number required on tax returns and other documents submitted to the Internal Revenue Service; that is, an individual’s social security number (SSN) or an employer identification number (EIN). A SSN is composed of nine digits separated by two hyphens, for example, 123-45-6789. An EIN is composed of nine digits separated by one hyphen, for example, 12-3456789. The hyphens are an essential part of the numbers.
Tender means an offer, or bid, to purchase a marketable Treasury security.
Transaction is any action affecting Treasury securities or account information.
Transfer is a transaction to move a security, or a portion of a security, to or from a TreasuryDirect account. (See § 363.26.)
Verification means confirming the identity of an online applicant for a TreasuryDirect account at account establishment using an online verification service or offline verification.
Verification service means a public or private service that confirms the identity of an online applicant for a TreasuryDirect account at account establishment using information provided by the applicant.
Voluntary representative means the person qualified by the Department of the Treasury to accept payment or direct distribution of a decedent’s securities pursuant to § 363.44.
We, us, or our refers to the Bureau of the Fiscal Service. The term includes the Secretary of the Treasury and the Secretary’s delegates at the Treasury Department and Bureau of the Fiscal Service. The term also includes any fiscal or financial agent we designate to act on behalf of the United States.
You or your refers to a #TreasuryDirect primary account holder.
Zero-percent certificate of indebtedness is a one-day, non-interest-bearing security that automatically matures and is rolled over each day until you request that it be redeemed.
[67 FR 64286, Oct. 17, 2002, as amended at 68 FR 24807, May 8, 2003; 69 FR 2507, Jan. 16, 2004; 69 FR 50308, Aug. 16, 2004; 70 FR 14942, Mar. 23, 2005; 70 FR 57433, Sept. 30, 2005; 70 FR 57442, Sept. 30, 2005; 72 FR 30978, June 5, 2007; 74 FR 19416, Apr. 29, 2009; 75 FR 26090, May 11, 2010; 75 FR 70815, Nov. 19, 2010; 75 FR 78901, Dec. 17, 2010; 76 FR 18064, Apr. 1, 2011]
CLEARFIELD TRUST CO. ET AL. V. UNITED STATES. Ninth Circuit.
Facts & procedural history
“On April 28, 1936, the Federal Reserve Bank of Philadelphia mailed a check for $24.20, drawn on the Treasurer of the United States, to Clair Barner. The check was Barner’s paycheck from the Works Progress Administration (WPA). Barner never received the check, which was stolen by an unknown party. The thief forged Barner’s signature and cashed the check at the J.C. Penney department store in Clearfield, Pennsylvania, where the thief assumed the identity of Mr. Barner. J.C. Penney then turned the check over to Clearfield Trust Co. as its collection agent. Clearfield Trust Co. collected the check from the Federal Reserve Bank, knowing nothing about the forgery.
On May 10, 1936, Barner informed his supervisors at the WPA that he had not received his paycheck. His complaint made its way up the chain of command, and on November 30, 1936, Barner signed an affidavit alleging that the endorsement of his name on the check was forged. Neither J.C. Penney Co. nor Clearfield Trust Co. had any notice of the forgery until January 12, 1937, when the U.S. government sent its first notice about it. The United States sent its initial request for reimbursement on August 31, 1937, and filed suit against Clearfield Trust Co. in the United States District Court for the Western District of Pennsylvania on November 16, 1939. The government based its cause of action on the express guaranty of prior endorsements by Clearfield Trust Co.
The District Court determined that the dispute should be governed by the state law of Pennsylvania. It then dismissed the government’s complaint on grounds of laches, holding that because the United States unreasonably delayed in notifying Clearfield Trust Co. of the forgery, it was barred from recovery. The United States Court of Appeals for the Third Circuit reversed the dismissal.
Justice Douglas, writing for a unanimous United States Supreme Court, first distinguished the case from Erie Railroad Co. v. Tompkins, holding that because the U.S. government was exercising a constitutionally-permitted function in disbursing its own funds and paying its debts, the commercial paper it issues should be governed by federal law rather than state law. Thus, the Erie doctrine rule — that a United States District Court must apply the law of the state in which it is sitting — did not apply. In the absence of an applicable Act of Congress, a federal court had the right to fashion a governing common law rule by its own standards.
While the Court’s decision explicitly retained the option of applying state law in fashioning a federal common law rule, the Court chose instead to fashion its own rule based on prior decisions. Justice Douglas identified a major federal interest in permitting the Court to fashion its own rule: uniformity in dealing with the vast amount of negotiable instruments and commercial paper issued by the federal government. Douglas reasoned that if each transaction were subject to the application of a multiplicity of different state laws, confusion and uncertainty in the administration of federal programs would be the result.
Justice Douglas chose to follow the rule set forth in United States v. National Exchange Bank of Providence, 214 U.S. 302 (1909), in which the U.S. Supreme Court held that the U.S. government, “as drawee of commercial paper stands in no different light than any other drawee” and could recover on a check as a drawee from a person who had cashed a pension check with a forged endorsement, despite the government’s protracted delay in giving notice of the forgery. The National Exchange Bank case held the government to conventional business terms, but said nothing about whether lack of prompt notice was a defense for nonpayment of a check. The Court held that the Pennsylvania state law — requiring prompt notice from the drawee — presumed injury to the defendant by the mere fact of delay. In this case, not only did Clearfield Trust Co. fail to demonstrate that it had suffered a loss because of the delay in notice, it could still recover the amount of the check from J.C. Penney, because none of its employees detected the fraud. The court chastised both companies for their “neglect and error” in accepting the forged check, and suggested that they should only be permitted to shift the loss to the drawee only when he can demonstrate that the delay in notice caused him damage.’
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