Kubli v. N.Y.C. Police Prop. Clerk, 27 N.Y.2d 552 (1970)
Under New York Personal Property Law, a lost United States bearer bond is classified as an “instrument,” not “property,” and thus cannot be returned to the finder but must be retained by the police pending delivery to the person entitled thereto.
Summary
Henrietta Kubli found a $10,000 United States bearer bond in a subway station and turned it over to the police. After three years, she requested the bond’s return as the finder, but the Police Property Clerk refused. Kubli sued, arguing the bond should be considered “property” under the Personal Property Law, entitling her to it since the owner hadn’t been found. The court held that the bond was an “instrument” under the statute, precluding its return to the finder, regardless of the owner remaining unknown. This decision highlights the importance of statutory interpretation and the distinction between different types of found items.
Facts
On July 21, 1966, Henrietta Kubli found an envelope containing a $10,000 United States bearer bond in the 33rd Street PATH Station in Manhattan.
The bond was a 2%% treasury bond of the 1956-1959 series, issued in 1944 and redeemable on or after September 15, 1956.
Kubli immediately turned the bond over to the 30th Street Police Precinct and received a receipt.
After three years, Kubli demanded the bond from the Police Property Clerk, but her request was denied.
Procedural History
Kubli sued the Police Property Clerk in the New York City Civil Court to recover the bond.
The Civil Court ruled in favor of the defendant, dismissing the complaint.
The Appellate Term affirmed the Civil Court’s decision without opinion.
The Appellate Division, First Department, reversed the lower courts and directed judgment for Kubli.
The New York Court of Appeals then reviewed the Appellate Division’s decision.
Issue(s)
Whether a lost United States bearer bond is considered an “instrument” or “property” under Article 7-B of the New York Personal Property Law.
Whether federal Treasury regulations preempt New York law regarding the disposition of lost bearer bonds.
Holding
No, because under New York Personal Property Law, a bearer bond falls within the definition of “instrument,” not “property”.
No, because in disputes not touching the rights and duties of the United States, questions of title to bearer securities of the Federal Government are to be decided by State law.
Court’s Reasoning
The court reasoned that the New York Personal Property Law distinguishes between “property” and “instruments.”
“Property” includes money, goods, chattels, and tangible personal property, excluding “instruments.”
“Instrument” is defined as a check, draft, promissory note, bond, bill of lading, warehouse receipt, stock certificate, or other paper evidencing a chose in action or a right with respect to property.
The statute explicitly includes “bond” in the definition of “instrument.”
The court rejected Kubli’s argument that “bond” should be limited to “commercial paper,” finding no support for this exception in the statute’s language. The court stated, “The Legislature could easily have stated this exception had it been intended.”
The court also rejected Kubli’s argument that the phrase “or other interest in property or in an enterprise” qualifies the word “bond.” Instead, the court held that this phrase only qualifies the immediately preceding terms, “share, participation or other interest”.
The court noted that the bond found by Kubli evidenced a right in the bearer to payment, fitting the definition of an “instrument”.
Consequently, the bond cannot be returned to Kubli but must be retained in police custody pending delivery to “the person entitled thereto.”
The court addressed the pre-emption arguments, stating that the federal regulation relied upon by Kubli applied only to bearer securities not yet due and was therefore inapplicable.
The court further stated that, “In disputes not touching the rights and duties of the United States, questions of title to bearer securities of the Federal Government are to be decided by State law”.
Acknowledging the equities favoring Kubli’s position and the statute’s apparent purpose of encouraging responsible action by finders, the court emphasized it could not ignore the statute’s clear terms. The court recognized the need for legislative action to address the disposition of instruments when the owner cannot be ascertained.