WILBUR K. MILLER, Chief Judge.
Aetna Casualty and Surety Company appeals from an order of the District Court quashing its attachment of certain share or investment accounts in federal savings and loan associations which were established and augmented by Porter’s committee from moneys received for him from the United States Veterans’ Administration.
The situation which gave rise to the action should first be noted. Gore Properties, Inc., a corporation engaged in the real estate business in the District of Columbia, employed one William F. Hickey, as resident manager of the Ritz Apartments, one of its properties. In the summer of 1952, Hickey hired the present appellee, Harry Clifford Porter, a non-commissioned officer in the United States Air Force, to paint the interiors of several apartment units in the development. The manager knew nothing about Porter except that he had seen him in military uniform, and made no investigation into his background or character. He directed Porter to paint the apartment of one of the tenants, Miss Codie A. Whitman, a young lady who lived alone. Porter murdered Miss Whitman, for which he was subsequently indicted. His later trial resulted in a verdict of not guilty by reason of insanity.
After the murder, Miss Whitman’s administratrix brought a wrongful death action against Gore, its manager, Hickey, and the American Security and Trust Company, Gore’s collection agent, alleging they were negligent in hiring Porter [390]*390without any investigation into his background or character, and in failing properly to supervise and control him. The trial court directed verdicts in favor of all defendants, and the plaintiff appealed. This court reversed and remanded, as to defendants Gore and Hickey.
The defense of the wrongful death action had been undertaken by Aetna Casualty and Surety Company, under the provisions of a policy of liability insurance which it had issued to Gore. Upon remand, counsel for Aetna effected a settlement of the suit, and the company paid the settlement amount. Thereafter, under the subrogation provision of the Gore policy, Aetna sued Porter to recover the money it had paid in Gore’s behalf and was awarded judgment. On October 11, 1960, Porter’s appeal therefrom was dismissed as frivolous by an order of this court.
I After obtaining this indemnity judgment, Aetna attached the checking account of Porter’s committee and also the share or investment accounts in two federal savings and loan associations which stood in the name of the committee. The latter moved to quash the attachments on the theory that the bank checking account and the accounts in the federal associations were statutorily exempt from the claims of creditors,1 because they were, as he alleged, payments received by the committee under a law administered by the Veterans’ Administration. The District Court granted the motion to quash except as to the dividends which had been added to the accounts in the federal associations. Apparently conceding that the checking account was exempt, Aetna states in its brief that this appeal is from the District Court’s action “in quashing the attachments laid against the corpus of the investment accounts in the two savings institutions.”
Thus the question is whether share accounts in federal savings and loan associations held by a veteran’s committee are exempt from the claims of creditors because they were paid for with money received by the committee as “Payments of benefits due * * * under any law administered by the Veterans’ Administration * *
The Supreme Court had before it, in Trotter v. State of Tennessee,2 the question whether lands purchased by the guardian of a veteran with moneys received from the United States for the use of the disabled ward are subject to taxation. The World War Veterans’ Act, there involved, provided that “The compensation, insurance, and maintenance and support allowance payments under Parts II, III and IV, respectively, shall not be assignable; shall not be subject to the claims of creditors * * * and shall be exempt from all taxation.” Mr. Justice Cardozo, writing for a unanimous court, said, 290 U.S. at pages 356-357, 54 S.Ct. at page 139:
“ * * * The moneys payable to this soldier were unquestionably exempt till they came into his hands or the hands of his guardian. McIntosh v. Aubrey, 185 U.S. 122 [22 S.Ct. 561, 46 L.Ed. 834]. We leave the question open whether the exemption remained in force while they continued in those hands or on deposit in a bank. [Cases cited.] Be that as it may, we think it very clear [391]*391that there was an end to the exemption when they lost the quality of moneys and were converted into land and buildings. The statute speaks of ‘compensation, insurance, and maintenance and support allowance payable’ to the veteran, and declares that these shall be exempt. We see no token of a purpose to extend a like immunity to permanent investments or the fruits of business enterprises. Veterans who choose to trade in land or in merchandise, in bonds or in shares of stock, must pay their tribute to the state. * * ”
Although the Trotter case left open the question whether the exemption remains in force while the benefit payments remain in the veteran’s hand “or on deposit in a bank,” the Supreme Court thought it “very clear” that the exemption ends when the benefit payments are converted into permanent investments, land, buildings, bonds or shares of stock.
Congress answered the first of these reserved questions by providing that the payments shall not be liable to process “either before or after receipt by the beneficiary” in § 3 of the World War Veterans’ Act of 1935.3 The second question was answered by the Supreme Court in Lawrence v. Shaw4 5when it said concerning bank deposits stipulated to be “uninvested balances” of the government payments:
“ * * * We hold that the immunity from taxation does attach to bank credits of the veteran or his guardian which do not represent or flow from his investments but result from the deposit of the warrants or checks received from the government when such deposits are made in the . ordinary manner so that the pro-:' ceeds of the collection are subject to draft upon demand for the veteran’s use. In order to carry out the intent of the statute, the avails of the government warrants or checks must be deemed exempt until they are expended or invested.”
The Supreme Court had occasion to construe 38 U.S.C. § 3101 in Carrier v. Bryant.5 Relying on Trotter v. State of Tennessee and Lawrence v. Shaw, supra, the Court held that investments purchased with money received in settlement of benefits are not “payments due or to become due” which are statutorily exempt from the claims of creditors.
The immediate question is, therefore, whether the acquisition of share accounts in federal associations is an investment of the type the Supreme Court said is not exempt, or whether it is tantamount to an uninvested balance of government payments on deposit in a bank, which has been held to be exempt.
It appears that here the committee deposited in his ordinary checking account all government payments received by him.
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WILBUR K. MILLER, Chief Judge.
Aetna Casualty and Surety Company appeals from an order of the District Court quashing its attachment of certain share or investment accounts in federal savings and loan associations which were established and augmented by Porter’s committee from moneys received for him from the United States Veterans’ Administration.
The situation which gave rise to the action should first be noted. Gore Properties, Inc., a corporation engaged in the real estate business in the District of Columbia, employed one William F. Hickey, as resident manager of the Ritz Apartments, one of its properties. In the summer of 1952, Hickey hired the present appellee, Harry Clifford Porter, a non-commissioned officer in the United States Air Force, to paint the interiors of several apartment units in the development. The manager knew nothing about Porter except that he had seen him in military uniform, and made no investigation into his background or character. He directed Porter to paint the apartment of one of the tenants, Miss Codie A. Whitman, a young lady who lived alone. Porter murdered Miss Whitman, for which he was subsequently indicted. His later trial resulted in a verdict of not guilty by reason of insanity.
After the murder, Miss Whitman’s administratrix brought a wrongful death action against Gore, its manager, Hickey, and the American Security and Trust Company, Gore’s collection agent, alleging they were negligent in hiring Porter [390]*390without any investigation into his background or character, and in failing properly to supervise and control him. The trial court directed verdicts in favor of all defendants, and the plaintiff appealed. This court reversed and remanded, as to defendants Gore and Hickey.
The defense of the wrongful death action had been undertaken by Aetna Casualty and Surety Company, under the provisions of a policy of liability insurance which it had issued to Gore. Upon remand, counsel for Aetna effected a settlement of the suit, and the company paid the settlement amount. Thereafter, under the subrogation provision of the Gore policy, Aetna sued Porter to recover the money it had paid in Gore’s behalf and was awarded judgment. On October 11, 1960, Porter’s appeal therefrom was dismissed as frivolous by an order of this court.
I After obtaining this indemnity judgment, Aetna attached the checking account of Porter’s committee and also the share or investment accounts in two federal savings and loan associations which stood in the name of the committee. The latter moved to quash the attachments on the theory that the bank checking account and the accounts in the federal associations were statutorily exempt from the claims of creditors,1 because they were, as he alleged, payments received by the committee under a law administered by the Veterans’ Administration. The District Court granted the motion to quash except as to the dividends which had been added to the accounts in the federal associations. Apparently conceding that the checking account was exempt, Aetna states in its brief that this appeal is from the District Court’s action “in quashing the attachments laid against the corpus of the investment accounts in the two savings institutions.”
Thus the question is whether share accounts in federal savings and loan associations held by a veteran’s committee are exempt from the claims of creditors because they were paid for with money received by the committee as “Payments of benefits due * * * under any law administered by the Veterans’ Administration * *
The Supreme Court had before it, in Trotter v. State of Tennessee,2 the question whether lands purchased by the guardian of a veteran with moneys received from the United States for the use of the disabled ward are subject to taxation. The World War Veterans’ Act, there involved, provided that “The compensation, insurance, and maintenance and support allowance payments under Parts II, III and IV, respectively, shall not be assignable; shall not be subject to the claims of creditors * * * and shall be exempt from all taxation.” Mr. Justice Cardozo, writing for a unanimous court, said, 290 U.S. at pages 356-357, 54 S.Ct. at page 139:
“ * * * The moneys payable to this soldier were unquestionably exempt till they came into his hands or the hands of his guardian. McIntosh v. Aubrey, 185 U.S. 122 [22 S.Ct. 561, 46 L.Ed. 834]. We leave the question open whether the exemption remained in force while they continued in those hands or on deposit in a bank. [Cases cited.] Be that as it may, we think it very clear [391]*391that there was an end to the exemption when they lost the quality of moneys and were converted into land and buildings. The statute speaks of ‘compensation, insurance, and maintenance and support allowance payable’ to the veteran, and declares that these shall be exempt. We see no token of a purpose to extend a like immunity to permanent investments or the fruits of business enterprises. Veterans who choose to trade in land or in merchandise, in bonds or in shares of stock, must pay their tribute to the state. * * ”
Although the Trotter case left open the question whether the exemption remains in force while the benefit payments remain in the veteran’s hand “or on deposit in a bank,” the Supreme Court thought it “very clear” that the exemption ends when the benefit payments are converted into permanent investments, land, buildings, bonds or shares of stock.
Congress answered the first of these reserved questions by providing that the payments shall not be liable to process “either before or after receipt by the beneficiary” in § 3 of the World War Veterans’ Act of 1935.3 The second question was answered by the Supreme Court in Lawrence v. Shaw4 5when it said concerning bank deposits stipulated to be “uninvested balances” of the government payments:
“ * * * We hold that the immunity from taxation does attach to bank credits of the veteran or his guardian which do not represent or flow from his investments but result from the deposit of the warrants or checks received from the government when such deposits are made in the . ordinary manner so that the pro-:' ceeds of the collection are subject to draft upon demand for the veteran’s use. In order to carry out the intent of the statute, the avails of the government warrants or checks must be deemed exempt until they are expended or invested.”
The Supreme Court had occasion to construe 38 U.S.C. § 3101 in Carrier v. Bryant.5 Relying on Trotter v. State of Tennessee and Lawrence v. Shaw, supra, the Court held that investments purchased with money received in settlement of benefits are not “payments due or to become due” which are statutorily exempt from the claims of creditors.
The immediate question is, therefore, whether the acquisition of share accounts in federal associations is an investment of the type the Supreme Court said is not exempt, or whether it is tantamount to an uninvested balance of government payments on deposit in a bank, which has been held to be exempt.
It appears that here the committee deposited in his ordinary checking account all government payments received by him. He paid out of that account the ordinary and necessary expenses incident to the veteran’s care and maintenance, and built up the accounts in the federal associations by drawing from the checking account such sums as he thought could be withdrawn without jeopardizing its adequacy for the payment of current expenses. This was done under the authority of Rule 23 of the District Court which governs the investment of trust funds.6
[392]*392Obviously the committee created the accounts in the federal associations so that he might obtain for Porter some income from funds not immediately needed for his maintenance, which could not be obtained so long as such funds remained on deposit in his ordinary cheeking account. From this we conclude that the committee acquired the federal associations’ shares by way of investing that portion of the government payments which he considered to be surplus income over and above ordinary and necessary expenses.
It may not be generally known, but it is nevertheless true, that federal savings and loan associations are not obligated to permit withdrawals on demand, but only to honor withdrawal requests within thirty days. This fact not only sharply distinguishes the share accounts from ordinary bank deposits by preventing their use as checking accounts, but also stamps them with the characteristics of investments. A share account in a federal association is distinguishable from an ordinary bank savings deposit in other respects: the owner of the share account becomes, by virtue of that ownership, a voting member of the association and thus more nearly comparable to a stockholder of a bank than one of its depositors; and we have shown that, as a share account owner, he is not a creditor of the association as a depositor is a creditor of the bank. Indeed the Home Owners Loan Act under which a federal association is created describes the purpose as “to provide local mutual thrift institutions in which people may invest their funds * * 12 U.S.C.A. § 1464. (Emphasis added.) While it is not a controlling consideration, it should be noted that the yield on share accounts in a federal association is generally higher than on deposits in savings banks. Cf. Wisconsin Bankers Association v. Robertson, 1961, 111 U.S.App.D.C. —, 294 F.2d 714.
We think it clear that the committee’s accounts in the federal savings and loan associations were investments subject to the claims of creditors. It follows that the District Court erred in quashing the attachments. Its order will be set aside and the case will be remanded with instructions to deny the motion to quash and to grant the motion for judgment subjecting the share accounts to appellant’s judgment debt.
It is so ordered.