Flanders v. Adams

10 Ohio Law. Abs. 325, 28 Ohio N.P. (n.s.) 542, 1931 Ohio Misc. LEXIS 1198

• Court: City of Dayton Municipal Court
• Decided: August 14, 1931
• Docket: No. 87011
• Status: Published

Opinion

MARTIN, J.

Section 308 of the World War Compen-. sation Act, which is applicable in this case reads as follows:

“No sum payable under this chapter to a veteran or his dependents, or to his estate, or to any beneficiary named under Part V of this chapter, no adjusted service certificate, and no proceeds of any loan made on such certificate, shall be subject to attachment, levy or seizure under any legal or. equitable process or to national or state taxation” * * *

For the sake of distinguishing this case from a pension money case and illustrating the reasoning of the Supreme Court of the United States, the court will refer to Section 4747 of the Rev. Stat. of the U. s’. regulating the exemption of pension money, which reads as follows:

“No sum of money due, or' to become due:, to any pensioner shall be liable to attachment, levy or seizure by or under any legal or equitable process whatever, whether the same remains with the Pension Office, or any office or agent thereof, or is in the course of transmission to the person entitled thereto, but shall accrue wholly to the benefit of such pensioner.”

Justice McKenna of the Supreme Court in the case of McIntosh v Audrey, 185 U. S., 122, in construing the pension section above set forth, held that the language “due or to become due” had reference to that situation which exists before the pension money is actually paid to the pensioner, and that consequently, pension money after being paid to the pensioner is not exempt from execution.

Section 308 of the World War Compensation Act and not the Pension Act herein-above referred to is controlling of the decision in this case. The applicable part of : said section reads, and, obviously, the phrase “proceeds of any ,loan” is much broader than the phrase “no sum of money*1 due or to become due,” as used in the Pension Act. “Proceeds” is defined by Webster’s New International Distionary as

“No proceeds of any loan made on such : certificate shall be subject to attachment, le^y or seizure” * * *.

“That which results, proceeds, or accrues from some possession or transaction; especially, the amount realized from a sale of property; as, the proceeds of a sale, or a year’s labor, etc.”

Bouvier’s Law Dictionary defines> “Proceeds” as

“money or articles of value obtained from the sale of property.

Goods purchased with money arising from the sale of other goods, or obtained on their credit are proceeds of such goods. 2 Parson’s 'Maritime Law 201. Bened. Adm. 290.

The sum, amount, or value of goods sold, or converted into money. — Wharton’s Dictionary.

Proceeds does not necessarily mean money. Phelps v Harris, 101 U. S. 380.”

Corpus Juris, Vol. 50, pages 427, 28, 29, 30. defines “Proceeds”

“as a word of not any fixed or definite meaning, but of varying and loose significance, employed with different meanings of equivocal import and great generality. It does not necessarily mean money or cash. Its meaning in each case depends on its context, depends very much on the connection in which it is employed and the subject matter to which it is applied. Strictly speaking, it implies something or leads out of, or from another thing;”

To illustrate the general intention of. Congress with reference to monies paid to World War veterans and their beneficiaries under the various acts passed for their benefit, the court will refer to the War Risk Insurance Act, Section 28 of which reads as follows:

“The allotments and family allowances, compensation and insurance payable under Articles II, III and IV, respectively, shall not be assignable; shall not be subject to the claims of creditors otf any person to whom an award is made under Articles II, III, or IV; and shall be exempt from all taxation.”

The case of Payne, Adm. v Jardon, 152 Ga. 367, in interpreting the above section held in effect, that money paid over to a beneficiary, although deposited by her in a bank, is* not subject to garnishment for the reason that the intent and purport of the act is not merely to protect an allotment made under the act from legal process while in the hands of the government, or its agencies, but to preserve the allotment itself from legal process against the beneficiary except as against the claims of the government itself.

In view of the broad menaing and usage of the word “proceeds,” the court is of the opinion that Congress in enacting Section 308 of the World War Compensation Act intended' that the money loaned to a veteran on his adjusted service certificate should remain proceeds so long as the veteran retains his ownership and control of the same as an entity separable and distinct from his other property.

Unquestionably, the cash proceeds of a loan realized hf a veteran by discounting or cashing his government draft so long as the cash remains in his possession or control are exempt from attachment, levy or seizure under any legal or equitable process. Or if the proceeds of a veteran’s loan are de-. posited in a trust account, making the bank his trustee, such funds without question would be exempt from attachment, levy or seizure.

In this case, however, defendant placed the entire proceeds of his loan in checking and savings accounts. Such accounts, according to the decisions of Ohio create a debtor-creditor relationship between the bank and the depositor, and the bank is in no way a bailee or trustee of such funds. On the other hand, the money deposited by the defendant was payable on demand, and the defendant, in a larger non-technical sense, was the owner of such funds.

Corpus Juris, page 641, paragraph (326) H, reads in part:

“And while the relation between a bank and a depositor in respect to a general deposit is generally regarded as that of a debt- or and creditor, yet in. another sense the depositor is the owner of the deposit, in that he can demand payment at any time.”

Recognizing the fact that defendant’s deposits in a checking and savings account established a debtor-creditor relationship between the bank and defendant under'Ohio decisions, the court is of the opinion that 811,738 GC, enacting that money due a person from a corporation (debtor-creditor relationship) is not exempt and is subject to execution, is in conflict with Section 308 of the World War Compensation Act as construed by this eóurt. Under such circumstances the ■ federal law controls by virtue of paragraph 2, Article 6 of the United States Constitution.

See Tax Commission v Rife, 119 Oh St, 83 at bottom of page 90 and top of page 91.

Keeping in mind the intention •nf Congress as manifested by the use of the word “proceeds” in Section 308 of the World War Compensation Act, the court is of the opinion that the money deposited by defendant in the Winters National Bank did not cease to be proceeds merely by virtue of such deposits. It was the intention of Congress that the veteran have the absolute and exclusive right to use the money loaned him as he sees fit, and for this court to hold that he forfeited such right through a mere bank deposit would render ineffective and abrogate the substantial spirit and purpose of the Act.

Defendant’s deposits of his loan money were not mixed or confused with other money or property and were definitely traced and identified as being the proceeds of a loan on his adjusted service certificate.

The courWherefore is of the opinion that defendant by merely depositing his loan money in checking and savings accounts in a bank bound to pay the same on demand, did not thereby lose his right to claim it exempt from attachment, levy or seizure, as provided by Section 308 of the Compensation Act.

Defendant’s motion to dissolve the attachment will'be sustained.