Andrew v. Colo Sav. Bank

• Decision Date: 03 April 1928
• Docket Number: No. 38759.,38759.
• Parties: ANDREW, STATE SUPERINTENDENT OF BANKING, v. COLO SAV, BANK (RIDGWAY, CLAIMANT).
• Court: Iowa Supreme Court

205 Iowa 872

219 N.W. 62

ANDREW, STATE SUPERINTENDENT OF BANKING,

v.COLO SAV, BANK (RIDGWAY, CLAIMANT).

No. 38759.

Supreme Court of Iowa.

April 3, 1928.

Appeal from District Court, Story County; Sherwood A. Clock, Judge.

The proceeding was instituted for the purpose of establishing a preferred claim in John H. Ridgway, based upon a deposit by him of his pension money in the Colo Savings Bank before that institution closed its doors and went into the hands of the Superintendent of Banking, as receiver therefor. From a judgment allowing the application for preference, the Receiver appeals. Reversed.John Fletcher, Atty. Gen., and Welty & Soper, of Nevada, Iowa, for appellant.

John R. Larson, of Nevada, Iowa, for appellee.

KINDIG, J.

There is little dispute concerning the facts, and the question before us for determination is very largely one of law.

It is conceded that the Colo Savings Bank was an active and going concern prior to the 13th day of February, 1926, and during its period of operation John H. Ridgway, the appellee, on or about the 5th day of February of that year, deposited in the banking establishment $1,227.50, and he received at that time the following certicate therefor:

“Colo Savings Bank.

+------------------------------------------+
                ¦Certificate of Deposit.¦72-1257. No. 8762.¦
                +------------------------------------------+
                

Colo, Iowa, Feb. 5, 1926.

John H. Ridgway has deposited in this bank twelve hundred twenty-seven and 50/100 dollars ($1,227.50) payable in current funds to the order of himself on return of this certificate properly indorsed 6 or 12 months after date with interest at 5 per cent. per annum from the time specified only.

Albert Powers, Assistant Cashier.”

That “deposit” represented pension money belonging to the appellee, and was obtained by him from the United States government for his services rendered it during the Civil War. When receiving this money, the bank knew the source from which it came and understood that it was “pension money.” These funds were thus placed in the depository without any other contract or agreement.

On February 13th, the Colo Savings Bank was declared insolvent and the state superintendent of banking was duly appointed receiver to take charge thereof. Appellee, in due time, filed his claim for a preference, basing it upon the proposition that his “deposit” represented by said “certificate” was entirely composed of “pension money,” as aforesaid, and therefore amounted to, and entitled him to the benefits of, a “preferred” claim.

This is the problem now confronting us for solution.

I. At the outset, it is argued by the claimant that “pension money” is exempt, and therefore he is afforded a special privilege in the distribution of the assets of this defunct bank. For an understanding of the issues here involved, it is necessary to study the very purpose and object of the “pension” relied upon.

Section 4747 of the United States Revised Statutes (38 USCA § 54) provides:

“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 officer or agent thereof, or is in course of transmission to the pensioner entitled thereto, but shall inure wholly to the benefit of such pensioner.”

And the 1924 Code of Iowa, § 11761, contains this:

“All money received by any person, a resident of the state, as a pension from the United States government, whether the same shall be in the actual possession of such pensioner, or deposited, loaned, or invested by him, shall be exempt from execution, whether such pensioner shall be the head of a family or not.”

[1] Manifestly, the intention of the state and the federal government was to so surround the pensioner with protection that his creditors would not be able to seize the subject-matter of the bounty and thus deprive him of its use. In other words, during the course of human events, the thought became developed among states and nations that for the good of mankind there are instances when it is best that creditors go unpaid in order that certain individuals in society may have a particular source of income dedicated to personal or family sustenance, maintenance, and enjoyment. Primarily, the aim is to defend against the onslaught of creditors. Whose creditors? Clearly those of the debtor who has a right to assert the exemption, and none other.

Throughout the years of its application, this law has been confined to attempts of “creditors” to collect indebtednesses due them from the “pensioner,” through the process of attachment, garnishment, execution, or some other system of levy and sequestration. For examples of this interpretation, we find among many others, the cases of McIntosh v. Aubrey, 185 U. S. 122, 22 S. Ct. 561, 46 L. Ed. 834;Crow v. Brown, 81 Iowa, 344, 46 N. W. 993, 11 L. R. A. 110, 25 Am. St. Rep. 501; and Treadway v. Board of Directors of Veterans' Home of California, 14 Cal. App. 75, 111 P. 111. While these authorities are not exactly in point on the precise controversy before us, yet they are illustrative of many other similar “applications.” Section 11761, supra, is contained in chapter 499 of our Code, embracing exemptions from execution. Consequently it is consistent with and within the purview of the legislative idea, as well as in harmony with the numerous judicial pronouncements, to hold that the exemption in this instance is limited in its scope to security against the encroachments of appellee's personal “creditors” only. Before he can have a “creditor,” he must owe a debt. Was his property taken in the case at bar to satisfy a financial obligation which he owed to any one? Therein lies the criterion for a decision here. An answer to the preceding interrogatory will determine this litigation.

[2][3] II. As a result of the “deposit,” if it were general, there was created between appellee and the bank the relationship of debtor and creditor. Officer v. Officer, 120 Iowa, 389, 94 N. W. 947, 98 Am. St. Rep. 365;Hunt v. Hopley, 120 Iowa, 695, 95 N. W. 205;Leach v. Beazley, 201 Iowa, 337, 207 N. W. 374;Palo Alto County v. Ulrich, 199 Iowa, 1, 201 N. W. 132. Who then was the debtor and who the creditor? Obviously, the bank, in such event, owed appellee. Forsooth, the latter “owed” no one through this transaction. So when, during the administration of the insolvent institution's affairs, the receiver, by appropriating the assets, was thereby using the...