Bednar v. Carroll

• Decision Date: 05 May 1908
• Citation: 116 N.W. 315,138 Iowa 338
• Parties: CHARLES BEDNAR, Appellant, v. C. D. CARROLL, as Treasurer of Linn County
• Court: Iowa Supreme Court

116 N.W. 315

138 Iowa 338

CHARLES BEDNAR, Appellant, v. C. D. CARROLL, as Treasurer of Linn County

Supreme Court of Iowa, Des Moines

May 5, 1908

Appeal from Linn District Court.--HON. B. H. MILLER, Judge.

ACTION in equity to enjoin the enforcement of an assessment to plaintiff of property omitted from taxation. There was a judgment for defendant, and plaintiff appeals.

Affirmed.

Lewis Heins, for appellant.

Voris & Haas, for appellee.

OPINION

MCCLAIN, J.

In March, 1903, in pursuance of proper notice, the defendant as treasurer assessed against plaintiff taxes in the sum of $ 594.49 for moneys and credits of plaintiff omitted from taxation for the years 1898 to 1902, inclusive, the valuation of the moneys and credits thus omitted being specified in sums exceeding $ 10,000, save for the year 1898, for which it was fixed at an amount slightly exceeding $ 4,000. Plaintiff appeared in response to the notice, and had an opportunity to be heard before the assessment was made but he did not appeal from the assessment, and in this action asks that the enforcement of the assessment be enjoined, on the ground that the moneys and credits thus assessed as omitted property consisted exclusively of pension money received from the federal government, which is exempt under the provisions of Code, sections 1309, 4009, and Rev. St U.S. section 4747. Plaintiff testified that in 1882 he received a back pension from the federal government in the sum of $ 185, and from that on a pension at the rate of $ 12 per month, and that he kept this pension money invested at interest as a separate fund, adding thereto interest received from such investment, which interest amounted as he variously estimated it in his testimony to from $ 3,000 to $ 10,000. He claimed that his entire expenses for living and other purposes were defrayed during these years out of his earnings as a laborer and out of the interest and income on other moneys and property, and to a slight extent out of the interest on pension money, but that no portion of his pension money was ever expended. He did not claim, however, that the moneys and credits consisting of notes secured by mortgage on which the assessment for omitted property was based wholly represented pension money, or the interest thereon, nor did he claim that in the investment of his pension money he kept it separate from money received from other sources. It is sufficient for the purpose of disposing of the case to accept his general statement made without proof as to specific items of investment by way of principal or interest that he had received $ 4,000 as pension money, and that with interest added to and invested with such pension money he had a fund of $ 7,000 exempt from assessment, and that this $ 7,000 was included in the moneys and credits for which the treasurer made the assessment complained of.

In the first place, we find no authority for allowing an exemption from taxation of the interest received on pension money. The provision of the federal statute is that no sum of money due or about to become due to any pensioner shall be liable to seizure under process while remaining in the pension office or with any officer or agent thereof, or in the course of transmission to the pensioner, but shall inure wholly to the benefit of such pensioner. This statutory provision is fully satisfied when the pension money is allowed to pass into the hands of the pensioner to be used by him as funds received from other sources. The State statute is not broader in its terms, for it simply provides that pensions are not to be included in the term "credits" which are subject to taxation. See Code, section 1309. Under section 4009 pensions received are exempt from execution whether in the actual possession of the pensioner or deposited, loaned, or invested by him. Prior to the enactment of this statutory provision we had held that property exclusively acquired by the investment of pension money was exempt from execution under the provisions of the federal statute. Crow v. Brown, 81 Iowa 344, 46 N.W. 993, same case, 86 Iowa 741. But in Smyth v. Hall, 126 Iowa 627, 102 N.W. 520, we said that the statutory provision embodying this rule did not operate to exempt the increase or proceeds derived from the property exempted to the debtor as procured with pension money. We find no authority for exempting to the pensioner the interest and interest upon interest derived from investments of pension money. If the profits derived by the investment of pension money in property are not exempt from execution, there seems to be no reason for holding that interest derived from the loaning of pension money shall be exempt from taxation. Conceding, then, for the purpose of this case, that plaintiff, although mingling his pension money with money derived from other sources, might claim exemption to the aggregate extent of the pension money received and not expended out of his total moneys and credits, we reach the conclusion that under the evidence this exemption could not exceed $ 4,000, which he claims is the total amount of pension money received.

We have, then, this situation: Plaintiff was taxed in the sum of $ 504.49 on moneys and credits omitted from assessment for previous years, as shown by a tabulated statement of notes secured by mortgages held by him during the years in question, amounting to sums largely in excess, not only of the total amount of his pension money received, but for all the years save one largely in excess of the entire fund which he claims to have had on hand as the result of the investment of pension money and...