In re Bagnall's Guardianship

• Decision Date: 14 October 1947
• Docket Number: 47055.
• Citation: 29 N.W.2d 597,238 Iowa 905
• Court: Iowa Supreme Court
• Parties: In re BAGNALL'S GUARDIANSHIP. BAGNALL v. IOWA-DES MOINES NAT. BANK & TRUST CO.

29 N.W.2d 597

238 Iowa 905

In re BAGNALL'S GUARDIANSHIP.

BAGNALL v. IOWA-DES MOINES NAT. BANK & TRUST CO.

No. 47055.

Supreme Court of Iowa

October 14, 1947

E W. McManus, of Keokuk, for appellant.

Parrish Guthrie, Colflesh & O'Brien, of Des Moines, for appellee.

BLISS Justice.

The primary question for determination on this appeal is whether the property of the mentally incompetent, divorced husband, in the possession of his guardian, which has been acquired with benefit payments of the kind noted above, is exempt, under either the statutes of the United States or the statutes of Iowa, from the enforced payment of the judgment of the plaintiff-wife for alimony.

This question has never before been presented to this court.

The facts are not in dispute. Daniel L. Bagnall served in the armed forces of the United States in 1918 and 1919. The plaintiff and he were married on December 28, 1921, and they lived together as wife and husband for five or six years. He did not provide for her and because thereof they lived with her parents. He abused her by physical violence and mistreatment, by cursing and improper language, by neglect and absence, and by addition, acquired subsequent to the marriage, to the use of intoxicating liquor and drugs.

He was adjudged insane in 1928, and since September of that year has been continuously a patient in the Veterans' Hospital at Knoxville, Iowa. The defendant was appointed guardian of his property by the District Court of Polk County, Iowa, on June 3, 1929. Through the Veterans' Administration there had been paid to the defendant and its predecessor guardian, to June 12, 1946, disability compensation or pension in the sum of $17,574.06, war risk insurance in the sum of $6,552.35 and adjusted service compensation or bonus, in the sum of $603, or a total of $24,729.41. The only property in the hands of the guardian was acquired with these payments. At the time of the trial it had in its possession as the property of its ward, 2 1/2% Treasury Bonds of the United States of the par value of $2,250, carried at $2,255, due September 15, 1932, optional September 15, 1950; United States Savings Bonds, Series D, due December 1, 1949, of $400 maturity value, carried at $336; United States War Savings Bonds, Series G, of $16,300 par value, of various denominations, maturities and numbers; a United States Government Insurance policy for $5,000 in the name of Daniel L. Bagnall, carried at $1. These securities totalled $18,892. Each and all of them represent investments made by the guardian or its predecessor from the proceeds of disability compensation, pension money, war risk insurance and adjusted service compensation or bonus.

On August 30, 1946, plaintiff obtained a decree of divorce from Bagnall in the District Court of Lee County, Iowa. An authenticated copy of the decree was received in evidence, without objection. It appears therefrom the court found that the husband, after the marriage had become addicted to habitual drunkenness in the use of intoxicating liquors and drugs, and had been guilty of such cruel and inhuman treatment as to endager plaintiffs' life and health; that plaintiff was 46 years old and defendant was about 50 years of age; that plaintiff lived with her parents and had no earning capacity and no property of any kind, and was entitled to permanent alimony; and that the husband was the owner of cash and securities amounting to $19,160.11. Plaintiff was granted a decree of absolute divorce, and a judgment against her husband-defendant in the sum of $9,580, as permanent alimony.

On November 1, 1946, plaintiff filed the application herein, alleging in substance the facts above set out, praying for a hearing, and an order requiring the defendant to pay plaintiff out of its said guardianship funds the sum of $9,577.50, with interest.

On November 9, 1946, defendant filed resistence to the application, alleging the army service of its ward, his honorable discharge, his disability in the service, his mental incompetency and guardianship, and the award to him of disability compensation or pension and monthly payments of war risk insurance as provided in the World War Veterans' Act, Title 38 U.S.C.A. § 421 et seq., Chap. 10. The resistance admitted the government payments as alleged in the application, and cash or property in which the payments had been invested of the value of $19,160.11, as shown by its last report of June 12, 1946; it alleged that all nonexempt funds, and earnings on exempt funds as invested, had been disbursed by the guardian by order of court, and that all the funds and property now in the hands of the guardian were exempt with respect to the judgment for alimony, by reason of section 454a, Title 38 U.S.C.A., Chap. 10, which applies to the disability compensation or pension and to the war risk insurance payments, and by reason of section 618, Title 38 U.S.C.A., Chap. 11, which applies to adjusted service compensation or bonus, and by reason of section 627.8, Code of Iowa 1946, which exempts pension money from execution, and section 511.37, Code of Iowa 1946, which exempts a benefit or indemnity paid under an accident, health or disability policy to the assured.

For reply to the resistance plaintiff admitted all allegations therein set forth above, but denied the exemption of the property as against the judgment for alimony.

In its judgment of December 12, 1946, denying the application the court held: 'Without setting forth the exemption statutes cited in the guardian's resistance, it is manifest that, construing the Federal and State statutes together, pension money in the form of money or investments, is exempt from execution in Iowa. There can be no doubt that under the applicable Federal statutes, the moneys paid to the veteran are exempt. Under the Federal statutes and the constructions of our Supreme Court, a guardian while holding funds of an incompetent veteran is nothing more than an agent for the Government and such funds have therefore not reached the hands of the veteran. In addition to the interpretation of the Federal statute by our State court, the pension funds is exempt by virtue of the State statute, which provides: (quoting sect. 627.8, Code 1946). The pension money received by the veteran or his guardian, whether 'deposited, loaned or invested by him,' is exempt from execution. The application to subject the funds and property in the hands of the guardian to applicant's judgment is an aid to and amounts to an execution and is contrary to the exemption statute.' Omitting preliminary maters, the above-noted quotation is the judgment in full. Plaintiff's motion to set aside the judgment and for new trial, based upon various grounds alleging error in holding the property to be exempt, was denied.

Plaintiff assigns four errors upon which she relies for reversal: 1. error in holding the investments exempt under Federal statutes; 2. error in holding the guardian was an agent of the Federal Government and that the guradianship funds are exempt because they have not reached the hands of the veteran; 3. error in holding the investments exempt under the Iowa statutes; 4. error in holding that investments derived from pension funds can under no circumstances be subject to execution in Iowa.

No question is presented in reference to the validity or the invalidity of the decree of divorce or the judgment for alimony.

The defendant bases its resistance to plaintiff's application, and the trial court based its decision, upon both Congressional Acts and the statutes of Iowa, noted in the resistance filed by defendant. We set out below the pertinent parts of the Acts. The Federal Acts, now in force, may be found in Title 38--Pensions, Bonuses, and Veterans' Relief--U.S.C.A. Chapter 10 thereof--World War Veterans' Relief--is commonly cited as the 'World War Veterans' Act, 1924', June 7, 1924, c. 320, sect. 1 et seq., 43 Stat. 607.

The payments of disability compensation ($17,574.06) and war risk insurance ($6,552.35) were received by Bagnall's guardian under sect. 454 of Chap. 10, Title 38 U.S.C.A. This section provided: 'The compensation, insurance, and maintenance and support allowance payable under titles II (Disability Pensions), III (Insurance), and 1V (Vocational Rehabilitation), respectively, shall not be assignable; shall not be subject to the claims of creditors of any person to whom an award is made under Titles II, III, or IV; and shall be exempt from all taxation: * * *'. Act of June 7, 1924, supra.

An earlier Act of Congress relating to pensions to Civil War veterans, was section 4747, Revised Statutes of the United States, passed March 3, 1873, 38 U.S.C.A. § 54, Chap. 2. This section provided that: '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 pension entitled thereto, but shall inure wholly to the benefit of such pensioner.'

Both section 4747 of the Revised Statutes, supra, 38 U.S.C.A. § 54, and section 454, supra, of Chap. 10, 'World War Veterans' Act, 1924', 38 U.S.C.A. § 454, were repealed by Act of August 12, 1935, c. 510, sect. 3, 49 Stat. 409, and section 454a of chap. 10, Title 38 U.S.C.A., was enacted, as follows:

'§ 454a. Assignability and exempt status of payments of benefits. Payments of benefits due or to become due shall not be assignable, and such payments made to, or on account of, a beneficiary under any of the laws relating to veterans shall be exempt from taxation, shall be exempt from the claims of creditors, and shall not be liable to attachment levy, or seizure by or under any...