Manning v. Spry

• Decision Date: 10 October 1903
• Citation: 96 N.W. 873,121 Iowa 191
• Parties: CALVIN MANNING, Guardian, Appellee, v. JOHN H. SPRY, Treasurer of Wapello County, AND WAPELLO COUNTY, Appellants
• Court: Iowa Supreme Court

96 N.W. 873

121 Iowa 191

CALVIN MANNING, Guardian, Appellee, v. JOHN H. SPRY, Treasurer of Wapello County, AND WAPELLO COUNTY, Appellants

Supreme Court of Iowa, Des Moines

October 10, 1903

Appeal from Wapello District Court.--HON. T. M. FEE, Judge.

SUIT in equity to restrain the defendant treasurer from collecting a tax assessed against plaintiff, as guardian of one John Schwabkey, insane, on property held by him as such guardian on the ground that the property was and is exempt from taxation. Defendants filed a demurrer to the petition, which was overruled, and, electing to stand on their demurrer, a decree was entered as prayed, and defendants appeal.

Affirmed.

D. H Emery, County Attorney, and A. W. Enoch for appellant.

Mitchell & Hunter and S. E. Adler for appellee.

OPINION

DEEMER, J.

The controlling facts, as gathered from the petition, are as follows: In the year 1839 one Blake was appointed guardian of the person and property of John Schwabkey, insane. He continued to act as such guardian until his death, in March of the year 1897. Thereupon plaintiff was appointed in his stead. The assessor of the city of Ottumwa, in Wapello county, listed and assessed against plaintiff money and credits to the amount of $ 4,500, and the board of supervisors levied taxes thereon amounting to over $ 300, which were regularly entered on the taxbooks of the county. In January of the year 1901 the defendant Spry, as county treasurer, entered on the taxbooks of the county taxes against plaintiff, on moneys and credits held by him during the years 1895, 1896, 1897, 1898, and 1899, amounting in all to something like $ 1,700. Quoting now from the petition: "(4) That the moneys so assessed, and on account of which said levies were made, were and are moneys paid to this plaintiff as guardian of said John Schwabkey, and to his predecessor in the guardianship, by the United States government, as a pension to said John Schwabkey, under the general pension laws of the United States, for and on account of physical disabilities received and sustained by the said John Schwabkey while a soldier in the regular army of the United States during the war of the Rebellion, and credits on which assessments were made and are made, and on account of which such levies were made, were and are promissory notes taken and held by plaintiff for money loaned by him, the money so loaned being received by him, and his predecessor in guardianship from the United States government on account of the pension allowed his ward as aforesaid. (5) That the United States government first allowed said John Schwabkey a pension on or about the 9th day of March, 1889, and on or about that time paid plaintiff's predecessor, as back and accrued pension due plaintiff's ward, $ 3,752. Afterwards, and on or about the 27th day of May, 1890, the government increased the rating of plaintiff's ward to $ 72 per month, and for him, on or about said time, paid to plaintiff's predecessor the sum of $ 11,244 as back and accrued pension due plaintiff's ward; and ever since said time plaintiff's predecessor and himself have received from the government $ 216 per quarter as pension from the government to their ward. That during all of the said time the said John Schwabkey has been insane and utterly helpless, and the expenses of his keep, care, attention, and medical attention, and the expenses of his guardianship, have largely exceeded any interest income that either the plaintiff's predecessor or himself could or have derived upon or from the aforesaid pension money by loaning out the same. That no part of the moneys have been used productively, other than being loaned out at interest, and the moneys and credits held now by plaintiff aggregate much less than the principal amount he and his predecessors have directly received from the government to their said ward; and their said ward does not now own, and has not owned since long prior to his being placed under guardianship, any money, property, or other valuable thing whatsoever, except the pension money received from the government, and promissory obligations taken for it when loaned out."

Plaintiff claims that these tax levies were each and all illegal and void, in that the moneys and credits were and are exempt from taxation under section 4747 of the Revised Statutes of the United States [U. S. Comp. St. 1901, page 3279]. He also pleads that the state has no power to tax pension money, or the immediate avails thereof; that such property is exempt from taxation under the laws of the United States and the Constitution and statutes of this state; and that taxes levied under state laws upon pension moneys in the hands of a pensioner, and received by him, under the laws of the United States government as a bounty on account of disabilities he received in the military service of the government, are in contravention of the soverenity of the United States government under the Constitution, in that they impair and burden the power of the government to reward for military or naval service by bounty or pension. The demurrer, of course, challenges each and all of these legal propositions, but admits the facts; hence we have to deal simply with the questions of law presented.

Section 4747 of the Revised Statutes, relied upon by the plaintiff reads as follows: "No sum of money due or about 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 the course of transmission to the pensioner entitled thereto, but shall inure wholly to the benefit of such pensioner." And section 1309 of our Code reads in this wise: "The term credit as used in this chapter includes every claim or demand due or to become due for money * * * and all money or property secured by deed * * * mortgage or otherwise, but pensioners of the United States or any of them, or salaries or payments expected for services to be rendered are not included in the above term." Construing these sections together, it is manifest that pension money is exempt, not only from execution, but also from taxation, so long as it remains in the shape of money to meet the daily wants and necessities of the pensioner. This must be so, else it would not inure wholly to the benefit of the pensioner. Moreover, when we consider the nature and object of this bounty, it is clear to our minds that, were there no statute expressly exempting such funds, they should not be held subject to taxation. There is an old phrase to the effect that "the power to tax is the power to destroy." There are, perhaps, some limitations of this doctrine, which would materially modify or explain it, but for present purposes it must be accepted as a truism. A pension is a mere bounty or gratuity given by the government in consideration or recognition of meritorious past services rendered by the pensioner or by some kinsman or ancestor. The policy of granting the same has prevailed both here and in the mother country from a very early period, and no burden has been more easily borne or zealously guarded than this. The first Continental Congress, by act of August 26, 1776, provided for pensions for soldiers and sailors serving in the Revolutionary War; and one of the earliest acts of the Congress was a pension bill passed September 29, 1789. 1 Stat. 95, chapter 24. Since that time a large number of general and special acts have been passed, and the government has been extremely liberal with those who have served it in time of need. The Constitution does not confer express power on Congress to pass such bills, but the right has been exercised under the grant of power to raise and support armies. As we view it, the power to grant pensions and bounties is...