Pefly v. Reynolds

• Decision Date: 12 January 1924
• Docket Number: 24,874
• Citation: 115 Kan. 105,222 P. 121
• Parties: ELLA PEFLY, Appellant, v. W. E. REYNOLDS, as Sheriff, and W. L. CROWE, Appellees
• Court: Kansas Supreme Court

222 P. 121

115 Kan. 105

ELLA PEFLY, Appellant, v. W. E. REYNOLDS, as Sheriff, and W. L. CROWE, Appellees

No. 24,874

Supreme Court of Kansas

January 12, 1924

Decided January, 1924.

Appeal from Neosho district court; SHELBY C. BROWN, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

EXEMPTIONS--Proceeds of Fraternal Insurance Policies--Land Purchased by Beneficiary With Proceeds of Exempt Money Not Exempt to Such Beneficiary. Under statutes providing that life insurance policies, including fraternal beneficiary certificates, shall inure to the sole use of the beneficiaries and shall be free from all taxes and the claims of creditors of the persons named in such policies, and that the money paid by any fraternal beneficiary association shall not be appropriated by any legal or equitable process to pay any debt of the beneficiary, no exemption is created with respect to property purchased by the beneficiary with money paid upon a life insurance policy or beneficiary certificate.

J. W Finley, J. A. Allen, B. M. Dunham, and T. R. Evans, all of Chanute, for the appellant.

R. B. Smith, of Erie, and C. M. Brobst, of Chanute, for the appellees.

OPINION

MASON, J.:

W. L. Crowe obtained a judgment for $ 600 against Ella Pefly. An execution was issued and levied upon land owned by her. She brought this action to enjoin the sale on the ground that the land was exempt because it had been purchased by her with a part of the proceeds of fraternal insurance upon the life of her husband, paid to her November 22, 1904. A temporary injunction was denied on these facts and she appeals.

The plaintiff invokes the statutes reading:

"In case any life insurance company, fraternal order or beneficiary society shall have issued or shall hereafter issue any policy or policies of insurance or beneficiary certificate upon the life of an individual and payable at the death of the assured, or in any given number of years, to any person or persons having an insurable interest in the life of the assured, all such policies and their reserves of the present value thereof shall inure to the sole and separate use and benefit of the beneficiaries named therein, and shall be free from the claims of the assured, and shall also be free from the claims of the person or persons effecting such insurance, their creditors and representatives, and shall be free from all taxes and the claims and judgments of the creditors and representatives of the person or persons named in said policy or policies of insurance." (Gen. Stat. 1915, § 5237. See, also, R. S. 40-327.)

"The money or other benefit, charity, relief or aid to be paid, provided or rendered by any association authorized to do business under this act [that relating to fraternal beneficiary associations] and the reserve or emergency fund of such association shall not be liable to attachment by trustee, garnishee, or other process, and shall not be seized, taken, appropriated or applied, by any legal or equitable process or by operation of law, to pay any debt or liability of a certificate-holder or of any beneficiary named in the certificate, or any person who may have a right thereunder, and shall be exempt from all taxes." (Gen. Stat. 1915, § 5411; R. S. 40-714.)

The second of these sections has been held to protect the money paid to a beneficiary after it has been deposited in a bank. (Emmert v. Schmidt, 65 Kan. 31, 68 P. 1072.) The section first quoted is obviously no more favorable to the claims of the plaintiff, and need not be separately considered.

Where one deposits money in a bank the relation established is of course that of debtor and creditor, the title to the specific currency passing. Technically the transaction may be considered as an investment of the cash in a demand against the bank, by which its form is changed; but in a practical sense the depositor is regarded as retaining the control of the money, just as one who deposits in a bank the money of others entrusted to his keeping is not treated as having converted it. (Phillips v. Bank, 98 Kan. 383, 158 P. 23.) Therefore it does not follow from the decision in the Emmert-Schmidt case that property purchased with money paid on a life insurance policy is itself...