Shippee v. Commercial Trust Co.

• Decision Date: 12 July 1932
• Parties: SHIPPEE, Bank Com'r, v. COMMERCIAL TRUST CO. In re CALLERY.
• Court: Connecticut Supreme Court

161 A. 775

115 Conn. 326

SHIPPEE, Bank Com'r, v. COMMERCIAL TRUST CO.

In re CALLERY.

Supreme Court of Errors of Connecticut.

July 12, 1932

Appeal from Superior Court, Hartford County; Newell Jennings, Judge.

Proceeding by Lester E. Shippee, Bank Commissioner, against the Commercial Trust Company. On application of the receiver or the defendant for advice as to the status of certain certificates of deposit issued to James T. Callery, as conservator of the estate of James A. Callery, an incompetent person. The superior Court held that the claimant was not entitled to priority, and he appeals.

No error.

HAINES and AVERY, JJ., dissenting.

John A. Danaher, of Hartford, for appellant.

Donald Gaffney, of New Britain (B. F. Gaffney, of New Britain, on the brief), for appellee.

BANKS J.

James A. Callery was a veteran of the World War and as such became entitled to certain compensation and disability benefits under the " World War Veterans' Act 1924," as amended (38 USCA § 121 et seq.). In 1921 he was found to be mentally incompetent and was committed to the Connecticut Hospital for the Insane at Middletown, and his father, James T. Callery, was appointed conservator of his estate. From time to time payments of compensation and disability due to James A., Callery were made by checks payable to the " Estate of James Callery, James T Callery, Conservator," in the total amount of $7,000, which were deposited by the conservator in the savings department of the Commercial Trust Company. Thereafter the conservator withdraw these funds from the savings department and invested them in four " industrial certificates of deposit" of the trust company which were issued by it " to the estate of James Callery, James T. Callery, Conservator." The Commercial Trust Company is in receivership, and demand was made upon the receiver that the certificates of deposit receive priority, and the funds represented thereby be paid over to the conservator of James A. Callery. The trial court held that these funds were not entitled to a preference from the assets of the defendant in the hands of the receiver.

The position of the claimant is that, in receiving as conservator funds payable to his ward under the federal statutes because of his disability, he is acting merely as the agent of the government, and that the moneys thus payable are at all times funds of the United States in transit to the veteran until the latter actually receives them himself. He claims therefore that, since these funds, payable to his ward and received by the conservator on his behalf, never came into the actual possession of the ward, they are still moneys of the United States in transit to the ward, and as such entitled to priority in the distribution of the assets of the defendant trust company.

The World War Veterans' Act 1924, c. 320 § 21, 43 Stat. 613, as amended, USCA title 88, § 450, provides in part as follows: " Where any payment under this chapter is to be made *** to a person mentally incompetent, or under other legal disability adjudged by a court of competent jurisdiction, such payment may be made to the person who is constituted guardian, curator, or conservator by the laws of the State or residence of the claimant, or is otherwise legally vested with responsibility or care of the claimant or his estate." Section 454, title 38, USCA, provides in part as follows: " The compensation, insurance, and maintenance and support allowance payable *** [under the act] shall not be assignable; shall not be subject to the claims of creditors of any person to whom an award is made *** and shall be exempt from all taxation." Section 450 of the Code further provides that if the conservator is not in the opinion of the Director of the Veterans' Bureau properly executing the duties of his trust, the director may appear in the court which has appointed such fiduciary and make presentation of such matter to the court, that the director may in his discretion suspend payments to a conservator who neglects to render an account, and that any part of the compensation, the payment of which is thus suspended, may be paid temporarily to the person having custody and control of the incompetent. It also provides that any funds in the hands of a conservator which, under the laws, of the state wherein the veteran had his last legal residence, would escheat to the state, shall escheat to the United States. These and other analogous provisions of the act evidence the solicitude of the Congress for the welfare of the veteran who has become mentally incompetent to manage his own affairs, and an intention to safeguard the payment to him of the compensation and disability benefits to which he might be entitled under the act so that they should not be dissipated or the veteran deprived in any way of their full benefit. We do not, however, find in the act any intention, express or implied, that the title to the United States after they have been paid over to his conservator, and until they have been actually paid into the hands of the ward, or disbursed for his benefit. We find no justification in the act for the claim that the conservator acts merely as the agent of the government through whom the funds are paid to his ward. A conservator is appointed by the probate court for one who is incapable of managing his affairs, and his duty is to manage the estate of his ward and to apply it to his support and that of his family. Gen. Stat. § § 4815, 4819. The care and management of the ward's estate is primarily entrusted to the probate court, and the conservator is in many respects but the arm or agent of the court in performance of the trust and duty imposed upon it. Johnson's Appeal, 71 Conn. 590, 598, 42 A. 662. The World War Veterans' Act recognizes this status of the conservator in the provision that, when he has been derelict in the performance of his duties, the Director of the Veterans' Bureau may appear in the court which appointed him and make presentation of such fact. No doubt Congress might have provided that money paid by the government for the benefit of a soldier who was incompetent to manage his own affairs should not come into the hands of a guardian appointed by a state court, but should be held and disbursed on account of the beneficiary by some agency of the United States as is done in the case of certain Indian tribes. In such case the United States itself is the guardian of the Indian upon the reservation, and when it causes money received by it through its officer for the use of the Indian to be deposited to its credit in a bank, the money is that of the United States, and it is entitled to priority of payment out of the funds of the bark. U.S. F. & G. Co. v. Bramwell (D. C.) 295 F. 331, affirmed 269 U.S. 483. 46 S.Ct. 176, 70 L.Ed. 368. The World War Veterans' Act does not so provide, but does provide for the payment of the benefits due an incompetent veteran to his guardian or conservator appointed by the state court. When such funds come into his possession, the title to them vests in the ward, and the possession of the guardian or conservator is deemed to be the possession of the ward. 28 C.J. 1128; 12 R.C.L. 1123. These funds were paid to the " Estate of James Callery," and upon their receipt by the conservator title to the funds vested in James A. Callery, but, because of his incompetence, their care and management was in the hands of his conservator appointed by the probate court. That the title to the funds vested in the ward is recognized by the provision in the act that when such funds would, under the law of the state where the ward resided, escheat to the state, they shall escheat to the United States. The provision of section 454 of the code that allowances payable thereunder shall not be assignable or subject to the claims of creditors, and shall be exempt from taxation, do not tend to support the contention of the claimant that after such funds have been paid to the representative of the person to whom they were payable they still remain moneys of the United States. Rev. St. U.S. § 4747, title 38, USCA § 54, provides that no money due or to become due to any pensioner shall be liable to attachment or levy under legal process " but shall inure wholly to the benefit of such pensioner." This statute protects pension money from attachment so long as it remains due to the pensioner, but not after it has been actually paid over, and has come into his possession. Price v. Society for Savings, 64 Conn. 362, 365, 30 A. 139, 42 Am.St.Rep. 198; McIntosh v. Aubrey, 185 U.S. 122, 22 S.Ct. 561, 46 L.Ed. 834. Nor after it has been paid to the agent of the pensioner, for it is no longer " money due, or to become due." Kellogg v. Waite, 12 Alien, 529. In Manning v. Spry, 121 Iowa, 191, 96 N.W. 873, it was held that pension money in the hands of the guardian of the pensioner was exempt from taxation under this statute, following a previous holding in that state that property purchased with pension money was exempt from levy and sale under execution, which it was conceded was contrary to the weight of authority elsewhere. The Iowa court held that the guardian was nothing more than the agent of the government and that the pension money in his hands was still under its control and management. In State ex rel. Spillman v. First State Bank of Pawnee, 121 Neb. 515, 237 N.W. 623, the court, citing and relying on the Iowa case, held that war risk insurance money deposited by a guardian in a bank was money of the United States, and entitled to priority in the distribution of the assets of the bank. We are unable to follow the rulings in these cases to the extent of holding that the claimant as conservator is the agent of the government, and that the securities held by him in which...