State ex rel. Sorensen v. Sec. Bank of Creighton

• Decision Date: 10 July 1931
• Docket Number: No. 27696.,27696.
• Citation: 237 N.W. 620,121 Neb. 521
• Parties: STATE EX REL. SORENSEN, ATTY. GEN., v. SECURITY BANK OF CREIGHTON (AGLER, INTERVENER). INTERVENER).
• Court: Nebraska Supreme Court

121 Neb. 521

237 N.W. 620

STATE EX REL. SORENSEN, ATTY. GEN.,

v.SECURITY BANK OF CREIGHTON (AGLER, INTERVENER). INTERVENER).

No. 27696.

Supreme Court of Nebraska.

July 10, 1931.

Syllabus by the Court.

After the designated beneficiary's death, war risk insurance is payable to the estate of the insured for distribution to persons then living within permitted class, as beneficiaries, and not as heirs at law.

Syllabus by the Court.

Money payable by the United States under the war risk insurance acts is money of the United States until it reaches the beneficiary of the fund.

Appeal from District Court, Knox County; Chas. H. Stewart, Judge.

Action by the State, on the relation of C. A. Sorensen, Attorney General, against the Security Bank of Creighton, in which Maggie A. Agler, administratrix of the estate of Robert R. Gordon, deceased, intervened and filed a claim. From a judgment awarding intervener a first lien on assets of the bank, the bank's receiver appeals.

Affirmed.W. A. Meserve, of Creighton, and I. D. Beynon and C. M. Skiles, both of Lincoln, for appellant.

Richard Steele, of Creighton, and F. H. Wagener, of Omaha, for appellee.

Heard before GOSS, C. J., and ROSE, DEAN, GOOD, DAY, and PAINE, JJ.

DAY, J.

This case arose out of the claim of one Maggie A. Agler, administratrix of the estate of Robert R. Gordon, deceased, a soldier in our Army in the World War, against the receiver of the Security Bank of Creighton, on a certificate of deposit in her name, as administratrix, in said bank, which deposit represented the proceeds of war risk insurance. The administratrix claims that she stands in the place of the United States in relation thereto and has a first lien on all the assets of said bank superior to the other depositors. The district court so found, and the receiver appeals.

The Security Bank of Creighton was taken over by the department of trade and commerce on May 17, 1928, and operated by the guaranty fund commission as a going bank until June 4, 1929, on which date a receiver was appointed to liquidate. The administratrix filed her claim on a certificate of deposit which was classified and allowed as a deposit. The claimant filed a petition of intervention in said proceedings claiming that the said deposit was the proceeds of war risk insurance issued by the United States on the life of Robert R. Gordon, who died intestate on December 19, 1919, and claimed that said money was the property of the United States, and that she had a first lien on the assets of said bank under the provisions of section 3466, U. S. Rev. St. (31 USCA § 191). The receiver objected to the allowance of the claim because, first, the depositors' lien created by statute was a prior lien upon the assets of the bank, and, second, the administratrix is not a governmental agency and the deposit was not money of the United States.

Relative to the first question, this court has decided in a recent case the time when the statutory lien of the depositors attaches to the assets of a state bank. In State v. Thurston State Bank, 120 Neb. ___, 237 N. W. 293, the material facts are substantially the same as in the instant case and control the question of priorities of liens. It is sufficient to state that under the rules of law therein stated, if the deposit involved is money of the United States, it is a lien upon the assets of the bank superior to the statutory lien in favor of general depositors.

There remains but one question for our determination. Was the deposit made by the administratrix in the Security Bank of Creighton, Nebraska, money of the United States within the comprehension of section 3466, U. S. Rev. St.? The claim of the administratrix is based on the provision of the above statute, which reads as follows: “Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied; and the priority established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed.” In this case, it is not disputed that the officers of the bank at the time the deposit was received knew from what source it came and that such deposit was the proceeds of war risk insurance paid by the United States.

The purpose of the war risk insurance was to benefit the World War veteran and his dependents. Congress could adopt any method which seemed to it best suited to accomplish its purpose. The initial act of October 6, 1917, provided for insurance, “in order to give to every commissioned officer and enlisted man” greater protection for themselves and their dependents. 40 U. S. St. at Large, c. 105, § 400, p. 409. This purpose is reaffirmed in the Act of Congress of June 7, 1924, 43 U. S. St. at Large, c. 320, § 300, p. 624, and restated in the Act of Congress of March 4, 1925, 43 U. S. St. at Large, c. 553, § 12, p. 1308 (38 USCA § 511). The purpose of the statutes providing for war risk insurance is important and helpful in determining the intention of Congress as expressed by its legislative acts.

To study and ascertain the intent of Congress, let us consider section 454, 38 USCA, which is as follows: “The compensation, insurance, and maintenance and support allowance payable under Parts II, III, and IV, respectively, shall not be assignable; shall not be subject to the claims of creditors of any person to whom an award is made under Parts II, III, or IV; and shall be exempt from all taxation.” (Italics ours.)

The insurance provided was not assignable. It was the intention of Congress to protect the fund so that it would be directed to the benefit of the veteran and his dependents. This provision was clearly to protect him from himself as well as from others. To accomplish this purpose and to insure with certainty that the funds provided would go directly to the maintenance and support of the veteran and his dependents, it was also provided that it was not subject to the claims of creditors. In Payne v. Jordan, 152 Ga. 367, 110 S. E. 4, it was held that funds actually paid by the government to the beneficiary of an insurance policy and by her deposited in a bank are not subject to garnishment. To the same effect is Perrydore v. Hester, 215 Ala. 268, 110 So. 403. It was held that it should be exempt from all taxation. Succession of Geier, 155 La. 167, 99 So. 26, 32 A. L. R. 353, holds that the beneficiaries of deceased service men who receive insurance money under the war risk insurance act are not subject to a state inheritance tax. To the same effect is In re Shaw's Estate, 130 Misc. Rep. 440, 224 N. Y. S. 344;In re Estate of Harris, 179 Minn. 450, 229 N. W. 781;Tax Commission of Ohio v. Rife, 27 Ohio App. 516, 162 N. E. 398;In re Cross' Estate, 152 Wash. 459, 278 P. 414;Manning v. Spry, 121 Iowa, 191, 96 N. W. 873;Watkins v. Hall, 107 W. Va. 202, 147 S. E. 876;Wanzel's Estate, 295 Pa. 419, 145 A. 512.

It is evident from these foregoing provisions that Congress intended the money to go to the veteran and his dependents. It provided for every foreseen contingency to retain control of the money until it was placed in the hands of the beneficiary. To accomplish this beneficent purpose, it has surrounded the money with every safeguard to protect it. It has placed the funds upon a plane analogous to a trust impressed...