City Loan & Savings Co v. Guthridge

This is an appeal on questions of law from an order of the Common Pleas Court allowing an exemption to defendant, Olive Guthridge, on her motion. The following entry sets forth the essential facts and the final order from which the appeal is prosecuted: "* * * The court finds as follows: That judgment for $414.66 had been rendered against Orla Orville and Olive Guthridge and that E.R. Randolph, executor of the estate of Fannie N. Crouch, deceased, has, upon an affidavit of interpleader, filed with the clerk of this court the sum of $213.58, being the distributive share of Olive Guthridge in said estate. "The court hereby orders and decrees that the motion of Olive Guthridge is well taken, and is hereby sustained, and that the clerk of courts is hereby ordered and directed immediately to pay unto said Olive Guthridge the sum of $213.58, being her distributive share in said estate, and said defendant is entitled to have this money set off to her in lieu of a homestead, as exempt from execution, under and by virtue of Section 11738, General Code of Ohio. "To all of which plaintiff herein excepts." From the pleadings and court orders we must conclude that distribution to Olive Guthridge had been made. The question presented is: Was the judgment debtor entitled to the exemption granted under Section 11738, General Code? The respective parties, in their briefs, cite and comment upon the following Ohio authorities: Morris Plan Bank of Cleveland v.Viona, 122 Ohio St. 28, 170 N.E. 650; Ohio Building MaterialCo. v. Nero, 9 Ohio Law Abs., 199; Dennis v. Smith, 125 Ohio St. 120, 180 N.E. 638. *Page 204 Section 11738, General Code, provides for an allowance to the head of the family or his wife, as the case may be, in lieu of homestead rights, the amount of the allowance, designates who may make selection, and defines property exempt from levy. Defendant has conformed to all requisites of the statute and is entitled to the exemption unless precluded by the last part of the section which is pertinent to our case: "Such selection and exemption shall not be made by the debtor, or his attorney, or allowed to him from money, salary or wages due to him from any person, partnership or corporation * * *." We do not have the opinion of the trial judge, but it is probable that the exemption was allowed to defendant judgment debtor upon the theory that the money representative of the bequest to be paid by the executor to defendant was not money due to her from a person. This construction of the law is questioned by the appeal. The cases cited are not especially helpful to the court. Although they involve the exemption statutes they do not directly reach the query raised by the facts here. The case of Morris PlanBank of Cleveland v. Viona, supra, held that: "Money deposited for or in the name of a judgment debtor is money due him, within the meaning of such statutory provision [Section 11738, General Code], and may not be allowed him as exempt in lieu of a homestead." In that case the effort was made to give the term "money due," as employed in the section, the limited meaning of salary or wages. The court held that such construction did violence to the clear and unambiguous language of the statute. The decision was clearly correct. The relationship of a bank and its depositor has uniformly been held to be that of debtor and creditor. Thus, as to any money on deposit in a bank, *Page 205 the bank was the debtor of the depositor and the money was clearly money due the depositor. In Ohio Building Material Co. v. Nero, supra, the status of the garnishee who held the money which was claimed as exempt by the debtor does not definitely appear and we can not determine whether the law as applied to the facts would be helpful. The court, however, followed the doctrine of Morris Plan Bank ofCleveland v. Viona, supra. The writer of this opinion is familiar with the third case,Dennis v. Smith, supra, having participated in its consideration when it was in the Court of Appeals of Greene county. The court held that the right to claim certain personal property as exempt from execution continued as to money received by way of proceeds of an insurance policy covering that exempt personal property. It will be noted that none of these cases treats of our narrow question, namely, whether money in the hands of an executor, which upon court order is ready to be distributed to a legatee, is money due. Our examination of these authorities has been without success, as the question is related to the exemption statutes there applicable. However, we have found helpful cases, namely, those involving garnishment, which proceeding is invoked in this case. A garnishee is required to answer if he is indebted to the defendant. Many cases have arisen where, during the administration of estates actions have been instituted and the fiduciary has been served as garnishee for the purpose of requiring him to hold certain interests of beneficiaries, legatees or distributees. Such a situation was presented in Orlopp v. Schueller, Admr.,72 Ohio St. 41, 73 N.E. 1012, 106 Am. St. Rep., 583, the first paragraph of the syllabus of which is: "Property or money held by the executor or administrator of an estate in his representative capacity, *Page 206 cannot be reached by attachment or garnishee process in an action against the heir or legatee before an order of distribution has been made." Judge Crew writing the opinion, supporting the syllabus quoted, said at page 56: "Such has been the almost uniform holding of the courts of last resort except in those jurisdictions where the rule has been changed by express statutory enactment. And this rule has thus been generally so held and applied by the courts, whether it was sought to charge the executor or administrator on account of adebt owing from the estate to the defendant in the attachment suit, or on account of the latter's being entitled to a distributive share of the estate as heir or legatee. * * * Indeed, so far as our examination of the authorities has enabled us to discover, the only state in which the garnishment of an executor or administrator is allowed before final settlement or order of distribution, in the absence of express statutory authority therefor, is the state of Indiana." This opinion and others are grounded upon the proposition that until there is an order of distribution the funds of the estate are as though in custodia legis; that it can not be determined until then that prior claims will not take precedence over a bequest of money. See Remelin v. Butterworth, 20 Ohio App. 356, 152. N.E., 193; Lease v. Downey, 5 C.C., 480, 483, 484, 3 C.D., 235. This question is the subject of an annotation to Bank v. Chase, 59 A.L.R., 766, the annotation beginning at page 768. Among the cases reviewed are Gilroy v. Conn, 3 Ont. Weekly Notes, 732;Deeks v. Strutt, 101 Eng. Rep., 384; Jones v. Tanner, 108 Eng. Rep., 825. In Gilroy v. Conn, supra, it was determined that the claim of a residuary legatee against the executors was not a debt within the meaning of a rule providing that the judgment creditor, by garnishee process, was enabled *Page 207 to reach "all debts owing or accruing from the garnishee, to his debtor. And in Hunsberry v. Kratz, 5 Ont. L. Rep., 635, it was held that where executors were garnisheed for the interest of a residuary legatee in an estate, such an interest was not an attachable debt within the meaning of the statute. We have cited these cases because they are counter to the great weight of authority. The annotator in summarizing the law as found in the many cases cited supports the rule as announced inOrlopp v. Schueller, supra, and then says: "But, after settlement and a decree of distribution, garnishment would lie, because then the representative ceased to hold as an officer of the law and in his representative capacity, and became a personal debtor of the persons entitled to payment of a debt, or to a legacy or distributive share." Later cases supporting the foregoing are Hussey v. Titcomb,127 Me. 423, 144 A. 218; Mosher v. Mosher, ___ Mass., ___,199 N.E. 301; Woodbine Savings Bank v. Yager, 61 S.D. 1,245 N.W. 917; Russell v. Prospect Lodge, 172 Okla. 622, 46 P.2d 478. Webster v. Bible Society, 50 Ohio St. 1, 33 N.E. 297, supports the conclusion that funds due from administrators and executors, representative of the legacy, are money due to the legatee. Such funds are not held under a subsisting trust such as is recognized in equity but are subject to a legal action of the legatee against the fiduciary to recover. At page 12 of the opinion it is said: "`Money applicable' to the payment of the legacy, means money which the plaintiff was entitled to have applied in payment, and imports that there were no debts or other obligations having preference over the legacy, to prevent the proper appropriation of the money in the hands of the administrators to its payment, or delay its recovery by the legatee. * * * The *Page 208 duty of paying the legacy belonged to the administrators, as such, and not as trustees of a continuing trust." It is our conclusion that, at the time the exemption was allowed, the money in the hands of the executor, payable to defendant on distribution, was "money due" her under the terms of Section 11738, General Code, and was therefore not exempt. The judgment will be reversed and cause remanded and order entered denying exemption to defendant. Judgment reversed and cause remanded. BARNES, P.J., and GEIGER, J., concur.