Stockwell v. National Bank

Learned, P. J. : The plaintiff, a receiver of the property of one Rowell, appointed in proceedings supplementary taken by a creditor of Rowell, seeks in this action to recover money standing to the credit of Rowell in the savings department of the National Bank of Malone. The defense of the bank and of Rowell is that the money is pension money, and therefore is exempt under Code section 1393. For military services in the late civil war Rowell was granted a pension by the Hnited States. Having in his possession $100, part of such pension money, and also a check or draft of the pension agent for $1,000, being also a part of such pension, Rowell deposited the said money and the said check or draft to his credit in the said Eavings department; where the same stood to his credit at the time [584] of the appointment of the plaintiff as receiver as aforesaid. At that time there also stood to his credit the sum of nineteen dollars, credited to him for interest on said deposit of $1,100, making in all $1,119 ; all of the same being such pension money and interest. The bank allows him interest on his deposit. He did not have actual possession of the $1,000 mentioned in the draft, but deposited the draft itself as above stated. The question is whether the money is exempt. The "United States law (R. S., § 4747) does not apply. That protects pensions “ in the course of transmission.” The decisions under that law are therefore of no weight in this case. Such are Cranz v. White (27 Kan., 319); Webb v. Holt (57 Ia., 712); Jardain v. Fairton Savings Fund Association (44 N. J., 376); Kellogg v. Waite (12 Allen, 529); Spelman v. Aldrich (126 Mass., 113). The section of the Code, omitting the parts which are not material, is: “A pension * * * granted by the United States * * * for military * * * services ” is “ exempt * * * from seizure for non-payment of taxes, or in any other legal proceeding.” The other things exempted by the same section are things which usually are in the actual possession of the person entitled to them. And it is apparent that by this section a pension is exempted, not, as by the United States statute, only when “ in course of transmission,” but after it has been received by the pensioner. Then the question is whether this money, by its deposit in a savings bank on interest, had ceased to be a pension under this section. In Whiting v. Barrett (7 Lans., 106), under a similar statute it was held that county bonds being exempt, might be transferred by the soldier to his wife; and that such transfer would not be in fraud of his creditors, as they had no claim to the bonds. This case shows that a transfer of the exempt property did not authorize the creditors to reach it. The case of Wygant v. Smith (2 Lans., 185) was one where the property claimed to be exempt was the result of successive dealings and transfers. As the court say it was “ in part the third and in part the sixth or seventh remove from the original exempt fund.” That is not the present case. The plaintiff urges that by the deposit of the money the identity of the pension was lost, and that Rowell became simply a creditor [585] of the bank. Now the pension reached Nowell in the form of a draft. It would be absurd to say that if Nowell should obtain the money on that draft he would change the form, so that the money would not be exempt. Then must he hold that money in his actual custody, or may he do, as prudent men do, deposit it in a bank and use it as he needs ? It would be clearly unreasonable to hold that the quality of exemption was lost by what was only a careful mode of preserving the money. It is true that, accurately speaking, the bank becomes the debtor. Still, practically, the money is there for the depositor’s use and is so regarded by him. And none the less so because the bank allows interest. The section did not intend to prevent the pensioner from using his pension. It would be of no benefit to him unless he could use it. We are not called upon to say in this case to what extent purchases made with this exempt money would be themselves exempt. Though we should be disposed to hold that every thing bought in the ordinary way of using and enjoying such a pension would be exempt, as the pension itself is. But in the present ease, in all fair and reasonable meaning, this money in the savings bank is the pension, just as much as the draft was, and just as much as the avails of the draft would have been, if Nowell had received the avails in money. An illustration of the view we have taken may be seen in Tillotson v. Wolcott (48 N. Y., 190), where it was held that a judgment recovered by a debtor against his creditor for unlawfully levying on and selling exempt property was itself exempt. The object of the section is to secure the pensioner in the use and enjoyment of this gift of the government, and to prevent his creditors from taking it away. As far as possible the courts should protect him in such use and enjoyment. If, like a prudent man, the pensioner places his money in bank, where it will gain a little interest, it would be most unjust to make this act the ground of depriving him of that which the State intended that he should keep and enjoy. See, also, the case of Wildrick v. De Vinney, (18 N. Y. Weekly Dig., 355), which seems to be exactly in point. Judgments affirmed in each of the two cases, with costs. Landon, J., concurred.