Aetna Casualty and Surety Company v. Harry Clifford Porter
296 F.2d 389
D.C. Cir.
1961
Check Treatment

*1 CASUALTY AND SURETY AETNA COMPANY, Appellant,

v. PORTER, Appellee.

Harry Clifford No. 16066. Laskey, Washington, Mr. John L. D. Appeals Court United States , appellant. C. for of Columbia Circuit. District Washington, Frey, Mr. Ethelbert B. Argued Feb. C., appellee. D. July Decided Before Chief K. Miller, Wilbur Rehearing En Banc Denied Petition for Prettyman Judge, Cir- Burger, Aug. 21, 1961. Judges. cuit 11, 1961. Dec. Certiorari Granted See S.Ct. 384. Judge. MILLER, WILBUR K. Chief Casualty Surety Company

Aetna appeals from an order of the District its attachment of cer- tain share investment in fed- eral and loan associations which augmented by were established and Por- moneys ter’s for him from the United Veterans’ States Administration. gave

The situation which rise to the Prop- action should first noted. Gore erties, corporation engaged Inc., a real estate business the District of Columbia, employed one F. William manager Hickey, as resident of the Ritz Apartments, properties. one of its In the 1952, Hickey pres- summer hired the appellee, Harry Porter, ent Clifford a non- commissioned officer in the United States Force, paint Air the interiors of sev- apartment development. eral units manager nothing knew about Porter military had seen him in investigation uniform, and made no background his or character. He direct- paint apartment ed Porter to of one tenants, Whitman, Codie Miss A. young lady who alone. lived Porter Whitman, murdered Miss for which he subsequently was indicted. His later guilty resulted a verdict of trial insanity. reason of murder, After Miss Whitman’s brought wrongful administratrix death against Gore, manager, Hickey, its action Security and the American and Trust Company, agent, alleg- Gore’s collection hiring negligent in Porter *2 investigation any appeal his back- brief that this District without is from the failing ground prop- Court’s character, action in “in the attach- or and against The erly corpus him. ments in- supervise and control laid the savings in favor vestment trial in the court directed verdicts accounts two appealed. defendants, plaintiff institutions.” all and the remanded, toas and This court reversed question Thus the whether Hickey. and Gore defendants savings share accounts in and wrongful by death loan com associations held a veteran’s defense of the The by Aetna exempt from claims of undertaken mittee the action had been Casualty the Surety Company, they paid under creditors because money for with were liability by insur- policy provisions received the committee of a * * * Upon “Payments of un to Gore. due ance which it had issued benefits any by a set- der remand, effected law for Aetna administered the Vet counsel * * paid company suit, the erans’ Administration tlement of the Thereafter, un- amount. the settlement it, The in Court had before the subrogation provision of der the Tennessee,2 the Trotter v. State of re- Porter policy, Aetna sued Gore by question purchased whether the lands money paid in Gore’s had it cover the guardian moneys re- a veteran with judgment. On behalf was awarded ceived the from the States United appeal there- 11, 1960, Porter’s October subject use of the disabled ward are by an as frivolous from was dismissed to taxation. The World War Veterans’ order of this court. Act, involved, provided there that “The compensation, insurance, and mainte- judg- indemnity obtaining this After I nance and allowance checking ac- ment, attached Aetna II, IV, respectively, under Parts III and also of Porter’s count assignable; shall not be shall be fed- in two accounts investment share or * * * subject to the claims of creditors loan associations eral exempt and shall be from all taxation.” committee. name in the stood writing Cardozo, Mr. Justice for a unan- attach- quash the latter moved The court, said, pages imous at check- theory that the on the ments 356-357, page 54 S.Ct. at 139: account “ * * * statutorily moneys ex- payable to were The federal associations creditors,1 unquestionably be- empt soldier claims this were alleged, they were, exempt till came into his hands cause guardian. a law by under hands Mc- the committee or the of his by Aubrey, Adminis- the Veterans’ Intosh v. 185 U.S. [22 administered granted 46 L.Ed. leave 834]. The District S.Ct. We tration. open except question the divi- quash whether ex- motion emption ac- to the in added remained force while had been dends which Ap- in associations. those hands or on de- in continued counts parently checking conceding posit Be bank. [Cases cited.] may, very in its exempt, Aetna as it we think it clear states was account process whatever, part, 3101(a) pertinent equitable is, either before § U.S.C. 1. 38 beneficiary. receipt or after preceding as follows: ' apply “Payments shall or to become sentence of benefits due arising any States under administered of the United law claims such under due exemption laws nor shall the there- shall not be as- Administration Veterans’ specifically signable as to taxation extend extent contained to the purchased any property by law, or whol- and such authorized made ” * * * payments. beneficiary ly of, to, of such out on account or exempt taxation, shall be shall exempt creditors, 290 U.S. S.Ct. 78 L. [s] from the claim attachment, Ed. 358. not be liable to and shall any legal levy, or .under or seizucé exemp- government checks that there an to the was end received from the quality tion moneys when such when lost are made the . pro-:' land converted into manner so *3 buildings. speaks subject and ceeds of the The statute collection are insurance, of to ‘compensation, draft demand for the vet- carry eran’s use. In maintenance and payable’ allowance order to out veteran, the statute, intent the declares to avails the government exempt. see the shall We of or warrants checks purpose exempt no token must extend be deemed of until immunity expended permanent like are invest- or invested.” or ments en- the of business fruits Supreme The Court had occasion to terprises. Veterans who choose construe 38 U.S.C. 3101 in Carrier v. § merchandise, in land or in trade in Bryant.5 Relying on Trotter v. of State stock, or bonds shares of must supra, Tennessee and Shaw, Lawrence v. ”** pay their tribute the state. the pur Court held that investments money chased with received in settlement Although open the the Trotter case left “payments benefits not are or to due question exemption whether the remains due” statutorily become which are ex in force while re- the empt from the claims of creditors. deposit main in the hand “or on veteran’s bank,” thought Supreme in a the Court question is, therefore, immediate “very exemption it clear” that ends the acquisition whether the of share accounts when the benefit converted in federal is associations an investment permanent investments, land, build- type Supreme the said not is ings, bonds or shares stock. exempt, or whether it tantamount government an uninvested balance Congress the answered first of these payments deposit bank, on which has questions by providing reserved that the exempt. been held to be process shall not be liable to appears It that here the committee receipt “either or before after the deposited ordinary in his checking ac- beneficiary” in 3 of § the World War government payments count all by Veterans’ Act of 1935.3 The second paid him. He out of that account the question was answered the ordinary necessary expenses incident Court in Lawrence v. Shaw4 5when it to the maintenance, veteran’s care and concerning deposits stipulated said up and built the accounts in the federal gov to be “uninvested balances” the by drawing associations check- the payments: ernment ing thought account such sums he “ * * * could be jeopardizing the im- withdrawn We hold that without adequacy munity payment its expenses. does for the from taxation attach of current his of the veteran or This was credits done under to bank the au- thority guardian represent not or do Rule 23 of which the District Court governs investments but result his flow from the investment of trust deposit warrants funds.6 3. 4. 5. nary 443, 445, 81 L.Ed. 623. court, erwise 708, 83 L.Ed. 976. 49 Rule 23 “Investment of Stat. conditions will 300 U.S. provided trust, or is in ordinarily 609; 545, 547, set 245, 250-251, trust 38 U.S.C. forth be sanctioned follows: funds, instrument creat- under extraordi- fully unless oth- S.Ct. § 57 S.Ct. 454a. only Associations. Associations, following when made located and tificates institution, provided Loan of Columbia and its stitutions “Section Il-a. v Associations, Building requirements: [*] doing deposit exceeding $10,000.00 Investment business in the District obligations meeting Federal [*] Savings accounts are insured accounts in said in- such institution is Savings [*] shares, and Loan and Loan [*] cer- one ertson, 1961, U.S.App.D.C. —, Obviously committee created F.2d associations might in- some for Porter obtain We it committee’s think clear that the immediately needed from funds come accounts in and loan the federal maintenance, not be which could his subject associations were investments remained funds such obtained so the claims of creditors. It follows cheeking ac- deposit in his the District Court erred in conclude that count. this we From attachments. set aside Its order will be acquired associa- in- case will be remanded with *4 investing by way that of tions’ shares deny quash structions to to the motion government payments portion grant of the judgment and to the motion for surplus income be he considered to subjecting which appel- share accounts necessary ordinary judgment lant’s over above debt. expenses. It so ordered. is known, generally Judge PRETTYMAN, (dis- may not Circuit be It senting) true, that . it is nevertheless but not are savings associations loan purpose The clear Act of the “[t]o de on obligated permit withdrawals safeguard the estates of veterans derived re only honor withdrawal mand, but payments pension,” etc.,1 from of is to days. thirty fact This quests within make for these benefit available distinguishes share only sharply sup use in the maintenance and current deposits ordinary bank from port veteran, of the without interference checking ac as by their use preventing taxes creditors. with Consistent stamps them with counts, also but principle this the courts have held that A share investments. of characteristics as the remain aas is dis federal association account tinguishable deposit they bank immune are from outside ordinary sav bank an from orption;2 but, pass abs when respects: own ings deposit in other form of investments land or becomes, by account the share er of buildings (which would indicate are voting ownership, mem a of that virtue currently needed), lose their more and thus association ber immunity. Thus, my mind, the cases of a nearly comparable to a stockholder clearly implement Congression the basic depositors; and we of its than one purpose. al that, a account share shown have at bar In the case owner, of associa he not a creditor is “Savings deposited in Aceount[s]” depositor a is creditor as a tion savings and loan associa- with Loan Home Owners Indeed the bank. disposition not a which This was tions. under which a federal association Act availability for funds difficult made the pro purpose as “to describes created majority opinion purposes. The current thrift institutions in local mutual vide points rules the associations re- may people invest their funds days’ withdrawal, for quiring notice ** (Em- U.S.C.A. § (Ex. them advertises one of but at least added.) phasis it is While not a con- organization in C) its 1907 its since trolling consideration, it should be noted pay practice been to withdrawals has yield on accounts in a share demand; my upon indeed promptly derstanding un- higher generally federal association is (which is such common un- savings derstanding judicial deposits I can take Cf. than on banks. fact) no such is that asso- notice of Bankers Association v. Rob- Wisconsin (1935). Savings 1. 49 Stat. Insur- Loan the Federal Corporation provisions under ance Shaw, 1937, g., Subehaptor IV, E. Lawrence v. 12 of the United Title 81 L.Ed. 623. 57 S.Ct. States Code.” accumulating interest, Washington requires no- a small sure- such time ciation savings living ly many prudent person a respect In tice. right do; periodical payments now generally would reserve accounts banks to, says notice,3 days’ the committee he wants but 30 or 60 to demand would, purposes depositor the funds for can withdraw a matter of custom the support of maintenance and of the veter- for cur- Needs demand. withdraw an. are not maintenance rent necessarily steady month in amount The committee before claims he can us fluctuate; month; such needs prove by documentary evidence that monthly several income actually needs, use, and would funds may meet a accumulated to months already to meet a bill rendered him for poten- need; clothes, recurrent a suit current subsistence of this veteran. bills, repairs tial doctors’ a home I would remand the case for a factual many examples items. familiar few determination the nature these de- are the And us there case before posits, e., i. current or invest- potential needs of rehabilitation. ments in the sense in which the *5 disposi- nature Of course the of some Court used that term in the Lawrence clear; purchases of tions of funds suppose case.4 I proof the burden of stocks, etc., land, hand on the one committee, should be on the since he alone regular cheeking accounts in banks on requisite has the information. It seems to facts the other. me surrounding deposits have here we material, dispositive, even would be legalisms they the case. On naked might other. On the facts be one or the might clearly Thus, appear. nature their deposit left for if had been current were met

time while needs BLAKE COMPANY, CONSTRUCTION funds, other their accumulation if Appellant Inc., (in- much in excess of current needs were v. cluding auxiliary reasonable reserve UNITED America, STATES of might contingencies), deposits Appellee. clearly appear But, to be investments. if were were facts America, UNITED STATES of needs, periodically used for current or if Appellant actually and were needed v. and the available committee intended so AETNA CASUALTY AND SURETY them, to use their nature as current de- COMPANY, Appellee. might clearly posits appear. Deposits 15948, Nos. 16049. legal may, in these associations as a bare Appeals United States Court of matter, be one or the other. District of Columbia Circuit. decide this case nice- I would Argued Jan. 1961. legalisms “deposit” as to a and an ties of Aug. 3, I would it on the decide Decided “investment”. 1961. statute, as con- intention broad courts, plain, and the sim- strued Here the the case. ple facts of in ac- put where in financial institutions counts readily available, mean- practice Supra Tunnicliffe, 1931, note 2. Fla. Mallett v.

3. See 137 So. 80 A.L.R. So.