Opinion
Decided December 17, 1931.
Execution — Exemptions — Adjusted war service certificates — Title 38, Section 618, U.S. Code — Veteran's property, delivered to wife, declared a trust, when — Wife's bank deposit received from selling stock purchased with adjusted compensation loan — Federal statute exempting loan proceeds, liberally construed — Money held in trust traceable to investment, when — Proceeds of adjusted compensation loan, exempt from execution, when.
1. Property delivered by husband to wife may be declared trust, in absence of positive evidence of valuable consideration or gift.
2. Bank deposit of cash, received from corporation by war veteran's wife on return of stock, purchased by her from money borrowed on adjusted war service certificate, held exempt from execution as "proceeds" of loan (Title 38, Section 618, U.S. Code).
3. Money held in trust will be traced to any investment, unless title is inconsistent or trust repudiated.
4. Federal statute, exempting proceeds of loans on adjusted war service certificates from execution, should be liberally construed (Title 38, Section 618, U.S. Code).
5. Proceeds of loan on adjusted war service certificate are exempt from execution so long as fund can reasonably be traced (Title 38, Section 618, U.S. Code).
ERROR: Court of Appeals for Darke county.
Messrs. Murphy Staley, for plaintiff in error.
Mr. John M. Hoel and Mr. Herman F. Krickenberger, for defendants in error.
Glen R. Hoblit, defendant in error, was an overseas veteran of the World War.
Under the act of Congress he was authorized to borrow up to 50 per cent. of his certificate of service, and he drew $515 from that source. A draft or check for that amount was forwarded by the government to Glen R. Hoblit, was transferred to the People's Savings Bank of Greenville, Ohio, and cashed. Hoblit then paid off some small bills and gave the balance, amounting to approximately $300, to his wife, Mrs. Glen R. Hoblit. The transfer to his wife was made for the use and benefit of the veteran, Glen R. Hoblit, and his family, consisting of his wife and eight small children ranging from two to twelve years of age. Mrs. Hoblit, out of said fund, purchased three shares of Electric Light Company stock, and after three months returned the stock to the company and received cash therefor, which she deposited with the Second National Bank of Greenville, Ohio, subject to check. She avers that said money has been paid out only for living expenses for the family; that the amount of money still remaining on deposit in said bank amounts to $274.66. By this action this amount has been attached and sought to be reached by the plaintiff.
The act of Congress under which this money was received contains the following clause: "No sum payable under this chapter to a veteran or his dependents, or to his estate, or to any beneficiary named under Part V of this chapter, no adjusted service certificate, and no proceeds of any loan made on such certificate, shall be subject to attachment, levy, or seizure under any legal or equitable process, or to National or State taxation." Title 38, Section 618, U.S. Code.
The question is whether the deposit made by Mrs. Hoblit in the Second National Bank of Greenville, Ohio, is "proceeds" of the loan made by the father, Glen R. Hoblit, and therefore protected from being reached by his creditors.
It will be observed that Mrs. Hoblit did not take title as an adverse party. She took merely as trustee for her husband, Glen R. Hoblit, to be applied to the benefit of the family. The trial court in its opinion thus states the facts in the case: "However, the Mother-Wife does not appear in this record as a `third person.' This bonus money was not given to her to be used by her as an individual or `third person,' but strictly as a trustee for the benefits of the husband and family. If she had attempted or should attempt to appropriate this money to herself personally and exclusively as `third person' apart from her embodiment wife-mother and member of the family she could be subjected to mandamus to force compliance with the trusteeship."
This finding of fact by the trial court is amply sustained by the evidence in the case. It has been uniformly held in this state that property delivered by a wife to a husband, or vice versa, can always be declared a trust in the absence of positive evidence that the property was transferred for valuable consideration, or given as a gift. Newton v. Taylor, 32 Ohio St. 399; Bechtol v. Ewing, Admr., 89 Ohio St. 53, 105 N.E. 72, L.R.A., 1917 E, 279, Ann Cas., 1915 C, 1183; Richards v. Parsons, 7 Ohio App. 422; Stickney v. Stickney, 131 U.S. 227, 9 S. Ct., 677, 33 L. Ed., 136. The following citations are also applicable: Payne, Admr., v. Jordan, 36 Ga. App. 787, 138 S.E. 262; Payne, Admr., v. Jordan, 152 Ga. 367, 110 S.E. 4. In construing the provision of Section 28 of the War Risk Insurance Act (40 Stats. at L., 609), now Section 454 of Title 38 of the U.S. Code, it was held by the courts of Georgia that a house purchased with the proceeds of a policy of government insurance was not subject to execution and that neither was money, the proceeds of such insurance, deposited in a bank.
We may also refer in this connection to the case of Flanders v. Adams, in the Municipal Court of Dayton, Ohio, decided by Judge Martin. The opinion in that case is illustrative, and appropriate to the facts of the present case.
It is claimed that because Mrs. Hoblit purchased stock of the Electric Light Company out of this fund it can no longer be claimed as "proceeds." This, we think, is erroneous. There was no other fund commingled with this fund, nor was the title to the stock adverse to the trust. The doctrine of equity is that money will be traced to any investment where there is no inconsistent title or any repudiation of the trust. The money invested in stock could be clearly traced, and upon the sale of the stock could be again traced into the checking deposit in the bank. There is no question as to the identical money being involved and traced into the stock and thence into the bank deposit. "Proceeds" is a broader term than any heretofore used in exempting from execution money received as a pension. There was a clear intention to exempt not only the check, as issued, but to exempt the money so long as it could be fairly and reasonably traced. This statute should be liberally construed. Again it is claimed as to a pension given to a soldier that after it goes into the hands of the soldier and out into the stream of property the federal government has no power to control or regulate it. We think this question comes too late in the history of jurisprudence to be available. We are clear that the federal exemption being to protect the donor it exists so long as the fund can reasonably be traced. We think the decisions of the federal courts are clear upon this question. We therefore hold that this fund is exempt from execution and that the judgment of the court of common pleas must be affirmed.
Judgment affirmed.
KUNKLE, J., concurs.
HORNBECK, J., concurs in the judgment.