Source: https://supreme.justia.com/cases/federal/us/300/245/
Timestamp: 2019-04-24 18:03:36+00:00

Document:
Bank credits of a veteran of the World War, or his guardian, which do not represent or flow from his investments, but result from the deposit of the warrants or checks received from the government in payment of benefits, are exempted from local taxation by the World War Veterans' Act, § 22, and the Act of August 12, 1935, §§ 3 and 5, when such deposits are made in the ordinary manner, so that the proceeds of collection are subject to draft upon demand for the veteran's use. Trotter v. Tennessee, 290 U. S. 354, distinguished. P. 300 U. S. 248.
210 N.C. 352, 186 S.E. 504, reversed.
Certiorari, 299 U.S. 537, to review the affirmance of a judgment against Lawrence in a proceeding to recover a sum paid, under protest, as a tax.
The controversy in this case relates to the liability to local taxation of certain bank deposits made by the petitioner as guardian of an incompetent veteran of the World War. Immunity was claimed under the federal statutes. World War Veterans' Act, 1924, § 22, [Footnote 1] 43 Stat.
606, 613, 38 U.S.C. § 454; Act of August 12, 1935, §§ 3 and 5, [Footnote 2] 49 Stat. 607, 609. The Supreme Court of North Carolina denied the immunity (210 N.C. 352, 186 S.E. 504), and this Court granted a writ of certiorari. January 4, 1937.
however, the tax officials assessed the ward's property for each of the years 1931 to 1935, inclusive. The property consisted of deposits in banks and real estate loans. No question is raised by the petitioner with respect to the taxability of the latter. See Trotter v. Tennessee, 290 U. S. 354.
"represented and, in fact were the collections from warrants or checks drawn and issued by the United States Government in payment of compensation and insurance"
due to the ward, that these warrants or checks were deposited by the guardian and credited in his bank account, and that the items assessed were "the unexpended and uninvested balances," in the hands of the guardian, of the payments thus made by the government. [Footnote 4] Petitioner paid the taxes under protest and demanded refund which was refused.
"Where a guardian of a World War Veteran receives from the Veterans' Bureau of the United States Government, warrants or checks issued by said Government in payment of adjusted compensation or insurance due the guardian's ward, and said warrants or checks are deposited by the guardian in a depository, collected by it, and the proceeds are credited in the guardian's account carried in such depository, are such deposits subject to taxation by county and municipal authorities?"
"The statute speaks of 'compensation, insurance, and maintenance and support allowance payable' to the veteran and declares that these shall be exempt. We see no token of a purpose to extend a like immunity to permanent investments or the fruits of business enterprises. Veterans who choose to trade in land or in merchandise, in bonds or in shares of stock, must pay their tribute to the state."
Id., pp. 290 U. S. 356-357.
of this immunity, which would attach to the moneys in his hands, by depositing the government warrants or checks in bank to be collected and credited in the usual manner. These payments are intended primarily for the maintenance and support of the veteran. To that end, neither he nor his guardian is obliged to keep the moneys on his person or under his roof. As the immunity from taxation is continued after the payments are received, the usual methods of receipt must be deemed available so that the amounts paid by the government may be properly safeguarded and used as the needs of the veteran may require.
intent of the statute, the avails of the government warrants or checks must be deemed exempt until they are expended or invested.
The answer by the state court is broad enough to cover bank deposits of that sort, and we consider the ruling in that application to be contrary to the federal statute. The judgment is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.
"Sec. 22. That the compensation, insurance, and maintenance and support allowance payable under Titles 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 Titles II, III, or IV, and shall be exempt from all taxation: Provided, That such compensation, insurance, and maintenance and support allowance shall be subject to any claims which the United States may have, under Titles II, III, IV, and V, against the person on whose account the compensation, insurance, or maintenance and support allowance is payable."
"Sec. 3. Payments of benefits due or to become due shall not be assignable, and such payments made to, or on account of, a beneficiary under any of the laws relating to veterans shall be exempt from taxation, shall be exempt from the claims of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. Such provisions shall not attach to claims of the United States arising under such laws nor shall the exemption herein contained as to taxation extend to any property purchased in part or wholly out of such payments. Section 4747 of the Revised Statutes and § 22 of the World War Veterans' Act, 1924, are hereby repealed, and all other Acts inconsistent herewith are hereby modified accordingly. . . ."
"Sec. 5. That this Act shall take effect and be in force from and after its passage, but the provisions hereof shall apply to payments made heretofore under any of the Acts mentioned herein."
They were $5,787.72 in 1931, $3,868.42 in 1932, $3,704.76 in 1933, $987.48 in 1934, and $2,730.93 in 1935.
"That each of the said items set out and shown in paragraph 16 as 'Deposits in Banks,' for each of said years, represented, and in fact were, the collections from warrants or checks drawn and issued by the United States Government in payment of Compensation and Insurance due by it to plaintiff's ward, which said warrants or checks were deposited by plaintiff in such depositories and credited by them in the plaintiff's account as guardian aforesaid, and the amounts of said assessments and levies made up by said defendants on the items aforesaid, and shown in said paragraph, represented and were, in fact, the unexpended and uninvested balances in the hands of the said guardian of payments aforesaid by the U.S. Government, of warrants or checks issued by it for compensation and insurance due by it to the said veteran."
See report of the Committee on Finance of the Senate, Sen.Rep. No. 1072, 74th Cong., 1st Sess.

References: § 22
 v. 
 § 22
 § 454
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 § 22