U.S. Supreme Court LAWRENCE V. SHAW , 300 U.S. 245 (1937)

300 U.S. 245

LAWRENCEv. SHAW et al.No. 549.

Argued Feb. 12, 1937.Decided March 1, 1937.

Mr. John E. Benton, of Washington, D.C., for petitioner.

Mr. W. D. Boone, of Winton, N.C., for respondents.

Mr. Chief Justice HUGHES, delivered the opinion of the Court.

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, 22,1 43 Stat.

[ Lawrence v. Shaw 300 U.S. 245 (1937) ]

[Page 300 U.S. 245 , 247]

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.

The agreed case showed the bank deposits as they stood on April 1st of each year. [Footnote 3] It does not appear when the amounts making up these annual balances had been deposited or whether there was any special agreement relating to them. They are scheduled as 'deposits in bank,' without more. The stipulation states that they '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.

[Page 300 U.S. 245 , 249]

into his hands or those of his guardian, we left the question open 'whether the exemption remained in force while they continued in those hands or on deposit in a bank.' The World War Veterans' Act, 1924, provided that the compensation and insurance allowances should be 'exempt from all taxation.' The Act of 19356 is more specific, providing that the payments shall be exempt from taxation and shall not be liable to process 'either before or after receipt by the beneficiary.' There was added the qualification that the exemption should not extend 'to any property purchased in part or wholly out of such payments.' This more detailed provision was substituted for that of the earlier act and was expressly made applicable to payments theretofore made. We think it clear that the provision of the later act was intended to clarify the former rather than to change its import and it was with that purpose that it was made retroactive. [Footnote 7]

[Page 300 U.S. 245 , 251]

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.

Reversed. Footnotes

Footnote 1 Section 22 provides:'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.'

Footnote 2 Sections 3 and 5 of the Act of 1935 provide:'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 section 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.'

Footnote 3 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.

Footnote 4 The paragraph of the agreed case upon this point is as follows:'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.'

Footnote 5 See Note 1.

Footnote 6 See Note 2.

Footnote 7 See report of the Committee on Finance of the Senate, Sen. Rep. No. 1072, 74th Cong., 1st Sess.