Service Store v. Speck , 48 Ohio App. 2d 115 ( 1976 )

The issue raised appears to be of first impression in this state. Therefore, it is necessary to consider the broader subject of exemptions in general and the construction that has been given to them.

Although in derogation of the common law, statutes granting exemptions because of the humane purposes they seek to further have been construed liberally in favor of the debtor. See, e.g., Dennis v. Smith (1932), 125 Ohio St. 120. This principle, however, has no application where there is no ambiguity in the statute and where the construction urged does violence to the plain meaning of the statute's language. Morris Plan Bank v.Viona (1930), 122 Ohio St. 28. The import of statutory language may not be enlarged, nor its meaning strained, so as to bring within its purview a case clearly beyond its scope. Gibson v. Mundell (1876), 29 Ohio St. 523.

The statute in controversy here, R. C. 5107.12, reads:

"Aid under sections 5107.01 to 5107.16 [relating to aid to families with dependent children], inclusive, shall beinalienable whether by way of assignment, charge, or otherwise, and exempt from execution, attachment, garnishment, and other like process." (Emphasis supplied.)

The majority predicates its opinion upon the case of FirstNational Master Charge v. Gilardi (1975), 44 Ohio App. 2d 383, wherein the Court of Appeals for Hamilton County construed R. C.5113.01, which is nearly identically worded with R. C. 5107.12. I disagree with the rationale applied by my colleagues. The decision in Gilardi, supra, conflicts with that court's rationale in In re Ell (1943), 71 Ohio App. 535, wherein that court did not exempt proceeds of a police pension deposited in a bank account. At that time, G. C. 4628-2 provided:

"No sum of money due, or to become due, to any pensioner shall be liable to attachment, levy or seizure by or under any legal or equitable process whatever, whether the same remains with the treasurer of the pension fund * * * or is in the course of transmission to the pensioner, but shall inure wholly to thebenefit of such pensioner." (Emphasis supplied.)

Three federal cases were cited as authority in Gilardi. While these cases are of little precedential value, they are indicative of a judicial expression of social policy.

Philpott v. Essex County Welfare Board (1973), 409 U.S. 413, held that social security benefits are exempt from attachment after they are deposited in a bank account by the recipient. Title 42, Section 407, U.S. Code, states: "none of the moneyspaid or payable * * * shall be subject to * * * attachment, garnishment, or other legal process * * *." (Emphasis added.)

Porter v. Aetna Casualty Surety Co. (1962), 370 U.S. 159, held veterans' benefits, pursuant to Title 38, Section 3101, U.S. Code, to be exempt from the claims of creditors even though deposited in a savings and loan association account. That statute provides that payments shall be exempt "either before or after receipt by the beneficiary * * *." (Emphasis added.)

Lawrence v. Shaw (1937), 300 U.S. 245, held World War I veterans' compensation immune from state taxation under Title 38, Section 454, U.S. Code, which provided that such compensation "shall not be assignable * * * shall be exempt from the claims of creditors, and shall not be liable to attachment, levy, or seizure * * * either before or after receipt by the beneficiary." (Emphasis added.)

While in each of these three cases the court alludes to the social policy underlying the grant of aid and the immunity of that aid from the claims of creditors, it is apparent that the ratio decidendi in each was the clear import of the statutory language that they be exempt after as well as before receipt.

An examination of some of the decisions rendered by the courts of other states indicates that judicial interpretation of exemptions has not expanded the exemption beyond the plain meaning of the statute. Miller v. Monrean (Alaska 1973),507 P.2d 771; Colton v. Martell (1974), 79 Misc. 2d 190, 359 N. Y. So.2d 632; Kaufman v. Hicks (1974), 17 Ill. App. 3d 274,307 N.E.2d 615; Kruger v. Wells Fargo Bank (1974), 11 Cow. 3d 352,521 P.2d 441; G. M. A. C. v. Falcone (1974), 130 N. J. Super. 517,327 A.2d 699 a New Jersey case conflicting with Beierlien v.Faulkner (1937), 190 A. 853. These cases are consistent with the case law rules of construction in Ohio.

R. C. 5107.12 speaks of two concepts: aid which is inalienable and aid which is exempt. The former refers to voluntary action by the intended recipient and the latter refers to involuntary action against the intended recipient. Nowhere does the statute mention what occurs after the aid is paid to the recipient. Only while it is aid does it retain its inalienability and exemption. All of the examples mentioned in the statute such as "assignment, charge, * * * attachment, garnishment * * *" are all processes and actions to prevent the aid ever reaching the recipient. The legislature was trying to close all the doors to payment to the recipient. If it also intended to protect the monies after the payment to the recipient, the legislature should have so provided or at least provided a partial exemption under R. C. 2329.62 through R. C. 2329.66. Once it is paid to the recipient, can anyone say it is no longer alienable? Otherwise, how could it ever be applied for the benefit of the dependent children? If it loses its inalienability after payment, it must also lose its exempt quality. The law does not specify any method of disbursement or accounting but simply requires the recipient to expend the funds for the benefit of the dependent children. The benefit can take various forms.

I see no reason to decide this case in a manner inconsistent with the rules of construction long followed in this state concerning exemptions. The majority's holding enlarges the scope of the exemption accorded by this statute beyond the plain import of the statutory grant. I am unwilling to engage in impermissible judicial legislation.

While allowing the attachment of these funds after receipt by the beneficiary may be viewed as thwarting the legislative intent behind the grant, Title 42, Section 602, U.S. Code, contains no language prohibiting the garnishment after payment. Moreover this statute clearly establishes procedures to be followed when it appears that aid is not inuring to the benefit of the child, including counseling of the mother or even making a child a ward of the state in extreme cases. The procedures thus established would better insure that the aid benefits the child than would the court's decision today. This is especially true where the debtor may well be one who previously furnished food, goods, or services on credit to the mother for the benefit of the children.

In short, my colleagues say the money in the checking account is exempt from attachment because it can be traced and is readily discernible and available for disbursement by the mother. Would they still follow the aid if it were put in jewelry? a used auto? a savings bond? a savings account? furniture? cash? or a payment on a house? I doubt it. If it is exempt, it is exempt for all purposes not just because it loses its identity and is commingled. Speaking of commingling and loss of identity, is a checking account anything other than a debtor-creditor relationship after a deposit is made?