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Dept. of Public Welfare v. Sevcik





APPEAL from the Circuit Court of Cook County; the Hon. WM. J. TUOHY, Judge, presiding.


The Department of Public Welfare of the State of Illinois filed a petition in the probate court of Cook County, seeking to obtain payment from John Sevcik, Conservator of Paul Sevcik, an incompetent, for certain accrued charges for care and maintenance of the incompetent, a patient confined to the Elgin State Hospital. By its petition the Department sought to recover accrued charges and to obtain a continuing order that would compel the conservator to pay monthly charges computed pursuant to statutory authorization for care and treatment of the incompetent.

The conservator resisted the petition and claim of the Department on the grounds that the only assets of the conservatorship were funds received as proceeds of veteran's pension checks exempt from the claim of any creditor under Federal law applicable to veterans' benefits.

It was established that the only estate in the hands of the conservator consisted of cash on deposit in a bank and United States Government bonds. It is uncontroverted that this estate was accumulated solely from veteran pension benefits.

The probate court by its order allowed the claim, exclusive of certain exemptions permitted by the rules and regulations of the Department.

On appeal to the circuit court, that court held the cash was exempt from the claim of the State as proceeds of veteran's benefits but that the United States Government bonds were an investment, not exempt, and the claim was allowed to the extent of the face value of the bonds less the $500 exemption permitted by the regulations of the Department.

The Department of Public Welfare prosecutes this appeal to reverse the order of the circuit court in so far as the same held the cash in the bank to be exempt. This court has jurisdiction on direct appeal because the State has an interest and because public revenues are involved.

No cross appeal was filed by the conservator as to that portion of the order relating to the nonexempt status of the United States bonds. Indeed, both parties now here concede that that portion of the circuit court order was correct. Thus, the only question presented by this appeal is whether the bank account, composed solely of the proceeds of the pension, is exempt from the claim of the State for payment of charges assessed under the Mental Health Act.

Section 3101 of title 38 of United States Code, Ann., in so far as the same is here applicable, provides that "Payments of benefits due or to become due under any law administered by the Veterans' Administration * * * shall be exempt from the claim 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."

This exemption, as the same now exists, is the same as prior statutory language found in former sections 454a and 454. Thus, the prior cases, although decided before the effective date of the present act, would, nevertheless, be applicable to the present question.

It has been held that the exemption or immunity is not lost to the veteran when he deposits the Government warrant or check in a bank to be collected and credited in the usual manner. The exemption is operative until the money is either invested or expended. Lawrence v. Shaw, 300 U.S. 245, 81 L.ed. 623.

Bank deposits of veterans' benefits have been held to be exempt from attachment by a judgment creditor. (Williams v. United States Fidelity & Guaranty Co. (D.C. cir.) 107 F.2d 210.) A bank deposit composed solely of veteran's pensions received by the defendant from her deceased husband was held to be exempt from her creditors in the case of Surplus v. Remmele, 87 N.Y.S.2d 651. See also In re Cervantes, 22 N.Y.S.2d 116, and In re Bowen, 141 Ohio St. 602.

The Department of Welfare here concedes that Veterans' pension funds on deposit in a bank are not subject to attachment, levy or seizure by a general creditor. It is the contention of the Department, however, that a claim for subsistence charges or medical care was not meant to be excluded. Such charges, it is asserted, are for "those necessaries without which the incompetent could not subsist" and, therefore, subject to a different classification. Cited in support of this proposition are the following cases: In re Shinberg, 76 N.Y.S.2d 334; In re Simpson, 61 N.Y.S.2d 529; In re Cerello's Estate, 281 N.Y.S. 599; In re Murphy's Committee, 237 N.Y.S. 448; In re Guardianship of Remowski, 3 Wis.2d 133, 88 N.W.2d 22; In re Todd's Estate, 243 Iowa 930, 54 N.W.2d 521, and In re Lewis's Estate, 287 Mich. 179, 283 N.W. 21.

The reasoning in support of these cases is well illustrated by the following language from the opinion of the Supreme Court of Michigan in In re Lewis' ...

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