W. B. Worthen Co. v. Thomas

STATEMENT BY THE COURT.

Appellant, W. B. Worthen Co., agent, plaintiff below, procured judgment in personam against one Ralph Thomas and Mrs. W. D. Thomas, known also as Van Cleve Thomas, appellee herein, doing business as copartners under the firm name and style of Enterprise Harness Company, based upon personal service of summons upon each of said defendants, in the Pulaski Circuit Court, Second Division, on August 31, 1932, in the sum of $1,200, with interest thereon at 6 per cent. per annum from July 5, 1932, until paid, and costs. The judgment was not appealed from, and remains in full force.

Pursuant to said judgment, the appellant caused writs of garnishment with allegations and interrogatories to be served upon certain persons, naming them, who answered, denying having any property belonging to either Ralph Thomas or Mrs. W. D. Thomas, and, stating further, that they were not indebted to them, or either of them, in any amount.

Appellant caused a writ of garnishment, based upon the judgment aforesaid with allegations and interrogatories, to be served upon the Missouri State Life Insurance Company by the sheriff of Pulaski County by delivering same to U. A. Gentry, State Insurance Commissioner, the agent designated by said garnishee for service of process upon it in Pulaski County, wherein appellant alleged that said garnishee had in its hands and possession $5,000 belonging to appellee as shown by the sheriff's return.

The Legislature enacted act 102 at its 1933 session, the title and first section of which reads as follows:

"ACT 102.

"An Act to Extend the Exemption Laws of this State.

"Be it enacted by the General Assembly of the State of Arkansas:

"Section 1. All moneys paid or payable to any resident of this State, as the insured or beneficiary designated under any insurance policy, or policies, providing for the payment of life, sick, accident and/or disability benefits, shall be exempt from liability or seizure under judicial process of any court, and shall not be subjected to the payment of any debt by contract, or otherwise by any writ, order, judgment or decree of any court, provided that the validity of any sale, assignment, mortgage, pledge or hypothecation of any policy of insurance or if any avails, proceeds or benefits thereof, now made, or hereafter made, shall in no way be affected by the provisions of this act."

Approved: March 16, 1933.

Appellee filed a motion to dismiss the writ of garnishment against the life insurance company issued and served on March 10, 1933, and for the further purpose of scheduling a certain sum of money owed her by the aforesaid insurance company as exempt from garnishment or seizure under the provisions of act 102 of 1933, which she alleged exempted the money due her from garnishment or seizure under the judicial process of any court.

On April 6, 1933, the insurance company answered the garnishment, stating that it had issued theretofore to W. D. Thomas its policy No. 86,800 in the amount of $5,000; "that appellee herein, Mrs. W. D. Thomas, known also as Van Cleve Thomas, was designated as beneficiary therein, and that she had made claim on it for the proceeds of said policy. That, by reason of certain accumulations on said policy, that it admitted an indebtedness thereunder in the amount of five thousand, fifty-seven and 80/100 dollars ($5,057.80), and that it was ready to pay this amount to said beneficiary when authorized to do so by an order of the Pulaski Circuit Court."

It stated further "that by the provisions of act 102, enacted by the General Assembly of the State of Arkansas, at its 1933 session, all moneys payable to any resident of this State under a policy of insurance are exempt and not subject to seizure under judicial process of any court. That appellee was then a resident of this State," and prayed the court to enter an order discharging it of all liability to appellant, and that it be authorized to pay the proceeds of the policy to appellee.

On April 7, 1933, the court, upon a petition of appellee, found that $2,000 was a sufficient amount to satisfy any claim or judgment that appellant could have against any of the funds held by the insurance company, and ordered, upon the payment of that amount into the registry of the court by it, that said company should be discharged from any liability arising from the writ of garnishment, and that it be discharged with its costs.

On April 20, 1933, appellant filed its response to the motion to dismiss the writ of garnishment, and on April 29 it filed an amendment thereto in which it resisted the aforesaid motion to dismiss, challenging act 102 of 1933 as unconstitutional and void.

On the hearing, the court found that the insurance company had paid $2,000 into the registry of the court pursuant to its order, and was discharged from further liability as garnishee, which was held subject to further order of the court, and that said sum of money was exempt from liability or seizure under any judicial process of any court and granted said motion and schedule; ordered that the money paid into court be released from liability under the garnishment, and ordered the clerk to pay over the money to Mrs. W. D. Thomas, or her attorney of record, taking a receipt therefor on the margin of the record. Appellant excepted to the court's action in granting the motion and schedule, and prayed an appeal to the Supreme Court. (after stating the facts). The only question for determination here is the constitutionality of act 102 of 1933, approved March 16, 1933.

It is insisted that said act is violative of 10, article 1, of the Constitution of the United States, as impairing the obligations of a contract, and 17 of article 2 of the Constitution of Arkansas.

In Acree v. Whitley, 136 Ark. 149, 206 S.W. 137, it was said: "It may be stated at the outset that 21 does not relate to the absolute exemption of personal property allowed a resident of this State, as exempt from certain debts and liabilities under 1 and 2 of article 9 of our Constitution. The reason is beneficiaries in insurance policies, as well as other persons, are obliged to pay judgments against them in favor of third persons and exemptions from execution and other process of the court are fixed by the sections of the Constitution above referred to. The statute in question was not enacted for the purpose of allowing beneficiaries exemptions which they are not entitled to under the Constitution and laws of this State, but the act was passed for the purpose of exempting these funds from the operation of our general statutes regulating issuance of garnishments and proceedings thereunder."

It is true this act is broader in its terms than the one construed in the above case, since it exempts all moneys payable to any resident of the state "as the insured or beneficiary designated under any insurance policy or policies providing for the payment of life, etc., * * * from liability or seizure under judicial process of any court, and shall not be subject to the payment of any debt by contract or otherwise by any writ, order, judgment or decree of any court, * * * provided that the validity of any sale, mortgage, or hypothecation of any policy of insurance, etc., shall in no way be affected by the provisions of this act."

As said by this court of the other statute, it can well be said of this statute, act 102 of 1933, that it "does not relate to the absolute exemption of personal property allowed a resident of this State as exempt from certain debts and liabilities under 1 and 2 of article 9 of our Constitution. * * * was not enacted for the purpose of allowing beneficiaries exemptions which they are not entitled to under the Constitution and laws of this State, but the act was passed for the purpose of exempting these funds from the operation of our general statutes regulating issuance of garnishments and proceedings thereunder."

This could be done without violation of our Constitution. No creditor has the right to any particular remedy, and such statutes prohibit only the issuance of garnishments against such funds, as already held by our court; and neither does it violate the Constitution of the United States in impairing the obligations of a contract by prohibiting the use of certain procedure in subjecting certain insurance funds to the payment of a judgment against the beneficiary in an insurance policy — funds that were not in existence when the judgment was obtained and were allowed to be provided for by the insured whom the law allows to expend a certain amount of money to provide insurance for the benefit of his wife.

The law allows the equities in cases to be considered in the construction of the statutes relating to the subject in question. Evans-Snider-Buel Co. v. McFadden, 105 F. 293, 58 L.R.A. 900.

The judgment is affirmed.

MEHAFFY, J., dissents.