Opinion
No. 79-842-A
June 18, 1980
Former Bankruptcy Act — Title to Property — Workmen's Compensation — Exemptions
Workmen's compensation benefits deposited in the bankrupt's checking account are exempt from the claims of creditors, and therefore not property of the bankrupt's estate since the benefits provide only for the basic necessities and were not invested, spent, or commingled with other monies. See Sec. 70a at ¶ 2679 and Sec. 541(a) at ¶ 9501.
[Digest of Opinion]
The bankrupt alleged that funds in her checking account resulting from disability payments under the state Workmen's Compensation Act were not available to creditors because they were exempt under federal law, 33 U.S.C. § 916, and state law, Virginia Code Section 65.1-82 (Replacement 1973). It was asserted that if disability payments are placed in a checking account the funds do not lose their identity or exempt status if identifiable.
The court cited the Supreme Court of West Virginia, in Billingslea v. Tartell, 35 S.E.2d 89 (W.Va. 1945), wherein it was held that as long as money received as compensation can be identified or legally treated as such it is exempt. Further, that court determined that as the money deposited in the bank had not been spent, invested or commingled with other monies, it could not be said that such compensation money had lost its identity.
It was then noted that the United States Supreme Court, in Porter v. Aetna Casualty and Surety Co., 370 U.S. 159 (1962), has adopted this view with respect to veterans' benefits by determining that such benefits retained their exempt status even after being deposited in a federal savings and loan association. In that case it was noted that a withdrawal of the deposited funds could be made as quickly as in a checking account to meet the veteran's needs.
Accordingly, this court determined that the funds were exempt and not property of the estate pursuant to Section 70a of the Bankruptcy Act.