American Nat. Bank & Trust Co. v. United States, 8046.

• Decision Date: 15 February 1943
• Docket Number: No. 8046.,8046.
• Citation: 134 F.2d 674
• Court: U.S. Court of Appeals — District of Columbia Circuit
• Parties: AMERICAN NAT. BANK & TRUST CO. OF CHICAGO, ILL., et al., v. UNITED STATES et al.

134 F.2d 674 (1943)

AMERICAN NAT. BANK & TRUST CO. OF CHICAGO, ILL., et al., v. UNITED STATES et al.

No. 8046.

United States Court of Appeals for the District of Columbia.

Decided February 15, 1943.

Mr. Warren E. Miller, of Washington, D. C., for appellants.

Mr. Keith L. Seegmiller, Attorney, Department of Justice, of Washington, D. C., with whom Messrs. Edward M. Curran, United States Attorney, Julius C. Martin, Director, Bureau of War Risk Litigation, and James B. Costello and Wilbur C. Pickett, Attorneys, Department of Justice, all of Washington, D. C., were on the brief, for the United States of America.

Mr. John L. Fowler, of Washington, D. C., was on the brief for appellees other than the United States of America.

Before GRONER, Chief Justice, and VINSON and RUTLEDGE, Associate Justices.

RUTLEDGE, Associate Justice.

The issues relate to the amount and disposition of the benefits of a revived policy of war risk yearly renewable term insurance, issued originally in 1918 to Alcee Peter Seldon, pursuant to the War Risk Insurance Act of October 6, 1917.¹ The claimants are the guardian of the insured's minor children, the administrator of his estate, the administrator of his widow's estate, and his sister, Eulalie Gougis, who was the named beneficiary. The District Court rendered judgment for the guardian, denying the other claims, for the aggregate sum of the monthly instalments accruing subsequent to December 7, 1935, when the widow died. We think the judgment for the guardian was right, but the amount awarded fell short of what should have been recovered.

The issues require construction of the applicable statutes and, for specific statement, summation of the more important facts, which are not in dispute.

The policy became effective January 15, 1918. It designated as beneficiary the insured's sister, Eulalie Gougis. The record does not disclose whether he was then married. His children were born later. The policy lapsed for nonpayment of the premium due March 1, 1919; but is revived under the provisions of Section 305, World War Veterans' Act, as amended July 2, 1926,² by compensation uncollected on May 24, 1927, when the insured became totally and permanently disabled. The amount of the revived insurance is $4,587.30, payable in monthly instalments of $26.38. The insured died intestate May 14, 1930. He was survived by his widow, Genevieve B. Seldon, their two children, Genevieve and Cecelia Seldon, and his sister, Eulalie Gougis. The widow died intestate December 7, 1935. The two daughters survived her, as did Eulalie Gougis. Appellant, the American National Bank of Chicago, is administrator of the insured's estate. The Gary State Bank is administrator of the widow's estate and is also guardian of the minor children. The insured's administrator and his sister, the named beneficiary, originally instituted this suit against the United States. The widow's administrator and the children's guardian intervened. Each of the claimants asserts a right to receive all or part of the insurance.

The two basic issues are: (1) Who is entitled to receive the insurance; and (2) what is the proper amount for which the judgment should be rendered? The first, stated more specifically, is whether the insured's sister is within the permitted class of beneficiaries under Section 305; and, if not, to which of the other claimants the proceeds should be awarded. The trial court found that the sister is not within the permitted class. The second issue arises from the court's decision that 36 monthly instalments, aggregating $949.68, accruing from May 24, 1927, to May 24, 1930, the period (lacking a few days) of the insured's total and permanent disability, are not now payable to anyone, apparently in the view that they became payable only if collected in his lifetime; that 67 instalments, aggregating $1,767.46, accruing from May 24, 1930, to December 24, 1935, the period of the widow's survival, are not payable to her estate or anyone; and that the guardian's recovery for the children must be limited to the amount due under the policy after deducting these instalments. The various claimants challenge these findings in accordance with their respective interests. The Gary State Bank, particularly, as guardian of the children, contends that the Government is obligated to pay the full 240 instalments provided by the policy, so long as any permitted beneficiary remains living; and that in this case the payments should all be made directly to it as guardian for the surviving children.

I. We turn first to the question, who among the various claimants is entitled to receive the insurance? Section 305, as amended July 2, 1926, provides in pertinent part:

"Provided, That insurance hereafter revived under this section and Section 309 section 516b of this title by reason of permanent and total disability or by death of the insured, shall be paid only to the insured, his widow, child or children, dependent mother or father, and in the order named unless otherwise designated by the insured during his lifetime or by last will and testament." (Italics added.)³

The fundamental question involves the meaning of the words "unless otherwise designated by the insured during his lifetime or by last will and testament." Does this clause refer to the antecedent, "shall be paid only to the insured, his widow, child or children, dependent mother or father" or to "in the order named"? If the former, the insured was at liberty to go outside the persons mentioned, who do not include a sister, and name any other person as his beneficiary. In this construction Eulalie Gougis, the named beneficiary, would receive the insurance and the surviving children would be excluded. If the latter view is taken, the allegedly ambiguous language permits only variation of the statute's order of enumeration among the specified persons, so that the insured might prefer his dependent parent to his wife and children, or his children to his widow. He could not designate anyone outside the enumerated class. In this interpretation, Eulalie Gougis, though named in the policy, could not take as beneficiary or by testamentary disposition.

She relies upon Heinemann v. Heinemann, 6 Cir., 1931, 50 F.2d 696, and United States v. Woolen, 6 Cir., 1928, 25 F.2d 673, 678. In both cases it was held the statutory designation does not apply to policies in which the insured has named a beneficiary and that his mother, not shown to be a dependent, might take to exclusion of his widow. The Heinemann case is based upon the Woolen case, and the opinion does not discuss the issue. The Woolen case is distinguishable, both on the facts and because revival there took place by virtue of provisions of Section 309 rather than Section 305. But the opinion discusses the latter, and seems to regard the limitation of beneficiaries to the named persons as contrary to the "plain justice" Congress intended to do for the soldier by reviving his policy; finds "the natural inference * * * the other way"; and states "the new disposition" of the statute should be limited to cases where the insured has made no disposition or perhaps where his disposition has failed. The decision possibly was affected also by the apparent, but we think not real and certainly not legally invalid, retroactive effect of the change.⁴

The authority of these decisions, as they affect Section 305, in the respect now material, is impaired, if not destroyed, by the same court's later decision in United States v. Lee, 6 Cir., 1939, 101 F.2d 472. In that case the claim of the insured's estate under authority of Section 303, for insurance revived after July 2, 1926, was denied on the ground that payment of such insurance to one not mentioned in Section 305 was not authorized. When that is conceded, it is not apparent how authority for departure, when the insured designates a beneficiary, can be found within the statute's terms. Moreover, as the present case shows, there are strong considerations of "plain justice" and "natural inference" against permitting the departure.

We think the construction sought by the named beneficiary is contrary to the plain intent of the statute, as shown by the language of Section 305, its legislative history, the administrative construction and practice, the general policy of veterans insurance legislation, and persuasive judicial construction.

Punctuation clearly argues for the limited class, with leave only to vary the order of priority among the persons mentioned. Natural grammatical construction attaches the clause beginning "unless otherwise designated" to "in the order named." The word "only" in the clause "shall be paid only to" loses nearly all force under any other view. In our view the language is not doubtful. But if it were, the legislative history and administrative construction supply the intent clearly.

Before discussing these further, we turn briefly to the argument, relating to the allegedly retroactive effect of the section interpreted in this manner, as bearing not only upon its meaning, but also upon its validity. The named beneficiary urges that such a construction gives the section retroactive effect which deprives her of a vested property right. The argument is without merit. The policy was issued pursuant to Section 402, War Risk Insurance Act,⁵ and provided explicitly that it should be "subject in all respects to the provisions of such act, of any amendments thereto, and of all regulations thereunder, now in force or hereafter adopted." In White v. United States, 1926, 270 U.S. 175, 46 S.Ct. 274, 275, 70 L.Ed. 530, the validity of this reservation was upheld as effective "to embrace changes in the law no less than changes in the regulations." Cf. also Singleton v. Cheek, 1932, 284 U.S. 493, 52 S.Ct. 257, 76 L.Ed. 419, 81 A.L.R. 923; Dowell v. United States, 5 Cir., 1936, 86 F.2d 120, 122; United States v. Chavez, 10 Cir., 1936, 87 F.2d 16, 18. The policy therefore by its...