McClure v. United States

• Decision Date: 28 March 1938
• Docket Number: No. 8596.,8596.
• Citation: 95 F.2d 744
• Parties: McCLURE v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

95 F.2d 744 (1938)

McCLURE v. UNITED STATES.

No. 8596.

Circuit Court of Appeals, Ninth Circuit.

March 28, 1938.

Graham K. Betts, of Seattle, Wash., and Alan G. Paine and Post, Russell, Davis & Paine, all of Spokane, Wash., for appellant.

James M. Simpson, U. S. Atty., and S. R. Clegg, Asst. U. S. Atty., both of Spokane, Wash., and Julius C. Martin, Director, Bureau of War Risk Litigation, of Washington, D. C., and Wilbur C. Pickett, Sp. Asst. to Atty. Gen., and Newman A. Townsend, Sp. Atty., and Keith L. Seegmiller, Atty., Department of Justice, both

of Washington, D. C., and George R. Stuntz, Atty., Department of Justice, of Seattle, Wash.

Before WILBUR, DENMAN, and STEPHENS, Circuit Judges.

WILBUR, Circuit Judge.

This action was brought by John F. McClure, who claimed that he had become totally and permanently disabled and was entitled to recover upon his war risk insurance. Subsequently he died, and the action was continued by his widow as administratrix of his estate, and individually. The action is predicated upon section 305 of the World War Veterans' Act of 1924, 43 Stat. 607, 626, as amended, 38 U.S.C.A. § 516.

The case was tried without a jury and the trial court made its findings of fact which brought the case squarely within the provisions of section 305, supra. The trial court found that the deceased enlisted December 14, 1917, and was discharged January 29, 1919; that he applied for and was granted a policy of war risk term insurance in the sum of $10,000 and paid premiums thereon to and including January 1919; that he became permanently and totally disabled on December 1, 1929, and had not been permanently or totally disabled at any time previous to that date; that on the date the deceased permitted his policy of insurance to lapse for failure to pay the premium in 1919 he was suffering from a compensable disability for which there was then due and uncollected compensation; that on the date of total permanent disability there was due and uncollected compensation in an amount sufficient to pay all premiums due upon said policy had the same been applied in payment thereof since the date the insurance lapsed and that said compensation still remains uncollected by reason of the provisions of section 210 of the World War Veterans' Act as amended, 38 U.S.C.A. § 499, the deceased having first made claim for such compensation on the 15th day of April 1929; that the deceased left surviving him his widow and two children. The court concluded as a matter of law that the plaintiff was not entitled to recover because under the provisions of section 301 of the World War Veterans' Act, as amended, 38 U.S.C.A. § 512, the policy sued upon ceased and terminated July 2, 1927.

Although the facts found by the trial court brought the case clearly within the provisions of section 305, supra, 38 U.S. C.A. § 516, it is claimed by the government that section 301 of the World War Veterans' Act of 1924, as amended, prohibits the application of section 305 to yearly renewable term insurance where the loss occurred after July 2, 1927, because, as that section (section 301) was amended June 2, 1926, 44 Stat. 686, it provided that yearly term insurance should cease July 2, 1927. The effect of this interpretation of these two sections (301, 305) would be that, if a veteran died or became totally and permanently disabled after the enactment of the World War Veterans' Act of 1924, and before July 2, 1927, he would be entitled to recover under the conditions set forth in section 305, but, if death or permanent disability occurred thereafter, neither he nor his beneficiaries could recover because of the provisions of the statute, section 301, declaring that yearly renewable term insurance should cease on July 2, 1927. The government claims that its view is supported by the practice of the Veterans' Bureau and by the decision of the Circuit Court of Appeals of the Tenth Circuit in Skelton v. U. S., 88 F. 2d 599, upon rehearing. Before considering these matters we will examine the statutes involved and their legislative history.

The provisions found in section 305 of the act of 1924 are predicated upon a somewhat similar provision of section 408 added to the War Risk Insurance Act of 1921, 42 Stat. 147, 156, by the third proviso of that section. It applied only to compensation for "wounds or disease suffered or contracted in line of service" and was retroactive in favor of those who had died "from said wounds or disease." The act of 1924 repealed the War Risk Insurance Act as amended. 43 Stat. 629, § 601. The repealing act provided that "the sections of this codification herein applicable thereto shall be in force in lieu thereof, subject to the limitations contained in this title," section 601; and in section 602, 38 U.S.C. A. § 571 note, that the "repeal of the several acts as provided in sections 600 and 601 hereof shall not affect any act done or any right or liability accrued, * * * but all such rights and liabilities under said Act shall continue and may be enforced in the same manner as if said repeal had not been made."

Section 305 of the World War Veterans' Act of 1924 set out in the footnote¹ limited the right to collect insurance which had lapsed to those cases: (1) Where the person at the time of the lapse was suffering from a compensable disability; (2) for which compensation was not collected; (3) dies or has died or becomes or has become permanently and totally disabled; and (4) at the time of such total and permanent and total disability was or is entitled to compensation remaining uncollected; (5) the amount of recovery to be limited to the amount which such uncollected compensation would purchase "if applied as premiums when due."

It is clear that section 305 as enacted June 7, 1924, supra, applied to the holders of yearly term insurance which had lapsed prior to the passage of the act under the circumstances and conditions described in the section. Section 301 of the same act, 38 U.S.C.A. § 512, was directed to the problem of converting yearly term insurance to other forms of insurance provided by law and regulation. It provided that "not later than July 2, 1926, all term insurance held by persons who were in the military service after April 6, 1917, shall be converted, without medical examination, in such form or forms of insurance as may be prescribed by regulation and as the insured may request." It also provided that all term insurance shall cease on July 2, 1926, except when death or total permanent disability shall have occurred before July 2, 1926. It further provided that, where yearly renewable term insurance had matured by reason of total permanent disability and the disability had ceased, the insured be given an additional period of two years from the date on which he is required to renew payment of premiums, in which to convert his term insurance.

The government insists that the express provisions for the extension of yearly term insurance contained in section 301 prevent the engrafting upon the provisions of section 301 of another exception based upon section 305. This contention cannot be maintained. Sections 301 and 305 are parts of the same statute enacted at the same time and must be construed together. The numbering of sections is wholly immaterial to their proper interpretation. The subdivision of the act into sections is purely a matter of convenience. Section 305 is just as much a part of the legislation in section 301 as though it had been added to section 301 as a paragraph thereof.

A basic fallacy in the contention that section 305 is limited by section 301 providing that yearly term insurance shall cease July 2, 1926, is the implied contention that section 305 makes provision for extending yearly term insurance beyond July 2, 1926. Section 305 does not so provide. It deals with the specified case above outlined. It does not extend or renew insurance with the correlative rights of insurer and insured. It exacts no promise, express or implied, for the payment of premiums. It does not permit such payment by the veteran. It provides for the payment of a gratuity in the form of insurance to the veteran, or to his beneficiaries (limited July 2, 1926, 44 Stat. 799, 38 U.S.C.A. § 516, to widow, child or children, or dependent father or mother).² The amount was to be ascertained by the fiction of treating such uncollected compensation as though it had been actually paid to the veteran by the government and by him repaid to the government as premiums which would have been due upon his lapsed insurance if it had not lapsed. This legislation recognized that the ascertainment of the amount of compensation allowable under the law was a fact difficult of ascertainment; that the factual decision might be long delayed; and that it was subject to revision even then. If at any time prior to his death or permanent total disability he collects his compensation, neither he nor his beneficiaries can claim payment of the gratuity. That he is not permitted to pay any premium is a clear indication that the yearly term insurance is not continued in force under section 305.

Section 305, supra, limits the application of his unpaid compensation to the lapsed policy. It does not authorize the veteran to convert his policy before July 2, 1927, when the yearly term insurance ceases and to thereafter apply the amount of uncollected compensation to premiums upon some converted form of insurance, but specifically provides for the application of the uncollected compensation to the premiums which were due under the terms of the lapsed policy and not under the terms of the converted policy.

Furthermore when the War Risk Insurance Act was passed, Congress contemplated the termination of all yearly renewable term war risk insurance within five years. The enactment of section 301, supra, in 1924, carried out this purpose, but the earlier acts provided for the voluntary conversion of yearly term insurance so...