Neuhard v. United States
| Decision Date | 08 April 1949 |
| Docket Number | Civil Action No. 3121. |
| Parties | NEUHARD v. UNITED STATES. |
| Court | U.S. District Court — Middle District of Pennsylvania |
Charles L. Casper, of Fahey & Casper, all of Wilkes Barre, Pa., for plaintiff.
Arthur A. Maguire, Asst. U. S. Atty., of Scranton, Pa., for defendant.
This is an action for $10,000 on two policies of life insurance issued to George L. Fahnestock, now deceased, under the National Service Life Insurance Act of 1940, as amended, 38 U.S.C.A. § 801 et seq., hereinafter referred to as the "Act of 1940."
The plaintiff, Ida Neuhard, was an aunt of the insured, and was designated as beneficiary in the policies. The plaintiff claims the proceeds of the policies, alleging that she stood "in loco parentis" to the insured for more than a year prior to his entry into the service and, therefore, is within the class of permitted beneficiaries under Section 802(g) of the Act of 1940. The Government denies the plaintiff's allegation of the "in loco parentis" relationship.
After the plaintiff completed presentation of her evidence the Government moved for a dismissal of the action on the ground that, upon the facts and the law, the plaintiff had shown no right to relief. On this motion, the action was dismissed without prejudice to the plaintiff. Plaintiff has moved the Court to vacate its order of dismissal and to enter judgment for the plaintiff. This motion is now before the Court for disposition.
Plaintiff contends that judgment should be entered for the plaintiff for the reason that "the United States may not contest this action under the provisions of the National Service Life Insurance Act." Section 802(w) of the Act, on which plaintiff relies, reads as follows: "Subject to the provisions of section 812 of this title, all contracts or policies of insurance before or after August 1, 1946 issued, reinstated, or converted shall be incontestable from the date of issue, reinstatement, or conversion except for fraud, nonpayment of premium, or on the ground that the applicant was not a member of the military or naval forces of the United States."
It does not seem that Congress intended by this incontestable provision to increase or broaden the limits of the insurance contracts of the United States but only to clearly fix enforceability of the contracts as set out in the policies. Here Section 802(g) of the Act of 1940, which sets forth the class of permitted beneficiaries, was a term of the insurance contracts, since the certificates issued to the insured in lieu of policies state in part, "* * * this insurance is granted under the authority of the National Service Life Insurance Act of 1940, and 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, all of which, together with the application for this insurance, and the terms and conditions published under authority of the Act, shall constitute the contract." Therefore, a defense denying that plaintiff is in the class of permitted beneficiaries does not contest the validity of these policies; but this defense is an assertion of and a reliance on the terms of the policies. Such defense is not a contest of the policies so as to be precluded by Section 802(w) of the Act of 1940. The Government admits in its answer that insured was granted said policies and that the insurance was in full force and effect at the date of insured's death. The Government does not deny that the proceeds are payable, but does deny that they are payable to this plaintiff, and all that is contested is the claim of this plaintiff. The policy itself is not contested. It is impossible to conceive that the contract could provide that the policy shall be payable only to certain relatives of the insured, and also provide that, if a person who is not such a relative claims the proceeds of the policy, the United States shall be barred from contesting that person's claim.
A careful examination of the cases fails to show a federal case wherein the same question as to incontestability arose and was determined. In the case of Branch v. United States et al., D.C.W.D. Okl., 63 F. Supp. 641, the plaintiff sought as the widow of the insured to recover the proceeds of an insurance policy similar to the one involved in the present action. The United States contested the claim, and the Court concluded that the plaintiff was not the lawful wife of the insured, and was not within the class of beneficiaries as permitted by Section 802(g) of the Act of 1940. In this case, it was not contended that defendant was barred from contesting the Plaintiff's claim. In the case of Gehm v. United States, D.C.S.D.N.Y., 83 F.Supp. 1003, the plaintiff sought to recover as beneficiary of a policy similar to the one involved in the present action. The plaintiff alleged that she was the widow of the insured. The Court held that the plaintiff, the named beneficiary of decedent's policy, was not entitled to payment of the proceeds of decedent's insurance since she was never the legal wife of the decedent, and stated in the opinion: "Since the insured designated a beneficiary who was not within one of the classes of permitted beneficiaries his designation was ineffectual and the policy stood as if no beneficiary had been designated." There was no contention in this case ...
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