Ray v. United States, 7391.

• Decision Date: 25 June 1941
• Docket Number: No. 7391.,7391.
• Citation: 121 F.2d 416
• Parties: RAY v. UNITED STATES.
• Court: U.S. Court of Appeals — Seventh Circuit

121 F.2d 416 (1941)

RAY v. UNITED STATES.

No. 7391.

Circuit Court of Appeals, Seventh Circuit.

June 25, 1941.

B. Howard Caughran, U. S. Dist. Atty., of Indianapolis, Ind., Julius C. Martin, Asst. Atty. Gen., and Fendall Marbury and Wilbur C. Pickett, both of Washington, D. C., for appellant.

Frank C. Wade, of Terre Haute, Ind., for appellee.

Before SPARKS and KERNER, Circuit Judges, and LINDLEY, District Judge.

SPARKS, Circuit Judge.

The Government appeals from a judgment for refund of premiums paid by the insured on a war risk insurance policy rescinded by it on the ground of fraud in the application for reinstatement. The suit was brought by the beneficiary of the policy and the administratrix of the estate of the deceased insured. The bill of complaint was in the alternative, to recover the face amount of the policy, or to recover the amount of premiums paid in by the insured after reinstatement of the policy. Both plaintiffs joined in both paragraphs of the complaint. Judgment was rendered January 18, 1941, in favor of the Government on the first paragraph, denying recovery of the face amount of the policy, and in favor of the plaintiffs on the second paragraph, for refund of the premiums paid after reinstatement. On January 25, the judgment was amended, on motion of plaintiffs, to include a provision for payment to their counsel of ten per cent of the amount thereof, for services rendered by him in the litigation. On March 2, the judgment was further amended, apparently on the court's own motion, to provide that the beneficiary of the policy take nothing, and that the administratrix recover the full amount of the premiums involved. From this judgment the Government appealed on June 1, 1941.

We are first confronted by appellee's motion to dismiss the appeal on the ground that it was not timely taken. She contends that the amendment must have been made under either Rule 52(b) or Rule 60(a) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c,¹ and that unless such amendment fundamentally changes the character of the judgment, it does not extend the time for appeal. Here, she contends, the amendment was merely to correct an error arising from an oversight, and did not fundamentally alter the character of the judgment which remained the same, so far as appellant was concerned — it did not change the amount found by the court to be due from it, but merely provided that that amount should be paid to one person instead of to two.

We do not agree with appellee that the amendment of March 2, constituted merely the correction of a clerical error. The judgment of January 25 was clearly erroneous in ordering payment of the amount of the premiums to the beneficiary and the administratrix of the insured, since only the latter was entitled to recover the amount due, if any. In view of the ruling in Zimmern v. United States, 298 U.S. 167, 56 S.Ct. 706, 80 L.Ed. 1118, we think there can be no question of the power of the court to correct the judgment, whether such correction was necessitated by a clerical error or one of law. The amended judgment was not entered nunc pro tunc, nor was there any reason why it should have been. We are convinced that it was a new judgment from which time for appeal is to be computed. Hence, the appeal is properly before us, and the motion to dismiss is overruled.

Appellant contends that the court erred in ordering it to refund premiums paid by the insured after he obtained reinstatement of his policy by fraudulently misrepresenting the then condition of his health, and withholding information as to ailments suffered and physicians consulted by him after lapse of his policy. The facts were stipulated, and the court adopted the stipulation for its special findings of facts. The insured was honorably discharged from service in May, 1919, and a policy theretofore issued to him was lapsed for non-payment of premiums July 1, 1919. In September, 1926, he made written application for reinstatement of $5,000 of the insurance, stating that he was then in as good health as at the due date of the premium in default, and answering "No" to the question, "Have you been ill, or contracted any disease, or suffered any injury, or been prevented by reason of ill health from attending your usual occupation, or consulted a physician in regard to your health, since lapse of this insurance?" He was examined by a medical examiner who recommended him as a first-class risk. In his statement to him he answered the question, "Are you now in good health," "Yes"; and "Have you ever been treated for any disease of the kidney or bladder," "No." On the basis of the applications and the medical examiner's report, the policy was reinstated, as of the date of October 1, 1926, without payment of back premiums to the date of lapse, as required in the case of veterans not in good health at the time of reinstatement.

In December, 1926, the insured made application for compensation, claiming a partial eye disability which he said began during service, and for which he received treatment at a hospital in France. In November, 1934, he filed application for total permanent disability, alleged to have begun in August, 1934, and to be caused by "cardiorenal disease." Because of alleged discrepancies discovered while the claim was being investigated, the Veterans' Administration notified the insured in March, 1935, that his reinstated policy was cancelled as of the date of issuance, October 1, 1926, for the reason that he had...