Reivich v. United States

• Decision Date: 03 April 1928
• Docket Number: No. 4898.,4898.
• Citation: 25 F.2d 670
• Parties: REIVICH v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Sixth Circuit

25 F.2d 670 (1928)

REIVICH v. UNITED STATES et al.

No. 4898.

Circuit Court of Appeals, Sixth Circuit.

April 3, 1928.

Francis J. Cook, of Cleveland, Ohio, for appellant.

Howell Leuck, Asst. U. S. Atty., of Cleveland, Ohio (A. E. Bernsteen, U. S. Atty., of Cleveland, Ohio, James O'C. Roberts, Asst. Gen. Counsel of U. S. Veterans' Bureau, of Washington, D. C., James T. Brady, of New York City, and C. L. Dawson, of U. S. Veterans' Bureau, of Washington, D. C., on the brief), for appellees.

Before DENISON, MOORMAN, and KNAPPEN, Circuit Judges.

DENISON, Circuit Judge.

Herman Reivich died in October, 1918, holder of a $10,000 war risk insurance policy, payable to himself as beneficiary. By will made before the application for the policy, he had made his grandmother sole legatee. Following the then prevailing view that such a legatee was not a "designated beneficiary" under the War Risk Insurance Act (Comp. St. § 514a et seq.), the Director of the Bureau, in March, 1919, awarded the insurance to the soldier's brother, Alex Reivich ("as the person named as beneficiary by" the soldier), and payments to him were begun. Later the question was raised as to his right, and July 11, 1924, it was decided that he was the sole person entitled, as against other relatives, and another award to him was made. The payments to him, including July, 1924, aggregated $4,073. On August 26, 1924, the Bureau, following U. S. v. Napoleon (C. C. A. 5) 296 F. 811, decided that the award to him had been erroneous, and that the "proceeds are properly payable" to the grandmother as the designated beneficiary. It soon appeared that in July, 1924, the grandmother had died. In October the Bureau wrote to counsel for Reivich: "You are advised that it has been determined that the grandmother of the insured was entitled to the monthly payments of insurance during her lifetime under will of the insured. However, it has been determined further that the payments of the insurance previously made in this case will be allowed to stand, and that, subsequent to the death of the grandmother, the full brother, your client, Alex Reivich, under the laws of the state of Ohio is entitled to the remaining installments of the insurance."

In May, 1925, Reivich was advised that formal proof of the death of the grandmother had been received, but that owing to the provisions of section 303 of the Veterans' Act, as amended March 4, 1925 (38 USCA § 514), the remaining payments should be commuted and paid to the estate of the insured; "the remaining insurance will therefore be payable to Mr. Cahuse, as executor." On May 26, Reivich was advised by the Bureau "that the precise amount of the remainder of the insurance which will be so paid to the executor is $7,748." Later Reivich became administrator d.b.n. c.t.a. of the soldier's estate in place of the named executor, and in September he was again advised "that it has been held that the insurance installments payable subsequent to the death of your grandmother are now payable to the administrator of the veteran's estate in a lump sum." At a later date, the Bureau deducted from this $7,748 the $4,073 which had been previously paid to Reivich as brother, and paid to Reivich as administrator only the balance, being $3,675. This voucher and payment were apparently the first notice that the Bureau intended to deduct from the present value of the remaining payments the amount of those payments which it held had been erroneously made to Alex Reivich, as beneficiary. It appears, also, that the administrator of the grandmother's estate was before the Bureau claiming this $4,073, and that the Bureau was intending to pay this sum to that administrator, though apparently no award had ever been made to the grandmother.

In this situation, this bill was filed in the court below by the administrator of the soldier against the United States and the grandmother's administrator, asking payment of the balance, $4,073, which the Bureau had deducted. The United States and the grandmother's administrator filed answers and cross-complaints, affirming that the grandmother's administrator was entitled to this balance. Upon final hearing in this case, the court below agreed with the views of the Bureau and directed payment of this balance to the grandmother's administrator. The record contains no finding of facts and no agreed statement, but the opinion and decree say that the facts were agreed upon and the opinion summarizes them. We assume that the stipulation existed as recited.

The underlying question involved is whether the grandmother was the "designated beneficiary" under section 402 of the original act (Comp. St. § 514uuu). Where a will was made before the insurance was in existence or contemplated, and where in the application the soldier refrained from naming this legatee in the blank provided therefor, but named "himself," we can feel no certainty that this legatee is that "designated beneficiary" whom section 402 contemplates. That he is was considered in the Napoleon Case, supra (though perhaps, on account of the pleading, not expressly decided); that case on that point has not been doubted; and the Bureau has followed it for years in many cases. Lacking any conviction to the contrary, we think it better to accept and follow the rule there announced.

The question chiefly argued is as to the construction of section 303. Correctly to apprehend it, as applied to this case, its origin and development should be observed. In the original War Risk Insurance Act of October, 1917, the conditions of the policies were not fully stated but were to be fixed by regulations, though the statute, section 402, expressly prescribed that, "if no beneficiary within the permitted class be designated by the insured, either in his lifetime or by his last will and testament, or if the designated beneficiary does not survive the insured, the insurance shall be payable to such person or persons, within the permitted class of beneficiaries as would under the laws of the State of the residence of the insured, be entitled to his personal property in case of intestacy." Bulletin No. 1 of the Bureau, dated October 15, 1917, prescribed the form of policy; and this form, after providing a blank for designating the beneficiary to whom the payments were to be made, continued: "If no beneficiary within the permitted class be designated by the insured, either in the insured's lifetime or by last will and testament * * * the insurance (or, if any above designated beneficiary shall survive the insured but shall not receive all the installments, then the remaining installments) shall be payable etc., as in section 402."

It will be seen that the statute, section 402, apparently contemplated that the designated beneficiary who survived the insured would take an interest, which under ordinary rules would be a vested interest, in all the unpaid installments, fairly implying that those...