Riley v. United States

• Decision Date: 05 May 1954
• Docket Number: No. 6773.,6773.
• Citation: 212 F.2d 692
• Parties: RILEY v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Fourth Circuit

212 F.2d 692 (1954)

RILEY v. UNITED STATES et al.

No. 6773.

United States Court of Appeals Fourth Circuit.

Argued April 8, 1954.

Decided May 5, 1954.

Oscar J. Andre, Charleston, W. Va. (Ernest C. Swiger and Steptoe & Johnson, Clarksburg, W. Va., on the brief), for appellant and cross-appellee.

Herman S. Greitzer, Atty., Department of Justice, Washington, D. C. (Warren E. Burger, Asst. Atty. Gen., Howard Caplan, U. S. Atty., and Paul A. Sweeney, Atty., Department of Justice, Washington, D. C., on the brief), for appellee and cross-appellant.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

DOBIE, Circuit Judge.

This is a civil action brought in the United States District Court for the Northern District of West Virginia under the provisions of the National Service Life Insurance Act of 1940, 38 U.S. C.A. § 801 et seq., involving the proceeds of a life insurance policy upon the life of Charles P. Kelley, who was killed in action in World War II while on a bombing raid over Japan. His widow, Virginia T. Riley, the appellant before us and plaintiff below, claimed to be the principal designated beneficiary in the policy in question. The Government, appellee before us and defendant below, though it knew of her claim, nevertheless made monthly payments of the insurance to the insured's father, Bruce Warder Kelley, until he died in January, 1952. The appellant, in this action, sought to recover the entire proceeds of the policy as principal beneficiary or, in the alternative, to recover that portion of the proceeds of the policy remaining after the payments to insured's father.

The Government contended that the appellant is not the principal beneficiary and is, therefore, not entitled to the entire proceeds of the policy. As to that portion of the proceeds remaining unpaid, it took the position that it was merely a "stakeholder" between appellant as surviving widow and the brothers and sister of the deceased soldier, whom it interpleaded as third party defendants.

The third party defendants, appellees, insisted that appellant's right to recover under the terms of the policy was barred by statutory limitations and, further, that they, as brothers and sister of the deceased soldier, are entitled to the remaining unpaid proceeds of the policy in question, because appellant, the surviving widow, has remarried.

The District Court held, 116 F.Supp. 155:

1. Appellant is the properly designated principal beneficiary in the policy in question.

2. Appellant's action was timely instituted and is not barred by limitations.

3. Although appellant's action was timely instituted, and she is the principal beneficiary in the policy, nevertheless, she is estopped to recover the full amount of the proceeds as such beneficiary.

4. Appellant, as the surviving wife of the deceased soldier, is entitled to the proceeds of the policy remaining after deducting payments made to the father.

5. The third party defendants, appellees, are not entitled to any of the proceeds of the policy.

There is no dispute as to the facts in this case. Charles Kelley, the deceased soldier, was inducted into the United States Army Air Force on January 31, 1944, and the National Service Life Insurance Policy in question, written on his life for $10,000.00, became effective February 22, 1944. At that time, Kelley was not married and he designated his mother, Florence Elizabeth Kelley, as principal beneficiary, with his father, Bruce Warder Kelley, as contingent beneficiary. His mother died on December 19, 1944. On January 9, 1945, Kelley and appellant were married. Subsequently, they resided at Pyote, Texas, near Pyote Army Air Base where Kelley was stationed. Appellant remained with him there until he received overseas orders.

While Kelley and appellant were living together near Pyote Army Air Base, he discussed his insurance program with her and told her then that he had made the necessary changes in his National Service Life Insurance Policy to designate her as the principal beneficiary, but that as to another policy he had with a commercial company, it was payable to his father and he wanted it to remain payable to him.

On or about February 17, 1945 Kelley made and signed at Pyote Army Air Base which is known as an "AAF Personal Affairs Statement," in which he stated that he had $10,000.00 in National Service Life Insurance on the term plan and that the principal beneficiary for the full amount of the policy was his wife, with his father as contingent beneficiary. Three copies of that statement were prepared on that date. One was signed by Kelley with Captain R. A. Deidrich as witnessing officer and with Captain W. O. Hedley as reviewing officer. The original copy, signed by the two officers, was kept in Kelley's service record. An authenticated photostat of it was introduced into evidence in this case by the Government. A second copy, signed by Kelley and the witnessing officer was mailed from headquarters of Pyote Army Air Base, office of the Station Commandant, to appellant. A third copy was retained by Kelley and was among his personal effects which were sent to appellant following his death.

In March, 1945, after having advised appellant that he was going to do so, Kelley sent to her a paper in mimeographed form with filled in blanks, indicating the financial benefits which would come to her in the event of his death in service. Among the items, one stated that appellant would receive from his National Service Life Insurance the sum of $55.10 per month for a period of twenty years.

On June 18, 1945, Kelley was reported missing in action following a bombing raid over Japan and appellant was so notified. About a year later, by a letter dated May 2, 1946, appellant was informed that Kelley had been killed in action on the date he had previously been reported as missing in action.

Appellant made claim to certain benefits to which she thought she was entitled. Among them was a claim to the life insurance in question. She was then informed by the Veterans Administration that its records did not disclose that any change of beneficiary had ever been made in Kelley's insurance and that the beneficiary was the insured's father as contingent beneficiary, since the principal beneficiary, the mother, had previously died.

In support of her claim, appellant sent to the Veterans Administration all the documents which she had, including the Personal Affairs Statement and the form indicating possible benefits; but these documents were held to be insufficient to effect the change of beneficiary according to the Veterans' Administration's rules. She was then informed that unless she could produce additional proof to sustain her claim by January 13, 1947, the insurance would be paid to Kelley's father. Appellant did nothing more.

The Government, with the knowledge of appellant, began making monthly payments to Kelley's father, which continued until the father's death, January 20, 1952. The father received a total of $6,326.60. Kelley left no children. Surviving both him and his father were two brothers Virgil Kelley and Dorsie Kelley, and one sister, Charlotte Davis. On November 26, 1948, appellant married, and has since been living with, Charles Riley. The instant civil action was instituted on February 1, 1952.

We think the judgment below must be affirmed, but we base our opinion upon grounds quite different from those on which the District Judge based his decision.

We come first to the Statute of Limitations. 38 U.S.C.A. § 445 provides, in part:

"In the event of disagreement as to claim * * * under a contract of insurance between the Veterans\' Administration and any person or persons claiming thereunder an action on the claim may be brought against the United States * * * in the district court of the United States in and for the district in which such persons or any one of them resides, and jurisdiction is hereby conferred upon such courts to hear and determine all such controversies * * *.

"No suit on yearly renewable term insurance shall be allowed under this section unless the same shall have been brought within six years after the right accrued for which the claim is made * * * Provided, That for the purposes of this section it shall be deemed that the right accrued on the happening of the contingency on which the claim is founded: Provided further, That this limitation is suspended for the period elapsing between the filing in the Veterans\' Administration of the claim sued upon and the denial of said claim by the Administrator of Veterans\' Affairs. * * *

* * * *

"The term `claim\', as used in this section, means any writing * * * which uses words showing an intention to claim insurance benefits, and the term `disagreement\' means a denial of the claim by the Administrator of Veterans\' Affairs or someone acting in his name on an appeal to the Administrator. * * *"

It is conceded that, if this Statute begins to run from the death of Kelley, appellant's civil action is barred; but, if the Statute begins to run only from the date when appellant received notice of Kelley's death, then this action was timely filed. We think the Statute starts to run upon Kelley's death. Accordingly, the instant action brought by appellant, seeking as beneficiary the entire amount of the policy, is barred by the Statute.

Under the precise terms of the Statute, "the right accrued on the happening of the contingency on which the claim is founded". Clearly, this would seem to contemplate only one contingency, which must be the death of Kelley. The statute makes no reference to notification of such death by the Government. Certainly, in the absence of any such notification, which forms no basis for the claim or cause of action, a beneficiary who could clearly prove insured's death, would have a valid claim.

Again, it is the general rule that Statutes of Limitation begin to run upon the happening of the event which gives rise to the claim or cause...