United States v. Cathcard

• Decision Date: 24 April 1946
• Docket Number: Civ. No. 59.
• Citation: 70 F. Supp. 653
• Parties: UNITED STATES v. CATHCARD et al.
• Court: U.S. District Court — District of Nebraska

70 F. Supp. 653

UNITED STATES v. CATHCARD et al.

Civ. No. 59.

District Court, D. Nebraska, Omaha Division.

April 24, 1946.

COPYRIGHT MATERIAL OMITTED

Joseph T. Votava, U. S. Dist. Atty. for the Dist. of Neb., of Omaha, Neb., for plaintiff.

C. L. Dawson, of Washington, D. C., and Carl T. Self, of Omaha, Neb., for defendants.

DONOHOE, District Judge.

This is an action by the United States against James S. Cathcard, incompetent, and Helen L. Marsh, his guardian, to recover from the defendants the sum of $7,964.11, with interest and costs, on the ground that the defendants are indebted to the United States in that amount.

It is alleged in the complaint that this sum represents a balance due to the United States from the defendants on account of payments of compensation and vocational training pay, which were made to the incompetent, a veteran of World War I, under the provisions of legislation enacted for the benefit of veterans. The government alleges that the incompetent was not entitled to receive these payments due to the fact of reenlistment in the United States army, and the perpetration by him of a fraud upon the United States.

It is also charged, in substance, that the terms of the legislation under which the payments were made provide that in case of fraud the recipient is obligated to refund to the United States the money received, and that such legislation creates a contractual obligation on his part to do so.

On the evidence which has been submitted to the court, a trial by jury having been waived by stipulation, the court makes the following special Findings of Fact:

Findings of Fact

1. The defendant, James S. Cathcard, served as a soldier in the United States army from May 11, 1918, until July 5, 1919. and was honorably discharged on the latter date.

2. During the period of his military service between May 11, 1918, and July 5, 1919, the defendant James S. Cathcard was granted war risk insurance, and thereafter, with the consent of the United States, converted such insurance into convertible term insurance.

3. On February 18, 1920, James S. Cathcard executed a claim for disability benefits on the ground that he had contracted disabilities during his period of military service.

4. On August 30, 1920, before the allowance of the claim for disability benefits, James S. Cathcard attempted to enter into a purported contract of reenlistment.

5. On September 14, 1920, James S. Cathcard deserted from the army, and was not "apprehended" until February 28, 1926, and was thereafter discharged on April 19, 1926, "not honorable per desertion, not admitted, and physical unfitness."

6. Between August 30, 1920, and February 28, 1926, the United States paid out on account of James S. Cathcard the sum of $5,019.35, as compensation payments, and the sum of $1,018.60 as vocational training payments.

7. Between October 5, 1926, and November 30, 1928, the United States paid out on account of James S. Cathcard the sum of $2,072.26 as compensation payments.

8. After James S. Cathcard was discharged on April 19, 1926, following his purported reenlistment, the Regional Office of the Veterans' Administration stopped his award for compensation and vocational training payments, effective as of the date of reenlistment.

9. On October 6, 1926, the Committee on Recoveries, Central Office, of the Veterans' Administration rendered a decision waiving recovery of overpayments of compensation to James S. Cathcard in the amount of $4,873.07.

10. On February 26, 1927, the Committee on Recoveries, Central Office, of the Veterans' Administration rendered a decision waiving recovery of overpayments of training allowances to James S. Cathcard in the amount of $1,018.66.

11. On November 24, 1928, the Committee on Recoveries, Central Office, of the Veterans' Administration, reconsidered its former decisions waiving recovery of overpayments to James S. Cathcard, and then set those decisions aside and held that recovery of the overpayments was not waived.

12. On February 25, 1932, the Central Committee on Recoveries and Forfeitures rendered a decision holding that James S. Cathcard had, by conspiring to defraud the government, violated Section 504 of the World War Veterans' Act, and had thereby forfeited all claims and benefits under Title II and IV of the Act, as amended.

13. After a hearing held on March 28, 1932, the Administrator's Board of Appeals rendered a decision affirming the Central Committee's decision of February 25, 1932.

14. On June 5, 1933, James S. Cathcard, incompetent, by his next friend and legal guardian, Helen L. Marsh, commenced an action designated as No. 3127 Law, in the District Court of the United States, for the District of Nebraska, Omaha Division, against the United States to recover accumulated monthly installments under policies of war risk or converted term insurance.

15. The issues in case No. 3127 Law included the questions of whether James S. Cathcard was insane by reason of mental diseases contracted during his period of military service between May 11, 1918, and July 5, 1919, and whether such insanity had continued since this period of military service, thereby rendering him totally and permanently disabled.

16. In case No. 3127 Law, a judgment was rendered against the United States on July 8, 1936, in the amount of $2,232.34 for accumulated monthly installments of insurance, and this judgment, being unappealed, became final.

17. On or about February 21, 1938, an action was filed in the District Court of the United States for the District of Columbia by the United States on the relationship of Helen L. Marsh, as legal guardian and next friend of James S. Cathcard, an incompetent, against Frank T. Hines, as Administrator of Veterans' Affairs, and Richard N. Elliott, Acting Comptroller General of the United States, for a writ of mandamus to compel payment of the judgment in case No. 3127 Law.

18. On April 17, 1939, the United States Court of Appeals for the District of Columbia rendered a decision affirming a judgment issuing a writ of mandamus.

19. The court further finds all of the facts which have been stipulated.

Discussion

It has been stipulated that on October 6, 1926, an order was entered by the Probate Court of Hennepin County, Minnesota, appointing William FitzGibbons as guardian for James S. Cathcard, and it appears from the evidence and argument that, pursuant to a petition alleging that James S. Cathcard had regained his mental capacity, the Minnesota court entered an order on January 31, 1928, finding that Cathcard was then of sound mind and discharging the guardian. Subsequently, on August 19, 1930, another guardian was by the same court appointed for Cathcard, and this guardian continued in that capacity until discharged by an order of the court, dated February 4, 1931. Thereafter Helen L. Marsh, the veteran's mother, was appointed as his guardian by an order of the County Court of Douglas County, Nebraska, in April of 1931.

The sum of $7,964.11, which the United States now seeks to recover in this action, is made up of different items, and somewhat different grounds of recovery are urged with respect to the various items. The first item is an amount of $5,019.35, representing compensation payments made between August 30, 1920, and February 28, 1926. The second item is for $1,018.60, covering vocational training payments which were made between the same dates. The government is also attempting to recover, as the third item in the total of $7,964.11, the sum of $2,072.26 (less $146.10 conceded to have been properly paid to the veteran) representing compensation payments made from October 5, 1926, to November 30, 1928.

As grounds for the recovery of the first two items representing compensation and vocational training payments made between the date the veteran allegedly reenlisted and the date of his "apprehension" after desertion, the government contends that the veteran was not entitled to such payments because he was then in an active service pay status within the statute, 38 U.S.C.A. § 422, excluding those in receipt of active service pay from the benefit of compensation and vocational training payments. It is the government's contention that the fact that the veteran was prevented from receiving active service pay by his misconduct during the time of his desertion does not preclude him from being in an active service pay status, within the statute, during that time. Recovery of these payments is therefore sought on the ground that they were paid under a mistake of law and fact, the veteran having allegedly concealed his reenlistment, and that the Central Committee's waiver of recovery of the overpayments was based upon fraud in connection with the Minnesota court's determination of the veteran's insanity.

However, contrary to the government's contention in this matter, there is nothing on the face of the Committee's decisions waiving recovery which indicates that the Committee was then influenced in any way by what occurred in the Minnesota court.

Recovery of the item representing compensation payments made between October 5, 1926, and November 30, 1928, is claimed on the ground that these payments were made under a new award obtained as of the former date by the veteran through alleged fraud and misrepresentation in procuring the Minnesota court's adjudication of his insanity. The government also bases its case upon Sections 205, 210 and 504 of the World War Veterans' Act of 1924, 38 U.S. C.A. §§ 494, 499 and 555, providing for the termination of compensation in case of fraud by the beneficiary and for forfeiture of payments made when based upon a fraudulent showing.

Finally, the government places much emphasis on the argument that under the provisions of the Act of October 17, 1940, 38 U.S.C.A. § 11a — 2, the decisions of the Veterans' Administrator, through his duly delegated committees, rescinding the earlier decisions waiving recovery of the...