United States v. Golden

• Decision Date: 01 August 1929
• Docket Number: No. 22.,22.
• Citation: 34 F.2d 367
• Parties: UNITED STATES v. GOLDEN.
• Court: U.S. Court of Appeals — Tenth Circuit

34 F.2d 367 (1929)

UNITED STATES v. GOLDEN.

No. 22.

Circuit Court of Appeals, Tenth Circuit.

August 1, 1929.

COPYRIGHT MATERIAL OMITTED

Lawrence A. Lawlor, Atty. U. S. Veterans' Bureau, of Washington, D. C., and H. S. Bowman, Asst. U. S. Atty., of Santa Fe, N. M. (John W. Wilson, U. S. Atty., of Albuquerque, N. M., on the brief), for the United States.

J. S. Vaught, of Albuquerque, N. M., and George W. Hay, of Silver City, N. M., for appellee.

Before LEWIS, COTTERAL, and McDERMOTT, Circuit Judges.

McDERMOTT, Circuit Judge.

This is an action on a war risk insurance policy. The plaintiff claimed permanent and total disability dating from 1919. The government denied such claim and asserted that even so, the soldier had lost his right by converting his term policy into an ordinary life policy in 1926. The trial court found for the plaintiff, and this appeal results.

The whole case is clouded by a mistake plaintiff labors under, a confusion of war risk insurance and compensation. It appears at length in his amended complaint, in the testimony, and apparently in the findings of the trial court. In his amended complaint, instead of simply alleging a permanent and total disability while the policy sued on was in force, the plaintiff set out in detail the various "ratings" of the government for purposes of compensation. Counsel for the government promptly detected the error, and moved to strike all the allegations as to "ratings" for compensation, and in support thereof said:

"That the first grammatical paragraph 6 of said amended complaint should be stricken because the said war risk insurance matures either upon the permanent total disability or death of the insured while the said insurance is in force and effect and it is immaterial whether the disability or death is due to the military service of the insured or whether any rating was ever given the said insured and therefore the said allegations in the said paragraph are immaterial and irrelevant, and do not constitute a cause of action against this defendant."

The government is quite right in this contention. While the laws as to compensation and insurance are administered by separate divisions of the Veterans' Bureau, and while the beneficent provisions of both laws are confined to war veterans, there the similarity ends. Compensation flows from service, like pensions of old, and the soldier is not consulted in the matter. Insurance is a contract, and the soldier takes it or leaves it alone; if he takes it, he pays for it, and his benefit is proportional to his payment. White v. U. S. 270 U. S. 180, 46 S. Ct. 274, 70 L. Ed. 530. Compensation benefits are paid to veterans to compensate them for a loss of ability to follow their pre-war occupation. It is only payable when the incapacity is traceable to a service origin and in line of duty. Compensation is "rated" in percentages, from nothing to 200 per cent., and is figured on comparative inability to follow a pre-war occupation. When the disability occurs is immaterial, save that it must be traceable to service origin. The amount of benefits paid are the same to all equally disabled.

On the other hand, insurance benefits go only to those who have bought and paid for policies of insurance. The amount paid depends on the amount of insurance bought. There are no degrees of disability recognized by the insurance contract — no "ratings" made. An insured must be totally and permanently disabled, or he recovers nothing; 90 per cent. disability avails him not. Nor does his disability depend upon his ability to follow his pre-war occupation; he must be disabled from following "any substantially gainful occupation." Service origin is immaterial in insurance. If he is totally and permanently disabled while his insurance is in force, he recovers, regardless of its origin. A total disability directly traceable to service origin will not entitle him to recover, unless it occurred while his insurance was in force.

Another striking difference is that Congress has conferred no jurisdiction upon the courts to determine disagreements over compensation, and the Supreme Court has held there is no such jurisdiction, "at least unless his the Director's decision is wholly unsupported by the evidence, or is wholly dependent upon a question of law or is seen to be clearly arbitrary or capricious." Silberschein v. U. S., 266 U. S. 221, 225, 45 S. Ct. 69, 71 (69 L. Ed. 256). On the contrary, Congress expressly placed upon the courts the duty of deciding claims under insurance policies in case of disagreement of the parties. Section 19, World War Veterans Act, as amended by Act March 4, 1925, § 2 (43 Stat. 1302, 38 USCA § 445). Necessarily, therefore, the fact that the Bureau does not believe a man is permanently and totally disabled does not conclude the case where a claim is made on an insurance policy; such belief starts the case in the courts, for, if the Bureau believed he was totally and permanently disabled, there would be no disagreement and no jurisdiction. This is spelled out in McGovern v. U. S. (D. C.) 294 F. 108, where Judge Bourquin allowed a recovery, notwithstanding a rating by the Bureau of no disability, and the judgment was affirmed (C. C. A.) 299 F. 302, and writ of error dismissed, 267 U. S. 608, 45 S. Ct. 351, 69 L. Ed. 812. Judge Bourquin said:

"Incidentally, the Bureau's determinations are not final; the statute (section 1, Act May 20, 1918, 40 Stat. 556, Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 514kk), providing that, in event of disagreement between the Bureau and insured, action like this at bar may be brought. Therein the whole matter is at large and open to contention, the proceeding in no sense a review of the Bureau's judgment. The statute prescribing no procedure, the rule as usual is that the action will be assimilated to like actions, here, against the United States, and so in accordance with the Tucker Act (24 Stat. 505)."

This is enough to indicate the immateriality of "ratings" for compensation in an insurance case. The doctors making the "ratings" are of course competent witnesses, just as doctors examining for other purposes are; but it is their testimony that is competent, and not the Bureau's "rating" predicated thereon. While the motion to strike should have been sustained, the error has resulted in no prejudice, save the necessity of clearing up the resulting confusion.

Another confusing circumstance is the fact that the amended bill not only sets up the plaintiff's claim, but also the defense and the plaintiff's reply thereto. Upon oral argument, we are advised that originally the action was at law, and there is in the record a stipulation waiving a jury trial. Issue was joined as to the release of the claim by the application and acceptance of the new policy, and the plaintiff's claim of mutual mistake thereto. An equitable issue was thus presented, which must be tried by the chancellor and disposed of, before the remaining issues can be tried at law. Upon this situation developing, plaintiff's counsel took leave to file an amended complaint, in which he set up his claim, anticipated the government's defense, and his reply thereto; the entire case was then transferred to the equity side. However, this unusual situation in the pleadings presents no obstacle to a consideration of the controversy as actually presented by the record.

The controversy may be thus summarized: (1) The plaintiff alleges the existence of a policy of insurance in 1919; that he became permanently and totally disabled at that time. The government admits the policy existed at that time, but denies the disability. That is the first issue, and presents a legal question. (2) The plaintiff alleges a disagreement; the government denies it. That is the second question, a legal one. (3) The government alleges a discharge by virtue of a surrender of the contract sued on, and acceptance of a converted policy, and estoppel. The plaintiff alleges mutual mistake, fraud, etc. That is the third issue, an equitable one. (4) The defense also alleges lack of a necessary party, the Director of the Veterans' Bureau, and plaintiff's failure to first ask for or receive a surrender of the converted policy.

Upon the first issue, the trial court found that the plaintiff became totally and permanently disabled on November 1, 1919. The testimony affords ample support for this finding. Aside from plaintiff's evidence, which alone is sufficient, it appears from the government records that he was diagnosed as an active pulmonary tubercular in June, 1918, and sent to an army hospital; that in October, 1919, he was discharged from the army on account of tuberculosis; that from May, 1922, to January 1925, the government conceded his disability was permanent and total and paid him his insurance installments. His condition was then thought to be arrested, and he started vocational training in May, 1925, light work in a cleaning and pressing establishment. Even that work brought on hemorrhages, and the government stopped his training in August, 1925, and in November, 1925, declined to accept premiums on his policy because of his permanent and total disability. Shortly after that, he was advised that this ruling had been changed to a total temporary disability, and he should again pay his premiums. He did so, but demanded a review of his entire case "for the purpose of receiving the benefits of his insurance." The government declined to pay. His condition has not improved. From this short statement, it will be seen that he was totally disabled, and concededly so from the year 1918, to late in 1925, except for a few months' duration, during which few months, even very light work brought on a serious relapse. His condition during these months — the only period in this stretch of years that the government did not concede his total disability — is described in the government's brief as follows:

"During his employment in such vocational...