A-14176, MAY 20, 1926, 5 COMP. GEN. 924

A-14176: May 20, 1926

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THE GENERAL RULE IS THAT UNLESS AN AWARD OF TERM INSURANCE WAS ACTUALLY MADE AND AT LEAST ONE INSTALLMENT PAID THEREUNDER PRIOR TO MARCH 4. IN CASES WHERE AN AWARD UNDER AN INSURANCE POLICY WAS MADE PRIOR TO MARCH 4. IN FAVOR OF A NUMBER OF PERSONS AND WAS IN COURSE OF PAYMENT ON THAT DATE. PAYMENT TO ONE OF THE DISTRIBUTEES WAS WITHHELD BECAUSE OF SOME LEGAL DISABILITY. PAYMENT TO THE ESTATE OF THE INSURED IS NOW REQUIRED IN CASES WHERE IT WAS DETERMINED PRIOR TO THE PASSAGE OF THE ACT OF MARCH 4. THAT MINORS WERE ENTITLED TO AN AWARD. ACTUAL AWARD AND PAYMENTS HAVE BEEN WITHHELD. OR UPON REQUEST OF INTERESTED PARTIES TO PERMIT ACCUMULATION UNTIL MINORS SHALL HAVE REACHED THEIR MAJORITY IN ORDER TO SAVE THE BENEFICIARY THE EXPENSE OF GUARDIANSHIP PROCEEDINGS.

A-14176, MAY 20, 1926, 5 COMP. GEN. 924

VETERANS' BUREAU - INSURANCE - AWARDS IN COURSE OF PAYMENT UNDER THE PROVISIONS OF SECTION 303 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1310, EXCEPTING AWARDS "IN COURSE OF PAYMENT" FROM THE REQUIREMENT THAT PAYMENT SHALL BE MADE TO THE ESTATE OF THE INSURED IN THE EVENT OF THE DEATH OF THE DESIGNATED BENEFICIARY BEFORE RECEIVING ALL OF THE 240 MONTHLY INSTALLMENTS, THE GENERAL RULE IS THAT UNLESS AN AWARD OF TERM INSURANCE WAS ACTUALLY MADE AND AT LEAST ONE INSTALLMENT PAID THEREUNDER PRIOR TO MARCH 4, 1925, THE AWARD DOES NOT FALL WITHIN THE EXCEPTION OF THE SECTION. IN CASES WHERE AN AWARD UNDER AN INSURANCE POLICY WAS MADE PRIOR TO MARCH 4, 1925, IN FAVOR OF A NUMBER OF PERSONS AND WAS IN COURSE OF PAYMENT ON THAT DATE, BUT PAYMENT TO ONE OF THE DISTRIBUTEES WAS WITHHELD BECAUSE OF SOME LEGAL DISABILITY, SUCH AS MINORITY, INSANITY, ETC., AND NO GUARDIAN HAD BEEN APPOINTED, THE AWARD AS AN ENTIRETY MAY BE CONSIDERED AS IN COURSE OF PAYMENT ON MARCH 4, 1925, AND WITHIN THE EXCEPTION TO SECTION 303 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1310.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, MAY 20, 1926:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF APRIL 29, 1926, REQUESTING DECISION WHETHER, UNDER SECTION 303 OF THE WORLD WAR VETERANS' ACT AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1310, PAYMENT TO THE ESTATE OF THE INSURED IS NOW REQUIRED IN CASES WHERE IT WAS DETERMINED PRIOR TO THE PASSAGE OF THE ACT OF MARCH 4, 1925, THAT MINORS WERE ENTITLED TO AN AWARD, BUT BECAUSE OF THE SMALL AMOUNT OF MONTHLY INSTALLMENTS DUE, ACTUAL AWARD AND PAYMENTS HAVE BEEN WITHHELD, EITHER AS AN ADMINISTRATIVE EXPEDIENCY, OR UPON REQUEST OF INTERESTED PARTIES TO PERMIT ACCUMULATION UNTIL MINORS SHALL HAVE REACHED THEIR MAJORITY IN ORDER TO SAVE THE BENEFICIARY THE EXPENSE OF GUARDIANSHIP PROCEEDINGS. YOU STATE A SIMILAR QUESTION ARISES IN THESE CASES IN WHICH BENEFICIARIES MAY BE LABORING UNDER OTHER LEGAL DISABILITY, SUCH AS INSANITY, AND NO GUARDIAN OR CURATOR HAS BEEN APPOINTED.

AS ILLUSTRATIVE OF THE QUESTION OF WHICH DECISION IS REQUESTED YOU STATE THE FACTS IN THE CASE OF WILLIAM R. MATCHETT AS FOLLOWS:

THE FACTS IN THE INSTANT CASE DISCLOSE THAT MR. MATCHETT WHILE IN THE SERVICE CONTRACTED FOR $5,000 INSURANCE, DESIGNATING AS BENEFICIARY THEREOF HIS FATHER, MATT BELL MATCHETT, AND HIS MOTHER, MANDY VALLIE MATCHETT, EACH IN THE AMOUNT OF $2,500. THE INSURED'S DEATH OCCURRED OCTOBER 21, 1918, AND AWARDS WERE MADE TO THE MOTHER AND FATHER UNDER THE PROVISIONS OF THE POLICY. THE MOTHER'S DEATH OCCURRED SEPTEMBER 23, 1920, AND THE RECORDS IN THE CASE DISCLOSE THAT SUBSEQUENT TO THE DEATH OF THE MOTHER IT WAS DETERMINED THAT THE REMAINING INSTALLMENTS OF INSURANCE FOR WHICH SHE WAS THE DESIGNATED BENEFICIARY SHOULD BE DISTRIBUTED UNDER SECTION 402 OF THE WAR RISK INSURANCE ACT AS AMENDED IN ACCORDANCE WITH THE INTESTACY LAWS OF THE STATE OF TEXAS, THIS BEING THE LAST LEGAL DOMICILE OF THE DECEASED INSURED.

UNDER SUCH DISTRIBUTION THE FATHER WOULD BE ENTITLED TO ONE-HALF OF THE AMOUNT IN QUESTION, THE REMAINING HALF TO BE DIVIDED EQUALLY AMONG THE BROTHERS AND SISTERS, SO THAT THE AMOUNTS PAYABLE WOULD BE $7.19 TO THE FATHER, AND 71 CENTS PER MONTH TO EACH OF THE BROTHERS AND SISTERS.

AWARDS WERE DRAWN AND PAYMENTS INAUGURATED TO THE FATHER, BROTHERS, AND SISTERS, WITH THE EXCEPTION OF CLARENCE MATCHETT, WHO WAS A MINOR, AND FOR WHOM NO GUARDIAN HAD BEEN APPOINTED. NO AWARD WAS ACTUALLY DRAWN IN FAVOR OF CLARENCE MATCHETT, BECAUSE SUCH AWARD UNDER THE BUREAU PRACTICE WOULD HAVE TO BE DRAWN IN THE NAME OF THE GUARDIAN, AS, FOR EXAMPLE,"JOHN DOE, GUARDIAN FOR CLARENCE MATCHETT.'

THE BUREAU INFORMED INTERESTED PERSONS ON JUNE 11, 1921, THAT IT WOULD BE ADVISABLE TO WITHHOLD PAYMENTS TO THE MINOR, CLARENCE MATCHETT, UNTIL HE ATTAINED THE AGE OF TWENTY-ONE YEARS, IN VIEW OF THE SMALL AMOUNT WHICH WOULD BE PAYABLE MONTHLY, IT BEING OBVIOUS THAT TO HAVE A GUARDIAN APPOINTED TO COLLECT THIS AMOUNT WOULD INVOLVE AN EXPENDITURE IN EXCESS OF THE MONEY DUE AND PAYABLE.

IT WILL BE SEEN, THEREFORE, THAT THE BUREAU MADE A DEFINITE DETERMINATION WITH RESPECT TO THE DISTRIBUTION OF THE INSURANCE IN QUESTION, PRIOR TO THE ENACTMENT OF SECTION 303 AS CONTAINED IN THE ACT OF MARCH 4, 1925, UNDER WHICH THE MINOR, CLARENCE MATCHETT, WOULD BE ENTITLED TO 71 CENTS PER MONTH, ALTHOUGH NO AWARD HAD BEEN MADE TO HIM FOR THE REASONS HERETOFORE STATED. SECTION 303 PROVIDES IN PART AS FOLLOWS:

"THAT ALL AWARDS OF YEARLY RENEWABLE TERM INSURANCE WHICH ARE IN COURSE OF PAYMENT ON THE DATE OF THE APPROVAL OF THIS ACT SHALL CONTINUE UNTIL THE DEATH OF THE PERSON RECEIVING SUCH PAYMENTS, OR UNTIL HE FORFEITS SAME UNDER THE PROVISIONS OF THIS ACT. WHEN ANY PERSON TO WHOM SUCH INSURANCE IS NOW AWARDED DIES OR FORFEITS HIS RIGHTS TO SUCH INSURANCE, THEN THERE SHALL BE PAID TO THE ESTATE OF THE INSURED THE PRESENT VALUE OF THE REMAINING UNPAID MONTHLY INSTALLMENTS OF THE INSURANCE SO AWARDED TO SUCH PERSON: PROVIDED FURTHER, THAT NO AWARD OF YEARLY RENEWABLE TERM INSURANCE WHICH HAS BEEN MADE TO THE ESTATE OF A LAST SURVIVING BENEFICIARY SHALL BE AFFECTED BY THIS AMENDMENT: PROVIDED FURTHER, THAT IN CASES WHEN THE ESTATE OF AN INSURED WOULD ESCHEAT UNDER THE LAWS OF THE PLACE OF HIS RESIDENCE THE INSURANCE SHALL NOT BE PAID TO THE ESTATE BUT SHALL ESCHEAT TO THE UNITED STATES AND BE CREDITED TO THE MILITARY AND NAVAL INSURANCE APPROPRIATION. THIS SECTION SHALL BE DEEMED TO BE IN EFFECT AS OF OCTOBER 6, 1917.'

THE ACT OF MARCH 4, 1925, AMENDS SECTION 303 OF THE WORLD WAR VETERANS' ACT SO AS TO PROVIDE FOR PAYMENTS TO THE ESTATE OF THE INSURED OF THE VALUE OF REMAINING INSTALLMENTS IN THE EVENT A DESIGNATED BENEFICIARY DIED PRIOR TO RECEIVING ALL OF THE 240 INSTALLMENTS. THE FIRST SENTENCE OF THE QUOTED PORTION OF THE SECTION EXCEPTS AWARDS "WHICH ARE IN COURSE OF PAYMENT ON THE DATE OF THE APPROVAL OF THIS ACT.' PAYMENTS UNDER THESE EXCEPTED AWARDS ARE TO CONTINUE TO THE BENEFICIARY IN WHOSE FAVOR THEY WERE BEING PAID ON MARCH 4, 1925, UNTIL DEATH OR FORFEITURE.

THE QUESTION IS WHETHER THERE WAS AN AWARD "IN COURSE OF PAYMENT" ON MARCH 4, 1925, THE DATE OF THE ACT, IN FAVOR OF CLARENCE MATCHETT, THE MINOR, WHICH WILL SAVE TO HIM THE ACCRUED PAYMENTS WITHHELD AS INDICATED UNTIL HE REACHES HIS MAJORITY. IF NOT, THE ESTATE OF THE INSURED WOULD BE ENTITLED BY REASON OF THE DEATH OF ONE OF THE DESIGNATED BENEFICIARIES, MANDY VALLIE MATCHETT, THE STATUTE BEING RETROACTIVELY EFFECTIVE AS OF OCTOBER 6, 1917.

THE PHRASE "AWARDS * * * IN COURSE OF PAYMENT" IS PLAIN AND NEEDS NO INTERPRETATION. THE PURPOSE OF THE SAVING CLAUSE IN FAVOR OF AWARDS IN COURSE OF PAYMENT WHEN THE STATUTE WAS ENACTED WAS TO AVOID THE HARDSHIP THAT WOULD RESULT FROM DEPRIVING A PERSON OF SOMETHING HE HAD BEEN ACCUSTOMED TO RECEIVING. THE GENERAL RULE MUST BE, THEREFORE, THAT UNLESS AN AWARD OF TERM INSURANCE WAS ACTUALLY MADE AND AT LEAST ONE INSTALLMENT PAID THEREUNDER PRIOR TO MARCH 4, 1925, THE AWARD DOES NOT FALL WITHIN THE SAVING CLAUSE OF THE STATUTE. 5 COMP. GEN. 501, 503.

IN THE CASE OF WILLIAM R. MATCHETT, SUPRA, UPON THE DEATH PRIOR TO MARCH 4, 1925, OF ONE OF THE DESIGNATED BENEFICIARIES WHO HAD BEEN RECEIVING ONE -HALF OF THE INSURANCE, AWARD WAS MADE OF THAT ONE-HALF OF THE INSURANCE IN ACCORDANCE WITH THE LAWS OF DISTRIBUTION IN THE STATE WHICH WAS THE DOMICILE OF THE DECEASED. THIS AWARD TO ALL OF THE DISTRIBUTEES COLLECTIVELY MAY BE CONSIDERED AS AN ENTIRETY, AND NOT AS SEPARATE AND DISTINCT AWARDS TO EACH OF THE INDIVIDUAL DISTRIBUTEES. AND AS PAYMENTS WERE BEING MADE UNDER SAID AWARD AT THE TIME OF ENACTMENT IT MAY BE HELD THAT SAID AWARD WAS "IN COURSE OF PAYMENT" ON MARCH 4, 1925, ALTHOUGH NO PAYMENT HAD BEEN MADE TO ONE OF THE BENEFICIARIES THEREUNDER, THE REASON STATED BY YOU FOR WITHHOLDING THE SMALL MONTHLY PAYMENTS BEING SUFFICIENT JUSTIFICATION THEREFOR.

LIKEWISE, IN OTHER CASES WHERE INSTALLMENTS OF INSURANCE WERE WITHHELD FROM ONE OF SEVERAL DISTRIBUTEES WHO WAS LABORING UNDER A LEGAL DISABILITY, AND THE COURSE OF DISTRIBUTION WAS BEING OTHERWISE EFFECTED ON MARCH 4, 1925, THE AWARD AS AN ENTIRETY MAY BE CONSIDERED AS "IN COURSE OF PAYMENT" WITHIN THE MEANING OF THE STATUTE. TO HOLD OTHERWISE IN SUCH CASES PROBABLY WOULD RESULT IN THE DISTRIBUTEES TO WHOM FULL SHARES HAVE BEEN OR ARE BEING PAID RECEIVING IN ADDITION THERETO A PART OF THE SHARE OF A DISTRIBUTEE TO WHOM PAYMENT HAD BEEN DEFERRED BECAUSE OF A LEGAL DISABILITY.