A-14366, JULY 27, 1926, 6 COMP. GEN. 75

A-14366: Jul 27, 1926

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WAR-RISK INSURANCE - DEDUCTION OF PREMIUMS FROM ARREARS OF SERVICE PAY THE AMOUNT OF RETAINER PAY DUE A MEMBER OF THE NAVAL RESERVE FORCE AT THE DATE OF HIS DEATH IS NOT AVAILABLE TO PAY PREMIUMS TO PREVENT THE LAPSING OF WAR-RISK INSURANCE POLICY FOR NONPAYMENT OF SUCH PREMIUMS. AT THIS TIME HE WAS A COXSWAIN. HE WAS APPOINTED ENSIGN ON DECEMBER 31. WAS PUT ON AN INACTIVE DUTY STATUS WITH THE RESERVE. PREMIUMS WERE DEDUCTED FOR HIS INSURANCE THROUGH THE MONTH OF MARCH. IN WHICH MONTH HE WAS. THERE IS NO RECORD OF ANY PREMIUM PAYMENT FOR INSURANCE AFTER THE FURLOUGH TO THE RESERVE WITH THE EXCEPTION OF ONE PREMIUM PAID ON APRIL 2. GREAT DEAL OF EVIDENCE HAS BEEN PRESENTED TO SHOW THAT THERE WERE IN FACT OTHER PAYMENTS BUT A COMPLETE AND EXHAUSTIVE SEARCH OF THE RECORDS IN THIS BUREAU.

A-14366, JULY 27, 1926, 6 COMP. GEN. 75

WAR-RISK INSURANCE - DEDUCTION OF PREMIUMS FROM ARREARS OF SERVICE PAY THE AMOUNT OF RETAINER PAY DUE A MEMBER OF THE NAVAL RESERVE FORCE AT THE DATE OF HIS DEATH IS NOT AVAILABLE TO PAY PREMIUMS TO PREVENT THE LAPSING OF WAR-RISK INSURANCE POLICY FOR NONPAYMENT OF SUCH PREMIUMS. THE AMOUNT OF ARREARS OF PAY DUE A COMMISSIONED OFFICER OF THE NAVY AT THE DATE OF HIS RELEASE FROM ACTIVE SERVICE TO THE NAVAL RESERVE FORCE, FOR WHICH THE OFFICER HAD FILED CLAIM PRIOR TO HIS DEATH AND WHICH HAD BEEN PAID TO HIS PERSONAL REPRESENTATIVE SUBSEQUENT TO HIS DEATH, MAY NOT BE CONSIDERED AS HAVING BEEN AVAILABLE TO PREVENT THE LAPSING OF A WAR- RISK INSURANCE POLICY FOR NONPAYMENT OF PREMIUMS BECOMING DUE SUBSEQUENT TO HIS RELEASE FROM ACTIVE SERVICE.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, JULY 27, 1926:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF MAY 10, 1926, REQUESTING DECISION WHETHER THE WAR-RISK INSURANCE POLICY ISSUED TO ENSIGN SHIRLEY S. BRUCE, DECEASED, LAPSED FOR NONPAYMENT OF PREMIUMS UNDER THE PROVISIONS OF THE REGULATIONS OF THE BUREAU OF WAR RISK INSURANCE IN FORCE AT THE TIME.

YOU STATE THE FACTS AS FOLLOWS:

THE DECEASED ENTERED THE NAVAL SERVICE ON DECEMBER 12, 1917, AND ON JANUARY 10, 1918, APPLIED FOR $10,000 INSURANCE. AT THIS TIME HE WAS A COXSWAIN, U.S. NAVY. HE WAS APPOINTED ENSIGN ON DECEMBER 31, 1918, AND ON MARCH 25, 1919, WAS PUT ON AN INACTIVE DUTY STATUS WITH THE RESERVE. THE NAVY DEPARTMENT HAS REPORTED THAT SUBSEQUENT TO ENSIGN BRUCE'S APPOINTMENT AS AN ENSIGN ON DECEMBER 31, 1918, PREMIUMS WERE DEDUCTED FOR HIS INSURANCE THROUGH THE MONTH OF MARCH, 1919, IN WHICH MONTH HE WAS, AS HEREIN STATED, PLACED ON AN INACTIVE DUTY STATUS WITH THE RESERVE. THERE IS NO RECORD OF ANY PREMIUM PAYMENT FOR INSURANCE AFTER THE FURLOUGH TO THE RESERVE WITH THE EXCEPTION OF ONE PREMIUM PAID ON APRIL 2, 1919. GREAT DEAL OF EVIDENCE HAS BEEN PRESENTED TO SHOW THAT THERE WERE IN FACT OTHER PAYMENTS BUT A COMPLETE AND EXHAUSTIVE SEARCH OF THE RECORDS IN THIS BUREAU, TOGETHER WITH AVAILABLE REPORTS FROM THE NAVY DEPARTMENT, FAILS TO SUBSTANTIATE THIS CONTENTION.

ENSIGN BRUCE DIED ON JANUARY 27, 1920, AS THE RESULT OF AN ACCIDENT IN THIS CITY WHILE COASTING. AT THE TIME OF DEATH THERE WAS DUE FROM THE NAVY DEPARTMENT A SUM REPORTED TO AMOUNT TO $53.20 FOR BACK PAY AND $12 RETAINER PAY. NAVAL RESERVE FORCE, A TOTAL AMOUNT OF $65.20.

UNDER YOUR DECISIONS OF WHICH THERE HAVE BEEN SEVERAL RELATING TO RETAINER PAY, IT SEEMS CLEAR THAT THE $12 REPRESENTING SUCH RETAINER PAY IN THE PRESENT CASE COULD NOT BE APPLIED TO PREVENT THE LAPSE OF THE INSURANCE. THE RULINGS OF YOUR OFFICE RELATIVE TO THE NATURE OF THIS RETAINER PAY RECEIVED FURTHER SUPPORT FROM THE DECISION OF THE DISTRICT COURT, NORTHERN DISTRICT OF OHIO, JULY 3, 1923, IN THE CASE OF CRAWFORDV. UNITED STATES, 291 FED. 901.

WHILE THIS DISPOSES OF THE $12 ITEM THERE IS A QUESTION AS TO WHETHER THE $53.50 MAY BE APPLIED TO PREVENT THE LAPSE OF THIS INSURANCE. THE REASON FOR THE INSURED'S FAILURE TO COLLECT THE $53.20 PRIOR TO DISCHARGE IS EXPLAINED IN THE FOLLOWING MEMORANDUM FROM THE NAVY DEPARTMENT.

"2. THE ABOVE MENTIONED OFFICER, AFTER HIS DISCHARGE FROM THE SERVICE, FILED A CLAIM WITH THE AUDITOR FOR THE NAVY TO RECOVER MONEY WHICH HAD BEEN DEDUCTED FROM HIS PAY BECAUSE OF A WAR-RISK ALLOTMENT WHICH WAS NOT PAID. IN FEBRUARY 1920 THE AUDITOR ALLOWED THIS CLAIM FOR $53.20 AND A WARRANT FOR THAT AMOUNT, NUMBER 14,208 DATED 19 FEBRUARY 1920, WAS ISSUED. THE RECORDS OF THE TREASURY DEPARTMENT SHOW THAT THIS WARRANT WAS PAID 30 JUNE 1920 TO CLINTON S. HUTCHINSON WHO SIGNED HIS NAME "ADMINISTRATOR FOR SHIRLY S. BRUCE, ENSIGN, U.S.N.R.F.'"

SECTION 404 OF THE WAR RISK INSURANCE ACT OF OCTOBER 6, 1917, 40 STAT. 410, PROVIDED THAT THE TIME AND METHOD OF PAYMENT OF INSURANCE PREMIUMS SHOULD BE PRESCRIBED BY REGULATIONS.

THE REGULATIONS OF THE BUREAU OF WAR RISK INSURANCE IN FORCE AT THE TIME IN QUESTION APPEAR IN DECISION OF SEPTEMBER 30, 1922, 2 COMP. GEN. 249- 250, AND ARE QUOTED AS FOLLOWS:

BULLETIN NO. 1, ISSUED BY THE DIRECTOR UNDER DATE OF OCTOBER 15, 1917, PUBLISHED THE TERMS AND CONDITIONS OF THE STATUTORY INSURANCE CONTRACT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 402. THAT BULLETIN PROVIDES:

"PREMIUMS SHALL BE PAID MONTHLY ON OR BEFORE THE LAST DAY OF EACH CALENDAR MONTH AND WILL, UNLESS THE INSURED OTHERWISE ELECTS IN WRITING, BE DEDUCTED FROM ANY PAY DUE HIM/HER FROM THE UNITED STATES OR DEPOSIT BY HIM/HER WITH THE UNITED STATES, AND, IF SO TO BE DEDUCTED, A PREMIUM WHEN DUE WILL BE TREATED AS PAID, WHETHER OR NOT SUCH DEDUCTION IS IN FACT MADE, IF UPON THE DUE DATE THE UNITED STATES OWES HIM/HER ON ACCOUNT OF PAY OR DEPOSIT AN AMOUNT SUFFICIENT TO PROVIDE THE PREMIUM, PROVIDED THAT THE PREMIUM MAY BE PAID WITHIN 31 DAYS AFTER THE EXPIRATION OF THE MONTH, DURING WHICH PERIOD OF GRACE THE INSURANCE SHALL REMAIN IN FULL FORCE. ANY PREMIUMS BE NOT PAID, EITHER IN CASH OR BY DEDUCTION AS HEREIN PROVIDED WHEN DUE OR WITHIN THE DAYS OF GRACE, THIS INSURANCE SHALL IMMEDIATELY TERMINATE, BUT MAY BE REINSTATED WITHIN SIX MONTHS UPON COMPLIANCE WITH THE TERMS AND CONDITIONS SPECIFIED IN THE REGULATIONS OF THE BUREAU.'

TREASURY DECISION NO. 33, W.R., DATED SEPTEMBER 20, 1918, PROMULGATED REGULATIONS TO GOVERN LAPSATION OR OTHER TERMINATION OF WAR-RISK INSURANCE, AS FOLLOWS:

"/1) THE INSURANCE GRANTED UNDER ARTICLE IV OF THE WAR RISK INSURANCE ACT WILL NOT BE PERMITTED TO LAPSE FOR NONPAYMENT OF PREMIUMS WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE, AND PREMIUMS, THEREFORE, ARE AUTHORIZED TO BE DEDUCTED FROM THE INSURED'S PAY OR DEPOSIT.

"/2) THE SAID INSURANCE SHALL LAPSE AND TERMINATE IF, AT THE EXPIRATION OF A PERIOD OF 31 DAYS AFTER THE INSURED LEAVES THE ACTIVE MILITARY OR NAVAL SERVICE FOR REASONS OTHER THAN STATED IN SECTION 29 OF THE WAR RISK INSURANCE ACT (ENEMY ALIEN, CONSCIENTIOUS OBJECTOR, DESERTER, ETC.), THE WHOLE OR ANY PART OF ANY PREMIUMS WHICH WERE IN ARREARS AT THE TIME OF HIS SO LEAVING THE SERVICE REMAINS UNPAID, OR IF AT ANY TIME AFTER SO LEAVING THE SERVICE THE WHOLE OR ANY PARTY OF ANY PREMIUM THEREAFTER ACCRUING IS NOT PAID PROMPTLY WHEN DUE OR WITHIN 31 DAYS THEREAFTER.'

IT HAS BEEN DEFINITELY HELD THAT RETAINER PAY RECEIVED AS A MEMBER OF THE NAVAL RESERVE FORCE IS NOT "PAY" WITHIN THE MEANING OF THE REGULATIONS ABOVE QUOTED FROM WHICH WAR RISK INSURANCE PREMIUMS WERE DEDUCTIBLE. CRAWFORD V. UNITED STATES, 291 FED.REP. 901; SAWYER V. UNITED STATES, 10 FED.REP./2D) 416.

THE FACTS AS STATED DISCLOSE NO AUTHORIZATION OR ALLOTMENT FOR DEDUCTION OF INSURANCE PREMIUMS FROM THE PAY OF THE INSURED AS A COMMISSIONED OFFICER. IT HAS BEEN HELD THAT THE AUTHORIZATION OR ALLOTMENT GIVEN FOR THE DEDUCTION OF PREMIUMS FROM ENLISTED PAY DOES NOT CARRY AUTHORIZATION FOR DEDUCTION THEREOF FROM PAY AS A COMMISSIONED OFFICER. 2 COMP. GEN. 249, 251, AND DECISION OF DECEMBER 5, 1923, A.D.7875.

THE FACTS DISCLOSE THAT THERE WAS DUE THE INSURED AT DATE OF HIS DEATH, JANUARY 27, 1920, ARREARS OF PAY AS A COMMISSIONED OFFICER OF THE NAVY AMOUNTING TO $53.20, WHICH, IT IS UNDERSTOOD, WOULD HAVE BEEN SUFFICIENT TO PAY PREMIUMS DUE BETWEEN THE DATE OF LAST PAYMENT OF PREMIUM AND THE DATE OF DEATH. ANY AUTHORIZATION OR ALLOTMENT OF PAY TO COVER INSURANCE PREMIUMS THAT MAY HAVE BEEN EXECUTED BY THE OFFICER AUTOMATICALLY TERMINATED WITH HIS FINAL SEPARATION FROM ACTIVE NAVAL SERVICE. THE AUTHORIZATION OR ALLOTMENT SYSTEM WAS A MEDIUM ADOPTED FOR THE CONVENIENCE OF THE SERVICE PERSONNEL TO COVER PREMIUMS DUE DURING ACTUAL PERIOD OF ACTIVE SERVICE AND WAS NOT OPERATIVE FOR PERIODS SUBSEQUENT TO FINAL SEPARATION FROM ACTIVE SERVICE. IT IS SHOWN IN THIS CASE THAT ALL PREMIUMS DUE DURING PERIOD OF ACTIVE SERVICE WERE PAID BY DEDUCTION FROM PAY OR OTHERWISE. THEREFORE, ANY ARREARS OF PAY DUE AT DATE OF FINAL RELEASE FROM ACTIVE SERVICE WAS NOT AVAILABLE TO PAY INSURANCE PREMIUMS THEREAFTER DUE IN THE ABSENCE OF A SPECIFIC AUTHORIZATION. 2 COMP. GEN. 249. SEE ALSO GENERALLY 4 COMP. GEN. 36; ID. 155; ID. 691; 5 ID. 208. THE FACTS IN THE CASE OF MORTEX V. UNITED STATES, 297 FED.REP. 485, FROM WHICH YOU QUOTE AT LENGTH, APPARENTLY WITH AN INTENTION TO SHOW THE ATTITUDE OF THE COURT WITH RESPECT TO THE AVAILABILITY OF ARREARS OF PAY FOR PAYMENT OF INSURANCE PREMIUMS, DISCLOSE THAT THE INSURED DIED DURING ACTIVE MILITARY SERVICE. UNDER THE REGULATIONS ABOVE QUOTED, THERE WOULD BE INVOLVED AN ENTIRELY DIFFERENT QUESTION THAN THAT HERE PRESENTED. FURTHERMORE, YOU STATE AS A FACT THAT THE OPINION OF THE COURT WAS LATER MATERIALLY MODIFIED AND THE JUDGMENT RENDERED ON THE BASIS THAT THE INSURED HAD DIED DURING ACTIVE MILITARY SERVICE. IN VIEW THEREOF, THE OPINION AS REPORTED IS OF NO VALUE AS A PRECEDENT IN CONNECTION WITH THE PRESENT CASE.

THERE IS ALSO FOR CONSIDERATION IN THE PRESENT CASE THAT SUBSEQUENT TO FINAL RELEASE FROM ACTIVE SERVICE AND PRIOR TO THE DATE OF HIS DEATH, AND WHILE INSURANCE PREMIUMS WERE IN ARREARS, THE INSURED FILED A CLAIM IN THE OFFICE OF THE AUDITOR FOR THE NAVY DEPARTMENT FOR THE ARREARS OF PAY DUE HIM. THIS WAS AN AFFIRMATIVE ACT SHOWING CONCLUSIVELY THAT THERE WAS NO INTENT ON HIS PART TO HAVE THE GOVERNMENT APPLY THE AMOUNT OF THE ARREARS OF PAY TO PAYMENT OF INSURANCE PREMIUMS. THE AMOUNT WAS PAID TO HIS PERSONAL REPRESENTATIVE, APPARENTLY WITHOUT PROTEST, SUBSEQUENT TO HIS DEATH, WHICH WAS AN INDICATION THAT THE INTERESTED PARTIES DID NOT UNDERSTAND THAT THE AMOUNT DUE FROM THE GOVERNMENT SHOULD HAVE BEEN APPLIED AS INSURANCE PREMIUMS.

YOU ARE ADVISED, THEREFORE, THAT THE FACTS AS REPORTED SHOW BEYOND A REASONABLE DOUBT THAT THE POLICY OF INSURANCE ISSUED TO SHIRLY S. BRUCE, LAPSED FOR NONPAYMENT OF PREMIUMS, IN VIEW OF WHICH PAYMENTS THEREUNDER ARE NOT AUTHORIZED.