A-19085, JULY 14, 1927, 7 COMP. GEN. 33

A-19085: Jul 14, 1927

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VETERANS' BUREAU - INSURANCE - ESCHEAT UPON THE DEATH OF THE DESIGNATED BENEFICIARY OF A WAR RISK INSURANCE POLICY THE PERSONS ENTITLED TO THE PROCEEDS AS DISTRIBUTEES OF THE ESTATE OF THE DECEASED VETERAN ARE TO BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF THE INSURED'S RESIDENCE AT THE TIME OF DEATH. 1927: RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF JULY 1. UPON WHICH YOUR DECISION IS REQUESTED. WHILE EFFORTS WERE MADE TO LOCATE THE VETERAN'S FATHER. THE BUREAU WAS UNSUCCESSFUL. NOTICE WAS RECEIVED THAT THE FATHER HAD DIED IN NEW YORK CITY ON JANUARY 23. FOR A CONSIDERABLE TIME EFFORTS TO DISCOVER OTHER RELATIVES OF THE VETERAN WERE UNAVAILING. IN 1921 THE CLAIM WAS DISALLOWED.

A-19085, JULY 14, 1927, 7 COMP. GEN. 33

VETERANS' BUREAU - INSURANCE - ESCHEAT UPON THE DEATH OF THE DESIGNATED BENEFICIARY OF A WAR RISK INSURANCE POLICY THE PERSONS ENTITLED TO THE PROCEEDS AS DISTRIBUTEES OF THE ESTATE OF THE DECEASED VETERAN ARE TO BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF THE INSURED'S RESIDENCE AT THE TIME OF DEATH. NO PAYMENT OF SUCH PROCEEDS MAY BE MADE TO AN ADMINISTRATOR OF THE VETERAN'S ESTATE IN THE ABSENCE OF EVIDENCE THAT THE AMOUNTS PAID TO HIM WOULD NOT ESCHEAT TO THE STATE.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, JULY 14, 1927:

RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF JULY 1, 1927, REQUESTING DECISION UPON QUESTIONS PRESENTED AS FOLLOWS:

THE CLAIM OF JOHN S. MCCLOSKEY (DECEASED), C-135249, PRESENTS A NUMBER OF QUESTIONS RELATIVE TO SECTION 303, WORLD WAR VETERANS' ACT, AS AMENDED, UPON WHICH YOUR DECISION IS REQUESTED.

THE FACTS OF THE CASE SHOW THAT THE VETERAN WHILE IN THE SERVICE APPLIED FOR $10,000 TERM INSURANCE FOR WHICH HE DESIGNATED HIS FATHER, PATRICK MCCLOSKEY, AS BENEFICIARY. THE VETERAN DIED IN SERVICE ON NOVEMBER 6, 1918. WHILE EFFORTS WERE MADE TO LOCATE THE VETERAN'S FATHER, THE BUREAU WAS UNSUCCESSFUL. LATER, HOWEVER, NOTICE WAS RECEIVED THAT THE FATHER HAD DIED IN NEW YORK CITY ON JANUARY 23, 1919. FOR A CONSIDERABLE TIME EFFORTS TO DISCOVER OTHER RELATIVES OF THE VETERAN WERE UNAVAILING, AND, THEREFORE, IN 1921 THE CLAIM WAS DISALLOWED.

IN 1926 A COMMUNICATION WAS RECEIVED FROM JOHN A. SCULLEY, OF NEW YORK CITY, WHO ALLEGED THAT HE WAS A COUSIN OF THE VETERAN AND WHO REQUESTED INFORMATION AS TO THE STATUS OF THE INSURANCE. APPROPRIATE INFORMATION WAS FURNISHED IN RESPONSE TO THIS REQUEST. THERE HAS NOW BEEN SUBMITTED TO THE BUREAU A COPY OF A PETITION FOR LETTERS OF ADMINISTRATION ON THE VETERAN'S ESTATE FILED BY MR. SCULLEY IN THE SURROGATE'S COURT, COUNTY OF NEW YORK, ON OCTOBER 29, 1926. THERE HAS ALSO BEEN SUBMITTED A CERTIFIED COPY OF AN ORDER OF THE SURROGATE APPOINTING MR. SCULLEY AS ADMINISTRATOR OF THE VETERAN'S ESTATE. THE PETITION FOR THE LETTERS OF ADMINISTRATION SETS OUT THAT THERE ARE TWO MATERNAL COUSINS CAPABLE OF INHERITING THE VETERAN'S ESTATE AND THERE IS ALSO SOME EVIDENCE BEFORE THE BUREAU THAT THERE ARE OTHER MATERNAL COUSINS ALSO SURVIVING.

FROM THE FACTS AS DEVELOPED IT APPEARS THAT THE VETERAN WAS SURVIVED BY THE DESIGNATED BENEFICIARY, HIS FATHER, WHO, HOWEVER, WAS NEVER LOCATED DURING THE LATTER'S LIFETIME, AND THERE IS NO EVIDENCE BEFORE THE BUREAU TO SHOW THAT THE FATHER WAS SURVIVED BY ANY LIVING RELATIVE. SINCE THE VETERAN HIMSELF WAS SURVIVED BY THE DESIGNATED BENEFICIARY IT HASBEEN ARGUED THAT, AT THIS STAGE OF THE CASE, THE REQUIREMENT OF SECTION 303, WORLD WAR VETERANS' ACT, AS AMENDED, HAS NOT BEEN MET, SO THAT AT LEAST THE INSTALLMENTS OF TERM INSURANCE ACCRUING DURING THE FATHER'S LIFETIME MIGHT BE PAID TO THE REPRESENTATIVE OF THE FATHER'S ESTATE IN THE EVENT THAT IT SHOULD BE SHOWN THAT THERE WILL BE NO ESCHEAT OF THE FATHER'S ESTATE. AS TO INSTALLMENTS OF INSURANCE ACCRUING AFTER THE FATHER'S DEATH, IT HAS BEEN ARGUED THAT SUCH INSURANCE IS PROPERLY SUBJECT TO THE PROVISIONS OF SECTION 303, WORLD WAR VETERANS' ACT, AS AMENDED, AND AS QUOTED HEREIN, SO THAT SUCH INSURANCE BECOMES PAYABLE AS TO ITS COMMUTED VALUE IN A LUMP SUM TO THE REPRESENTATIVE OF THE VETERAN'S ESTATE, WHO HAS SUBMITTED HIS LETTERS OF ADMINISTRATION.

THE QUESTION ARISES WHETHER IN THE EVENT OF AN AWARD TO THE ADMINISTRATOR OF THE VETERAN'S ESTATE DISTRIBUTION SHOULD BE MADE TO HIS HEIRS AT LAW AND NEXT OF KIN OF THE VETERAN AS OF THE VETERAN'S DEATH, OR WHETHER SUCH DISTRIBUTION SHOULD BE MADE TO THE HEIRS AT LAW AND NEXT OF KIN OF THE VETERAN AS OF THE BENEFICIARY'S DEATH. SECTION 303 IS SILENT AS TO THE QUESTION WHETHER THE DISTRIBUTION SHOULD BE MADE AS OF THE VETERAN'S DEATH OR AS OF THE BENEFICIARY'S DEATH. IF IN THE PRESENT CASE AN AWARD OF THIS INSURANCE UNDER SECTION 303, WORLD WAR VETERANS' ACT, IS MADE TO THE ADMINISTRATOR OF THE VETERAN'S ESTATE ON THE THEORY THAT DISTRIBUTION IS TO BE MADE TO THE VETERAN'S HEIRS AND NEXT OF KIN AS FO THE DATE OF THE VETERAN'S DEATH, THEN IT WOULD FOLLOW THAT SUCH AN AWARD TO THE ADMINISTRATOR OF THE VETERAN'S ESTATE WOULD PASS TO THE ESTATE OF THE VETERAN'S FATHER. AS JUST SET OUT, AS FAR AS THE BUREAU IS ADVISED, THE FATHER WAS NOT SURVIVED BY ANY LIVING RELATIVES SO THAT THERE WOULD BE A STRONG POSSIBILITY OF ANESCHEAT OF THE FATHER'S ESTATE. IN OTHER WORDS, WHILE THERE WOULD NOT BE AN ESCHEAT OF THE VETERAN'S ESTATE, YET IF DISTRIBUTION BE MADE AS OF THE DATE OF HIS DEATH, THE PAYMENT OF THE COMMUTED VALUE OF THE INSURANCE WOULD PASS TO AN ESTATE WHICH MAY ESCHEAT.

THE OTHER ALTERNATIVE WOULD BE TO HOLD THAT THE DISTRIBUTION SHOULD BE MADE TO THE HEIRS AT LAW AND NEXT OF KIN OF THE VETERAN AS OF THE BENEFICIARY'S DEATH AND IF AN AWARD OF THE COMMUTED VALUE OF THIS INSURANCE BE APPROVED IN FAVOR OF THE ADMINISTRATOR OF THE VETERAN'S ESTATE ON THE THEORY THAT THE DISTRIBUTION WILL BE MADE TO THE HEIRS AT LAW AND NEXT OF KIN OF THE VETERAN AS OF THE DATE THE FATHER DIED, THEN THE DISTRIBUTION WOULD PASS TO THE MATERNAL COUSINS WHO WERE SURVIVING WHEN THE FATHER DIED. THIS HAS EVIDENTLY BEEN THE THEORY UPON WHICH LETTERS OF ADMINISTRATION HAVE BEEN GRANTED BY THE NEW YORK COURT UPON THE VETERAN'S ESTATE, NAMELY, THAT DISTRIBUTION MIGHT BE MADE AS OF THE DATE OF THE FATHER'S DEATH.

IT HAS BEEN THE GENERAL POLICY OF THE VETERANS' BUREAU IN CASES ARISING UNDER SECTION 303, WORLD WAR VETERANS' ACT, TO HOLD THAT THE DETERMINATION OF THE QUESTION WHETHER THE DISTRIBUTION OF THE FUND IN THE HANDS OF THE ADMINISTRATOR SHOULD BE MADE AS OF THE VETERAN'S DEATH OR AS OF THE BENEFICIARY'S DEATH WAS PRIMARILY FOR THE LOCAL AUTHORITIES TO DETERMINE, CERTAINLY IN CASES WHERE THE EVIDENCE SHOWED THERE WOULD BE NO ESCHEAT UNDER EITHER THEORY. THE BUREAU HAS COLLATED A NUMBER OF DECIDED CASES IN A GREAT MAJORITY OF WHICH THE LOCAL AUTHORITIES HAVE AUTHORIZED A DISTRIBUTION AS OF THE DATE OF THE INSURED'S DEATH. * * *

THE PRESENT CASE, THEREFORE, PRESENTS THESE PRINCIPAL QUESTIONS:

(1) WHETHER IT IS PROPER TO MAKE A PAYMENT UNDER SECTION 303 OF THE WORLD WAR VETERANS' ACT, AS AMENDED, TO THE ADMINISTRATOR OF THE VETERAN'S ESTATE, WHERE THE APPOINTMENT OF SUCH ADMINISTRATOR PRESUPPOSES A DISTRIBUTION TO THE MATERNAL RELATIVES OF THE INSURED AS OF THE BENEFICIARY'S DEATH AND NOT AS OF THE INSURED'S DEATH, WHICH DISTRIBUTION WOULD BE CONTRA TO DECIDED CASES AND THE BUREAU INTERPRETATION OF SECTION 303, WORLD WAR VETERANS' ACT, AS AMENDED.

(2) WHETHER PAYMENT MAY BE MADE UNDER SECTION 303, WORLD WAR VETERANS' ACT, TO THE ADMINISTRATOR OF THE INSURED'S ESTATE ON THE THEORY THAT DISTRIBUTION IS TO BE MADE TO THE HEIRS AT LAW AND NEXT OF KIN AS OF THE INSURED'S DEATH, WHERE THE INSURED'S ESTATE WILL NOT ESCHEAT BUT WHERE THERE IS THE POSSIBILITY OF THE ESCHEAT OF THE INSURED'S HEIR, THAT IS, IN THE PRESENT CASE, AN ESCHEAT OF THE ESTATE OF THE INSURED'S FATHER WHO SURVIVED HIM.

SECTION 303 OF THE WORLD WAR VETERANS' ACT, AS AMENDED, PROVIDES AS FOLLOWS:

IF NO PERSON WITHIN THE PERMITTED CLASS BE DESIGNATED AS BENEFICIARY FOR YEARLY RENEWABLE TERM INSURANCE BY THE INSURED EITHER IN HIS LIFETIME OR BY HIS LAST WILL AND TESTAMENT OR IF THE DESIGNATED BENEFICIARY DOES NOT SURVIVE THE INSURED OR SURVIVES THE INSURED AND DIES PRIOR TO RECEIVING ALL OF THE TWO HUNDRED AND FORTY INSTALLMENTS OR ALL SUCH AS ARE PAYABLE AND APPLICABLE, THERE SHALL BE PAID TO THE ESTATE OF THE INSURED THE PRESENT VALUE OF THE MONTHLY INSTALLMENTS THEREAFTER PAYABLE * * *: 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.

AT COMMON LAW AND UNDER STATUTES IN MOST OF THE STATES PERSONS ENTITLED TO PERSONAL PROPERTY AS HEIRS OR DISTRIBUTEES ACQUIRE A VESTED EQUITABLE RIGHT IMMEDIATELY ON THE DEATH OF THE INTESTATE AND ON DISTRIBUTION THEIR RIGHT OR TITLE RELATES BACK TO THE INTESTATE'S DEATH. UNDER SUCH LAWS THE PERSONAL ESTATE OF AN INTESTATE GOES TO THOSE WHO ARE HIS NEXT OF KIN AT THE TIME OF HIS DEATH AND NOT TO THOSE WHO ARE HIS NEXT OF KIN AT THE TIME OF DISTRIBUTION, AND, ACCORDINGLY, WHEN A PERSON ENTITLED AS DISTRIBUTEE DIES AFTER THE DEATH OF THE INTESTATE AND BEFORE DISTRIBUTION, HIS SHARE DOES NOT GO TO THE OTHER PERSON OR PERSONS ENTITLED AS DISTRIBUTEES BUT VESTS IN THE PERSONAL REPRESENTATIVE OF THE DECEASED DISTRIBUTEE FOR THE PURPOSES OF ADMINISTRATION. SEE 18 CORPUS JURIS, PAGES 878, 879. REVERSIONARY INTEREST IN PERSONALTY FOLLOWS THE SAME GENERAL RULE AS PERSONAL PROPERTY IN POSSESSION. 18 C.J. 822.

UNDER THE LAWS OF THE STATE OF NEW YORK, WHICH STATE APPEARS TO HAVE BEEN THE DOMICILE OF THE DECEASED VETERAN AND OF HIS FATHER, IF THE DECEASED LEFT A FATHER BUT NO MOTHER, CHILD, DESCENDANT, OR WIDOW, THE FATHER TAKES THE WHOLE OF THE PERSONAL PROPERTY OF THE INTESTATE. IT IS UNDERSTOOD FROM THE RECENT DECISIONS OF THE NEW YORK STATE COURTS IN CASES OF STORUM'S ESTATE AND THE ESTATE OF WILLIAM T. RYAN, THAT THE DISTRIBUTION OF VETERANS' BUREAU INSURANCE, WHEN PAYABLE TO THE ESTATE OF A VETERAN, FOLLOWS THE SAME ORDER, THAT IS TO SAY, THAT THE RIGHT THERETO VESTS IN THOSE PERSONS WHO AT DATE OF DEATH OF THE VETERAN WOULD HAVE BEEN ENTITLED TO TAKE AS DISTRIBUTEES. IT APPEARS THAT THE FATHER OF THE VETERAN IN THIS CASE WAS LIVING AT THE DATE OF THE VETERAN'S DEATH. THEREFORE, IF AT THAT TIME NO WIDOW, MOTHER, CHILD, OR DESCENDANT OF THE VETERAN SURVIVED, THE FATHER BECAME ENTITLED TO THE WHOLE OF THE INTESTATE'S PERSONALTY INCLUDING ANY REVERSIONARY INTEREST. UNDER SUCH CIRCUMSTANCES, AND FOLLOWING THE RULE ABOVE STATED, PAYMENT OF THE PROCEEDS OF THE INSURANCE TO THE ESTATE OF THE INSURED WOULD NOT RESULT IN ITS DIRECT ESCHEAT TO THE STATE BUT IT WOULD PASS TO THE ESTATE OF THE FATHER AND THEN ESCHEAT IF THE FATHER'S ESTATE WOULD ESCHEAT UNDER THE LAWS OF THE STATE OF HIS RESIDENCE.

IT WOULD APPEAR FROM YOUR SUBMISSION THAT THE FATHER WAS POSSIBLY THE SOLE DISTRIBUTEE OF THE ESTATE OF THE INSURED UNDER THE LAWS OF THE PLACE OF HIS RESIDENCE AND THAT THE FATHER LEFT NO HEIRS OR RELATIVES ENTITLED TO DISTRIBUTION OF HIS ESTATE, THE MATERNAL COUSINS OF THE INSURED NOT BEING ENTITLED TO ANY PART OF THE ESTATE OF THE FATHER OF THE INSURED. THEREFORE, IT IS PROBABLE THAT THE FATHER'S ESTATE, IF ANY, WOULD ESCHEAT TO THE STATE. SUCH BEING THE CASE, AND IN VIEW OF THE PURPOSE AND INTENT OF THE PROVISION IN SECTION 303, SUPRA, RELATIVE TO ESCHEATS, AND ALSO THE PROVISIONS IN SECTION 26 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 614, WHICH READ:

THAT THE AMOUNT OF THE MONTHLY INSTALLMENTS OF COMPENSATION, YEARLY RENEWABLE TERM INSURANCE, OR ACCRUED MAINTENANCE AND SUPPORT ALLOWANCE WHICH HAS BECOME PAYABLE UNDER THE PROVISIONS OF TITLES II, III, OR IV HEREOF, BUT WHICH HAS NOT BEEN PAID PRIOR TO THE DEATH OF THE PERSON ENTITLED TO RECEIVE THE SAME, MAY BE PAYABLE TO THE PERSONAL REPRESENTATIVES OF SUCH PERSON: PROVIDED, THAT IN CASES WHERE THE ESTATE OF THE DECEDENT WOULD ESCHEAT UNDER THE LAWS OF THE PLACE OF HIS RESIDENCE, SUCH INSTALLMENTS SHALL NOT BE PAID TO THE ESTATE OF THE DECEDENT BUT SHALL ESCHEAT TO THE UNITED STATES AND SHALL BE CREDITED TO THE APPROPRIATION FROM WHICH THE ORIGINAL AWARD WAS MADE.

I HAVE TO ADVISE THAT NO PAYMENT SHOULD BE MADE TO THE ADMINISTRATOR OF THE ESTATE OF THE INSURED IN THE CASE SUBMITTED, NOR TO THE PERSONAL REPRESENTATIVE OF THE FATHER, IN THE ABSENCE OF SATISFACTORY EVIDENCE THAT SUCH PAYMENTS, IF MADE, WOULD NOT ESCHEAT TO THE STATE. A-14609, JULY 28, AND NOVEMBER 30, 1926.