A-19470, AUGUST 20, 1927, 7 COMP. GEN. 134

A-19470: Aug 20, 1927

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MAY NOT BE CONSIDERED AS IN COURSE OF PAYMENT TO THE EXTENT OF THE INDIVIDUAL SHARES WHICH WERE CORRECT IN AMOUNT AND NOT IN COURSE OF PAYMENT TO THE EXTENT OF THE SHARE WHICH WAS INCORRECT IN AMOUNT. WHICH WERE CORRECT IN AMOUNT BUT BASED ON AN UNLAWFUL DISTRIBUTION BECAUSE OF THE OMISSION OF ANOTHER DISTRIBUTEE WHICH AFFECTED ONLY THE SHARE RECEIVED BY STILL ANOTHER DISTRIBUTEE. THE FACTS AND THE QUESTIONS INVOLVED ARE STATED IN YOUR LETTER AS FOLLOWS: ON MAY 28. FOLLOWING HIS DEATH INFORMATION WAS REQUESTED AS TO HIS SURVIVING RELATIVES IN ORDER THAT THE TERM INSURANCE MIGHT BE DISTRIBUTED UNDER SECTION 402 OF THE WAR RISK INSURANCE ACT AS AMENDED. THE EVIDENCE SHOWED THAT THE VETERAN HAD BEEN A RESIDENT OF ILLINOIS AND THAT HE WAS SURVIVED BY A MOTHER AND FATHER.

A-19470, AUGUST 20, 1927, 7 COMP. GEN. 134

VETERANS' BUREAU - INSURANCE - AWARDS IN COURSE OF PAYMENT AN AWARD OF TERM INSURANCE MADE PRIOR TO MARCH 4, 1925, TO SEVERAL DISTRIBUTEES UNDER SECTION 402 OF THE WAR RISK INSURANCE ACT, AS AMENDED JUNE 25, 1918, 40 STAT. 615, WHICH ERRONEOUSLY OMITTED ONE OF THE DISTRIBUTEES ENTITLED UNDER THE LAW, BUT WHICH RESULTED IN ONLY ONE OF THE OTHER DISTRIBUTEES RECEIVING MORE THAN HIS SHARE, MAY NOT BE CONSIDERED AS IN COURSE OF PAYMENT TO THE EXTENT OF THE INDIVIDUAL SHARES WHICH WERE CORRECT IN AMOUNT AND NOT IN COURSE OF PAYMENT TO THE EXTENT OF THE SHARE WHICH WAS INCORRECT IN AMOUNT, WITHIN THE MEANING 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" ON THE DATE OF THE ACT FROM THE REQUIREMENT THAT PAYMENT OF THE VALUE OF THE REMAINING INSTALLMENTS OF INSURANCE SHALL BE MADE IN A LUMP SUM TO THE ESTATE OF THE INSURED UPON THE DEATH OF THE DESIGNATED BENEFICIARY; BUT THE AWARD AS A WHOLE MUST BE CONSIDERED AS UNLAWFUL AND INVALID AND THEREFORE AS NOT "IN COURSE OF PAYMENT" ON MARCH 4, 1925.

ACTING COMPTROLLER GENERAL GINN TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, AUGUST 20, 927:

CONSIDERATION HAS BEEN GIVEN YOUR LETTER OF AUGUST 4, 1927, REQUESTING DECISION WHETHER, IN THE CASE OF DAN MADIARINI, DECEASED, 304775, AWARDS MADE PRIOR TO MARCH 4, 1925, TO SOME OF THE DISTRIBUTEES UNDERSECTIONS 402 OF THE WAR RISK INSURANCE ACT, WHICH WERE CORRECT IN AMOUNT BUT BASED ON AN UNLAWFUL DISTRIBUTION BECAUSE OF THE OMISSION OF ANOTHER DISTRIBUTEE WHICH AFFECTED ONLY THE SHARE RECEIVED BY STILL ANOTHER DISTRIBUTEE, MAY BE CONSIDERED AS "IN COURSE OF PAYMENT" ON MARCH 4, 1925, WITHIN THE MEANING OF SECTION 303 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF THAT DATE, 43 STAT. 1310, SAVING AWARDS IN COURSE OF PAYMENT ON THE DATE OF THE ACT FROM THE REQUIREMENT THAT THE VALUE OF THE REMAINING INSTALLMENTS OF INSURANCE BE PAID IN A LUMP SUM TO THE ESTATE OF THE INSURED UPON THE DEATH OF THE DESIGNATED BENEFICIARY.

THE FACTS AND THE QUESTIONS INVOLVED ARE STATED IN YOUR LETTER AS FOLLOWS:

ON MAY 28, 1918, DAN MADIARINI APPLIED FOR $10,000 TERM INSURANCE IN FAVOR OF HIMSELF, HE HAVING ENLISTED FIVE DAYS PREVIOUS TO THE DATE OF THE APPLICATION FOR INSURANCE. THE SOLDIER DIED IN SERVICE ON SEPTEMBER 14, 1919, AND FOLLOWING HIS DEATH INFORMATION WAS REQUESTED AS TO HIS SURVIVING RELATIVES IN ORDER THAT THE TERM INSURANCE MIGHT BE DISTRIBUTED UNDER SECTION 402 OF THE WAR RISK INSURANCE ACT AS AMENDED. THE EVIDENCE SHOWED THAT THE VETERAN HAD BEEN A RESIDENT OF ILLINOIS AND THAT HE WAS SURVIVED BY A MOTHER AND FATHER, THREE SISTERS, AND TWO BROTHERS. ALTHOUGH THE BUREAU HAD SUFFICIENT EVIDENCE TO SHOW THAT THE MOTHER WAS SURVIVING, NEVERTHELESS, THE INSURANCE WAS DISTRIBUTED ONE-SEVENTH EACH TO THE FIVE BROTHERS AND SISTERS AND TWO SEVENTHS TO THE FATHER, OMITTING ENTIRELY THE VETERAN'S MOTHER. THE ERROR WAS NOT DISCOVERED UNTIL AFTER MARCH 4, 1925, AND THE QUESTION ARISES WHETHER, SINCE THE AWARD OF THE FATHER'S SHARE WAS IN ERROR, AND SINCE IT WAS AWARDED TO HIM, NEVERTHELESS, UNDER A DISTRIBUTION IN WHICH THE WHOLE OF THE INSURANCE WAS INVOLVED, THE PAYMENTS TO THE BROTHERS AND SISTERS SHOULD BE ALLOWED TO CONTINUE, OR WHETHER THE SHARES AWARDED TO THE BROTHERS AND SISTERS SHOULD NOW STAND FOR PAYMENT UNDER SECTION 303, WORLD WAR VETERANS' ACT.

THE SPECIFIC QUESTION, IN OTHER WORDS, IS WHETHER THE PAYMENTS TO THE BROTHERS AND SISTERS, BEING CORRECT IN AMOUNT AND BEING PROPERLY PAID TO THE PERSONS ENTITLED THERETO, SHOULD BE ALLOWED TO RUN, OR WHETHER THE SHARES OF THE BROTHERS AND SISTERS SHOULD BE MADE SUBJECT TO SECTION 303, WORLD WAR VETERANS' ACT SO THAT THE PRESENT VALUE THEREOF IS TO BE PAID IN A LUMP SUM TO THE REPRESENTATIVE OF THE VETERAN'S ESTATE.

THIS OFFICE HAS DEFINITELY ADOPTED THE PRINCIPLE THAT AWARDS MADE PRIOR TO MARCH 4, 1925, TO A NUMBER OF DISTRIBUTEES ENTITLED TO TAKE ON ACCOUNT OF THE DEATH OF THE INSURED OR OF THE DESIGNATED BENEFICIARY, AS FOR INSTANCE UNDER SECTION 402 OF THE WAR RISK INSURANCE ACT AS AMENDED JUNE 25, 1918, 40 STAT. 615, SHOULD BE CONSIDERED AS AN ENTIRETY, OR AS ONE AWARD, WITHIN THE MEANING OF SECTION 303 OF THE WORLD WAR VETERANS' ACT, AND NOT AS A NUMBER OF INDIVIDUAL AWARDS TO THE SEVERAL DISTRIBUTEES. THE DISTRIBUTION WAS LAWFULLY MADE BUT PAYMENTS WERE WITHHELD FROM ONE OR MORE OF THE INDIVIDUAL DISTRIBUTEES FOR SOME REASON THAT WOULD NOT HAVE AFFECTED THE VALIDITY OF THE DISTRIBUTION, THE AWARD TO ALL OF THE DISTRIBUTEES IS TO BE CONSIDERED AS IN COURSE OF PAYMENT ON THE DATE OF THE ACT. SEE THE MATCHETT CASE, 5 COMP. GEN. 924. BUT IF THE DISTRIBUTION WAS UNLAWFUL, THE AWARD BASED THEREON SHOULD NOT BE CONSIDERED AS IN COURSE OF PAYMENT ON THE DATE OF THE ACT. IN DECISION OF AUGUST 23, 1926, 6 COMP. GEN. 152, 154, IT WAS STATED:

OBVIOUSLY THE PRINCIPLE OF THE MATCHETT CASE WOULD NOT BE APPLICABLE TO AN INVALID AWARD TO SEVERAL DISTRIBUTEES BASED ON AN ERROR IN THE DISTRIBUTION OF INSURANCE EITHER BECAUSE OF A MISTAKE OF LAW OR BECAUSE OF THE DISCOVERY OF SOME RELATIVE ENTITLED TO A SHARE OF WHOM THE BUREAU HAD NO PREVIOUS KNOWLEDGE. IN SUCH A CASE THERE WAS IN FACT NO VALID AWARD MADE PRIOR TO THE PASSAGE OF THE ACT. ACCORDINGLY, IN THE SECOND TYPE OF CASES DESCRIBED IN YOUR SUBMISSION, THE AWARD MAY NOT BE CONSIDERED "IN COURSE OF PAYMENT" ON MARCH 4, 1925.

SUCH IS THE SITUATION IN THE PRESENT CASE. THERE WAS NO VALID AWARD DISTRIBUTING THE INSURANCE UNDER SECTION 402 OF THE WAR RISK INSURANCE ACT, SUPRA, FOR THE REASON THAT ONE OF THE PERSONS ENTITLED THEREUNDER, THE MOTHER, WAS OMITTED FROM THE DISTRIBUTION. THE FACT THAT ONLY THE SHARE OF THE FATHER WAS AFFECTED BY THE ERROR, AND THAT THE SHARES OF THE BROTHERS AND SISTERS WOULD HAVE REMAINED THE SAME UPON CORRECTION AFTER MARCH 4, 1925, TO INCLUDE THE MOTHER, DOES NOT RENDER THE ORIGINAL AWARD OF DISTRIBUTION LAWFUL IN PART AND UNLAWFUL IN PART. THE GENERAL PRINCIPLE ANNOUNCED IN THE ABOVE-CITED DECISIONS REQUIRES THAT THE AWARD BE CONSIDERED EITHER AS LAWFUL OR UNLAWFUL IN ITS ENTIRETY. IN THIS CASE THE AWARD WAS UNLAWFUL IN ITS ENTIRETY. SEE DECISION OF JULY 22, 1927, A- 19197, IN THE CASE OF IGNOS DUMBLAUSKAS, 7 COMP. GEN. 57.

YOU ARE ADVISED, THEREFORE, THAT THE VALUE OF THE REMAINING INSTALLMENTS OF ALL OF THE INSURANCE, INCLUDING THE SHARES OF THE BROTHERS AND SISTERS, SHOULD BE PAID IN A LUMP SUM TO THE PERSON DULY QUALIFIED AS THE REPRESENTATIVE OF THE ESTATE OF THE INSURED.