A-21495, FEBRUARY 23, 1928, 7 COMP. GEN. 509

A-21495: Feb 23, 1928

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THAT HE WAS DISCHARGED ON JULY 8. THAT HE WAS MARRIED ON OCTOBER 18. THAT TWO CHILDREN WERE BORN OF THE MARRIAGE. THE REINSTATEMENT WAS EFFECTED UNDER SECTION 304 OF THE WORLD WAR VETERANS' ACT. PROOF THAT HE IS NOT PERMANENTLY AND TOTALLY DISABLED. IT IS UNDERSTOOD THAT THESE CONDITIONS PRECEDENT WERE MET TO THE SATISFACTION OF THE VETERANS' BUREAU. PRESUMED TO HAVE BEEN SERVICE CONNECTED UNDER THE PROVISIONS OF THE STATUTE. WHEREIN HE WAS SUPPOSED TO HAVE BEEN CONFINED. FROM A GUNSHOT WOUND INFLICTED BY OFFICERS OF THE LAW WHILE HE WAS ATTEMPTING TO ESCAPE CAPTURE IN A STOLEN AUTOMOBILE. IT IS UNDERSTOOD THAT THE VETERANS' BUREAU HAS RULED THAT A GUARDIAN OF AN INCOMPETENT VETERAN MAY APPLY FOR REINSTATEMENT AND CONVERSION OF TERM INSURANCE IN THE SAME MANNER AS THE INSURED MIGHT HAVE DONE UNDER THE PROVISIONS OF THE APPLICABLE LAW AND REGULATIONS.

A-21495, FEBRUARY 23, 1928, 7 COMP. GEN. 509

VETERANS' BUREAU - INSURANCE PAYMENT OF DEATH BENEFITS UNDER A CONVERTED WAR-RISK INSURANCE POLICY, REINSTATED AND CONVERTED BY THE GUARDIAN OF THE INSURED AT A TIME WHEN THE INSURED HAD BEEN LEGALLY ADJUDGED MENTALLY INCOMPETENT, SHOULD NOT BE MADE TO THE PERSON DESIGNATED BY THE INSURED AS THE DEATH BENEFICIARY UNDER THE TERM INSURANCE, BUT SHOULD BE MADE TO THE ESTATE OF THE INSURED ON THE BASIS THAT NO DESIGNATION OF A BENEFICIARY UNDER THE CONVERTED POLICY HAD BEEN MADE.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, FEBRUARY 23, 1928:

THERE HAS BEEN BROUGHT TO MY ATTENTION THROUGH THE PREAUDIT OF VETERANS' BUREAU ACCOUNTS THE PROPOSED PAYMENT OF A VOUCHER FOR $9,327.31 IN FAVOR OF LOUISE YOUNGER AS DEATH BENEFICIARY UNDER THE CONVERTED WAR-RISK INSURANCE POLICY ISSUED IN FAVOR OF HER BROTHER, LEROY EVANS HUNTER, DECEASED, C-262319, K-602667.

IT APPEARS THAT THE VETERAN ENLISTED SEPTEMBER 2, 1918, AND ON SEPTEMBER 11, 1918, APPLIED FOR $10,000 TERM INSURANCE, DESIGNATING "HIMSELF" AS BENEFICIARY; THAT ON JUNE 10, 1919, HE EXECUTED A CHANGE OF BENEFICIARY IN FAVOR OF HIS SISTER, MRS. LOUIS YOUNGER; THAT HE WAS DISCHARGED ON JULY 8, 1919, AND PERMITTED HIS INSURANCE TO LAPSE FOR NONPAYMENT OF PREMIUMS DUE THEREAFTER; THAT IN JANUARY, 1920, HE REINSTATED HIS INSURANCE BUT FAILED TO CONTINUE THE PAYMENT OF PREMIUMS AFTER THE MONTH OF REINSTATEMENT AND THE INSURANCE AGAIN LAPSED; THAT HE WAS MARRIED ON OCTOBER 18, 919; THAT TWO CHILDREN WERE BORN OF THE MARRIAGE, ONE ON AUGUST 23, 1920, AND ONE DECEMBER 25, 1923; THAT ON JULY 29, 1924, THE SUPERIOR COURT OF THE STATE OF CALIFORNIA ADJUDGED THE VETERAN TO BE INCOMPETENT AND APPOINTED HIS WIFE AS GUARDIAN; AND THAT ON AUGUST 18, 1926, THE SAME COURT APPOINTED THE BANK OF ITALY AS GUARDIAN OF THE ESTATE OF THE VETERAN IN PLACE OF THE WIFE.

FEBRUARY 7, 1927, THE BANK OF ITALY, ACTING AS GUARDIAN, APPLIED FOR REIMBURSEMENT OF $10,000 LAPSED TERM INSURANCE AND AT THE SAME TIME APPLIED FOR ITS CONVERSION INTO A FIVE-YEAR CONVERTIBLE TERM POLICY. THE REINSTATEMENT WAS EFFECTED UNDER SECTION 304 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF JULY 2, 1926, 44 STAT. 797, WHICH REQUIRES AS A PREREQUISITE TO REINSTATEMENT THAT THE APPLICANT'S DISABILITY BE SERVICE CONNECTED; THAT THE APPLICANT FURNISH, DURING HIS LIFETIME, PROOF THAT HE IS NOT PERMANENTLY AND TOTALLY DISABLED; AND THAT HE PAY ALL THE BACK PREMIUMS, WITH INTEREST, OR THAT THE AMOUNT THEREOF BE PLACED AS AN INTEREST-BEARING INDEBTEDNESS AGAINST THE FACE OF THE POLICY.

IT IS UNDERSTOOD THAT THESE CONDITIONS PRECEDENT WERE MET TO THE SATISFACTION OF THE VETERANS' BUREAU, THERE HAVING BEEN IN EFFECT AT THE TIME OF APPLICATION FOR REINSTATEMENT AND THEREAFTER UNTIL THE DEATH OF THE INSURED A RATING OF TEMPORARY TOTAL DISABILITY, PRESUMED TO HAVE BEEN SERVICE CONNECTED UNDER THE PROVISIONS OF THE STATUTE. DEATH OF THE INSURED RESULTED MAY 11, 1927, DURING A FURLOUGH FROM THE INSTITUTION FOR THE MENTALLY INCOMPETENT, WHEREIN HE WAS SUPPOSED TO HAVE BEEN CONFINED, FROM A GUNSHOT WOUND INFLICTED BY OFFICERS OF THE LAW WHILE HE WAS ATTEMPTING TO ESCAPE CAPTURE IN A STOLEN AUTOMOBILE. THE GUARDIAN FOR THE INSURED DESIGNATED AS BENEFICIARY IN THE APPLICATION FOR CONVERTED INSURANCE THE "ESTATE OF LEROY E. HUNTER (INCOMPETENT).' THE VETERANS' BUREAU DISREGARDED THIS DESIGNATION AND ISSUED THE CONVERTED POLICY OCTOBER 25, 1927, NAMING THE SISTER OF THE INSURED AS BENEFICIARY, WHO HAD BEEN THE BENEFICIARY UNDER THE TERM INSURANCE.

IT IS UNDERSTOOD THAT THE VETERANS' BUREAU HAS RULED THAT A GUARDIAN OF AN INCOMPETENT VETERAN MAY APPLY FOR REINSTATEMENT AND CONVERSION OF TERM INSURANCE IN THE SAME MANNER AS THE INSURED MIGHT HAVE DONE UNDER THE PROVISIONS OF THE APPLICABLE LAW AND REGULATIONS, BUT THAT THE GUARDIAN CAN NOT CHANGE THE BENEFICIARY OF HIS WARD'S INSURANCE. THIS OFFICE WOULD NOT BE DISPOSED TO QUESTION THIS HOLDING. BUT IT WOULD NOT NECESSARILY FOLLOW THAT THE BENEFICIARY UNDER THE INSURANCE SO REINSTATED AND CONVERTED MUST BE THE SAME AS UNDER THE FORMER TERM INSURANCE THAT HAD LAPSED--- PARTICULARLY IN A CASE SUCH AS HERE PRESENTED WHERE A MARRIAGE AND BIRTH OF CHILDREN HAD INTERVENED SINCE THE FORMER DESIGNATION.

TERM INSURANCE AND CONVERTED INSURANCE ARE SEPARATE AND DISTINCT CONTRACTS UNDER THE PROVISIONS OF THE WORLD WAR VETERANS' ACT, WITH SEPARATE AND DISTINCT CONSIDERATIONS. IN THIS RESPECT THE DIFFERENCE IS SIMILAR TO THAT BETWEEN TERM AND CONVERTED COMMERCIAL LIFE INSURANCE. SEE 37 CORPUS JURIS 362, 363. IT IS UNDERSTOOD THAT IN CASES WHERE THE INSURED IS ACTING IN HIS OWN BEHALF, AND THERE IS INVOLVED NO QUESTION OF THE MENTAL CONDITION OF THE INSURED, A NEW DESIGNATION OF BENEFICIARY IS REQUIRED BY THE BUREAU UPON CONVERSION OF THE TERM INSURANCE, AND THAT THE DESIGNATION OF THE BENEFICIARY UNDER THE TERM INSURANCE WOULD NOT BE RECOGNIZED UNDER THE CONVERTED POLICY IN THE ABSENCE OF AFFIRMATIVE ACTION BY THE INSURED DESIGNATING THE SAME BENEFICIARY. IT IS NOT APPARENT WHY A DIFFERENT RULE SHOULD BE APPLIED WHERE THE INSURED IS MENTALLY INCOMPETENT AND HIS GUARDIAN IS ACTING IN HIS BEHALF IN REINSTATING AND CONVERTING THE INSURANCE.

THE BASIS FOR PAYMENT OF ALL LIFE INSURANCE IS THE INTENT OF THE INSURED. THERE WOULD BE NO MORE REASON TO CONCLUDE THAT AN INCOMPETENT INSURED WOULD NOT INTEND TO CHANGE THE BENEFICIARY UPON CONVERSION AFTER A LAPSE OF SEVERAL YEARS THAN TO CONCLUDE HE WOULD INTEND TO CHANGE HIS BENEFICIARY, PARTICULARLY IN SUCH A CASE AS THE ONE HERE INVOLVED. OTHER WORDS, THERE IS NO AUTHORITY OF LAW TO INDULGE IN ANY PRESUMPTION OR CONCLUSION AS TO THE INTENT OF AN INCOMPETENT VETERAN TO DESIGNATE ANY CERTAIN INDIVIDUAL AS BENEFICIARY UNDER HIS CONVERTED POLICY. THEREFORE THE POLICY, IF OTHERWISE LAWFULLY ISSUED, SHOULD BE CONSIDERED AS PAYABLE ON THE BASIS OF NO DESIGNATION OF A BENEFICIARY, WHICH WOULD AUTHORIZE PAYMENT TO HIS ESTATE UNDER THE TERMS OF SECTION 301 OF THE WORLD WAR VETERANS' ACT AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1309, 1310.

ACCORDINGLY, I HAVE TO ADVISE THAT PAYMENT UNDER THE CONVERTED POLICY HERE IN QUESTION TO THE SISTER OF THE INSURED WOULD APPEAR TO BE ILLEGAL AND UNAUTHORIZED.

IF YOU ARE SATISFIED THAT ALL CONDITIONS NECESSARY TO THE REINSTATEMENT AND CONVERSION OF THE INSURANCE IN THIS CASE WERE COMPLIED WITH, IT WOULD SEEM ADVISABLE THAT THE PARTIES IN INTEREST BE GIVEN A REASONABLE TIME WITHIN WHICH TO BRING SUIT UNDER THE PROVISIONS OF SECTION 19 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1302, 1303. IN THE ABSENCE THEREOF PAYMENT UNDER THE CONVERTED POLICY SHOULD BE MADE ONLY TO THE DULY APPOINTED ADMINISTRATOR OF THE ESTATE OF THE INSURED.