A-24416, OCTOBER 12, 1928, 8 COMP. GEN. 176

A-24416: Oct 12, 1928

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1928: THERE IS BEFORE THIS OFFICE FOR CONSIDERATION IN THE PREAUDIT OF ACCOUNTS THE WAR RISK INSURANCE CASE OF BEVERLY ALLEN READ. MAY BE ASSIGNED BY THE DESIGNATED BENEFICIARY TO THE DIVORCED WIFE OF THE INSURED WHO WAS NOT WITHIN THE PERMITTED CLASS OF BENEFICIARIES PRIOR TO THE DATE OF SAID STATUTE. SHALL NOT BE SUBJECT TO THE CLAIMS OF CREDITORS OF ANY PERSON TO WHOM AN AWARD IS MADE UNDER TITLES II. WAS TO LIMIT THE PERMITTED CLASS OF BENEFICIARIES TO TERM INSURANCE. NO CORRESPONDING AMENDMENT WAS MADE TO SECTION 22 OF THE STATUTE WITH RESPECT TO ASSIGNMENT BY ANY PERSON TO WHOM CONVERTED INSURANCE IS PAYABLE OF HIS INTEREST IN SUCH INSURANCE. IT IS A QUESTION WHAT EFFECT. WHETHER THE FAILURE TO MAKE ANY MODIFICATION IN SECTION 22 OF THE STATUTE WAS OR WAS NOT AN OVERSIGHT.

A-24416, OCTOBER 12, 1928, 8 COMP. GEN. 176

VETERANS' BUREAU - INSURANCE - ASSIGNMENT THE PROVISIONS OF SECTION 13 OF THE ACT OF MAY 29, 1928, 45 STAT. 968, AMENDING SECTION 300 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, SO AS TO REMOVE ALL RESTRICTION AS TO DESIGNATION OF BENEFICIARIES FOR CONVERTED INSURANCE, DID NOT REPEAL OR RENDER INOPERATIVE THE PROVISIONS OF SECTION 22 OF THE STATUTE, 43 STAT. 613, RESTRICTING THE ASSIGNMENT OF WAR RISK INSURANCE TO MEMBERS OF THE PERMITTED CLASS OF BENEFICIARIES.

DECISION BY COMPTROLLER GENERAL MCCARL, OCTOBER 12, 1928:

THERE IS BEFORE THIS OFFICE FOR CONSIDERATION IN THE PREAUDIT OF ACCOUNTS THE WAR RISK INSURANCE CASE OF BEVERLY ALLEN READ, C-724108, K-218953, INVOLVING THE QUESTION WHETHER BENEFITS UNDER A CONVERTED INSURANCE POLICY MATURING BY REASON OF THE DEATH OF THE INSURED SUBSEQUENT TO THE AMENDATORY ACT OF MAY 29, 1928, 45 STAT. 964, MAY BE ASSIGNED BY THE DESIGNATED BENEFICIARY TO THE DIVORCED WIFE OF THE INSURED WHO WAS NOT WITHIN THE PERMITTED CLASS OF BENEFICIARIES PRIOR TO THE DATE OF SAID STATUTE.

THE VETERAN DIED JULY 7, 1928, AT WHICH TIME HE HAD IN FORCE A $10,000 ORDINARY LIFE INSURANCE POLICY, THE BENEFICIARY THEREOF BEING HIS DAUGHTER, CLAUDIA B. READ. SUBSEQUENT TO THE DEATH OF THE INSURED THE DAUGHTER EXECUTED AN ASSIGNMENT OF ALL RIGHTS, TITLE, AND INTEREST IN THE POLICY TO HER MOTHER, LILLIAN M. READ, WHO HAD BEEN DIVORCED FROM THE INSURED PRIOR TO HIS DEATH.

THE VETERANS' BUREAU HAS SUBMITTED FOR PREAUDIT A VOUCHER IN FAVOR OF LILLIAN M. READ, THE DIVORCED WIFE, ON THE BASIS OF THE ASSIGNMENT BY THE DESIGNATED BENEFICIARY, FOR THE FULL FACE VALUE OF THE POLICY.

SECTION 22 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 613,PROVIDED AS FOLLOWS:

* * * INSURANCE * * * PAYABLE UNDER TITLES * * * III * * * SHALL NOT BE ASSIGNABLE; SHALL NOT BE SUBJECT TO THE CLAIMS OF CREDITORS OF ANY PERSON TO WHOM AN AWARD IS MADE UNDER TITLES II, III, OR IV; AND SHALL BE EXEMPT FROM ALL TAXATION; * * *.

THAT THE PROVISIONS OF THIS SECTION SHALL NOT BE CONSTRUED TO PROHIBIT THE ASSIGNMENT BY ANY PERSON TO WHOM CONVERTED INSURANCE SHALL BE PAYABLE UNDER TITLE III OF SUCH ACT OF HIS INTEREST IN SUCH INSURANCE TO ANY OTHER MEMBER OF THE PERMITTED CLASS OF BENEFICIARIES.

THE EFFECT OF SECTION 13 OF THE ACT OF MAY 29, 1928, 45 STAT. 968, AMENDING SECTION 300 OF THE WORLD WAR VETERANS' ACT, WAS TO LIMIT THE PERMITTED CLASS OF BENEFICIARIES TO TERM INSURANCE, AND, THEREBY TO REMOVE ALL RESTRICTION AS TO DESIGNATION OF BENEFICIARIES FOR CONVERTED INSURANCE. DECISION OF SEPTEMBER 7, 1928, A-24129, 8 COMP. GEN. 107. NO CORRESPONDING AMENDMENT WAS MADE TO SECTION 22 OF THE STATUTE WITH RESPECT TO ASSIGNMENT BY ANY PERSON TO WHOM CONVERTED INSURANCE IS PAYABLE OF HIS INTEREST IN SUCH INSURANCE, IT IS A QUESTION WHAT EFFECT, IF ANY, THE AMENDMENTS OF MAY 29, 1928, HAD UPON THE ASSIGNMENT OF CONVERTED INSURANCE.

AS A BASIS FOR APPROVING THE VOUCHER FOR PAYMENT IN THE INSTANT CASE IT WOULD BE NECESSARY TO CONCLUDE THAT THE CONGRESS INTENDED BY THE AMENDMENT TO REMOVE ALL RESTRICTION ON ASSIGNMENT OF CONVERTED INSURANCE, AS WELL AS TO REMOVE ALL RESTRICTION ON DESIGNATION OF BENEFICIARIES THEREOF. THE STATUTE AS AMENDED, WHEN CONSIDERED IN CONNECTION WITH THE GENERAL RESTRICTION ON ASSIGNMENTS, DOES NOT JUSTIFY SUCH AN ASSUMPTION. WHETHER THE FAILURE TO MAKE ANY MODIFICATION IN SECTION 22 OF THE STATUTE WAS OR WAS NOT AN OVERSIGHT, THE REPEAL OR MODIFICATION OF A STATUTORY PROVISION BY IMPLICATION IS NOT FAVORED. PARTICULARLY AS TO ASSIGNMENTS OF WAR RISK INSURANCE IS IT IMPROPER TO CONCLUDE BY INFERENCE ONLY THAT THE CONGRESS INTENDED TO REMOVE ENTIRELY ALL RESTRICTIONS ON ASSIGNMENTS OF CONVERTED INSURANCE, SO CONTRARY TO THE STATUTORY PROVISION PROHIBITING ASSIGNMENT OF OTHER CLASSES OF CLAIMS AGAINST THE UNITED STATES, SECTION 3477, REVISED STATUTES, AND ALSO IN VIEW OF THE VARIOUS STATE STATUTES MAKING ONE CLASS OF RESTRICTION OR ANOTHER AS TO ASSIGNMENT OF LIFE INSURANCE. SEE 37 CORPUS JURIS, 422-438, PARTICULARLY PARAGRAPHS 127 AND 128, PAGES 423-425. IN OTHER WORDS, IT DOES NOT FOLLOW, NECESSARILY, THAT BECAUSE THE CONGRESS REMOVED ALL RESTRICTION AS TO DESIGNATION OF BENEFICIARIES OF CONVERTED INSURANCE, IT WAS INTENDED ALSO TO REMOVE ALL RESTRICTIONS AS TO ASSIGNMENT OF SUCH INSURANCE.

IT IS CONCLUDED, THEREFORE, THAT SECTION 22 OF THE ACT HAS NOT BEEN REPEALED, MODIFIED, SUPERSEDED, OR RENDERED INOPERATIVE, AND THAT ASSIGNMENTS OF CONVERTED INSURANCE WILL BE RECOGNIZED ONLY IF AND WHEN MADE TO A PERSON COMING WITHIN THE PERMITTED CLASS OF BENEFICIARIES AS EXISTING PRIOR TO THE AMENDATORY ACT OF MAY 29, 1928. IN THIS CASE, AS THE ASSIGNEE WAS NOT WITHIN THE PERMITTED CLASS, THE ASSIGNMENT MAY NOT BE RECOGNIZED AND THE VOUCHER MAY NOT BE APPROVED FOR PAYMENT.