A-26658, MAY 14, 1929, 8 COMP. GEN. 603

A-26658: May 14, 1929

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VETERANS' BUREAU - INSURANCE - JUDGMENTS THE VETERANS' BUREAU IS WITHOUT AUTHORITY TO AWARD TO A SUCCESSFUL LITIGANT IN A SUIT BROUGHT PURSUANT TO LAW UNDER A CONTRACT OF WAR-RISK INSURANCE. EVEN THOUGH THE ADDITIONAL AMOUNT WOULD HAVE BEEN AUTHORIZED IF THE ISSUES DECIDED BY THE COURT VALIDATING THE INSURANCE HAD BEEN DECIDED BY THE COURT VALIDATING THE INSURANCE HAD BEEN DECIDED FAVORABLY TO THE PARTIES IN INTEREST BY THE BUREAU WITHOUT LITIGATION. THE FACTS IN THE TWO CASES ARE STATED IN YOUR SUBMISSION TO BE AS FOLLOWS: RIGNEY'S INSURANCE WAS DEEMED NOT TO HAVE LAPSED UNDER THE PROVISIONS OF SECTION 305 OF THE WORLD WAR VETERANS' ACT. MONTHLY INSTALLMENTS IN THE AMOUNT OF $57.03 WERE MADE PAYABLE TO HIM COMMENCING AS OF APRIL 30.

A-26658, MAY 14, 1929, 8 COMP. GEN. 603

VETERANS' BUREAU - INSURANCE - JUDGMENTS THE VETERANS' BUREAU IS WITHOUT AUTHORITY TO AWARD TO A SUCCESSFUL LITIGANT IN A SUIT BROUGHT PURSUANT TO LAW UNDER A CONTRACT OF WAR-RISK INSURANCE, ANY AMOUNT IN ADDITION TO THAT SPECIFICALLY PROVIDED FOR IN THE JUDGMENT OR COMPUTED IN ACCORDANCE WITH ITS SPECIFIC TERMS, EVEN THOUGH THE ADDITIONAL AMOUNT WOULD HAVE BEEN AUTHORIZED IF THE ISSUES DECIDED BY THE COURT VALIDATING THE INSURANCE HAD BEEN DECIDED BY THE COURT VALIDATING THE INSURANCE HAD BEEN DECIDED FAVORABLY TO THE PARTIES IN INTEREST BY THE BUREAU WITHOUT LITIGATION.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, MAY 14, 1929:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF MARCH 13, 1929, SUBMITTING FOR CONSIDERATION THE WAR-RISK INSURANCE CASES OF VOLLEY HARDIN RIGNEY, C- 528971, AND WILFRED MACHUGH, C-208610, INVOLVING THE QUESTION WHETHER A GREATER AMOUNT THAN SPECIFICALLY STATED IN A FINAL JUDGMENT OF THE COURT MAY LAWFULLY BE PAID TO THOSE DETERMINED TO BE ENTITLED, IF FOUND DUE BY THE DIRECTOR OF THE VETERANS' BUREAU UNDER THE CONTRACT OF INSURANCE AND PROVISIONS OF CONTROLLING STATUTES AND REGULATIONS.

THE FACTS IN THE TWO CASES ARE STATED IN YOUR SUBMISSION TO BE AS FOLLOWS:

RIGNEY'S INSURANCE WAS DEEMED NOT TO HAVE LAPSED UNDER THE PROVISIONS OF SECTION 305 OF THE WORLD WAR VETERANS' ACT, AND MONTHLY INSTALLMENTS IN THE AMOUNT OF $57.03 WERE MADE PAYABLE TO HIM COMMENCING AS OF APRIL 30, 1920 (THE DATE ON WHICH HE WAS RATED BY THE BUREAU AS PERMANENTLY AND TOTALLY DISABLED), AND CONTINUING ON THE 30TH DAY OF EACH SUCCEEDING MONTH TO AND INCLUDING JUNE 30, 1926. RIGNEY DIED ON JULY 13, 1926. YOU WILL NOTE THAT THE ANNIVERSARY DATE OF THE AWARD WAS THE 30TH DAY OF THE MONTH AND THE LAST INSTALLMENT PAID TO RIGNEY WAS THAT WHICH ACCRUED ON JUNE 30, 1926. THE NEXT INSTALLMENT DUE UNDER THE CONTRACT OF INSURANCE ACCRUED ON JULY 30, 1926, AND BY REASON OF RIGNEY'S DEATH BECAME PAYABLE TO THE BENEFICIARY UNDER THE CONTRACT.

SUBSEQUENT TO RIGNEY'S DEATH A DISPUTE AROSE BETWEEN CERTAIN PERSONS, CLAIMING AS BENEFICIARIES, AND THE BUREAU. SUIT ON THE CLAIM WAS INSTITUTED UNDER THE PROVISIONS OF SECTION 19 OF THE WORLD WAR VETERANS' ACT, AND THE COURT HELD THE PLAINTIFF TO BE THE PROPER BENEFICIARY AND ENTERED THE FOLLOWING JUDGMENT:

"IT IS THEREFORE ORDERED * * * THAT THE UNITED STATES OF AMERICA PAY UNTO THE PLAINTIFF, * * * THE SUM OF TWELVE HUNDRED FORTY-FOUR AND 21/100 DOLLARS ($1,244.21), BEING THE AMOUNT OF MONTHLY INSTALLMENTS ACCRUING FROM THE DATE OF THE DEATH OF THE DECEDENT (THE INSURED), TO WIT, JULY 13, 1926, UP TO AND INCLUDING THE DATE OF SIGNING HEREOF. * * *.'

THE JUDGMENT WAS SIGNED JUNE 8, 1928, AND THE LAST INSTALLMENT WHICH ACCRUED WITHIN THE PERIOD COVERED BY THE JUDGMENT WAS THAT OF MAY 30, 1928. THEREFORE THERE HAD ACCRUED BETWEEN JULY 13, 1926 (DATE OF INSURED'S DEATH), AND JUNE 8, 1928 (ENTRY OF JUDGMENT), TWENTY-THREE INSTALLMENTS EACH IN THE AMOUNT OF $57.03, TOTALLING $1,311.69, OR $67.48 IN EXCESS OF THE AMOUNT ($1,244.21) ALLOWED BY THE JUDGMENT.

IN THE MACHUGH CASE THE INSURED MADE CLAIM UPON THE BUREAU FOR BENEFITS UNDER A $5,000 CONTRACT OF TERM INSURANCE ON THE GROUND THAT HE WAS PERMANENTLY AND TOTALLY DISABLED ON AND AFTER THE DATE OF HIS DISCHARGE. THE BUREAU DENIED THE CLAIM AND SUIT WAS INSTITUTED UNDER SECTION 19 OF THE WORLD WAR VETERANS' ACT. DURING THE PENDENCY OF THE SUIT THE PLAINTIFF DIED AND THE SUIT WAS CONTINUED BY THE INSURED'S ADMINISTRATRIX. THE MATERIAL ALLEGATIONS OF THE COMPLAINT WERE THAT A CONTRACT OF WAR-RISK TERM INSURANCE IN THE AMOUNT OF $5,000 WAS IN FORCE ON APRIL 30, 1919; THAT BY THE TERMS OF SAID CONTRACT THE INSURER AGREED TO PAY THE INSURED $28.75 PER MONTH IF THE INSURED BECAME PERMANENTLY AND TOTALLY DISABLED DURING THE LIFE OF THE CONTRACT; THAT THE INSURED BECAME PERMANENTLY AND TOTALLY DISABLED ON APRIL 30, 1919; THAT THE DESIGNATED BENEFICIARY PREDECEASED THE INSURED; THAT THE INSURED DIED ON DECEMBER 11, 1927; AND THAT THE PLAINTIFF WAS THE REGULARLY APPOINTED, QUALIFIED, AND ACTING ADMINISTRATRIX OF THE ESTATE OF THE INSURED. UPON A TRIAL OF THE CASE THESE ISSUES WERE FOUND IN FAVOR OF THE PLAINTIFF. JUDGMENT FOR THE ADMINISTRATRIX IN THE AMOUNT OF $5,000 WAS ENTERED SEPTEMBER 28, 1928. THE PRINCIPAL ISSUE WAS WHETHER OR NOT THE INSURED BECAME PERMANENTLY AND TOTALLY DISABLED ON THE DATE ALLEGED, APRIL 30, 1919, AND AS HERETOFORE STATED WAS DECIDED IN FAVOR OF THE PLAINTIFF.

WITH THESE ISSUES DETERMINED IN FAVOR OF THE PLAINTIFF IT WOULD HAVE BEEN PROPER TO ENTER A JUDGMENT IN FAVOR OF THE PLAINTIFF IN THE AMOUNT OF $6,233.00, OR $1,233.00 OVER AND ABOVE THE AMOUNT OF THE JUDGMENT WHICH HAS BEEN ENTERED. THIS LARGER AMOUNT ($6,233.00) IS COMPUTED AS FOLLOWS:

TABLE

INSTALLMENT OF $28.75 ACCRUED ON APR. 30, 1919, AND AN

INSTALLMENT OF LIKE AMOUNT ACCRUED ON THE 30TH DAY OF

EACH SUCCEEDING MONTH TO AND INCLUDING THE 30TH DAY

OF NOVEMBER, 1927 -------------------------------------- $2,990.00

COMPUTED VALUE OF INSTALLMENTS ACCRUED AFTER DEATH

OF INSURED --------------------------------------------- 3,243.00

6,233.00

YOU UNDERSTAND, I AM SURE, THAT IF THE ISSUE OF PERMANENT TOTAL DISABILITY HAD BEEN DETERMINED BY THE BUREAU IN FAVOR OF THE PLAINTIFF THE PAYMENT OF THE LARGER AMOUNT TO THE ADMINISTRATRIX WOULD HAVE BEEN MADE WITHOUT QUESTION.

WITH REFERENCE TO THE MATTER YOU STATED:

ALSO, IT IS A FACT THAT IN A GREAT NUMBER OF SIMILAR CASES ARISING PRIOR TO YOUR DECISION OF NOVEMBER 9, 1928, THE FULL VALUE OF UNPAID INSTALLMENTS UNDER THE CONTRACT OF INSURANCE WAS PAID BY MEANS OF ADJUSTMENT CHECKS ISSUED AFTER THE PAYMENT OF THE AMOUNTS ALLOWED IN THE JUDGMENTS. THE PRACTICE HAD CONTINUED FOR A PERIOD SO LONG--- AND WITH YOUR SANCTION--- THAT ITS PROPRIETY WAS UNQUESTIONED AND ATTORNEYS FOR THE GOVERNMENT HAVE NOT HESITATED TO REPRESENT TO ATTORNEYS FOR THE PLAINTIFFS THE DESIRABILITY OF ENTERING JUDGMENTS FOR AMOUNTS "LESS"RATHER THAN "MORE" THAN THE VALUE OF ACCRUED INSTALLMENTS: THIS FOR THE REASON THAT IF JUDGMENT BE ENTERED FOR AN AMOUNT IN EXCESS OF ACCRUED INSTALLMENTS, MODIFICATION IS ABSOLUTELY ESSENTIAL, WHEREAS IT WAS REPRESENTED THAT JUDGMENTS ENTERED FOR LESS THAN THE VALUE OF ACCRUED INSTALLMENTS WOULD CAUSE NO LOSS TO THE JUDGMENT CREDITOR, BECAUSE HE WAS ADVISED THAT ADJUSTED PAYMENTS WOULD TAKE CARE OF ANY DISCREPANCY.

THE SUITS IN BOTH OF THESE CASES WERE BROUGHT PURSUANT TO THE AUTHORITY CONTAINED IN SECTION 19 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1302. SEE, ALSO, AMENDMENT OF MAY 29, 1928, 45 STAT. 964. THE SUIT IN THE RIGNEY CASE WAS APPARENTLY BROUGHT UNDER THAT PORTION OF THE STATUTE PROVIDING:

* * * IN ALL CASES WHERE THE BUREAU ACKNOWLEDGES THE INDEBTEDNESS OF THE UNITED STATES UPON ANY SUCH CONTRACT OF INSURANCE AND THERE IS A DISPUTE AS TO THE PERSON OR PERSONS ENTITLED TO PAYMENT, A SUIT IN THE NATURE OF A BILL OF INTERPLEADER MAY BE BROUGHT BY THE BUREAU IN THE NAME OF THE UNITED STATES AGAINST ALL PERSONS HAVING OR CLAIMING TO HAVE ANY INTEREST IN SUCH INSURANCE IN THE SUPREME COURT OF THE DISTRICT OF COLUMBIA OR IN THE DISTRICT COURT IN AND FOR THE DISTRICT IN WHICH ANY SUCH CLAIMANTS RESIDE: * * *.

THE SUIT IN THE MACHUGH CASE WAS APPARENTLY BROUGHT UNDER THAT PORTION OF THE STATUTE ROVIDING:

IN THE EVENT OF DISAGREEMENT AS TO CLAIM UNDER A CONTRACT OF INSURANCE BETWEEN THE BUREAU AND ANY PERSON OR PERSONS CLAIMING THEREUNDER AN ACTION ON THE CLAIM MAY BE BROUGHT AGAINST THE UNITED STATES EITHER IN THE SUPREME COURT OF THE DISTRICT OF COLUMBIA OR IN THE DISTRICT COURT OF THE UNITED STATES IN AND FOR THE DISTRICT IN WHICH SUCH PERSONS OR ANY OF THEM RESIDES, AND JURISDICTION IS HEREBY CONFERRED UPON SUCH COURTS TO HEAR AND DETERMINE ALL SUCH CONTROVERSIES. * * *.

THE PRIMARY ISSUE BEFORE THE COURT IN THE RIGNEY CASE WAS THE DETERMINATION OF LAWFUL BENEFICIARIES TO THE INSURANCE DUE UNDER THE CONTRACT, AND IN THE MACHUGH CASE, WHETHER THE INSURANCE MATURED BY HAPPENING OF PERMANENT TOTAL DISABILITY PRIOR TO ITS LAPSE FOR NONPAYMENT OF PREMIUMS. EACH OF THESE ISSUES WAS DETERMINED AGAINST THE GOVERNMENT. WHILE IT IS TRUE THAT IN NEITHER CASE WAS THERE A DIRECT ISSUE BEFORE THE COURT AS TO THE EXACT AMOUNT OF INSURANCE DUE THE PLAINTIFFS, THE FINAL ACTION OF A UNITED STATES COURT IN A SUIT PROPERLY INSTITUTED UNDER THE PROVISIONS OF THE STATUTE IS CONTROLLING NOT ONLY OF THE PARTICULAR ISSUES FORMING THE BASIS OF THE COURT'S ACTION, BUT ALSO OF OTHER MATTERS ESSENTIAL TO THE PROPER AND FINAL DISPOSITION OF THE CASE, INCLUDING THE AMOUNT PAYABLE TO THE SUCCESSFUL LITIGANTS, IF COVERED BY THE JUDGMENT OF THE COURT.

THE WELL-SETTLED RULE IS THAT THE GOVERNMENT MAY PAY NEITHER MORE NOR LESS UNDER A JUDGMENT AGAINST IT THAN THE AMOUNT SPECIFICALLY PROVIDED FOR IN THE JUDGMENT, OR COMPUTED IN ACCORDANCE WITH ITS SPECIFIC TERMS. THERE IS NOTHING IN THE PROVISIONS OF THE WORLD WAR VETERANS' ACT VESTING IN THE UNITED STATES COURTS JURISDICTION TO DETERMINE QUESTIONS ARISING UNDER WAR -RISK INSURANCE TO JUSTIFY OR AUTHORIZE ANY EXCEPTION OF WAR-RISK INSURANCE CASES FROM THIS GENERAL RULE. WHERE THE LANGUAGE OF THE JUDGMENT WILL PERMIT, IT MAY BE CONSTRUED LIBERALLY TO GIVE THE FULL BENEFIT TO WHICH THE PLAINTIFFS ARE ENTITLED UNDER THE PRINCIPLES ANNOUNCED BY THE COURT, BUT THE JUDGMENT MAY NOT BE AMENDED OR MODIFIED BY AN EXECUTIVE OFFICER OF THE GOVERNMENT. IF ANY ERROR OR OMISSION HAS BEEN MADE IN THE FINAL JUDGMENT OF THE COURT IN WAR-RISK INSURANCE CASES, RESULTING UNFAVORABLY EITHER TO THE GOVERNMENT OR TO THE PLAINTIFFS, IT IS THE DUTY OF THE ATTORNEY CONCERNED TO APPLY TO THE COURT FOR CORRECTION OR AMENDMENT OF THE JUDGMENT.

THERE IS FOR THE CONSIDERATION OF THE VETERANS' BUREAU AND THE DEPARTMENT OF JUSTICE THE MATTER OF EITHER REQUESTING THE COURTS TO REFRAIN FROM STATING IN JUDGMENTS IN WAR-RISK INSURANCE CASES THE SPECIFIC AMOUNT DUE WHEN THE AMOUNT IS NOT DIRECTLY IN ISSUE, SUGGESTING THAT THE JUDGMENTS READ,"SUCH AMOUNT AS MAY LAWFULLY BE FOUND DUE BY THE UNITED STATES VETERANS' BUREAU PURSUANT TO THE CONTRACT OF INSURANCE AND THE CONTROLLING STATUTES AND REGULATIONS," OR OF EXERCISING GREATER CARE IN STATING IN THE PLEADINGS OR OTHERWISE THE EXACT AMOUNT INVOLVED. THE PAST PRACTICE IN THIS CONNECTION, AS REPORTED IN YOUR LETTER, UNDER WHICH IT HAS BEEN CUSTOMARY TO STATE IN THE PLEADINGS AN AMOUNT AS IN ISSUE LESS THAN THE PLAINTIFFS WOULD BE ENTITLED TO, IF SUCCESSFUL, SHOULD BE DISCONTINUED. THE COURTS HAVE BEFORE THEM IN THESE CASES THE LEGALITY OF INSURANCE CONTRACTS OBLIGATING THE GOVERNMENT FOR CERTAIN SPECIFIED MONTHLY PAYMENTS COMPUTED IN ACCORDANCE WITH CERTAIN RULES AND REGULATIONS, IN VIEW OF WHICH THE GREATEST POSSIBLE CARE SHOULD BE EXERCISED IN PRESENTING TO THE COURT THE EXACT AMOUNT WHICH THE GOVERNMENT WILL BE OBLIGATED TO PAY FROM GOVERNMENT FUNDS IN THE EVENT THE ISSUES ARE DECIDED AGAINST IT.

IT IS NOTED THAT THE JUDGMENT IN THE RIGNEY CASE, AFTER DIRECTING PAYMENT OF A SPECIFIC AMOUNT, PROVIDES FOR CONTINUING THE MONTHLY INSTALLMENTS "UNTIL THE FULL AMOUNT OF THE POLICY HAS BEEN PAID IN ACCORDANCE WITH VETERANS' BUREAU RULES AND REGULATIONS.' THEREFORE, WHILE ONLY $1,244.21 IS FOR PAYMENT AS OF DATE OF JUDGMENT, INSTALLMENTS THEREAFTER MAY CONTINUE UNTIL THE FULL AMOUNT OF THE POLICY SHALL HAVE BEEN PAID. HENCE, THE APPARENT ERROR IN THIS CASE MAY, TO SOME EXTENT AT LEAST, BE SUBSEQUENTLY ADJUSTED.

IN THE MACHUGH CASE THE TERMS OF THE JUDGMENT PERMIT OF NO ADJUSTMENT, THE JUDGMENT BEING FOR THE LUMP SUM OF $5,000, AND THAT AMOUNT ALONE IS PAYABLE IN FULL SATISFACTION OF THE JUDGMENT.