A-27645, JULY 6, 1937, 17 COMP. GEN. 4

A-27645: Jul 6, 1937

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THERE IS NO OBJECTION TO ASSIGNMENTS OF ATTORNEYS' FEES ALLOWED BY THE COURTS IN CONNECTION WITH WAR RISK INSURANCE LITIGATION PURSUANT TO SECTION 19. NOTWITHSTANDING THERE IS DOUBT WHETHER SUCH DETERMINATION WOULD BE FINAL AND CONCLUSIVE UNDER THE PROVISIONS OF SAID SECTION 5. IS AS FOLLOWS: ON JUNE 28. THE COMPTROLLER GENERAL ADVISED THE DIRECTOR OF THE THEN UNITED STATES VETERANS' BUREAU THAT THERE WAS NO AUTHORITY TO PERMIT AN ATTORNEY IN RECEIPT OF A FEE PURSUANT TO A JUDGMENT RENDERED UPON A SUIT INSTITUTED ON A WAR-RISK INSURANCE CONTRACT TO ASSIGN HIS FEE. THE COMPTROLLER GENERAL SUGGESTED IN SUCH A CASE THAT IF ONE ATTORNEY OF RECORD SHOULD DESIRE TO ASSIGN HIS INTEREST IN THE FEE TO ANOTHER ATTORNEY OF RECORD IT WOULD BE PROPER TO PETITION THE COURT WHICH HAD JURISDICTION OF THE CASE AND HAVE THE NECESSARY APPORTIONMENT TO REFLECT THE DESIRES OF THE ATTORNEYS MADE BY THE COURT IN ITS JUDGMENT.

A-27645, JULY 6, 1937, 17 COMP. GEN. 4

ATTORNEYS' FEES - ASSIGNMENTS - WAR RISK INSURANCE LITIGATION THE ADMINISTRATOR OF VETERANS' AFFAIRS BEING CHARGED WITH FULL RESPONSIBILITY FOR SUCH DETERMINATIONS DEEMED BY HIM TO BE WITHIN THE PURVIEW OF SECTION 5 OF THE WORLD WAR VETERANS' ACT, AS AMENDED JULY 3, 1930, 46 STAT. 991, MAKING "ALL DECISIONS OF QUESTIONS OF FACT AND LAW AFFECTING ANY CLAIMANT TO THE BENEFITS OF TITLES II, III, OR IV * * *" OF SAID ACT CONCLUSIVE EXCEPT AS OTHERWISE PROVIDED, THERE IS NO OBJECTION TO ASSIGNMENTS OF ATTORNEYS' FEES ALLOWED BY THE COURTS IN CONNECTION WITH WAR RISK INSURANCE LITIGATION PURSUANT TO SECTION 19, TITLE I OF THE WORLD WAR VETERANS' ACT, AS AMENDED, 43 STAT. 1311, IF DETERMINED BY THE ADMINISTRATOR TO BE NECESSARY TO EFFECTUATE THE PURPOSES OF THE INSURANCE STATUTE, NOTWITHSTANDING THERE IS DOUBT WHETHER SUCH DETERMINATION WOULD BE FINAL AND CONCLUSIVE UNDER THE PROVISIONS OF SAID SECTION 5.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, JULY 6, 1937:

YOUR LETTER OF JUNE 7, 1937, IS AS FOLLOWS:

ON JUNE 28, 1929, A-27645, THE COMPTROLLER GENERAL ADVISED THE DIRECTOR OF THE THEN UNITED STATES VETERANS' BUREAU THAT THERE WAS NO AUTHORITY TO PERMIT AN ATTORNEY IN RECEIPT OF A FEE PURSUANT TO A JUDGMENT RENDERED UPON A SUIT INSTITUTED ON A WAR-RISK INSURANCE CONTRACT TO ASSIGN HIS FEE, OR ANY PART THEREOF, TO ANOTHER ATTORNEY, AND THE COMPTROLLER GENERAL SUGGESTED IN SUCH A CASE THAT IF ONE ATTORNEY OF RECORD SHOULD DESIRE TO ASSIGN HIS INTEREST IN THE FEE TO ANOTHER ATTORNEY OF RECORD IT WOULD BE PROPER TO PETITION THE COURT WHICH HAD JURISDICTION OF THE CASE AND HAVE THE NECESSARY APPORTIONMENT TO REFLECT THE DESIRES OF THE ATTORNEYS MADE BY THE COURT IN ITS JUDGMENT.

SINCE THE RENDITION OF THE FOREGOING DECISION EFFORTS HAVE BEEN MADE TO APPLY SAID RULING AND I AM NOW REQUESTING YOUR FURTHER CONSIDERATION OF THIS QUESTION BECAUSE OF DIFFICULTIES WHICH HAVE BEEN ENCOUNTERED WITH REFERENCE TO PARTITIONS OF ATTORNEYS' FEES. WHILE, OF COURSE, THE AMENDMENT TO THE WORLD WAR VETERANS' ACT OF JULY 3, 1930, AMENDED SECTION 5 OF THAT ACT SO AS TO MAKE DECISIONS OF THE DIRECTOR (ADMINISTRATOR) CONCLUSIVE AS TO QUESTIONS BOTH OF FACT AND LAW AFFECTING ANY CLAIMANT TO THE BENEFITS OF TITLES II, III, OR IV OF SAID ACT, I AM RELUCTANT TO DISREGARD THE COMPTROLLER GENERAL'S DECISION AS TO ATTORNEYS' FEES UNTIL YOU HAVE HAD OPPORTUNITY TO CONSIDER THE PROBLEM IN THE LIGHT OF THE CASES WHICH WILL NOW BE PRESENTED.

IN THE CASE OF GILBERT BARNES, XC-1287399, A JUDGMENT WAS RENDERED IN 1928 BY THE DISTRICT COURT OF THE NORTHERN DISTRICT OF TEXAS. THE TERM OF THAT COURT IN WHICH THE JUDGMENT WAS ENTERED HAS NOW EXPIRED, SO THAT IT WOULD NOT BE POSSIBLE AT THE PRESENT TIME TO FOLLOW THE PROCEDURE SUGGESTED IN THE COMPTROLLER GENERAL'S DECISION OF JUNE 28, 1929, TO SECURE AN AMENDED JUDGMENT. THE JUDGMENT IN QUESTION GAVE TO THE FIRM OF MATHIS, TEAGUE, HAWKINS AND MATHIS, ATTORNEYS AT LAW, 10 PERCENT OF THE AMOUNT AWARDED AND 10 PERCENT OF FUTURE INSTALLMENTS. CHECKS IN THE AMOUNTS OF $5.60, REPRESENTING 10 PERCENT OF THE MONTHLY INSTALLMENTS OF INSURANCE AWARDED UNDER THE JUDGMENT, WERE DRAWN IN FAVOR OF THE FIRM IN QUESTION. MR. B. F. TEAGUE, ONE OF THE MEMBERS OF THE FIRM, IS DECEASED, AND FURTHER, THE PARTNERSHIP HAS BEEN DISSOLVED. MR. J. MEEK HAWKINS AND MR. JOHN M. MATHIS, SR., HAVE WAIVED THEIR RIGHTS TO THEIR SHARES OF THE MONTHLY PAYMENTS COVERING ATTORNEYS' FEES IN FAVOR OF MR. JOHN M. MATHIS, JR., AND HAVE REQUESTED THAT THE ENTIRE AMOUNT OF THE FEES SHOULD BE PAID TO THE LATTER. IT APPEARS IN THIS CASE THAT FOR SOME TIME THE ATTORNEYS THEMSELVES, BY AN ARRANGEMENT THAT WAS MUTUALLY SATISFACTORY, PERMITTED THE CHECKS IN THE FIRM NAME TO BE RECEIVED BY MR. JOHN M. MATHIS, JR., WHO, AS LONG AS HE REMAINED IN THE SAME TOWN WHERE THE FORMER FIRM HAD PRACTICED, WAS ALLOWED TO RECEIVE THE CHECKS THROUGH THE MAIL WITHOUT ANY QUESTION BY THE POST OFFICE. IT IS STATED THAT MR. JOHN M. MATHIS, JR., WOULD THEN INDORSE THE CHECKS AND NO QUESTION AS TO THE DISPOSITION OF THE FEE WAS EVER RAISED WITH THE VETERANS' ADMINISTRATION UNTIL MR. JOHN M. MATHIS, JR., MOVED TO ANOTHER TOWN, WHEREUPON THE LOCAL POSTMASTER REFUSED TO DELIVER CHECKS TO HIM ADDRESSED IN THE FIRM NAME ON THE GROUND THAT NO SUCH FIRM WAS IN EXISTENCE IN THE SECOND TOWN.

THE SUGGESTION IS OFFERED THAT IN THE BARNES CASE SINCE IT IS IMPOSSIBLE TO SECURE AN AMENDMENT TO THE ORIGINAL JUDGMENT BY REASON OF THE LAPSE OF TIME AND SINCE THE PARTNERSHIP IN QUESTION HAS BEEN DISSOLVED BY THE VOLUNTARY ACT OF THE SURVIVING MEMBERS OF THE FIRM, A DISPOSITION OF THE CHECKS COVERING THE ATTORNEYS' FEES SO THAT MR. JOHN M. MATHIS, JR., MIGHT RECEIVE THE ENTIRE AMOUNT WOULD NOT BE REGARDED PRIMARILY AS AN ASSIGNMENT BUT AS A DISTRIBUTION OF THE PARTNERSHIP ASSETS. THIS WOULD FIND SUPPORT IN THE PRINCIPLE CITED IN 47 CORPUS JURIS, PAGE 1132, IN THE TREATISE ON PARTNERSHIP:

"IN GENERAL AFTER DISSOLUTION EACH PARTNER HAS AN EQUAL RIGHT TO THE POSSESSION OF FIRM ASSETS AND HAS THE RIGHT AND DUTY TO DISPOSE OF THEM FOR THE PURPOSE OF LIQUIDATING THE FIRM AFFAIRS. HOWEVER, THE FIRM MEMBERS MAY AGREE THAT ONE OR MORE OF THEIR NUMBER SHALL HAVE EXCLUSIVE CONTROL AND THE EXCLUSIVE RIGHT TO DISPOSE OF THE PARTNERSHIP PROPERTY.'

THE VETERANS' ADMINISTRATION IS DESIROUS, IF IT MAY LEGALLY DO SO, TO MEET THE WISHES OF THE ATTORNEYS IN THIS CASE. THE AMOUNT INVOLVED IS SMALL, IT IS NOT FEASIBLE TO OBTAIN AN AMENDED JUDGMENT, AND THE FIRM OF ATTORNEYS WHICH RENDERED THE ORIGINAL SERVICES TO THE VETERAN IS NOW NO LONGER IN EXISTENCE. FURTHERMORE, TO CONTINUE THE ISSUANCE OF THE CHECKS IN THE NAME OF A FIRM WHICH THE VETERANS' ADMINISTRATION NOW HAS KNOWLEDGE IS NO LONGER IN EXISTENCE PRESENTS AN ANOMALOUS SITUATION IN ITSELF.

YOUR CONSIDERATION IS ALSO ASKED TO THE CASE OF PHILIP A. SMITH, C 1735768, IN WHICH A JUDGMENT WAS OBTAINED IN THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF OKLAHOMA IN DECEMBER 1934 ON A CONTRACT OF CONVERTED GOVERNMENT INSURANCE (K-160597). THE JUDGMENT AWARDED THE ATTORNEY OF RECORD, OSCAR SPEED, A FEE OF 10 PERCENT. THE VETERANS' ADMINISTRATION HAS MADE PAYMENTS IN ACCORDANCE WITH THE JUDGMENT. IN APRIL 1937 THE ATTORNEY ADVISED THAT THE VETERAN HAD MADE A SETTLEMENT WITH HIM IN FULL FOR ALL LEGAL SERVICES AND REQUESTED THAT IN FUTURE THE VETERAN RECEIVE THE FULL AMOUNT OF THE PAYMENTS UNDER THE JUDGMENT AND THAT THE ATTORNEY HAD NO FURTHER INTEREST IN THE CHECKS PREVIOUSLY SENT REPRESENTING THE FEE OF 10 PERCENT. THE ATTORNEY HAS EXECUTED AN ATTEMPTED ASSIGNMENT HERE QUOTED:

"FOR VALUE RECEIVED I, OSCAR SPEED, ATTORNEY FOR THE PLAINTIFF IN THE ABOVE-STYLED CAUSE, DO HEREBY SELL, ASSIGN, AND DELIVER OVER TO PHILIP ALEXANDER SMITH, PLAINTIFF IN THIS ACTION, ALL OF MY RIGHT, TITLE, AND INTEREST WHICH ACCRUED TO ME BY VIRTUE OF A JUDGMENT ON DECEMBER 4, 1934, IN SAID COURT WHEREIN I WAS GRANTED CERTAIN ATTORNEY FEES, FOR THE REASON THAT I HAVE SETTLED IN FULL WITH SAID SMITH FOR ATTORNEY FEES DUE ME.'

SECTION 22 OF THE WORLD WAR VETERANS' ACT, 1924, AS AMENDED, PERMITS THE ASSIGNMENT BY ANY PERSON TO WHOM CONVERTED INSURANCE MAY BE PAYABLE OF HIS INTEREST IN SUCH INSURANCE TO ANY OTHER MEMBER OF THE PERMITTED CLASS OF BENEFICIARIES. WHILE THIS SECTION WAS REPEALED BY PUBLIC, NO. 262, 74TH CONGRESS, OF AUGUST 12, 1935, SECTION 3 OF THE LATTER ACT IS SPECIFIC THAT THE PROVISIONS OF SAID SECTION SHALL NOT BE CONSTRUED TO PROHIBIT THE ASSIGNMENT BY ANY PERSON TO WHOM CONVERTED INSURANCE SHALL BE PAYABLE UNDER TITLE III OF THE WORLD WAR VETERANS' ACT, 1924, OF HIS INTEREST IN SUCH INSURANCE TO ANY OTHER MEMBER OF THE PERMITTED CLASS OF BENEFICIARIES. AS THE PHILIP A. SMITH CASE INVOLVES A CONVERTED INSURANCE CONTRACT AND AS THE VETERAN HAS MADE FULL SETTLEMENT WITH HIS ATTORNEY, AND IT IS NOT POSSIBLE, OWING TO THE PASSAGE OF TIME, TO PROCURE AN AMENDED JUDGMENT, MAY THE ASSIGNMENT BY THE ATTORNEY BE RECOGNIZED IN VIEW OF THE FACT THAT THERE IS A LIMITED RIGHT OF ASSIGNMENT AS TO THE BENEFITS OF CONVERTED INSURANCE?

IN THE CASE OF EMMETT L. CHANDLER, C-387090, A JUDGMENT WAS OBTAINED IN THE DISTRICT COURT OF THE UNITED STATES FOR THE MIDDLE DIVISION OF THE NORTHERN DISTRICT OF ALABAMA, ON AUGUST 21, 1935, WHICH JUDGMENT PROVIDED FOR A FEE OF 10 PERCENT IN FAVOR OF THE ATTORNEYS OF RECORD, W. M. RAYBURN, OF GADSDEN, ALABAMA, AND THOMAS H. STEPHENS, OF GADSDEN, ALABAMA, ONE-HALF OF SUCH FEES TO BE PAID TO EACH ATTORNEY. THE VETERANS' ADMINISTRATION HAS PROCEEDED TO APPLY THE TERMS OF THE JUDGMENT, BUT ON APRIL 7, 1937, A COMMUNICATION SWORN TO BY ONE OF THE ATTORNEYS OF RECORD, THOMAS H. STEPHENS, WAS RECEIVED BY WHICH HE SEEKS TO TRANSFER HIS INTEREST IN THE JUDGMENT TO THE OTHER ATTORNEY, W. M. RAYBURN. THE FEES IN QUESTION AMOUNTED TO $2.73 ON POLICY K-640485 AND $0.14 ON POLICY K- 925472 ON EACH INSTALLMENT. WHILE CONVERTED INSURANCE IS INVOLVED IN THE CHANDLER CASE AS IN THE SMITH CASE, AT THE SAME TIME THE ASSIGNMENT IS NOT IN FAVOR OF THE VETERAN BUT IS BY ONE ATTORNEY IN FAVOR OF THE OTHER ATTORNEY.

YOUR FURTHER CONSIDERATION OF THIS QUESTION IS REQUESTED IN ORDER THAT, IF POSSIBLE, SOME SOLUTION MAY BE REACHED BY WHICH THERE WILL BE OBVIATED THE DIFFICULTIES AT PRESENT ENCOUNTERED WITH REFERENCE TO ATTORNEYS' FEES, AS ILLUSTRATED BY THE THREE CASES HERE PRESENTED.

SECTION 500, TITLE V, OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1311, PROVIDES AS FOLLOWS:

* * * PROVIDED, HOWEVER, THAT WHEREVER A JUDGMENT OR DECREE SHALL BE RENDERED IN AN ACTION BROUGHT PURSUANT TO SECTION 19 OF TITLE I OF THIS ACT THE COURT, AS A PART OF ITS JUDGMENT OR DECREE, SHALL DETERMINE AND ALLOW REASONABLE FEES FOR THE ATTORNEYS OF THE SUCCESSFUL PARTY OR PARTIES AND APPORTION SAME IF PROPER, SAID FEES NOT TO EXCEED 10 PERCENTUM OF THE AMOUNT RECOVERED AND TO BE PAID BY THE BUREAU OUT OF THE PAYMENTS TO BE MADE UNDER THE JUDGMENT OR DECREE AT A RATE NOT EXCEEDING ONE-TENTH OF EACH OF SUCH PAYMENTS UNTIL PAID. * * *

SECTION 5 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF JULY 3, 1930, 46 STAT. 991, PROVIDES IN PART AS FOLLOWS:

* * * ALL DECISIONS OF QUESTIONS OF FACT AND LAW AFFECTING ANY CLAIMANT TO THE BENEFITS OF TITLES II, III, OR IV OF THIS ACT SHALL BE CONCLUSIVE EXCEPT AS OTHERWISE PROVIDED HEREIN * * *.

SECTION 500 OF THE STATUTE CONTAINING THE AUTHORITY FOR FIXING AND PAYING ATTORNEYS' FEES IS IN TITLE V OF THE ACT, AND SECTION 19 OF THE STATUTE CONTAINING THE AUTHORITY FOR THE LITIGATION INVOLVING WAR-RISK INSURANCE POLICIES IS IN TITLE I OF THE ACT. THE DECISIONS OF THE ADMINISTRATOR OF VETERANS' AFFAIRS WHICH ARE MADE FINAL AND CONCLUSIVE BY SECTION 5 OF THE STATUTE, SUPRA, ARE THOSE "AFFECTING ANY CLAIMANT TO THE BENEFITS OF TITLES II, III, OR IV OF THIS ACT.' SINCE A CLAIM FOR ATTORNEYS' FEES IN A SITUATION SUCH AS HERE INVOLVED IS BASED UPON A COURT JUDGMENT OR DECREE AS DISTINGUISHED FROM A DETERMINATION BY THE ADMINISTRATOR OF VETERANS' AFFAIRS, AND FURTHER, SINCE SUCH CLAIM ARISES UNDER TITLES I AND V OF THE ACT, AS DISTINGUISHED FROM TITLES II, III, OR IV OF THE ACT, THERE IS CONSIDERABLE ROOM FOR DOUBT WHETHER YOUR DETERMINATION IN THIS MATTER WOULD BE FINAL AND CONCLUSIVE, AS SEEMS TO HAVE BEEN ASSUMED BY YOU IN THE SECOND PARAGRAPH OF YOUR LETTER.

HOWEVER, IN VIEW OF THE STATED DOUBT, AND SINCE YOU MUST ASSUME FULL RESPONSIBILITY FOR SUCH DETERMINATIONS AS ARE DEEMED BY YOU TO BE WITHIN THE PURVIEW OF SECTION 5 OF THE HEREINABOVE-QUOTED ACT, THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO THE ASSIGNMENTS OF THE CLASS HERE REFERRED TO IF IN THE ADMINISTRATION OF THE INSURANCE PROVISIONS OF THE WORLD WAR VETERANS' ACT, AS AMENDED, YOU SHOULD FIND THAT THE RECOGNITION OF SUCH ASSIGNMENTS IS NECESSARY TO EFFECTUATE THE PURPOSES OF THE INSURANCE STATUTE WITH RESPECT TO TERM AND/OR SO-CALLED CONVERTED INSURANCE CASES. IN THIS CONNECTION SEE MARTIN V. NATIONAL SURETY CO., DECIDED BY THE SUPREME COURT OF THE UNITED STATES, MARCH 29, 1937.