A-6637, FEBRUARY 14, 1925, 4 COMP. GEN. 691

A-6637: Feb 14, 1925

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WILL BE HELD TO BE THAT OF THE OFFICER HIMSELF. UNLESS HE CAN ESTABLISH AFFIRMATIVELY BY COMPETENT EVIDENCE THAT THE FAULT WAS NOT HIS. THE CONCLUSION IS JUSTIFIED THAT HE HAD WITHDRAWN HIS ALLOTMENT OR AUTHORIZATION FOR INSURANCE PREMIUMS. THE OFFICER IS PRESUMED TO HAVE HAD ACTUAL KNOWLEDGE THAT HIS PRIOR AUTHORIZATION TO DEDUCT INSURANCE PREMIUMS HAD NOT BEEN INDICATED IN THE TRANSFER PAPERS. THE RESPONSIBILITY IS HIS FOR FAILURE TO DEDUCT AND PAY INSURANCE PREMIUMS THEREAFTER BECOMING DUE CAUSING HIS INSURANCE POLICY TO LAPSE. 1925: I HAVE YOUR LETTER OF DECEMBER 2. IS NOT SUFFICIENT ALONE TO ESTABLISH A PRESUMPTION OF BREACH OR REVOCATION OF THE ALLOTMENT. IS WHETHER ACCEPTANCE BY THE ENLISTED MAN OF MONTHLY PAY WITHOUT DEDUCTION OF THIS ALLOTMENT MUST BE TAKEN AS EITHER A BREACH OR A REVOCATION OF THE ALLOTMENT.

A-6637, FEBRUARY 14, 1925, 4 COMP. GEN. 691

WAR RISK INSURANCE - DEDUCTION OF PREMIUMS THE RESPONSIBILITY FOR FAILURE TO DEDUCT INSURANCE PREMIUMS FROM THE PAY OF A NAVAL OFFICER, IN ACCORDANCE WITH AN AUTHORIZATION OR ALLOTMENT THEREFOR, CAUSING THE INSURANCE TO LAPSE, WILL BE HELD TO BE THAT OF THE OFFICER HIMSELF, UNLESS HE CAN ESTABLISH AFFIRMATIVELY BY COMPETENT EVIDENCE THAT THE FAULT WAS NOT HIS. WHERE A NAVAL OFFICER DRAWS OR ACCEPTS PAY FOR TWO OR THREE CONSECUTIVE MONTHS IN SUCH AMOUNTS AS WOULD NOT LEAVE FUNDS SUFFICIENT TO COVER HIS INSURANCE PREMIUMS AS DUE, THE CONCLUSION IS JUSTIFIED THAT HE HAD WITHDRAWN HIS ALLOTMENT OR AUTHORIZATION FOR INSURANCE PREMIUMS. WHERE PAPERS TRANSFERRING THE ACCOUNTS OF A NAVAL OFFICER, INCIDENT TO A CHANGE OF SHIP OR STATION, PLAINLY STATE NO ALLOTMENT OR AUTHORIZATION FOR WAR RISK INSURANCE PREMIUMS, THE OFFICER IS PRESUMED TO HAVE HAD ACTUAL KNOWLEDGE THAT HIS PRIOR AUTHORIZATION TO DEDUCT INSURANCE PREMIUMS HAD NOT BEEN INDICATED IN THE TRANSFER PAPERS, AND THE RESPONSIBILITY IS HIS FOR FAILURE TO DEDUCT AND PAY INSURANCE PREMIUMS THEREAFTER BECOMING DUE CAUSING HIS INSURANCE POLICY TO LAPSE.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, FEBRUARY 14, 1925:

I HAVE YOUR LETTER OF DECEMBER 2, 1924, AS FOLLOWS:

THE QUESTION HAS ARISEN IN THIS BUREAU AS TO THE PROPER ADJUDICATION OF THE CASE OF THOMAS C. LATIMORE, LIEUTENANT, UNITED STATES NAVY, IN VIEW OF YOUR DECISIONS OF OCTOBER 10, 1923, (A.D. 7867) AND DECEMBER 5, 1923, (A.D. 7875).

IN YOUR DECISION OF OCTOBER 10, ABOVE MENTIONED, IN THE CASE OF ANTHONY ALFRED SKOMSKY, YOU HELD THAT THE FACT THAT AN ENLISTED MAN IN THE ACTIVE SERVICE ACCEPTED MONTHLY PAY WITHOUT DEDUCTION OF AN ALLOTMENT FOR PAYMENT OF INSURANCE PREMIUMS, IS NOT SUFFICIENT ALONE TO ESTABLISH A PRESUMPTION OF BREACH OR REVOCATION OF THE ALLOTMENT. YOU STATED THEREIN:

"THE QUESTION FOR DECISION, THEREFORE, IS WHETHER ACCEPTANCE BY THE ENLISTED MAN OF MONTHLY PAY WITHOUT DEDUCTION OF THIS ALLOTMENT MUST BE TAKEN AS EITHER A BREACH OR A REVOCATION OF THE ALLOTMENT. IN THIS RESPECT THE ENLISTED MAN STOOD ON A DIFFERENT FOOTING FROM AN ARMY OFFICER WHO PREPARES HIS OWN PAY VOUCHER, AND A NAVAL RESERVIST WHOSE RETAINER PAY IS SENT TO HIM FROM THE CENTRAL OFFICE IN WASHINGTON. THE ENLISTED MAN IN ACTIVE SERVICE IS NOT, GENERALLY SPEAKING, RESPONSIBLE FOR THE CORRECT COMPUTATION OF HIS MONTHLY PAY. THE COMPUTATION IS MADE BY A SUPERIOR OFFICER AND THE NET AMOUNT FOUND DUE IS RECEIVED AND ACCEPTED BY THE ENLISTED MAN, USUALLY WITHOUT QUESTION AND WITHOUT VERIFICATION OF THE AMOUNT RECEIVED. * * * IN CASE THE FAILURE TO DEDUCT PREMIUMS IS DUE ENTIRELY TO THE GOVERNMENT, AND THERE IS NO AFFIRMATIVE EVIDENCE SHOWING THE FAULT OF THE INSURED, THE INSURANCE MUST BE CONSIDERED AS CONTINUING EFFECTIVE UNTIL SUCH TIME AS ATTENTION IS CALLED TO THE ERROR AND AN OPPORTUNITY GIVEN FOR CORRECTION. IF THE INSURED HAS DIED IN THE MEANTIME, I SEE NO REASON WHY THE INSURANCE WHICH WOULD OTHERWISE BE DUE MAY NOT BE PAID SUBJECT TO THE DEDUCTION OF THE UNPAID PREMIUMS.'

IN YOUR DECISION OF DECEMBER 5, 1923, WITH REFERENCE TO ARMY OFFICERS YOU STATED:

"THE SPECIFIC AUTHORIZATION FOR DEDUCTION OF PREMIUMS FROM COMMISSIONED PAY DOES NOT NECESSARILY PLACE UPON THE GOVERNMENT THE RESPONSIBILITY FOR MAKING THE DEDUCTION. THERE IS NO EXPLANATION OF WHY THE DEDUCTION WAS NOT MADE OR WHY THE OFFICER CONTINUED TO ACCEPT PAY WITHOUT DEDUCTION. UPON THE FACTS APPEARING NO FINAL CONCLUSION CAN BE REACHED IN THIS CASE. * * * IT IS NOTED THAT THE GENERAL AUTHORIZATION FOR DEDUCTION OF PREMIUMS FROM PAY IS QUALIFIED BY THE WORDS "UNLESS THEY BE OTHERWISE PAID.' WAS CUSTOMARY FOR OFFICERS TO NOTE THE DEDUCTION OF PREMIUMS FROM THEIR PAY VOUCHERS. THE ABSENCE OF SUCH NOTATION ON THIS OFFICER'S PAY VOUCHER INDICATES THAT THE PREMIUMS WERE INTENDED TO BE OTHERWISE PAID.'

FROM THE ABOVE IT WILL BE SEEN THAT BY YOUR DECISIONS YOU HAVE COVERED THE CASES OF ENLISTED MEN IN THE MILITARY AND NAVAL SERVICE AND OFFICERS IN THE MILITARY SERVICE. HOWEVER, THE INSTANT CASE IS THAT OF AN OFFICER IN THE NAVAL SERVICE, AND BEFORE ADJUDICATING THIS CASE THE BUREAU DESIRES YOUR DECISION AS TO THE RULE WHICH SHOULD APPLY IN THE CASES OF NAVAL OFFICERS.

THE ABOVE-NAMED MAN, WHILE AN OFFICER IN THE ACTIVE NAVAL SERVICE, APPLIED FOR $10,000 WAR RISK INSURANCE NOVEMBER 14, 1917, AND AUTHORIZED DEDUCTIONS TO BE MADE FROM HIS PAY. FOR SOME UNKNOWN REASONS NO DEDUCTIONS WERE MADE FROM HIS PAY SUBSEQUENT TO DECEMBER 7, 1919, UNTIL SEPTEMBER 21, 1922, WHEN HE APPLIED FOR THE REINSTATEMENT OF HIS INSURANCE. IN ANSWER TO THIS APPLICATION ON DECEMBER 17, 1922, THE BUREAU ADVISED HIM THAT A CAREFUL SEARCH OF THE RECORDS FAILED TO SHOW THAT HIS INSURANCE HAD BEEN DISCONTINUED BY REQUEST AND IN ACCORDANCE WITH THE PRECEDENTS OF THIS OFFICE THEN EXISTING HE WAS ADVISED THAT THE INSURANCE WAS IN FULL FORCE AND EFFECT AND THAT ALL PREMIUMS IN ARREARS WERE DUE THE BUREAU. THE AMOUNT OF THESE UNPAID PREMIUMS WERE ESTABLISHED AS A LIEN AGAINST THE INSURANCE. THE CASE WAS THEN ADMITTED TO THE OFFICE OF THE GENERAL COUNSEL OF THIS BUREAU FOR AN OPINION, AND IT WAS RULED BY THAT OFFICER THAT THE INSURANCE LAPSED FOR THE NONPAYMENT OF THE PREMIUM DUE JANUARY 1, 1921, BUT THAT PREMIUMS TO THAT DATE WERE DUE AND OWING TO THE BUREAU FOR THE REASON THAT PROTECTION HAD BEEN EXTENDED THE OFFICER TO THAT DATE. THE GENERAL COUNSEL'S OPINION WAS PREDICATED UPON THE FACT THAT AUTHORIZATION TO DEDUCT PREMIUMS MADE BY THIS MAN AT THE TIME OF APPLICATION FOR INSURANCE WHEN HE WAS A NAVAL OFFICER, THAT HE HAD CONTINUED IN THE SAME STATUS TO JANUARY 1, 1921, AND THAT HE FAILED TO DISCONTINUE OR TO EXPRESS IN ANY WAY HIS DESIRE TO DISCONTINUE HIS INSURANCE, AND THE MERE FAILURE TO DEDUCT PREMIUMS WAS NOT SUFFICIENT. THIS OPINION SET FORTH THAT AN OFFICER OF THE NAVY DOES NOT DRAW PAY REGULARLY EACH MONTH BY MEANS OF A PAY VOUCHER AS DOES THE OFFICER IN THE ARMY, BUT DRAWS ON HIS PAY AT ANY TIME HE SO DESIRES UP TO THE AMOUNT DUE HIM. ALSO, IN MANY CASES AN OFFICER WILL NOT DRAW HIS FULL PAY FOR A PERIOD OF SEVERAL MONTHS OR EVEN A YEAR AND THAT IN SUCH CASES THE ACCRUED PAY IS HELD BY THE PAY OFFICER OF THE NAVY, TO BE DRAWN UPON BY THE OFFICER. ATTENTION WAS CALLED TO THE FACT THAT IT WOULD BE VERY EASY IN SUCH CASES FOR AN OFFICER WHO HAD AUTHORIZED DEDUCTION OF PREMIUMS TO BE TOTALLY UNAWARE OF THE FACTS THAT INSURANCE PREMIUMS WERE NOT BEING PAID. IT WAS THEREFORE HELD THAT AS THERE WAS NO AFFIRMATIVE EVIDENCE TO SHOW THAT THE OFFICER DESIRED TO DISCONTINUE HIS INSURANCE AND THAT IN VIEW OF THE FACT IF HE HAD DIED DURING THE INTERVENING PERIOD, THE INSURANCE WOULD BE PAYABLE, THAT HE OWNED THE BUREAU FOR THE INSURANCE PROTECTION WHICH HAD BEEN EXTENDED TO HIM.

THE REASON FOR ARRIVING AT JANUARY 1, 1921, AS THE EFFECTIVE DATE OF LAPSE, WAS DUE TO THE ISSUANCE BY THE NAVY DEPARTMENT IN THE FALL OF 1920, OF NAVY DEPARTMENT CIRCULAR NO. 14, WHICH CHANGED THE METHOD OF PAYMENT OF PREMIUMS IN THE NAVY ON TERM INSURANCE FROM THE CHECK AGE SYSTEM TO THE ALLOTMENT SYSTEM. FULL NOTICE OF THIS CHANGE WAS EXTENDED TO ALL OFFICERS AND MEN OF THE NAVY AND AN AMPLE OPPORTUNITY WAS GIVEN TO EXECUTE AN ALLOTMENT IF IT WAS DESIRED TO CONTINUE INSURANCE IN FORCE. HAVING FAILED TO DO THIS IT WAS HELD THAT THE INSURANCE LAPSED SUBSEQUENT TO JANUARY 1, 1921, THE EFFECTIVE DATE OF NAVY DEPARTMENT CIRCULAR NO. 14. THIS OPINION WHILE RECOGNIZING THE RIGHT UNDER THE STATUTE OF A PERSON IN THE MILITARY AND NAVAL SERVICE TO HAVE HIS PREMIUMS DEDUCTED FROM HIS PAY, NEVERTHELESS HELD THAT THE WAR AND NAVY DEPARTMENTS HAD THE RIGHT TO SPECIFY THE PROPER METHOD BY WHICH SUCH DEDUCTION WOULD BE MADE AND THAT IF SUCH REGULATIONS PERTAINING TO DEDUCTIONS WERE NOT COMPLIED WITH, THE INSURANCE WOULD LAPSE, IF PREMIUMS WERE NOT ACTUALLY PAID WITHIN THE GRACE PERIOD.

THE QUESTION WHICH ARISES IN THE CASE NOW, IS WHETHER THE BUREAU'S ACTION IN THIS MATTER WAS PROPER. IF YOUR RULING PERTAINING TO ARMY OFFICERS APPLIES TO OFFICERS OF THE NAVAL SERVICE, THEN THE RULING APPARENTLY IS INCORRECT AND THE INSURANCE LAPSED FOR THE NONDEDUCTION OF PREMIUMS IN DECEMBER, 1919. IF YOUR RULING WITH REFERENCE TO ENLISTED MEN IS TO GOVERN, THEN THE BUREAU'S RULING APPEARS TO BE CORRECT AND THE INSURANCE DID NOT LAPSE UNTIL JANUARY 1, 1921. THIS OFFICE IS INDOUBT AS TO WHICH RULE SHOULD APPLY, AND IT IS THEREFORE REQUESTED THAT A DECISION BE RENDERED COVERING THIS CLASS OF CASES.

WHILE IT IS UNDERSTOOD THAT NAVAL OFFICERS DO NOT EXECUTE MONTHLY PAY VOUCHERS FOR THE FULL AMOUNT OF PAY DUE THEM FOR THE MONTH AS DO ARMY OFFICERS (2 COMP. GEN. 249 AND DECISION OF DECEMBER 4, 1923, 28 MS. COMP. GEN. 216), BUT ARE USUALLY PAID ON THE SAME ROLLS WITH ENLISTED MEN OF THE NAVY (SECTION 4912, NAVAL INSTRUCTIONS, 1913, AND SECTION 1538, NAVAL REGULATIONS, 1920), THE ACTUAL CONDITION IS THAT NAVAL OFFICERS HAVE CLOSER CONTACT AND FAMILIARITY WITH, AND GREATER OPPORTUNITY TO VERIFY, THEIR ACCOUNTS THAN DO ENLISTED MEN OF THE NAVY. IT MAY NOT BE SAID, THEREFORE, THAT THE RULE HERETOFORE LAID DOWN CONCERNING THE RESPONSIBILITY FOR CHECK AGE OF INSURANCE PREMIUMS FROM PAY OF ENLISTED MEN OF THE NAVY (3 COMP. GEN. 202) APPLIES IN ALL CASES TO RESPONSIBILITY FOR CHECK AGE OF INSURANCE PREMIUMS FROM PAY OF NAVAL OFFICERS.

IN THE CASES OF NAVAL OFFICERS THE PRIMARY RESPONSIBILITY FOR PROPER DEDUCTION FROM HIS PAY OF INSURANCE PREMIUMS WILL BE HELD TO BE THAT OF THE OFFICER HIMSELF. WHERE THERE HAS BEEN A FAILURE TO DEDUCT INSURANCE PREMIUMS FROM THE PAY OF A NAVAL OFFICER, UNDER AN ALLOTMENT MADE BY HIM, FOR A SUFFICIENT TIME TO CAUSE THE POLICY TO LAPSE, THE RESPONSIBILITY WILL BE THAT OF THE OFFICER HIMSELF UNLESS HE ESTABLISHES AFFIRMATIVELY BY COMPETENT EVIDENCE THAT THE FAULT WAS NOT HIS. WHAT WOULD CONSTITUTE COMPETENT EVIDENCE IN ALL CASES IS NOT POSSIBLE TO STATE GENERALLY, BUT THE VETERANS' BUREAU SHOULD MAKE CAREFUL INQUIRY INTO THE ACTUAL FACTS DISCLOSED TO DETERMINE WHERE THE RESPONSIBILITY LIES FOR FAILURE TO DEDUCT AND PAY THE PREMIUMS. WHAT CONCLUSIONS MAY BE REACHED FROM EXISTING FACTS MAY NOT BE STATED GENERALLY, BUT, AS AN ILLUSTRATION, IF THE OFFICER DRAWS OR ACCEPTS HIS PAY, SAY, FOR TWO OR THREE CONSECUTIVE MONTHS, IN SUCH AMOUNTS AS WOULD NOT LEAVE FUNDS SUFFICIENT TO COVER HIS INSURANCE PREMIUMS AS DUE, IT WOULD BE ACTION BY HIM SO INCONSISTENT WITH THE PURPOSE OF THE ALLOTMENT AND SO EFFECTUAL IN PREVENTING ITS OPERATION AS TO JUSTIFY THE CONCLUSION THAT HE HAD WITHDRAWN THE ALLOTMENT.

THE RECORDS OF THIS OFFICE IN THE PRESENT CASE INDICATE THE REASON FOR FAILURE TO DEDUCT INSURANCE PREMIUMS AFTER DECEMBER, 1919, FROM THE PAY OF LIEUTENANT LATIMORE. ON DECEMBER 11, 1919, HIS ACCOUNTS WERE TRANSFERRED FROM CAPT. JOSEPH FYFFE, PAY CORPS, NAVY YARD, PHILADELPHIA, PA., TO LIEUT. L. H. HUEBNER, PAY CORPS, U.S.S. LEARY. IN THE TRANSFER PAPER ENTITLED "SINGLE TRANSFER ACCOUNT," DESCRIBED AS "TRANSFER OF ALLOTMENT ONLY," THE BLANK SPACE FOR WAR-RISK INSURANCE PREMIUMS IS CROSSED OUT, AND IN THE "SINGLE TRANSFER ACCOUNT" TRANSFERRING THE REMAINDER OF THE ACCOUNT IS THE STATEMENT "NO INSURANCE FORM RECEIVED WITH ACCOUNT.' IN THE SAME PAPERS ISSUED INCIDENT TO THE TRANSFER OF LIEUTENANT LATIMORE, MAY 5, 1920, FROM THE U.S.S. LEARY TO THE U.S.S. PUTNAM THE BLANK SPACE FOR INSURANCE PREMIUMS IS LEFT BLANK. IT IS UNDERSTOOD THAT THESE TRANSFER PAPERS ARE ACTUALLY CARRIED IN PERSON BY THE OFFICER BEING TRANSFERRED FROM ONE STATION OR SHIP TO ANOTHER. WHETHER SUCH PAPERS WERE ACTUALLY CARRIED OR SENT AT THE TIME OF TRANSFER, THE NOTATION ON THE TRANSFER PAPERS IS REASONABLY PERSUASIVE THAT LIEUTENANT LATIMORE HAD ACTUAL KNOWLEDGE THAT HIS PREVIOUS AUTHORIZATION TO DEDUCT INSURANCE PREMIUMS HAD NOT BEEN INDICATED IN THE TRANSFER PAPERS, SUFFICIENT TO HAVE PUT HIM ON NOTICE AND ENABLED HIM TO HAVE CORRECTED THE OMISSION OR OVERSIGHT, IF SUCH. THESE FACTS, IN ADDITION TO THE FACT THAT HE LATER REQUESTED REINSTATEMENT ON THE BASIS THAT THE POLICY HAD LAPSED, ESTABLISH THAT THE POLICY LAPSED IN DECEMBER, 1919, OR JANUARY, 1920, AT THE END OF THE GRACE PERIOD, AND THAT THE OFFICER SO UNDERSTOOD IT. ACCORDINGLY, THE ACCOUNT BETWEEN THE VETERANS' BUREAU AND LIEUTENANT LATIMORE SHOULD BE ADJUSTED ON THAT BASIS.