A-11030, OCTOBER 12, 1925, 5 COMP. GEN. 249

A-11030, OCTOBER 12, 1925, 5 COMP. GEN. 249

VETERANS' BUREAU - INSURANCE - CHANGE OF BENEFICIARY THE ESTATE OF THE INSURED IS NOT WITHIN THE PERMITTED CLASS OF BENEFICIARIES OF GOVERNMENT TERM INSURANCE THAT MAY BE DESIGNATED BY THE INSURED IN LIEU OF THE ORIGINAL DESIGNATED BENEFICIARY, WITHIN THE MEANING OF THE STATUTORY PROVISION AUTHORIZING THE CHANGE OF DESIGNATED BENEFICIARY ,ONLY WITHIN THE CLASS HEREIN PROVIDED.' WHERE THE INSURED OF A GOVERNMENT POLICY OF TERM INSURANCE DESIGNATED HIS SISTER AS BENEFICIARY AND DURING HIS LIFETIME FILED A FORM IN THE VETERANS' BUREAU PROVIDING FOR A CANCELLATION OF ALL PREVIOUS DESIGNATIONS OF A BENEFICIARY AND DIRECTING THE INSURANCE TO BE PAID FROM AND AFTER HIS DEATH TO HIS ESTATE AS HIS WILL AND TESTAMENT SPECIFIES, AND THE ONLY PERSON DESIGNATED IN THE WILL TO RECEIVE THE INSURANCE IS HIS FIANCEE, WHO IS NOT WITHIN THE PERMITTED CLASS, THE INSURANCE IS PAYABLE TO THE SISTER OF THE INSURED, WHO IS THE ORIGINAL DESIGNATED BENEFICIARY, FOR THE REASON THAT THE ATTEMPTED CHANGE OF BENEFICIARY FAILED, THERE HAVING BEEN NO PERSON DESIGNATED WITHIN THE PERMITTED CLASS IN LIEU OF THE ORIGINAL BENEFICIARY.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, OCTOBER 12, 1925:

I AM IN RECEIPT OF YOUR LETTER OF AUGUST 24, 1925, REQUESTING DECISION OF A QUESTION PRESENTED AS FOLLOWS:

IN THE ADJUDICATION OF CLAIMS PRESENTED TO THE BUREAU ON ACCOUNT OF THE DEATH OF PERSONS GRANTED INSURANCE UNDER THE WAR RISK INSURANCE ACT THERE HAS BEEN PRESENTED THE QUESTION OF THE AUTHORITY OF THE BUREAU TO MAKE PAYMENT TO THE PERSONAL REPRESENTATIVES OF THE INSURED WHERE AFTER DESIGNATING A PERSON WITHIN THE PERMITTED CLASS OF BENEFICIARIES THE INSURED HAS LATER EXECUTED A FORM OF CANCELLATION OF THAT DESIGNATION AND DIRECTION THAT PAYMENT BE MADE TO HIS ESTATE.

THE CASE OF JOHN ARTHUR LOGAN EWING (C-615,018) IS TYPICAL OF THE SITUATIONS WHICH ARISE. THE FACTS OF THIS CASE, PERTINENT TO THE QUESTION, ARE AS FOLLOWS:

EWING BECAME PERMANENTLY TOTALLY DISABLED APRIL 18, 1921, AND AT THE TIME OF HIS DEATH WAS RECEIVING MONTHLY INSTALLMENTS ON ACCOUNT OF SUCH PERMANENT TOTAL DISABILITY ON $8,000 YEARLY RENEWABLE TERM INSURANCE. HIS ORIGINAL APPLICATION FOR INSURANCE EWING'S SISTER, ROSE EWING WHEELER, WAS NAMED AS SOLE BENEFICIARY. ON JULY 23, 1924, WHILE EWING WAS RECEIVING PERMANENT TOTAL DISABILITY BENEFITS HE EXECUTED A PRINTED CHANGE OF BENEFICIARY FORM REFERRING TO THE REMAINING INSTALLMENTS OF THIS INSURANCE. THE PRINTED PORTION OF THIS FORM READS: "I, THE UNDERSIGNED INSURED, HEREBY CANCEL ALL PREVIOUS DESIGNATION OF BENEFICIARIES AND DIRECT THAT MY INSURANCE UNDER THE ABOVE NUMBERED CERTIFICATE OR POLICY, WHICH AMOUNT TO $ -------- , BE PAID FROM AND AFTER MY DEATH TO THE FOLLOWING PERSONS IN THE FOLLOWING AMOUNTS: " IN THE SPACE PROVIDED FOR THE NAME, ADDRESS, AND RELATION OF BENEFICIARIES AND THE AMOUNT OF INSURANCE TO BE PAID TO EACH, THE INSURED INSERTED: "TO MY ESTATE AS WILL AND TESTAMENT OF OCTOBER 6, 1923, SPECIFY-S.' NO COPY OF THE WILL WAS FILED WITH THE BUREAU DURING EWING'S LIFETIME.

THE INSURED DIED NOVEMBER 29, 1924. A COPY OF THE LAST WILL AND TESTAMENT EXECUTED OCTOBER 6, 1923, AND ADMITTED TO PROBATE DECEMBER 29, 1924, WAS RECEIVED BY THE BUREAU JANUARY 19, 1925. THE SAID WILL, AFTER DIRECTING THE PAYMENT OF DEBTS AND FUNERAL EXPENSES, MAKES MONETARY BEQUESTS TO THE FOLLOWING RELATIVES:

"BYRON EWING, MY NEPHEW," $500;

"BESSIE THOMAS, MY NIECE," $500;

"BEULAH CURTIS, MY NIECE," $500;

"JAMES E. EWING, MY BROTHER," $200;

"MAGGIE CURTIS, MY SISTER," $100;

"ROSE WHEELER, MY SISTER," $100;

"GEORGE M. EWING, MY BROTHER," $100;

"RICHARD WILSON, MY GOOD FRIEND," $100;

"ELIZABETH JOHNSON, MY GOOD FRIEND," $200. THERE WERE ADDED CERTAIN PROVISIONS FOR THE DISPOSITION OF THE AMOUNTS SO BEQUEATHED IN THE EVENT THE BENEFICIARIES PREDECEASED THE TESTATOR, THAT PROVIDED FOR BYRON EWING TO GO TO BESSIE THOMAS; THAT PROVIDED FOR BESSIE THOMAS TO GO TO HER CHILDREN; OTHERWISE, ALL LEGACIES TO LAPSE AND PASS TO THE RESIDUARY LEGATEE. THE WILL FURTHER PROVIDED A SUM OF $200 FOR THE PURCHASE AND ERECTION OF A MONUMENT AT THE GRAVE OF THE TESTATOR'S MOTHER. ANN C. BJORK WAS NAMED AS THE RESIDUARY LEGATEE, AND IN THE ITEM SO NAMING HER AND DISPOSING OF THE REMAINING PROPERTY IS THE FURTHER PROVISION:

"PROVIDED, HOWEVER, THAT WHEREAS MY ESTATE WILL CONSIST OF THE PROCEEDS FROM CERTAIN INSURANCE POLICIES WITH THE UNITED STATES GOVERNMENT, PAYABLE IN STIPULATED AMOUNTS EACH MONTH, IT IS MY DESIRE AND INTENTION THAT SAID ANN C. BJORK SHALL HAVE THE PROCEEDS THEREFROM DURING HER LIFE OR UNTIL SUCH TIME AS SHE MAY MARRY; THEREAFTER THE PROCEEDS THEREFROM SHALL BE PAID TO, AND I DO HEREBY GIVE, DEVISE, AND BEQUEATH THE SAME AND ALL THE REST AND REMAINDER THEREOF UNTO MINNEAPOLIS BRANCH OF INTERNATIONAL SUNSHINE SOCIETY.'

IT APPEARS THAT ANN C. BJORK'S RELATIONSHIP TO THE INSURED WAS THAT OF INTENDED WIFE. THEREFORE SHE IS NOT WITHIN THE PERMITTED CLASS OF BENEFICIARIES DESCRIBED BY THE STATUTE.

CLAIMS HAVE BEEN FILED BY ANN C. BJORK AS EXECUTRIX AND BY ROSE WHEELER, BOTH CLAIMING THE UNPAID PORTION OF THE INSURANCE.

SECTION 402 OF THE WAR RISK INSURANCE ACT OF OCTOBER 6, 1917, 40 STAT. 409-410, PROVIDED AS FOLLOWS:

* * * SUBJECT TO REGULATIONS, THE INSURED SHALL AT ALL TIMES HAVE THE RIGHT TO CHANGE THE BENEFICIARY OR BENEFICIARIES OF SUCH INSURANCE WITHOUT THE CONSENT OF SUCH BENEFICIARY OR BENEFICIARIES, BUT ONLY WITHIN THE CLASSES HEREIN PROVIDED. * * *

THIS PROVISION REMAINED IN FORCE UNTIL JUNE 7, 1924, BUT WAS NOT REENACTED IN THE WORLD WAR VETERANS' ACT APPROVED THAT DATE. THE ACT OF MARCH 4, 1925, 43 STAT. 1309, AMENDING THE WORLD WAR VETERANS' ACT OF 1924, REENACTED THE ABOVE QUOTED PROVISION RETROACTIVELY EFFECTIVE FROM JUNE 7, 1924. THE PROVISION MAY BE CONSIDERED AS IN EFFECT CONTINUOUSLY FROM OCTOBER 6, 1917.

THE WORD "CLASSES" USED IN THE QUOTED PROVISION RESTRICTS THE PERSONS WHO MAY BE DESIGNATED UPON CHANGE OF BENEFICIARY AND REFERS TO THE RELATIONSHIPS OR,"PERMITTED CLASS" SPECIFIED IN THE WAR RISK INSURANCE ACT AND WORLD WAR VETERANS' ACT TO WHOM INSURANCE MAY BE PAYABLE, VIZ, ,SPOUSE, CHILD, GRANDCHILD, PARENT, BROTHER, SISTER, UNCLE, AUNT, NEPHEW, NIECE, BROTHER-IN-LAW, OR SISTER-IN-LAW, OR TO ANY OR ALL OF THEM, AND ALSO DURING TOTAL AND PERMANENT DISABILITY TO THE INJURED PERSON.' SEE SECTION 300 OF THE WORLD WAR VETERANS' ACT 1924, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1308.

SECTION 303 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1310, PROVIDES IN PART AS FOLLOWS:

IF NO PERSON WITHIN THE PERMITTED CLASS BE DESIGNATED AS BENEFICIARY FOR YEARLY RENEWABLE TERM INSURANCE BY THE INSURED EITHER IN HIS LIFETIME OR BY HIS LAST WILL AND TESTAMENT OR IF THE DESIGNATED BENEFICIARY DOES NOT SURVIVE THE INSURED OR SURVIVES THE INSURED AND DIES PRIOR TO RECEIVING ALL OF THE TWO HUNDRED AND FORTY INSTALLMENTS OR ALL SUCH AS ARE PAYABLE AND APPLICABLE, THERE SHALL BE PAID TO THE ESTATE OF THE INSURED THE PRESENT VALUE OF THE MONTHLY INSTALLMENTS THEREAFTER PAYABLE, SAID VALUE TO BE COMPUTED AS OF DATE OF LAST PAYMENT MADE UNDER ANY EXISTING AWARD. * * * THIS SECTION SHALL BE DEEMED TO BE IN EFFECT AS OF OCTOBER 6, 1917.

WHILE THE FIRST CLAUSE OF THIS SECTION WOULD SEEM TO CONTEMPLATE VALID EXISTING TERM INSURANCE WITHOUT THE DESIGNATION OF ANY ONE WITHIN THE PERMITTED CLASS AS BENEFICIARY, THERE DOES NOT APPEAR A CLEAR INTENT TO AUTHORIZE AFFIRMATIVELY THE DESIGNATION OF THE INSURED'S ESTATE IN HIS TERM INSURANCE AS WITHIN THE PERMITTED CLASS, OR TO RECOGNIZE A PRIOR DESIGNATION OF HIS ESTATE AS WITHIN THE PERMITTED CLASS. THE PROVISION IS PARTLY IN THE NEGATIVE FORM, AND THE AUTHORITY FOR PAYMENT TO THE ESTATE IS MORE IN THE NATURE OF A SAVING CLAUSE TO PREVENT FAILURE OF BENEFICIARY THAN IT IS AN ENLARGEMENT OF THE PERMITTED CLASS. THE PROVISION, THEREFORE, HAD NO RELATIONSHIP TO THAT PORTION OF THE SAME STATUTE AND PRIOR STATUTES AUTHORIZING CHANGE OF BENEFICIARIES.

THERE IS NO AMBIGUITY IN THE TERMS OF THE STATUTE AUTHORIZING THE CHANGE OF BENEFICIARY. THE CHANGE MUST BE TO A PERSON OR PERSONS "WITHIN THE CLASSES HEREIN PROVIDED.' DESIGNATION BY THE INSURED IN THIS CASE "TO MY ESTATE AS WILL AND TESTAMENT OF OCTOBER 6, 1923, SPECIFY-S" MAY NOT BE CONSIDERED A LAWFUL CHANGE OF BENEFICIARY WITHIN THE MEANING OF THE STATUTE, FOR THE REASON, FIRST, BECAUSE THE ESTATE GENERALLY IS NOT WITHIN THE PERMITTED CLASS, AND, SECOND, BECAUSE ANN C. BJORK, THE ONLY PERSON DESIGNATED IN THE WILL TO RECEIVE THE REMAINING UNPAID INSTALLMENTS OF INSURANCE, WAS THE FIANCEE OF INSURED AND NOT WITHIN THE PERMITTED CLASS.

THIS IS NOT A CASE INVOLVING AN UNQUALIFIED REVOCATION OR CANCELLATION OF PRIOR DESIGNATION OF BENEFICIARY WITHOUT DESIGNATING A NEW BENEFICIARY, AND SUCH A STATE OF FACTS IS NOT NECESSARY FOR CONSIDERATION IN THE DISPOSITION OF THIS CASE. THERE IS HERE INVOLVED ONLY AN ATTEMPTED CHANGE OF BENEFICIARY WHICH FAILS BECAUSE NOT IN ACCORDANCE WITH THE PROVISIONS OF THE STATUTE RELATIVE THERETO. THEREFORE THE SITUATION IS AS THOUGH NO CHANGE HAD BEEN ATTEMPTED, THE ORIGINAL DESIGNATION REMAINING IN FULL FORCE AND EFFECT. THE CONCLUSION REACHED IN THE CASE OF ELLIOTT V. UNITED STATES ET AL., 271 FED.REP. 1001, CITED BY YOU, IS NOT IN CONFLICT HEREWITH. THAT CASE ALSO DEALT WITH AN ATTEMPTED CHANGE OF BENEFICIARY RATHER THAN A STRAIGHT CANCELLATION OF PRIOR DESIGNATION.

YOU ARE ADVISED, THEREFORE, THAT PAYMENT OF THE INSURANCE IN THIS CASE, PROPERLY DUE UNDER THE POLICY SUBSEQUENT TO THE DEATH OF THE INSURED, SHOULD BE MADE TO THE ORIGINALLY DESIGNATED BENEFICIARY, ROSE EWING WHEELER, THE SISTER OF THE INSURED.