Respondent Supplemental Brief — United States v. Atkinson

_ FILE. COPY ormep Ef

| | JAN 8 1936

OCTOBER TERM, 1935 ~~ .

No. 265

THE UNITED STATES OF AMERICA,

Petitioner,

US.

RAY KEITH ATKINSON,

ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT

OF APPEALS FOR THE FIFTH CIRCUIT.

SUPPLEMENTAL BRIEF ON BEHALF OF

. RESPONDENT.

/ Warren KE. Miter,

Southern Building,

‘ | Washington, D. C.,

i Counsel for Respondent.

A. H. Cutwe tt,

JoHn M. WorreE.u,

R. A. D. Morton,

‘El Paso, Texas.

Pera ae ae

\

‘9

‘

Bg ae OT ET Nl RRND an eA

INDEX.

SuBsecr INDEX.

Page

EEE CONV ONNG TUK o0 4500 d08 oe bON eh he 664405 eon beds chews cad 1

NE UE. So cc seceectccussscevenecettceedescevectecesses 3

I MP IIIS ds nak ss 0deeseu ms bdeede duce dyaccncceseck. 3

ME 05 660055050 540:9.0:00 54-0005 OO KO Ke ad 4 nak sd Whakdecucekvenwe 4

(a) The Statute, Regulations and the Legislative‘ approval by

subsequent enactments of law by the National Congress

clearly shows that this clause is valid and binding upos

We I 04.5 6.00.0'05 0.40 445000080 belo ekceuciiuces 4

(b) Petitioner is attenmpting to “contest” the insurance contract

sued upon which is specifically forbidden by law and the

express provisions of said contract; and. such action also.

violates the 5th amendment to the Constitution........... 14

(2) The Circuit Court of Appeals was correct in holding that

this Court in the case of Miller vs. United States, 294

; U. S. 435 was not applicable to the case ................. 18

PONE cose ee enensens tariseesunnerensaseneewidinewsnieduyeedl 22

APPENDIX.

Letter from Honorable Frank T. Hines, Administrator of Veterans’

Affairs, dated January 6, 1936, regarding dividends paid on United

States Government Life Insurance ........ nes $4644 wee os 8410 gabe 23

© Cases CITED.

Hahn v. United States, 107 U.S. 402......... 0. ccc cece ccc ccc ccccee 10

Hurni Packing Co. v. Mutual Life Insurance Company, 263 U. S. 167,

es a ee ae 15

Lynch vy. United States, 292 U. S. 571, 78 L. Ed. 1439 peeeeiss seesaw 8,18

Miller v.' United States, 294 U. S. 485...0.. 00.0.0 cece cc cccccucccee 2, 4,18

Mutual Reserve Fund Association v Austin, 142 Fed. 398........... 15

National Lead Company vs. United States, 252 U. S. 140............ 12

New York, New Haven & Hartford Railroad Company v. Interstate

Commerce Commission, 200 U. S. 361 .......... 0c cece cc ccccecece 11

Northwestern Mutual Life Insurance aw v. Johnson, 254 U. 8.

i i. it ccccdseuluesd seanada Sidenawedeéoeseseéonesscce 17

Ritter v. Insurance Company, 169 U. 8. 139 seeecooccéooers Seccecose ,17

Sinking Fund Cases, 99 U. 8. 700, 719, 25 L. Ed. 496, 501............. 18

eee Se Ge UL, OP UL, Oh OU, cc cccnccecoceccccesceccstoosees 10

United States v. The Alabama Great Southern Railroad Company, 142

RARE im ARSE SEIS Ae ap, Lean ee Ra 10

White v. United States, 270 U. S. 175, 70 b. Ed. 530................- S

Whitefield v. Insurance Company, 205 U. S. 489...........00ceeceee 17

Wilbur National Bank y. United States, 79 L.-Ed. 402........... Sees s

—7281-C :

INDEX

STATUTES AND REGULATIONS.

Public No. 47,.67th Congress, 42 Stat. 147, 148, Section 404

Public No. 90, 65th Congress, 40 Stat. 398, 399, Section 13

Public 242, 68th Congress, 43 Stat. 607, 38 U. S. Code 193 et seq.,

Public No. 242, 68th Congress, 43 Stat. 607, 38 * 8S. C. A. 193, et seq.,

Section 301

Public No. 448, 69th Congress, 44 Stat. 790

Public No. 522, 7ist Congress, 46 Stat. 991, amending Section 5 of

the Act of June 7, 1924

Public 522, 71st Congress, 46 Stat. 991, Section 307, World War Vet-

erans’ Act as amended by Section 24

Section 512, U. S. Code Anndtated ....

Section 3122, Regulations of the Veterans’ Administration

Title 38 U. S. C. A., Paragraph 512

MISCELLANEOUS.

Report of Administrator of Veterans’ Affairs for 1934

Paragraph 11 of United States Government Life (converted) Insur-

WS GUIS ks koncincintentsevevesiveions Sivawsc ake s ceuakewens

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1935

No. 265

THE UNITED STATES OF AMERICA,

Petitioner,

V3.

RAY KEITH ATKINSON.

ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT

OF APPEALS FOR THE FIFTH CIRCUIT.

SUPPLEMENTAL BRIEF ON BEHALF OF

| RESPONDENT.

Statement.

From a jury verdict finding respondent permanently and

totally disabled from December 1, 1932 (R. 7), because of

the permanent loss of hearing of both ears while his con-

tract of United States Government (converted) Insurance’

was in full force and effect, petitioner appealed to the Cir-

cuit Court of Appeals for the Fifth Circuit (R. 91-102)

in

9

ae

assigning as error the following instruction (R. 94-95) of

the trial court (italics supplied) :

‘VIII. The court erred in instructing the jury as |

follows: |

‘And in Clause (a) of said Paragraph 11 of the

policy, as relating to total and permanent disability, it

is provided as follows: ‘Without prejudice to any other

cause of disability, the permanent loss of the use of

both feet, or both hands, or of both eyes, or of one

foot and one hand, or of one foot and one eye, or of »

one hand ‘and one eye, or the loss of hearing of both

ears, or becoming permanently helpless or permanently

bedridden, shall be: deemed to be total permanent dis-

ability ;.and monthly installments for any of these spe-

cifically ‘enumerated causes of total permanent dis-

ability, and any premiums paid after the date of such

total permanent disability shall be refunded without

interest.’ ’ :

‘Therefore, gentlemen of the jury, you are instructe

by the Court as a matter of law that, by the terms and

provisions of said life insurance policy issued by the

defendant, United States of América, to the plaintiff,

Ray Keith Atkinson, it is provided that in the event.

the insured, the plaintiff herein, sustained loss of the

hearing of both ears, the same constitutes total and

permanent disability under the terms and provisions of

said War Risk Insurance Policy’ .’’

The Circuit Court of Appeals affirmed the judgment be-

low, holding that the provisions of Paragraph 11(a) of the.

contract sued upon was valid, coming within the authority

conferred by law and that the decision of this Court in the

Miller v. United States, 294 U. S. 435, affirming the decision

of the Fifth Circuit Court of Appeals in that case (71.

F’. (2d) 361), was inapplicable.

Questions Presented.

1. The United States, in the instant case, contends that

‘there is no authority in law for including in contracts of

United States Government Life (converted) Insurance

against total permanent disability, the following clause .

contained in said contracts: |

‘‘the permanent loss of hearing of both ears * * *

shall be deemed to be total permanent disability.’’

2. The United States, in the instant case, contends that

the action taken by the District Court and the United States

Cireuit Court of Appeals for the Fifth Circuit was contrary

to the decision of this Cour. in Miller v. United States, 294

U. S. 435.

Summary of Argument.

1. PerITIONER’S ATTEMPT TO ESCAPE LIABILITY UPON THE

GROUND THAT THERE WAS NO AUTHORITY OF LAW FOR INCLUDING

In contracts oF Unitep States GOVERNMENT LIFE (con-

VERTED) INSURANCE AGAINST TOTAL AND. PERMANENT DISABILITY

THE PROVISION SET FORTH IN THE CONTRACT HEREIN SUED

UPON THAT ‘*THE PERMANENT LOSS OF HEARING OF BOTH

EARS * * * SHALL BE DEEMED TO BE TOTAL AND PERMANENT

DISABILITY’ IS UNTENABLE BECAUSE—

(a). THE STATUTE, REGULATIONS, AND THE LEGISLATIVE AP-

PROVAL BY SUBSEQUENT ENACTMENTS OF LAW BY THE NaTIONAL

CoNGRESS CLEARLY SHOWS THAT THIS CLAUSE IS VALID AND

BINDING UPON THE RESPONDENT.

(b) Perrrioner 1s ATTEMPTING TO ‘‘conTEST’’ THE INSUR-

ANCE CONTRACT SUED UPON WHICH IS SPECIFICALLY FORBIDDEN

BY LAW AND THE EXPRESS PROVISIONS OF BAID CONTRACT, AND

SUCH ACTION ALSO VIOLATES THE STH AMENDMENT TO THE

CONSTITUTION.

4

2. Tue Circuit Court or APPEALS WAS CORRECT IN HOLDING

THAT THE DECISION OF THIS:CouURT IN THE CASE OF Miller y.

United States, 294 U. S. 435, was NoT APPLICABLE TO THIS

CASE. os

ARGUMENT.

(a) The statute, regulations, and the legislative approval

‘by subsequent enactments of law by the National Congress

clearly shows that this clause is valid: and oe upon the

respondent. ail

Respondent (and some six — thousand other citi-

zens up to the close of the fiscal year 1934) obtained from

the United States and paid premiums upon contracts of

United States Government Life (converted) Insurance’

containing clauses similar to that which the United States

is attacking in this suit*. Premiums are being paid today

upon hundreds of thousands of these contracts by World

War Veterans for the protection covered by the express

terms thereof,.including the protection which the United

States in the present suit seeks to renounce and avoid lia-

. bility upon by declaring this provision of its solemn writ-

ten contract to be a nullity. | :

‘ The contract herein sued upon provides (R. 19-20)

(italics supplied) :

‘“Total visscinaadaled disability.—11. Total per manent

disability as referred to herein is any impairment of

‘mind or body which continuously renders it impossible

for the disabled person to follow any substantially

gainful occupation, and which is founded upon condi-

a Benork of Administrator of Veterans’ Affairs for 1934,

p. 29.

2 See history of these os contalaedt in brief of Veter

ans’ Administration filed in this Court in the case of Miller

v. United States (No. 342 October Term, 1934) pp. 12-21.

D

tions which render it reasonably certain that the total

disability will continue throughout the life of the dis-

abled person.. The total permanent disability benefits

may relate back to a date not exceeding six months

prior to receipt of due proof of such total permanent

disability, and any premiums paid after receipt of due

proof of total permanent disability, and within the six

months shall be refunded without interest.

_ (a) Without prejudice to any other cause of dis-

ability, the permanent loss.gf the use of both feet, or

both hands, or of both eyes, or\pf, one foot and@.one hand,

or of one foot’‘and one eye, orf one hand and one eye,

or the loss of hearing of both ears, or becoming perma-

nently helpless. or permanently bedridden, shall be

deemed to be tota} permanent disability ; and monthly in-

stallments for any .of/ these specifically enumerated

causes of total permanent disability shall accrue from

the date of such total permanent disability, and any

premiums paid after the date of such total permanent —

disability shall be refunded without interest.’’

The foregoing provision in this contract is based upon

Section 3122 of the Regulations of the United States Veter-

ans’ Administration duly issued by the A istrator of

Veterans’ Affairs, which provides:

‘63199, Without prejudice to any other cause ‘of dis-

- ability, the permanent loss of the use of both feet,-or

both hands, or-both eyes, or of one foot and one hand,

or of one foot and one eye, or of one hand and one eye,

or of the loss of hearing of both ears, or the organic

loss of speech, or becoming permanently helpless or —

permanently bedridden, shall be deemed to be total per-

manent disability under United States. Government life

insurance; and monthly installments of insurance for

any of these specifically enumerated cases of total per-

manent disability shall accrue from the date of such

total permanent disability, and any premiums paid

after the date of such total permanent disability shall

be refunded without interest.’’

2n

6

The authority for the foregoing provisions of the insur-

ance contract and the above quoted Regulation is found in -

Title 38, U. S. C. A., Paragraph 512, which provides.

(italics supplied) : |

‘*Not later than July 2, 1926, all term insurance shall

be converted * * * into such forms of insurance as

may be prescribed by regulations and as the insured

may request. Regulations shall provide for the right

te convert into ordinary-life, twenty-payment life, en-

dowment maturing at age- sixty-two, five-year level

premium term, and into other usual forms of insurance,

* * * in accordance with regulations to be issued by .

the director, * * * Proyisions for maturity at cer-

tain ages, for continuous installments during the life of

the insured or beneficiaries, or both, for refund of pre-

miums, cash, loan, paid up and extended values, divi-

dends from gains and savings, and such other provi-

sions for the protection and advantage of and for alter-

native benefits'to the insured and the beneficiaries as

may be found to be reasonable and practicable, may be

provided for in the contract of insurance, or from time

to time by regwations.

The Circuit Court of Appeals (R. 105), like the District

Court, held the provisions of the insurance contract sued _

"upon now contested by the Goveramenit comes clearly within -

the foregoing authorization. 2, head submit it does.

The insurance which was the subject of congressional

legislation from 1914 until 1933 was a contract created and

existing between the insurer and the insured with respect

to the ‘‘coverage’’ or subject matter of the insurance con-

tract. ‘‘Total permanent disability’’ had a fairly well de-°

fined and understood meaning not only by reason of general

use of the term but also because of judicial construction

_ thereof in’ sundry cases decided prior to the World War.

As a general rule and particularly if the insured is suffering .

from some affliction within the body, the term is more or less

flexible. Certain conditions, however, so generally incapac-

7

itate those. suffering therefrom that reasonable men did

‘not and do not differ on the question of whether such condi-

tions in fact produce ‘‘total permanent disability.’’ If it

should be conceded that occasionally some very exceptional

person, with exceptional mental endowment and exceptional

economic opportunity, may .possibly producé some income

notwithstanding he is totally blind or has lost both legs or . ao

‘one arm and one eye, or has suffered some of the other

afflictions indicated in the specific loss provisions of the con-

tract, nevertheless we are dealing with a practical and not a

theoretical or abstract problem. Congress in express terms

gave the person charged with the administration of the War

Risk Insurance Act authority to make—

“‘such other provisions for the protection and advan- ~

tage of and for alternative benefits to the insured and

the beneficiaries as may be found to be reasonable and

practicable, may be provided for in the contract of in-

_ surance, or from time to time in the regulations.’’

(Title 38, U.'S. C. A., Paragraph 512.)

‘It will thus be seen that Congress intended for these con-

tracts to be practicable or practical as well as reasonable;

and it is submitted that this ‘‘specific loss’’ provision which

the Government is now aiainaaes is both reasonable and

practical.

- Further, even though the contract itself did not include

the so called ‘‘specific loss’’ provision, as it does, the ad-

ministrative officials could properly adjudicate claims upon

the standards indicated by the regulations. :

Some standard for the guidance of the subordinates actu-

ally doing the rating was and is indispensable. In the last _

analysis the enumeration of these, specific losses, so called,

is nothing more’ nor less than laying down a rule of meas-.

urément found by experience to be substantially accurate.

That it is incorporated.in the contract, in.the Regulations

8

or in certain internal instructions or general orders, is a

detail of no importance so far as the principle involved is

concerned. ‘

‘ ‘The World War Veterans’ Act approved June 7, 1924

(Public No. 242—68th Congress, 43 Stat. 607, 38 U.S. C. A.

193, et seq.), provided in Section 301 that all term insurance

shall be converted not later than July 3, 1927 into such—

‘‘form or forms of insurance as may be prescribed by

regulations and as the insured may request.’’

It is apparent, therefore, that there is ample statutory.

authority for the issuance of Section 3122 of the Regula-

tions, United States Veterans’ Administration, which pre-

scribes certain ‘‘provisions for the protection and advan-

tage of and for alternative benefits to the insured. * * *”

38 U. §. C. A., Paragraph 512.

— said by this Court in the case of Wilbur National

Ban United States in decision rendered February 4,

1935, 79 L. Ed.-402 at page 405:

‘‘The statutes and regulations which govern the War

Risk Insurance Bureau we must assume are known to

those who deal with it.’’

As was said by this Court in the case of Lyneh v. United

States, 292 U. S. 571 (78 L. Ed. 1434, at page 1439)—

‘In order to promote efficiency in administration

and justice in the distribution of War Risk Insurance

benefits, the Administration was given power to ‘pre-

scribe the form of policies and to make regulations.

The form prescribed provided that the policy should

be subject to all amendments to the original Act, to

all regulations then in force or thereafter adopted. ”

The regulations issued by: the Director are apart of the

contract of insurance under the expressed terms thereof

(White v. U. S.,270 U.S. 175, 70 L. Ed. 530) and these regu-

9

is

lations which are a part .of the contract are as binding on

the Government as they are upon the veteran. Lynch v.

U. S., supra. The clause in question here was printed on

the face of the contract sued on, and was there when the

contract was issued to Atkinson, who paid his premiums

on the faith of it. So did several hundred thousand others

pay their money on the faith of the contract offered-them.

Many of the six hundred. thousand citizens carrying in-

surance policies of this character cannot now procure in-

surance in private corporations because, relying upon the

provisions of their government contracts, being no longer

insurable risks, they could not now obtain other insurance.

It is respectfully submitted that af petitioner’s. conterition

is the law of this case, many citizens who have been paying

premiums on their contracts for the past fifteen years or

more in the confidence which they have had in the promise

of their Government will suffer. No private insurance

company could possibly hope -to repudiate a portion of its

contract, as the Government is here attempting. Such at-

tempt, therefore, should not be allowed to succeed unless

the law clearly and imperatively requires that result. It

clearly does not require, and I insist, does not permit such

a dishonest result.

I respectfully submit that, under the settled rule of law,

continued administrative interpretations of statutes will

be respected and enforced. For the past several years the

administrative interpretation has been that the regulations,

and provistons of the contract which the Government is

now attempting to avoid, have been recognized as valid.

This interpretation it is respectfully submitted was cor-

rect. a

’ But even if it were believed that the construction of -the

various statutes by the several officials primarily charged

with the duty of construing and administering them over a

j period of years was erroneous, such construction having -

‘

10

been uniformly given by these various administrative offi-

cials and having been applied i in hundreds of thousands of

cases and incorporated in over half a million contracts

now outstanding and in force, it is well settled law that

such construction will be adhered to and adopted by the —

Court, as has been held in many cases. A few citations

will suffice.

In the case of Hahn v. United States, 107 U. S. 402, the

‘Appellant sought to recover a share in certain fines and.

forfeitures accruing at the Port of New York and his right

thereto turned primarily upon the proper construction of a _

statute enacted in 1867. Under the construction thereof

which had been adopted and followed by the Treasury De-

partment, he was not entitled to participate in such fines,

ete. This Court approved the reasoning and conclusions

of the Court of Claims which emphasized the fact that Con-

‘gress

*

‘‘had not interfrered with such constructions by the

‘Secretary of the Treasury while the Act was in force.”

This: was in accord with the case of United States v.

Pugh, 99 U. S. 265, wherein this Court 1 in the course of its

opinion observed—

‘‘In the case of a doubtful and ambiguous law the con-

temporaneous construction of those who have been

called upon to carry it into effect, is entitled to gr eat

respect.’’

In United States v. The Alabama Great Southern Rail-

road Company, 142 U. S. 615, the controversy involved the

proper construction of a'statute relating to concession in

the price for transporting mails where the carrier had

received land grants from the Government. The Post Office

Department had construed the statute in a certain manner,

which construction was followed from 1876 to 1886 by three

11

Postmasters General. Then a new Postmaster General

sought to change the construction and this Court denied

his right so to do and held in favor of the carrier. In the

course of the opinion (page 621), it is said (italics sup-

. plied) :

‘We think the contemporaneous construction: thus

given by the executive department of the government,

and continued for nine years through six different ad-

ministrations of that Department; a construction

which though inconsistent with the literalism of the

Act, certainly consorts with the equities of the case;

should be considered as decisive in this suit. It is a set-

tled doctrine of this Court that in case of ambiguity,

the judicial department will lean in favor of a construc-

tion given to a'statute by the department charged with

the execution of such statute, and, if such construc-

tion be ACPTED UPON FOR A NUMBER.OF YEARS,

will look with disfavor upon any sudden change,

whereby parties who have contracted with the govern-

ment upon the faith of such construction may be prej-

udived. *:* * "’

In New York, New Haven & Hartford Ratlroad Company

v. Interstate Commerce Commission, 200 U. S. 361 (at 401),

this Court clearly indicated that notwithstanding the fact

that it might disagree with the construction of the statute

in certain particulars, nevertheless, since the rulings had

been made by such Commission during ‘‘the many years

which have followed those decisions, we concede that the

interpretation given by the Commission in those cases to

_ the ‘Act to Regulate Commerce’ is now binding, and, as

restricted to the precise conditions which were passed on

in the cases referred to, must be applied to all strictly

identical cases in the future; * - * We make this con-

cession because we think we are constrained to so do, in

consequence of the familiar rule that a construction made

12

by the body charged with the enforcement of a statute,

which construction has long obtained in practical execu-

tion, AND HAS BEEN IMPLIEDLY SANCTIONED BY THE REENACT-

MENT OF THE STATUTE WITHOUT ALTERATION IN THE PARTICU-

LARS CONSTRUED, when not plainly erroneous, must be treated

as read into the statute’’ (page 402).

In National Lead Company v. United States, 252 U. S.

140, this Court again recognized the binding effect of the

administrative construction of a statute extending over a

substantial period of time. |

_ Section 13 of the Act of October 6, 1917 (Public No. 90—

65th Congress) 40 Stat. 398 provided that the director of the

Bureau of War Risk Insurance under the general direction

of the Secretary of the Treasury should ‘‘administer, exe-

cute, and enforce the provisions of this Act and for that

purpose shall have full power and authority to make rules

and regulations not inconsistent with the provisions of this

Act necessary OR APPROPRIATE to carry out-its PURPOSES, and

shall decide all questions arising under the Act, * * *.

The director shall adopt reasonable and proper rules to

govern the procedure * * * to regulate.and provide for

the nature and extent of the proofs and evidence and the

method of taking and furnishing the same in order to estab-

lish the right to * * * InsuRANcE provided for in this

act; * * * andthe manner and form of adjudications and

. awards.’’ (40 Stat. 399.) With some changes in verbiage

this is still the law.

Pursuant to such. auth8rity the administrative officers did

determine the detailed f€rms of the contracts and among

other things provided that any of the enumerated specific

losses should constitute a loss insured against by the con- *

tract. - .

Atihough Congress has legislated on the subject fre-

quently during the past fourteen years, there has been no

statute indicating any dissatisfaction of the Congress with

13

the terms of said contracts so promulgated by the-Adminis-

trator pursuant to the directions contained in the statutes.

There has been no narrowing of the language quoted in any

of the thousands of contracts of insurance subsequently

issued. Hundreds of claims have been. asserted under such

contracts, and undoubtedly many are being paid pursuant.

to administrative determination or in accordance with jadg-

ments obtained in the Courts for the ‘‘specific losses’’ set

forth in these contracts. These veterans, som@ of whom

were wounded in hostilities have been paid benefits in good

faith by the proper administrative officials. .If the Govern-

ment’s contention prevails in this case undoubtedly efforts

will be made to collect from these seriously disabled veter- .

ans the sums heretofore paid them over a period of years

pursuant to adjudications by the administrative officials of

the Government causing gross injustice and mischievous

results. | ‘

Congtess has legislated time and again upon this subject

without disturbing or changing in any way this long con-

tinued administrative construction. - I respectfully submit

that by reason of the legislative history of this matter,

Congress, many members of which are World War veterans

_ and undoubtedly hold similar contracts, has approved and

adopted and in effect directly authorized the language. in

dispute with reference to this ‘*specific loss’’ provision.

Public No. 47,-67th Congress approved August 9, 1921

_ (42 Stat. 147), created the Veterans’ Bureau transferring

_ the duties conferred by the law then being administered by

_ the Bureau of War Risk Insurance to the Veterans’ Bureau

: (42 Stat. 148). Section 404 of this Act relating to the con-

_ version of the term insurance theretofore written ‘‘into

such form or forms of insurance as may be prescribed by

. regulations and, as. the insured may request.’’ That was

long after the administrative practice in question was well

established and it is. respectfully submitted that Congress

14

by this Act expressly approved the existing practice, the

‘*specific loss’’ provision having become a part of the con-

tract and this approval by Congress had the effect of-ex-

tending legislative sanction thereto.

Section 300 of the Wérld War Veterans’ Act approved

Jiine 7, 1924 (Public No. 942—68th) Congress, 43 Stat. 607,

38 U.S. Code 193 et seq.) relates to insurance and is in sub-

stantially the same language as the ged acts, so far as this

question is concerned. ,

Section 301 provides that all term insurance shall be con-

verted not later than July 2, 1927, into such ‘‘ form or forms

* of insurance as may be prescribed by regulations and as the

insured may request.”’

Public No. 448 of the 69th Congress, approved July 2,

1926 (44 Stat. 790), amended the World War Veterans’ Act

in several respects but Section 300 in which is described the

disability insured against uses the same words as used

throughout viz: ‘‘total permanent disability.’’

Again Congress approved the practice. which had been in

existence for years and it must be borne in mind that the

World War Veterans’ Act of 1924 followed extensive hear-

ings and investigations on the entire subject of veterans’

relief and veterans’ insurance and that Act in effect was

a codification of what Congress deemed appropriate after

a completa,overhauling of all existing legislation on the

subject of World War veterans. This is significant, and

negatives the thought that there may have béen any over- |

sight by the Congress in connection with the present sub-

ject.

(b) Petitioner is wnine. to “contest”? the insurance

contract sued upon which is specifically forbidden by law

and the express provisions of said contract, and such action

also violates the 5th Amendment of the Constitution.

The insurance contract provided that respondent’s dis-

abilities were, totally and permanently disabling. Peti-

15

tioner’s.attack upon the specific provision of contract, it

is respectfully submitted, amounts to a ‘‘contest’’ of this

contract, which is precluded by statute.

Section 307 of the World War Veterans’ Act, as amended

by Section 24 of Public 522, approved July 3, 1930 (46

Stat. 991) provides: .

‘*All contracts or policies of insurance HERETOFORE

OR HEREAFTER issued, reinstated, or converted, sHALL BE

INCONTESTABLE FROM THE DATE OF ISSUANCE, reinstate-

ment, or conversion, except for fraud, nonpayment of

premiums, or on the ground that the applicant was

not a member of the military or naval forces * * *

this section shall be deemed to be effective as of April

6, 1917, and APPLICABLE FROM THAT/DATE to ALL con-

trdets or policies of insurance.’’

Formerly Section 307 provided that the itsurance should

be incontestable ‘‘after the insurance has been in force

six months from the date of issuance or reinstatement

_* © *,** and also that a letter mailed by the Bureau should

constitute a contest. This latter provision undoubtedly

was incorporated to meet the decision of this Court in

Hurni Packing Company v. Mutual Life Insurance Com-

pany, 263 U. 8. 167; 68 L. Ed. 235. It was therein held

that the contest must be initiated within the period pro-

vided in the policy, notwithstanding that death occurred |

prior to the expiration of such period. But said provision

for a letter of contest was eliminated when Section 307 was

amended in 1930, as indicated above.

As far as I can discover there is only one decision in the

United States directly in point presumably because the

conclusion therein indicated is:so manifestly correct that

_ counsel for private insurance companies never thought it

worthwhile to litigate the question.. I refer to Mutual Re-

serve Fund Life Association v. Austin, decided by the Cir-

_cuit Court of Appeals for the First Circuit in December,

1905, 142 Fed. 398. Suit w: 3 brought to recover the face “

‘ amount of a life insurance contract which contained this

provision: of .

‘<If this policy of insurance shall have been in con- |

. tinuous force for. three years from its date, it shall

‘thereafter be incontestale ex¢ept for nonpayment? of”

premiums * * * or for misstatement c° .he age * * *.”’

« It also.contained a provision as follows:

+ ete ‘“‘This cofftract shall not take effect until this policy A

is delivered to the member in person during his life-

. time and while in good health, nor until the first pay-

ment is paid in cash hereon while said member isealso -

- in good health.’? :

The- wnidienebel facts in that case showed that the de-

- ceased insured was not in good health at the time the con-

"tract was delivered to him. He died more than three years

®

Hist: sata wm

after Uc GALT thereof. Juans mont for p nlaintiff was affirmed,

- The Court said (page 401) :

‘The term sssanteneie is of great bréadth. It is

the policy which is to be incontestable. We think the

language broad enough to cover all grounds for contest

- not specially excepted intiat clause. * * * The word

policy may well be taken to mean a formal document

delivered by the company and containing evidence of

eee

an obligation to pay : ’

| It will be observed that ‘Section 307 above provides that

‘all contracts or policies of insurance * * * shall be in-°

contestable from. the date of issuance.’’ Formerly in the

1924 Act the language read: ‘‘shall be incontestable after

' the insurance has been in force six months fuom the date

of issuance * * *,”? seid the same: language | as in

the Austin case tea.. roe

This-change in the language in 1930 indicates an inten-

tion by the Congress to liberalize the incontestable pro-.

Ww...

vision'so as to make it more desirable to the insured. If .

also is further evidence of Congressional approval of the

then existing terms of the insurance “‘contracts or pol- »

icies’’ which had long been im existence pursuant to the

administrative officers’ determination thereof.

In the case of N orthwestern Mutual Life Insurance Com- ;

pany v. Johnson, 254 U: 8 S. 96, 65 L: Ed, 155, this Court af-

firmed a judgment for the plaintiff, beneficiary under two .

life insurance policies. Payment was contested on the

_ ground that the insured committed suicide. The language

most favorable to the insur er WAS: |

~ “Tf within two years from the date hereof the said

insured shall * * die -— his own hand “ _* °

this policy shall be void.’ i . \

The other policy provided :

“This contract shall be Sipianbontabiac after one year

from the date of its issuance aa usa the ) required

premiums are duly paid.’ ig

After pointing out that ie case of Ritter v. Insurance

Company, 169 U. S. 139, had been modified by the decision

in Whitefield v. Insurance Company, 205. U: S. 489, this .

Court, answering a certified question, held the insurer was

liable under both contracts: The insured ‘committed sui-

cide at a date “more than twa years after the first policy

and more than one year after the second policy was issued. :

The Court said:.

‘“The object of the clause i is plain and laudable—to

create an absolute assurance of the benefit as free ‘as

may be from any dispute of fact except the fact of

death and as soon as it can reasonably be done.’’

It further held that the two quoted clauses were the same

_ in effect and that each policy was incontestable after the

period stated therein. } : i

s

It seems clear that under the express terms of the stat-

utes cited providing that these \policies should be incon-

testable from their dates that it iA not now open to the in-

- gurer (the United States) to contest the validity of the

specific loss provisions théreof. And it will be ‘noted: that

the incontestable section of the statute is expressly made

effective as of April 6, 1917.

This contract constituted _ property rights. Rights 4

against the United States arising out. of contracts with it ‘

are protected by’ the” Fifth Amendment to our ‘Constitu-

tion. . ~

(Lynch vy. U. 8. 292 U. S. 578, 78 L. Ed. 1444, and cases

cited therein.)

° When the United States enters into contract relations

its rights and duties therein are governed generally by

_. the law applicable to contracts between private individuals.

: (Lynch v. U.S8., supra.) . |.

As. Congress had the power to authorize the Bureau of

- War Risk Insurance to issue these contracts, the due proc-

ess clause prohibits the United States from annulling same.

As was said by this Court in the case of Lynch v. United

States, supra:

‘‘Pynctilious fulfillment of contractual obligations

is ‘essential to the maintenance of the credit of public

as well as private debtors * * * the United States

are as much bound by their contracts as are individu-

als. If they repudiate their obligations, it is as much

repudiation, with all the wrong and reproach that

term implies, as it would'be if .the- repudiator had been

a state or a municipality or a ceitizen.’’- (Citing Sink- -

‘ing Fund.-cases, 99 U. S. 700, 719, 24 L. Ed. 496, 501).

s |

2. Tue Circuit Court or AppEats Was Correct 1n Hotp-:

ING THAT THE DECISION OF THIS CouRT IN THE CasE oF Muller

v. United States, 294 U. S. 435, Was nor APPLICABLE TO THIS

CaseE. ;

ae Ae Ae

The statutory bast for the provision “‘the permanent —

loss of hearing of both ears *** * shall be deemed to be

total: permanent disability’’ is- different in this case from 4

the statutory authority relied on in the Miller case for we

issuance of a regulation making the pravision of the stat- ©

ute relating to compensation applicable to insurance, and

retroactively effective. In the Miller case, involving yearly

renewable _war risk term i insurance we only ‘stat ory basis

proved. July 3, 1930 (46 Stat. 991) ometiing

the Act of June 7, 1924 and reading— | :

ae director, subject’ to the general direction of

:the President, shay administer, execute, and enforce ‘»

the. provisiogs of this Act, and for that purpose shall

* have full power and authori to make rules and regu- °

lations, not inconsistent with the provisions of this

Act, which are necessary’or appropriate to carry’ out

its purposes, and SHALL DECIDE ALL QUESTIONS arising

under this Act; and all pEcISIONS OF QUESTION OF FACT

AND LAW affecting any claimant to the benefits of Titles -

IT, II, or IV sHauu BE CoNcLUsIvE except as otherwise

provided herein. oo

Life (converted) Insurance on a legal 1 reserve self-sustain-

~~ ing* basis, the statutory authority for issuing this policy _

with the ‘‘specific logs’? provision referred to above, as —

pointed out by the Ciouit Court of Appeals i in the instant

case (R. 105) was Section 512,-U. S. Code Annotated pro-

- viding—

‘Not later than July 2, 1926, all term insurance shall

be converted * * * into such form or forms of in-

‘surance as may be prescribed by regulations and as the

insured may request.’’ ‘ ‘Regulations shall provide for

the right to convert into ordinary life, etc. * * *+

and into other usual foyms of insurance.’’ "Provisions

for maturit ty ab-certain ages and sei other provisions

for the protection and advantage of and for alternate -

benefits to the insured and the’ beneficiaries as may be

found to be redsoriable and practical may be provided

- for in the contract of insurance, or from time to time

by regulations.”’

A comparison of these two statutory provisions, relating

to different kinds of insurance, will disclose that the statute

relating to the regulation ‘referred to in the Miller case,

Supra, WAS A general statute; while here the regulation and

the policy were issued under a statute specifically referring

to and providing for the promulgation of terms of J nited

States Government Life (converted) Insurance only. Also,

in the instant case the contract sued on was made subse-’

quent to the statutory enactment and issuance of the regu- _—

lations, and the contract, containing on its face the specific

loss provision, matured after it had been im force for a

—considerablé period of time, with payment of. premiums

during s riod.

This Court. in the Miller case was not called upon ty and

did not in any way consider the above quoted statute, which

is applicable only to\United States Government Life (con-

verted) Insurance. i

The regulation in the Miller case was’ ~theit ere until:

_ eleven years after the insurance policy sued upon had

elapsed (or matured) and Miller’s cause of action thereon |

_ had fully matured, if any he had. There was no longer a

contract, but a chose in action in the Miller case. This Court

“is not called upon here to deal with such a situation. Atkin-

son’s contract contains the language under attack. He —

bought it and paid for it with that language in it—one of

the ‘‘terms and conditions’’ placed in it by the official desig-

nated so to do by the statute. .

b]

21

Phe ingurance contract sued on.in the instant case is legal

reserve life (and disability) insurance and the premiums °

paid are deposited in a self-supporting mutual furd in the

Treasury, which fund is invested and reinvested in interest.

bearing obligations. Dividends resulting from this interest

and from mortality savings are and have been regularly

paid to its policy holders. The following statement by years .

shows the annual, and the accumulated amount of dividends

"paid to dates indicated. after setting aside the reserve re-

quired according to accepted actuarial principles: to provide

for losses®, - is

Dividends paid Accumulated amount

one during year dividends paid to:

_ December 31. indicated. date indicated.

1920-21 ...... $ 993,706.92 $ 993,706.92

re 1,631,103:46 2,624,810.38

ae 2,056,213.06 4,681,023.44 ~~

a . 2,585,215.87 ’ 7,266,239.31 .

1925 . ets ees 2,795,372.73 ° 10,061,612.04

; aa 3,086,678.49 }3,148,290.53

ae -3,846,772.86 _ 16,995,063.39

1928 ...*.... 5,958,383.94 22,953,447.33

1929°...... .. 6,033,216.41 * _98,525,663.74

ee 6,903,625.19 . 85,890,288.93

i ae 7,738,296.83 - 43,628,585.76 —

_ ee 7,270,066.72 .--50,898,652.48

i ae ‘. . .8,420,603.09 wt 54,319,255.57

me ....-.%: §,944,589.52 + 60,263,845.09 -

1935 {11 Mo.) ‘5,865,033.01 a ania a

. See letter from Frank T. Hines, Administrator of Vet-

erans’ Affairs, to Watson B. Miller, Director, National Re-

habilitation Committee, The American Legion, dated Jan-

uary 6, 1936, regarding dividends paid on United States

Government Life Insurance set forth verbatim i in the ap-

paid hereto, :

\

—~

22 .

Conclusion. -

For the reasons and upof, the authorities stated: on pages

two and three of Respondent’s original brief in this Court

it is believed Petitioner is precluded from having réviewed

the question it’presents. But if the question is. open to

‘review ‘in this Court the conclusion hecessarily must be

that: (1) inere was legal authority for including in plain-

tiff’s contract of United States Government Life (con-

verted) Insurance against total: permanent disability the .—

clause; ‘‘* * the permanent loss of hearing of - both

earg * * * shall be deemed to be total and permanent

, disability”; (2) the judgment below in this case is not in

conflict With the decision of this Court in the case of Miller

v. United States, 294 U. S. 435; (3) aside from the right to

srecover on the so called specific loss provision of his con-

tract (the validity of which was eden to in the trial

court), the record reflects evidence cient to support the

verdict and judgment for respondent. The judgment

should be affirmed. | .

Warren EK. —

Southern Budding,

Washington, D. C.,

; Counsel for Respondent..

A. H. Cutwe, : eee ere oen

Joun M. WorzkELt,

R. A. D. Morton,

El Paso, Texas.

2

| Captain. Watson B. Miller,

a 23

APPENDIX. _

VETERANS ADMINISTRATION, WASHINGTON.

Office of the Aeeeneynee. of Veterans Affairs

January 6, 1936.

_ Director of Rehabilitation, \ ve

American Legion,

1608 K Street, N. W.

Washington, D

My Dear Caprary Muze: ~ >

This is in response ‘to. your request to be aiivieed the

amount paid as dividends a -Bnited States Government

; Life. Insurance Policies.

According to the records of the Fine Sorte of the

Veterans’ Administration, the amounts paid as dividends -

on such policies: by calendar years (eleven months in 1935

- to November 30) and enmulatively. tn Navamhar 90 1095

vy S38 UV UE UV, aJ0U,

are as. allows: .

\ Dividends paid Accumulated amount

, during year dividends paid to

December 31. indicated. Pr . date indicated.

1920-21 ...... + 993,706.92 $ 993,706.92

BE ieee cease 1,631,103.46 . 2,624,810.38

1923 ...:.... 2,056,213.06 - 4,681,023.44

1924... . 2,585,215.87 — ; 7,266,239.31

1925 ..&.... 2,795,372.73 sie 10,061,612.04

ee AS: ' 3 ‘086, 678.49 | ae 13,148,290.53

1907 ...04... 3,846,772.86 ae 16,995,063.39

Se ea 5,958,383.94 . 22 953, ‘447. 33

ME oad eaters 6,033,216.41 : oe '986, 663.74

a i ck 6,903,625.19 35,890,288.93

ere 7,738.296.83 43,628,585.76 ©

Eee 7 ;270,066.72 50,898,652.48

«ee 3,420,603°09 i 54,319,255.57

Ss seer 5,944, 589. ) | 60,263,845.09

1935 (11 Mo.) 5, 865, 033.01 . sera 66,128 ihaat

Very truly yours, :

oe i, Frank T. Hrvzs,

f~ ar: | : Administrator.

(1281-0)