Where the holder of a lapsed policy of war-risk term insurance
reinstates and converts his insurance into an ordinary life policy
and thereafter surrenders this policy upon payment of its cash
surrender value, he is entitled, under § 307 of the World War
Veterans' Act of 1924, as amended by the Act of July 3, 1930, to
recover upon the original term policy for total and permanent
disability occurring during the life of such policy, even though
the converted
Page 287 U. S. 471
policy, having been previously turned over to the Veterans'
Bureau, cannot be surrendered by him.
57 F.2d 488 affirmed.
Certiorari to review the affirmance of a recovery in an action
on a war-risk insurance policy.
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
Respondent Arzner enlisted in the Army March 29, 1918, and was
discharged January 16, 1919. While in the service, he took out a
war risk insurance policy for $10,000 on which premiums were paid
through January, 1919. The policy lapsed, but March 1, 1920, it was
reinstated and then converted into an ordinary life policy.
Premiums upon the latter were paid through February, 1921. The
respondent then gave up $5,000 of it and received the cash
surrender value -- $45; he surrendered the remaining $5,000 in
December, 1921, and accepted the cash value -- $18.30.
March 5, 1929, he began this proceeding in the United States
District Court. He alleged total disability, resulting from
injuries received in battle, commencing in 1918, and sought
recovery under his original war risk insurance policy of 1918 --
$57.50 per month.
Upon properly framed issues, the cause went to trial in June,
1931. The jury found respondent's total and permanent disability
commenced September 29, 1918, and returned a verdict in his favor.
An appropriate judgment
Page 287 U. S. 472
followed; the Circuit Court of Appeals, Ninth Circuit,
affirmed.
Because of conflicting views in the Circuit Courts of Appeals,
we granted certiorari.
Here, it is said that the court below erred in holding that
respondent was entitled to recover upon his original policy, since,
at the time final judgment went down, he could not surrender the
converted policy as required by § 307, amended World War Veterans'
Act 1924, c. 320, 43 Stat. 607, 627, Act July 3, 1930, c. 849, 46
Stat. 991, 1001. The facts are not in dispute.
Prior to July, 1930, federal courts held divergent views
concerning the rights of veterans whose original term insurance
policies had lapsed and thereafter had been reinstated or converted
into some other form.
Stevens v. United States, 29 F.2d
904;
United States v. Buzard, 33 F.2d 883;
United
States v. Kusnierz, 33 F.2d 887;
United States v.
Cross, 33 F.2d 887;
United States v. Allen, 33 F.2d
888;
United States v. Barker, 36 F.2d 556;
Duggan v.
United States, 36 F.2d 804;
Franks v. United States,
43 F.2d 455;
United States v. Golden, 34 F.2d 367;
United States v. Acker, 35 F.2d 646;
United States v.
Schweppe, 38 F.2d 595;
Woolfolk v. United States, 44
F.2d 701;
Crawford v. United States, 40 F.2d 199;
United States v. Andrews, 43 F.2d 80.
With the evident purpose to accord liberal treatment to those
veterans who at any time had become entitled to receive benefits
under any insurance policy, Congress by the Act of July 3, 1930,
amended World War Veterans' Act,
supra, so as to read:
"All contracts or policies of insurance heretofore or hereafter
issued, reinstated, or converted shall be incontestable from the
date of issuance, reinstatement, 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 of the United States, and
subject to
Page 287 U. S. 473
the provisions of § 23,
Provided, That the insured
under such contract or policy may, without prejudicing his rights,
elect to make claim to the bureau or to bring suit under § 19 of
this Act on any prior contract or policy, and if found entitled
thereto, shall, upon surrender of any subsequent contract or
policy, be entitled to payments under the prior contract or policy:
Provided further, That this section shall be deemed to be
effective as of April 6, 1917, and applicable from that date to all
contracts or policies of insurance."
When the trial court rendered final judgment, respondent had
given up his converted policy, and therefore could not surrender it
again. For petitioner it is said that, being unable to comply with
the literal terms of the 1930 amendment, he could not recover under
the original (1918) policy. Also:
"The Government, of course, does not question the right of a
veteran who has converted his term insurance to sue on his prior
policy, even if he has allowed the converted policy to lapse,
provided he surrenders the converted policy."
The suggested construction of the statute is too narrow. It
would deprive veterans of a right which we think Congress intended
to confer. The probable reason for requiring surrender of the
subsequent contract or policy was to prevent any further claim and
thus silence controversy.
Undoubtedly respondent became entitled in September, 1918,
during the life of his original policy, to the benefits therein
provided. And we think Congress, by the Act of 1930, intended to
permit him to assert the right which then accrued. To deprive him
of this simply because he could not actually surrender a writing
already delivered to the United States would defeat the generous
purpose behind the enactment.
True it is, respondent agreed to cancellation of his converted
policy and accepted the surrender value -- a portion of the money
paid by him for premiums thereon.
Page 287 U. S. 474
But this action worked no material disadvantage to the
government. Indeed, the veteran made payments when in fact entitled
to receive monthly benefits for total disability. If the converted
policy had been allowed finally to lapse because of nonpayment of
premiums, the agreement between the parties would have been fully
complied with. Nevertheless, the proper admission is that, under
such circumstances, there could have been a recovery on the
original policy, upon actual surrender of the expired policy. The
government now has possession of the cancelled converted policy,
and is in no worse position than it would be in the supposed
circumstances.
Affirmed.