1. As a general rule, the United States is not estopped by
arrangements or agreements of its agents to do what the law does
not sanction, and those who deal with its agents are charged with
notice of the limitations of their powers. P.
294 U. S.
123.
2.
Quaere, how far, if at all, these general rules are
subject to modification where the Government enters into
transactions of a commercial nature. P.
294 U. S.
124.
3. Assuming that the United States may be estopped in its
insurance business, it is not bound to pay a policy which had
lapsed and become nonreinstatable merely because the Veterans'
Bureau did not notify the insured of how a cash payment by him was
allocated to premiums and other charges, or notify him of the
default, such notices not being customary in the Bureau's practice,
nor because the Bureau did not promptly acknowledge sums which were
remitted to it as premium payments after the policy had lapsed and
when reinstatement had become impossible. P.
294 U. S.
124.
69 F.2d 526 affirmed.
Certiorari, 293 U.S. 541, to review the reversal of a judgment
recovered against the United States in an action on a government
life insurance policy.
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
July 1, 1927, James Patrick Mahar applied to the United States
Veterans' Bureau for reinstatement of $5,000 insurance upon his
life, and with the application
Page 294 U. S. 121
sent check for $13.90. The allocation of this sum then suggested
by him gives no indication that he thought it sufficient to meet
any premium due after August 1st.
September 19th, a policy in the usual form issued, and was
delivered. It showed payment of the monthly premium -- $3.95 -- due
July 1st, and that like payment would be necessary on the first of
each succeeding month. Also:
". . . T his policy takes effect on the first day of July,
nineteen hundred and twenty-seven. . . ."
"Premiums are due and payable monthly in advance," and "if any
premium be not paid when due, this policy shall cease and become
void . . . ," but that
"a grace of thirty-one days without interest will be allowed
during which time the policy will remain in force. . . . This
policy, if it has not been surrendered for a cash value, may be
reinstated at any time after lapse upon evidence of the
insurability of the insured satisfactory to the Director of the
United States Veterans' Bureau, and upon the payment of all
premiums in arrears, with interest from their several due dates at
the rate of five percentum per annum, and the payment or
reinstatement of any indebtedness which existed at the time of such
default, with policy loan interest."
A letter dated July 29th, acknowledging receipt of the check
which accompanied the application, contained the following
clause:
"Important. -- Insurance under the application evidenced by the
above remittance shall be effective subject to the World War
Veterans' Act, 1924, and Regulations. . . ."
Neither this letter nor any other notice informed the assured
how the $13.90 had been allocated, but, under the statute and
regulations, it sufficed to pay prescribed charges and two premiums
on the $5,000 policy -- July 1st and August 1st; also $2.65 for
credit on the premium due September 1st.
Page 294 U. S. 122
Two remittances of $3.95 by or for the assured were made to the
Bureau November 2d and December 20th, respectively. These were
retained, but were not acknowledged until after the assured's
death. After issuance of the policy, no notice was given the
assured concerning payment of premiums, default, or that the policy
had lapsed or was about to do so. Apparently the only
communications sent prior to his death were the receipt of July
29th, and the policy, delivered September 19th.
Nothing indicates that the Bureau ordinarily sent notices
concerning premiums or lapses. We are referred to no statute or
regulation which required such a notice. No officer of the Bureau
is shown to have had power to reinstate lapsed policies without
evidence of insurability.
Mahar became totally incapacitated October 17th, but the Bureau
had no notice of this fact. He died the 24th of December. Payment
under the policy was refused upon the ground that it had lapsed
because of failure to pay the premium due September 1st. The grace
period ended October 2d.
Petitioner, as administrator of the estate, brought this action
in the District Court, Northern District, New York (ยง 445, c. 10,
Title 38, U.S.C.). It alleged issuance of the policy, that all
matured premiums upon the policy had been duly paid, and asked
recovery.
According to the provisions of the policy, it expired October
2d. But petitioner claimed, and the District Court ruled, that,
because the Bureau failed to give notice concerning allocation of
the sum forwarded July 1st, failed to give notice of the due dates
of the premium or that the policy had or was about to lapse, and
retained the two payments of $3.95 each, the United States were
estopped to deny liability. It said:
"If the defendant was a private insurance company, I would have
no hesitancy in declaring it estopped from
Page 294 U. S. 123
claiming the policy had lapsed for nonpayment of premium. . . .
The same principle should be applied against the defendant in this
case."
"When the United States went into the insurance business, issued
policies in familiar form, and provided that, in the case of
disagreement, it might be sued, it must be assumed to have accepted
the ordinary incidents of suits in such business."
Judgment for the petitioner was reversed. The Circuit Court of
Appeals held:
"The conditions of the policy relating to premium payments were
not met by a payment of the premium due September 1, 1927, and the
insurance policy therefore expired, counting in the grace period,
on October 2, 1927, unless there was a waiver by the appellee. The
claim that there was such a waiver cannot be sustained. . . . The
law does not permit waiving statutory requirements by the acts of
employees of the government. The failure to pay the premiums prior
to October 2 resulted in a lapse of the policy which may not now be
held to be waived by the conduct of the government's
employees."
The cause is here by certiorari granted upon an application
which asserts that the questions presented are: first, whether the
United States are engaged in the life and disability insurance
business, and obligated to observe the same rules in respect of
notices, applying premiums, and obeying customs that are applicable
to competing commercial companies, and second, whether the United
States, in the circumstances shown, are bound by the acts of their
agents like other insurance companies and estopped to deny payments
because of such acts.
Undoubtedly, the general rule is that the United States are
neither bound nor estopped by the acts of their officers and agents
in entering into an agreement or arrangement to do or cause to be
done what the law does not sanction or permit. Also, those dealing
with an agent of the United
Page 294 U. S. 124
States must be held to have had notice of the limitation of his
authority.
Utah Power & Light Co. v. United States,
243 U. S. 389,
243 U. S. 409;
Sutton v. United States, 256 U. S. 575,
256 U. S.
579.
How far, if at all, these general rules are subject to
modification where the United States enter into transactions
commercial in nature (
Cooke v. United States, 91 U. S.
389,
91 U. S. 399;
White v. United States, 270 U. S. 175,
270 U. S. 180)
we need not now inquire. The circumstances presented by this record
do not show that the assured was deceived or misled to his
detriment, or that he had adequate reason to suppose his contract
would not be enforced, or that the forfeiture provided for by the
policy could be waived.
New York Life Insurance Co. v.
Eggleston, 96 U. S. 572;
Phoenix Mut. Life Insurance Co. v. Doster, 106 U. S.
30. The grounds upon which estoppel or waiver are
ordinarily predicated are not shown to exist.
The statutes and regulations which govern the War Risk Insurance
Bureau we must assume are known by those who deal with it. When
issuing a policy, the Bureau, so far as shown, did not ordinarily
notify the assured of the allocation of the cash payment; there was
no custom to give notice of defaults. Here, the insured had no
right to expect such notices. His policy finally lapsed October 2d.
After that, no officer of the Bureau had authority to reinstate it
without proof of insurability. The policy so declared.
The assured's health began to decline in September, and on
October 17th, he was permanently and totally disabled, but no
notice of this was given. Payments of November 2d and December 20th
were sent when this disability existed. They were received by the
Bureau when ignorant of the true situation, and at a time when
reinstatement by affirmative action was inadmissible.
Nothing indicates intention by any officer or agent to vary the
contract, and we find nothing done or omitted
Page 294 U. S. 125
from which the assured or his representatives could reasonably
imply such purpose or intent. The claim of estoppel or waiver is
not supported by the facts shown, and the questioned judgment must
be affirmed.
Affirmed.