1. The provisions of § 305 of the World War Veterans' Act, as
amended, whereby a policy which has lapsed while the insured was
suffering from a compensable disability for which compensation was
not collected may be revived and matured
pro tanto if the
insured has become permanently disabled, by applying the
uncollected compensation as premiums, do not extend to an earlier
policy which was converted into the one that lapsed. P.
300 U. S.
502.
2. In the congressional legislation dealing with the subject,
Veterans' insurance changed from one form to another is termed
"converted." P.
300 U. S.
503.
3. Neither the words nor the legislative history of § 305 of the
Act suggest that the phrase "cancelled or reduced insurance" was
intended to include insurance elsewhere described in the Act as
"converted," at least where the conversion was not accompanied by a
reduction of the policy. P.
300 U. S.
505.
4. The holder of a converted policy is not "entitled" to total
disability benefits under the original policy, within the meaning
of § 307 of the Act, as amended in 1930, where the total disability
did not occur until after the conversion. P.
300 U. S. 506.
5. Section 307 does not, either by its terms or by reasonable
implication, extend the privileges of § 305 to converted insurance.
Its legislative history does not disclose any purpose to amend or
to depart from the policy of § 305. P.
300 U. S. 506.
6. A construction of a new section added to an existing statute,
as by implication modifying a settled construction of an earlier
section, is not favored. P.
300 U. S. 506.
85 F.2d 609 reversed.
Certiorari, 299 U.S. 538, to review a judgment affirming a
recovery of total disability benefits in a suit on a contract of
war risk term insurance.
Page 300 U. S. 501
MR. JUSTICE STONE delivered the opinion of the Court.
Respondent brought this suit in the District Court for Southern
California to recover total permanent disability benefits under a
contract of war risk term insurance. While in the military service
of the United States in the World War, he acquired a term policy of
war risk insurance. On November 1, 1919, availing himself of the
benefits of § 404 of the War Risk Insurance Act of October 6, 1917,
c. 105, 40 Stat. 398, 410, he converted his term insurance into a
twenty-payment life policy of United States government insurance.
He paid premiums on this policy until January 31, 1920, when it was
allowed to lapse for nonpayment of premiums. On the date of the
conversion of his first policy, he was suffering from a
"compensable disability," and, after the lapse of the second, on
June 6, 1925, he was rated by the Veterans' Bureau as totally and
permanently disabled. At that time, he was entitled to disability
compensation from the government in the sum of $312.25.
On the trial in the District Court, a jury was waived and the
case was heard on an agreed statement of facts. The court gave
judgment for the respondent for permanent disability benefits under
his first policy, with respect to so much of the insurance as the
$312.25 of disability compensation, remaining uncollected at the
time of total permanent disability, would have purchased if applied
to the payment of premiums due upon the original policy between the
date of its conversion and the date of total disability. The
Circuit Court of Appeals for the Ninth Circuit affirmed, 85 F.2d
609, holding that respondent was entitled,
Page 300 U. S. 502
under §§ 305, 307 of the World War Veterans' Act, to revive the
original term insurance and to recover under it the permanent
disability benefits awarded by the trial court. We granted
certiorari because of the importance of the decision of the Court
of Appeals, which conflicts with the consistent rulings of the
Administrator of Veterans' Affairs, and affects, adversely to the
government, a large number of pending insurance claims.
Section 305 of the World War Veterans' Act of June 7, 1924, c.
320, 43 Stat. 624, 626, as amended July 2, 1926, c. 723, 44 Stat.
790, 799, 38 U.S.C. § 516, applies to lapsed, cancelled, or reduced
insurance policies. It provides:
"Where any person has heretofore allowed his insurance to lapse,
or has cancelled or reduced all or any part of such insurance,
while suffering from a compensable disability for which
compensation was not collected and dies or has died, or becomes or
has become permanently and totally disabled and at the time of such
death or permanent total disability was or is entitled to
compensation remaining uncollected, then and in that event so much
of his insurance as said uncollected compensation . . . would
purchase if applied as premiums when due, shall not be considered
as lapsed, cancelled or reduced, and the United States Veterans'
Bureau is hereby authorized and directed to pay to said soldier, or
his beneficiaries, as the case may be, the amount of said
insurance."
Section 307, as amended July 3, 1930, 46 Stat. 991, 1001, 38
U.S.C. § 518, relates to all insurance policies "heretofore or
hereafter issued, reinstated, or converted." It declares that all
such policies shall be incontestable, and provides:
"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
Page 300 U. S. 503
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."
Respondent elected to claim under his original policy,
presumably because the rate of premiums for the term insurance was
lower than for the twenty-payment life policy, and the $312.25 of
disability compensation would purchase a larger amount of the
former type than of the latter. The government admits that the
respondent is entitled, under § 305, to revive the twenty-payment
life policy which has lapsed, but contends that he is not entitled
to revive the earlier term insurance which he had converted,
because § 305 omits any reference to converted insurance, such as
appears in § 307.
All war risk policies were required to be for term insurance by
§ 404 of the War Risk Insurance Act, but that section permitted
conversion of the insurance into other forms, after termination of
the war. When Congress desired to legislate about one form of
insurance thus changed into another, it explicitly used the
descriptive term "converted." [
Footnote 1] The omission of any reference to converted
insurance in § 305 indicates that the privilege of reviving a
lapsed, cancelled, or reduced policy was not intended to extend to
an earlier policy converted into another whose lapse is the
condition of the revival. Such must be taken to be the meaning if
it is consistent with the purposes of the section disclosed by its
legislative history and with the provisions of other sections.
Page 300 U. S. 504
The legislative history supports the government's argument that,
from the beginning, the aim of the legislation later embodied in §
305 was to permit the veteran to revive his policy when he had
allowed it to lapse, for want of funds at a time when there was
money due him from the government for a compensable disability. The
supposition was that he would have paid the premiums on the lapsed
policy if he had then received the sum due from the government -- a
supposition which is inadmissible if, at that time, he had
converted low premium term insurance into any of the other forms of
insurance commanding a higher premium, as permitted by § 404.
In its original form, § 305 appeared as a part of § 408 of the
War Risk Insurance Act, added by the Act of August 9, 1921, § 27,
c. 57, 42 Stat. 147, 156, 157. The bill which became § 408, as
originally reported by the House Committee, provided for the
reinstatement by disabled veterans of their lapsed and cancelled
policies. In recommending this legislation, the Committee of the
House having it in charge pointed out that most such lapses and
cancellations occurred at a time when disability compensation was
due to the veteran, and were probably occasioned by lack of funds.
[
Footnote 2] The bill was
amended on the floor of the House [
Footnote 3] so as to include the provisions later
elaborated into § 305. They permitted the revival of a lapsed
policy in favor of the beneficiaries of a deceased veteran if, at
the time of the lapse, he had been entitled to money from the
government for a compensable
Page 300 U. S. 505
disability. [
Footnote 4] The
proviso, upon which revival was conditioned that, at the time of
the lapse, compensation be due from the government to the veteran,
made more explicit the purpose indicated in the Committee Report.
[
Footnote 5]
As then adopted, the revival provision applied only to lapsed
policies, but, as amended by the Act of July 2, 1926 (44 Stat.
790), it was extended to include "cancelled or reduced" insurance.
This amendment was adopted for the purpose of avoiding a ruling of
the Comptroller General that the phrase "lapsed insurance" did not
embrace cancelled or reduced insurance, even though the
cancellation or reduction occurred at a time when compensation was
owing to the veteran.
See Report of House Committee, No.
1217, 69th Cong., 1st Sess., pp. 7, 8; Hearings before Senate
Finance Committee, 69th Cong., 1st Sess., on H.R. 12175, pp. 50,
51. Neither the words nor the legislative history of § 305 suggest
that the phrase "cancelled or reduced insurance" was intended to
include insurance elsewhere described in the act as "converted," at
least unless the conversion was accompanied by a reduction of the
policy. The like administrative construction which has consistently
been given to the section by the Veterans' Bureau [
Footnote 6] is of persuasive force.
Norwegian
Page 300 U. S. 506
Products Co. v. United States, 288 U.
S. 294,
288 U. S. 315;
Brown v. United States, 113 U. S. 568,
113 U. S.
571.
The other sections of the act are consistent with this
construction of § 305. Section 307 permits the insured, if totally
disabled, to make claim under his converted policy, and entitles
him to the benefits of that policy "if found entitled thereto."
See United States v. Arzner, 287 U.
S. 470,
287 U. S. 473.
But it is plain that respondent is not "entitled" to total
disability benefits under the original policy, within the meaning
of § 307, because the total disability did not occur until after
its conversion. Section 307 does not, either by its terms or by
reasonable implication, extend the privileges of § 305 to converted
insurance. The legislative history of § 307 does not disclose any
purpose to amend § 305, or to depart from its policy, and in any
case the modification by implication of the settled construction of
an earlier and different section is not favored.
United States
v. Munday, 222 U. S. 175,
222 U. S. 182;
Ibanez v. Hongkong Banking Corp., 246 U.
S. 621,
246 U. S. 626.
The right of respondent to revive his insurance is limited to the
lapsed twenty-payment life policy.
Reversed.
[
Footnote 1]
See World War Veterans' Act, 1924, § 307, as amended
July 3, 1930, 46 Stat. 991, 1001, 38 U.S.C. § 518.
Compare
World War Veterans' Act, 1924, § 310, 45 Stat. 970, 38 U.S.C. §
512a; § 311, 45 Stat. 970, 38 U.S.C. § 512b; § 302, 43 Stat. 625,
38 U.S.C. § 513; § 308, 44 Stat. 790, 800, 38 U.S.C. § 516a, for
legislation applying the term "converted" to the subsequent, United
States Government life insurance.
[
Footnote 2]
Report of House Committee, No. 104, 67th Cong., 1st Sess., p.
10, states:
"It would appear to be equitable and fair when it is remembered
that, as a matter of fact, in most of the instances, the reason the
disabled soldier failed to keep up his insurance was that he was
short of funds and it took the Government some time to investigate
and grant his compensation, and that, because of this financial
stringency, he allowed his insurance to lapse."
[
Footnote 3]
61 Cong.Rec. 2422.
[
Footnote 4]
Section 408 was amended by the Act of March 4, 1923, c. 291, 42
Stat. 1521, 1525, 1526, to provide that a lapsed policy could be
revived by one who became permanently and totally disabled.
[
Footnote 5]
See 34 Op.Atty.Gen. 369, 371.
[
Footnote 6]
See communication of Administrator of Veterans' Affairs
to the Solicitor General, December 5, 1936:
". . . It has been the consistent practice of the Veterans'
Administration and its predecessors to administer Section 305,
World War Veterans' Act, 1924, and the preceding provisions of
Section 408, War Risk Insurance Act, on the theory that they
contained no provisions, express or implied, for revival of
insurance under a yearly renewable term contract after it had been
converted to a policy of United States Government life insurance. .
. ."