STATEMENT OF J. O'C. ROBERTS, LEGISLATIVE REPRESENTATIVE OF THE BUREAU, CONCERNING THE CONSTRUCTION PLACED ON SECTION 303 OF THE WORLD WAR VETERANS' ACT AS AMENDED MARCH 4, 1925

The ruling of the office of the general counsel of the bureau on section 303, which has been discussed by the committee, was approved by the director only after careful consideration of the question at issue. It was appreciated that in many cases minors, incompetents, and persons who have been missing are adversely affected by this ruling. Howeyer, the phraseology of the amendment of March 4, 1925, which was made effective as of October 6, 1917, and thus speaks from that date, is so specific in is terms as in our opinion to permit of no other ruling. The pertinent part of section 303 is quoted in the foregoing opinion of the general counsel of the bureau. Attention is called to the fact, and under this section, which, as before stated, speaks as of October 6, 1917, if the insured failed to designate a beneficiary, or designated a beneficiary and such beneficiary predeceased him, or if the designated beneficiary survived him and died prior to receiving all the 240 monthly installments, the insurance is payable to the estate of the insured. A proviso, however, was added to the amended section to protect certain persons who were then in receipt of installments of insurance by reason of the happening of one of the contingencies before mentioned, but were receiving such payments under a prior statute somewhat similar to the amendment, but which provided a different method of distribution. This proviso reads, "That all awards of yearly renewable term insurance which are 'in course of payment' on the date of the approval of this act shall continue until the death of the person 'receiving such payments,' or until he forfeits same under the provisions of this act." It is clear that under this proviso the only cases which are protected are those wherein awards are in the course of payment and such awards are only to continue until the death of the person receiving the same or until he forfeits his right. This phraseology, in the opinion of the bureau, permits of only one construction, and that is that those persons are protected by it only where at the time of the enactment of the amendment payments were going to such person under a valid award. It must be remembered in this connection that the proviso is a qualification of the general enacting clause contained in section 303. Under the rules of statutory construction such provisos only protect those persons who are clearly within its terms. I do not see how it is possible to say that the rights of persons are protected by the proviso where no awards are in the course of pay

ments.

At the time this amendment was recommended to the committee which acted favorably on it the bureau reported that while the amendment in question would not affect the eventual liability of the Government it would accelerate the same, and further it would not adversely affect a large number of persons who might then be entitled. It was appreciated at the time the amendment was drawn that there might be some cases which would not be protected. The particular cases which have been adversely affected were not at that

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time contemplated. If the committee desires to further amend the law, attention is invited to the fact that already payments have been made under this amendment and a further amendment should specifically provide whether or not duplicate payments should be made. The question was raised in the committee as to the possible constitutionality of this amendment. This question is, of course, an important one, but it is not within the province of an administrative bureau to declare laws unconstitutional. At the present time there is before the Supreme Court of the United States a case involving the question of the right of the Congress to amend laws pertaining to war-risk insurance so as to affect policies which have previously matured. The decision by the court in such cases will, of course, have great effect upon this section, and I am this day suggesting to the director that no further payments be made under section 303 where a change of distribution will take place on any contract where the insured died prior to the passage of the amendment pending receipt of the Supreme Court ruling.

The CHAIRMAN. You would think, in a case of that kind, where a minor was being deprived of these payments, that whoever is in charge of that matter in the legal division of the bureau would at least save the rights of the minor and save this money and let the administrator of the estate sue for it.

Mr. MILLER. I must confess, Mr. Chairman, that I was a party to some of these discussions. Originally I was of the opinion that those reserved payments should be regarded as payments which were in course, but I finally came to the conclusion, on account of the unmistakable and definite language of the preamble of this section, that from the time of the passage of this act all payments not then in course of being made had to then pass to the estate of the insured.

The CHAIRMAN. Well, at least the bureau could have protected this minor by not paying it and compel somebody to bring it up in court, even if that is the proper construction.

Mr. MILLER. The bureau has a right to resort to an interpleader in case of doubt as to who shall take.

Mr. RANKIN. I think you will find that one of the fundamental principles of construction is that the law does not presume a forfeiture, and, even if it did, I can think of no rule of construction, even strained construction, that would hold that a minor forfeited his right to anything before he was incompetent under the law to make application for it.

Mr. MILLER. I think the minor had the right to these payments prior to the passage of the act of March 4, 1925, but I think that the new law deprived him of part of that prior existing right.

Mr. BROWNING. What is there in this law that shows he has forfeited it? That is what I do not understand. There is nothing in either of these provisions here that shows he has forfeited it.

Mr. MILLER. The law says that from the date of the approval of this act the amounts not in course of payment shall pass to the estate in cash. Now, if you can say that the amounts that have been reserved in the interest of people whose whereabouts are unknown, and which have been reserved in the interest of minors, are awards in the course of payment, we are in the clear; but otherwise, in reading this section, I do not think we are.

The CHAIRMAN. This section originated as a Senate amendment, did it not?

Mr. MILLER. I think it did not, sir. I think it preceded from the joint conference of the Veterans' Bureau and the service organizations. We wanted to do something to clear up estates and keep estates from having to be kept open for 15 or 20 years merely for the receipt of a few dollars per month of insurance. I think the section was written as well as we could at the time without previously having had experience as to how it would work. I am strongly of the belief now that it should be amended.

The CHAIRMAN. Are you not also of the belief that payments should be suspended to the estate and that that section should be construed by some court with the right of the bureau to interplead? Mr. MILLER. I would be glad to see it receive judicial determination.

Mr. RANKIN. In the first place, Mr. Chairman, this insurance belongs to these men or their estates. If we were coming here to pass a law now to deprive these men or their estates of the insurance on which they have been making payments for several years, clearly we would be abrogating a contract, and whatever law we should pass to that effect, in my opinion, would be unconstitutional. It was not intended when we passed that law to deprive these people of the benefits of their insurance.

Mr. MILLER. There is no actual deprivation there. All of the insurance is paid. It is just a question of who gets it, and how much. The CHAIRMAN. Are there any further questions?

(No response.)

The CHAIRMAN. Thank you for appearing, Representative Watson, and calling the attention of the committee to this situation. The letter you referred to will be made a part of the record. (The letter in question is as follows:)

UNITED STATES VETERANS' BUREAU,
Washington, October 29, 1925.

(In reply refer to: FABA, Knobloch, Frank, C-147581)

Hon. HENRY W. WATSON,

House of Representatives, Washington, D. C.

MY DEAR MR. WATSON: This will refer to your personal call in reference to the above-captioned case and your letter of October 27, 1925, quoting from a communication received by you from Mr. H. J. Alker, jr., respecting the distribution of an unpaid portion of insurance left by the decedent.

Prior to the passage of the March 4, 1925, amendment to the World War veterans' act (sec. 303), the bureau was authorized, upon the occasion of the death of an original beneficiary, to distribute the remaining unpaid installments under the policy to those persons within the permitted class who would have been entitled to the estate of the deceased insured under the intestacy laws of the State of last legal residence. The legislation authorizing this mode of distribution was in force and effect as of the date when awards of insurance were certified in favor of Marie Coyle, sister, and Fred, Herman, and Harry Knobloch, brothers of the deceased insured, each of these persons being awarded their distributive shares following the intestacy laws of the State of Pennsylvania at the rate of $5.75 per month effective from May 5, 1922, the insurance anniversary date following the death of the original beneficiary, the soldier's father, Herman Knobloch, deceased. This deceased father had been designated by the soldier as sole beneficiary under a $5,000 contract insurance policy and was paid, during his lifetime, pursuant to the terms of the original contract at the rate of $28.75 monthly. When the awards were

certified in favor of the four brothers and sister aforementioned, however, the fifth distributee, Charles Knobloch, had not as yet attained his majority, wherefore by letter of June 28, 1924, he was informed that in order to receive payments it would be necessary that a guardian be appointed over his estate. Under date of July 2, 1924, he replied that inasmuch as he would attain his majority on May 23, 1925, he would dispense with the appointment of a guardian and await a legal settlement in his own name as of said date. In this connection it will be appreciated of course that the bureau on the date that this arrangement was conceived, did not foresee the passage of amendatory legislation which would, in effect, preclude an award to Charles Knobloch as contemplated.

Section 303 of the World War veterans' act was, however, amended on March 4, 1925, a date prior to the contemplated award in favor of Mr. Knobloch, and reads as follows:

"If no person within the permitted class be designated as beneficiary for yearly renewable term insurance by the 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: Provided, That all awards of yearly renewable term insurance which are in course of payment on the date of the approval of this act shall continue until the death of the person receiving such payments, or until he forfeits same under the provisions of this act. When any person to whom such insurance is now awarded dies or forfeits his rights to such insurance, then there shall be paid to the estate of the insured the present value of the remaining unpaid monthly installments of the insurance so awarded to such person: Provided further, That no award of yearly renewable term insurance which has been made to the estate of a last surviving beneficiary shall be affected by this amendment: Provided further, That in cases when the estate of an insured would escheat under the laws of the place of his residence the insurance shall not be paid to the estate but shall escheat to the United States and be credited to the military and naval insurance appropriation. This section shall be deemed to be in effect as of October 6, 1917."

It will be noted that the first proviso of this section excepts from its application all awards of yearly renewable term insurance which are in course of payment on the date of its approval, whereby the awards to the insurance distributees of record on that date, the three brothers and the sister, are permitted to remain undisturbed. The distributive portion of insurance for Charles Knobloch, however, was not in process of payment. Consequently, it must be distributed in accordance with the terms of the legislation in effect as of the date when it is proposed to distribute it. Hence, the bureau has no recourse but to require administration over the soldier's estate and to pay in a lump sum to the administrator named the present value of 200 unpaid installments on account of one-fifth of the $5,000 insurance, the commuted value of said 200 unpaid installments amounting to $876.

The bureau appreciates the fact, as stated by Mr. Alker that under the Pennsylvania laws, moneys paid over to an administrator are distributable to the heirs at law. It is suggested in this connection, however, in accordance with the practice of the bureau in such cases, that the administrator inform the court of the fact that but for the amendment of March 4, 1925, the brother, Charles Knobloch, would have received all of the proceeds of his distributive share of the insurance; in other words he would have, like his brothers and sisters, been entitled to the sum of $5.75 monthly effective from May 5, 1922, until January 4, 1939, unless his death intervened. The bureau of course can in no way instruct the probate court in the premises or prevent the funds from being distributed to all of the heirs at law, to the probable deprivation of the brother, Charles. The bureau can, however, suggest that the position of this brother in the matter of insurance awards be brought to the attention of the court and the court informed that four-fifths of the insurance was distributed to the brothers and sisters of Charles Knobloch equally and that a one-fifth share would have been given to Charles Knobloch had a guardian been appointed for him at the time of distribution and distribution accomplished under the law as it existed before March 4, 1925. It will thereupon be the province of the court to determine the appropriate distribution of the funds in question.

Before an award of the unpaid insurance can be accomplished, it will be necessary that this office receive a certified copy of letters of administration over the estate of the soldier and proper evidence to show that the court has fixed bond after having been apprised of the amount of insurance involved. CHARLES E. MULHEARN,

Assistant director
(For the director).

The CHAIRMAN. We have before us Representative Andrew J. Hickey, of Indiana, who has something he desires to present to the committee. Mr. Hickey introduced House bill 6735, and we would be very glad to hear from you, Mr. Hickey.

STATEMENT OF HON. ANDREW J. HICKEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA

Mr. HICKEY. This bill, Mr. Chairman, proposes to amend section 200 of the World War veterans' act, and the only new language that is proposed is to be found on page 3, lines 11 and 18, with reference to chronic arthritis.

Now, the purpose of this amendment is to take care of a class of cases that it seems to be difficult for the medical authorities to agree upon-tuberculosis and chronic arthritis. I have had several of those cases myself, and I have one case in particular that was considered by the regional office at Chicago.

This young man entered the service at the age of about 20 years, and served until the close of the war. He was very strong, physically, at the time he entered the service; but from the time of his separation from the service he has been troubled with tuberculosis. Now, the doctors who have examined him, and one of them was formerly connected with the Mayo staff, say it is tuberculosis, and the X-ray readings would indicate that it is tuberculosis; but the doctor representing the bureau at Chicago, a specialist who is connected with the bureau, seems to take the position that it is chronic arthritis.

At any rate, the man has been practically unfit for work since his separation from the service, and it would seem to me that if the law is not capable of taking care of such a case, the language that I have proposed would bring his case and other like cases within its provisions.

That is practically all I have to say on the matter. It is a very simple proposition.

Mr. FITZGERALD. May I ask if difficulty has not arisen on account of a construction of the Veterans' Bureau that all cases of chronic arthritis are due to willful misconduct; that is, that arthritis is due to a venereal disease?

Mr. HICKEY. That is not involved in this case at all. The suggestion has never been made by any of the doctors who have considered this case.

The CHAIRMAN. I think, Mr. Fitzgerald, that it is involved in only a small percentage of them.

I am very glad, Mr. Hickey, that you brought this matter to the attention of the committee, and your suggestion will be considered by the subcommittee in charge of the drafting of this bill.