United States v. Griffin (216 F.2d 217, 1954)

SANBORN, Circuit Judge.

George Griffin, Sr., the principal beneficiary under a policy of National Service Life Insurance issued to his son George Griffin, Jr., while on active duty in the Army, brought this action on March 28, 1952, against the United States upon the claim (previously disallowed by the Veterans Administration) that the policy was in force at the time the insured died on March 24, 1951, while absent without leave from his assigned station. During the pendency of the action, George Griffin, Sr., died and Rosa Griffin, administratrix of his estate, was substituted as plaintiff.

Two issues were presented by the pleadings and tried to the court: (1) whether the insured was guilty of desertion and had thereby forfeited his rights under the policy, and (2) whether the policy had lapsed for nonpayment of premiums. The court found in favor of the plaintiff on both issues and entered judgment against the United States for the proceeds of the policy, 115 F.Supp. 509. The Government has appealed, but challenges only the court’s ruling that the policy had not lapsed for nonpayment of premiums at the time the insured died.

The question presented for decision is whether, in view of the insured’s allotment for payment of premiums, uncollected active-service pay earned by him prior to the time he absented himself without leave from his assigned military station was to be applied to continue his National Service Life Insurance in force during the period of such absence without leave.

The facts with respect to that question are stipulated, and, so far as essential, may be summarized as follows:

On October 11, 1950, George Griffin, Jr., a member of the Army Enlisted Reserve Corps, entered upon extended active duty. On October 13, 1950, he made an application for level-premium five-year term National Service Life Insurance in the amount of $10,000, naming his father, George Griffin, Sr., as principal beneficiary, and his mother, Rosa Griffin, as contingent beneficiary. Under the heading in his application form, “Method of Payment of First Premium (Check one),” he checked: “Allotment from Advanced Active Service Pay, under the Provisions of Public Law 451, 77th Congress. Month Allotment Effective: Nov. 50 (2 ded.) [two deductions].” There was also a check mark before “Allotment from Active Service Pay. Month Allotment Effective: Nov. 50 (2 ded.)” On the day he made his application, the insured executed Standard Form DD 234 authorizing an allotment from his pay to cover a premium of $7.20 a month, referring specifically to the premiums for November and December, 1950. The insured’s application was approved, effective November 1, 1950, and an allotment was made from thé insured’s service pay for the November and December premiums. This was a so-called Class “N” allotment.

On November 28, 1950, the insured absented himself without leave from his assigned station, Camp Stoneman, California, and did not return to military duty at any time prior to his death on March 24, 1951, which occurred at the home of his parents in Clarksville, Arkansas. At the time he went AWOL he was placed in a nonpay status, but was credited with $64.31 in accrued service pay for the period November 1, 1950, to November 28, 1950. For obvious reasons, the insured did not apply for or collect this pay. On February 28, 1951, Capt. William L. Otis, at Camp Stone-man, pursuant to Army Special Regulation 35-1900-5, October 10, 1950, executed Form DD 234 for the purpose of terminating the insured’s allotment as of November, 1950. This form recited that the “Final Deduction to be Made” was “Dec. 1950,” and the “Reason” “AWOL fr. 28 Nov. 1950.” On March 6, 1951, the allotment was discontinued as of the end of November, 1950.

Special Army Regulation 35-1900-5, relative to discontinuing allotments, contains the following pertinent provisions:

“1. Action upon discontinuance.

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The provisions of the Regulation of the Veterans Administration pertinent to the instant case are as follows (Section 8.18 of 38 C.F.R., 1949 Ed.):

“National Service life insurance will lapse and terminate while the insured is in the active military or naval service of the United States:

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“(b) * * * if the service department shall discontinue the allotment [for payment of premiums] and premium is not otherwise paid prior to expiration of the grace period.”

If the insured’s allotment was lawfully discontinued by the Army as of November 30, 1950, his National Service life insurance lapsed for nonpayment of premiums on January 1, 1951, pursuant to the above quoted regulation, unless it is inconsistent with the National Service Life Insurance Act. Regulations of the Veterans Administration, if consistent with that Act, have the force of law and are a part of the contract of insurance. Jones v. United States, 8 Cir., 189 F.2d 601, 602.

Since the discontinuance of the insured’s allotment was not a forfeiture of his insurance, the controlling question, we think, is whether the Army regulation pursuant to which his allotment was terminated, and the regulation of the Veterans Administration providing for the lapse of his policy if the allotment was terminated and if premiums were not otherwise paid, are invalid.

The Veterans Administration, in adopting the regulation providing for the lapse of policies where allotments had been discontinued, seems to have done nothing more than Congress did when, in amending § 802 (m) of Title 38 U.S.C., § 602 (m) of the Act, it recognized that the Army, pursuant to its regulations, was discontinuing the insurance allotments of servicemen who were in a non-pay status. We think the regulation of the Veterans Administration is valid.

That leaves for consideration the question whether the Army was obliged to continue in effect the insurance allotment of an insured who went AWOL but had to his credit uncollected accrued service pay, and to deduct insurance premiums from such pay so long as it lasted. That is the troublesome question in this case.

From the viewpoint of the District Court, § 802(m) (1) of Title 38 U.S.C.A., permitting an insured to elect to have premiums deducted from active-service pay, means that so long as he has service pay current or accrued the Government must deduct premiums, and that only when all accrued pay is exhausted can his insurance allotment and the payment of premiums be discontinued. From the viewpoint of the Government, an insurance allotment is an authorization to deduct monthly premiums from monthly pay, and when monthly pay ceases there is no obligation and no authority to continue premium payments out of accrued pay from which premiums have already been deducted for the months the pay was earned. The question whether the Army regulation is consistent with § 802 (m) (1) of Title 38 U.S.C.A. is not free from doubt, and there can be an honest difference of opinion about it.

The Army regulation requiring the discontinuance of the allotments of servicemen who absent themselves without leave is not an unreasonable one, has apparently been long established, and has received recognition from Congress. We feel justified in resolving in favor of its validity and effectiveness whatever doubts we might otherwise entertain.

If the insured had made no insurance allotment his accrued service pay would not have been available to continue his insurance in force, for the reasons stated in Mikell v. United States, 4 Cir., 64 F.2d 301, 302, in which it was said that “an insured who defaults in the payment of premiums on a government policy is not entitled to have his insurance continued in force merely because in some of its various activities, not connected with insurance, the government is indebted to him.” The case of United States v. Morrell, 4 Cir., 204 F.2d 490, 36 A.L.R.2d 1374, certiorari denied 346 U.S. 875, 74 S.Ct. 128, is not to the contrary. In that case it appeared that the insured, before his death, had paid premiums which he was entitled to have waived and which, if applied to his policy, were sufficient in amount to have carried it in force until his death. The credit to which the insured was held entitled in that case constituted, in effect, an overpayment of premiums and was directly related to his insurance contract.

The District Court was of the opinion that the cases holding that a fund not related to insurance may not be applied to the payment of premiums are inapplicable to the instant case because the “plaintiff is only seeking to have the accrued active service pay, which is the fund specified by statute and by the insured’s application for insurance, used for the payment of premiums.” But if the insured’s insurance allotment was lawfully discontinued as of November 30, 1950, after he had absented himself without leave, his accrued service pay would, we think, be no more related to his insurance than it would have been had he made no such allotment, and was not available for the payment of premiums.

The plaintiff contends that because after the insured’s death the Secretary of the Army issued to the father of the insured a Certificate of Honorable Service, which is issued to the nearest of kin in recognition of services rendered by those who die in line of duty while in active military service, that excused the insured’s absence without leave and nullified the termination of his allotment.

The insured, at the time of his death, had either a matured policy or a lapsed policy. What happened after his death had, we think, no materiality relative to' the question before us for review.

Our conclusion is that the judgment appealed from should be reversed. The question of the validity of the regulations applicable to this case is important to the plaintiff and to the Government. The plaintiff, if she elects to do so, may apply to the Supreme Court for certiorari without payment of any further Clerk’s fees or costs in this Court.

The judgment appealed from is reversed and. the case is remanded with directions to enter judgment for the United States.