Opinion
No. 423.
December 14, 1928.
Wm. R. Misbaugh and F.W. Fickett, Jr., both of Tucson, Ariz., for plaintiff.
John B. Wright, U.S. Atty., of Tucson, Ariz., and B.E. Marks, Asst. U.S. Atty., and J.P. Gross, Regional Attorney, Veterans' Bureau, both of Phœnix, Ariz., B.L. Guffy, Special Counsel for Veterans' Bureau, of Washington, D.C., and L.B. Dunn, Special Counsel, for Veterans' Bureau, of Washington, D.C., for the United States.
At Law. Action by Fannie Underwood Larsen, executrix of Orville Larsen. deceased, against the United States. Judgment for plaintiff.
The plaintiff seeks to recover on a $10,000 war risk insurance policy. The case was tried before the court, a jury being waived, on written stipulations of the parties, filed with the clerk. The court makes the following findings:
1. On March 26, 1918, Larsen enlisted in the military service of the United States and was thereafter granted the war risk insurance sued on. While in service in active combat in the St. Mihiel offensive in France, he inhaled poisonous gases, suffered hardship and exposure, and upon his discharge on the 5th day of April, 1919, was sick and in weak physical condition, unable to perform, except very light service, and was rated as 25 per cent. disabled by the Veterans' Bureau.
2. The policy lapsed, for nonpayment of premium, April 30, 1919.
3. Upon discharge he was unable to work, but on July 18, 1919, he secured position as clearings clerk in the Corn Exchange Bank of Chicago, but did not feel physically fit and requested that he be given position as messenger so as to afford some outdoor work, but in October, 1919, had to quit, and was during all the time subsequent thereto, to the time of his death, in the early part of 1928, unable physically to perform any labor or to do anything towards earning a livelihood.
4. On November 8, 1919, diagnosis of Larsen on file in the Veterans' Bureau shows chronic parenchymatous nephritis and was rated by the Bureau as temporary, total disability as of November 3, 1919. April 30, 1920, diagnosis shows temperature 101, extreme pain in right chest, "whole right chest is dull. X-ray of chest shows entire right lung cloudy." May 5, 1920, diagnosis temperature 101, extreme pain in right chest. October 14, 1920, he was rated by the War Risk Insurance Division, "The degree of vocational handicap is major." September 15, 1921, was rated as temporary, total disability from January 8, 1921. April 4, 1922, reported by medical director of Olive View Sanatorium as not feasible for vocational training. July 24, 1922, report diagnosis tuberculosis, pulmonary, chronic — "apparently arrested." August 12, 1922, diagnosis tuberculosis, pulmonary, chronic, not able to resume pre-war occupation. April 6, 1923, rated temporary, total from August 12, 1922. October 30, 1923, rated permanent and total from August 31, 1923, and total, permanent, disability rating continued until his death.
$2,000 of the policy was reinstated on his application of October 24, 1921, in which he stated: "I have continuously had a rating temporary, total disability since Nov. 3, 1919, and therefore a patient at the United States Hospital, No. 51, Tucson, Ariz." January 24, 1922, he stated: "I have been advised to reinstate insurance in the amount of $2,000 at this time. It is my intention to reinstate the policy of $8,000 at a later date." October 1, 1922, he applied for conversion of the $2,000, reinstated, term policy into 20-payment life policy, and premiums were paid until death. Upon death the amount of $2,000 was paid to the beneficiary. Defendant paid the monthly installments accruing upon the converted insurance from October 31, 1923, until January, 1927.
Larsen was unable to do any work, and the evidence is clear and convincing that his impairment was total at the date of his discharge, and that it presented a condition of mind and/or body which rendered it reasonably certain that his disability would continue to be total throughout the remainder of his lifetime, and that his impairment rendered it impossible for him to engage in any employment that would bring him continuous, gainful results, something dependable for earning a livelihood.
From the facts stated the plaintiff is entitled to recover all of the due payments of the policy, and the other payments in accordance with the provisions of the policy; that credit should be given to the defendant for the amounts paid either to the deceased in his lifetime or his representative since death. The surrender of the policy and changing the form of $2,000 of the policy by reinstating and then converting it into a term policy does not estop the plaintiff in this action.
There can be no doubt as to the fact that the deceased was totally and permanently disabled on the date of his discharge. This condition matured the policy, and he became entitled to the payment of 240 monthly installments of $57.50 each from the date of discharge.
Is the plaintiff estopped by the assertion of the equitable defense by the application of the deceased for reinstatement of $2,000 of the policy and conversion thereof into term insurance, surrendering the $10,000 policy and receiving the reissued policy, and accepting monthly payments under the provisions of the new policy from the date disclosed in the record? Was the whole $10,000 policy satisfied by the acceptance of the new $2,000 policy? This burden is on the defendant to establish by a fair preponderance of the evidence, and this has not been done.
The condition of the deceased was known to the Veterans' Bureau. He was in United States hospitals. All medical diagnoses were in its possession, and all show the deceased's physical condition and that he was not fit for vocational training or for any service; and none show improvement except that of July 24, 1922, which says tuberculosis, pulmonary, chronic, "apparently arrested," but in less than three weeks thereafter deceased was rated temporary, totally disabled. The defendant upon the record must have known deceased's condition. The fact deceased did not know his condition, and relied upon the Bureau in his application for reinstatement and conversion, cannot change the plaintiff's status. The defendant on permanent, total disability was bound to pay by the terms of the policy, the legal obligation having matured. The liability became fixed in the full amount, and acceptance of a part of the due payment, even though it may have been through a reissued policy in lieu of the old, does not change the status nor bar plaintiff's claim to the balance. There was no benefit of right accruing to the plaintiff or damage to the defendant. Brooks v. White, 2 Metc. (Mass.) 283, 37 Am. Dec. 95. The defendant lost nothing, Struck Co. v. Slicer, 23 Ga. App. 52, 97 S.E. 455; Borden Co. v. Vinegar Co., 7 Ala. App. 335, 62 So. 245; La Moure v. Cuyuna-Mille Lacs Iron Co., 147 Minn. 433, 180 N.W. 540; and the plaintiff gained nothing. See, also, United States v. Skinner Eddy Corp. (D.C.) 28 F.2d 373, 381. The defendant paid only a part of what was due to plaintiff. The plaintiff did not know his legal status and right, and I think upon the record the court must find relied upon the Bureau. There is no suggestion in the record that deceased was consciously unfairly dealt with by the Bureau or overreached. On the contrary, it shows that deceased was given much consideration. The Bureau has its problems and must administer its trust guardedly and conscientiously. It cannot, nor may the court, distribute largess. The fact is, however, deceased had due $10,000, and the defendant seeks to satisfy it by the payment of $2,000, and in this the plaintiff would be greatly wronged. This court, in United States v. Skinner Eddy Corp., supra, at page 382 of 28 F.2d, said: "Blackstone has said: `There is no wrong without a remedy.' Law or equity must remedy a wrong unfolded before it. Wrong, in truth, sometimes appears in the habiliments of right. The law blossoms upon the soil of wrong; but, if the law is barren, the virtue of equity must unfold into the fruitage of right. This asserted wrong may be within the garb of right, `so stated in the bond,' but it does not disclose the true intent, and equity must unfold and fix the true status, and place the agreement within the intent and spirit of the parties. * * * The Court should look beyond the strict letter of the correspondence to the intent, in view of the unconscionable result." In the instant case the law is potent. All payments that were made were due to Larsen or his legal representative, and defendant was bound to make them. There was no consideration for the new policy. Fire Ins. Ass'n v. Wickham, 141 U.S. 564, 12 S. Ct. 84, 35 L. Ed. 860.
The answer seeks enforcement of the reissued $2,000 converted policy instead of the $10,000, and to prevail the defendant must clearly show that the issuance is free from mistake or illegality, perfectly fair, equal, and just, not only in its terms but in the circumstances, Nevada Nickel Syndicate v. National Nickel Co. (C.C.) 96 F. 135, at page 145; and where it is "unconscientious or unreasonable," Cathcart v. Robinson, 5 Pet. (30 U.S.) 264, 8 L. Ed. 120, or the disproportion so great as to shock the conscience, Marks v. Gates (C.C.A.) 154 F. 481, 14 L.R.A. (N.S.) 317, 12 Ann. Cas. 120, or where the disparity is gross, equity will not enforce relief, Pasco F.L. Co. v. Timmermann, 88 Wn. 112, 152 P. 675. All of the disclosed circumstances show that this claim, as said by the Supreme Court in Piatt's Adm'r v. United States, 89 U.S. (22 Wall.) 496, 22 L. Ed. 858, "* * * is utterly destitute of merit and repugnant to the plainest dictates both of law and justice."
Judgment will be awarded in favor of the plaintiff for the amount due on the policy, less the payments which have been received, and the remainder to be paid in accordance with the provisions of the policy. The premiums paid by the deceased must be held to have been voluntary payments, and may not be recovered.