Court Opinion

ID: 6900893
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:54:48.489401+00
Date Added: 2024-06-11T16:06:09.922246
License: Public Domain

HUTCHESON, Circuit Judge
(dissenting).
When this case was here before on Moskowitz’s appeal,1 we said, “The contention now made is that under the law and the terms of the policy, the extended insurance operated notwithstanding the indebtedness against the policy, the indebtedness being carried at interest until the policy matured by death. This seems an unreasonable construction, since the extended insurance is supposed to be purchased by the cash surrender value, and it would leave the indebtedness to increase while the surrender value which was a security for the indebtedness is exhausted by the extension of the insurance. The construction ought not to prevail unless required by the applicable language.”
Now with one new judge on the court, this view seems to be abandoned, in the face of the terms of the policy expressly declaring in 5(a) : that “The said cash surrender value * * * shall be the reserve * * * less any indebtedness under this policy.”; and in 5(c) : “* * * this policy shall be extended automatically as term insurance * * * for such time from the due date of the premium unpaid as the cash surrender value will purchase when applied as a net single premium at the attained age of the insured.” (Emphasis supplied). Despite the views announced in the former opinion, the majority as now constituted, adopts the view deprecated there, a view which “would leave the indebtedness to increase while the surrender value which was a security for the indebtedness is exhausted by the extension of the insurance.”
Too much is said in the argument of the appellee and in the opinion of the majority about the beneficient purposes of Congress in the enactment of Sec. 304, World War Veterans’ Act, as amended in 1926. Too little is said about the clear and express conditions of the insurance contract which was issued to the veterans, too little about the long continued and uniform administrative construction2 accorded the act in dispositions under it by the Veterans’ Bureau without any change in the act being made or attempted to be made in Congress.
“This administrative interpretation over a period of 17 (here 20) years, controlling the settlement of thousands of cases is entitled to great weight, ‘and such construction is not to be overturned unless clearly wrong or unless a different construction is plainly required,’ ” United States v. Citizens Loan & Trust Co., 316 U.S. at page 214, 62 S.Ct. at page 1029.
I agree fully with what the United States says in its brief:
“If Section 304 indebtedness can only be satisfied in the event the insurance matures by total permanent disability or death, then it is submitted that the statutory requirement set forth in Section 304 (Appendix, Infra), that the premiums, with interest, be either paid or carried as an indebtedness against the insurance to be deducted in any settlement, will obviously be defeated in every case where an insured exercises his right to surrender the policy for cash after carrying it for a long period of years until the cash value (reserve plus dividend accumulations) almost equals the amount of the insurance, or carries the insurance on one of the endowment plans and it matures as an endowment. Manifestly, the Congress had no intention of according such preferential treatment to veterans who have not paid the back premiums, with interest, or of waiving the statutory requirement that the premiums be paid in such cases. And, if this decision is upheld, it is reasonable to suppose that policyholders with outstanding Section 304 liens (of which there are 2,950 active at the present) may abandon any attempt to liquidate this indebtedness where the cash surrender value almost equals the amount of insurance, or where insurance is about to mature as an endowment.” I particularly agree with what is said there as to the effect of the decision below. I add: If the opinion of the majority stands it will operate as a gross discrimination against, (1) veterans who have paid their back premiums in cash; (2) veterans who, having *876304 liens on their policies, have, by paying their indebtedness, acquired a cash surrender value; and (3) those veterans who, under the long continued interpretation of the Veterans’ Bureau, have lost their policies because, with the indebtedness against them, they have had no cash surrender value with which to purchase extended insurance.
What the majority holds is in effect that Congress, by granting reinstatement with Sec. 304 liens, has agreed not only to give the veteran an opportunity to keep his policy in force by paying premiums but also to waive security on the reserve for the indebtedness. I do not contend that Congress could not have done this. I think it clear, however, that nothing in the act shows any such intention. The policy issued under Sec. 304 made clear provision for deducting the indebtedness from the reserve in any calculation of the cash surrender value, and nothing in the act accomplishes a repeal or waiver of this provision. On the contrary, it is plain, I think, that Congress, having in mind the various settlements accorded in the policy, cash surrender value, paid up insurance, extended insurance, provided that “the amount of unpaid premiums with interest as provided in this section shall be placed as an interest-bearing indebtedness against the insurance, such -indebtedness to bear interest at the rate of 5 per centum per annum, compounded annually, to be deducted in any settlement thereunder”. The settlement made applicable here under the automatic terms of the policy was the settlement of extended insurance. The indebtedness being greater than the reserve, when the premium was not paid under the precise terms of the policy, there was a settlement for such extended insurance as the reserve less indebtedness would buy, and this amounting to nothing, there was not, there could not have been, any extended insurance. This being so, I cannot understand how the majority can hold that the policy continued in force for three years after it had lapsed for non-payment of premiums, though there was, under the unchanged provisions of the policy, no cash surrender value with which to purchase extended insurance.
When the case was here before, we said of a similar contention there made, “This seems an unreasonable construction, since the extended insurance is supposed to be purchased by the cash surrender value, and it would leave the indebtedness to increase while the surrender value which was a security for the indebtedness is exhausted by the extension of the insurance. The construction ought not to prevail unless required by the applicable language.” I am of that opinion still, and I respectfully dissent from the affirmance of the judgment.

 Moskowitz v. United States, 5 Cir., 145 F.2d 196, 197.

 United States v. Citizens Loan & Trust Co., 316 U.S. 209, 62 S.Ct. 1026, 86 L.Ed. 1387; United States v. Jackson, 280 U.S. 183, 193, 50 S.Ct. 143, 74 L.Ed. 361.