106 F.2d 888 | 5th Cir. | 1939
The plaintiff-appellant, William W. Jones, while in the naval service was issued a war risk insurance policy on Feb. 1, 1918, which lapsed for non-payment of premiums March 1, 1919. In June, 1925, he obtained a reinstatement of it, and on July 1, 1927, a converted policy was issued for the same amount. This lapsed for non-payment of premium May 1, 1928, but on an application dated Oct. 4, 1928, was reinstated on Jan. 1, 1929. On Feb. 11, 1931, claiming total and permanent disability, Jones sought payment on the policy. The claim was finally rejected in 1933 on the ground that the first reinstatement had been fraudulently obtained. Suit was brought on the claim and tried to a jury on the sole issue of fraud. The evidence was a stipulation of facts supplemented by testimony. Jones made motions to exclude all the evidence of fraud prior to the conversion of the policy and its' subsequent reinstatement because these were new contracts, and if any previous fraud had existed the defendant was fully aware of it; and if the reinstatement as sought ought not to stand Jones was and is entitled to a reinstatement on an alternative plan provided by law under which the asserted fraudulent misrepresentations would be immaterial. These motions were overruled, and this judgment constitutes the only error specified. The jury found for the defendant, judgment was entered, and appeal taken.
The evidence touching the fraud was in brief this: In his application for reinstatement in 1925 Jones sought to reinstate by showing good health and paying two premiums. He stated in answer to questions that he had not consulted a physician about his health since the lapse of the insurance in 1919 except for influenza and a tonsil operation in 1924, naming the physicians. He stated also that he had never been treated for any disease of brain or nerves, or genito-urinary organs, and the medical examination specifically stated he had never had syphilis. The truth, as stipulated, was that in 1916 he had contracted syphilis while in the navy but .ashore at the Virgin Islands, had been
The deceit was not rendered harmless by the provisions of law found in 38 U.S.C.A. § 515, permitting a reinstatement when the applicant is not in good health if his “disability is the result of an injury or disease, or of an aggravation thereof, suffered in the active military or naval service during the World War”, provided he pays all back premiums with 5% interest, or charges them as a lien against the policy. Thesé provisions contemplate “acceptance of the application for reinstatement” after an investigation of these conditions, which is to say, a determination by the Director of the Veterans Bureau, now styled the Administrator of Veterans Affairs, that the conditions are established. The Director’s action is final, is not reviewable in court, and-cannot be substituted by court action. Meadows v. U. S., 281 U.S. 271, 50 S.Ct. 279, 74 L.Ed. 852, 73 A.L.R. 310. The Director here did not make such findings nor give an acceptance based on them. The insured elected to seek reinstatement on the basis of good health, and thus to avoid the uncertainty of establishing service connected disability and to save the six years of back premiums that would have to be paid. His fraudulent effort succeeded. When detected after total and permanent disability had supervened, he should not be treated with such favor as to substitute the other form of reinstatement. Sect. 515 names as one condition that he shall not be totally and permanently. disabled when reinstated. While it does' appear that by a rating sheet dated Jan. 8, 1932, he was rated as entitled to. compensation from July 11, 1924, for a service connected disability of general paresis, this is not the equivalent of ah “acceptance” or “approval” on that ground of an application for reinstatement of his insurance as of June, 1925. Jones, a man of high intelligence as shown by this record, presented his application on the basis of good health, concealing his disability and saving his back premiums. He should not now be treated as though he had revealed his condition, proved that it was service connected, and had paid those premiums. The very generous provisions of the War Risk Insurance Act are somewhat paternal, but the United States are entitled to good faith from the insured. Fraud is expressly excepted from the incontestible clause.
The- next contention is that the deceit soon became known in the Veterans Bureau and with that knowledge the policy was converted in 1928 and the converted policy was reinstated in 1929 and premiums were collected, thus waiving the fraud or estopping the United States to assert ■ it. As to that the facts are these: On Oct. 28, 1925, Jones, having applied for compensation because of deafness, was examined by a Veterans Bureau doctor in Atlanta and diagnosed as having cerebrospinal syphilis and early paresis. He was treated in a Veterans hospital at Augusta until March, 1926. Subsequent examinations occurred at long intervals up to 1933, with findings of paralysis and paresis. The stipulation shows that these examinations were made by Veterans Bureau physicians in Atlanta and Augusta and what the findings were." It does not show what was done with the reports, or what officers of the Veterans Administration saw them prior to 1932 or 1933, when the Administrator and his Board of Appeals rejected this insurance claim on account of them, and cancelled the policy and tendered back the premiums paid since reinstatement. It is argued that the Director of the Veterans
If the reinstatement of 1925 was invalid, the converted policy must fall. The court below .rightly held that a verdict might be lawfully rendered for the defendant, and did not err in refusing to rule out the evidence .of the fraud in 1925.
Judgment affirmed.