Opinion
Decided March 6, 1933.
War risk insurance — No vested right in beneficiaries under 1917 Act — Congress empowered to amend statute to operate retroactively — Under 1925 Act, unpaid insurance becomes assets of insured's estate — Government insurance claim passed under insured's will bequeathing personal property — Installments payable to legatee for life — Commuted value payable to administrator for benefit of insured's heirs after legatee's death.
1. Under 1917 War Risk Insurance Act confining beneficiaries to certain classes, no class had vested right to insurance, and Congress had power to amend statute and make change retroactive (40 Stats. at L., 409, Section 400 et seq.; Title 38, Section 514, U.S. Code).
2. Under 1925 War Risk Insurance Act, all unpaid insurance becomes assets of estate of insured on his death, and, in absence of will, passes to his heirs like other personalty (Title 38, Section 514, U.S. Code).
3. Will whereby testator bequeathed to his brother "all money and personal property" he possessed held to include testator's claim against government for war risk insurance (Title 38, Section 514, U.S. Code).
4. Under soldier's will bequeathing all his personalty to his brother on soldier's death, installments under war risk policy were payable to his brother during his life, and on the brother's death commuted value was payable to soldier's administrator for benefit of legatee's widow and children (Title 38, Section 514, U.S. Code).
ERROR: Court of Appeals for Lucas county.
Mr. George N. Fell, Mr. James V. Easley and Mr. C.B. Thornton, for plaintiffs in error.
Messrs. Smith, Beckwith, Ohlinger Froehlich, for defendant in error.
The original action was begun by E.C. Unckrich, as administrator with the will annexed of the estate of Frank D. Ferneau, deceased, for the purpose of having the court construe the will and determine the rights of the parties to the commuted value of certain war risk insurance paid by the United States government to the administrator of said deceased. The trial court rendered a judgment and decree favorable to the contentions of Unckrich, administrator, plaintiff in that court, and from that judgment error is prosecuted.
A copy of the will of Frank D. Ferneau is attached to the petition, and, after directing that his debts be paid, it reads as follows: "2. After which I will bequeath to my brother S.W. Ferneau all money personal property I possess."
This will was duly probated on May 21, 1919.
The case was submitted to the trial court on an agreed statement of facts, from which it appears that Frank D. Ferneau served during the World War as a soldier of the United States, and was insured under the War Risk Insurance Act of October 6, 1917 (40 Stats. at L., 409, Section 400 et seq.), in the sum of $10,000. He died on May 18, 1919, having duly designated his brother S.W. Ferneau, as the beneficiary of the insurance. Frank D. Ferneau never married, and never had any children. He left surviving him as his next of kin his brother S.W. Ferneau, a brother Otho Ferneau, a sister Minnie Wilson, and Marjorie Ward, daughter and only child of a deceased sister. S.W. Ferneau died on July 22, 1930, and left surviving him a widow, Laura Ferneau, and two children. After the death of Frank D. Ferneau, the monthly installments of war risk insurance were paid to S.W. Ferneau, the beneficiary of the insurance, until his death. Soon after the death of S.W. Ferneau the government paid the commuted value of the war risk insurance, amounting to $5,211.40, to the administrator de bonis non of the estate of Frank D. Ferneau. This fund is claimed under the will of Frank D. Ferneau by the administratrix of the estate of S.W. Ferneau, and is claimed as intestate property by the surviving brother, sister, and niece of Frank D. Ferneau.
This case involves the federal statute providing for war risk insurance and a construction of the will of Frank D. Ferneau, deceased. As originally enacted by Congress, the beneficiaries of war risk insurance were confined to certain permitted classes, specified in the statute. We think it clear, however, that no class had a vested right to the insurance, and it is settled that Congress had power to amend the statute and make the change retroactive. The statute, as amended March 4, 1925 (Title 38, Section 514, U.S. Code), reads as follows: "If no person within the permitted class be designated as beneficiary for yearly renewable term insurance by 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 were in course of payment on March 4, 1925, shall continue until the death of the person receiving such payments, or until he forfeits same under the provisions of this chapter. When any person to whom such insurance was awarded prior to such date 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 made to the estate of a last surviving beneficiary prior to March 4, 1925, shall be affected by the foregoing provisions. 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."
By its terms, the statute shall be deemed to be in effect as of October 6, 1917, a date prior to the death of Frank D. Ferneau.
This statute has been many times before the courts, and it has been determined that by its provisions the earlier rule which limited the benefit of the unpaid insurance to persons within certain designated classes has been abandoned by the present statute, and the estate of the insured substituted as the payee. Under this statute all unpaid insurance becomes assets of the estate of the insured upon his death, and, in the absence of a will, would, like other personal property, pass to his heirs. As has been well said in Mason's Administrator v. Mason's Guardian, 239 Ky. 208, 39 S.W.2d 211: "This sum is a part of the personal estate of the soldier, it is payable to and is receivable by his personal representative, and, with the exception of not being subject to his debts, to be administered just like any other personal estate of the soldier * * *."
It is apparent from the will of Frank D. Ferneau that it was his intention to bequeath to his brother S.W. Ferneau all the money and personal property which the testator possessed. The language manifestly includes his claim on the government for the war risk insurance, and he did not die intestate as to that. Upon the death of the soldier in 1919, the installments were payable to the designated beneficiary, S.W. Ferneau, during his life, and upon his death the commuted value would be payable to the soldier's administrator for the benefit of the widow and children of the legatee, S.W. Ferneau.
A great many cases construing the war risk insurance statute have been determined by the courts, of which we cite only a few: Ogilvie's Estate, 291 Pa. 326, 139 A. 826; Singleton v. Cheek, 284 U.S. 493, 52 S. Ct., 257, 76 L. Ed., 419, 81 A.L.R., 923; White v. United States, 270 U.S. 175, 46 S. Ct., 274, 70 L. Ed., 530; Gunn v. Yancey, 225 Mo. App., 1231, 33 S.W.2d 1029; Coleman v. Harrison, 168 Ga. 859, 149 S.E. 141; In re Estate of Tiffany, 137 Misc. 627, 244 N.Y.S., 255; In re Estate of Jones, 88 Colo. 386, 297 P. 990; Palmer v. Mitchell, Admr., 117 Ohio St. 87, 158 N.E. 187, 55 A.L.R., 566.
The trial court held that the administrator of the soldier should pay the amount of the fund remaining to the administratrix of S.W. Ferneau, deceased. That holding is correct, and the judgment will be affirmed.
Judgment affirmed.
WILLIAMS and LLOYD, JJ., concur.