Opinion
No. 20255
Decided June 15, 1927.
War risk insurance — Congress empowered to change class of beneficiaries — To whom insurance payable upon soldier's death — Beneficiary without vested interest preventing Congress from enacting later legislation — Giving balance due at beneficiary's death to insured's estate — Designated beneficiary survived soldier but died before all installments payable — Present value of insurance payable to soldier's estate — And distributed as intestate property as of date of soldier's death.
1. There is no constitutional inhibition against the power of Congress to pass the various acts, including that approved March 4, 1925, relating to the Federal Government's War Risk Insurance of soldiers engaged in the World War. Congress had the power to change the class of beneficiaries to whom the insurance should be paid upon the soldier's death. If, in his certificate of insurance, the soldier had designated a beneficiary prior to the adoption of said Act of March 4, 1925, said beneficiary has no such vested interest therein as will prevent Congress from enacting later legislation giving the balance of the insurance due at the beneficiary's death to the estate of the insured.
2. Under Section 303, of the Act of Congress, approved March 4, 1925, if the designated beneficiary survives the insured and dies prior to receiving all the installments of insurance payable, the present value of the insurance thereafter payable must be paid to the estate of the insured soldier and, in case of his intestacy, distributed according to the law of descent and distribution in force at the date of the soldier's death.
ERROR to the Court of Appeals of Belmont county.
One Basil Palmer, an American soldier, resident of Ohio, died on July 18, 1918, while a soldier in France. At the time of his death he left surviving him a father, Isaiah Palmer, and a brother, William Ross Palmer, who was designated as his beneficiary. He had no other next of kin. On July 19, 1919, the federal government made an award or allotment of war risk insurance to the then surviving brother, as Basil's named beneficiary, under the Act of Congress of October 6, 1917, allotting him insurance payable in the sum of $57.50 per month from July 20, 1918, to July 20, 1938. A provision was attached to the award that, in the event of the death of William Ross Palmer prior to 1938, any remaining payments of insurance were to be paid to those persons within the permitted class of spouse, child, grand-child, parent, brother, and sister of the deceased soldier as would under the laws of the state of his residence be entitled to his personal property, in case of intestacy.
The beneficiary, William Ross Palmer, died October 11, 1924, leaving surviving him his widow, Stella Palmer, and his father, Isaiah Palmer. His widow, Stella Palmer, was appointed his administratrix. Between the period of Basil's death and William Ross' death the father remarried, and the three minor plaintiffs in error were born of said marriage; the youngest being born June 24, 1926.
On June 24, 1925, Herbert W. Mitchell was appointed administrator of Basil's estate, and on August 28, 1925, the unpaid balance of said insurance, amounting to a lump sum of $7,570, was paid to Mitchell as administrator of Basil. Basil's administrator filed his action in the court of common pleas alleging these facts, and asked direction of the court as to the distribution of the funds in his hands. Answers were filed by Stella Palmer, as administratrix of William Ross Palmer, deceased, claiming that her decedent, William Ross Palmer, was the sole heir of Basil at the time of the latter's death, and that she as his administratrix was entitled to all the assets belonging to Basil's estate. She also filed her answer as widow, claiming that, as such, there being no children, she was the sole heir of William Ross Palmer, and entitled to the estate and the fund in the hands of Basil's administrator. The minor defendants answered by a guardian ad litem.
The Court of Common Pleas held that the father and the three oldest minor children were entitled to the fund, and that the time of the death of the beneficiary, William Ross Palmer, was the controlling date of its distribution. The Court of Appeals, on appeal, held that the fund should be distributed as of the date of Basil's death; that the fund was due Stella, as administratrix of the estate of William Ross Palmer, deceased, and ordered Basil's administrator to pay the same to her as administratrix.
Error from the latter decree was prosecuted to this court.
Mr. C.E. Timberlake, for plaintiffs in error.
Messrs. Thornburg Lewis and Messrs. Mitchell, Mitchell Butcher, for defendants in error.
Mr. Ed. P. Buckenmyer, amicus curiæ.
The sole question for determination is whether the course of descent of the fund in controversy is to be determined and the fund distributed as of the date of the death of the beneficiary, William Ross Palmer (October 11, 1924), as held by the common pleas court, or as of the date of Basil's death (July 18, 1918), as held by the Court of Appeals.
This question only becomes important in view of the claim that the Ohio statute controlling the descent of personal property was materially changed between the years 1918 and 1924. The departmental officer of the federal government paid to the administrator of Basil the present value balance of the insurance then due, reciting that, since Basil was "insured by the United States under the Act of Congress of October 6, 1917, as amended by the Act of March 4, 1925," such administrator was entitled to receive said sum of $7,570 in full settlement.
It is conceded by the parties that the war risk insurance in question was a "renewable term insurance." Under our federal legislation the balance of the unpaid installments did not vest in the beneficiary, nor in the beneficiary's heirs at his death. The government could designate, by proper legislation, a new class of beneficiaries to whom such installments might be paid. White v. United. States, 270 U.S. 175, 46 S.Ct., 274, 70 L.Ed., 530. In that case an American soldier took out war risk insurance on June 1, 1918, and died on October 4, 1918. He had designated his mother as a beneficiary, but at the same time, by a letter established as his will, he also designated an aunt as a beneficiary, who should receive one-half of the amount due at his death. At the time of the aunt's designation there was no federal statute including aunts among the permitted class of beneficiaries. However, on December 24, 1919 (41 Stat., 371), federal legislation was enacted enlarging the permitted class so as to include aunts. After this later legislation the mother filed suit to establish her claim to the whole of the unpaid installments, contending that the Act of 1919 was retroactive, and that it deprived her of property without due process of law. It was urged in her behalf that the mother's interest had become vested at her son's death, and could not be defeated by later legislation which had extended the benefit to aunts, in violation of her contractual rights under the certificate of insurance. The Supreme Court of the United States, Mr. Justice Holmes delivering the opinion, said (page 180 [ 46 S.Ct., 2751]):
"The certificate of insurance provided in terms that it should be 'subject in all respects to the provisions of such Act [of 1917], of any amendments thereto, and of all regulations thereunder, now in force or hereafter adopted, all of which, together with the application for this insurance, and the terms and conditions published under authority of the Act, shall constitute the contract.' These words must be taken to embrace changes in the law no less than changes in the regulations."
The Supreme Court held that, while the insurance was in the nature of a contract, it was not entered into by the United States for gain, and that under the nature of the plan adopted by the federal government the relationship between the holder and the government was one of "benevolence established by the government at considerable cost to itself for the soldier's good. * * * If the soldier was willing to put himself into the government's hands to that extent no one else could complain. The only relations of contract were between the government and him. White's mother's interest at his death was vested only so far as he and the government had made it so, and was subject to any conditions upon which they might agree. They did agree to terms that cut her rights down to one-half. She is a volunteer and she cannot claim more." The Supreme Court held that there was no constitutional inhibition preventing Congress from enacting later provisions which would include the aunt as one of the beneficiaries in the permitted class, to whom awards of insurance should be paid.
The sole question then remaining is whether the balance of the insurance fund should be paid to those who are entitled to the same under our statutes of descent and distribution existing at the time of Basil's death, or under the later statutes, in force at the time of William Ross Palmer's death.
Both parties concede that the World War Veterans Act, amendatory of former acts, and approved March 4, 1925 (43 Stats. at L., 1302), relating to the distribution of this fund, applies. Section 303 of the act (as so amended [Comp. Stats., Section 9127 1/2-303]) expressly provides that that section "shall be deemed to be in effect as of October 6, 1917." The pertinent provisions of the act are as follows:
"If the designated beneficiary * * * 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."
It will therefore be noted that the act is not only made effective as of October 6, 1917, but provides that the present value of the monthly installments, thereafter payable, shall be paid "to the estate of the insured." So far as this record discloses, the dead soldier had no estate or property other than the balance of the insurance fund in question. The requirement of the act is specific and plain; that is, that the fund should be paid to the soldier's estate without any limitation. It nowhere says that it shall be paid to the estate of the insured to be distributed as of the date of the death of the beneficiary. All authorities agree that the distributees of an estate take it as of the date of the death of the decedent. This is the principle announced in Sommers v. Boyd, Treas., 48 Ohio St. 648, 29 N.E. 497, wherein the syllabus reads:
"When administration is granted upon the estate of a deceased ward, the assets vest immediately in the administrator whose title, by relation, dates back to the time of the decease."
This rule of descent is carried into the syllabus of McBride, Adm'r., v. Vance, 73 Ohio St. 258, 76 N.E. 938, 112 Am. St. Rep., 723, 4 Ann. Cas., 197.
The question whether the estate's interest in the fund after the death of the beneficiary was vested or contingent is academic, for the obvious reason that the act of Congress definitely placed the fund in the decedent's estate. Under the Act of March 4, 1925, there always remained the contingency that Basil's estate would secure whatever remained of the insurance after the beneficiary's death. The other view would connote a possibility of several periods of distribution of Basil's estate. For instance, had Basil in fact designated several equal beneficiaries there would be a possibility that there would arise several periods of distribution, depending upon the survivorship of each. Had Congress intended such a result it would have provided for such a situation instead of specifically providing that the present value of the monthly installments thereafter payable should "be paid to the estate of the insured."
While the exact question we have under consideration was not there determined, the Supreme Court of Wisconsin in Singer v. Tikalsky, 213 N.W. 479, decided last April, evidently construed the Act of March 4, 1925, as we do. In the course of the opinion it is said:
"Here the language of the act is perfectly plain — the remainder of the fund is to be paid to the estate of the deceased. Hence there is no room for the application of rules of construction * * *. The whole amount of the policy not having been paid to the beneficiary, the estate of the deceased was augmented by the present worth of future payments. When this sum was paid to the administrator under the law, it must be distributed to his heirs as of the date of his death."
We therefore arrive at the conclusion that the lump sum representing the present value of monthly installments thereafter payable was properly paid by the federal government to the administrator of Basil, and that the same should, in case of intestacy, be distributed to those who are entitled to his personal estate under the law as it existed at the time of Basil's death.
The judgment of the Court of Appeals is affirmed.
Judgment affirmed.
MARSHALL, C.J., DAY and MATTHIAS, JJ., concur.
ALLEN, J., dissents.