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SMITH v. UNITED STATES

February 26, 1964

JAMES E. SMITH AND JAMES E. SMITH, ADMINISTRATOR OF THE ESTATE OF MAUDE SPAIN SMITH, DECEASED, PLAINTIFF,
v.
UNITED STATES OF AMERICA, ROBERTA MAY SMITH, BERTHA M. RITCHIE, GUARDIAN AD LITEM FOR ROBERTA MAY SMITH, DEFENDANTS.



The opinion of the court was delivered by: John E. Miller, Chief Judge.

This is an action by the plaintiff, James E. Smith, individually and as Administrator of the Estate of Maude Spain Smith, deceased, to recover the installment benefits of a National Service Life Insurance policy under 38 U.S.C. § 784. Plaintiff commenced this action on May 11, 1963, to recover the installment benefits of one-half of a $10,000 National Service Life Insurance policy, No. 39234003, issued on the life of Cecil H. Smith. The defendant United States answered August 16, 1963, asserting that the insurance benefits in question are payable to defendant Roberta M. Smith, the minor daughter of the deceased insured and the surviving co-beneficiary. On August 16, 1963, the defendant United States filed a motion in which it asked that a guardian ad litem be appointed for the minor, Roberta M. Smith, and on August 17, 1963, the court entered an order appointing Bertha M. Ritchie, mother and custodian of Roberta M. Smith, the guardian ad litem.

On September 23, 1963, the defendant Roberta M. Smith filed an answer by and through her guardian, Bertha M. Ritchie, which contained a cross claim against the defendant United States for the benefits of said policy. The defendant United States on October 7, 1963, filed its answer to the cross claim of the defendant Roberta M. Smith.

The plaintiff, James E. Smith, on January 21, 1964, filed a motion for summary judgment. On January 31, 1964, the defendant Roberta M. Smith, through her guardian, Bertha M. Ritchie, filed a response to the motion of plaintiff for summary judgment, together with a motion for summary judgment on behalf of the defendant Roberta M. Smith. On February 12, 1964, the defendant United States filed a motion for summary judgment.

The case is now before the court on cross motions for summary judgment. The parties have submitted briefs in support of their respective contentions which have been considered by the court.

The plaintiff, James E. Smith, a citizen of the State of Arkansas and a resident of Lincoln, Arkansas, was the father of the insured, Cecil H. Smith. Maude Spain Smith, mother of the insured, died in Washington County, Arkansas, January 10, 1963. Defendant Roberta M. Smith, daughter of the insured, lives with her mother and guardian, Bertha M. Ritchie, a citizen of the State of California and resident of Sacramento.

On January 24, 1956, the insured, Cecil H. Smith, executed VA Form 9-336, designating Maude Spain Smith, mother, and his daughter, Roberta M. Smith, as principal beneficiaries "in equal shares with right of survivorship, Option #2, 36 months." The insured's father, James E. Smith, plaintiff herein, was designated "contingent beneficiary" for the full amount of the policy to be paid under settlement Option #2 in 36 equal monthly installments.

The insured's mother, Maude Spain Smith, made her claim for benefits under the policy after the death of the insured December 4, 1962. Subsequent to the filing of Maude Spain Smith's claim for benefits, she died January 10, 1963, prior to the payment to her of any installment payments. The contingent beneficiary, James E. Smith, the insured's father, made claim for one-half of the total benefits which was disallowed on February 25, 1963, and again disallowed on April 19, 1963.

Plaintiff, James E. Smith, the contingent beneficiary, contends that "on the death of the insured [Cecil H. Smith], Maude Spain Smith became the owner of one-half of the total benefits under said policy amounting to $5,000, and on her death the plaintiff, James E. Smith, became the owner thereof as contingent beneficiary or said sum became an asset of her estate."

Defendant Roberta M. Smith contends that as "the surviving principal beneficiary," she became entitled to the entire installment benefit payments upon the death of the other principal beneficiary, Maude Spain Smith.

The defendant United States contends that the plaintiff, James E. Smith, is not entitled, either individually or as administrator of the estate of Maude Spain Smith, to the installment benefits of the deceased principal beneficiary, Maude Spain Smith, and asserts that the "surviving principal beneficiary" is entitled to installment benefits of the deceased co-principal beneficiary.

National Service Life Insurance policies are contracts with the United States, and their terms are governed by federal statutes and regulations is determining who is to share in the benefits arising from such policies. See, Wissner v. Wissner, 338 U.S. 655, 70 S.Ct. 398, 94 L.Ed. 424 (1950); Pack v. United States, (9 Cir. 1949) 176 F.2d 770.

Section 602(u) of the National Service Life Insurance Act, 38 U.S.C.A. § 802(u), provides that when a designated beneficiary not entitled to a lump-sum settlement dies before receiving all the benefits due and payable, the remaining unpaid insurance (whether accrued or not) shall be paid in one sum to the "estate of the insured." The Veterans Administration in its regulations construes beneficiary to include contingent as well as principal beneficiaries.

In United States v. Short, (9 Cir. 1956) 240 F.2d 292, the court, in construing Sec. 602(u), supra, at page 296 said:

  "The word `beneficiary' is used in the statute in
  the singular. We hold that the phrase `designated
  beneficiary' includes contingent as well as
  principal beneficiaries. This is the construction
  which has been followed by the Veterans
  Administration since the enactment of the
  statute, Regulations, Sec. 10:3489, 11 F.R. 9285,
  38 C.F.R. § 10:3489 (Supp. 1946) 38 C.F.R. § 8.89
  (1949). The trial court herein also so held.
  Washburn v. United States, D.C.Mo. 1945,
  63 ...

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