On appeal from the District Court of the City of Atlantic City.
For the appellant, Irving I. Jacobs.
For the respondent, Samuel Levinson.
Before Justices Parker, Heher and Colie.
The opinion of the court was delivered by
HEHER, J. This is an action of replevin. The subjectmatter is a life insurance policy (converted) in the sum of $5,000, issued by the United States to plaintiff (a veteran of the first World War) on January 24th, 1928, under the World War Veterans' Act of 1924. 43 Stat. 607; 38 U.S.C.A., §§ 421, et seq. Plaintiff and defendant were then married; and the latter was designated as beneficiary. The marriage was dissolved by a decree of divorce in the latter part of the year 1941; and shortly thereafter plaintiff appointed his mother as beneficiary of the policy in the place and stead of defendant. This change of beneficiary was communicated to and recognized by the Veterans' Bureau, but it was not endorsed upon the policy, for the instrument was then in defendant's possession and she has ever since refused to surrender it. The policy reserved to plaintiff the right to effect a change of beneficiary "at any time without the knowledge or consent of the named beneficiary." And it contained a provision that the "proceeds" thereof "shall not be assignable, except that any person to whom this insurance shall be payable may assign his interest" therein "to any other beneficiary within the class permitted by the World War Veterans' Act or any amendment thereof or supplement thereto."
The District Court judge found that plaintiff had made a gift of the policy to defendant; and he therefore awarded judgment to defendant. In this, there was error in matter of law.
At the time of the issuance of the policy, the statute made nonassignability, and exemption from the claims of creditors
and all taxation, attributes of the "insurance" thereby granted. 43 Stat., pp. 607, 613, § 22. This provision rendered non-assignable "the compensation, insurance, and maintenance and support allowance payable" thereunder. It was construed to bar assignments of such policies by the insured. Christensen v. Christensen, 14 Fed. Rep. (2 d) 475. On August 12th, 1935, the clause was superseded by one providing that "Payments of benefits due or to become due shall not be assignable, and such payments made to, or on account of, a beneficiary under any of the laws relating to veterans shall be exempt from taxation" and "the claims of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary." 49 Stat., pp. 607, 609, § 3; 38 U.S.C.A., § 454a. Section 22, supra, was thereby expressly repealed; and the repealer was followed by the direction that "The provisions of this section shall not be construed to prohibit the assignment by any person, to whom converted insurance shall be payable under title III of the World War Veterans' Act, 1924, of his interest in such insurance to any other member of the permitted class of beneficiaries." This provision would seem to be ambiguous, for, while the statute originally prohibited payment of the proceeds of an insurance policy (term or converted) to a person not within certain specified classes related to the insured by blood or marriage, under an amendment adopted in 1928 this limitation of the beneficiaries to a definite class is now confined to "yearly renewal term insurance." 43 Stat. 624, § 300; 38 U.S.C.A., § 511. Vide United States v. Garrison, 39 Fed. Rep. (2 d) 225; Lewis v. Untied States, 56 Id. 563; Small v. United States, 110 Id. 122. The report of the Committee on World War Veterans' Legislation of the House of Representatives reveals that the design of the amendment was to give the insured under converted insurance "the same right with regard to designating a beneficiary or changing a beneficiary as he would have under a commercial insurance policy."
But this does not mean that converted policies have all the characteristics of the ordinary life insurance policy. As noted, "payments of benefits," due or to become due, are non-assignable
and beyond the reach of creditors and legal or equitable process, either before or after receipt by the beneficiary; and the statute further provides that, "Subject to regulations, the insured shall at all times have the right to change the beneficiary or beneficiaries without the consent of such beneficiary or beneficiaries, but only within the classes herein provided." 38 U.S.C.A., § 512. Of course, for the reasons ...