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Docket Number

No. 3848.

Attorney(S)

Randolph C. Shaw, Sp. Asst. to the Atty. Gen. (James O. Carr, U.S. Atty., of Wilmington, N.C., Will G. Beardslee, Director, Bureau of War Risk Litigation, of Washington, D.C., and Wilbur C. Pickett, Sp. Asst. to the Atty. Gen., on the brief), for the United States. Emmett H. Bellamy, of Wilmington, N.C. (John D. Bellamy, of Wilmington, N.C., on the brief), for appellees.

Judges

Elliott Northcott
Morris Ames Soper
William Calvin Chesnut

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Smart Summary

Summary of Opinion: United States v. McIver et al., No. 3848 (4th Cir. Apr. 22, 1935)

Factual and Procedural Background

The plaintiff, Mrs. Frances McIver, brought suit as administratrix of Wharton McIver and as beneficiary to recover total disability benefits under a war risk insurance policy issued while the insured served in the Naval Service. The original policy lapsed in March 1919. The veteran reinstated and converted his insurance into a five-year term policy on July 1, 1927, paying one month's premium; this reinstated policy lapsed on September 1, 1927. The complaint alleged the insured contracted pulmonary tuberculosis while in service and became totally and permanently disabled August 1, 1927. The insured died March 12, 1931.

The complaint was filed in November 1932 in the Eastern District of North Carolina. A trial occurred in October 1934. After both parties presented evidence, both moved for directed verdicts and the district judge directed a verdict for the plaintiff; judgment was entered for the plaintiff. The United States appealed, and this opinion reviews whether there was substantial evidence to support the trial court's finding.

Legal Issues Presented

Whether there was any substantial evidence to support the trial court's directed verdict and judgment for the plaintiff—specifically, whether the evidence established that the insured's total and permanent disability occurred during the life of the reinstated policy (July 1, 1927 to September 1, 1927).

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
U.S. v. Hodges, 74 F.2d 617, 618	That allowing a jury to fix impairment within a very short period out of many years is to permit speculation rather than reasonable inference.	The court quoted Hodges to support that submitting the issue of impairment within a less-than-two-month period (out of many years) would be speculation and guesswork, not reasonable inference.
Werth v. U.S., 75 F.2d 192	The plaintiff bears the burden of proving the disability occurred during the life of the policy.	The court cited Werth for the principle that the plaintiff must show the disability occurred while the policy was in force, and evidence leaving the question to conjecture fails that burden.
U.S. v. Spaulding, 293 U.S. 498, 55 S. Ct. 273, 79 L. Ed. ___	Commentary by the Supreme Court on the evidentiary effect of procuring an examination for reinstatement of insurance.	The court referenced Spaulding to note the Supreme Court's comments regarding the evidentiary significance of examinations procured for reinstatement.
Hicks v. U.S., 65 F.2d 517	Under this court's rule, reinstated insurance is invalid if the insured was totally and permanently disabled at the time of reinstatement.	The court invoked Hicks to state that, if total and permanent disability existed at the time of reinstatement, the reinstated policy would not be valid.
U.S. v. Stevens (C.C.A.) 64 F.2d 853	Affirmation of the same holding as Hicks regarding validity of reinstated insurance when insured was totally and permanently disabled at reinstatement.	The court cited Stevens as another case reaching the same rule applied in Hicks.
U.S. Kaminsky (C.C.A.) 64 F.2d 735	Affirmation of the same holding as Hicks regarding reinstatement and preexisting total and permanent disability.	The court cited Kaminsky as an additional case holding similarly to Hicks and Stevens.

Court's Reasoning and Analysis

The court framed the sole question as whether substantial evidence supported the trial court's directed verdict for the plaintiff. It reviewed the relevant factual record: the policy lapse and reinstatement dates (reinstated July 1, 1927; lapsed September 1, 1927), the June 24, 1927 examination showing a negative finding for tuberculosis, and a September 15, 1927 Veterans' Administration physician's report diagnosing moderately severe bronchitis and a minor skin infection with tuberculosis "nonactive."

The court took judicial cognizance of the general character of pulmonary tuberculosis and found it impossible to conclude that a permanent and total disability developed within the short two-month period the reinstated policy was in force. Noting the insured had been alleged to have contracted tuberculosis in 1919 and died of the disease in 1931, the court reasoned it was improbable that a total and permanent disability arose precisely during July–August 1927.

The court applied controlling legal principles: the plaintiff bears the burden of proving the disability occurred while the policy was in effect; allowing a jury to fix impairment within such a brief period among many years would be speculation (citing U.S. v. Hodges). It also relied on precedent establishing that reinstated insurance is invalid if total and permanent disability existed at reinstatement (citing Hicks, Stevens, Kaminsky), and referenced Spaulding regarding the evidentiary effect of examinations procured for reinstatement.

Concluding its analysis, the court determined the plaintiff's evidence did not tend to show the disability occurred during the crucial short period the policy was in force. Even when viewed most favorably to the plaintiff, the evidence was equally consistent with the disability having existed before or developed after that period. Because the plaintiff's proof left the central issue to speculation and conjecture rather than reasonable inference, the court found no substantial evidence to support the directed verdict and judgment for the plaintiff.

Holding and Implications

REVERSED.

Holding: The Circuit Court of Appeals reversed the district court's directed verdict and judgment for the plaintiff on the ground that there was not substantial evidence that the insured's total and permanent disability occurred during the life of the reinstated policy (July 1, 1927 to September 1, 1927).

Implications: The direct effect is that the judgment entered for the plaintiff in the district court was vacated. The opinion applies existing precedents regarding burden of proof and the evidentiary standards for proving disability during the life of a policy; it does not announce a novel rule of law beyond those applications.

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UNITED STATES v. McIVER et al.

PER CURIAM.

The appellee, hereinafter referred to as the plaintiff, brought this action as administratrix of Wharton McIver and in her own right as beneficiary, for total disability benefits, on a policy of yearly renewable term insurance issued by the United States, the appellant, hereinafter referred to as the defendant.

The complaint was filed in the District Court of the United States for the Eastern District of North Carolina in November, 1932. A trial was had in October, 1934, and after evidence was heard, both for the plaintiff and the defendant, both parties moved for a directed verdict, whereupon the judge below directed a verdict for the plaintiff. Upon this verdict judgment was entered, from which judgment this appeal was brought.

The only question involved is whether there was any substantial evidence to support the finding of the trial court.

The deceased veteran, Wharton McIver, while in the Naval Service of the United States was issued a war risk insurance policy in the principal sum of $5,000, which policy lapsed in March, 1919, and on July 1, 1927, the veteran reinstated and converted his insurance into a five-year term policy and paid one month's premium thereon, the policy again lapsing September 1, 1927. The plaintiff was named as beneficiary in the new policy.

The complaint alleged that while in the Naval Service the insured contracted pulmonary tuberculosis and that he became totally and permanently disabled August 1, 1927. The insured died on March 12, 1931.

Regulation No. 138, of the Veterans' Administration Bureau, as amended by Regulation 203, sections 4110, 4112 and 4113, provides for the reinstatement of a war risk insurance policy provided the applicant is in good health. The report of the examination of the insured made on June 24, 1927, just prior to the reinstatement of the policy, showed a negative finding as to tuberculosis and another examination made September 15, 1927, by a physician in the Veterans' Administration showed the deceased to be suffering from bronchitis, moderately severe, and a minor skin infection, with the tuberculosis nonactive.

In the face of the admitted facts and the general knowledge of the character of pulmonary tuberculosis, of which we take judicial cognizance, it is impossible to conclude that a permanent and total disability of the insured took place within the short period of two months during which the reinstated insurance was in force, to wit, July 1, 1927, to September 1, 1927.

The veteran was alleged to have contracted tuberculosis in the year 1919 and to have died from the disease in 1931, and it is impossible to conclude that during this period of twelve years total and permanent disability occurred in the short period during which the insurance was in force.

"To permit the jury to fix impairment within a period of less than two months out of a possible twelve or fifteen years is to submit a factual issue to speculation and guess and not to reasonable inference." U.S. v. Hodges, 74 F.2d 617, 618, decided by the Circuit Court of Appeals for the Sixth Circuit, January 8, 1935.

The burden is upon the plaintiff to show that the disability occurred during the life of the policy, and this burden cannot be met by evidence which leaves the question to speculation and conjecture. Werth v. U.S., 75 F.2d 192, decided by this court, January 16, 1935, and authorities there cited.

The evidentiary effect of the procuring of an examination for reinstatement of insurance is commented on by the Supreme Court in the case of U.S. v. Spaulding, 293 U.S. 498, 55 S. Ct. 273, 79 L. Ed. ___, decided January 7, 1935.

Under the rule laid down by this court in Hicks v. U.S., 65 F.2d 517, the reinstated insurance here involved would not be valid if the insured was totally and permanently disabled at the time of the reinstatement. The same holding has been made in U.S. v. Stevens (C.C.A.) 64 F.2d 853, and in U.S. Kaminsky (C.C.A.) 64 F.2d 735.

Existence of a condition of total and permanent disability before July 1, 1927, or the absence of such a condition after September 1, 1927, would be fatal to plaintiff's claim.

A study of the case leads us to the conclusion that the evidence relied on by plaintiff does not tend to show that the disability occurred during the short crucial period, rather than at a point of time before or after that period. On the contrary, the evidence, taken in the aspect most favorable to the plaintiff, is as consistent with one theory as another. Hence, the judgment must be reversed.

Reversed.

UNITED STATES v. McIVER