applied for insurance "shall be deemed to have applied for and to have been granted Insurance"

*

It is obvious that Congress chose to consider the induction of the soldier into the service and his disability or death within 120 days thereafter as equivalent to an application for and a grant of insurance, so that a contract of insurance of equal validity to those for which applications should be made would come into existence; and since Congress accepted the military service as the basis of the contract, it is of no moment that no written document was issued to the soldier or that no premium for the brief period of 120 days was required. None of the soldiers indeed made adequate money payment for the insurance granted, since the premiums paid were much below the approved standard in view of the risks involved. See part II of Regulations and Procedure, United States Veterans' Bureau, page 1255, Bulletin No. 3, Active and Obsolete Issues as of December 31, 1928.

The holding in the Jackson case was affirmed upon review by the Supreme Court, 82 L. Ed. 488.

Congress must be presumed to have accepted and adopted this established judicial construction when it employed the words "shall be deemed to have applied for and to have been granted" insurance, in conferring under the National Service Life Insurance Act a gratuitous benefit comparable to automatic insurance. See Kepner v. United States, 49 L. Ed. 114, 122; United States v. Merriam, 68 L. Ed. 240, 244. Accordingly it must be recognized that the benefit conferred by subsections 602 (d) (3) (A) and (B) of the National Service Life Insurance Act of 1940, as amended, is a "contract" benefit, even though the statute requires that it be treated in some respects upon a different basis than is insurance issued pursuant to application.1

The protection afforded to contracts under the National Service Life Insurance Act of 1940, as amended, extends only to those “heretofore" entered into and since the Rescission Act became effective as of February 18, 1946, no valid contract could be entered into after that date with any member or former member of the armed forces of the Government of the Commonwealth of the Philippine Islands upon the basis of service in the armed forces of the United States. It is completely clear however that contracts entered into prior to that date are to be fully executed according to the terms of such contracts. It is necessary, therefore, to examine the several sections of the National

1 See Administrator's Decision No. 713, vol. I, p. 1463, reading as follows:

Gratuitous insurance # * is solely a creature of the statute and although conferred upon the fiction that an application has been made, the statute itself prescribes certain differences in treatment between insurance for which an actual application is made and insurance for which an application is merely 'deemed' to have been made. For example note (1) the inflexible beneficiary designation for gratuitous insurance in section 602 (d) (2) and 602 (d) (5) as compared with the choice permitted by section 602 (g) when insurance has been issued pursuant to the application; (2) that section 602 (d) (3) (A) provides an automatic waiver for a limited period of premiums upon gratuitous insurance whereas section 602 (n) requires an application for waiver of premiums upon contract insurance; (3) that insurance which is gratuitous in origin, unlike other insurance, is exempted by section 602 (d) (3) (A) from the requirement, of section 602 (n), that as a condition to waiver of premium for total disability, such disability should have commenced ‘subsequent to the date of his application for insurance.'”*

Service Life Insurance Act of 1940, as amended, relating to gratuitous insurance for the purpose of determining (1) which statutory provisions have the effect of creating contracts and as of what date such contracts come into being and (2) which provisions relate merely to the fulfillment of the terms of contracts already established. The controlling rule is that where a right is conferred or a contract is created by operation of statute the process of conference or creation is completed upon the concurrence of the conditions prescribed in the statute. 35 Op. Atty. Gen. 241, 243, 244.

Section 602 (d) (2) prescribes as conditions upon the grant of gratuitous insurance thereunder that the person insured should have died in active service, in line of duty and within stated time limits, without having in force at the time of death an aggregate of at least $5,000 of Government insurance. It is obvious that any insurance thus granted becomes effective as of the date of the death of the person thus insured and that the remaining provisions of this section, relating to the amount of insurance granted and the beneficiaries thereof serve only to spell out the terms of the contract. Moreover it is apparent that all contracts authorized by this section came into being or were "entered into" long prior to the enactment of the Rescission Act of February 18, 1946, and hence are unaffected by it.

Section 602 (d) (3) (A) prescribes as conditions upon the grant of gratuitous insurance thereunder that the person insured should have become totally disabled in active service (as a result of an injury or disease incurred in line of duty) within stated time limits and without having in force at the time of the incurrence of such disability an aggregate of at least $5,000 of Government insurance and that such disability should have continued without interruption for a period of 6 months or until death. It is obvious that any insurance thus granted becomes effective as of a date 6 months subsequent to the incurrence of such total disability or as of the date of intervening death. The remaining provisions of this section relate not to the inception of the contract but to the conditions of the contract itself. Thus it is provided that the insurance shall continue in force without premium payments until 6 months after the insured ceases to be totally disabled or until September 30, 1945, whichever is the earlier date. The insured is given the right, however, to apply in writing at any time prior to the date as of which his gratuitous contract would otherwise expire (Sept. 30, 1945, at the latest) for the continuance of the insurance in whole or in part upon tender of premiums or the submission of evidence of entitlement to premium waiver under section 602 (n) of the act. It is apparent that all contracts authorized

by this section came into being or were "entered into" by September 30, 1945, at the latest and hence are unaffected by the Rescission Act. [Italics supplied.]

Section 602 (d) (3) (B) prescribes as conditions upon the grant of gratuitous insurance thereunder that the person insured should have been captured, besieged, or otherwise isolated by the enemy during active service within stated periods without having in force at the time of such capture, siege or isolation an aggregate of at least $5,000 of Government insurance. It is expressly provided that any insurance granted under this section is effective as of the date of capture, siege, or isolation. Other provisions of the section state the conditions of the contracts thus granted. Any such contract is to remain in force with premiums waived while the insured remains captured, besieged or isolated and for six months thereafter, and the insured is given the right to apply in writing at any time prior to the date as of which his contract would otherwise expire for the continuance thereof upon payment of premiums or submission of evidence of entitlement to a continued waiver of premiums under section 602 (n) of the act. It is apparent that all contracts authorized by this section were entered into long prior to February 18, 1946, and hence are unaffected by the Rescission Act.

Gratuitous insurance is not granted by any section of the National Service Life Insurance Act other than those heretofore analyzed although other sections such as 602 (n) are applicable to all insurance contracts including those which were gratuitous in origin. Reference should be made, however, to section 602 (d) (5) which is applicable only to contracts of gratuitous origin. This section provides that no application for "insurance payments under subsections (2) or (3) shall be valid unless filed within 5 years after the date of death of the insured." This provision may be regarded either as an essential part of such contracts, which appears the proper view, or as a limitation upon the payment of benefits under them. If the former, it clearly is not affected by the Rescission Act which is inapplicable to contracts entered into prior to February 18, 1946; and if the latter, there appears no reasonable basis for reading into the Rescission Act, by implication, any unexpressed intention to provide a less liberal limitation. When Congress provided in the Rescission Act of February 18, 1946, that service in the organized forces of the Philippines would not be regarded as service in the military or naval forces of the United States except for benefits under "(1) the National Service Life Insurance Act of 1940, as amended, under contracts heretofore entered into" it must be credited with having used the word "contract" in the broad sense,

embracing contracts theretofore created by statute as well as those created by application, in view of the considerations heretofore stated. HELD: The rights of any person otherwise entitled to gratuitous insurance are not affected by the provisions of the Rescission Act of 1946. (Opinion of the Solicitor, Veterans' Administration, dated Oct. 8, 1946, approved Oct. 8, 1946.)

ADMINISTRATOR'S DECISION, VETERANS' ADMINISTRATION, NO. 729 NOVEMBER 2, 1946.

Subject: Service connection for aggravation of disability presumptively incurred in line of duty for purposes of section 700 (a), Public Law 346, Seventy-eighth Congress, as amended.

QUESTION PRESENTED: Where a veteran is discharged by reason of disability under conditions other than dishonorable after service of less than 90 days, is there any material difference in the requirements for the establishment of service connection of that disability under the terms of Veterans Regulation 1 (a), part I, paragraph 1 (b), Public Law 2, Seventy-third Congress, as amended, and the requirements to establish basic eligibility for readjustment allowance under the provisions of section 700 (a), chapter VII, title V, Public Law 346. Seventy-eighth Congress, as amended, for the establishment of service connection?

FACTS: The veteran performed active service from July 13 to October 5, 1944 and was discharged under honorable conditions by reason of psychoneurosis, a condition held by Army medical officers as having existed prior to service and not aggravated by service. Service connection by way of the presumption of aggravation was granted by duly constituted authority and a rating of 10 percent is presently in force. The veteran's claim for readjustment allowance under the terms of title V, Public Law 346, Seventy-eighth Congress, as amended, was denied for the reason he had not been discharged for disability incurred in service, in line of duty, although pension had been awarded, service connection having been granted under the presumptive provisions of the law.

COMMENT: In a letter addressed to the manager, New York, N. Y., and dated May 17, 1935, the Administrator of Veterans' Affairs stated that:

You have presented the inquiry as to whether a veteran who served less than ninety days within the period of the World War as specified by Veterans Regulation 1 (a), part I, paragraph 1 (a), who was discharged for disability which the service department has reported as incurred not in line of duty, may be awarded benefits pursuant to the provisions of Veterans Regulation 1 (c), para

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graph 3 (a), in the event a determination is made that the condition for which he was discharged was aggravated during service.

In this connection you are informed that where a finding is made that the disability, for which a veteran serving less than ninety days was discharged, was aggravated during the period of his World War service, it will be considered that the disability in question was incurred in the service in line of duty for the purpose of awarding pension for permanent total disability not the result of his service, if he is otherwise entitled thereto.

See also Administrator's Decision 393.

Section 1500, Public Law 346, Seventy-eighth Congress, provides in part that:

Except as otherwise provided in this act, the administrative, definitive, and penal provisions under Public Numbered 2, Seventy-third Congress, as amended, shall be for application under this act.

* * *

The phrase "or by reason of any injury or disability incurred in service in line of duty" in section 700 (a), Public Law 346, Seventyeighth Congress, is not defined in that act. Hence, it should be given the same meaning as was given by the Administrator to the similar phrase found in Veterans Regulation 1 (c), paragraph 3 (a), that is, "or who, having served less than 90 days, was discharged for disability incurred in the service in line of duty." In other words the phrase “injury or disability incurred in service in line of duty" includes injury or disability presumed to have been incurred in or aggravated by active service in line of duty.

HELD: In view of the foregoing a grant of service connection for aggravation, whether the aggravation be held to have been directly incurred or presumptively incurred in service in line of duty, should be sufficient basis for conclusion that the veterans' disability was "incurred in service in lino of duty" for the purposes of section 700 (a), Public Law 346, Seventy-eighth Congress.

HELD FURTHER: There is a material difference in the entitlement under title II and entitlement under titles III and V of Public Law 346, Seventy-eighth Congress, as amended, of veterans who served less than 90 days. Section 400 (b), title II, provides that the veteran who served less than 90 days to be eligible must "have been discharged or released from active service by reason of an actual service-incurred injury or disability." [Italics supplied.] This means without benefit of presumptions, thus taking the title II cases out of the rule prescribed by section 1500, and leaving no possible conclusion but that the other titles not so excepted are subject thereto. (Opinion of the Solicitor, Veterans' Administration, dated Sept. 11, 1946, approved Oct. 8, 1946.)