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or prosecuted, and to all witnesses in such action, fees and mileage, the same as is now paid and allowed to witnesses in the United States courts, in going to, remaining at, and returning from place of trial, and without any regard to whether the action, if any, is brought or prosecuted in a court of the United States or some other court.
In all cases of assignment of causes of action under this section, whether the assignment be heretofore or hereafter made, where it shall appear to the director to be to the best interests of the beneficiary so to do, the director, acting for and in the name of the United States, may assign the cause of action back to the beneficiary or to his personal representatives.
The section covers and provides for three alternative procedures:
First is the case of a beneficiary who has recovered damages from the outside party on his own initiative without requirement or direction from the Veterans' Bureau. In such case the section provides that the amount recovered shall be credited upon any compensation payable or to become payable on account of the same injury or death. There can be no doubt, I think, that the amount to be so credited is the net amount of damages received by the beneficiary. The purpose and intent of the statute is to limit the beneficiary to his war-risk compensation if he elects to apply for the same, giving him the full benefit of such compensation, and giving the Government the benefit of the net recovery.
Second is the case of a beneficiary who has been required by the Veterans' Bureau to prosecute the action for damages in his own name. In such case I understand that the conduct of the case is left to the injured party subject only to general supervision by the Veterans' Bureau. In this case, also, the money recovered is required to be credited upon any compensation payable by the Veterans' Bureau on account of the same injury or death. Here, too, only the net amount recovered should be so credited.
Third is the case where the injured party assigns the right of action to the United States and the same is prosecuted or compromised by the director of the Veterans' Bureau. In such case the statute requires that any money realized or collected on such prosecution or compromise, less the reasonable expense of realization or collection, shall be placed to the credit of the military and naval compensation fund, or be paid to the beneficiary and credited against compensation to be paid. Regulation No. 45 of January 31, 1920, provides:
By virtue of the authority conferred in sections 13 and 313 of the war risk insurance act, the following regulation is issued relative to the deduction of expenses in recoveries in cases arising under section 313.
1. For the purpose of determining what amount shall be placed to the credit of the military and naval compensation appropriation in each case arising under the provisions of section 313 of the war risk insurance act, where recorery is made, all expenses incurred by the bureau, such as traveling expenses and salaries of representatives of the bureau, shall be classed as administra. tive expenses and shall not be deducted from such recovery.
2. All expenses incurred that may be incident to the prosecution of such cases, viz, court costs, attorneys' fees, and kindred charges, shall be deductible from such recovery before placing same to the credit of the military and baval compensation appropriation.
The statute and regulation contemplate in the latter class of cases that realization or collection will be by the Government as assignee, that the net amount recovered after deduction of authorized expenses shall be either placed to the credit of the military and naval compensation fund against past payments of compensation for the same injury or death, or paid to the beneficiary as a credit against future payments of compensation for the same injury or death, and that the compensation account of the injured party shall be adjusted accordingly.
There appears no great doubt or difficulty in laying down the general rule and procedure under section 313 of the war risk insurance law. It is in applying the rule and procedure to the action taken by the bureau in certain cases that doubt and difficulty arise. You have presented as typical the case of Charles Deuter, a soldier who was injured June 15, 1919, in a collision between an Army motor truck and a street car operated by the Harrisburg Railways Co., under circumstances which resulted in recovery from the said railways company of damages in the amount of $10,000 with interest and cost, upon which was realized $10,000, plus $361.67 interest, plus $133.12 court costs, or a total of $10,494.79.
There appears discrepancy or doubt as to certain material facts of the case. According to the statement of fact in your letter, inquiry into this collision was instituted by an attorney of the bureau June 30, 1919. On July 30, 1919, the said attorney got in touch with the injured soldier and took the matter of recovery up with the street railway company. Compensation was awarded Deuter by the bureau from the date of his discharge.
Under date of May 16, 1921, the attorney aforesaid advised Deuter that it probably would be necessary to bring action against the street railway company, and inclosed for his signature the bureau form of agreement to assign the claim under section 313 of the war risk insurance act, which agreement was signed by Deuter, returned to the attorney, and receipt of same acknowledged by the attorney on May 26, 1921. In form this agreement is not an assignment of the cause of action. It is in form an agreement to assign “at any time the same may be required by such bureau” the right of action or any judgment on same that might be obtained. The intention is to assign to the United States, and if the practice has been to obtain no further assignment in connection therewith, but to act thereon as the assignment, such intention being established may control and require the matter to be held an assignment. There has not been presented sufficient data to enable this to be determined definitely and the bureau should make further investigation and act accordingly. It does not appear that any later assignment was executed by the injured party or required by the bureau. Under date of June 3, 1921, the bureau attorney forwarded this and other similar agreements to Mr. James Mercer Davis, an attorney of Camden, N. J., advising Mr. Davis that he might go ahead and represent the men, and that it was assumed that the cases would be filed at an early date. It is stated in your submission that the bureau attorney engaged Mr. Davis to prosecute these cases, but upon what terms does not appear. In this connection see statement in the affidavit proposed for Deuter's signature that he, Deuter, employed Mr. Davis to commence an action in this case. It is stated that Mr. Davis employed John R. Geyer, of Harrisburg, Pa., to assist him in the prosecution of the case. It does not appear that this latter employment was made at the instance of the bureau or with its authority or consent. It may be observed here also that the attorney, Davis, was at Camden, N. J., remote from the place at which it was necessary to bring suit, Harrisburg, Pa., and that attorney employed an attorney at Harrisburg, Pa. The procedure thus followed complicates the question of an assignment having been made but can not be viewed as determinative of the question, if the intention of assignment to the United States can be definitely established as in previous paragraphs suggested for furt'ier investigation by the bureau.
The statement of facts proceeds as follows: The preparation of the case, however, appears to have been almost wholly made by attorneys of this bureau. Attorneys Bramhall and McFadden made a number of trips to interview the plaintiffs, attorneys, and witnesses. Attor. ney McFadden arranged for the appearance of three surgeons from New York, one from Buffalo, and one from Olean, New York, together with a Harrisburg physician. Considerable expense was thus incurred by the bureau for the salaries, travel, per diem, etc., of bureau attorneys who assisted in these cases. The physicians who were called as expert witnesses were given Gorernment transportation. Their fees as experts were advanced by Mr. Davis and are shown in the form of affidavit prepared for Deuter's signature in connet tion with the settlement of the case, copy of which is attached. These expert witness fees were later deducted from the plaintiff's share of the recovery and refunded to attorney Davis. In one instance it appears that the witness was advanced only one half of bis fee, the other half being contingent upon recovery of damages.
On June 15, 1922, the case went to trial, and a verdict was returned for the the sum of $10,000, with interest and costs. On March 27, 1923, Attorney Daris advised Attorney McFadden of this bureau that he had on hand $6.103.28. being the amount remaining after deducting his fee of $3,453.89 and $637.62 for expert witness fees and other costs advanced by him. On March 31, 1923, Attorney McFadden advised Mr. Davis to pay one expert witness an additional $50.00 due him on account of contingent fee, and to make checks as follows:
“ Checks payable to the order of the Treasurer of the United States, cover. ing a refund to the bureau on account of witnesses' fees and mileage and er. penses in connection with the prosecution of the case, paid by this bure:iu, totaling $236.47; check payable to the Treasurer of the United States in the sum of $1,888.26 to reimburse this bureau for compensation paid to date to Mr. Deuter; a check payable to the order of Charles Deuter for the balance in your hands, $4,248.55."
In conclusion, Attorney McFadden said:
“Kindly mail these three checks direct to me, Room 1058, Arlington Building, and I will see that you are supplied with the proper release by Mr. Deuter add receipts from the bureau covering the same."
On April 4, 1923, Mr. Davis forwarded the checks as instructed, which ehecks are now in the possession of the bureau awaiting your decision as to their proper disposition.
The proposed distribution of the total recovery of $10,494.79 is fully set forth in the form of aflidavit prepared for Deuter's signature, copy of whicb is attached.
Attached to your submission is a copy of an affidavit prepared by the bureau for signature of Charles Deuter. According to this proposed affidavit he employed Mr. Davis to commence an action for him against the railroad company, which action was commenced accordingly. Subsequent to his discharge from the Army he applied to the bureau for war-risk compensation and received the same to the amount of $1,888.26. He was present at the trial of the case; he has examined the account rendered by his attorney, which account is set forth in the affidavit; and he acknowledged the receipt of the net sum of $1,248.55 shown by the said account to be due him in full settlement of his case against the street railway company, which said sum is said to have been paid to him on the —
day of April, 1923. The proposed affidavit further sets forth the understanding of affiant that he will not be entitled to any compensation from the Veterans' Bureau until such time as suspended payments of any award that may be made to him accrue to the amount of $1,248.55.
The material facts of the case are not fully and clearly stated. It seems clear, however, that the bureau did not in fact prosecute the case for the United States as assignee of the injured party. While the facts are left somewhat in doubt it seems that the injured party prosecuted the action in his own name, through an attorney he has accepted as his own attorney and recovered in his own right, the bureau exercising general supervision only over the prosecution and recovery. Assuming such to be the case, the statute requires only that the net amount recovered shall be credited against compensation payable or to become payable to this beneficiary.
The item of $1,888.26 is properly reimbursable to the military and naval compensation appropriation whether such reimbursement be under the terms of the statute upon assignment of the right of action or as refund of an erroneous payment made in contemplation of an assignment not afterwards in fact made.
Regulation 45 makes fees and mileage paid by the bureau a part of the expense to be deducted from the amount recovered before applying the recovery to the compensation account. It is proper therefore that where such expenses have been paid by the bureau they shall be deducted from the amount recovered and returned to the appropriation from which the payment was made.
Subject to the question of assignment for investigation by the bureau, the check to the order of Charles Deuter would be for transmission to him and the amount thereof credited to his compensation account, upon execution by him of a proper acknowledgment and acceptance of the amount in lieu of any compensation that may hereafter become payable to him up to the said amount.
While the Government finds itself in a position where it must accept and credit against Deuter's war risk compensation only the net recovery on the action against the street railway company, certain phases of the case call for comment by this office.
It would seem that if the Veterans' Bureau was prosecuting the case for the United States as assignee of the injured soldier and em. ployment of local counsel was necessary, there should have been employed a Harrisburg attorney without the intervention of the attorney at Camden, whose function and service in the case does not appear. It seems also that if the action was by the United States as assignee, recovery would be accordingly and the United States would be the judgment creditor to whom the amount recovered should be paid for proper distribution.
As it is only the net amount recovered that is to be credited against the war-risk compensation award the Government is interested in holding the expense of recovery to the minimum consistent with good service. It is suggested that allowance by the bureau of contingent fees to attorneys in cases which the bureau prosecutes tends to greatly increase the cost of recovery and lessen the net recovery, to the prejudice of the interest of the Government. Also, the practice at best is of doubtful legality.
Authority in the director to prosecute a cause of action assigned to the United States under section 313 of the war-risk insurance act implies authority in him to employ an attorney for that purpose if he deems such employment necessary or advisable. The resulting expense is one of bureau administration which may be paid in the first instance from the bureau appropriation for administrative espenses, subject to reimbursement of the appropriation in case of recovery according to the provisions of Regulation No. 45. It is unnecessary, and I think improper, to resort to the contingent-fee basis for employing attorneys in these cases.
RENT OF BUILDINGS IN DISTRICT OF COLUMBIA.
The authority granted to the Public Buildings Commission by the act of
March 1, 1919, 40 Stat., 1269, does not authorize the renting of buildings or parts of buildings in the District of Columbia for which no appropriation has been made, contrary to the provisions of the act of March 3, 1877,
19 Stat., 370. The appropriation in the act of June 1, 1922, 42 Stat., 613, for the Bureau of
Investigation, while contemplating the establishment and maintenance of offices in the District of Columbia, makes no specific appropriation for the rental of offices, and can not be construed to authorize such rental in view of the probibition in the act of March 3, 1877, 19 Stat., 370.