Opinion
No. 5626.
October 14, 1930.
John B. Nicklas, Jr., of Pittsburgh, Pa., for plaintiff.
Louis E. Graham, U.S. Atty., and W.J. Aiken, both of Pittsburgh, Pa., for the United States.
At Law. Action by John L. Quirk against the United States, in which Florence Quirk, administratrix of the estate of John L. Quirk, deceased, was substituted as plaintiff.
Judgment for plaintiff.
Plaintiff's action is based on a $10,000 war risk insurance policy. The evidence was stipulated by the parties who waived trial by jury. The court finds the following facts and conclusions of law:
Findings of Fact.
1. John L. Quirk entered into the military service of the United States December 1, 1917, and was honorably discharged November 8, 1919, upon a surgeon's certificate of disability.
2. On December 10, 1917, while in the military service he made application for, and there was issued to him, war risk insurance in the sum of $10,000, the policy being No. T-354043. The beneficiary named was himself during permanent total disability and after death his mother, Helen Foley Quirk. The premiums were paid on the policy up to and including August, 1920.
3. On January 17, 1921, Quirk made application for reinstatement of the $10,000 policy aforesaid, which application was refused February 8, 1921. On December 31, 1921, he made application for reinstatement of $3,000 of said $10,000 policy, which application was granted and the policy changed to a twenty-payment life on March 1, 1922. His wife, Florence Quirk, was named beneficiary therein.
4. Quirk failed to pay the premium on the $3,000 policy for the month of November, 1924, and made an application for reinstatement on December 13, 1924, which was granted on December 23, 1924. Quirk again failed to pay the premium due on the converted policy for the month of May, 1925, and he again made application for reinstatement on June 13, 1925. While the stipulated facts do not state whether the application was granted, yet the parties at the argument and in their briefs state that said policy is in force and effect.
5. On February 21, 1927, Quirk made application for reinstatement of the remaining $7,000 of the $10,000 war risk insurance policy in suit, which application was refused.
6. On or about April 14, 1927, Quirk made application to the Board of Appeals of the United States Veterans' Bureau for permanent and total disability rating as of date of discharge. He claimed he was entitled to payment of the insurance on the policy in suit as being permanently and totally disabled at date of discharge, which application was refused by the Board of Appeals May 11, 1927.
7. Following the refusal of the Board of Appeals, Quirk appealed from its decision to the Director of the United States Veterans' Bureau, which appeal was refused February 24, 1928.
8. On April 25, 1928, Quirk entered this suit to recover $10,000 on the war risk insurance policy aforesaid, claiming permanent and total disability as of date of discharge.
9. Quirk died February 10, 1930, letters of administration on his estate were granted to Florence Quirk, his wife, by the probate court of Summit county, Ohio, and the wife as administratrix of the estate of John L. Quirk, deceased, has been substituted as plaintiff in this action.
10. The medical findings as to his condition recommending his discharge were as follows:
"Pleurisy, sero-fibrinous, left, chronic. Manifested by diminished expansion of lungs 1¼ inches. Physical signs and X-Ray findings. Incapacitated by fibrosis of left lung, may be tubercular, with increased liability to disease to the lung. Incurred April 22, 1919, while on duty with command at Menton, France. There is no unmistakable evidence that disability existed prior to April 22, 1919, and must therefore be considered in line of duty per paragraph 2 C.O. 47, W.D. May 11, 1918. Maximum benefit has been attained under hospital treatment. Disability is permanent. Recommend discharge from service."
11. From the date of Quirk's discharge November 8, 1919, to April 25, 1928, the date of entering this action, Quirk was able to work intermittently only 232 days by reason of his physical condition, and was permanently and totally disabled when discharged on November 8, 1919, as will more fully appear by the subsequent findings of fact.
12. Quirk's pre-war occupation was that of an auto tire builder, and following his discharge from the Army, he attempted, about the middle of November, 1919, to resume his occupation with the Goodyear Tire Rubber Company at Akron, Ohio, but was unable to perform his work, and on being examined November 20, 1919, by Dr. Clyde Leeper, the company doctor, the doctor reported finding an old tuberculosis lesion, which at that time was quiescent. Quirk was examined by Dr. Leeper again on December 5, 1919, and the physician classed his condition as "turban 2-A" and recommended institutional treatment instead of vocational training.
13. Following this last examination of Dr. Leeper, Quirk was accordingly discharged by the Goodyear Tire Rubber Company as being unable to work.
14. On January 19, 1920, Quirk was examined at Cincinnati, Ohio, and diagnosed, "pleurisy, chronic, fibrinosis."
15. In January of 1920, Quirk entered training (six hours per day and five days per week), in the Ohio Mechanics' Institute at Cincinnati, Ohio, under the supervision and cost of the Federal Board for Vocational Education.
16. On January 24, 1920, Quirk was examined by Drs. Dunham Dunham, 2503 Auburn Avenue, Cincinnati, Ohio, whose report was as follows:
"Pleura is greatly thickened over entire left side from apex to base. Left border of heart and left diaphram are obscured by great mass of increased density involving left base as high as fifth rib. Increased liber tissue in lower left lobe. Density in lower rib suggest changes follow case of bronchial pneumonia due to flu. This case does not have appearance of tuberculosis. At least one-half of left lung function has been lost and there is some damage to lower right lobe."
17. In March of 1920, Quirk entered into placement training in the drafting room of the Goodyear Tire Rubber Company at Akron, Ohio, where he remained until June of 1920, at which time the plant shut down and Quirk transferred to the Y.M.C.A. School at Cleveland, Ohio, taking a drafting course.
18. Quirk discontinued his drafting course training at the Y.M.C.A. School at Cleveland, Ohio, on or about September 22, 1920, for the purpose of entering the Marine Hospital at Cleveland, Ohio, for further observation of his chest condition. He re-entered the school January 1, 1921, was in the United States Marine Hospital approximately two weeks in March of 1921, and was back again in the school until June 24, 1921. His physical examination on that date at the United States Marine Hospital showed the following diagnosis: "Chronic pulmonary tuberculosis, active, moderately advanced, pleurisy with effusion over left side and base."
19. He immediately entered the Marine Hospital at Cleveland, Ohio, for treatment, and in July of the same year, was transferred to the Mt. Vernon Sanitarium, where he remained until August of 1921.
20. On August 2, 1921, Quirk was examined by Dr. Roy G. Werner, at Akron, Ohio, whose report was as follows:
"Expansion of left upper chest very limited. No expansion of left lower chest. Expansion of right chest fair. Vocal fremetis present over right chest and upper left chest. Breath sounds are rough over whole right chest and absent over lower left base. Pulmonary tuberculosis and pleurisy with effusion."
21. Quirk was then transferred to the Sanitarium at Greenville, S.C., at which institution he remained for approximately three weeks.
22. On October 6, 1921, Quirk was given a temporary total disability rating from date of discharge, which lasted until January 1, 1922.
23. On October 31, 1921, Quirk re-entered training in West Tech at Cleveland, Ohio, having as his vocational objective a manual training teacher, but, because of the dust in the wood-working rooms, was forced to almost immediately change his objective back to drafting, and in November of 1921, he re-entered the Y.M.C.A. School at Cleveland, Ohio, where he remained until March 1, 1922.
24. From January 1, 1922, to March 1, 1922, Quirk was rated "temporary partial disability."
25. In March of 1922, his training was again interrupted because of illness and weakness, and he was again sent to the Mt. Vernon Sanitarium, where he remained under treatment for three months.
26. During the hospitalization at Mt. Vernon, he was again rated "temporary total" from March 1, 1922, to June 29, 1922.
27. On June 29, 1922, he again re-entered the Y.M.C.A. School at Cleveland, Ohio, to resume training. As soon as he re-entered training at the Y.M.C.A. School at Cleveland, Ohio, the last of June, 1922, he was again given a "temporary partial" rating from June 29, 1922, to January, 1923.
28. On January 24, 1923, he entered placement training at the Foote-Burt Company, Cleveland, Ohio, but seven days thereafter, to wit, January 31, 1923, while with the Foote-Burt Company, Quirk had a hemorrhage, and on recommendation of the medical department of the Veterans' Bureau was hospitalized at the Marine Hospital, Cleveland, Ohio.
29. Quirk was rated "temporary total" for the month of February, 1923, and was then put back on a "temporary partial" rating until August of 1923.
30. June 20, 1923, Quirk's placement training was changed to the V.R. Browning Company at Cleveland, Ohio, where he remained until July 31, 1923.
31. Quirk was examined on July 18, 1923, by Dr. H.O. Black, T.B. Specialist, connected with the United States Veterans' Bureau, at Cleveland, Ohio, whose report was as follows: "Pulmonary tuberculosis, inactive, thickened pleura, left lung impaired throughout."
32. In August of 1923, Quirk entered the Altamont Hospital at Ft. Thomas, Ky., where he was examined by Dr. E.A. Martin, whose report was as follows:
"The X-ray films show no involvent of right lung, except a couple of heavy trunks to the eighth and ninth ribs posteriorly. In the left lung are seen fairly heavy deposits, probably active but not showing an attempt at healing. These deposits extend down to the second rib anteriorly and fifth rib posteriorly. Diagnosis: — Absorbed pleural effusion of the left side with paralysis of the left diaphram and costo diaphramic adhesions, obliterating the sulcus. We believe this man is tubercular, that the lesions are present active regardless of the absence of elevation of temperature and that he should be treated in a sanitarium for this disease."
33. On October 9, 1923, Quirk was then sent for treatment to the Irene Byron Sanitarium at Ft. Wayne, Ind., where he was examined on December 9, 1923, and diagnosed as "chronic pulmonary tuberculosis, active, advanced."
34. Quirk then received home treatment under the Veterans' Bureau's supervision for approximately six months, and in June of 1924, at the suggestion of the Veterans' Bureau, was employed by the Cleveland Crane Engineering Company, at Wickliffe, Ohio.
35. On or about June 14, 1924, he was examined by the Veterans' Bureau at Cleveland, Ohio, and diagnosed as follows: "Involvement shown on left side chest, heavy fibrosis and heavy diffused fibrosis, infiltration over the entire lower lobe extending to the cortex."
36. From August or September of 1924, Quirk worked part time until December 26, 1924, at which time Dr. J.W. Le Fevre, connected with the United States Veterans' Bureau at Cleveland, Ohio, rendered an X-ray report as follows:
"The right side shows a moderate fibrosis at the hilum, heavy infiltration in the larger bronchi and moderate diffused infiltration in the smaller bronchi over the inner half of lung area, the apex and cortex of the upper and middle lobe hazy, heavy infiltration around the base of heart shadow with slight infiltration over the inner half of the lower lobe. The outer cortex fairly clear. Diaphragm smooth. The left side shows moderate fibrosis at the hilum, with thin diffused mottled shadows radiating out over the lower portion of the upper lobe and extending slightly upward into the apex, the lower lobe shows a heavy fibrosis band just over the diaphragm shadow extending out to the cortex, the pleura thickened over the entire lower lobe, this having the appearance of an old pleurisy. Diaphragm shadow partially obscured. The heart normal in size. Blood vessels normal. He complained of coughs now and then and hemorrhage from the lungs about three weeks ago, stated that it was his second hemorrhage during the year, headaches. Diagnosis: Pulmonary tuberculosis, active."
37. As a result of Dr. Le Fevre's report, Quirk left the Cleveland Crane Engineering Company and was hospitalized at the Warrensville Sanitarium in January, 1925, where he remained for approximately three months.
38. In April of 1925, he secured a position as draftsman with the McMyler-Interstate Company at Bedford, Ohio, and worked three days.
39. About one month later, he secured work with Bartlett Snow Company, at Cleveland, Ohio, doing temporary work in the drafting room, where he remained for about six weeks, and then was employed by the Variety Iron Works at Cleveland, Ohio, as draftsman in the latter part of June.
40. During his employment at the Variety Iron Works he had another hemorrhage in July of 1925, and was examined by the Veterans' Bureau on July 10, 1925, which diagnosis was as follows: "Pulmonary tuberculosis, moderately advanced, quiescent, chronic, fibrinous and pleurisy." He was advised to continue his work, which he did until August of 1925.
41. Quirk then secured employment in September of 1925 with Knight, Norris Gibbs, Wurlitzer Building 1017 Euclid avenue, Cleveland, Ohio, as a real estate salesman, but was forced to quit said employment inside of one month due to his physical condition.
42. In October of 1925, Quirk was reemployed by the McMyler-Interstate Company, but was unable to endure any kind of work.
43. In January of 1926, Quirk had a severe hemorrhage and was examined on January 11, 1926, by the Veterans' Bureau at Cleveland, Ohio, report of which examination was as follows:
"January 11, 1926, X-ray of chest — Right side shows a moderate fibrosis at the hilum with heavy infiltration in the larger bronchi and slight infiltration in the smaller bronchi over the inner half of lung area. The apex and cortex of the upper lobe clear. Slight infiltration in the lower portion. Diaphragm smooth. Left side shows a heavy fibrosis at the hilum with thin diffused infiltration over the lower lobe and some thickening of the pleura in this area. Diaphragm elevated and roughened over the outer angle. Thin diffused infiltration in the upper lobe including the apex and cortex. The heart and blood vessels normal. Diagnosis: X-ray Examination shows a moderate fibrosis at the hilum, with heavy infiltration, the larger bronchi with a slight infiltration in the smaller bronchi. Left side shows a heavy fibrosis at the hilum with thin diffused infiltration."
44. Quirk was again examined by the Veterans' Bureau doctors at Cleveland, Ohio, on January 19, 1926, whose report was as follows:
"January 19, 1926 Bureau examination shows complaint of hemorrhage from lungs, headache. History: Discharged with T. Bc. Been in hospital four times since January 1920 for pulmonary hemorrhages. Had been working ten weeks until onset of present illness, night of January 17, 1926. Examination shows temperature 36.2 to 38.6. Pulse 70 to 100. Sputum positive. Height 69", weight 165 lbs. Normal weight 180 lbs. Chest long, broad and deep, lagging at left side. Fremitus increased right upper and left side: decreased resonance right and left lungs. B.V.B. and I.W.V. above third rib and fifth D.S., no rales, right lung. B.V.B. and I.W.V. above fourth rib and eighth D.S. Fine and medium rales above same area, left lung. Fibrosis right upper with infiltration left upper and upper part of lower lobes. Diagnosis: tuberculosis, moderately advanced, active."
45. He was accordingly sent to the Marine Hospital at Cleveland, Ohio, for hemorrhage, and was again examined on February 2, 1926, which diagnosis showed pulmonary tuberculosis, moderately advanced, active.
46. On March 1, 1926, Quirk was transferred to the Soldiers' National Military Home, at Dayton, Ohio, and on March 3, 1926, was again examined, which report was as follows:
"March 3, 1926, Bureau examination shows temperature range 97 to 99. Pulse 70 to 100, weight 165½ lbs. Normal weight 161 lbs. Sputum positive. Has had no hemorrhage since admission. In bed a week. Chest broad, short and shallow. Mobility: even full expansion. Fremitus: moderately dull above clavicle, right and left lungs. Increased vocal resonance, right lung, increased whispered voice with broncho-vesicular breathing over area dullness. No constant rales heard. Increased vocal resonance with broncho-vesicular breathing over area fulness, left lung. Increased whispered voice above third rib and sixth dorsal spine. Medium rales heard above fourth dorsal spine, posteriorly. Infiltration upper left lobe. Fibrosis upper right lobe. Diagnosis: X-ray examination shows a moderate fibrosis at the hilum, with heavy infiltration the larger bronchi with a slight infiltration in the smaller bronchi. Left side shows a heavy fibrosis at the hilum with thin diffused infiltration over the lower lobe and some thickening of the pleura. Diaphragm elevated and roughened over the outer angle. Thin diffused infiltration in the upper lobe including the apex and cortex."
47. At Dayton, Quirk had constant sore throat and hemorrhages in May and June of 1926, and being dissatisfied with the treatment he received there, he left the institution on July 20, 1926.
48. When Quirk had entered the Altamont Hospital on August 1, 1923, he had been again rated "temporary total" from August 8, 1923, until July 20, 1926, at which time he left the Soldiers' National Military Home, at Dayton, Ohio, against medical advice. He was on that date placed back upon a "temporary partial" rating, which continued until October 26, 1926, when he entered the Veterans' Hospital at Aspinwall, Pa., and was again given a "temporary total" rating from that date until February 14, 1927, when he was given a "permanent and total" rating.
49. On July 28, 1926, Quirk's throat was examined by Dr. C.L. Hyde of the Springfield Lake Sanitorium, East Akron, Ohio, and was diagnosed as T.B. Laryngitis.
50. On July 28, 1926, Quirk was examined by Dr. D.K. Herwig of the Municipal Tuberculosis Clinic.
51. On October 23, 1926, Quirk was again examined at the United States Marine Hospital at Cleveland, Ohio, with the following diagnosis: "Chronic pulmonary tuberculosis, moderately advanced, active."
52. On October 26, 1926, Quirk entered the United States Veterans' Hospital, at Aspinwall, Pa., and was examined at said institute on October 27, 1926, which report was as follows:
"October 27, 1926, report shows admission to Hospital #103 October 26, 1926. Examination showed height: 68", weight 165 lbs. Sputum positive. X-ray of chest October 27, 1926, showed chest short, broad at base, dome-shaped. Left outer angle of diaphragm squared, 2nd and 3rd ribs on left appear somewhat collapsed. Right lung: apex is slightly cloudy. Balance of lung infiltrated by a fine mottling with a few coarse striations. There is an area of rather solid shadow over the posterior, extremity of the 7th rib believed to be an area of calcification. Left lung: upper portion of apex opaque. In the outer central portion of upper lobe is a cavity irregular in outline 2.75 cm. Balance of lobe shows mixed fine striation and mottling. Lower lobe is hazy and shows rather thick coarse striation. Impression: Semi-arrested tuberculosis of all lobes with cavity left upper. Old fluid level left lower. Diagnosis: Tuberculosis, chronic, pulmonary, far advanced, active B."
53. On February 15, 1927, Quirk was again examined at the United States Veterans' Hospital, at Aspinwall, Pa., which report was as follows:
"February 15, 1927, a supplementary report of Hospital #103 shows chest B.V.B. right lung third rib up, compensatory below third rib, right lung: prolonged expiration throughout posteriorly and broncho vesicular above 5th D.S. Whisper above 3rd rib and 8th D.S. with pectoriloquy between 3rd D.S. and 6th D.S. Medium rales 6th rib up, inconstant rales posteriorly. Left lung: diminished breath sounds 4th rib up. Feeble below 4th rib. Feeble throughout posteriorly. Whispered increase throughout anteriorly: More marked above 3rd rib. Pectoriloquy in 2nd and 3rd interspaces. Posteriorly whisper is increased above 7th D.S. pectoriloquy between 4th and 6th D.S. anteriorly. Medium rales throughout becoming coarse above 6th D.S. Diagnosis: Infiltration of lobes, both lungs: cavitation left upper: Laryngitis, probably T.B. Recommendation: Permanent total rating, under Section 7035, paragraph B, far advanced active pulmonary tuberculosis."
54. Quirk in his application for reinstatement of the $10,000 policy in suit, on January 17, 1921, stated that he was in good health; in his application of December 31, 1921, for conversion, that he was disabled on account of injury or disease; in his application for reinstatement of the $3,000 policy on December 15, 1924, that he was not permanently and totally disabled; in his application for reinstatement of the $3,000 policy on June 13, 1925, that he was not permanently and totally disabled, and in the application for reinstatement of the remaining $7,000 of the policy in suit on February 21, 1927, that he was `temporary total."
55. The statements of Quirk in finding No. 54 were statements of opinion innocently and mistakenly made by him. Defendant was also mistaken as to the facts, although it had a better opportunity of knowing and appraising the value thereof. Defendant in its action on the various applications relied on its own knowledge of the facts and not on the opinion of Quirk.
56. The defendant is not suffering any loss as to the $7,000 of the policy in suit which was not reinstated or converted.
Conclusions of Law.
1. That John L. Quirk was permanently and totally disabled when discharged November 8, 1919.
2. That plaintiff is not estopped from recovering $7,000 on the policy in suit by reason of representations made by Quirk to defendant, in the various applications for reinstatement, that he was not permanently and totally disabled, and by the issuance of the $3,000 policy.
3. The policy in suit matured November 8, 1919, and plaintiff is entitled to recover $7,000 thereof, being the amount of said policy for which there was no reinstatement or conversion.
4. Plaintiff is not entitled to recover the remaining $3,000 of the $10,000 policy in suit, which amount is represented by the converted policy of $3,000.
The United States is not in the insurance business for profit, but only for the purpose of protection to those who offered themselves voluntarily or involuntarily as sacrifices in its military and naval service. Such contracts should be construed liberally so as to afford the protection intended by the statutes. White v. U.S., 270 U.S. 175, 180, 46 S. Ct. 274, 70 L. Ed. 530; Peart v. Chaze, 13 F.2d 908 (D.C.W.D. La.); and Starnes v. U.S., 13 F.2d 212 (D.C.E.D. Tex.). Congress evidently intended that such contracts should be so construed, as appears by the amendment to the War Veterans Act of July 3, 1930 (38 USCA § 518), making such contracts incontestable except for certain specific reasons named therein.
Defendant denies plaintiff's right to recover on two grounds: First, that Quirk was not totally and permanently disabled when discharged from the military service; and, second, that having represented in his applications for reinstatement that he was not totally and permanently disabled and having received a $3,000 converted policy, plaintiff is now estopped from making any claim on the $10,000 policy in suit.
What is total and permanent disability within the meaning of the policy in suit? I do not know of any better definition than that contained in Regulation No. 11, under the War Risk Insurance Act, which reads:
"Any impairment of mind or body which renders it impossible for the disabled person to follow continuously any substantially gainful occupation shall be deemed, in articles III (relating to compensation) and article IV (relating to insurance) to be total disability.
"`Total disability' shall be deemed to be permanent whenever it is founded upon conditions which render it reasonably certain that it will continue throughout the life of the person suffering from it."
See, also, Starnes v. U.S., 13 F.2d 212 (D.C.E.D. Tex.); U.S. v. Eliasson, 20 F.2d 821 (C.C.A. 9th); U.S. v. Cox, 24 F.2d 944 (C.C.A. 5th); Jagodnigg v. U.S. 295 F. 916 (D.C.W.D. Mo.) and U.S. v. McGovern, 299 F. 302 (C.C.A. 9th).
Applying the above definition to the facts found in this case, which disclose sickness and disability beginning before discharge and continuing until the death of the insured, which disability permitted the insured to work during a period of little over eight years, 232 days only, thus establishing that the insured was disabled from continuously and substantially following any gainful occupation and therefore was totally and permanently disabled within the meaning of the policy in suit. For decisions sustaining this principle in cases which are analogous in the facts, see Law v. U.S., 290 F. 972 (D.C. Mont.); U.S. v. Cox, 24 F.2d 944 (C.C.A. 5th); McGovern v. U.S., 294 F. 108 (D.C. Mont.) and U.S. v. Acker, 35 F.2d 646 (C.C.A. 5th).
Is plaintiff estopped from recovering on the policy in suit by reason of the misrepresentations contained in the various applications for reinstatement and by reason of the issuance of the $3,000 converted insurance. In 21 C.J. 1125, it is stated:
"No estoppel arises where the representation or conduct of the party sought to be estopped is due to ignorance founded upon an innocent mistake. And while there is authority to the contrary, the weight of authority is that the acts and declarations of a party based upon an innocent mistake as to his legal rights will not estop him to assert the same, especially where every fact known to the party sought to be estopped is equally well known to the party setting up the estoppel."
See, also, Andrews v. U.S., 28 F.2d 904 (D.C. Colo.) and Jenkins v. U.S., 22 F.2d 568 (D.C.R.I.).
The statements made by Quirk were innocently and mistakenly made. Like every tubercular patient, he no doubt believed his illness was temporary.
Defendant must have relied on the representations made by Quirk. In 21 C.J. 1126, it is stated:
"It is an essential element of equitable estoppel that the person invoking it has been influenced by and has relied on the representation or conduct of the person sought to be estopped."
The defendant in this case did not rely on Quirk's representations, but upon the representations of its own doctors.
Representations to create an estoppel must be of fact and not of opinion. In 21 C.J. 1142, it is stated:
"Mere expressions of opinion by interested persons cannot, although subsequently shown to be groundless or false, be regarded as misrepresentations for the purpose of creating an estoppel; there must be a material representation of a fact. A fortiori is this so where the representation is known by the party to whom it is made to be nothing more than expression of opinion."
Quirk did not know his physical condition and, if he had known, would not have been able to state what the result would be. What he stated was merely an opinion.
If a representation is relied upon, it must have caused a loss. Larsen v. U.S., 29 F.2d 847 (D.C. Ariz.). No loss has been shown in this case.
For a case analogous in its facts on the matter of estoppel, see Dobbie v. U.S., 19 F.2d 656 (D.C.S.D. Tex.). In U.S. v. Buzard, 33 F.2d 883, 885 (C.C.A. 9th), an analogous case on the facts, in which there was a policy of $10,000, $5,000 of which was reinstated, the court said:
"It is thought to be clear that as to the second $5,000 of the original term insurance there is no ground for the application of the principles of estoppel, waiver, merger, or novation — defenses invoked or suggested by the government. No new contract was entered into respecting or based upon it, it was in nowise superseded, plaintiff got no benefit on account of it, and in respect of it the government lost nothing, and was in no wise prejudiced by what occurred after its termination. If it can be said that plaintiff at any time made representations directly or indirectly relating to it, inconsistent with his contention now that he was totally and permanently disabled on and after June 18, 1918, they may be of probative value on the general issue, and as tending to discredit his testimony, but they do not necessarily conclude the issue; and hence that branch of the case was correctly submitted to the jury. * * *
"We are of the opinion that, under the circumstances assumed, and in the absence of actionable fraud or mistake, the contract of converted insurance would become a substitute for, and supersede, the earlier contracts in respect of the $5,000 covered thereby. If it was entered into through fraud or mistake, it may be rescinded or avoided by appropriate proceedings under principles applicable to such cases. * * * By our reference to `appropriate procedure' to rescind the reinstated and converted insurance contracts for fraud or mistake, we are not to be understood as necessarily holding that a preliminary, plenary suit in equity for that purpose is requisite. Possibly section 274b of the Judicial Code (28 USCA § 398) affords an adequate remedy, provided, of course, the plaintiff by his answer pleads in substance the facts necessary for an independent bill. See Whitney [Co.] v. Johnson (C.C.A.) 14 F.2d 24, and Liberty Oil Co. v. Condon Bank, 260 U.S. 235, 43 S. Ct. 118, 67 L. Ed. 232."
See U.S. v. Acker, 35 F.2d 646 (C.C.A. 5th); Larsen v. U.S., 29 F.2d 847 (D.C. Ariz.); Andrews v. U.S., 28 F.2d 904 (D.C. Colo.); and U.S. v. Golden, 34 F.2d 367, 373 (C.C.A. 10th), which is an analogous case on the facts, and in which the court said:
"It is alleged that this situation presents an estoppel in pais, and an estoppel by contract. There is no active misrepresentation by the assured; no intention to deceive; no reliance by the government, for it knew more of the truth than he did; and no substantial injury. Furthermore, the representation that he was not totally and permanently disabled, implied by his application, was induced by the representations of the government doctors. Certainly one party, whose own agents induced the misstatement, if there was one, cannot claim estoppel against the other, who relied thereon. It is the equivalent to saying that one can work an estoppel out of his own statements."
In Duggan v. U.S., 36 F.2d 804 (D.C. Minn.), there was a $10,000 term insurance policy; the policy lapsed for nonpayment of premiums; $3,000 was reinstated and converted. The court held there could not be any recovery for the part reinstated and converted, saying on page 806 of 36 F.2d:
"The reinstated policy superseded the original insurance contract between the plaintiff and the defendant, and the reinstated policy was in its turn superseded by the converted policy, thus doing away with the original contract, in so far as $3,000 of the amount of that policy is concerned, as long as the new contract stands. Stevens v. U.S. (C.C.A.) 29 F.2d 904, and U.S. v. Buzard (C.C.A.) 33 F.2d 883."
That the plaintiff could recover as to the balance, saying:
"The foregoing considerations do not apply to the $7,000 balance on the original policy, which was not reinstated. The government was not misled or in any wise prejudiced in regard to that part of the case, and the plaintiff is entitled, under the facts as here found, to recover, on that part of his claim. U.S. v. Buzard, supra."
The burden of proof rested on the government to establish the defense of estoppel averred. This it failed to do as to the $7,000 not reinstated or converted. As to the $3,000 reinstated and converted it has established a defense thereto. This contract is outstanding and recognized as valid by the parties in this action. There has been no attempt to rescind this policy on the ground of mutual mistake. There has been no surrender or offer of surrender, which is essential to recovery on the original policy under the Act of July 3, 1930, amending section 307 of the World War Veterans' Act of 1924 (38 USCA § 518).
For the reasons given plaintiff is entitled to judgment in the sum of $7,000.
Let an order be prepared accordingly.