United States v. McClure/Opinion of the Court
We are called upon to determine whether Section 301 or Section 305 of the World War Veterans' Act  applies to a lapsed policy of War Risk yearly renewable term insurance.

Section 301 authorizes conversion of such policies and provides (with exceptions not applicable here) that 'All yearly renewable term insurance shall cease on July 2, 1927, except when death or total permanent disability shall have occurred before July 2, 1927: * * *.'

Section 305 provides that 'Where any person has heretofore allowed his insurance to lapse, * * * while suffering from a compensable disability for which compensation was not collected and dies or has died, or becomes or has become permanently and totally disabled' while 'entitled to compensation remaining uncollected * * * his insurance * * * shall not be considered as lapsed;' and the Veterans' Administration shall pay him or his beneficiaries 'so much of his insurance as said uncollected compensation * * * would purchase if applied as premiums when due * * * less the unpaid premiums and interest thereon at 5 per centum compounded annually in installments.'

John F. McClure, a World War Veteran, allowed his yearly renewable term insurance to lapse by failing to pay the premium due February, 1919, 'while suffering from a compensable disability for which compensation was not collected.' December 1, 1929, when he became permanently and totally disabled, there remained uncollected compensation due him sufficient to pay all premiums then due on his lapsed policy. The veteran brought suit on his policy alleging total and permanent disability and, at his death, respondent-as administratrix and individually-filed an amended complaint seeking recovery under Section 305. The District Court held that the insurance was not revived under Section 305 and entered judgment for the government. The Circuit Court of Appeals reversed,  believing Section 301 did not limit Section 305 and that respondent was entitled to judgment on the policy, contrary to the result reached by the Circuit Court of Appeals for the Tenth Circuit. 

Since this veteran's lapsed policy was 'yearly renewable term insurance' and his permanent disability occurred after July 2, 1927, the question is, Did such insurance cease to exist on July 2, 1927 because of the general sweeping provisions of Section 301, or was lapsed yearly renewable term insurance-such as his-saved by the special benefits extended under Section 305? We find the answer in the language of the original War Risk Insurance Act and its amendments.

That original Act of October 6, 1917,  provided government insurance without medical examination for persons engaged in war services. Yearly renewable term insurance was granted with provision for conversion into other forms of insurance without medical examination not later than five years after the termination of the war.

August 9, 1921, Congress amended this Act and added Section 408.  Section 408 greatly liberalized the rights of veterans, both to reinstate and to revive lapsed 'yearly renewable term insurance.' First. Veterans suffering from disability contracted in active war service were permitted to reinstate their policies despite such disability. Second. Veterans' insurance which had lapsed while the veterans were suffering from service connected disabilities for which compensation had not been paid-as here, was revived in the amount which such uncollected compensation-at death or date of total disability-would purchase. This first provision of Section 408 was the original predecessor of Section 304; the second provision relied upon on to enforce McClure's policy-became Section 305.

By the Act of March 4, 1923,  Congress broadened both beneficial provisions of Section 408 and left it as a single Section. But in 1924, when Congress revised the War Risk Insurance Act,  these twin provisions of Section 408 were severed and thereafter appeared as two separate and distinct paragraphs, Sections 304 and 305. Section 304 incorporated that portion of Section 408 which had provided for reinstatement of lapsed term insurance despite physical disability. Section 305 reenacted the second provision of Section 408 which had authorized utilization of uncollected compensation for revival of such lapsed insurance. It is of vital significance that Congress in creating these two new Sections was careful to limit reinstatement of lapsed term insurance by concluding Section 304 with the pointed proviso 'That no term insurance shall be reinstated after July 2, 1926.' But Congress placed no such limitation of the right of revival under Section 305, on which this suit is brought.

The action of Congress in restricting the benefits only under one of the two Sections must be considered together with Section 301 of the same 1924 Act which provided that 'All term insurance shall cease on July 2, 1926, except when death or total permanent disability shall have occurred before July 2, 1926.' Congress in this 1924 Act, clearly evidenced its purpose to prohibit reinstatement of yearly renewable term policies under Section 304 after July 2, 1926, in order to make Section 304 conform to Section 301 which authorized conversion of such policies prior to that date. Reinstatement under 304, however, required action by the veteran. He was required to submit application, to comply with statutory and administrative regulations, and to pay back premiums. But action by the veteran was not required to revive a lapsed policy under Section 305. His rights did not depend upon application, proof, compliance with regulations or payment. Because his policy had lapsed while the government owed him money for service connected disability which had become total and permanent, his lapsed policy was automatically revived. To have required action on his part would have been inconsistent with the manifest purpose of Congress to permit revival and continuation of insurance solely because the government had in its possession funds due the veteran and sufficient to pay for his insurance.

June, 1926,  Section 301 was amended extending the date for conversion of yearly renewable term insurance to July 2, 1927, and the following month the proviso of Section 304 was specifically amended to conform to the June amendment to 301, by prohibiting reinstatement of such insurance after July 2, 1927.  Although the right of reinstatement under Section 304 thus was again specifically restricted, Congress in no way indicated any intention to add the same restriction to the right of revival under Section 305 on which the present suit is based. Instead, the benefits under Section 305 were extended by the July amendment so as to permit beneficiaries to apply uncollected bonuses to the lapsed policies of deceased veterans. Congress again gave special attention to Section 305 in 1928  and authorized the revival of lapsed policies by utilization of compensation otherwise uncollectible because barred by limitations. Continuing the separate consideration and treatment of Sections 304 and 305, Congress in 1930 once more applied the restrictive proviso to Section 304 but not to Section 305. 

The deliberate intention of Congress to apply different restrictions to the right of reinstating lapsed policies under Section 304 and that of reviving such policies under Section 305 was also made manifest by other changes in the Act of July 2, 1926.  While reinstatement of yearly renewable term insurance under 304, but not revival under 305, was therein prohibited after July 2, 1927, a new proviso was added to 305 under which the 'insurance hereafter revived under this section (305) * * * shall be paid only to the insured, his widow, child or children, dependent mother or father, * * *.' On the other hand, there is no such limitation as to beneficiaries of policies reinstated under the provisions of Section 304. This studied limitation of the government's liability on policies revived under Section 305, by restriction of beneficiaries, indicates a distinctive legislative consideration and treatment of that Section.

To hold that a lapsed yearly renewable term insurance policy cannot be revived under Section 305 would be to apply to that Section, by construction, the proviso which Congress attached only to 304. Sections 304 and 305 are distinct parts of the statute which contains them. While both Sections emanated from a single prior Section, Congress evidently separated them to provide for the individual treatment that has been given reinstatement as distinguished from revival of lapased policies. A deliberate separation of the two parts of the old Section-ap plying a restriction to one and not the other-indicates that a change was intended.  This is in accord with the presumption that a proviso 'refers only to the provision to which it is attached.' 

In the light of the statutory development of the War Risk Insurance Act. there is no conflict between the general provisions of Section 301 requiring conversion of yearly renewable term insurance by July 2, 1927, and the special benefits granted by Section 305 to that particular group of veterans to whom the government had not paid disability compensation which was justly their due. The benefits of the special provisions of Section 305 are extended to every veteran who has 'heretofore allowed his insurance to lapse, * * *.' The meaning of the words of the statute is apparent and we need not look beyond the language and statutory development of the War Risk Insurance Act.  A lapsed policy, whether yearly renewable term or in converted form, comes within the provisions of Section 305.

Since the veteran in this case was due compensation for service connected disabilities at the time his policy lapsed and at the time he became totally and permanently disabled the amount of his uncollected compensation was sufficient to pay all premiums then due, his insurance was revived under Section 305. The judgment of the Circuit Court of Appeals is therefore affirmed.

Affirmed. 

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