United States v. Arzner

Background

A veteran enlisted in 1918, bought a $10,000 war-risk policy, and later had that policy reinstated and converted into an ordinary life policy. He surrendered portions of the converted policy in 1921 for small cash values. In 1929 he sued, claiming total disability from battle that began in 1918 and seeking monthly payments under the original 1918 policy. A jury found his disability dated to September 29, 1918, and awarded him a verdict; the lower courts affirmed before the case reached this Court.

Reasoning

The key question was whether a 1930 law requiring the surrender of any later policy barred recovery when the veteran had already given up the converted policy. The Court read the statute in light of Congress’s intent to give generous treatment to veterans and to protect rights that had already vested under original policies. The Court explained that the surrender rule aimed to prevent duplicate claims, but that refusing recovery because the veteran could not physically surrender a policy already delivered to the Government would defeat Congress’s purpose. The Government was not prejudiced because it already possessed the cancelled converted policy and the veteran had in fact paid premiums when he was entitled to benefits.

Real world impact

The decision lets veterans press claims on their original wartime policies even after conversion or earlier surrender of later contracts. It prevents a narrow technicality from blocking long-vested disability claims and affirms jury findings awarding back benefits under the original 1918 policy.