author: SAWTELLE, Circuit Judge.

text:
    UNITED STATES v. LAWSON.
    No. 6261.
    Circuit Court of Appeals, Ninth Circuit.
    May 18, 1931.

      H. E. Ray, U. S. Alty., and Ralph R. Breshears, Sam S. Griffin, and W. H. Lang-roise, Asst. U. S. Attys., all of Boise, Idaho.
    Oscar W. Worthwine and Jess B. Haw-ley, both of Boise, Idaho, and R. W. Katern-dahl, of Salt Lake City, Utah, for appellee.
    Before RUDKIN, WILBUR, and SAW-TELLE, Circuit Judges.
   SAWTELLE, Circuit Judge.

This is an appeal from a judgment in favor of plaintiff, in an action upon a contract of war risk insurance.

The errors complained of by appellant are to the admission in evidence of a regulation defining total and permanent disability, promulgated by the Bureau of War Risk Insurance by virtue of authority conferred by the War Risk Insurance Act; the failure of the trial court .to give one of defendant’s requested instructions; and the refusal of the court to grant defendant’s motion for a directed verdict, made at the close of plaintiff’s evidence, and renewed at the close of all the evidence, and substantially upon the same grounds.

Spencer H. Lawson, the insured, enlisted in the military service of the United States on August 4, 1918, and went overseas on October 28, 1918. He arrived in the United States on his return October 6,1919, and was honorably discharged at Camp Dodge, Iowa, on October 20, 1919. His contract of war risk insurance lapsed November 30, 1919', at midnight. Plaintiff, when he enlisted, was 21 years old. The evidence tended to show that prior to his enlistment he had worked as a farmer for a period of 8 years, never having had any difficulty on account of his health in plowing ground, hauling wood, stacking grain, milking cows, and performing the general duties of a farmer on the average farm, and he had taken part in usual youthful athletic activities. His enlistment record showed him to be 5 feet 5% inches in height, and his weight 139 pounds. Prom a record of general physical examination at place of mobilization, it appeared that his head, eyes and vision, ears and hearing, chest and extremities, were “normal,” and that there were no deformities, except that under the head of “remarks” appeared the statement, “Remnants of old facial paralysis on right side, no trouble present.” Prom army hospital records it appeared that plaintiff, on or about December 27, 1918, had a case of “mumps, bilateral,” which lasted until on or about January 22, 1919; and the evidence tended to show that, previous to being taken to the hospital, plaintiff had been sick about 24 hours, the men having been doing 48-hour shifts. Prom the army records it further appeared that from March 4 to March 7, 1919, he was again under hospital treatment, the diagnosis being “glossi-tis” and “mumps, bilateral”; and that he was again admitted to the hospital, at Brest on August 21, 1919, the evidence tending to show that he had on a 3-day trip from Germany to Brest, in a bunk ear carrying from 80 to 85 men, developed a sore throat with swollen tongue, and that he was feeling “hot all over,” and that, on detraining at Brest, after he had “stood around eight or nine hours,” he was “tagged” and sent to the hospital, where, it appeared from the army records, he was under treatment from August 21 to October 1, 1919, when he was assigned to duty, the final diagnosis being “scarlet fever.”

At -the time of his discharge, plaintiff signed a declaration wherein, in response to the question whether he had any reason to believe that at the present time he was suffering from the effects of any wound, injury, or disease, or had any disability or impairment of health, he answered “No.” In a “Certificate of Immediate Commanding Officer,” which was at that time signed by the captain commanding, at Camp Dodge, Iowa, the body of such certificate — containing statements, with blanks to be filled in, as to whether or not the officer had reason to believe that the soldier signing the foregoing declaration had then a wound, injury, or disease, whether or not incurred in the military service of the United States — -was stricken out, and the certificate did not contain any statement on the above or any other subject. In another certificate1, the surgeon who examined plaintiff at the time of his discharge certified that he had been given a careful physical examination, and that “In view of occupation he is — 0—per cent, disabled.”

The evidence further tended to show that, after plaintiff’s discharge, he went directly from Camp Dodge to his home at Spencer, Idaho, arriving there about October 22, 1919; that, when he arrived home, he was weighing between 105 and 110 pounds, was troubled with a cough (which he had before his discharge), and suffered from lack of sleep on account of his aching joints; he at that time aching all over, and his back seeming to bother him more than other parts. It made him tired when he tried to carry a bucket of coal or milk a cow. His heart troubled him when he walked down town', about three blocks; he choked and got weak. Every afternoon he lay down on the lounge. As observed by witnesses who had know him and been familiar with his physical condition for a considerable period of time prior to his enlistment and who saw him after his return, he was very thin and was very much run down, was weak, nervous, and reticent, and there was a decided difference for the worse in his general condition of health. Ever since his discharge he has had a pain in his back, and has had pain continuously.

For about 6 months after his return, plaintiff rested, but in the spring of 1920; being unable to continue farming, and because he “had to do something,” he, feeling a little stronger, on May 15 secured employment with the Forest Service as temporary forest ranger. Immediately following this, he was employed by the Forest Service during the summer in telephone maintenance work. Upon concluding this work, he laid off for 6 months, but again went to work, in the spring of 1921, -as a forest ranger, continuing as such until the summer of 1923, when, on account of his condition, he was transferred to the office of the Forest Service at Mackay, Idaho. In the spring of 1924 he was discharged from his clerical position at Mackay because of his inability to handle or lift implements around the office. In the latter part of September, 1924, plaintiff became postmaster at Spencer, Idaho, a position which he held at the time of the trial. The employment records of the Forestry Department, introduced in evidence, tended to show that plaintiff was appointed temporary forest ranger on May 15, 1920, at a salary of $1,100 per annum, plus a bonus of $240 a year, this service terminating June 30, 1920, immediately following which he was employed on a temporary basis in connection with telephone maintenance work during the summer of 1920. On April 1, 1921, he was given a probatory appointment as forest ranger at a salary of $1,220 per year, plus an annual bonus of $240, serving in this capacity until August 31, 1923. On September 1, 1923, he was appointed a forest clerk at a basis salary of $1,100 per year, in which capacity' he served until April 15,1924. The duties of postmaster at Spencer were assumed by plaintiff in the latter part of September, 1924; his annual pay being $1,100. The evidence tended to show that plaintiff had paid out close to $1,400 since he had been postmaster, over and above any amount the government allowed him for separating allowance, for hire of substitutes during plaintiff's absence from the post office, while he was visiting hospitals and taking treatments.

While plaintiff was engaged in telephone maintenance work, he had to get off his horse every 15 or 20 minutes and either rest or walk. While he was a forest ranger he, on account of the pain it caused him to ride, used an automobile, except in one district where he had to use a horse. He had difficulty in riding, and rode with his right foot out of the stirrup, which permitted him to ride on the right side of the saddle, on the muscles of his leg. Owing to the difficulty he had in saddling a horse, he arranged at the ranger station a rope which was hung over a beam and which held the saddle suspended so that by untying the rope he, could drop the saddle on the back of the horse. He would make camp at some ranch or sheep camp, where he had assistance in saddling his horse when he left. Instead of marking trees himself, requiring the swinging of an axe, he had the purchaser mark them. In 1921, while a forest ranger, he tried to plow in doing some road and trail work, but found he was unable to do the jerking and side motions required to throw the plow out of the furrow. Plaintiff bought in 1921 a belt nine inches wide, and wore it under his trousers as a support for his back; in 1922 he purchased a body brace extending from the small of his back up to his shoulders, and, in 1925 or 1926, a corset-like brace extending down over the hips and up under the armpits; and continuously since 1921 he has worn one or the other of said supports. During the winter of 1922, obtaining permission to do so from the Forest Service, plaintiff removed his headquarters to Windspur, Idaho, because of the difficulty he had in making the trip between the station to which he had been assigned and the post office at Wind-spur, 15 miles distant, to get his mail. He stayed at Windspur until the road opened up so that he could use his ear to get back to the station, where, upon his return, he remained until he went to Mackay. As observed by a witness who saw plaintiff get out of his car at the station, and at gas stations at Dubois and at Spencer, Idaho, in 1921, 1922, and 1923, and since then it was quite an effort for plaintiff to get out and move around; “he acted like a man who had the lumbago— broken down in the back; always pitting Ms hand on his Mp or back,” and “he walked away from the ear like he had a kink in his back. * * * That condition has continued up to the present time.” In 1921 plaintiff still had a cough, but it seemed to be relieved a little, but during all the year 1922 and part of the year 1923 he had a violent cough, and he has had a cough ever since. After plaintiff’s return from the Army, he suffered continually. from lack of sleep, it being necessary to lie on his back or left side on account of the pain in his back, this condition not having changed, but having continued since his discharge. At night his mother, seeing a light on, went frequently into his room to try to make him comfortable and ease his pain, and his father, when he was alive, did the same. The evidence further tended to show that plaintiff has never had a full night’s sleep since his return from the Army, on account of the pain in his back, and this condition has continued since his discharge. He has not had any appetite from the time of his discharge to the present time. While he has been postmaster at Spencer, plaintiff’s mother and sister have had to assist him in lifting mail sacks and packages, and others have, because of his inability, assisted him in such work and in delivering mail at the post office and sending out parcel post mail. Somebody else had to cut the kindling for the post office stove and take the ashes out. In winter, when the snow was deep, plaintiff’s father, when he was alive, would break trail for plaintiff, and, after his father’s death, his mother would break trail for him.

The evidence further tended to show that plaintiff made numerous efforts, commencing in 1921 and continuing up to the time of the trial, to obtain relief from his ailments, by consulting and taking treatments from a number of osteopathic and other physicians, and by visits to and treatments at various United States, veterans’ hospitals in Idaho, Utah, Washington, and California, and by self-administered treatments consisting of hot mineral baths and of steam-cabinet baths, the latter being used by plaintiff, for the purpose of obtaining temporary relief from pain, during the entire period between plaintiff’s return home from the Army and the trial of the action. The reeord contains the testimony of five physicians. Two of these,Dr. Junkin and Dr. Newton, called on behalf of plaintiff, testified as to findings made and conclusions reached from examinations of plaintiff made in 1922, 1927, 1929, and 1930; the examination of 1930 being made by Dr. Newton in March, some 2 weeks before the trial, and the prior examinations' being made by Dr. Junkin. The three other physicians, called to testify on behalf of defendant, were Dr. Swaekhamer, Dr. Crouch, and Dr. Ensign. These physicians, located at various United States veterans’ hospitals, had in July, 1923, and December, 1924, made the respective examinations of plaintiff concerning which they testified. All of these witnesses, from the findings made by them as the result of their examinations, testified as to the conclusions reached and the opinions entertained by them, respectively, upon the question at issue as to whether or not the plaintiff was totally and permanently disabled at the date of his discharge from the army on October 20,1919.

The evidence tended to show that, following some 25 or 30 treatments of plaintiff by Dr. Young, an osteopathie physician of Dubois, Idaho, in 1921 and the spring of 1922, an examination of plaintiff was made,at his instance, by Dr. Junkin, one of the above-named physicians called on plaintiff’s behalf. This examination was made on August 18, 1922, without the taking of X-ray pictures. Dr. Junkin, in his deposition tak-: en in March, 1930, at Idaho Falls, Idaho,, stating that his testimony was principally from memory, but that he had examined plaintiff repeatedly, testified:

“I first treated the plaintiff Spencer H. Lawson August 18, 1922, and found him at that time to' be suffering from active pulmonary tuberculosis, chronic tonsilitis and' chronic infection of the spine. Since 1922 from my records, I have treated the plaintiff, Mr. Lawson, on January 3, 1923, Feb-' ruary 4, 1923, December 16, 1924, and May 8, 1925, and other occasions of which I have • no record.
“When I first treated Mr. Lawson in 1922: he was thin, emaciated, had a chronic cough! and was anaemic. I have observed Mr. Lawson at other times than the specified dates mentioned and have observed that he was-growing progressively more helpless. He,J was anaemic looking and had a sallow complexion. In my opinion during the past eight years Mr. Lawson has been suffering* with tuberculosis. The pulmonary phase of the tuberculosis was very active-in 1922 when I first saw him and has slowly gone into the fibrosed state. The condition of the spine has remained active and progressive. The infection of the spine has been a chronic one; there has been a question in my mind as to whether it was tubercular or not, but as the progress of the disease continues I am now of the opinion that the. condition of the spine is of a tubercular nature, and has been from the beginning of his trouble.”

At the dose of Dr. Junkin’s direct examination, a hypothetical question was put to him, in which there were stated, in substance, as assumptions, the fact previously referred to herein as tending to be shown by the evidence, touching plaintiff’s enlistment and service and his treatment in army hospitals overseas, including hospitalization of 6 weeks for scarlet fever; his discharge and return to his home; his inability to work for a period of 6 months after his return; his failure to regain the weight he had before his attack of scarlet fever, and his impaired appetite; his pains in the back since his discharge, his feeling of weakness, his impaired sleep, and having to sleep on' his back or left side; and the finding of the witness himself, from his examination of August 18, 1922, that plaintiff was suffering from tuberculosis. Said hypothetical question also assumed the definition of 'total and permanent disability promulgated in a regulation of the Bureau of War Risk Insurance which was made by virtue of authority conferred in section 13 of the War Risk Insurance Act (as added by Act Oct. 6, 1917, § 2, 40 Stat. 399, as amended by Act May 20, 1918, § 1, 40 Stat. 555); said definition being as follows: “Total disability is that condition of mind or body which makes it impossible for the disabled person to follow continuously any substantially gainful occupation. Total disability shall be deemed to be permanent when it is founded upon conditions which make it reasonably certain that it will continue throughout the life of the person suffering from it.”

Dr. Junkin, thereupon being asked to stato whether or not, in his opinion, plaintiff was totally and permanently disabled, within the above definition of those words, at the date of his discharge from the United States Army on October 20, 1919, answered in substance that in his (Dr.-Junkin’s) opinion the plaintiff was so disabled; the witness thereupon further testifying that what plaintiff was suffering from, at the date of his discharge, that caused him, in the opinion of the witness, to be totally and permanently disabled, was from “sequela of scarlet fever.”

Dr. A. M. Newton testified inter alia that “this case of osteomalacia, from which plaintiff is suffering, was of comparatively long standing origin” and that “the recognized treatment for this disease is rest and hygienic measures; proper dieting and balanced diet, and the administration, of calcium and phosphate methodically. There is no known cure for the trouble. The prognosis or outlook is unfavorable; he will either die of the disease or some intercurrent infection. He will not live to the normal period of expectancy. It is my opinion that Mr. Lawson is totally disabled, within the definition of permanent and total disability, being that condition of mind or body which renders it impossible for the disabled person to follow continuously any substantially gainful occupation, and permanent disability being defined as being a condition which is founded upon conditions which render it reasonably certain that it will continue throughout the life of the person suffering from it. I do not think he has a capacity for any labor that he can legitimately exercise, with regard to the preservation of life and health.”

Dr. Newton at this point in his direct examination was asked a hypothetical question, which assumed the existence of certain facts that the evidence previously introduced by plaintiff tended to show, and also assumed total and permanent disability to' be as defined in the regulation hereinbefore referred to. Upon the basis of such assumed facts, and of said definition, Dr. Newton was asked to “state whether or not in your opinion Mr. Lawson was permanently and totally disabled at the date of his discharge from the army, on the 20th of October, 1919?”

Answering said hypothetical question Dr. '.Newton testified: “My opinion is that he was totally disabled at that time. I think time will prove that it is a permanent disability also”; and “it was at that time.”

The testimony of the physicians called by the government tended to prove that plaintiff was not totally and permanently disabled, and that he could have followed continuously a substantially gainful occupation without impairment to his health. There was other evidence introduced by the government tending to show plaintiff’s employment by the Forestry Service and as postmaster at Spencer, Idaho, during the greater portion of the time from the date of his discharge from the Army to the date of trial. This lengthy statement of the plaintiff’s evidence is made only because of the earnest contention of counsel for the government that the evidence is not sufficient to support the verdict, and that the court erred in not granting defendant’s motion of a directed verdict in its favor. The only real issue involved in the trial of the case was whether the evidence was sufficient to establish total and permanent disability while the policy of the insured was in full force and effect. That it was incumbent on the plaintiff to establish that he was totally and permanently disabled on or before the date the policy expired is beyond question. United States v. McPhee, 31 F.(2d) 243 (C. C. A. 9).

Considering all the evidence, it is manifest that the court did not err in submitting the question of the plaintiff’s total and permanent disability to the jury. Undoubtedly there are cases arising under the War Risk Insurance Act where the trial court would not be warranted in submitting that question to the jury. In the case of United States v. Rice, 47 F.(2d) 749, this court reversed the ruling of the trial court, holding that there was total failure of proof on the question of total and permanent disability. In the case of United States v. Barker, 36 F.(2d) 556, this court said: “From the facts shown, to hold total disability would be to do violence to any common or reasonable understanding of the meaning of these terms. Not without hesitation we sustained the right of plaintiff to recover in the Sligh Case (C. C. A.) 31 F.(2d) 735, but to go further and yield to the contention of the plaintiff here would be to ignore one of the material limitations of the policy.”

We are not unmindful of the rule prevailing in the United States courts that a ease should never be submitted to a jury simply on the question of probabilities with a direction to find in accordance with the greater probability, and that a piere scintilla of evidence is not sufficient to warrant the submission of an issue of fact to a jury, but, as we view the situation here, that rule is not applicable, there being substantial evidence offered on behalf of the plaintiff which, if believed by the jury, is sufficient to justify their verdict.

“ ‘Total and permanent disability,’ within meaning of war risk insurance policy, does not mean absolute incapacity to do any work at all, but there must be such impairment of capacity as to render it impossible for assured to follow continuously some substantially gainful occupation, and this must occur during life of contract.” U. S. v. McPhee, supra.

It might be argued that the fact that plaintiff managed to hold several positions for the greater part of the time during the years in question, and actually engaged in work, proves that he was able to work and not totally and permanently disabled. But this does not necessarily follow. It is a matter of common knowledge that many men work in the stress of circumstances when they should not work at all. When they do that they should not be penalized, rather should they be encouraged. A careful examination and consideration of the evidence herein convinces us that the plaintiff worked when he was physically unable to do 'so, and that, but for the gratuitous assistance of friends and relatives who did much of his heavy work and the assistance of those whom plaintiff employed at his own expense, he would have been unable to retain his several positions. Under such circumstances, he should not be made to suffer foy carrying on when others less disabled than he would have surrendered.

In this connection we quote from the recent case of United States v. Godfrey, 47 F.(2d) 126, 127 (C. C. A. 1) decided February 11, 1931:

“We think the evidence fully warranted the jury in finding that his case falls within Reg. No. 11, as interpreted by this court in Ford v. United States, 44 F.(2d) 754, 755, where we said:
“ ‘If such claimants are able to follow gainful occupations only spasmodically, with frequent interruptions due to disability, they are entitled to recover under the act.’
“The evidence not only showed that God-frey did follow ‘only spasmodically’ his ‘gainful occupation,’ but that he was ‘able’ to do less than he actually did — that he went to his place of employment when (as the jury may well have found) he was not ‘able’ so to do.
“The evidence is persuasive that Godfrey was a war victim. He was entitled to the most favorable view of the evidence. Gray v. Davis (C. C. A.) 294 F. 57; Heisson v. Dickinson (C. C. A.) 35 F.(2d) 270; B. & A. R. R. v. Jones (C. C. A.) 36 F.(2d) 886. To hold him remediless because he tried, manfully, to earn a living for his family and himself, instead of yielding to justifiable invalidism, would not, in our view, accord with the treatment Congress intended to bestow on our war victims. United States v. Cox (C. C. A.) 24 F.(2d) 944; White v. United States, 270 U. S. 175, 46 S. Ct. 274, 70 L. Ed. 530.”

Another recent case in point is Carter v. United States (C. C. A. 4) 49 F.(2d) 221, 223, decided April 13, 1931, from which we quote:

“The mere fact that a claimant may have worked for substantial periods during the time when he claims to have been permanently and totally disabled is not conclusive against him. The question is not whether he worked, but whether he was able to work, i. e., whether he was able to follow continuously some substantially gainful occupation without material injury to his health. Of course, the fact that a man does work is evidence to be considered by the jury as tending to negative the claim of disability; but. the fact that he works when physically unable to do so ought not defeat his right to recover if the jury finds that such disability in fact existed. In the ease of tuberculosis the patient is notoriously able to carry on for a while and do a substantial amount of work, but in most eases the attempt to carry on results in an aggravation of the disease frequently ending in the death of the patient. ‘To say that the man who works, and dies, is as a matter of law precluded from recovery under the policy, but that one who following the advice of his physician refrains from such work, and lives, is entitled to recovery, presents an untenable theory of law and fact, and emphasizes the necessity for a determination upon the facts in each case whether the man * * * was able to continuously pursue a substantially gainful occupation.’

“The rule applicable in such eases was well stated by Judge Kenyon, speaking for the Circuit Court of Appeals of the Eighth Circuit in U. S. v. Phillips (C. C. A. 8th) 44 F.(2d) 689, 691, as follows:

“ ‘The government contends that the evi.dence of his working is so overwhelming that the court should have given a peremptory instruction to the jury. If the mere fact that the insured did work is conclusive evidence that he was not permanently and continuously disabled, then there should have been no recovery on this policy. The term “total and permanent disability” does not mean that the party must be unable to do anything whatever; must either lie abed or sit in a chair and be cared for by others. The test laid down in the cases is well stated in United States v. Sligh (C. C. A.) 31 F.(2d) 735, 736, as follows: “The term ‘total and permanent disability’ obviously does not mean that there must be proof of absolute incapacity to do any work at all. It is enough if there is such impairment of capacity as to render it impossible for the disabled person to follow continuously any substantially gainful occupation.” Some persons, who are totally incapacitated for work, by virtue of strong ■will power may continue to work until they drop dead from exhaustion, while others with lesser will power will sit still and do nothing. Some who have placed upon them the burdens of caring for aged parents or indigent relatives, feeling deeply their responsibility and actuated by affection for those who they desire to assist, will keep on working when they are totally unfit to do so. The mere fact that insured did work for Smith-MeCord-Townsend Dry Goods Company and also for Montgomery Ward & Co. does not necessarily prove that he could follow continuously a gainful occupation.’ ”

The next assignment of error relates to the admission of plaintiff’s Exhibit No. 4, Regulation No. 11, in evidence. It is contended that under the War Risk Insurance Act and under the decisions the said regulation is part of the law, and is a matter for interpretation and construction by the court, not properly one to be read to the jury. The certificate of insurance itself provides that it is “subject in all respects to the provisions of such aet, and of any amendments thereto,” and it also provides that it shall be subject to “all regulations thereunder, now in force or hereafter adopted, all of which, together with the application for , this insurance and the terms and conditions published under authority of the Act, shall constitute the contract.” In the case of White v. United States, 270 U. S. 175, 46 S. Ct. 274, 70 L. Ed. 530, the Supreme Court has held that insurance under the act and the amendments thereto is a contract. The regulation being a part thereof, it would seem that it is admissible in evidence. While it is true that the court takes judicial notice of all such regulations, still that fact would not make the regulation any less a part of the contract or render it any less admissible. The court in its instructions to .the jury quoted Regulation No. 11, and the mere fact that the jury was informed of the contents of that regulation before the court instructed them in relation thereto would seem to be immaterial. As a matter of fact, it would seem desirable that the jury should know in the early history of the ease the definition of “permanent disability” referred to in the certificate. We think that it was admissible, ■ but, if under any theory of the law it was inadmissible, the error was harmless, and did not prejudice the rights of appellant.

Error is also assigned to the refusal of the court to give defendant’s requested instruction No. 8 as follows: “You are further instructed that the plaintiff must establish permanent and total disability during the life of his policy, in this case on or before November 30, 1919, and that it makes no difference what his condition is today except as it throws light on his condition at that time.”

Appellant admits that the court instructed the jury that the burden was upon the plaintiff to establish total and permanent disability on or before November 30, 1919, but insists that the court gave no instruction relative to the consideration that should be given plaintiff’s physical condition at the time of the trial. As we have stated, it is undoubtedly the law that, before a person suing upon a contract of War Risk Term Insurance can recover, he must establish that he became permanently and totally disabled within the meaning of Regulation No. 11 during the life of the policy. It seems to us that the court in unmistakable language repeatedly charged the jury 'to this effect, and that the jury could not have failed to understand such instructions. We quote from the instructions:

“Gentlemen, it is a question of fact for you to decide in this ease whether the insured, the plaintiff was totally and permanently disabled during the life of the policy. The policy expired at midnight of November 30th, 1919, by reason of the failure to pay the premium due October 1st, 1919 (later corrected to read November 1st, 1919). To enable the plaintiff to recover thereon it is incumbent upon him to show that he was permanently and totally disabled at or before that time.
“Before the plaintiff can recover in this case he must establish to your satisfaction by a preponderance of evidence that he was totally and permanently disabled at or before the policy expired, which I have stated to you was on midnight of November 30th, > 1919, and when it was in full force and effect.” (Italics our own.)
And again: “If you are satisfied from .all of the evidence that the plaintiff became totally and permanently disabled as defined in these instructions, and while his policy was in full foróe and effect, it was not necessary for him to make any further payments as premiums after so becoming totally and permanently disabled.”
And again: “You will observe that there is one contract of'insurance or policy of insurance in the sum of $10,000 sued upon in this action which is payable in monthly in- ' stallments of $57.50 in the event the insured became permanently and totally disabled during the time that the contract of insurance was kept in force by the payment of . stipulated premiums due thereon.”

The judgment is affirmed.

WILBUR, Circuit Judge, concurs.


source: Caselaw Access Project

license: Public Domain

text:
    UNITED STATES v. BURKE.
    No. 6269.
    Circuit Court of Appeals, Ninth Circuit.
    June 1, 1931.
    Anthony Savage, U. S. Atty., and Thomas E. De Wolfe, Asst. U. S. Atty., both of Seattle, Wash., and William Wolff Smith, Gen. Counsel, United States Veterans’ Bureau, Bayless L. Guffy and Edward S. Rags-dale, Attys., United States Veterans’ Bureau, all of Washington, D. C., and Lester E. Pope, Atty., United States Veterans Bureau, of Seattle, Wash.
    Ralph A. Horr and Philip Tworoger, both of Seattle, Wash., for appellee.
    Before RUDKIN, WILBUR, and SAWTELLE, Circuit Judges.
   SAWTELLE, Circuit Judge.

David A. Burke, appellee, hereinafter referred to as plaintiff, enlisted in the United States Army June 15,1915, and was honorably discharged on the surgeon’s certificate of discharge June 16, ■ 1919. On February 1, 1918, he was granted while in the service a contract of war risk term insurance in the sum of $5,000, payable in monthly installments in the ease of total and permanent disability. He claimed total and permanent disability from June 17,1919, and from a judgment in his favor the government appeals.

Plaintiff testified as follows: He was kicked by a mule shortly after he enlisted in 1915, and during the time he was in the service of the United States government he was sent to a hospital in China for over a year, off and on many times. His knee would swell, and he would be in a hospital for 6 weeks, then be marked “quarters” for two or three days, and he would then again be sent to the hospital. While he was in the hospital in China under United States government surgeons, he had an operation on his right knee in 1916, then came to the Letterman General Hospital in San Francisco, where he stayed 2 months or more1, until he was called before a board and discharged with disability. After his discharge, he went to Payette, Idaho, his home, and. stayed there until November, 1919.

Plaintiff further testified: “I did nothing while there [i. e., Payette], my knees were sore at that time and it was painful”; that from Payette he went to take training under the Public Health Service at Boise, and remained in the latter place until 1921, although not in training. He was in training approximately 10 days. He left Payette and went to St. Francis Hospital, where he was ■ operated on for appendicitis. After leaving this hospital, he was given a six months’ leave before going into training, and did not do anything; then he went into training again as an automobile mechanic and spent 4 months -at Boise. This training consisted in bringing supplies from the stock room to mechanics working on cars. At the end of 4 months’ training, he was again put in the Public Health Service Hospital at Boise, a government hospital, for an operation for adhesions. He was there over a year, then afterwards in 1920 was transferred to Tacoma, where.he remained until August, 1920, during which time he did nothing. He returned to Payette, stayed there until October, 1920, and then went back to Tacoma about 1921. He did nothing while in Tacoma, for his legs were such that he could not do anything, and had been in that' condition since he left the service. Under the supervision of the Veterans’ Bureau he was taken .to the Tacoma General Hospital, where he stayed until September, 1922, when he was ordered to the Veterans’ Bureau Hospital at Boise, and stayed there under treatment a little over a year. He left the latter hospital in 1923 and went to the Soldiers’ Home at Saw-telle, stayed there until January, 1924, and was then transferred to the Veterans’ Bureau at Hot Springs, Ark., where he remained 4 months, later returning to Payette, where he remained until July, 1925. He was then sent by the Veteráns’ Bureau to a hospital at Boise, where he remained until he was discharged in September, 1925.

Plaintiff said further that at that time he was unable to do anything, and that he did not do anything because the Veterans’ Bureau told him not to; that he stayed in Pay-ette until July, 1926, when he was ordered to the Boise hospital by the Veterans’ Bureau, where he remained 3 or 4 months. He returned to Payette, thence to Seattle, where he stayed until July, 1927, since which time he has done nothing. At this point he exhibited his knee to tíie jury, and, in answer to a question propounded by the court, said that that condition of his knee had been continuous since his discharge.

On cross-examination plaintiff testified that he paid no premium on his insurance after he was discharged. When he left the service, he did not go to work for a while, went out on a threshing machine for a couple of days, then went into training for a while in 1919 with the Idaho Power Company. He was in the latter place only about 10 days, was in the hospital a good part of the time on sick leave, and had appendicitis, for whieh he had an operation in December, 1919. His knees were then in the same condition as they were at the time of the trial. In January, 1920, he had vocational training as an automobile mechanic; drew pay for one or two weeks there. During all this time he was receiving $80 a month from the government.

Plaintiff identified Government’s Exhibits A2 and A3 signed hy himself, these two' exhibits reporting that the training was satisfactory, and that he was following the course of work as outlined. In one of the statements signed by witness it was stated that ■he was learning how to set up pistons, tighten up bearings, adjust and reline brakes; that he was on the pay roll, and received 30 cents an hour. Later on in the cross-examination witness stated that the work that he did was while in a sitting position; that he himself never adjusted any steering gear or relined brakes; that he helped the mechanics once in a while; that he was under the impression that the pay there came from the mechanics as a donation, and that he did not recall signing any pay roll.

Plaintiff testified also that the government doctors told him to report to the hospital for examination and treatment ever so often, that he had not been in the hospital for 3% or 4 years prior to the date of trial, and had not tried to work during that time.

Edward Carieo, witness for plaintiff, testified that he had known plaintiff since 1906, that he saw him soon after plaintiff came from the Army in 1919 and at different times thereafter in Payette, Idaho; that plaintiff visited witness’ father on the ranch, and remained there possibly a couple of days, doing no work while there; that plaintiff was complaining of his knees, and appeared to be in about the same condition as he was at the trial, possibly not quite so crippled. Plaintiff had to strain when he got out of the chair; his knees did not bend right, and he did no work. Carieo said that he had. observed Burke several times since he had seen him in Seattle and that there had been no change in the latter’s condition; that when the latter visited witness’ father he walked around over the farm, but not all of it.

Dr. Everett 0. Jones, also a witness for plaintiff, testified that he was a surgeon admitted to practice in the state of Washington, had been engaged in the practice of surgery and medicine for 37 years; that he had examined plaintiff on March 3,1930, and found that the latter had chronic synovitis (arthritis) involving both knee joints, and that as a result of this condition plaintiff has relaxation of the ligaments of both knee jbints so that his knees are unstable. Because of this instability he has to keep the muscles of his legs in a state of constant contraction while he is standing, otherwise his knees would let him fall. The plaintiff has pains for two reasons : Eirst, because of synovitis in his knee joints, and because of loose bodies in the knee joints which frequently get pinched or locked in the joints, thus causing pain and swelling; second, pain from spasms of muscles of the thighs, which is produced because of the unnatural tension of having to hold his muscles in when he is on his feet in order to keep from falling. Witness further stated that from the medical history of the ease he would say that this had been a long-drawn-out condition, and that there were sears of two operations on the left knee and of one on the right. These operations had not cured plaintiff, and the latter’s condition was permanent. On cross-examination witness stated that he had never seen this plaintiff until March. 3, 1930, but that, quite aside from plaintiff’s physical condition which would prevent him from doing any kind of manual labor, it had been his experience as a physiean that persons who had been hospitalized as many times as this man were never good for any occupation. He went on to say that such persons were never any good; that they have no moral force; that they have lost their will or ability for independent effort of any sort. However, so far as the actual condition of plaintiff’s knee is concerned, that would disable him from doing anything on his feet, but would not disable him from carrying on in some sedentary occupation.

John D. Pearce stated that he had been acquainted with plaintiff since August 1, 1899, and has had occasion to observe him since the latter’s return from service in 1919. He first saw plaintiff in the early part of June, 192-1, and had occasion to observé his condition at that time, and, as far as he could see, plaintiff was in a very bad condition; that he got out of a taxicab and came into witness’ office, dropped into a chair, and seemed to be very weak, and had to lift himself up with his hands when he rose. Witness had occasion to see plaintiff many times since then, and said that occasionally the latter came into his office to sit and rest on his way to the Veterans’ Bureau for treatment. Witness did not see plaintiff between 1922 and 1925, but has seen him many times since the latter date.

Three physicians were called as witnesses on behalf of the defendant. Dr. C. T. Smith testified that he had examined the plaintiff in July, 1925> and that he found arthritis (an inflammatory condition of the lining membranes in the joints which causes new bone growth in the joint itself) of the right knee and to a lesser degree in the left. Just what effect arthritis has upon the activity of the limb or knee depends on the growth in the knee! Dr. Smith said that at the time of his examination of the plaintiff in 1925 there was nothing in the latter’s condition to prevent his following certain types of sedentary occupations where he did not have to be on his feet; for instance, practicing law or working as a bookkeeper or a shipping clerk, “anything that requires sitting down.” He said that plaintiff’s condition was permanent.

The testimony of the other two physicians called on behalf of the defendant tended to corroborate the testimony of Dr. Smith; that is, to show that plaintiff could do any kind of work “where he was sitting down, where he didn’t have to stand on his feet.”

At the end of the entire testimony, the defendant made a motion for a directed verdict in its favor on the ground that the evidence was not sufficient to establish a prima facie case. The question is whether the evidence tending to -establish total and permanent disability while the policy was in effect was sufficient to take the case to the jury. We do not weigh the evidence, but inquire merely whether there was sufficient evidence to sustain the verdict and judgment.

In considering whether the trial court erred in this respect, let us reflect for a few moments and consider the bearing of the evidence above referred to that was admitted on behalf of the plaintiff. We have at the outset a plaintiff who admittedly is suffering from a permanent disability, who has “chronic arthritis involving both knee joints and as a result of this condition has a relaxation of the ligaments of both knee joints so that his knees are unstable,” who has been twice operated on for that condition, who has “instability of the knee joints, because of which he has to keep the muscles of his legs in a state of constant contraction when he is on his feet; otherwise, his knees would let him fall,” “who suffers pain for two reasons, first because of the synovitis and arthritis in the knee joints and has loose' bodies in his knee joints which frequently get pinched or locked in the joints, and second, because of the spasms of the muscles of the thighs which is produced because of the unnatural tension he has to hold his muscles in when he is on his feet in order to keep from falling,” who must “sit and rest himself on his way to the Veterans’ Bureau for treatment,” who, when he arose from a chair, “lifted himself up,” whose “joints were painful,” who “was in a very bad condition and seemed to be very weak,” who “had to strain when he got out of a chair and whose knees did not bend right,” who exhibited his knee to the court and jury, and stated that the then existing condition of same had been continuous sinee his discharge, in whom there has been no change for the better during the last 3 years, • and who was found by the Veterans’ Bureau to be in need of vocational rehabilitation to overcome the handicap of his disability (38 USCA §§ 531, 532).

It is true that there was medical testimony tending to show that plaintiff might engage in some form of sedentary employment, and therefore was not totally disabled, but it is equally true that one of the medical experts testified' that it had been his experience that “men who have been hospitalized as many years- as this man has cure never any good for any hind of occupation.” (Italics our own.) With all this evidence, the court held that the case was properly one for the. jury, and it seems to us that it would have been error to have held otherwise.

Courts often experience great. difficulty in determining whether a given case should be left to the decision of the jury or whether a verdict should be directed by the court. Fortunately, however, the rule in this circuit has been definitely settled and almost universally observed. Judge Gilbert, for many years and until recently the distinguished senior judge of this court, whose gift for expression was unsurpassed, has stated the rule as follows:

“Under the settled doctrine as applied by all the federal appellate courts, when the refusal to direct a verdict is brought under review on writ of error, the question thus presented is whether or not there was any evidence to sustain the verdict, and whether or not the evidence to support a directed verdict as requested, was so conclusive that the trial court in the exercise of a sound judicial discretion should not sustain a verdict for the opposing party.
“And on a motion for a directed verdict the' court may not weigh the evidence, and if there is substantial evidence both for the plaintiff and the defendant, it is for the jury to determine what facts are established even if their verdict be against the decided preponderance of the evidence. Travelers’ Ins. Co. v. Randolph, 78 F. 754, 24 C. C. A. 305; Mt. Adams & E. P. Inclined Ry. Co. v. Lowery, 74 F. 463, 20 C. C. A. 596; Rochford v. Pennsylvania Co., 174 F. 81, 98 C. C. A. 105; United States Fidelity & Guaranty Co. v. Blum (C. C. A.) 270 F. 946; Smith-Booth-Usher Co. v. Detroit Copper Mining Co., 220 F. 600, 136 C. C. A. 58. In the ease last cited this court said:
“ ‘The right to a jury trial is guaranteed by the Constitution, and it is not to be denied, except in a clear case. The foregoing decisions, and many others that might be cited, have definitely and distinctly established the rule that if there is any substantial evidence bearing upon the issue, to which the jury might properly give credit, the court is not authorized to instruct' the jury to find a verdiet in opposition thereto.’ ” United States Fidelity & Guaranty Co. v. Blake (C. C. A.) 285 F. 449, 452.

Again, “such an instruction would be proper only where, admitting the truth of the evidence for the plaintiff below, as a matter of law, said plaintiff could not have a verdict.” Marathon Lumber Co. v. Dennis, 296 F. 471 (C. C. A. 5).

See, also, the following recent decisions of this court: U. S. v. Barker (C. C. A.) 36 F.(2d) 656; U. S. v. Meserve (C. C. A.) 44 F.(2d) 549; U. S. v. Rice (C. C. A.) 47 F.(2d) 749; U. S. v. Stamey (C. C. A.) 48 F.(2d) 150; U. S. v. Lawson (C. C. A.) 50 F.(2d) 646.

It is also contended that the court erred in refusing to give one of defendant’s requested instructions, but the record shows that, when the matter was brought to the attention of the court, the latter stated that the request had been given in effect, and proceeded to repeat the same in language that could not have been misunderstood. The comments made by the court in connection therewith were not prejudicial.

A trial judge is not a mere automaton. He is not required by law to employ the identical language set forth in the requested instructions, and under proper circumstances and in the interest of justice may explain, qualify, or modify any such instructions, provided, of course, that he correctly states the law and the complaining party is accorded the right of review.

“It is an established rule that a court of the United States, in submitting a case to the jury, may call their attention to parts of the testimony, provided the court clearly instructs the jury that they are the sole judges of the facts, and that no rule of law is incorrectly stated.” Ross v. McLean, 56 App. D. C. 62, 10 F. (2d) 627, 629, and cases therein cited.

We think that the charge as a whole is fair and free from error.

The judgment is affirmed.

WILBUR, Circuit Judge, concurs.


author: NETERER, District Judge.

text:
    ÆTNA LIFE INS. CO. v. GEHER.
    No. 6196.
    Circuit Court of Appeals, Ninth Circuit.
    June 15, 1931.
    Redman, Alexander & Bacon, of San Francisco, Cal., for appellant.
    Charles A. Wetmore, Jr., and H. H. Lin-ney, both of San Francisco, Cal., for appel-lee.

      Before WILBUR and SAWTELLE, Circuit Judges, and NETERER, District Judge.
   NETERER, District Judge.

This appeal is prosecuted from a judgment in favor of the beneficiary of three life insurance policies, with double indemnity provisions in the event of the death of the insured before the end of the endowment term. The ease was tried to the court, a jury having been expressly waived. The issuance of the policies by the appellant company and delivery to its agents is admitted. It is also admitted that the policies were delivered by the agent to the beneficiary. The agent claims, however, that delivery was for inspection only, the premiums to be paid before the policies became effective. The beneficiary claims they were delivered without restriction. There is dispute between the agent and the beneficiary as to an understanding that the agent would make payment, he, the beneficiary claims, being indebted to the insured, and also over a claimed statement by the agent that he forwarded his cheek to the company in payment of the premiums. There is evidence in the record that both parties testified in support of their contentions. The trial court heard the evidence, observed the parties and manner of testifying, and found the policies to be effective. Upon the record we are bound by the findings of the trial court on the questions of fact. No special findings were made, nor were any requested.

Aside from the findings of the trial court upon the- admitted facts as to delivery, section 1626 of the Civil Code of California provides: “A contract in writing takes effect upon its delivery to the party in whose favor it is made, or to his agent.”

The Supreme Court of California, in Harrigan v. Home Life Ins. Co., 128 Cal. 531, 546, 58 P. 180, 182, 61 P. 99, said: “Our statute makes the rule of delivery as to written instruments’ the same as in regard to grants. (Section 1627, Civ. Code.)”

And in Hotaling v. Hotaling, 193 Cal. 368, 381, 224 P. 455, 460, 56 A. L. R. 734: “They invoke the rule that a grant cannot be held in escrow by the grantee, and that there can be no such thing as a delivery of a grant to the grantee conditionally.”

In Berliner v. Travelers’ Ins. Co., 121 Cal. 451, 454, 53 P. 923, 923', it was stated that: “ "* * * Possession of the policy by the insured or by the beneficiary is prima facie evidence of its delivery as such valid and subsisting contract.”

In Farnum v. Phoenix Insurance Co., 83 Cal. 246, 252, 23 P. 869, 871, 17 Am. St. Rep. 233, it was said: “It seems to be settled by a controlling preponderance of authority that an express provision in a policy of insurance that the company shall not be liable on the policy until the premium be actually paid, is waived by the unconditional delivery of the policy to the assured as a completed and executed contract, under an express or implied agreement that a credit shall be given for the premium; and that in such ease the company is liable for a loss which may occur during the period of the credit. * * * ‘The fact that the insurer deliv-, ered to the insured the written contract as the consummated agreement between them, and did not then exact present payment of the premium, as a necessary precedent to delivery, was too plainly in contradiction ■ with the condition for prepayment for it to be supposed that it was meant by the insurer, or supposed by either party, that it was intended to make that condition a potent part of the contract. * * * ’”

In Jurgens v. New York Life Ins. Co., 114 Cal. 161, 166, 45 P. 1054, 1056, 46 P. 386: “This question is also covered by the ease of Griffith v. New York Life Ins. Co. [101 Cal. 627, 36 P. 113, 40 Am. St. Rep. 96], supra. It was there held that an express provision in the policy that the company shall not be liable until the premium is paid is waived by the unconditional delivery of the policy.”

The laws of the state of California entered into and became a part of the contract of insurance. Walker v. Whitehead, 16 Wall. (83 U. S.) 314, 21 L. Ed. 357. Restrictions and limitations contained in the policy must be determined by the laws of the state of the situs of the contract. Whitfield v. Ætna Life Ins. Co., 205 U. S. 489, 27 S. Ct. 578, 51 L. Ed. 895; Small v. Westchester Fire Ins. Co. (C. C.) 51 F. 789. “The laws of the several States * * * shall be regarded as rules of decision in trials at common law, in the courts of the United States, in oases where they apply.” 28 USCA § 725. See Travis v. Jackson (D. C.) 26 F.(2d) 373.

The policies are what are termed “educational endowment policies,”. and by their terms the appellant agreed to pay $1,000 on each policy at the end of seventeen, eighteen, and nineteen years, respectively, from the date thereof. Appellant contends that the court may not rewrite the contracts for the parties; that they had a right to make their own contráete; that under the contracts nothing has matured (citing Tatum v. Ackerman, 148 Cal. 357, 83 P. 151, 3 L. R. A. (N. S.) 908, 113 Am. St. Rep. 276, 7 Ann. Cas. 541; Landis v. Morrissey, 69 Cal. 83, 10 P. 258; Hulen v. Stuart, 191 Cal. 562, 217 P. 750); and that, being for payment of money, they will not support an action until due and payable according to the terms (citing, New York Life Ins. Co. v. English, 96 Tex. 268, 72 S. W. 58).

It was stipulated at the trial that proof of death was offered under each of the policies and that the appellant refused to- furnish forms on which to make proof of death, claiming that the policies were not legally executed nor in force or effect at the time of the death of the insured. The present action, while predicated upon the policies, is an action for damages for breach of contract-, the appellant having refused to recognize the policies as a valid legal and binding obligation. The appellee had a right to treat the renunciation as a breach, and her remedy was to sue for the present worth of the policies.

In 6 Cal. Jur. 458, it is said: “Where one party to an executory contract refuses to treat it as subsisting and binding upon him, or by his “conduct shows that he has renounced it and no longer considers himself bound, there is, in legal effect, a prevention of performance by the other party. In such a case it earn make no difference whether the contract has been partially performed or the time for performance has not yet arrived; nor is it important whether the renunciation be by declaration of the party that he will be no longer bound, or by conduct which clearly evinces that that determination had been reached and is being acted upon. * * * The real operation of a declaration of intention not to be bound appears to be to give the promisee the right of electing either to treat the declaration as brutum fulmén and, holding fast to the contract, to wait till the time for performance has arrived, or to act upon the declaration, and treat it as a final assertion by the promisor that he is no longer bound by the contract, and a wrongful renunciation of the contractual relation into which he has entered. If he elects to pursue the latter course, it becomes a breach of contract, excusing performance on his part and giving him an immediate right to recover upon it as such.”

And in Roehm v. Horst, 178 U. S. 1, 20 S. Ct. 780, 44 L. Ed. 953 (syllabus), it is said: “That rule is that after the renunciation of a continuing agreement by one party, the other party is at liberty to consider himself absolved from any future performance of it, retaining his right to sue for any damages he has suffered from the breach of it; but that an option should be allowed to the injured party, either to sue immediately, or to wait till the time when the act was to be done, still holding it as prospectively binding for the exercise of this option.”

The contention that the action was premature has no basis in fact. The record discloses that proofs were made and tendered, but that the appellant refused to furnish forms upon which to make proof of death, claiming that the policies were not legally executed and were not in force or effect at the time of the death of the insured. Under these circumstances, there was nothing more appel-lee could do. The denial of liability on the part of the appellant was clear, definite, and final. There was no objection to the form or substance of the proof. Being denied a claimed right by appellant’s renunciation of, and denial of liability under, the policies, and its refusal to accept proof of death and register the claims as just and payable according to the terms of the policies, appel-lee was not required to await the end of the tontine period, when testimony would likely be unavailable to sustain her claim.

The other and last contention is that there is no basis of fact in the record upon which the present worth of the policies was computed. This was made an issue of fact by the complaint, which alleged “that four per centum per annum, compounded semiannually, is the amount of interest which is customarily paid at the present time in the state of California upon money invested with tlie minimum of risk.” This was denied by the answer, but no proof was offered. It was error for the court to compute the present worth of the policies on the basis of 4 per cent, compounded semiannually. The legal rate of interest in California, the situs of the contracts in issue, is “seven dollars upon the one hundred dollars for one year.” General Laws of California 1923, Act 3757, § 1. The Supreme' Court of California holds that interest shall not be compounded unless agreed to by the parties. Matter of the Estate of Den, 35 Cal. 692; Yndart v. Den, 116 Cal. 533, 48 P. 618, 58 Am. St. Rep. 200. The present worth of a sum of money payable in the future without interest is such a sum as being put at interest at the legal rate will amount to the sum named in the respective policies at the end of seventeen, eighteen, and nineteen years, respectively, from the date of issue, based on the double liability provision. See Sanford’s Higher Analytical Arithmetic, 226-. The rule there given is to “divide the given sum or debt by the amount of 1 for the given time at the given rate; the quotient will be the present worth.” See, also, Williams v. McCranie, 27 Ga. App. 693, 109 S. E. 699; Seabury v. Detroit United Ry., 194 Mich. 423, 160 N. W. 570. For example:

$2,000 -4- (17 x 7% +1) = $913.24, present worth.

$2,000 -4- (18 X 7% +1) = $884.96, present worth.

$2,000 -4- (19 X 7% +1) =: $858.37, present worth.

At the date of issuance, the present worth «of these policies was $2,656.57. At the time -of death, 34 days later, the present worth had increased by $17.55. The application of this rule will reduce the amount of the judgment, .and to that extent the judgment will be modified ; in all other matters the judgment is affirmed. The case will be remanded to the Dis-trict Court, with directions to enter judgment in favor of the appellee for the sum of $2,-'674.12, the present worth of the policies.


author: DENISON, Circuit Judge.

text:
    COMMISSIONER OF INTERNAL REVENUE v. OHIO FALLS DYE & FINISHING WORKS.
    No. 5638.
    Circuit Court of Appeals, Sixth Circuit.
    June 13, 1931.
    Helen E. Carloss, of Washington, D. C. (G. A. Toungquist, Asst. Atty. Gen., Sewall Key, C. M. Charest, and E. N. Shaw, all of Washington, D. C., on the brief), for .petitioner.
    Chester A. Gwinn, of Washington, D. C. (Humphreys & Gwinn, of Washington, D. C., on the brief), for respondent.
    . Before DENISON, HICKS, and HICK-ENLOOPEE, Circuit Judges.
   DENISON, Circuit Judge.

The Commissioner levied a deficiency assessment against the Ohio Falls Works; upon appeal to the Board, the assessment was set aside beeaused barred by the five-year limitation; and the Commissioner in this appeal relies upon a statutory exception to that limitation. The controversy turns upon the interpretation of this exception.

The normal limitation would expire on ■ June 14,1924; and the deficiency assessment in question was made August 5, 1926. The Revenue Acts of 1924 and 1926 are alike, in that they provide as follows:

“See. 277. (a) Except as provided in section 278 * * * The amount of income, excess-profits, and war-profits taxes * * * shall he assessed within five years after the return was filed.” 26 USCA § 1057 and § 1057 note.
“Sec. 278 * * * (b) Any deficiency attributable to a change in a deduction tentatively allowed under paragraph * * * (8) of subdivision (a) of section 234, of'the Revenue Act of 1918 or the Revenue Act of 1921, may' be assessed * * * at any time.” 26 USCA § 1059.

(8) of section 234 (a) of each act, (40 Stat. 1077, 42 Stat. 254) provided, in substantially equivalent terms, that upon buildings and'equipment constructed or acquired after April 6, 1917, for war-manufacturing . purposes, there should be allowed to the tax- . payer a reasonable deduction for the amortization of the cost thereof.

Whether there had been, in this ease, such . a “deduction tentatively allowed” under this paragraph (8) as to permit the resulting deficiency to be assessed at any time, is the ‘controlling question. Since the five-year statute had not run on June 2, 1924, when the Revenue Act of 1924 took effect, no question arises as to whether the bar of the statute which has once become applicable, can ■later be removed.

The taxpayer filed, on June 14,1919, its return for the year 1918. It deducted on account of this amortization about $28,000, and ■ thereby correspondingly lessened the amount of the income and war and excess profits taxes otherwise payable. It is to be assumed that, in due course and pursuant to the regulations (article 1012, T. R. 45, infra, note 3), this return was examined and listed by the colleeter and forwarded to the Commissioner, that thereafter “the Commissioner assessed the tax on the basis of the Collector’s list,” and that thereupon, the collector spread upon Ms roll the tax so assessed; and it duly appears that the tax shown by this return and levied in tMs way was paid during the calendar year 1919. Evidently, when the return was reached for more careful investigation,-the Bureau directed an inquiry as to the propriety of this amortization deduction. This was not only by virtue of the Commissioner’s general power to redetermine a tax, but pursuant to tbe express provision of tbis paragraph (8) of section 234 (a) of the 1918 act, as well as of the corresponding provision of the 1921 act, which gave the Commissioner specific . power for this very inquiry. On October 30-, 1921, an engineer, representing the Commissioner and more particularly representing the Amortization Section of the Bureau, made an examination and recommended that the $28,000 deduction, thus taken in the return, he allowed to the extent of $11,000 and disallowed for the remaining $17,000. This report was approved by the Chief of Engineers and by the Chief of the Amortization Section. In December of the same year, some agent of the Bureau made an examination of the taxpayer’s boobs and records and reeommendéd also the dis-allowance of the $17,000. It does not appear that there was any further action at this time by the higher officers of the Bureau. In October, 1922, the taxpayer requested a redetermination upon the point and an allowance of its whole deduction, as originally taken. Pursuant thereto, another Bureau engineer visited the plants and made an investigation; and, in May, 1923, his report was approved by the Chief of the Amortization Section. This report recommended that out of the total deduction of $28,000, $23,000 be allowed and $5,000 be disallowed; and it was expressly said to supersede the report of October, 1921.

When the petitioner filed its return, it had applied for a special assessment of its profits tax under, sections 327 and 328 of the Revenue Act of 1918 (40 Stat. 1093). Tn November, 1923, in a letter from the Commissioner, acting by an unspecified Chief of Section, petitioner was told that, before this application could be considered, there must be a final determination of the net income, and that petitioner must therefore decide whether it would acquiesce in the determination of net income proposed in this letter, in which determination the amortization allowance was stated as being $23,000. The petitioner replied it would acquiesce in this determination, upon a certain condition, which condition was later accepted by the Commissioner; and the petitioner thereon, in January, '1924, definitely acquiesced in the determination involving tMs $23,000 allowance. Nothing further was done by the Bureau until in April, 1926, it proposed a deficiency assessment of taxes based upon a computation which seems to have adopted the $5,000 disallowance of the May, 1923, report and the January, 1924, agreement, and an additional disallowance of about $8,000, the basis of which does not appear, but which was apparently first proposed in this • April, 1926 action. Pursuant to this April letter, the deficiency assessment in controversy was made.

The difficulty in construction arises because the Bureau practice did not know, by these words, any such thing as a “tentative allowance” of any deduction claim by the taxpayer as against his gross income. There were numerous deductions expressly provided for, and they were eventually examined and approved or disapproved by various agencies in the Bureau, the result being merged into and evidenced by the deficiency assessment or the credit to the taxpayer later determined; hut no statute or regulation had defined or indeed recognized a “tentative allowance” of anything. If the phrase extended, without limitation, to the deduction taken in the return itself, the result is that the limitation bar is wholly removed as to this item, and that these amortization deductions can be revised and deficiency taxes assessed after ten years or twenty years; and the congressional intent to do that is so improbable that it should not he inferred, if it may reasonably he avoided. We have not been referred to any committee report or congressional action indicating the purpose or reason of Congress, either in permitting these deductions to be revised within a definite period (which might extend well beyond the five-year period), or in permitting a change therein to be made at any time if there had been a tentative allowance, as was done by the Revenue Acts of 1924 and 1926. If, however, we find the probable reason of making these exceptions to the limitation, that will lead us, or perhaps direct us, in the interpretation of the language used.

When the Revenue Act of 1918 was drafted and introduced, the future duration of the war was unknown. The proper amortization deduction could not be determined until the end of the war, because the number of years in the term and the utility of the property for other purposes at the end of the war were necessary elements of the computation. Ror the time being, no intelligent revision could be made of the taxpayer’s estimate upon this item. It was therefore appropriate to give the power of revision at any time within three years after the end of the war, or before June 15, 1924; and this necessarily would create an exception to the four or five year limitation, which might expire before June 15, 1924. When the Revenue Act of 1924 was adopted, .which first conditionally permitted this revision “at any time,” it was well known that the examination and revision of these tax returns by the Bureau was from three to five years in arrears, and that there were doubtless many returns claiming this amortization deduction which had never been examined. The further extension of time to assess a deficiency was therefore appropriate; but why should it have been made to he without limit, and thus in direct conflict with the general policy of fixing a time of repose? We can conceive only one reason. The return showed only the taxpayer’s estimate. Its actual true amount was to be determined by subsequent events, which might be very considerably postponed. At the end of the war, the buildings and equipment might be substantially worthless for any other purpose, so that there would be a minimum salvage. There might be very adaptable peace-time purposes which had been developed, so that there would be no amortization, as distinguished from depreciation (separately allowed). Very probably, as the event proved, adaptability for peace-time purpose would be uncertain, and there would be indefinite delay before events developed a use which would minimize the amortization. As a deduction taken when the return was made and the tax paid might seem to be reasonable, and as thus investigation and revision by the Bureau might never have seemed to be called for, it was reasonable to ask the taxpayer to submit to a deficiency assessment if and when it developed that his returned deduction had been too large. To extend this period without limit might have been thought unwise; hut no one could fix the maximum period within which new events, or newly observed events, might make revision appropriate, and so Congress fixed no limit. In this view, we have a possible, if not probable, reason for wholly removing the limitation bar.

This reason does not apply, or applies with minimum force, to those eases where during the normal period of assessment the Bureau has taken up the very question involved and considered and passed upon it, and reached a relatively final conclusion, so that, after the subject had been disposed of in accordance with the practice of the Bureau, there remained opportunity for assessment by the Commissioner within the limitation period. If the language of the Revenue Acts of 1924 and 1926 can be reasonably construed to permit assessment at any later time in the first class of eases and not in the second class, we can approximate an intelligent interpretation of- the statutes in this particular.

We think the original return, and the automatic action taken in connection therewith, may well be considered the “tentative allowance,” and the only “tentative allowance,” to which the Revenue Acts of 1924 and 1926 relate. In a very fair sense it was an “allowance,” and in a very fair sense it was “tentative.” The statutory reference is not restricted to an allowance made by the Commissioner. When the taxpayer makes his return, he proposes this deduction, and he “makes” it in computing and paying his tax. When the collector, and the Commissioner accept the report, the Commissioner assesses the tax involving and based upon this deduction, and the collector spreads the tax on his rolls and collects it, the taxing authorities very plainly “allow” this deduction. The Commissioner might immediately have rejected it and insisted upon a revision; when he did not, but made the assessment and directed the spreading of the tax based thereon, there was acquiescence, which was in necessary effect, for the time being, an approval and allowance.

Very clearly this allowance, like the contemporary acquiescence in other elements of the return, was “tentative”; it had no element or color of finality. It involved acquiescence only, not action. It answered every definition of “tentative,” because it was only on trial until it should be challenged. When we put these considerations with the fact that the statutory language must have been intended for the ordinary typical ease and not for some unusual one, the fact that in the ordinary ease, which had never gone beyond the making of the return, there was reason for preserving tbe right of revision, and the fact that no such thing as a “tentative allowance,” by that name, was known in the Bureau practice, we see no reason for doubting that the statutory reference was to that original allowance proposed by the taxpayer and accepted without objection or criticism by the Bureau, unless there is some reason in the objection that this construction necessarily removes all limitation as to all cases where this deduction was ever claimed and thus tentatively allowed, and that such construction is unnatural.

When such a claimed deduction is taken up by the Bureau, challenged, investigated, and passed upon by the highest appropriate authority in the Bureau (save the, usually formal, action of the Commissioner), as here by the Chief of the Amortization Section, and when the tentative allowance has been reexamined and superseded by other action affirming or disaffirming the first, the original “tentative allowance” to which the statute refers has disappeared; it has been merged in a relatively final allowance. True, this second allowance is, in a strict sense, also tentative, because the Commissioner, or even the under officers, continue to have power to set it aside, until there is a written stipulation or until the limitation period expires; but the fact that the statutory language literally applies both to the original wholly tentative allowance, and to the later relatively final action, does not prevent a conclusion that it was intended to apply to the first and not to the second. There is a fairly good reason for the law as applied to the first. We can conceive of no reason which might possibly have moved Congress for application to the second; and we conclude that it does not so apply.

In the present ease, this result is emphasized by, although it does not necessarily depend upon, the way in which the November, 1921, allowance was treated. The taxpayer was required to accept it and consent to it as a final allowance for the purpose of fixing his income tax on this basis, and as a condition of further considering his other request; which then the Bureau, when the finality of the allowance was thus agreed to, proceeded to consider. This indicates at least the different character of the original automatic and tentative allowance and of that special later allowance which was apparently the end of the controversy, and which only required the formality of the Commissioner’s approval to be as final as any allowance could be.

For these reasons, we conclude that the deficiency tax assessed was not attributable to a change in the deductions which had been tentatively allowed in connection with the filing of the report, but was attributable to a change in the deductions which had been allowed by the Bureau’s action of November, 1923, and of January, 1924, and which was not that kind of “tentative allowance” which Congress intended to have the effect of removing entirely the statutory bar.

The action of the Board is therefore affirmed.

       The Revenue Act of 1921, § 250 (d), 42 Stat. 264, first contains “at any time” in this connection, hut the deficiency assessment involved was not made under that act, nor does it seem helpful in the interpretation of the later acts.

       Revenue Act of 1918, § 234 (a) (8), allowed redetermination within three years after the end of the war; the same section of the Revenue Act of 1921, fixed March 3, 1924, as the last day for making or claiming this revision; and the Revenue Act of 1926, § 1209 (26 USCA § 1072), extended the time of claim till June 15, 1924.

       T. R. 45, art. 1012. Assessment of Tcue. When the returns are received at the collector’s offices they are examined and listed before being forwarded to the Commissioner. If it appears that the tax is greater-or less than shown in the return it is recomputed. After checking the figures the Commissioner assesses the tax on the basis of the collectors’ lists. The collectors then send out bills for the taxes, either as computed by the taxpayer or as recomputed. If a taxpayer believes that he has been over assessed, he may file a claim for abatement or (after payment of the tax) for a refund of the excess. Section 252 of the statute and articles 1031-1038. As soon as practicable the returns are carefully audited by accountants in the office of the Commissioner at Washington, assisted where necessary by reports of the examination of taxpayers’ books and records made by revenue agents in the field. If error in a return is detected, the taxpayer is notified accordingly and an additional assessment is made against him or he is given the opportunity to file a claim for a refund, as the case may be.