The opinion of the court was delivered by: POWELL
This is an action on a National Service Life insurance policy. The United States has paid the proceeds to the third party defendant. In the event the plaintiff is successful, the United States in a cross claim seeks recovery of the amount it has paid from the third party defendant.
James F. Picken, the insured, on or about December 1, 1947, converted his then existing National Service Life insurance policies and was issued a new policy, No. V 11 043 043, in the amount of $ 10,000. That is the policy involved in this case. On May 24, 1949, the insured wrote a letter to the Veterans Administration referring to that policy by number and designating 'my brother Bruce F. Picken of Tonasket, Washington, to be my benefactor.' At all times prior to, and at the time of insured's death, Bruce F. Picken was named in the policy in the records of the Veterans Administration as the beneficiary.
Plaintiff, Thelma I. Picken, and the insured, James F. Picken, were married on September 23, 1957. She was his wife at the time of his death on January 14, 1958. On that date National Service Life Insurance policy No. V 11 043 043 was in full force and effect with all premiums.
The insured mailed a letter to the Veterans Administration at Fort Snelling, St. Paul, Minnesota, dated October 25, 1957, in the handwriting of the insured and with it a check for $ 45.00. The plaintiff's contention is that the letter constituted a change of beneficiary to the plaintiff, Thelma I. Picken, in accordance with the provisions of the policy. The receipt stamp on the back of the letter shows it was received by the Veterans Administration, Administrative Division, Receipt and Dispatch Unit, on November 4, 1957. The letter and the check both referred to policy No. V 043 12 156. This was not the correct policy number.
The letter was opened in the regular course by an employee of the Veterans Administration designated to perform that service, and in reading the hand written letter and check the last name was read as 'PICHEN.' Due to the illegibility of the handwriting of the insured his name throughout the processing of the letter and check was considered to be 'Pichen', the 'k' in the manner written being read as an 'h'.
In processing the remittance and letter under the name of Pichen the Veterans Administration office followed the regular procedure, which was for the person who had the letter and the remittance card to call the Index Section. This was done but the only name used apparently was the name spelled 'Pichen'. There was apparently no effort to use alternate spelling in an effort to identify the insured.
On November 15, 1957, the Veterans Administration mailed the insured a notice of lapse of policy No. V 11 043 043 showing the date of the last premium payment as December 1, 1956. The insured did not respond. On December 16, 1957, the Veterans Administration mailed a final notice of lapse to the insured containing the same information as the previous notice, with no reference to the $ 45 remittance. On December 30, 1957, the insured wired an amount sufficient to pay the premium and prevent lapse of the policy.
During that entire period the Veterans Administration was endeavoring to associate the name 'Pichen', which they had gotten from insured's letter of October 25, 1957, with Policy No. V 043 12 156.
Although the Veterans Administration had received the letter with the check for $ 45 on November 4, 1957, they had not processed them through the office in Philadelphia until June 23, 1958. The insured died on January 14, 1958. The name 'Picken' was not associated with the remittance and the letter of October 25, 1957. A letter written to James F. Pichen on September 11, 1958, was delivered to and a reply received from R. L. Picken, the brother of the insured. He stated that James F. Picken was 'killed accidentally or otherwise last January 1958'.
The Veterans Administration, although it had knowledge that James F. Picken was married at the time of the payment of the policy, nevertheless on February 25, 1958, paid the claim of Bruce F. Picken as beneficiary in the amount of $ 10,152.40. The testimony of all of the witnesses is that no one knew of the attempted change of beneficiary or the letter of October 25, 1957, until about October 1958.
The policy provision, which is almost identical with regulation No. 3447, 38 C.F.R. Section 8.47, is set forth in this opinion. It provides in part:
'* * * A change of beneficiary to be effective must be made by notice in writing signed by the insured, and forwarded to the Veterans Administration by the insured or his agent, and must contain sufficient information to identify the Insured. * * * Provided that any payment made before proper notice of designation or change of beneficiary has been received in the Veterans Administration, shall be deemed to have been properly made and to satisfy fully the ...