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UNITED STATES V. ZAZOVE, 334 U. S. 602 (1948)
U.S. Supreme Court
United States v. Zazove, 334 U.S. 602 (1948)
United States v. Zazove
Argued April 19, 1948
Decided June 14, 1948
334 U.S. 602
1. Section 602(h)(2) of the National Service Life Insurance Act of 1940 provides that insurance payable to a beneficiary who is over 30 at the time of the insured's death shall be paid in equal monthly installments for 120 months certain, with such payments continuing during the remaining lifetime of the beneficiary. Regulation 3450 of the Veterans' Administration, issued as a construction of § 602(h)(2), provides that the amount of the monthly installments so payable shall be calculated in accordance with a schedule based upon the beneficiary's age and the American Experience Table of Mortality. The beneficiary of a National Service Life Insurance policy, who was over 30 at the time of the insured's death in 1943, sued to obtain monthly payments in an amount which, over a period of 120 months, would equal the face amount of the policy plus interest. She contended that Regulation 3450 was not a proper construction of § 602(h)(2).
Held: the regulation is valid. Pp. 334 U. S. 604-624.
2. Read in its entirety and with regard to the specialized, technical sense in which some of its wording is generally employed in the insurance field, § 602(h)(2) is not so clear and free from ambiguity as to preclude the construction adopted by the Veterans' Administration in Regulation 3450. Pp. 334 U. S. 608-610.
3. In construing the provisions of an Act of Congress setting up a system of national life insurance, only the intent of Congress need be ascertained; the layman understanding of the policyholder does not have the relevance that it has in the case of an ordinary commercial insurance contract. Pp. 334 U. S. 610-611.
4. It is not enough, however, that the regulation is not plainly interdicted by the statute, for, in § 608 of the Act, as amended, Congress manifested an intent that regulations of the Veterans' Administration be subjected to more than casual judicial scrutiny to determine whether they are "not inconsistent" with the statute, whether they are "necessary or appropriate" to carry out its purposes, and whether they are "properly" issued. Pp. 334 U. S. 611-612.
5. But when the respective assumptions and consequences of each of the two alternative interpretations of § 602(h)(2) presented
in this case are tested against the legislative history and the statute viewed in its entirety, it is clear that the one incorporated in Regulation 3450 is that intended by Congress. Pp. 334 U. S. 612-624.
(a) Under a contrary interpretation of the statute, a beneficiary over 30 would in most cases receive a far greater aggregate amount than a beneficiary under 30. There is no indication that Congress intended this sharp disparity of treatment, and it does not result under the regulation. Pp. 334 U. S. 612-616.
(b) Congress contemplated that the reserve fund to meet the liabilities of National Service Life Insurance policies was to be self-supporting, sustained by the premiums paid and by the yield of premiums invested, except as to those exceptional items of cost as to which the statute specifically provided that the Government would bear the financial burden. Under the construction advanced by the beneficiary in this case, however, the Government's total liability would be increased to an extent requiring either special Congressional appropriations or a substantial increase in premium rates. The statute nowhere specifies that the Government should bear this huge cost, nor is there any basis for assuming that Congress envisaged premium rates high enough to meet an added liability of such proportions. Pp. 334 U. S. 616-617.
(c) The practice in effect under United States Government Life Insurance for World War I veterans and the long established practice of commercial insurance companies, which must be viewed as part of the background of experience which the draftsmen of § 602(h)(2) had in mind, both accord with the construction embodied in Regulation 3450. Pp. 334 U. S. 617-619.
(d) The juxtaposition of § 602(h)(2) with other provisions indicating that actuarial principles were to be followed is also significant. P. 334 U. S. 620.
(e) The subsequent legislative history of the statute clearly indicates Congressional approval of the construction put on § 602(h)(2) by Regulation 3450. Pp. 334 U. S. 620-624.
162 F.2d 443 reversed.
In a suit by a beneficiary, the District Court sustained the validity of Regulation 3450 of the Veterans' Administration as being in accord with § 602(h)(2) of the National Service Life Insurance Act of 1940. The Circuit Court of Appeals reversed. 162 F.2d 443. This Court granted certiorari. 332 U.S. 835. Reversed, p. 334 U. S. 624.
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