Now, if you have no questions of me, I would like to yield to Mr. Melbourne M. Martin, who is a friend of the family of my constituent. He is here not in his capacity as a lawyer or lobbyist, but he is here as a friend of the family at his own expense. And he would like now to

be heard.

Mr. PROUTY. We would be very glad to hear Mr. Martin.

STATEMENT OF MELBOURNE M. MARTIN, ATTORNEY, LITTLE ROCK, ARK.

Mr. MARTIN. Thank you. I feel that this is a most ceremonious occasion, and I feel that you are more than indulgent to permit those witnesses who might appear before you to assume the informal role of characteristic action.

I appear as amicus et commentarius on the behalf of Mrs. Lottie Holmes Banks.

I consider it a privilege, indeed, and good compensation for having traveled the 1,300 miles, and for, incidentally, the delay of a week, where I was called upon to appear before the committee, if you please, because the telegram said we would be heard. That is not offered in any sense of the word as critical, I assure you.

Mr. PROUTY. May I say to the gentleman, in that connection, that the meeting when we intended to hear you was called rather early, and at the start we did not think a quorum was going to be present. And so the chairman thought perhaps it was better to notify all of the witnesses in advance.

Mr. MARTIN. Thank you, Mr. Prouty.

Mr. PROUTY. We are very sorry for the delay.

Mr. MARTIN. I assure you I have enjoyed the week in Washington. And more particularly, while I am a Methodist and Brother Norrell is a Baptist, I shall indulge myself to the Preakness tomorrow. Mr. PROUTY. Wish I could join you.

Mr. MARTIN. Gentlemen, I am a veteran of World War I. I serve with portfolio to the extent that I am greatly interested in seeing justice done to veterans of all wars. I am more particularly interested in seeing a just Government respond to a very solemn obligation, which, to me, is the paramount issue before you. That obligation is this:

Mrs. Lottie Holmes Banks is now the widow of a man of considerable means. She is not interested primarily in the payment of this insurance predicated upon that solemn contract, but she has boys that served, and the decedent soldier was killed by German artillery fire at Gereausweiler, Germany.

The background of his case is this: He enlisted. Meanwhile, if I might suggest, Mrs. Lottie Holmes Banks took on the responsibility of educating this soldier. She not only took on the responsibility of educating him, but she provided the home and the succulency that it took to maintain the home for her brother, who was a very sick man, for his widow after his death in 1942. And young Holmes having gone into the service, characteristic of all soldiers, they have very little time for anything more than to study the missions before them.

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When he was told insurance was available, he signed, as all soldiers did, and was the recipient of a solemn contract of insurance between the Government and himself.

In 1942, as suggested, his father died, and that left his mother. He designated that mother as his beneficiary in that policy; circumscribed by the limitations of the permitted class.

Now, those of us who were in the First World War recall that the limitations prescribed had their origin in the original United States Government life insurance, of which I am the proud possessor of a fully paid policy.

Then, on down the line, there was an amendment so as to include World War II soldiers, and in the course of events, with the termination of that war, Congress, through inadvertencies-I feel free to use the word-set up an arbitrary date line, if you please, saying to the dead soldiers, who could not speak for themselves, "We feel that this insurance should be enlarged in its application to the extent that those of you who are yet still alive shall have the privilege henceforth to designate and name an unlimited field of beneficiaries, in effect, even to include a stepchild and an illegitimate child."

Now, I am holding no brief for the purpose of assuming to criticize. I think that Congress, as most of the courts are inclined to do, when interpreting insurance policies, should construe the policy most liberally in favor of the insured and against the writer of that policy.

In the present case, Mrs. Banks does not want one dime of the proceeds or benefits of this insurance policy unless it can be extended to the entire category of dead soldiers. She doesn't need this money. But she feels that this Government has written a contract and has told her, after the death of a nephew, for whom she proved to be quite a benefactress she sent him through the Wharton School of Finance and the University of Arkansas, and the only thing that he could do for that aunt, that blood aunt, if you please, was to leave her a contract of insurance for which he had paid the premiums.

Now, I ask the committee in all fairness: How could one conceive that it would be just to say to him, "Your claim accrued before we tampered with the Insurance Act, but for those of you who survived the battle line, we are going at this time to extend it and just open the gates wide open in the future."

Mark you and mind you, if you please, that his beneficiary is not asking another similarly situated for a gratuity. He has paid for that. And if the Government does not pay off on that insurance, the Government stands in the attitude of extracting from his pay on the battle line, premiums, and even refusing to pay anything by way of restoration of the premiums.

Of course, in his case, and others similarly situated, it would be a poor time to compromise with principle and say, "We will return the premiums" at this stage of the game.

Insofar as the reserves are concerned, based upon that solemn contract, the Government set out in the beginning to assume certain administrative costs. It has done so, and has done so magnificently. It is very easy to tamper with the law and destroy that law. The courts would construe this, if this were a commerical company, as decreeing Mrs. Banks in loco parentis.

She is not in loco parentis, because he didn't acutally live in her home. The hands of the courts are tied insofar as reaping any

benefits from this solemn contract of insurance, and the courts can only ply the cold, hard letter of the law in its interpretation and application to insurance which has been paid for.

As far as reserves go, I want to admit to this committee that there has been an adverse report, probably, from the Veterans' Administration, because the Veterans' Administration takes the position, no doubt, that there must be an arbitrary line, that there must be a beginning and an end as far as the effectiveness or the effective dates of insurance are concerned. But the Veterans' Administration overlooks the fact that it stands there with its insurance premiums in its coffers.

Now insofar as the reserves actually meeting the cost of this insurance, I want to confess in a spirit of fairness that probably twothirds of that cost is covered by the premium.

There is a deficiency of one-third, but the maximum of such cases in terms of dollars-as I stated in the commentarius that I filed with the committee and every member of the committee that they might see it, and I have given the entire history of the case, in order that the committee might have something to refresh its memory if it chose that one-third has been borne by the Federal Government.

It is my opinion, based upon the best information and statistics that I have been able to acquire, that at tops it would be 3 million, in which event the cost of the Government would be a million. It has been suggested it is most likely a million. And that covers all veterans.

Now, if it were a million, the cost to the Government would be the significant, or should I say insignificant sum of $333,000.

I do not wish to take too much of the time of this committee. I have prepared a written statement which I think states Mrs. Banks' case, and I think that by extension of the facts underlying her case to other soldiers similarly situated, it is a gesture, if nothing more, to establish the beacon light that points the way in the guiding of this committee in meting out justice and responding to a solemn contract that exists between a dead soldier and the Government for which he fought and for which he died.

I am not an insurance expert. I tell you candidly and frankly that I have tried many, many insurance cases. I know the theory, fairly well, of insurance. I do not know the statistics underlying the entire setup here. I wish that I did. I do not. But whether there are any statistics which would augur against or for the amendment to this bill so as to permit those soldiers to come in at this time and prosecute claims which are just, I suggest to the committee that if you take this statement all in all, and apply it to the conscience of the Federal Government, I have no doubt about the committee recommending the House resolution authored by Mr. Norrell.

I appreciate very much the liberal time that you have given me, and I certainly regard this as a privilege to have appeared before you in any event.

One more statement and I conclude. I assure you that I appear as a friend of the dead soldier and as a friend of Mrs. Banks. I assure you that I have not nor would I receive professionally one 5-cent piece for appearing here today. That you may depend upon. Mr. PROUTY. Thank you, Mr. Martin.

Have you any questions, Mr. Bonin?

Mr. BONIN. Mr. Martin, just as a matter of satisfying my own. mind; what was the date of death of the mother?

Mr. NORRELL. She died a little while before he did.

Mr. MARTIN. She died in 1943, the latter part of 1943.

Mr. BONIN. And when did the insured die?

Mr. MARTIN. Horace Holmes, Jr., the insured, died on December 30, 1944, 1 year afterward.

Incidentally, may I explain to the committee that he has a blood aunt, who would constitute the sole beneficiary of his estate. His father died, his sister died, and his mother died. That left Horace Holmes, Jr., with the aunt, who was his benefactress in educating and maintaining him during his life. That is the story. He has no one to whom he could give this. Mrs. Banks is a woman 72 years of age at this time. She is an own-blood aunt.

Mr. NORRELL. Mr. Chairman, when I was about to introduce this bill, I called on the Library of Congress, the Law Section, to get me up the law regarding the insurance that the soldiers had during World War I and World War II. I have them here. I will not ask the committee to be burdened with more than one angle. That is that you do have a precedent to do what we are asking that you do. On January 19, 1949, Mr. F. W. Sharp of the Federal Law Section of the Library of Congress, among other things, made this written statement to me:

The permitted class of beneficiaries of World War II insurance was originally similar to the class of World War I. This class was enlarged to include uncles, aunts, nephews, nieces, and even brothers-in-law and sisters-in-law. Furthermore, the enlargement was made retroactive to the enactment of the original insurance act of October 6, 1917 (act of December 24, 1919, 41 Stat. 375, sec. 13).

So I am asking here nothing more than your existing law, that it be made retroactive to cover all similar cases.

Mr. MARTIN. Mr. Prouty, may I add this one statement: I have a communication from the American Legion. Now, they are suggesting that House Resolution 2126 they would support with their unqualified support. I have a copy of the letter here. I think it would be improper to place a personal communication from the organization to me into the record. That is their business, and I wouldn't assume the license, I assure you. But they make the statement, by resolution properly adopted. They say:

The American Legion will support the enactment, provided that on line 9 of page 1 of House Resolution 2126 the word "insured" were substituted for the words "such beneficiary."

In talking with the Legion on that proposition, I find, and I think probably they are right, Mr. Norrell, that they do not want it to go to the descendants of the beneficiary. They want to make it to the insured of the deceased soldier, or the assured; and I think that it is timely and it is well.

The balance of the bill has the hearty and full approval of the American Legion, and I would suggest that it be amended to conform to the wishes of the American Legion in that respect.

(NOTE.-See pertinent comments of the American Legion on p. 1160.)

Mr. NORRELL. I have no objection to that.

Mr. PROUTY. You have a prepared statement that you would like to leave with the committee?

Mr. MARTIN. I understand, sir, that this prepared statement that I made, and which I furnished through Mr. Norrell to each member of the committee

Mr. PROUTY. That is already a part of the record.

Mr. MARTIN. And if I may, Mr. Prouty and members of the committee, I am a slave to pure diction. I don't know that I can command the English tongue too well, but I am a slave to diction. I observe that in running this off, my secretary used a-n-t-i instead of a-n-t-e. And I am not "anti" anything.

Mr. PROUTY. Any questions?

Mr. Selden?

Mr. SELDEN. I believe Mr. Norrell and Mr. Martin made a very. clear explanation, and I have no question.

Mr. PROUTY. If agreeable, I would like to insert at the end of Mr. Martin's statement some excerpts from the legislative history of H. R. 2126. Also reports received from the Veterans' Administration may be inserted at the end of the hearing.

Mr. PATTERSON (counsel to the committee). Mr. Chairman, as you requested I will indicate something of the law and legislative history involved in this legislation. First, under existing law, all payments would have to be made from the Treasury. The National Service Life Insurance Act provides that all deaths due to the extra hazards of war would be paid out of the Treasury and not out of the fund. Thus, since the insured was killed in action the entire cost would be borne by the Treasury. It seems doubtful that the Congress could enact legislation to provide that such claims would be paid from the fund, inasmuch as such action would work against the interests of the other policyholders and would apparently violate a contract.

The significance of the August 1, 1946, date is that beginning on that date national service life insurance was sought to be placed on a basis similar to commercial companies. The material quoted below would apparently bear that out.

(The material referred to is as follows:)

EXTRACT FROM DEBATE ON H. R. 6371, 79TH CONGRESS, IN THE HOUSE OF REPRESENTATIVES (CONGRESSIONAL RECORD, JUNE 3, 1946, P. 6169)

Mr. RANKIN. * * *

This bill has for its purpose the placing of national service life insurance on a peacetime basis. ****

EXTRACT FROM TESTIMONY OF GEN. OMAR N. BRADLEY ON H. R. 6371, 79TH CONGRESS, BEFORE THE SENATE COMMITTEE ON FINANCE, JUNE 11, 1946

General BRADLEY. ***

(1) Removal of restrictions on permitted class of beneficiaries

Under the National Service Life Insurance Act of 1940, as now enacted, only the spouse, child, father, mother, brother, or sister of the insured may be designated as beneficiary. This restriction was reasonably necessary during the period of war because the cost of insurance protection furnished during that period was largely borne by the Government. During the period of hostilities, most of the liability for insurance losses fell upon the Government. Under peacetime conditions the liability of the Government will be negligible, and there is no reason why the insured should not be permitted to designate any person or legal entity as beneficiary of his insurance if he so desires. H. R. 6371 would permit him to do so. Attention is invited to the fact, however, that the restricted permitted class of beneficiaries would be applicable to all insurance policies which matured