p. 103
MIXED CLAIMS COMMISSION
UNITED STATES AND GERMANY
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OPINIONS AND DECISION
IN
LIFE-INSURANCE CLAIMS
UNITED STATES OF AMERICA on behalf of-
Provident Mutual Life Insurance Company, Docket No. 19;
New York Life Insurance Company, Docket No. 248;
Mutual Life Insurance Company, Docket No. 249;
Penn Mutual Life Insurance Company, Docket No. 250;
Aetna Life Insurance Company, Docket No. 251;
State Mutual Life Assurance Company, Docket No. 252;
Northwestern Mutual Life Insurance Company, Docket No. 253;
Equitable Life Assurance Society, Docket No. 254;
Manhattan Life Insurance Company, Docket No. 255;
Prudential Insurance Company, Docket No. 255;
Metropolitan Life Insurance Company, Docket No. 255;
Travelers Insurance Company, Docket No. 256,
Claimants,
v.
GERMANY
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[April 17, 1924.]
CERTIFICATE OF DISAGREEMENT BY THE TWO NATIONAL COMMISSIONERS.
The American Commissioner and the German Commissioner have been unable to agree upon the decision of these then cases, all of which arose through the sinking of the Lusitania, their respective opinions being as follows:-
OPINION OF MR. ANDERSON, THE AMERICAN COMMISSIONER.
In determining Germany’s financial obligations under the Treaty of Berlin no sound distinction in principle can be drawn between the claims which have been allowed by this Commission for pecuniary losses, resulting from deaths caused by the sinking of the Lusitania, and claims of insurance companies for pecuniary losses, resulting from the premature payment of life-insurance policies on account of the death of the person insured, when caused either by the sinking of the Lusitania or by other acts for which Germany is responsible under the Treaty of Berlin.
This Commission has held in the Opinion in the Lusitania Cases, dated November 1, 1923, that-[1]
Applying the rules laid down in Administrative Decisions Nos. I and II handed down this date, the Commission finds that Germany is financially obligated to pay to the United States all losses suffered by American nationals, stated in terms of dollars, where the claims therefor have continued in American ownership, which losses have resulted from death or from personal injury or from loss of, or damage to, property, sustained in the sinking of the Lusitania.
In the Lusitania Opinion it was further held that in death cases the right of action is for the loss sustained by the claimant, not by the deceased’s estate, and the basis of damage is not the loss to his estate, but the loss resulting to claimants from his death.
It was also held in that opinion that one of the elements to be estimated in fixing the amount of compensation for such loss was the amount “which the decedent, had he not been killed, would probably have contributed to the claimant”.
The contributions here contemplated were voluntary contributions, in the form of an allowance in some cases, and, in other cases, they payment of some periodical expenses, such as house rent, or occasional gifts of money.
The Lusitania Opinion also decided that in estimating the present cash value of probably contributions prevented by the death of the decedent one of the factors to be considered was-
“the probable duration of the life of deceased but for the fatal injury, in arriving at which standard life-expectancy tables and all other pertinent evidence offered will be considered.”
Germany’s responsibility for the premature death of the probably contributor is the basis for awarding damages, and the amount of the probably contributions, thus prevented, is the basis for determining the amount of damages to be awarded.
This is demonstrated by the following extracts from the decision of the Umpire in specific Lusitania cases. The Umpire held in his decision of February 21, 1924, in the Williamson case, Docket Nos. 218 and 529, as follows:
[An excerpt from the case of Mr. Charles Williamson, Saloon Passenger]
Again in the Umpire’s decision of the same date in the Robinson case, Docket No. 223, he held:
[An excerpt from the case of Mr. Charles E. Robinson, Saloon Passenger]
Again in his decision of the same date in the Allen case, Docket No. 233, the Umpire held:
[An excerpt from the case of Miss Dorothy D. Allen, Saloon Passenger]
This Commission having decided in the Lusitania cases that the expectation of voluntary contribution of this character forms the basis of awards for damages, on account of Germany’s responsibility for the premature death of the contributor, it inevitably follows that insurance companies, which were carrying life insurance on those lost on the Lusitania, are equally entitled to compensation for the amount of the contributions which, if death had not intervened, they probably would have received in the form of premiums to be paid until the maturity of those policies.
In both cases alike the only pecuniary interest, which the claimants had in the continuation of the decendent’s life, was their expectation of receiving the contributions which he probably would have made to them if he had not been killed, and the probability that in his contributions, in the form of premiums, would have been continued until the maturity of his life-insurance policy is, by reason of their investment character, even more certain than the probability that he would have continued his voluntary contributions to his or his wife’s relatives, which has formed the basis of the awards made by this Commission in the Lusitania cases.
The ten life-insurance cases, which have been submitted to the Commission for decision, all arose during the period of neutrality. In each of these cases the claim is for loss resulting from the death of an American citizen whose life was insured by the claimant and whose life was lost in the sinking of the Lusitania. In all of these cases the amount of the loss claimed is stated to be exactly equal to the present value, at the time of the decedent’s death, of the premiums which he would have paid prior to the maturity of the policy, computed by the standard present-value tables at a 3% interest rate. The same tables, at a 5% interest rate, were used for this computation in determining the Lusitania awards.
The German Agent contends that in none of these cases was there a real and substantial loss by the insurance companies, because in writing the policies they took into account the risk which resulted in the premature death of the insured, and that the premiums payable on these policies were fixed at a rate which was calculated to cover that risk. The same argument could be made, even more persuasively, with reference to the other claims in the Lusitania cases for the loss of expected contributions, when such losses were counterbalanced by the amount of the decedent’s life insurance received by the claimants.
Nevertheless, this argument has already been overruled by the Commission. In the Lusitania Opinion it was expressly held:
(h) the amount of insurance on the life of the deceased collected by his estate or by the claimants will not be taken into account in computing the damages which claimants may be entitled to recover.
It is contended, on the part of Germany, that a sound distinction in principle may be drawn between the contributions allowed in the Lusitania awards, and the contributions in the form of insurance premiums claimed in these cases. Apparently the argument is that the only contributions, for which awards have been made in the Lusitania cases, represented the expectations of relatives of the deceased, and therefore were natural consequences of Germany’s act which should have been anticipated, where the loss of insurance contractual relations, which can not be considered in estimating the damages for which Germany is responsible.
The objection to this argument is twofold. The treaty obligation of Germany are not limited to such damages only as might have been foreseen, and the claims for expected premium contributions are not dependent on contractual obligations, but can be sustained on the same basis as the others, in which the expected contribution depended wholly on the volition of the deceased, acting in his own interest and discretion. In neither class of cases were the expected contributions legally enforcible [sic].
It is argued, on the part of Germany, that under the Treaty Germany is only liable for damages resulting from injury to a person or property, and that the life-insurance companies have suffered no injury to person or property, because no personal injury was inflicted on the corporate body and the life-insurance policy which was terminated by the death of the deceased did not constitute property in legal contemplation, and the relationship between them and the deceased was not of a character which would justify them in claiming damages for his death. This argument, it will be noted, would apply equally to the claims which have already been allowed, in the Lusitania cases above cited, for the loss of voluntary contributions expected from the deceased.
In order to meet this difficulty, it is further contended that those awards were not based on an obligation to compensate for lost contributions, but that those contributions represented merely the measure of damages which the United States had elected to adopt for determining Germany’s financial obligation for the death of Lusitania passengers. Even if this explanation could be accepted as a correct statement of the basis for those awards, nevertheless, the United States would be at liberty to include these insurance premiums as part of the damages to be measured for the death of the insured, and its election to do so would be established by the fact that it has presented these claims.
The argument is fundamentally unsound, however, because by Administrative Decision No. I this Commission has determined that the liability of Germany is not limited to damages for injuries to persons or property. The Commission held, and definitely settled in that decision, that –
The financial obligations of Germany to the United States arising under the Treaty of Berlin on claims other than excepted claims, put forward by the the [sic] United States on behalf of its nationals, embrace:
(A) all losses, damages, or injuries to them, including losses, damages, or injuries to their property wherever situated, suffered directly or indirectly during the war period, caused by the acts of Germany or her agents in the prosecution of the war, etc.
The decision was rendered after full and careful consideration of all the undertakings and stipulations embodied in the Treaty of Berlin, and clearly establishes that the losses, damages, or injuries to the property of American nationals constitute only a part of the losses, damages, or injuries to them for which Germany is obligated to make compensation under the Treaty.
In conclusion, it follows, from the foregoing considerations, that in so far as the life expectancy of the deceased in each of these cases, at the time he was killed, covered the period within which the unpaid premiums under his policy were required to be paid to the claimant, and to the extent of the claimant’s loss, computed on the basis of the then present value of the probable future premiums, payment of which was prevented by the untimely death of the insured, these claims are justified and should be allowed in accordance with the decisions of this Commission announced in Administrative Decision No. I and in the Lusitania Opinion, of November 1, 1923, and in the awards of February 21, 1924, by the Umpire in the Lusitania cases.
CHANDLER P. ANDERSON.
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[1] Page 17 supra.
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