The fundamental purpose for the passage of the Soldiers’ and Sailors’ Civil Relief Act is to promote the welfare and consequently the morale and efficiency of those serving in the military and naval services. It has been held by the courts, in cases arising under the 1918 Act, that its purpose was to protect the civil rights of those in the military and naval services “and to enable them to devote their entire energy to the military needs of the nation.” (Clark v. Mechanics’ American National Bank 282 F. 589.)
The 1940 Act (Public No. 861 76th Congress) is subdivided into six articles: General Provisions; General Relief; Rent, Installment Contracts, Mortgages; Insurance; Taxes and Public Lands; and Administrative Remedies. These articles will, therefore, be treated separately in this analysis. All citations made necessarily arose under the Act of 1918. However, due to the great similarity of this act with that of 1940, it is reasonable to accept them as authority. In any event, since time has been too short for any cases under the 1940 Act to be reported, they constitute the only judicial interpretation available.
General Provisions
The act is designed to protect all persons “in the military service of the United States.” It does not extend to cover retired or reserve personnel not on active duty or civilians. However, Sec. 102 provides that the protection of the act shall, within the discretion of the court, be extended to sureties, guarantors, endorsers, and others who are liable on obligations of one in service, in suits wherein the benefits of the act are granted to such persons in service.
The act is effective from the date of its passage (October 17, 1940) until May 15, 1945, and if the United States is then at war it shall be extended “until such war is terminated by a treaty of peace . . . ” (Sec. 604). As to persons in active service at the date of its passage it was effective immediately. As to persons entering active service after its passage it applies from the date of their entry into active service.
The controlling point throughout the act is not only that of active military or naval service but whether such service “materially affects” the individual’s ability to perform his obligation. This may be evidenced in many ways, such as a drastic reduction in income or absence at sea, or in foreign lands, or, indeed, where one is on duty in his home city and unable, due to his service, to devote the requisite time and attention to his civil business. But it would not extend to cover an army captain who was defendant in a personal injury suit arising out of an automobile accident when his duties were not such as to prevent him from preparing his defense and attending trial. (Fermell v. Frisch 192 Ky. 535.)
The term is capable of a very broad interpretation and the courts have held that it should not “be defeated by a narrow or technical construction.”
General Relief
Section 200 (1) provides, in any suit where the defendant defaults in appearance, that before any judgment shall be entered against him the plaintiff shall file an affidavit stating that such defendant is not in military service or that the plaintiff is unable to determine as to whether or not the defendant is in such service.
This provision has been construed by the courts not to affect a judgment where there is no claim that defendant is in military or naval service (Howie Min. Co. v. McGary, 256 F. 38; and other cases); nor does it apply where the defendant files an answer and makes no mention as to whether or not he is in military service and where it does not appear that he was in such service at the time judgment was rendered. (Wells v. McArthur 77 Okla. 279.) And it has been held that where a person enters military or naval service after being personally served with process he is not relieved of his obligation to appear “since one properly served with process was presumed to be in court.” (Howie Min. Co. v. McGary, 256 F. 38.) It is further held in this same opinion, however, that where the court assumes jurisdiction over one in service and the fact of such service is brought to the attention of the court, either by the defendant or someone for him, the court should order a stay of the proceedings or appoint some attorney to represent the defendant unless it appears that his interest will not be affected.
A judgment rendered on default of the defendant to appear, and in absence of the required affidavit, has been held not to be rendered void but voidable only, where it appears that such defendant “was prejudiced by reason of his military service in making his defense thereto and that he had a meritorious defense to the action or some part thereof.” (Eureka Homestead Soc. v. Clark 145 La. 917.)
It is further provided in Sec. 200 (1) of the act that no judgment shall be entered in default of appearance by the defendant, and in absence of the required affidavit, unless the court shall order the entry of such judgment, and that no such order shall be made, where the defendant is in service, “until after the court shall have appointed an attorney to represent defendant and protect his interest,” and (in Sec. 200 (3)) “no attorney appointed under this act to protect a person in military service shall have power to waive any right of the person for whom he is appointed or bind him by his acts.”
This latter provision would seem to extend to those in service, where they do not appear in an action, the full benefit of legal representation without placing upon them any responsibility as principal for the acts of their attorney. And it has also been held that no compensation can be allowed an attorney so appointed, the court stating that it should be regarded by members of the bar as a “patriotic duty.” (Davison v. Lynch 171 NYS 46.)
As a further protection to those in service, the act provides that before any judgment may be entered, under circumstances as above described, the court may require the plaintiff to post a bond in sufficient amount to indemnify the defendant for any loss or damage he may suffer by reason of such judgment provided it is subsequently set aside on the ground that the defendant had a meritorious or legal defense to the action and “was prejudiced by reason of his military service in making his defense.” Application to have such judgment set aside must be made by the defendant or his legal representative within 90 days after the termination of his military or naval service.
Section 201 of the act provides that at “any stage” of any “Action or proceeding in any court,” wherein either the plaintiff or the defendant is in military or naval service, such action or proceeding may, on the court’s own motion, and shall, on the application of such person in service or someone for him, be stayed for the duration of such person’s service and 3 months thereafter, unless his ability to prosecute or defend the action is not materially affected by his military or naval service. Heretofore the right to a stay or continuance of any legal proceeding was a matter resting entirely within the discretion of the court. It appears from this section of the act that a continuance or stay of any proceeding is rendered mandatory in all cases wherein either the plaintiff or defendant is in service and his ability to prosecute or defend is materially affected by such service.
The act also goes further, and in Sec. 203 provides that, where a defendant is in military service, the court may on its own motion or on application of such defendant or other person for him, order the stay of “the execution of any judgment or order entered against such person” and it may “vacate or stay any attachment or garnishment of property, money, or debts in the hands of another.” It makes no difference as to whether or not the judgment was granted, the order entered, or the proceedings instituted before or after the commencement of the defendant’s military service. The principal, if not the only, controlling factor involved, as in all other provisions of the act, is—does such person’s military or naval service materially affect his ability to comply with the judgment or order concerned?
This is, perhaps, one of the most extensive provisions of the act. Its scope is so broad that to even attempt to ramify on it in this paper would be impossible. When one considers that under it the sailor at sea can rest content that his family will not be dispossessed, his bank account or insurance cannot be garnisheed, his automobile or furniture cannot be attached and sold, his real estate cannot be proceeded against to pay his debts, his wife cannot sue him for divorce, and he is not liable for fines or forfeitures arising under contracts on which proceedings have been stayed, the magnitude of this section becomes manifest.
The period during which a person is in military or naval service is not to be included in computing the limitation within which an action shall be brought (Sec. 205). Thus if a person owes an account, the statute of limitations on which expires in 30 days, and he enters naval service prior to the expiration thereof, the period within which an action may be brought on such account is extended for the period of such person’s naval service and three months thereafter, or to the date of the expiration of this act, whichever occurs first.
This section also operates to the benefit of the soldier or sailor, for, indeed, he may be the creditor instead of the debtor. In Steinfield v. Mass. Bonding and Insurance Co. (112 Atl. 800) it was held that the provision applied to a clause in an insurance contract which stipulated that any action thereunder should be brought within 90 days after accrual of the action. And in Green v. Banker’s Life Insurance Co. of Nebraska (209 Pac. 670) it was held that the statute of limitations did not run during the period when the assured was in the Army nor during the period thereafter when the beneficiary did not know, and had no means of knowing, that the insured had been killed in action.
Rent—Installment Contracts— Mortgages
Section 300 (1) of the act provides as follows:
No eviction or distress shall be made during the period of military service in respect of any premises for which the agreed rent does not exceed $80.00 per month, occupied chiefly for dwelling purposes by the wife, children, or other dependents of a person in military service, except upon leave of court granted upon application therefore or granted in an action or proceeding affecting the right of possession.
This operates to eliminate the summary proceeding of distress as an instrument of the landlord. Heretofore, this writ issued without any judicial action and summarily placed a levy on certain goods of a tenant without any previous notice or trial.
Section 300 (2) provides:
On any such application or in any such action the court may, in its discretion, on its own motion, and shall, on application, unless, in the opinion of the court the ability of the tenant to pay the agreed rent is not materially affected by reason of such military service, stay the proceedings for not longer than three months, as provided in this Act, or it may make such other order as may be just.
It was held in Gilluly v. Hawkins (182 Pac. 958) to be discretionary in the court to stay eviction proceedings for 3 months under the act. However, in the above section it appears to be explicit that it is discretionary for the court to stay the proceedings on its own motion but shall stay the proceedings on application, i.e., the motion of the person in service or someone for him, unless his ability to pay is not materially affected, etc., and in Bassham v. Evans (216 S.W. 446) the court held that a soldier who was ejected from his premises by sequestration proceedings could recover actual damages and also exemplary damages, where circumstances showed a “conscious disregard” of his rights, irrespective as to whether the facts as stated in the affidavit were true or false.
In Sec. 300 (4) of the act it is provided:
The Secretary of War, the Secretary of the Navy, or the Secretary of the Treasury with respect to the Coast Guard, as the case may be, is hereby empowered, subject to such regulations as he may prescribe, to order an allotment of the pay of a person in military service in reasonable proportion to discharge the rent of premises occupied for dwelling purposes by the wife, children, or other dependents of such person.
Installment sales contracts are treated by the act in Section 301 which considers both the so-called reserved title or conditional sales contract and the lease or bailment contract. In the former, title to the goods remains in the seller until the entire purchase price is paid. In the latter, title passes to the buyer after an agreed amount has been paid as rent for the article and the then balance secured by mortgage.
The protection of this section extends to all such contracts made prior to approval of the act and provides that no article so sold, and upon which any installment has been paid, whether as rent or otherwise, shall be repossessed by the seller for nonpayment of any installment except by judicial action. When any action on an installment contract, against one in military service, comes before a court for hearing, such court may on its own motion, and shall on application of such person in service, or someone on his behalf, stay the proceedings for the duration of such person’s service and three months thereafter, unless such person’s ability to comply with the contract is not materially affected by reason of his service. In the absence of an application for a stay of the proceedings, the court may, as a condition precedent to terminating the contract and awarding possession of the property to the seller, order the repayment of all prior installments, or any part thereof, to the defendant.
The only exception to this provision is in the case of installment contracts or purchase money mortgages covering motor vehicles or their accessories. (Sec. 303.) In cases involving their repossession, or sale, no application for stay of the proceedings shall be granted, unless 50 per cent or more of the purchase price has been paid. The court may, however, in all such cases require the plaintiff to post a bond, approved by the court, to indemnify the defendant against any loss or damage that he may sustain should the judgment awarding sale or repossession be later set aside.
With respect to any action brought under the terms of a deed of trust, or mortgage, on real or personal property of a person in military service, the court shall, where such mortgage was made prior to October 17, 1940, and where such person’s ability to comply with its terms is materially affected by reason of his service, either order a stay of the proceedings, as already explained, or make some other disposition of the case that will be equitable to all persons concerned. (Sec. 302.)
Section 302 (3) practically vitiates all powers of sale in deeds of trusts or mortgages and renders it mandatory to the validity of any sale, following default and during the military service of the mortgagor, that such sale be made under an order “previously granted by the court.” This operates to place all proceedings of foreclosure before a court of competent jurisdiction which may, as the facts merit, either stay the action or make some other equitable disposition of the case.
In applying this section of the 1918 Act, the court stated, in John Hancock Mutual Life Ins. Co. v. Lester (125 N.E. 594) that a mortgagee forecloses under a power of sale contained in a mortgage at his own peril, “Unless, upon an order of sale previously granted by the court,” and it was held in Hoffman v. Charlestown Five Cent Saving Bank (121 N.E. 15) that the protection of the section was not limited to property used as a residence or for business but extended to all mortgaged property of one in service.
It has been held, however, that the section does not apply to mortgaged property in the name of the mother of one in service. (Great Barrington Savings Bank v. Brown 132 N.E. 398), and that the section should not act to render invalid a foreclosure sale when the mortgagor knew of it and made no objection thereto, having been in a position to make such objection, the inference being that he assented thereto. (Church v. Brown 142 N.E. 91.)
It is definite that there is nothing in the act which prohibits an installment seller from repossessing, or a mortgagee from foreclosing under a power of sale, under instruments executed after the passage of the act. If such repossession, or such foreclosure, cannot be effected, however, without judicial action, then the other sections of the act must be considered.
Insurance
Article IV of the act provides, subject to certain provisions, for a moratorium on the payment of life insurance premiums, under a guarantee of the Government that such premiums will be paid, and hypothecating the cash surrender value, or death benefit, of the policy for that purpose.
Eligibility for the benefits of this article is determined upon a consideration of the following factors:
(1) That the applicant be in the military or naval service.
(2) That the face value of the insurance contract or contracts do not exceed $5,000.
(3) That such insurance contract be made and a premium paid thereon before the date of approval of this act or 30 days prior to entry into military or naval service.
(4) That no loan or other indebtedness be outstanding against the policy in an amount equal to 50 per cent or more of its cash surrender value.
(5) That the policy be in force and that the premiums thereon are not in arrears for more than one year.
The administration of this article has been assigned to the Administrator of Veterans’ Affairs who is directed to issue such information and forms pertaining thereto as required by those desiring to avail themselves of its benefits.
Each insurance company is required to render to the Veteran’s Administration a monthly report showing the names of those who have applied for benefits; the face value of their policies; and a computation showing the amount of unpaid defaulted premiums.
Upon verification of this report, the Administrator of Veterans’ Affairs shall deliver to each insurance company a certificate for the amount of such unpaid defaulted premiums which shall be held by them as security for the payment of the defaulted premiums reported with interest. In order to indemnify the Government against any loss arising hereunder, it is provided that it shall have a first lien upon the policy and that no loan, settlement, or dividend shall be paid thereunder without obtaining the written consent of the Veteran’s Administration.
Each insured who has availed himself of the benefits of this article is required to pay to his insurer within one year of the termination of this act or the termination of his service, the amount of all defaulted premiums with interest which were covered by the certificates issued to such insurer by the Administrator of Veterans’ Affairs. Upon default in this respect, the insured’s policy, or policies, shall lapse and the cash surrender value, or so much thereof as is necessary to cover the defaulted premiums and interest, is placed to the Government’s credit in making the final accounting with the insurance company. The difference, if any, is remitted to the insured.
Taxes and Public Lands
It is provided in Section 500 of this act that no real property, “owned and occupied for dwelling, agricultural or business purposes,” by persons in the military or naval service, or their dependents, at the time of their entry into the service, and is still occupied by their dependents or employees, shall be sold for nonpayment of any tax or assessment thereon, whether general or specific, and no action shall be commenced for that purpose except by leave of court after such person in military service, or someone for him, has filed an affidavit with the collector of taxes setting forth that a tax or assessment has been levied against property which is covered by this section; that the same is unpaid; and that his ability to pay such tax is materially affected by reason of his service.
When any action is commenced by the collector of taxes or other official to sell the property of one in military or naval service which is covered by this section, such action may be stayed by the court, as already discussed, for the duration of the service of such person and six months thereafter. If any such property is sold or forfeited by operation of law for the collection of any tax thereon, the same may be redeemed by one in military or naval service at any time within six months from the termination of his service or within six months from the termination of this act, whichever should be the first to occur.
It is provided in subsection 500 (4) as follows:
Whenever any tax or assessment shall not be paid when due, such tax or assessment due and unpaid shall bear interest until paid at the rate of 6 per centum per annum, and no other penalty or interest shall be incurred by reason of such nonpayment.
It will be noticed that this subsection contains no qualifications which would tend to restrict it to the tax on real property as above discussed. The act employs the words “whenever any tax or assessment. ...” A liberal interpretation of this subsection would seem to indicate, therefore, that it applied to all taxes for which a person in military or naval service should become liable whether on real estate or whether on personal estate.
The collection of any income tax assessed against persons in the military or naval service is made the subject of a separate section (513) which provides that the collection of taxes “shall be deferred for a period extending not more than six months after the termination of his period of military service” provided such person’s ability to pay such tax is materially affected by reason of his military or naval service. During the period of deferment, no interest or penalty shall accrue or be added to the tax by reason of nonpayment under this section.
It is expressly provided that:
The provisions of this section shall not apply to the income tax on employees imposed by section 1400 of the Federal Contributions Act.
The act also affords definite protection to those persons in the service who have acquired rights or claims in public lands, whether by homestead entry, desert-land entry, patent, permit, or lease. However, the situations covered by these sections of the act are so numerous as to be beyond the scope of this article.
Administrative Remedies
Under this heading, it is provided in Sec. 601 that the Chief of the Bureau of Navigation shall furnish upon request, insofar as naval personnel is concerned, a certificate as to the service of the person requesting the same, which shall be prima-facie evidence of the facts set out therein in any proceeding arising under this act.
It is further provided in this section as follows:
Where a person in military service has been reported missing he shall be presumed to continue in the service until accounted for, and no period herein limited which begins or ends with the death of such persons shall begin or end until the death of such person is in fact reported to or found by the Department of War or Navy, or any court or board thereof, or until such death is found by a court of competent jurisdiction: Provided, that no period herein limited which begins or ends with the death of such person shall be extended hereby beyond a period of six months after the time when this act ceases to be in force.
The fundamental purpose of this act is, as set out at the beginning of this paper, to protect the rights of those in the military or naval service in order that they may “devote their entire energy to the military needs of the nation.”
In considering this purpose and the fact that where personnel can clear their minds of the complexities of certain personal problems; and where they can be assured that their rights wall not be violated or damaged by legal technicalities or their inability to adequately protect them themselves; and where enlisted personnel can approach division officers and receive intelligent advice respecting their problems arising under this act, the effect on morale and efficiency should be more than negligible.