Lawrence C. Reed, now deceased, was for almost twenty-three years a member of the armed forces of the. United States. ■He retired from active service in the Army on December 31,1947. From June 1, 1943, until December 31, 1947, the date of his retirement, there was deducted, pursuant to his authorization, from his Army pay premiums due on a National Service Life Insurance policy.

Upon his retirement Reed indicated on his retirement certificate that he desired to continue his National Service Life Insurance allotment from his retirement *627 pay. 1 However, until his death thirteen months later, Reed received his retirement pay without an allotment for the premiums. This was due to the apparent neglect of the Army paymaster in the Canal Zone at which place he had retired from the active service.

Subsequent to the death of Lawrence Reed, Mildred Reed Wood, the beneficiary named in the policy, made a claim for the proceeds of the insurance. The claim was disallowed by the Veterans’ Administration on the ground that the said insurance policy had lapsed. An appeal was dismissed by the Board of Veterans’ Appeals. Thereafter Mrs. Wood filed suit for recovery of the proceeds under the National Service Life Insurance Act of 1940. 2 The District Court sustained the contention of the Government that the insurance policy had lapsed for non-payment of premiums and denied relief.

§ 608 of the National Service Life Insurance Act places administration of the Act with the Administrator of Veterans’ Affairs, and gives said Administrator power to provide rules and regulations, consistent with the purposes of the Act, for its administration. See 38 U.S.C.A. § 808 .

For the purpose of facilitating the collection of premiums, a plan was devised between the Veterans’ Administration and the Army whereby the Army would, under proper authorization from the Veterans’ Administration, make the necessary deductions from Army pay in order to pay premiums and thus prevent the insurance from lapsing. The monthly premiums thus deducted were placed to the credit of the Veterans’ Administration. 3

It will be noted that at the time of Reed’s retirement that regulations did *628 not provide for allotments or deductions from persons receiving retirement pay from the Army. This omission was corrected by a regulation promulgated in 1951. 4

However, it seems the Army and the Veterans’ Administration treated allotments from retirement pay at the time Reed retired in the same manner as allotments from regular Army pay, as evidenced by the form furnished Reed to indicate his desire to have regular allotments made from his retirement pay, and the Army regulation in force concerning continuance of the allotment upon retirement. 5

.At the invitation ■ of the Army Reed made the request that the allotment for National Service Life Insurance from his retirement pay be continued. 6 The Army was the collector for the Veterans’ Administration and inasmuch as the Army was to forward the allotment deduction to the Veterans’ Administration, it thereby became and was the agent of the Veterans’ Administration for the purpose of collecting premium payments. Hence, there was in the hands of the Veterans’ Administration agent (the Army) on the first day of each month a sum sufficient to pay the premiums. We have premium allotments authorized by the insured under National Service Life Insurance in accordance with the provisions of the Veterans’ Administration agreement with the Army. Although the deduction was not in fact made, the insurance premium should be treated as paid for the purpose of preventing lapse of the insurance, because upon the due date of the premium there was due and payable to the insured an amount of retirement pay sufficient to provide the payment. These circumstances bring the instant case within the spirit, if not the letter, of Veterans’ Administration Regulations, 38 C.F.R. § 10.3410 (Supp.1946, 11 F.R. 9281 ), which provided at the time of Reed’s retirement:

Under the circumstances we think the receipt and retention by the veteran of the full amount of his retirement pay did not result in a lapse of the policy. The failure to collect was that of the Veterans’ Administration by reason of the negligence of its agent, the Army. The Veterans’ Administration at all times had power to make itself whole and can yet do so by a deduction of premiums due from the amount of the policy. Such a resolution of this case would attain a more equitable and just result than would a holding that a lapse occurred. Accord, Bouvier v. United States, 9 Cir., 1954, 214 F.2d 329 .

The Government, relying on the case of Smith v. United States, 292 U.S. 337 , 54 S.Ct. 721 , 78 L.Ed. 1295 , contends that Lawrence Reed, having knowingly accepted his full retirement compensation, thereby abandoned the policy.

The Smith case is clearly distinguishable. There the veteran had three enlistments. On the first he authorized withholdings of premiums; on the last two he did not. The United States defended on the ground that the authorization for deductions on the first enlistment was ineffective after the expiration of that enlistment and would not authorize deductions for the second and third. This, in connection with the acceptance of full pay during the second and third enlistments, a period of more than three years, the Court concluded, was enough to establish a purpose to abandon the contract. The authorization having lapsed after the first enlistment, no premium deduction could have been made during the second and third.

In the instant case we have a specific authorization for deductions made at the time of retirement, which authorized the deduction each month. The failure to collect was the fault of the agent of the Veterans’ Administration. We fail to see in the instant case sufficient evidence of intent to abandon the policy. We note here that no notice of an impending lapse of the policy was given to Reed by the Veterans’ Administration.

Judgment reversed, and cause remanded with instructions to the District Court to enter judgment in favor of appellant for the amount of the insurance policy less premiums due at the time of the death of the insured.

. Reed signed an AGO 53-94 Form upon retirement. Tlie following instruction appeared on tlie form:

. 38 U.S.C.A. § 801 et seq.

. Veterans’ Administration Regulations, 38 C.F.R. § 10.3406 , (Cum.Supp.1943, 7 F.R. 6746 ) provided:

Army Regulations, 10 C.F.R. § 308.1 (Supp.1944, 9 F.R. 12709 ) provided:

Army Regulations, 10 C.F.R. § 308.2 , (Supp.1944, 9 F.R. 12709 ) provided:

Army Regulations, 10 C.F.R. § 308.3 , (Supp.1944, 9 F.R. 12709 ) provided:

. 38 C.F.R. § 8.6 (Supp.1956, 16 F.R. 12989 , Dec. 27, 1951) provides:

. For the form furnished Reed to indicate continuance of the allotment from retirement pay, see Note 1, supra. Army Regulations, 10 C.F.R. § 308.10 (Supp.1946, 11 F.R. 3392 ) provided:

. See note 1 supra.