B-159854, NOVEMBER 7, 1966, 46 COMP. GEN. 392

B-159854, NOVEMBER 7, 1966, 46 COMP. GEN. 392

MILITARY PERSONNEL - SAVINGS DEPOSITS - INTEREST THE ACT OF AUGUST 14, 1966 (10 U.S.C. 1035), PRESCRIBING $10,000 AS THE MAXIMUM AMOUNT UPON WHICH THE AUTHORIZED 10 PER CENTUM PER YEAR INTEREST, COMPOUNDED QUARTERLY, MAY BE EARNED, WHEN THE SAVINGS ACCOUNT OF A MEMBER OF THE UNIFORMED SERVICES REACHES $10,000, NEITHER INTEREST ACCRUAL CREDITS NOR ADDITIONAL SUMS DEPOSITED BY A MEMBER MAY DRAW INTEREST. STATUTORY CONSTRUCTION - LEGISLATIVE INTENT IN CONSTRUING A STATUTE, ITS WORDS AND PHRASES SHOULD BE GIVEN THEIR PLAIN, ORDINARY AND USUAL MEANING UNLESS A DIFFERENT PURPOSE IS CLEARLY MANIFESTED IN THE STATUTE OR ITS LEGISLATIVE HISTORY; THEREFORE, THE LEGISLATIVE HISTORY OF THE ACT OF AUGUST 14, 1966 (10 U.S.C. 1035), PROVIDING FOR THE PAYMENT OF INTEREST ON THE DEPOSIT ACCOUNTS OF MEMBERS OF THE UNIFORMED SERVICES ON AMOUNTS NOT IN EXCESS OF $10,000, EVIDENCING NO INTENT TO PAY INTEREST ON SUMS IN EXCESS OF THE PRESCRIBED LIMITATION, THE $10,000 MAXIMUM AMOUNT ON WHICH INTEREST MAY BE PAID MAY NOT BE INCREASED TO INCLUDE INTEREST ACCRUALS OR ADDITIONAL SUMS DEPOSITED BY MEMBERS.

TO THE SECRETARY OF DEFENSE, NOVEMBER 7, 1966:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 16, 1966, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), REQUESTING A DECISION WHETHER THE INTEREST--- AT THE PRESCRIBED RATE OF 10 PERCENTUM PER ANNUM, COMPOUNDED QUARTERLY--- UNDER SECTION 1 OF THE ACT OF AUGUST 14, 1966, PUBLIC LAW 89- 538, 80 STAT. 347, AMENDING SECTION 1035 OF TITLE 10, U.S. CODE, ON DEPOSITS TOTALING $10,000, MAY BE COMPOUNDED QUARTERLY IN SUCH A MANNER AS TO PERMIT THE SECOND QUARTERLY INTEREST COMPUTATION TO BE ON $10,250, WHICH AMOUNT REPRESENTS THE MAXIMUM AMOUNT MENTIONED IN SECTION 1 OF THE ACT, PLUS THE INTEREST FOR THE FIRST QUARTER. THE MATTER IS DISCUSSED IN MILITARY PAY AND ALLOWANCE COMMITTEE ACTION NO. 386.

THE PERTINENT STATUTORY LANGUAGE IS AS FOLLOWS:

(B) INTEREST AT A RATE PRESCRIBED BY THE PRESIDENT, NOT TO EXCEED 10 PER CENTUM PER YEAR, WILL ACCRUE ON AMOUNTS DEPOSITED UNDER THIS SECTION. HOWEVER, THE MAXIMUM AMOUNT UPON WHICH INTEREST MAY BE PAID UNDER THIS ACT TO ANY MEMBER IS $10,000. * * *.

IN CONSTRUING A STATUTE, ITS WORDS AND PHRASES SHOULD BE GIVEN THEIR PLAIN, ORDINARY AND USUAL MEANING UNLESS A DIFFERENT PURPOSE IS CLEARLY MANIFESTED IN THE STATUTE OR ITS LEGISLATIVE HISTORY. SEE CHAMPA V. CONSOLIDATED FINANCE CORPORATION, ET AL; 110 N.E. 2D 289 (1953), 36 ALR 2D 185, AND WARNER V. GALTRA, 293 U.S. 155 (1934). THEREFORE, UNLESS THE LANGUAGE USED OR THE LEGISLATIVE HISTORY IMPARTS SOME AFFIRMATIVE INDICATION THAT THE WORDS SHOULD BE GIVEN AN UNUSUAL MEANING, IT MUST BE CONCLUDED THAT THE STATUTE SHOULD BE INTERPRETED IN THE ORDINARY SENSE OF THE WORDS THERE USED. PUBLIC LAW 89-538 CLEARLY LIMITS THE PAYMENT OF INTEREST UNDER SECTION 1 OF THE ACT ON AMOUNTS NOT IN EXCESS OF $10,000 AND NOTHING FOUND IN THE LEGISLATIVE HISTORY OF THAT LAW EVIDENCES A CONTRARY INTENT.

WHILE COMPOUND INTEREST IS NOT MENTIONED IN THE STATUTE, REPORT NO. 1666 OF THE HOUSE COMMITTEE ON ARMED SERVICES, ON THE THEN PROPOSED LEGISLATION, STATES AT PAGE 3 THAT THE PLAN IS TO PROVIDE THAT "INTEREST WILL BE COMPOUNDED QUARTERLY" FOR THE PERIOD THERE PRESCRIBED. HOWEVER, IT IS STATED THAT ONE OF THE RESTRICTIONS TO BE APPLIED TO THE PLAN IS THAT "THE MAXIMUM BALANCE UPON WHICH INTEREST MAY BE PAID TO ANY MEMBER IS $10,000;, SUCH LANGUAGE WAS REPEATED ON PAGE 5 OF THE REPORT. A SIMILAR REFERENCE TO "MAXIMUM BALANCE" APPEARS ON PAGE 2 OF REPORT NO. 1422 OF THE SENATE COMMITTEE ON ARMED SERVICES.

INTEREST, COMPOUNDED QUARTERLY, MEANS SIMPLY INTEREST ON INTEREST, WITH EACH QUARTERLY INTEREST CREDIT TO BE ADDED TO THE PRINCIPAL, THUS FORMING A NEW PRINCIPAL WHICH IS INTEREST-BEARING AT THE NEXT INTEREST ACCRUAL DATE. SEE MADISON PERSONAL LOAN, INC. V. PARKER, 124 F. 2D 143 (1941) AND UNITED STATES V. MARINA REALTY COMPANY, 82 F. SUPP. 640 (1949). SEE ALSO 30 AM. JUR. 48.

IN VIEW OF THE CLEARLY EXPRESSED INTENT TO LIMIT TO $10,000 THE "MAXIMUM BALANCE" UPON WHICH INTEREST PRESCRIBED IN SECTION 1 MAY BE PAID, IT IS CONCLUDED THAT AT SUCH TIME AS INTEREST AT THE RATE PRESCRIBED PURSUANT TO SECTION 1 IS AUTHORIZED ON A BALANCE OF $10,000, ANY ADDITIONAL SUMS DEPOSITED BY THE MEMBER, OR CREDITED TO HIS ACCOUNT BY VIRTUE OF THE ACCRUAL OF INTEREST, MAY NOT DRAW INTEREST.