B-160808, APRIL 2, 1970, 49 COMP. GEN. 656

B-160808, APRIL 2, 1970, 49 COMP. GEN. 656

MILITARY PERSONNEL -- RECORD CORRECTION -- PAYMENT BASIS -- INTERIM CIVILIAN EARNINGS NAVAL OFFICERS WHOSE RETIREMENT ON JULY 1, 1965, WAS FOUND TO BE ILLEGAL IN A JUDGMENT AWARDED JUNE 14, 1968, ARE ON THE BASIS OF A RECORD CORRECTION ON SEPTEMBER 17, 1969, MAKING THEIR RETIREMENT EFFECTIVE AUGUST 1, 1969, WITH THE GRADE OF CAPTAIN UNDER 10 U.S.C. 6323, ENTITLED TO PAY AND ALLOWANCES FOR THE PERIOD SUBSEQUENT TO JUDGMENT, JUNE 15, 1968, TO JULY 31, 1969, REDUCED FIRST BY ANY RETIRED PAY RECEIVED AND THEN BY THE INTERIM CIVILIAN COMPENSATION EARNED, THE METHOD USED IN COMPUTING THE AMOUNT DUE UNDER THE COURT OF CLAIMS JUDGMENT, WHICH METHOD IS IN ACCORD WITH A DEPARTMENT OF DEFENSE DIRECTIVE AND IMPLEMENTING NAVAL REGULATIONS. MILITARY PERSONNEL -- RECORD CORRECTION -- PAYMENT BASIS -- LEAVE ACCRUAL PURSUANT TO A "STIPULATION OF SETTLEMENT" AGREEMENT, THE NAVAL OFFICERS WHO WERE CONSIDERED TO HAVE BEEN ILLEGALLY RETIRED ON JULY 1, 1965, HAVING BEEN AWARDED IN 188 CT. CL. 1169, SPECIFIC AMOUNTS TO FINALIZE THE LUMP- SUM LEAVE PAYMENTS RECEIVED BY THEM UPON RELEASE FROM ACTIVE DUTY ON JUNE 30, 1965, AND TO COVER THE PERIOD JULY 1, 1965, TO JUNE 14, 1968, THE DATE OF THE JUDGMENT IN WHICH THE OFFICERS WERE AWARDED ACTIVE DUTY PAY AND ALLOWANCES, THE LEAVE ACCRUAL FOR CONSIDERATION IN DETERMINING THE PAY AND ALLOWANCES DUE THE OFFICERS UPON CORRECTION UNDER 10 U.S.C. 1552, OF THEIR RETIREMENT DATE FROM JULY 1, 1965, TO AUGUST 1, 1969, IS THE LEAVE THAT HAD ACCRUED FROM JUNE 14, 1968, TO JULY 31, 1969, AS THE OFFICERS' LEAVE BALANCE IN ACCORDANCE WITH THE SETTLEMENT AGREEMENT HAD BEEN REDUCED ON DATE OF JUDGMENT AWARD TO ZERO.

TO LIEUTENANT (JG) H. F. BEERMAN, DEPARTMENT OF THE NAVY, APRIL 2, 1970:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 29, 1969, FILE REFERENCE CCA:MW:GP, 7220 PL 220, AND ENCLOSURES, FORWARDED HERE BY FIRST ENDORSEMENT DATED JANUARY 28, 1970, OF THE DIRECTOR, NAVY MILITARY PAY SYSTEM, REQUESTING A DECISION WHETHER OFFSET OF INTERIM CIVILIAN EARNINGS IS REQUIRED IN CONNECTION WITH PROPOSED PAYMENTS OF ACTIVE DUTY PAY AND ALLOWANCES TO BE MADE TO CAPTAIN RICHARD W. RICKER, CHC, USN, RETIRED, 151 350, AND CAPTAIN OSWALD B. SALYER, CHC, USN, RETIRED, 170 593, INCIDENT TO THE CORRECTION OF THEIR NAVAL RECORDS. YOUR REQUEST WAS ASSIGNED NO. DO-N -1067 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

THE RECORD SHOWS THAT SUBSEQUENT TO AN UNFAVORABLE BOARD RECOMMENDATION FOR ACTIVE SERVICE CONTINUATION, THE SUBJECT OFFICERS WERE RELEASED FROM ACTIVE DUTY ON JUNE 30, 1965, AND WERE RETIRED EFFECTIVE JULY 1, 1965, WITH THE GRADE OF CAPTAIN. BASED ON A CONTENTION THAT THEIR RETIREMENT WAS NOT LEGALLY EFFECTED BECAUSE THE CONTINUATION BOARD WAS ILLEGALLY CONSTITUTED, THE OFFICERS CONTESTED THE ACTION OF THE DEPARTMENT OF THE NAVY BY A COMBINED SUIT IN THE COURT OF CLAIMS. THE COURT UPHELD THE OFFICERS' CONTENTION AND ON JUNE 14, 1968, IT AWARDED JUDGMENT TO THE OFFICERS FOR ACTIVE DUTY PAY AND ALLOWANCES LESS APPROPRIATE OFFSETS. THE DETERMINATION OF THE AMOUNT OF RECOVERY WAS RESERVED PENDING FURTHER PROCEEDINGS UNDER COURT RULE 47(C).

PURSUANT TO A STIPULATION OF THE PARTIES, JUDGMENT WAS ENTERED BY THE COURT ON JULY 7, 1969 (188 CT. CL. 1169 (1969)), IN THE AMOUNTS OF $1,000 FOR PLAINTIFF RICKER AND $5,000 FOR PLAINTIFF SALYER. IN DETERMINING THE AMOUNT DUE UNDER THE JUDGMENT, THE ACTIVE DUTY PAY AND ALLOWANCES THAT ACCRUED TO EACH OFFICER WAS REDUCED BY THE RETIRED PAY HE HAD RECEIVED AND ALSO BY THE AMOUNT OF HIS CIVILIAN EARNINGS FOR THE PERIOD COVERED BY THE JUDGMENT.

THE PAPERS FORWARDED WITH YOUR REQUEST SHOW THAT UNDER DATE OF SEPTEMBER 8, 1969, THE BOARD FOR CORRECTION OF NAVAL RECORDS, ACTING UPON APPLICATIONS SUBMITTED BY THE SUBJECT OFFICERS AND AFTER HAVING CONSIDERED THE HOLDING OF THE COURT OF CLAIMS AND ITS JUDGMENT IN ACCORDANCE WITH THE STIPULATION BETWEEN THE PARTIES, RENDERED A DECISION WHICH, AMONG OTHER THINGS, DIRECTED THAT THE NAVAL RECORDS OF THE OFFICERS BE CORRECTED TO SHOW THAT THEY WERE NOT RETIRED ON JULY 1, 1965, BUT WERE CONTINUED ON ACTIVE DUTY UNTIL JULY 31, 1969, AND RETIRED ON AUGUST 1, 1969, WITH THE GRADE OF CAPTAIN PURSUANT TO 10 U.S.C. 6323.

THE BOARD RECOMMENDED THAT THE DEPARTMENT OF THE NAVY PAY TO EACH OFFICER OR OTHER PARTY OR PARTIES ALL MONIES LAWFULLY FOUND TO BE DUE FROM JUNE 15, 1968, TO JULY 31, 1969 (INCLUDING PAYMENT FOR ANNUAL LEAVE ACCRUED FOR SUCH PERIOD), LESS RETIRED PAY RECEIVED BY THEM FOR SUCH PERIOD. SEPTEMBER 17, 1969, THE ASSISTANT SECRETARY OF THE NAVY APPROVED THE BOARD'S DECISION AND RECOMMENDATION.

IN YOUR LETTER YOU SAY THAT IN LINE WITH MEMORANDUM DATED MARCH 18, (12), 1969, IN WHICH THE DEPARTMENT OF DEFENSE ADVISED THAT NET CIVILIAN EARNINGS SHOULD BE OFFSET IN CASES WHERE A DECISION OF THE BOARD FOR CORRECTION OF NAVAL RECORDS RESTORED MEMBERS TO ACTIVE DUTY, EACH OF THE OFFICERS WAS REQUESTED ON DECEMBER 4, 1969, TO FURNISH INFORMATION AS TO THE NET MONTHLY WAGES EARNED BY HIM FROM JULY 1, 1965, TO JULY 31, 1969.

IN THIS CONNECTION, YOU REFER TO A LETTER DATED DECEMBER 11, 1969, FROM THE OFFICERS' ATTORNEY. HE STATED IN THAT LETTER THAT THE CORRECTION ACTION IN THE CASES WAS TAKEN ON OR BEFORE SEPTEMBER 24, 1969, AND THAT, AS HE WAS INFORMED, A REGULATION WAS SIGNED ON OCTOBER 28, 1969, BY THE SECRETARY OF DEFENSE REQUIRING THAT "EARNINGS RECEIVED" BE DEDUCTED FROM ACTIVE DUTY PAY FOUND DUE AS A RESULT OF A CORRECTION BOARD ACTION. ALSO HE SAID THAT THE CORRECTIONS WERE MADE IN THESE CASES WITH THE DEFINITE UNDERSTANDING THAT NO DEDUCTION OF EARNINGS WOULD BE MADE AND HE CONTENDED THAT SUCH CORRECTIONS ARE FINAL AND CONCLUSIVE ON ALL OFFICERS OF THE UNITED STATES. HE EXPRESSED THE VIEW THAT THE OCTOBER 28, 1969, CHANGE TO THE REGULATION COULD NOT BE RETROACTIVELY APPLIED AND THEREFORE ADVISED THAT NO USEFUL PURPOSE WOULD BE SERVED BY FURNISHING THE REQUESTED INFORMATION.

YOU SAY FURTHER THAT THE REGULATIONS PROVIDING FOR DEDUCTION OF CIVILIAN EARNINGS IN THE SETTLEMENT OF SUCH CLAIMS WERE APPROVED BY THE SECRETARY OF THE NAVY ON SEPTEMBER 30, 1969, AND BY THE DEPARTMENT OF DEFENSE ON OCTOBER 28, 1969, AND WERE PUBLISHED IN THE FEDERAL REGISTER ON DECEMBER 4, 1969. YOU EXPRESS DOUBT CONCERNING THE EFFECTIVE DATE OF THOSE REGULATIONS PARTICULARLY SINCE THE INSTANT CASES WERE DECIDED PRIOR TO THE DATE THE REGULATIONS WERE APPROVED, BUT SUBSEQUENT TO THE DEPARTMENT OF DEFENSE MEMORANDUM DATED MARCH 18, (12), 1969. ACCORDINGLY, YOU REQUEST OUR DECISION WHETHER THE INTERIM CIVILIAN EARNINGS SHOULD BE OFFSET AGAINST THE AMOUNT DETERMINED TO BE DUE EACH OFFICER AS SHOWN ON THE SEPARATE CLAIM VOUCHERS.

IN TRANSMITTING THE PAPERS HERE THE DIRECTOR, NAVY MILITARY PAY SYSTEM, HAS ADDED A COPY OF LETTER DATED JUNE 24, 1969, FROM THE OFFICERS' ATTORNEY, AND LETTER DATED DECEMBER 10, 1969, FROM THE EXECUTIVE SECRETARY, NAVY BOARD FOR CORRECTION OF MILITARY RECORDS. IT IS SHOWN IN THAT CORRESPONDENCE THAT THE OFFICERS' APPLICATIONS FOR THE CORRECTION OF THEIR NAVAL RECORDS WERE SUBMITTED ON AN UNDERSTANDING WITH REPRESENTATIVES OF THE DEPARTMENT OF THE NAVY THAT THE OFFICERS' RETIREMENT, EFFECTIVE AS OF AUGUST 1, 1969, WOULD BE DEPENDENT ON A FINDING OF ENTITLEMENT TO ACTIVE DUTY PAY AND ALLOWANCES FOR THE PERIOD JUNE 15, 1968, TO JULY 31, 1969, "WITHOUT DEDUCTION FOR CIVILIAN EARNINGS," PLUS PAYMENT FOR UNUSED LEAVE.

ALSO, THE DIRECTOR PRESENTED QUESTIONS AS FOLLOWS:

IN THE EVENT THE DECISION IN THIS CASE REQUIRES THAT BOTH "RETIRED PAY" AND CIVILIAN EARNINGS BE OFFSET AGAINST THE AMOUNT OF ACTIVE DUTY PAY TO WHICH SUBJECT OFFICERS ARE ENTITLED, A DECISION IS REQUESTED AS TO WHICH SHOULD BE FIRST SETOFF AGAINST ACTIVE DUTY PAY.

IT IS NOTED THAT CREDIT HAS BEEN INCLUDED FOR 60 DAYS UNUSED LEAVE ON THE DATE OF RETIREMENT AS CHANGED BY THE BOARD FOR CORRECTION OF NAVAL RECORDS WITH OFFSET MADE FOR THE 60 DAYS CREDIT PREVIOUSLY PAID. YOUR DECISION IS FURTHER REQUESTED AS TO WHETHER THIS OFFSET IS CORRECT INASMUCH AS THE ORIGINAL PAYMENT WAS MADE DURING A PERIOD FOR WHICH SETTLEMENT WAS MADE IN ACCORDANCE WITH A JUDGMENT OF THE COURT OF CLAIMS, FULL INFORMATION ON WHICH IS ALREADY AVAILABLE IN YOUR FILES.

SECTION 1552 OF TITLE 10, U.S. CODE, AUTHORIZES THE SECRETARY OF A MILITARY DEPARTMENT, UNDER PROCEDURES ESTABLISHED BY HIM AND APPROVED BY THE SECRETARY OF DEFENSE AND ACTING THROUGH A BOARD OF CIVILIAN EMPLOYEES, TO CORRECT ANY MILITARY RECORD OF THAT DEPARTMENT WHEN HE CONSIDERS IT NECESSARY TO CORRECT AN ERROR OR REMOVE AN INJUSTICE. SUBPARAGRAPH (C) THEREOF PROVIDES IN PERTINENT PART THAT THE DEPARTMENT CONCERNED MAY PAY FROM APPLICABLE CURRENT APPROPRIATIONS A CLAIM FOR THE LOSS OF PAY, ALLOWANCES, COMPENSATION, EMOLUMENTS, OR OTHER PECUNIARY BENEFITS IF, AS A RESULT OF CORRECTING A RECORD THE AMOUNT IS FOUND TO BE DUE THE CLAIMANT ON ACCOUNT OF HIS OR ANOTHER'S SERVICE IN THE ARMY, NAVY, AIR FORCE, MARINE CORPS, OR COAST GUARD, AS THE CASE MAY BE.

THE PROPRIETY OF DEDUCTING EARNINGS RECEIVED FROM CIVILIAN EMPLOYMENT IN EFFECTING SETTLEMENT OF BACK PAY AND ALLOWANCES FOUND DUE A MEMBER OR FORMER MEMBER OF THE UNIFORMED SERVICES BY REASON OF THE CORRECTION OF HIS MILITARY OR NAVAL RECORDS PURSUANT TO THE PROVISIONS OF 10 U.S.C. 1552 WAS CONSIDERED IN OUR DECISION OF MARCH 10, 1969, 48 COMP. GEN. 580, TO THE SECRETARY OF DEFENSE. WE ADVISED HIM THAT SHOULD REGULATIONS BE ISSUED REQUIRING THE DEDUCTION OF CIVILIAN EARNINGS WHERE APPROPRIATE IN SUCH CASES, OUR OFFICE WOULD GIVE EFFECT TO THE REGULATIONS.

IN ACCORDANCE WITH THAT DECISION, THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) ADVISED THE ASSISTANT SECRETARIES OF THE MILITARY DEPARTMENTS (FINANCIAL MANAGEMENT) BY MEMORANDUM OF MARCH 12, 1969, THAT APPROPRIATE ACTION SHOULD BE TAKEN TO REQUIRE DEDUCTION OF INTERIM CIVILIAN EARNINGS IN EFFECTING SETTLEMENT OF BACK PAY AND ALLOWANCES DUE BY REASON OF THE CORRECTION OF MILITARY OR NAVAL RECORDS IN CERTAIN CASES PURSUANT TO 10 U.S.C. 1552.

DEPARTMENT OF THE NAVY REGULATIONS WITH RESPECT TO SETTLEMENT OF CLAIMS UNDER SECTION 1552 ARE CONTAINED IN 32 C.F.R. 723.10. SUBPARAGRAPH 723.10(C) THEREOF, AS REVISED TO REFLECT THE DIRECTIVE OF MARCH 12, 1969, AND PUBLISHED IN 34 F.R. 19196, DECEMBER 4, 1969, READS AS FOLLOWS:

(C) SETTLEMENT. (1) SETTLEMENT OF CLAIMS SHALL BE UPON THE BASIS OF THE DECISION AND RECOMMENDATIONS OF THE BOARD, AS APPROVED BY THE SECRETARY OF THE NAVY. COMPUTATION OF THE AMOUNTS DUE SHALL BE MADE BY THE APPROPRIATE DISBURSING ACTIVITY. IN NO CASE WILL THE AMOUNT FOUND DUE EXCEED THE AMOUNT WHICH WOULD OTHERWISE HAVE BEEN PAID OR HAVE BECOME DUE UNDER APPLICABLE LAWS HAD NO ERROR OR INJUSTICE OCCURRED. EARNINGS RECEIVED FROM CIVILIAN EMPLOYMENT DURING ANY PERIOD FOR WHICH ACTIVE DUTY PAY AND ALLOWANCES ARE PAYABLE WILL BE DEDUCTED FROM THE SETTLEMENT. TO THE EXTENT AUTHORIZED BY LAW AND REGULATIONS, AMOUNTS FOUND DUE MAY BE REDUCED BY THE AMOUNT OF ANY EXISTING INDEBTEDNESS TO THE GOVERNMENT ARISING FROM MILITARY SERVICE.

IN DECISION OF JULY 7, 1954, 34 COMP. GEN. 7, WE HELD THAT THE SECRETARIES OF THE ARMY, NAVY, AIR FORCE AND TREASURY ARE NOT VESTED WITH ANY DISCRETIONARY POWER TO MAKE DETERMINATIONS OF THE SPECIFIC AMOUNTS TO BE PAID AS A RESULT OF THE CORRECTION OF MILITARY OR NAVAL RECORDS PURSUANT TO SECTION 207 OF THE LEGISLATIVE REORGANIZATION ACT OF 1946, AS AMENDED (NOW CODIFIED IN 10 U.S.C. 1552) AND THEREFORE THE AMOUNTS AUTHORIZED TO BE PAID UNDER SECTION 207(B) OF THE ACT DEPEND SOLELY UPON A PROPER APPLICATION OF THE STATUTES TO THE FACTS AS SHOWN BY THE CORRECTED RECORD IN EACH PARTICULAR CASE. WE HAVE UNIFORMLY ADHERED TO THAT DECISION SINCE THAT DATE. SEE 40 COMP. GEN. 502 (1961); 42 ID. 582 (1963); 44 ID. 144 (1964); 45 ID. 47 (1965).

THE LEGISLATIVE HISTORY OF THE ACT OF OCTOBER 25, 1951, CH. 588, 65 STAT. 655, FROM WHICH 10 U.S.C. 1552 IS DERIVED, MAKES IT CLEAR THAT THE CORRECTION FUNCTIONS TO BE PERFORMED THROUGH RECORD CORRECTION BOARDS OF CIVILIAN EMPLOYEES AND THE PAYMENT FUNCTIONS TO BE PERFORMED BY REGULAR MILITARY AND NAVAL DISBURSING OFFICERS TO ALLOW AMOUNTS DUE ON THE BASIS OF CORRECTED RECORDS WERE INTENDED TO BE SEPARATE AND DISTINCT FUNCTIONS GOVERNED BY DIFFERENT CONSIDERATIONS AND PROVISIONS OF LAW AND REGULATION. SUCH LEGISLATIVE HISTORY (97 CONG. REC. 7588) SHOWS THAT CERTAIN COMMITTEE AMENDMENTS WERE OFFERED TO H.R. 1181, 82ND CONGRESS, WHICH WERE INCORPORATED INTO THAT BILL AS IT WAS FINALLY ENACTED AND BECAME THE ACT OF OCTOBER 25, 1951.

THREE OF SUCH AMENDMENTS (NOS. 1, 3 AND 4) WERE SUGGESTED TO THE CHAIRMAN, COMMITTEE ON ARMED SERVICES, HOUSE OF REPRESENTATIVES, BY OUR OFFICE IN A LETTER DATED MAY 25, 1951. AS INDICATED IN THAT LETTER, THE OBVIOUS PURPOSE OF THESE THREE AMENDMENTS WAS TO REMOVE ANY TENABLE BASIS FOR A CONSTRUCTION WHICH WOULD (1) GIVE THE SECRETARY CONCERNED ANY DISCRETIONARY AUTHORITY TO MAKE A FINAL (UNREVIEWABLE) SETTLEMENT BASED ON A RECORD CORRECTION, AND (2) GIVE A DEPARTMENTAL SETTLEMENT OR PAYMENT (AS DISTINGUISHED FROM A CORRECTION OF FACT IN A MILITARY RECORD) ANY FINALITY.

CONSEQUENTLY, ANY STIPULATION BY THE OFFICERS AS TO THE PAYMENT THEY WERE TO RECEIVE BY REASON OF THE CORRECTION OF THEIR RECORDS, OR ANY DETERMINATION BY THE CORRECTION BOARD AS TO THE BASIS ON WHICH THEIR MONEY CLAIMS WOULD BE SETTLED, IS WITHOUT EFFECT, THE AMOUNTS DUE BEING FOR DETERMINATION UPON A PROPER APPLICATION OF THE STATUTES AND REGULATIONS TO THE FACTS AS SHOWN BY THE CORRECTED RECORDS.

WHILE ONE PURPOSE OF THE CORRECTIONS MADE IN THE RECORDS OF CAPTAINS RICKER AND SALYER MAY HAVE BEEN TO ESTABLISH A RECORD OF THEIR RETIREMENT, SUCH CORRECTIONS ALSO WERE MADE TO EXTEND THE BENEFITS OF THE COURT OF CLAIMS JUDGMENT BY PROVIDING A CLEAR BASIS FOR THE DEPARTMENT OF THE NAVY TO PAY THE OFFICERS ACTIVE DUTY PAY AND ALLOWANCES FOR A PERIOD SUBSEQUENT TO THE PERIOD COVERED BY SUCH JUDGMENT. THEIR RIGHTS TO BE SO PAID AROSE ON SEPTEMBER 17, 1969, WHEN THE CORRECTION OF CERTAIN FACTS IN THEIR RECORDS WAS APPROVED BY THE ASSISTANT SECRETARY OF THE NAVY.

THE PAYMENT OF THEIR CLAIMS FOR MONEY BASED ON THEIR CORRECTED RECORDS AND THE DETERMINATION OF THE NET AMOUNTS DUE ON SUCH CLAIMS, HOWEVER, WAS IN NO WAY SUBJECT TO THE JURISDICTION OF THE CORRECTION BOARD BUT DEPENDED, IN THE FIRST INSTANCE, UPON THE DETERMINATION OF THE DEPARTMENTAL PAYING AUTHORITIES AND THE APPLICATION BY SUCH AUTHORITIES OF THE LAWS, REGULATIONS, DIRECTIVES, PRACTICES AND POLICIES APPLICABLE AT THE TIME OF THE CONSIDERATION OF THE CLAIMS FOR PAYMENT.

ONE OF SUCH DIRECTIVES WAS THE MEMORANDUM OF THE ASSISTANT SECRETARY OF DEFENSE, DATED MARCH 12, 1969, WHICH PLAINLY INSTRUCTED THE HIGHEST FINANCIAL OFFICIALS OF THE MILITARY SERVICES THAT THEY SHOULD TAKE APPROPRIATE ACTION "TO REQUIRE DEDUCTION OF INTERIM CIVILIAN EARNINGS IN SUCH CORRECTION BOARD CASES." THE TERMS OF THIS DIRECTIVE INDICATE THAT IT WAS TO BE EFFECTIVE IMMEDIATELY AND IT IS OUR VIEW THAT IT WAS INTENDED TO APPLY TO ALL CLAIMS OF THE TYPE HERE INVOLVED WHICH WERE NOT PAID PRIOR TO ITS DATE. IN ADDITION, HOWEVER, THE NAVY REGULATIONS IMPLEMENTING THAT DIRECTIVE WERE APPROVED BY THE SECRETARY OF THE NAVY ON SEPTEMBER 30, 1969, AT ABOUT THE TIME THE OFFICERS' CLAIMS "FOR MONETARY BENEFITS DUE BY REASON OF CORRECTION OF NAVAL RECORD" WERE SUBMITTED. ALSO, AS INDICATED ABOVE, SUCH NAVY REGULATIONS WERE APPROVED BY THE DEPARTMENT OF DEFENSE ON OCTOBER 28, 1969, WHILE SUCH CLAIMS WERE UNDER CONSIDERATION IN THE NAVY FINANCE CENTER.

UNDER THESE CIRCUMSTANCES, AND SINCE THE CIVILIAN EARNINGS OF CAPTAINS RICKER AND SALYER DURING THE PERIOD COVERED BY THE COURT OF CLAIMS JUDGMENT WERE DEDUCTED IN DETERMINING THE AMOUNTS DUE FOR THAT PERIOD, WE HAVE VERY SERIOUS DOUBT THAT THESE OFFICERS SHOULD BE CONSIDERED AS HAVING A LEGAL RIGHT TO PAY AND ALLOWANCES FOR THE SUBSEQUENT PERIOD HERE INVOLVED WITHOUT DEDUCTION OF THEIR CIVILIAN EARNINGS FOR SUCH SUBSEQUENT PERIOD, PARTICULARLY SINCE THE COURT OF CLAIMS HAS CONSISTENTLY REQUIRED DEDUCTION OF CIVILIAN EARNINGS DURING A SPECIFIED PERIOD FROM ACTIVE-DUTY MILITARY PAY AND ALLOWANCES FOUND DUE FOR THE SAME PERIOD BECAUSE OF ILLEGAL SEPARATION FROM THE SERVICE. SEE, FOR EXAMPLE, EGAN V UNITED STATES, 141 CT. CL. 1 (1958); CLACKUM V UNITED STATES, 161 CT. CL. 34 (1963); GARNER V UNITED STATES, 161 CT. CL. 73 (1963).

IT HAS LONG BEEN THE RULE THAT THE GOVERNMENT ACCOUNTING AND ADMINISTRATIVE OFFICERS SHOULD REJECT OR DISALLOW ALL CLAIMS AS TO WHICH THEY BELIEVE THERE MAY BE A SUBSTANTIAL DEFENSE IN LAW OR AS TO THE VALIDITY OF WHICH THEY ARE IN DOUBT. SEE LONGWILL V UNITED STATES, 17 CT. CL. 288, 291 (1882); CHARLES V UNITED STATES, 19 CT. CL. 316, 319 (1884). WE, THEREFORE, MUST CONCLUDE, IN ANSWER TO THE PRIMARY QUESTION PRESENTED, THAT CAPTAINS RICKER AND SALYER ARE NOT ENTITLED TO ACTIVE-DUTY PAY AND ALLOWANCES FOR THE PERIOD JUNE 15, 1968, TO JULY 31, 1969, WITHOUT DEDUCTING FROM THE AMOUNT OTHERWISE DUE EACH OF THEM ON THAT ACCOUNT HIS EARNINGS FROM CIVILIAN EMPLOYMENT DURING THAT PERIOD.

THE CLAIM VOUCHERS INCLUDED IN THE FILE FORWARDED HERE SHOW THAT IN COMPUTING THE AMOUNTS DUE THERE WAS SET-OFF AGAINST THE GROSS PAY AND ALLOWANCES DETERMINED TO BE DUE EACH OF THE OFFICERS THE RETIRED PAY WHICH HE HAD RECEIVED FOR THE PERIOD JUNE 15, 1968, TO JULY 31, 1969. THE DEPARTMENTAL REGULATIONS DO NOT PRESCRIBE WHETHER, IN A CASE SUCH AS THIS, THE RETIRED PAY OR CIVILIAN EARNINGS SHOULD FIRST BE SET OFF FROM THE ACTIVE DUTY PAY DUE BY REASON OF THE CORRECTION OF THE RECORDS. THE CORRECTION OF RECORDS IS AUTHORIZED, HOWEVER, TO CORRECT AN ERROR OR REMOVE AN INJUSTICE. IN THE ABSENCE OF ADMINISTRATIVE REGULATIONS OR ANY SHOWING OF INTENT TO THE CONTRARY, WE BELIEVE THAT THE PURPOSE OF THE STATUTE WILL BEST BE SERVED BY FIRST SETTING OFF THE PAY REQUIRED TO BE RECOVERED BY REASON OF THE CORRECTION OF RECORDS AND THEN DEDUCTING CIVILIAN EARNINGS FROM THE BALANCE DUE.

IF CIVILIAN EARNINGS SHOULD BE FIRST DEDUCTED, THE BALANCE AVAILABLE FOR SETOFF MIGHT BE LESS THAN THE PAY REQUIRED TO BE RECOVERED BECAUSE OF THE CORRECTION OF RECORDS, LEAVING THE MEMBER OR FORMER MEMBER INDEBTED TO THE GOVERNMENT FOR THE BALANCE. WE DOUBT THAT SUCH A RESULT WAS INTENDED UNDER THE ADMINISTRATIVE REGULATIONS. ACCORDINGLY, THE RETIRED PAY IN THIS CASE SHOULD FIRST BE SET OFF.

THE SECOND QUESTION PRESENTED BY THE DIRECTOR, NAVY MILITARY PAY SYSTEM, CONCERNS THE PROPRIETY OF THE INCLUSION OF 60 DAYS OF ANNUAL LEAVE ON THE DATE OF EACH OFFICER'S RETIREMENT AS CHANGED BY THE BOARD AND THE CORRESPONDING OFFSET OF THE LUMP-SUM LEAVE PAYMENT FOR 60 DAYS OF ANNUAL LEAVE ON JUNE 30, 1965, IN VIEW OF THE PAYMENTS ($1,000 AND $5,000, RESPECTIVELY) MADE TO THEM UNDER THE JUDGMENT OF THE COURT OF CLAIMS. THE "STIPULATION OF SETTLEMENT" ON WHICH THE COURT GRANTED JUDGMENT TO THE OFFICERS ON JULY 7, 1969, PROVIDED, AMONG OTHER THINGS, THAT--

C. AS A FURTHER CONDITION OF THE COMPROMISE REACHED, AND TO SETTLE ALL CONTROVERSY CONCERNING THE QUESTION OF COMPENSATION RELATING TO LEAVE ACCRUED UP TO JUNE 14, 1968, THE PARTIES AGREE THAT DEFENDANT WILL NOT, AS A PART OF THE INSTANT PROCEEDING, TAKE A CREDIT FOR THE $2,486.16 LUMP SUM LEAVE PAYMENTS PAID TO EACH PLAINTIFF AS SET FORTH IN PARAGRAPH 2 ABOVE. PLAINTIFFS, IN TURN, EACH AGREE THAT (IN PROCEEDINGS BEFORE THE BOARD FOR CORRECTION OF NAVAL RECORDS OR OTHERWISE) THEY WILL NOT EVER CLAIM A LUMP- SUM LEAVE PAYMENT FOR THE ACCRUED LEAVE (OR ITS EQUIVALENT) REPRESENTED BY THE SAID $2,486.16 PAYMENT, AND THAT THEY WILL PROMPTLY REFUND TO THE GOVERNMENT ANY ADDITIONAL PAYMENT FOR SAID LEAVE WHICH MIGHT BE MADE EVEN THOUGH NOT CLAIMED BY THEM. PLAINTIFFS FURTHER AGREE THAT UNDER NO CIRCUMSTANCES WILL THEY SEEK TO HAVE THEIR NAVY LEAVE ACCOUNTS REFLECT AN ACCRUAL (OR RE-ACCRUAL) OF THE LEAVE (OR ITS EQUIVALENT) FOR WHICH THE $2,486.16 PAYMENTS HAVE BEEN MADE; BUT IT IS AGREED THAT THIS SETTLEMENT DOES NOT CONCERN, AND SHALL IN NO WAY AFFECT PLAINTIFFS' RIGHT TO SEEK COMPENSATION IN ANY APPROPRIATE FORUM FOR LEAVE WHICH IS ACCRUED TO THEIR CREDIT SUBSEQUENT TO JUNE 14, 1968.

THE EFFECT OF THE ABOVE-QUOTED PROVISION IN THE STIPULATION IS TO ELIMINATE FROM CONSIDERATION THE PAYMENT MADE BY THE NAVY FOR THE 60 DAYS OF LEAVE WHICH THE OFFICERS HAD ACCRUED PRIOR TO THEIR RELEASE FROM ACTIVE DUTY ON JUNE 30, 1965, AND AT THE SAME TIME REDUCE THEIR LEAVE BALANCE TO ZERO AS OF JUNE 14, 1968, IN DETERMINING THEIR RIGHT TO PAY FOR ANY LEAVE THAT MIGHT ACCRUE AFTER THAT DATE.

INASMUCH AS IT WAS STIPULATED THAT THE OFFICERS WOULD HAVE THE RIGHT TO CLAIM FOR ANY LEAVE WHICH MIGHT ACCRUE TO THEIR CREDIT SUBSEQUENT TO JUNE 14, 1968, THE AMOUNT DUE AS SHOWN ON EACH OF THE VOUCHERS SHOULD BE RECOMPUTED TO ELIMINATE THE LUMP-SUM PAYMENT PROPOSED FOR 60 DAYS OF LEAVE AND THE DEDUCTION OF THE AMOUNT PAID ON JUNE 30, 1965, FOR SUCH PERIOD OF LEAVE AND TO SUBSTITUTE IN LIEU THEREOF ONLY THE AMOUNT DUE FOR LEAVE ACCRUING FOR THE PERIOD JUNE 15, 1968, TO JULY 31, 1969.

ACCORDINGLY, THE VOUCHERS ARE RETURNED FOR RECOMPUTATION AND PAYMENT OF ANY AMOUNT DUE ON THE BASIS AS INDICATED ABOVE AFTER OBTAINING THE NECESSARY INFORMATION AS TO THE OFFICERS' CIVILIAN EARNINGS DURING THE PERIOD INVOLVED.