B-141116, DEC. 31, 1959

B-141116, DEC. 31, 1959

TO R. A. WILSON, DISBURSING OFFICER, DEPARTMENT OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 14, 1959, FORWARDED HERE BY SECOND ENDORSEMENT DATED OCTOBER 27, 1959, TO WHICH THE MILITARY PAY AND ALLOWANCE COMMITTEE, DEPARTMENT OF DEFENSE, HAS ASSIGNED SUBMISSION NO. DO -N-463. YOUR LETTER REQUESTS DECISION WHETHER THOMAS J. KRESS, 258 34 32, BMC, MAY BE CONSIDERED TO HAVE MADE AN EFFECTIVE ELECTION UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953 TO RECEIVE REDUCED RETIRED PAY IN ORDER TO PROVIDE AN ANNUITY FOR HIS DEPENDENTS FOLLOWING HIS DEATH.

IT APPEARS THAT ON JANUARY 13, 1959, A CLINICAL BOARD AT THE U.S. NAVAL HOSPITAL, PHILADELPHIA, PENNSYLVANIA, REPORTED THAT KRESS WAS MENTALLY COMPETENT. ON FEBRUARY 13, 1959, HE WAS TRANSFERRED TO THE VETERANS ADMINISTRATION HOSPITAL AT ROANOKE, VIRGINIA, WITH DIAGNOSIS OF MANIC- DEPRESSIVE REACTION, MIXED TYPE. ON MARCH 1, 1959, HE WAS TRANSFERRED TO THE TEMPORARY DISABILITY RETIRED LIST WITH SERVICE OF 17 YEARS, 10 MONTHS AND 3 DAYS FOR BASIC PAY PURPOSES. ON MARCH 13, 1959, AN "ADMISSION REPORT" OF THE VETERANS ADMINISTRATION HOSPITAL, ROANOKE, VIRGINIA, STATED IN PART THAT:

"AT THE PRESENT TIME THE VETERAN IS CONSIDERED MENTALLY INCOMPETENT TO HANDLE GOVERNMENT FUNDS. THE ESTIMATED INCAPACITY RECORDED IN THIS EXAMINATION IS FOR FULLER PSYCHIATRIC STUDY AND TREATMENT PURPOSES. IT IS NOT DETERMINATIVE AS A BASIS FOR COMPENSATION OR PENSION.'

ON MARCH 16, 1959, THE MANAGER, VETERANS ADMINISTRATION HOSPITAL, ROANOKE, VIRGINIA, ADVISED THE OFFICE OF THE JUDGE ADVOCATE GENERAL, WEST COAST, THAT KRESS WAS CONSIDERED INCOMPETENT. PRESUMABLY BECAUSE THIS ADVISE WAS CONTRARY TO THE CLINICAL BOARD'S REPORT OF JANUARY 13, 1959, THE DIRECTOR, OFFICE OF THE JUDGE ADVOCATE GENERAL, WEST COAST, ON APRIL 3, 1959, REQUESTED THE COMMANDANT, FIFTH NAVAL DISTRICT, TO CONVENE A MEDICAL BOARD TO DETERMINE WHETHER KRESS WAS CAPABLE OF MANAGING HIS OWN AFFAIRS.

KRESS ELECTED ON A FORM DATED MARCH 12, 1959, TO RECEIVE DISABILITY RETIRED PAY AT THE RATE OF $243.75 PER MONTH OF THE BASIS OF THE PERCENTAGE OF HIS DISABILITY. HOWEVER, THIS ELECTION FORM STATED THAT HE ALSO ELECTED TO RECEIVE REDUCED RETIRED PAY AS SHOWN ON ENCLOSED FORM NAVPERS 591. THE LATTER FORM--- ELECTION BY KRESS UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953 TO HAVE HIS DEPENDENTS RECEIVE ONE -HALF OF HIS REDUCED RETIRED PAY UNDER OPTION 3- - WAS DATED APRIL 3, 1959. HENCE, IT APPEARS THAT KRESS HAD NOTICE OF HIS RIGHT TO RETIRED PAY ON MARCH 12, 1959, AND THAT ON THAT DATE HE EXECUTED AN ELECTION AS TO THE METHOD OF COMPUTATION OF SUCH PAY AND ON APRIL 3, 1959, AN ELECTION UNDER THE CONTINGENCY OPTION ACT.

ON JUNE 4, 1959, THE DIRECTOR, OFFICE OF THE JUDGE ADVOCATE GENERAL, WEST COAST, DISPATCHED THE FOLLOWING SPEEDLETTER TO THE COMMANDING OFFICER, U.S. NAVY FINANCE CENTER, CLEVELAND, OHIO:

"IN VIEW OF A REPORT JUST RECEIVED OF THE RECORD OF PROCEEDINGS OF A BOARD OF MEDICAL EXAMINERS APPOINTED BY COMFIVE DATED 13 APRIL 1959 SHOWING THOMAS J. KRESS 258 34 22, BMC, USN RETIRED CAPABLE OF HANDLING HIS OWN AFFAIRS, PLEASE REINSTATE RETIRED PAY SUSPENDED BY NVC SPDLTR 3:31:4 OF APRIL 14, 1959 AND MAKE ALL FURTHER PAYMENTS DIRECT TO KRESS AT VETERANS ADMINISTRATION HOSPITAL ROANOKE, VIRGINIA.'

ON JUNE 23, 1959, THE NAVY FINANCE CENTER INFORMED KRESS THAT HIS ORIGINAL ELECTIONS WERE CONSIDERED INVALID AND FURNISHED HIM THE NECESSARY FORMS FOR NEW ELECTIONS. ON JUNE 26, 1959, HE EXECUTED A NEW ELECTION FORM TO TAKE DISABILITY RETIRED PAY AT THE RATE OF $243.75 PER MONTH, ON THE BASIS OF HIS PERCENTAGE OF DISABILITY AND ALSO ON THAT DATE HE EXECUTED A NEW ELECTION FORM UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953 TO TAKE REDUCED RETIRED PAY IN ORDER THAT HIS SURVIVING DEPENDENTS SHOULD RECEIVE ONE-HALF OF SUCH REDUCED PAY UNDER OPTION 3.

THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953 AS CODIFIED, 10 U.S.C. 1431-1444, PERMITS THE MAKING OF AN ELECTION UNDER THAT ACT AT THE TIME OF RETIREMENT FOR PHYSICAL DISABILITY IF THE MEMBER THEN HAD LESS THAN 18 YEARS OF SERVICE. 37 COMP. GEN. 843, 844. THE PHRASE "AT THE TIME" HAS BEEN CONSTRUED AS MEANING WITHIN 30 DAYS AFTER NOTIFICATION TO THE MEMBER THAT HE HAS BEEN AWARDED DISABILITY RETIRED PAY. 34 COMP. GEN. 582; 36 COMP. GEN. 586. PUTTING ASIDE FOR THE MOMENT THE QUESTION OF MENTAL CAPACITY, KRESS APPARENTLY HAD NOTICE ON MARCH 12, 1959, OF THE AWARD TO HIM OF RETIRED PAY, SINCE HIS ELECTION OF THE METHOD OF COMPUTATION OF SUCH PAY BORE THAN DATE. AN ELECTION UNDER THE CONTINGENCY OPTION ACT COULD BE MADE WITHIN 30 DAYS AFTER MARCH 12, 1959 (36 COMP. GEN. 586) AND WAS SO MADE ON APRIL 3, 1959. HENCE, THE ANNUITY ELECTION OF APRIL 3, 1959, WAS VALID IF KRESS ON THAT DAY WAS MENTALLY COMPETENT TO MAKE SUCH AN ELECTION.

KRESS WAS FOUND "MENTALLY INCOMPETENT TO HANDLE GOVERNMENT FUNDS" ON MARCH 13, 1959. HE MADE AN ANNUITY ELECTION ON APRIL 3, 1959. HE WAS FOUND "CAPABLE OF HANDLING HIS OWN AFFAIRS" BY A BOARD OF MEDICAL EXAMINERS APPOINTED ON APRIL 13, 1959, AS SHOWN BY THE ABOVE-QUOTED SPEEDLETTER OF JUNE 4, 1959. HE, IN EFFECT, RATIFIED THE ELECTION OF APRIL 3, 1959, ON JUNE 26, 1959, AFTER HE HAD BEEN FOUND CAPABLE OF HANDLING HIS OWN AFFAIRS. AN ANNUITY ELECTION IS A CONTRACTUAL MATTER. IT IS STATED AT 17 C.J.S. 482, THAT "TO AVOID A CONTRACT IT IS INSUFFICIENT TO SHOW MERELY THAT THE PARTY WAS OF UNSOUND MIND OR INSANE WHEN IT WAS MADE, BUT IT MUST ALSO BE SHOWN THAT THIS UNSOUNDNESS OR INSANITY WAS OF SUCH A CHARACTER THAT HE HAD NO REASONABLE PERCEPTION OR UNDERSTANDING OF THE NATURE AND TERMS OF THE CONTRACT.'

IN OUR OPINION IT HAS NOT BEEN SHOWN THAT UNDER THAT RULE MR. KRESS WAS NOT MENTALLY CAPABLE OF EXERCISING AN ANNUITY ELECTION ON APRIL 3, 1959. ACCORDINGLY, THE ELECTION OF THAT DATE SHOULD BE CONSIDERED VALID.