B-124100, AUG. 15, 1955

B-124100: Aug 15, 1955

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COLONEL SAILOR WAS PLACED ON THE RETIRED LIST EFFECTIVE DECEMBER 31. THE MAJORITY OF THE STOCK OF WHICH IS OWNED BY THE UNITED STATES. WITH YOUR LETTER YOU FORWARDED A STATEMENT BY COLONEL SAILOR WHEREIN HE SAYS THAT AT PRESENT THE UNITED STATES OWNS NO STOCK IN THE CORPORATION AND THAT "NO APPROPRIATED FUNDS ARE USED IN THE OPERATIONS OF THE CORPORATION.'. WE HAVE HELD THAT THE APPLICATION OF SECTION 212 IS NOT DEPENDENT UPON WHETHER COMPENSATION OF A PARTICULAR OFFICE OR POSITION IS PAID FROM APPROPRIATED FUNDS. THE CONTROLLING TEST HERE IS WHETHER THE CIVILIAN OFFICE OR POSITION SO HELD IS IN FACT . THE MAJORITY OF THE STOCK OF WHICH IS OWNED BY THE UNITED STATES.'. WOULD REQUIRE THE CONCLUSION THAT THE LIMITATION APPLIES ONLY TO FEDERAL CORPORATIONS THE MAJORITY OF WHOSE STOCK IS OWNED BY THE UNITED STATES.

B-124100, AUG. 15, 1955

TO LIEUTENANT COLONEL M. L. JOHNSON, DISBURSING OFFICER, UNITED STATES ARMY FINANCE CENTER:

BY FIRST INDORSEMENT DATED MAY 24, 1955, FINEM 201 SAILOR, VANCE L., G- 205 088, THE ASSISTANT CHIEF OF FINANCE (OPERATIONS) FORWARDED TO OUR OFFICE YOUR LETTER DATED APRIL 26, 1955, FINCS-B 201, AND THE ACCOMPANYING VOUCHER IN THE AMOUNT OF $510.33, REPRESENTING RETIRED PAY OF COLONEL VANCE L. SAILOR AT THE RATE OF $170.11 PER MONTH FOR THE PERIOD JANUARY 1 THROUGH MARCH 31, 1955.

COLONEL SAILOR WAS PLACED ON THE RETIRED LIST EFFECTIVE DECEMBER 31, 1954, UNDER THE PROVISIONS OF TITLE III OF THE ARMY AND AIR FORCE VITALIZATION AND RETIREMENT EQUALIZATION ACT OF 1948, 62 STAT. 1081, 1087. BECAUSE OF COLONEL SAILOR'S EMPLOYMENT BY THE FEDERAL DEPOSIT INSURANCE CORPORATION DURING THE PERIOD COVERED BY THE VOUCHER, HOWEVER, HIS RETIRED PAY FOR THE PERIOD HAS BEEN WITHHELD PURSUANT TO SECTION 212 OF THE ACT OF 1932, 47 STAT. 406, 5 U.S.C. 59A. AT THAT TIME SECTION 212 PROVIDED IN PERTINENT PART THAT---

"* * * NO PERSON HOLDING A CIVILIAN OFFICE OR POSITION, APPOINTIVE OR ELECTIVE, UNDER THE UNITED STATES GOVERNMENT * * * OR UNDER ANY CORPORATION, THE MAJORITY OF THE STOCK OF WHICH IS OWNED BY THE UNITED STATES, SHALL BE ENTITLED DURING THE PERIOD OF SUCH INCUMBENCY, TO RETIRED PAY FROM THE UNITED STATES FOR OR ON ACCOUNT OF SERVICES AS A COMMISSIONED OFFICER * * * AT A RATE IN EXCESS OF AN AMOUNT WHICH WHEN COMBINED WITH THE ANNUAL RATE OF COMPENSATION FROM SUCH CIVILIAN OFFICE OR POSITION, MAKES THE TOTAL RATE FROM BOTH SOURCES MORE THAN $3,000 * * *.'

SEE THE ACT OF AUGUST 4, 1955, PUBLIC LAW 239, 69 STAT. 497, 498, RELATIVE TO THE CHANGE OF $3,000 IN THE ACT OF $10,000.

WITH YOUR LETTER YOU FORWARDED A STATEMENT BY COLONEL SAILOR WHEREIN HE SAYS THAT AT PRESENT THE UNITED STATES OWNS NO STOCK IN THE CORPORATION AND THAT "NO APPROPRIATED FUNDS ARE USED IN THE OPERATIONS OF THE CORPORATION.' WE HAVE HELD THAT THE APPLICATION OF SECTION 212 IS NOT DEPENDENT UPON WHETHER COMPENSATION OF A PARTICULAR OFFICE OR POSITION IS PAID FROM APPROPRIATED FUNDS. THE CONTROLLING TEST HERE IS WHETHER THE CIVILIAN OFFICE OR POSITION SO HELD IS IN FACT ,UNDER THE UNITED STATES GOVERNMENT * * * OR UNDER ANY CORPORATION, THE MAJORITY OF THE STOCK OF WHICH IS OWNED BY THE UNITED STATES.' SEE 24 COMP. GEN. 771; 26 ID. 122; 28 ID. 588. ALSO SEE SULLIVAN V. UNITED STATES, 92 C.CLS. 154, AND DOHERTY V. UNITED STATES, 18 F.SUPP. 793, 94 FED. 2D 495.

A LITERAL INTERPRETATION OF THE EMPHASIZED LANGUAGE, ABOVE, WOULD REQUIRE THE CONCLUSION THAT THE LIMITATION APPLIES ONLY TO FEDERAL CORPORATIONS THE MAJORITY OF WHOSE STOCK IS OWNED BY THE UNITED STATES. A CAREFUL ANALYSIS OF THE LEGISLATIVE HISTORY AND OF THE CONDITIONS AND CIRCUMSTANCES EXISTING AT THE TIME OF THAT ACT, HOWEVER, DOES NOT INDICATE THAT THE CONGRESS INTENDED ANY SUCH ABSOLUTE RESTRICTION UPON THE APPLICATION OF SECTION 212. PRIOR TO THE ACT OF AUGUST 5, 1947, 61 STAT. 773, HOWEVER, OVER 50 PERCENT OF THE CORPORATION STOCK WAS OWNED BY THE UNITED STATES. WHILE THE STOCK WAS RETIRED PURSUANT TO THAT ACT, PROVISION IS MADE THEREIN FOR THE CORPORATION TO BORROW FUNDS FROM THE UNITED STATES TREASURY NOT EXCEEDING IN THE AGGREGATE THREE BILLION DOLLARS OUTSTANDING AT ANY ONE TIME. ALTHOUGH THE CONGRESS ONCE DESIGNATED THE CORPORATION AS A "MIXED CORPORATION" AND SUBSEQUENTLY HAS DIRECTED THE LIQUIDATION OF ITS CAPITAL STOCK, THE ADMINISTRATIVE AND FISCAL OPERATIONS OF THE CORPORATION STILL ARE SUBJECT TO SOME CONTROL AND REVIEW BY THE GOVERNMENT IN ACCORDANCE WITH THE ACT OF SEPTEMBER 21, 1950, 64 STAT. 873 (12 U.S.C., CHAP. 16). TWO OF THE CORPORATION'S DIRECTORS ARE APPOINTED BY THE PRESIDENT, BY AND WITH THE ADVICE AND CONSENT OF THE SENATE. THE THIRD DIRECTOR IS THE COMPTROLLER OF THE CURRENCY. THE LAW REQUIRES THAT MONEY OF THE CORPORATION NOT OTHERWISE EMPLOYED BY INVESTED IN OBLIGATIONS OF THE UNITED STATES OR OBLIGATIONS GUARANTEED BY THE UNITED STATES. ALSO, MOST OF THE EMPLOYEES OF THE CORPORATION APPEAR ENTITLED TO THE BENEFITS OF THE ANNUAL AND SICK LEAVE ACT OF 1951, 65 STAT. 679, AND OF OTHER STATUTES RELATING TO THE RETIREMENT OF CIVIL- SERVICE EMPLOYEES. SEE B-123364, JULY 5, 1955, 35 COMP. GEN. 1.

AS TO THE CASE OF PAUL TANNER V. UNITED STATES, 129 C.CLS. 792--- WHICH COLONEL SAILOR SAYS WOULD ENTITLE HIM TO RETIRED PAY FROM THE UNITED STATES ARMY--- WE ARE INFORMED THAT THE ATTORNEY GENERAL OF THE UNITED STATES PETITIONED THE SUPREME COURT ON AUGUST 1, 1955, FOR A WRIT OF CERTIORARI TO TEST THE CORRECTNESS OF THE LOWER COURT'S CONCLUSION. HENCE, IN THE EVENT THE JUDGMENT ENTERED BY THE COURT OF CLAIMS SHOULD BE SET ASIDE OR OVERRULED IN DUE COURSE, THERE WOULD BE NO PROPER BASIS FOR APPLICATION OF THE PRESENT TANNER DECISION IN THIS MATTER, AS INFERRED BY COLONEL SAILOR.

ACCORDINGLY, ON THE PRESENT RECORD, AND FOR THE REASONS SET FORTH ABOVE, COLONEL SAILOR IS NOT ENTITLED TO PAYMENT OF RETIRED PAY FOR THE PERIOD IN QUESTION. SINCE PAYMENT OF THE VOUCHER IS NOT AUTHORIZED, IT AND THE RELATED PAPERS YOU FORWARDED WILL BE RETAINED IN OUR OFFICE.