B-125609, DEC. 15, 1955

B-125609, DEC. 15, 1955

TO MR. JOSEPH F. SMITH:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 3, 1955, RELATIVE TO YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $213.91 FOR PAY AND ALLOWANCES PAID TO YOU FOR PERIODS OF EXCESS LEAVE. A FULL AND COMPLETE ANALYSIS OF THE DEBT AND AN EXPLANATION OF HOW IT AROSE WERE INCLUDED IN A LETTER TO YOU DATED FEBRUARY 15, 1955, FROM THE U.S. NAVY FINANCE CENTER, CLEVELAND, OHIO.

YOU CONTEND THAT IF YOU TOOK EXCESS LEAVE AT ANY TIME DURING YOUR SERVICE, YOU ARE NOT RESPONSIBLE THEREFOR AND THAT THE PERSONNEL OFFICER SHOULD HAVE DISAPPROVED YOUR REQUEST FOR LEAVE IF IT RESULTED IN THE TAKING OF EXCESS LEAVE. IN ADDITION, YOU STATE THAT YOU ARE EXEMPT FROM ALL TAXES AND INDEBTEDNESSES TO THE GOVERNMENT BY REASON OF PUBLIC LAW 262, 74TH CONGRESS, APPROVED AUGUST 12, 1935, SINCE YOU "HAVE BEEN AWARDED 100 PERCENT DISABILITY OF A ADPARAPLEGIC.'

IRRESPECTIVE OF ANY DETERMINATION AS TO WHERE THE RESPONSIBILITY SHOULD FALL IN THE GRANTING OR TAKING OF LEAVE IN EXCESS OF THAT AUTHORIZED, IT IS CLEAR THAT THERE IS NO AUTHORITY IN ANYONE TO RECEIVE OR RETAIN PAY AND ALLOWANCES OR OTHER CREDITS FOR DAYS OF OVERLEAVE OR DURING A PERIOD OF ABSENCE ON EXCESS LEAVE. TO THE EXTENT THAT YOU RECEIVED PAY AND ALLOWANCES FOR EACH DAY OF EXCESS LEAVE, YOU WERE OVERPAID, AND THE AMOUNT OF SUCH OVERPAYMENT IS DUE AND OWING TO THE GOVERNMENT.

SECTION 3 OF THE ACT OF AUGUST 12, 1935, WAS AMENDED BY SECTION 5 OF THE ACT OF OCTOBER 17, 1940, 38 U.S.C. 454A, AND NOW READS IN PERTINENT PART AS FOLLOWS:

"PAYMENTS OF BENEFITS DUE OR TO BECOME DUE SHALL NOT BE ASSIGNABLE,AND SUCH PAYMENTS MADE TO, OR ON ACCOUNT OF, A BENEFICIARY UNDER ANY OF THE LAWS RELATING TO VETERANS SHALL BE EXEMPT FROM TAXATION, SHALL BE EXEMPT FROM THE CLAIMS OF CREDITORS, AND SHALL NOT BE LIABLE TO ATTACHMENT, LEVY, OR SEIZURE BY OR UNDER ANY LEGAL OR EQUITABLE PROCESS WHATEVER, EITHER BEFORE OR AFTER RECEIPT BY THE BENEFICIARY. SUCH PROVISIONS SHALL NOT ATTACH TO CLAIMS OF THE UNITED STATES ARISING UNDER SUCH LAWS NOR SHALL THE EXEMPTION HEREIN CONTAINED AS TO TAXATION EXTEND TO ANY PROPERTY PURCHASED IN PART OR WHOLLY OUT OF SUCH PAYMENTS.

"FROM AND AFTER OCTOBER 17, 1940, THIS SECTION SHALL BE CONSTRUED TO PROHIBIT THE COLLECTION BY SET-OFF OR OTHERWISE OUT OF ANY BENEFITS PAYABLE PURSUANT TO ANY LAW ADMINISTERED BY THE VETERANS' ADMINISTRATION AND RELATING TO VETERANS, THEIR ESTATES, OR THEIR DEPENDENTS, OF ANY CLAIM OF THE UNITED STATES OR ANY AGENCY THEREOF AGAINST (A) ANY PERSON OTHER THAN THE INDEBTED BENEFICIARY OF HIS ESTATE; OR (B) ANY BENEFICIARY OR HIS ESTATE EXCEPT AMOUNTS DUE THE UNITED STATES BY SUCH BENEFICIARY OR HIS ESTATE BY REASON OF OVERPAYMENTS OR ILLEGAL PAYMENTS MADE UNDER SUCH LAWS RELATING TO VETERANS, TO SUCH BENEFICIARY OR HIS ESTATE OR TO HIS DEPENDENTS AS SUCH: * * *"

THE ABOVE STATUTE DOES NOT GRANT TO AN INDIVIDUAL DEBTOR AN EXEMPTION FROM THE PAYMENT OF DEBTS BUT PROHIBITS THE COLLECTION THEREOF BY THE GOVERNMENT FROM BENEFITS PAYABLE BY ANY LAW ADMINISTERED BY THE VETERANS ADMINISTRATION. THE INDEBTEDNESS OTHERWISE REMAINS COLLECTIBLE FROM ANY AVAILABLE SOURCE.

YOU INDICATE THAT YOU ARE 100 PERCENT DISABLED AND, PRESUMABLY, ARE RECEIVING DISABILITY COMPENSATION FROM THE VETERANS ADMINISTRATION. SUCH IS THE CASE, THE BENEFITS RECEIVED FROM THE VETERANS ADMINISTRATION ARE EXEMPT FROM THE GOVERNMENT'S CLAIM FOR OVERPAYMENTS FOR EXCESS LEAVE, UNLESS YOU DESIRE TO WAIVE THE EXEMPTION. AMOUNTS, OTHER THAN THOSE PAID YOU BY THE VETERANS ADMINISTRATION THAT MAY BE FOUND DUE YOU FROM THE UNITED STATES, INCIDENT TO YOUR NAVAL SERVICE, ARE SUBJECT TO SET-OFF. UNDER THE CIRCUMSTANCES HERE OBTAINING FURTHER AFFIRMATIVE ACTION TO COLLECT THE INDEBTEDNESS WILL NOT BE TAKEN BY OUR OFFICE, BUT A RECORD OF THE DEBT WILL BE MAINTAINED FOR POSSIBLE OFFSET IN THE FUTURE, SHOULD ANY SUM BE DUE YOU WHICH IS NOT EXEMPT.