B-141193, MAR. 17, 1960

B-141193: Mar 17, 1960

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ATTORNEYS AT LAW: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16. WHICH WAS DISALLOWED IN GENERAL ACCOUNTING OFFICE CERTIFICATION DATED JULY 17. HE WAS RECALLED TO ACTIVE DUTY EFFECTIVE AUGUST 7. THE DATE THAT HE WAS TRANSFERRED TO THE RETIRED LIST WITH A TEN PERCENT DISABILITY RATING. HOLCOMB WAS ADVANCED ON THE RETIRED LIST EFFECTIVE FROM DECEMBER 1. (CLAIM FOR RETIRED PAY COMPUTED ON THE ONE-HALF FORMULA ON THE BASIS OF THE GRADE OF COMMISSIONED WARRANT OFFICER WITH OVER 18 BUT NOT OVER 21 YEARS' SERVICE FOR THIS PERIOD ALSO WAS DISALLOWED IN GENERAL ACCOUNTING OFFICE CERTIFICATION DATED JULY 17. UNDER OPTION (B) IN SECTION 411 HE WAS ENTITLED TO RECEIVE RETIRED PAY COMPUTED BY ONE OF TWO METHODS CONTAINED IN SECTION 511 OF THAT ACT.

B-141193, MAR. 17, 1960

TO MR. THOMAS M. GITTINGS, JR., KING AND KING, ATTORNEYS AT LAW:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1959, REQUESTING RECONSIDERATION OF THAT PART OF THE CLAIM OF MR. STANLEY J. HOLCOMB, WHICH WAS DISALLOWED IN GENERAL ACCOUNTING OFFICE CERTIFICATION DATED JULY 17, 1958, FOR INCREASED RETIRED PAY EFFECTIVE FROM OCTOBER 1, 1949, COMPUTED UNDER SECTION 402 (D) OF THE CAREER COMPENSATION ACT OF 1949, 63 STAT. 818, IN ACCORDANCE WITH THE HOLDING OF THE COURT OF CLAIMS IN THE SELIGA DECISION OF MARCH 6, 1957, 137 C.CLS. 710.

IT APPEARS THAT WHEN TRANSFERRED TO THE FLEET NAVAL RESERVE ON DECEMBER 17, 1935, MR. HOLCOMB HAD APPROXIMATELY 16 YEARS, 1 MONTH AND 16 DAYS OF CREDITABLE ACTIVE SERVICE. HE REMAINED ON THE INACTIVE LIST UNTIL AUGUST 6, 1941, A PERIOD OF 5 YEARS, 7 MONTHS,AND 19 DAYS. HE WAS RECALLED TO ACTIVE DUTY EFFECTIVE AUGUST 7, 1941, AND SERVED TO NOVEMBER 23, 1945, INCLUSIVE. ON DECEMBER 1, 1945, THE DATE THAT HE WAS TRANSFERRED TO THE RETIRED LIST WITH A TEN PERCENT DISABILITY RATING, HE HAD COMPLETED APPROXIMATLEY 20 YEARS, 5 MONTHS AND 3 DAYS OF CREDITABLE ACTIVE SERVICE. MR. HOLCOMB WAS ADVANCED ON THE RETIRED LIST EFFECTIVE FROM DECEMBER 1, 1945, TO THE GRADE OF COMMISSIONED WARRANT OFFICER AS PROVIDED IN 34 U.S.C. 350I (B) (2), 1946 ED. HIS RETIRED PAY ACCOUNT (THROUGH FEBRUARY 28, 1958, LAST DATE OF RECORD IN THIS OFFICE) DISCLOSES THAT HE RECEIVED RETIRED PAY COMPUTED ON THE ONE-HALF FORMULA AS PRESCRIBED IN 34 U.S.C. 854B, 1946 ED. ON THE BASIS OF THE GRADE OF COMMISSIONED WARRANT OFFICER WITH OVER 18 BUT NOT OVER 21 YEARS' SERVICE DURING THE PERIOD FROM DECEMBER 1, 1945, TO OCTOBER 31, 1946, INCLUSIVE; ON THE BASIS OF ENLISTED PAY GRADE ONE WITH OVER 18 BUT NOT OVER 21 YEARS' SERVICE DURING THE PERIOD NOVEMBER 1, 1946, TO NOVEMBER 7, 1947, INCLUSIVE, (CLAIM FOR RETIRED PAY COMPUTED ON THE ONE-HALF FORMULA ON THE BASIS OF THE GRADE OF COMMISSIONED WARRANT OFFICER WITH OVER 18 BUT NOT OVER 21 YEARS' SERVICE FOR THIS PERIOD ALSO WAS DISALLOWED IN GENERAL ACCOUNTING OFFICE CERTIFICATION DATED JULY 17, 1958, BY REASON OF THE PROVISIONS OF 31 U.S.C. 71A); AND, DURING THE PERIOD FROM NOVEMBER 8, 1947, TO SEPTEMBER 30, 1949, ON THE BASIS OF THE GRADE OF COMMISSIONED WARRANT OFFICER WITH OVER 18 BUT NOT OVER 21 YEARS' SERVICE.

UNDER OPTION (A) IN SECTION 411 OF THE CAREER COMPENSATION ACT OF 1949, 63 STAT. 823, MR. HOLCOMB BECAME ENTITLED EFFECTIVE AS OF OCTOBER 1, 1949, TO QUALIFY FOR DISABILITY RETIRED PAY UNDER THE PROVISIONS OF THE 1949 LAW. UNDER OPTION (B) IN SECTION 411 HE WAS ENTITLED TO RECEIVE RETIRED PAY COMPUTED BY ONE OF TWO METHODS CONTAINED IN SECTION 511 OF THAT ACT, 63 STAT. 829. AN ELECTION TO RECEIVE RETIRED PAY EFFECTIVE FROM OCTOBER 1, 1949, IN ACCORDANCE WITH OPTION (A) WOULD HAVE ENTITLED HIM, AT HIS FURTHER ELECTION, TO RECEIVE DISABILITY RETIRED PAY AS PROVIDED IN SECTION 402 (D), COMPUTED (1) ON THE BASIS OF THE NUMBER OF YEARS OF HIS ACTIVE SERVICE, I.E., 20 YEARS TIMES TWO AND ONE-HALF PERCENT GIVING A RATE OF 50 PERCENT OF HIS ACTIVE DUTY PAY OR (2) ON THE BASIS OF THE PERCENTAGE OF HIS DISABILITY, 10 PERCENT. THE AMOUNT OF RETIRED PAY RECEIVED UNDER (1) ABOVE, IN EXCESS OF THAT DUE HIM UNDER (2) APPEARS TO BE SUBJECT TO INCOME TAX. (SEE SECTION 402 (H), 63 STAT. 820.)

UNDER METHOD (A) OF SECTION 511 HE WAS ENTITLED TO RECEIVE RETIRED PAY EFFECTIVE FROM OCTOBER 1, 1949, IN THE AMOUNT AUTHORIZED BY THE PROVISIONS OF LAW IN EFFECT ON SEPTEMBER 30, 1949, I.E., RETIRED PAY COMPUTED ON THE ONE-HALF BASIS AS PRESCRIBED IN 34 U.S.C. 854B, 1946 ED., BASED ON THE RATES OF PAY IN EFFECT ON SEPTEMBER 30, 1949. HIS RETIRED PAY UNDER THIS METHOD APPEARS TO BE ENTIRELY TAX EXEMPT. THE TWO AND ONE-HALF PERCENT TIMES YEARS OF ACTIVE SERVICE FORMULA PRESCRIBED IN METHOD (B) IN SECTION 511 ENTITLED HIM TO RECEIVE RETIRED PAY AT THE RATE OF 50 PERCENT OF HIS MONTHLY BASIC PAY AS PRESCRIBED IN THE 1949 LAW. UNDER THIS METHOD NONE OF HIS RETIRED PAY APPEARS TO BE EXEMPT FROM INCOME TAX.

THE RECORD SHOWS THAT PURSUANT TO HIS ELECTION TO RECEIVE RETIRED PAY UNDER OPTION (B) IN SECTION 411 MR. HOLCOMB'S RETIRED PAY ACCOUNT HAS BEEN ADJUSTED FOR THE PERIOD FROM OCTOBER 1, 1949, THROUGH FEBRUARY 28, 1958, TO THE ONE-HALF BASIS IN ACCORDANCE WITH METHOD (A) IN SECTION 511. THUS, UNDER THE PROVISIONS OF LAW IN EFFECT ON SEPTEMBER 30, 1949, HE HAS RECEIVED RETIRED PAY AT THE RATE OF $168 PER MONTH REPRESENTING ONE-HALF OF THE BASE PAY ($210) OF A COMMISSIONED WARRANT OFFICER WITH UNDER 10 YEARS OF COMMISSIONED SERVICE, $105, PLUS LONGEVITY INCREASE FOR OVER 18 BUT NOT OVER 21 YEARS' SERVICE, $63, AND IN ADDITION THE PERCENTAGE INCREASES WHICH BECAME EFFECTIVE AS OF MAY 1, 1952, AND APRIL 1, 1955. UNDER THE RULE OF THE SELIGA DECISION, UPON WHICH THE PRESENT CLAIM IS ADVANCED FOR THE COMPUTATION OF HIS RETIRED PAY EFFECTIVE FROM OCTOBER 1, 1949, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 402 (D) OF THE 1949 LAW, MR. HOLCOMB IS ENTITLED TO COUNT HIS INACTIVE SERVICE IN THE FLEET RESERVE IN DETERMINING THE MONTHLY BASIC PAY FACTOR TO BE USED IN ESTABLISHING THE RATE OF HIS MONTHLY RETIRED PAY. THUS, APPLYING THE RULE OF THE SELIGA CASE IN CONJUNCTION WITH THE HOLDINGS OF THE TATE, 136 C.CLS. 651, AND ATKINS (C.CLS.NO. 473-56, DECIDED JANUARY 15, 1958) CASES, MR. HOLCOMB IS ENTITLED UNDER OPTION (A) IN SECTION 411 TO RECEIVE DISABILITY RETIRED PAY EFFECTIVE FROM OCTOBER 1, 1949, IN THE AMOUNT OF $167.33 PER MONTH COMPUTED AS PRESCRIBED IN SECTION 402 (D) AND REPRESENTING 20 YEARS' ACTIVE SERVICE TIMES TWO AND ONE-HALF PERCENT GIVING A RATE OF 50 PERCENT OF THE MONTHLY BASIC PAY ($334.65) OF A COMMISSIONED WARRANT OFFICER (WARRANT PAY GRADE W-2) WITH OVER 26 BUT NOT OVER 30 YEARS OF CREDITABLE (ACTIVE AND INACTIVE) SERVICE. ONLY $33.47 OF THE ABOVE AMOUNT (REPRESENTING THE AMOUNT OF RETIRED PAY WHICH HE WOULD RECEIVE IF BASED SOLELY ON THE PERCENTAGE OF HIS DISABILITY, 10 PERCENTUM) WOULD APPEAR TO BE TAX FREE AND THE BALANCE, $133,86 IS SUBJECT TO INCOME TAX.

THE CLAIM NOW PRESENTED FOR CONSIDERATION WOULD IN EFFECT, RESCIND MR. HELCOMB'S ELECTION OF OPTION (B) IN SECTION 411 (AN ELECTION VALIDLY MADE BY HIM IN 1953, PRIOR TO THE EXPIRATION OF THE FIVE-YEAR PERIOD OF LIMITATION PRESCRIBED IN SECTION 411), IN ORDER TO PLACE HIM RETROACTIVELY EFFECTIVE AS OF OCTOBER 1, 1949, WITHIN THE SCOPE OF OPTION (A) IN SECTION 411. THE ISSUE WITH RESPECT TO THE RESCISSION AND VOIDING OF SUCH AN ELECTION WAS NOT PRESENT IN THE SELIGA CASE. HOWEVER, IN THE DECISION RENDERED ON DECEMBER 5, 1956, IN THE TRAVIS CASE, 137 C.CLS. 148, THE COURT CONSIDERED THE QUESTION WHETHER THE PLAINTIFF'S ELECTION OF OPTION (B) IN SECTION 411, TO CONTINUE TO RECEIVE RETIRED PAY AS AUTHORIZED BY THE LAWS IN EFFECT ON SEPTEMBER 30, 1949, PRECLUDED HIM FROM LATER CLAIMING GREATER RETIRED PAY BENEFITS FOUND DUE HIM UNDER SECTION 402 (D), EFFECTIVE OCTOBER 1, 1949, UNDER OPTION (A) IN SECTION 411. EXPRESSING THE VIEW THAT PLAINTIFF'S REFUSAL TO TAKE THE RETIRED PAY OFFERED HIM "IN AN AMOUNT NOT AUTHORIZED BY SECTION 411, DID NOT AMOUNT TO AN ELECTION TO REFUSE TO ACCEPT THE BENEFITS ACTUALLY AUTHORIZED AND REQUIRED BY THAT SECTION OF THE 1949 ACT" AND THAT "PLAINTIFF DID NOT ELECT TO FOREGO THE ADVANTAGES OF THE 1949 ACT. HE MERELY ELECTED TO REFUSE RETIRED PAY NOT AUTHORIZED BY THAT ACT" THE COURT CONCLUDED THAT,"UNDER SUCH CIRCUMSTANCES WE DO NOT THINK PLAINTIFF IS BOUND BY HIS ELECTION TO CONTINUE TO RECEIVE RETIRED PAY COMPUTED UNDER "OLD LAW.'"

A SIMILAR QUESTION AROSE IN THE COX CASE, C.CLS.NO. 167-57, DECIDED JUNE 3, 1959, WHERE THE PLAINTIFF DID NOT MAKE ANY ELECTION UNDER SECTION 411 FOR THE REASON THAT HE WAS INFORMED BY THE DEPARTMENT OF THE ARMY THAT THE AMOUNT OF RETIRED PAY HE WAS RECEIVING UNDER THE PROVISIONS OF LAW IN EFFECT ON SEPTEMBER 30, 1949, EXCEEDED THE AMOUNT OF RETIRED PAY TO WHICH HE THEN WAS DEEMED TO BE ENTITLED UNDER SECTION 402 (D) OF THE 1949 LAW PURSUANT TO OPTION (A) IN SECTION 411. IN THAT SITUATION THE COURT HELD THAT,"HENCE, PLAINTIFF IS NOT BOUND BY HIS ELECTION TO RECEIVE RETIRED PAY COMPUTED UNDER THE OLD LAW AND MAY NOW CLAIM THE BENEFITS OF THE CAREER COMPENSATION ACT * * *.'

IT WILL BE NOTED THAT IN BOTH THE TRAVIS AND COX CASES THE INITIAL DECISION ON THE PART OF THE INDIVIDUALS CONCERNED TO CONTINUE TO RECEIVE RETIRED PAY UNDER THE PROVISIONS OF LAW IN EFFECT ON SEPTEMBER 30, 1949, RESULTED ENTIRELY FROM THE FACT THAT THE INFORMATION FURNISHED BY THE ADMINISTRATIVE OFFICE INDICATED SUCH METHOD OF COMPUTING RETIRED PAY EXCEEDED THE AMOUNT OF RETIRED PAY DUE WHEN COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 402 (D) OF THE 1949 LAW WITHOUT BENEFIT OF INACTIVE SERVICE ON THE RETAINER OR RETIRED LIST. IT SEEMS CLEAR, THEREFORE, THAT IN ANY SUCH CASE AND NOTWITHSTANDING THE FACT THE FIVE- YEAR PERIOD PRESCRIBED IN SECTION 411 WITHIN WHICH TO ELECT EITHER OPTION (A) OR OPTION (B) EXPIRED OCTOBER 1, 1954, THE COURT DOES NOT CONSIDER AS BINDING EITHER A POSITIVE ELECTION OF OPTION (B) AS IN THE TRAVIS CASE OR THE FAILURE SPECIFICALLY TO ELECT EITHER OPTION (A) OR (B) AS IN THE COX CASE, WHEN IT CAN BE ESTABLISHED THAT SUCH ACTION WAS BASED ON INFORMATION RECEIVED FROM THE ADMINISTRATIVE OFFICE REFLECTING A RATE OF RETIRED PAY UNDER OPTION (B), WHICH WHEN THE RULE OF THE SELIGA DECISION IS APPLIED NOW IS FOUND TO BE LESS THAN THE AMOUNT OF RETIRED PAY DUE UNDER OPTION (A), THAT IS, RETIRED PAY COMPUTED UNDER THE PROVISIONS OF SECTION 402 (D) OF THE 1949 LAW, INCLUDING CREDIT FOR INACTIVE SERVICE ON THE RETAINER OR RETIRED LIST.

AT THE TIME MR. HOLCOMB EXERCISED HIS ELECTION OF OPTIONS UNDER AUTHORITY OF SECTION 411 IN 1953, HE WAS OFFERED RETIRED PAY UNDER OPTION (A) AT THE RATE OF $132.30 PER MONTH (ONLY $26.46 TAX FREE) AND UNDER OPTION (B) AT THE RATE OF $132 PER MONTH (ALL TAX FREE). IT CLEARLY WAS TO HIS ADVANTAGE TO ELECT TO RECEIVE RETIRED PAY UNDER OPTION (B) AND THAT ELECTION BROUGHT HIS RETIRED PAY STATUS SQUARELY WITHIN THE SCOPE OF THE PROVISIONS OF METHOD (A) IN SECTION 511, EFFECTIVE FROM OCTOBER 1, 1949. AS PREVIOUSLY POINTED OUT, THE MAXIMUM AMOUNT OF RETIRED PAY THAT HAS ACCRUED TO MR. HOLCOMB UNDER THE HOLDINGS IN THE SELIGA, TATE, AND ATKINS CASES, EFFECTIVE FROM OCTOBER 1, 1949, COMPUTED UNDER OPTION (A) WAS $167.33 PER MONTH (ONLY $33.47 TAX FREE), WHEREAS UNDER OPTION (B) HE WAS ENTITLED TO RETIRED PAY AT THE RATE OF $168, PER MONTH, ALL TAX FREE. IS OBVIOUS THAT IF MR. HOLCOMB'S ELECTION HAD BEEN BASED ON THE MAXIMUM AMOUNT OF RETIRED PAY NOW SHOWN TO HAVE ACCRUED TO HIM EFFECTIVE AS OF OCTOBER 1, 1949, HE WOULD HAVE ELECTED OPTION (B). SINCE HE DID IN FACT ELECT OPTION (B), THE HOLDINGS IN THE TRAVIS AND COX CASES PERMITTING RESCISSION OF OPTION (B) IN FAVOR OF GREATER RETIRED PAY UNDER OPTION (A), RETROACTIVELY EFFECTIVE FROM OCTOBER 1, 1949, CAN HAVE NO APPLICATION IN THE INSTANT CASE.

THERE HAS NOT BEEN OVERLOOKED THE CHANGES MADE IN THE RATES OF MONTHLY BASIC PAY BY THE ACT OF MARCH 31, 1955, 69 STAT. 18-23, WHICH UNDER OPTION (A) IN SECTION 411 WOULD HAVE RESULTED IN A RATE OF RETIRED PAY, EFFECTIVE FROM APRIL 1, 1955, IN EXCESS OF THE AMOUNT OF THE RETIRED PAY NOW DUE MR. HOLCOMB UNDER HIS ELECTION OF OPTION (B). HOWEVER, THE CHANGES THAT WERE MADE IN THE RATES OF MONTHLY BASIC PAY EFFECTIVE APRIL 1, 1955, DO NOT AFFECT MR. HOLCOMB'S RETIRED PAY STATUS, SINCE HIS RIGHT, IF ANY, TO RESCIND HIS PRIOR ELECTION OF OPTION (B) IN FAVOR OF OPTION (A), UNDER THE RULE OF THE TRAVIS AND COX CASES, MUST BE DETERMINED ON THE BASIS OF THE MONTHLY BASIC RATES OF PAY MOST ADVANTAGEOUS TO HIM ON OCTOBER 1, 1949, AND WITHOUT REGARD TO MONTHLY BASIC RATES OF PAY PRESCRIBED IN STATUTORY PROVISIONS ENACTED SUBSEQUENT TO THAT DATE.

SINCE MR. HOLCOMB'S RETIRED PAY ACCOUNT HAS BEEN ADJUSTED EFFECTIVE FROM OCTOBER 1, 1949, IN ACCORDANCE WITH THE ELECTION OF OPTION ACTUALLY EXERCISED BY HIM IN 1953 (OPTION (B) IN SECTION 411) AND SINCE THAT METHOD OF COMPUTING HIS RETIRED PAY WAS THE MOST FAVORABLE TO HIM AS OF OCTOBER 1, 1949, NO PROPER BASIS IS PRESENTED WHEREBY HE MAY RESCIND SUCH ELECTION AT THIS TIME. ACCORDINGLY, NO ADDITIONAL AMOUNT OF RETIRED PAY IS FOUND DUE MR. HOLCOMB EFFECTIVE FROM OCTOBER 1, 1949.