B-48550, APRIL 21, 1945, 24 COMP. GEN. 771

B-48550: Apr 21, 1945

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COMPENSATION - DOUBLE - RETIRED OFFICERS EMPLOYED BY ARMY POST EXCHANGES A PERSON EMPLOYED BY AN ARMY POST EXCHANGE IS TO BE REGARDED AS "HOLDING A CIVILIAN OFFICE OR POSITION * * * UNDER THE UNITED STATES GOVERNMENT" WITHIN THE MEANING OF SECTION 212 OF THE ACT OF JUNE 30. - RECEIVING RETIRED PAY AND ALSO CIVILIAN COMPENSATION AS AN ARMY POST EXCHANGE EMPLOYEE IS SUBJECT TO THE RESTRICTIONS OF THE STATUTE. 1945: REFERENCE IS MADE TO YOUR LETTER OF MARCH 17. THE MAJORITY OF THE STOCK OF WHICH IS OWNED BY THE UNITED STATES.'. HOLDING THAT AN EMPLOYEE OF A POST EXCHANGE IS COVERED BY THE ACT OF 1932. THE FULL FACTS OF THE MATTER NOW BEFORE YOU ARE NOT STATED. OPINIONS OF THE COURT OF CLAIMS HOLDING THAT POST EXCHANGES ARE AN ENTERPRISE OF THE GOVERNMENT ESTABLISHED AND MAINTAINED BY IT.

B-48550, APRIL 21, 1945, 24 COMP. GEN. 771

COMPENSATION - DOUBLE - RETIRED OFFICERS EMPLOYED BY ARMY POST EXCHANGES A PERSON EMPLOYED BY AN ARMY POST EXCHANGE IS TO BE REGARDED AS "HOLDING A CIVILIAN OFFICE OR POSITION * * * UNDER THE UNITED STATES GOVERNMENT" WITHIN THE MEANING OF SECTION 212 OF THE ACT OF JUNE 30, 1932, LIMITING TO $3,000 PER ANNUM THE COMBINED RATE OF RETIRED PAY AND CIVILIAN COMPENSATION, AND THEREFORE, A RETIRED OFFICER--- NOT OTHERWISE EXCEPTED FROM OPERATION OF THE STATUTE--- RECEIVING RETIRED PAY AND ALSO CIVILIAN COMPENSATION AS AN ARMY POST EXCHANGE EMPLOYEE IS SUBJECT TO THE RESTRICTIONS OF THE STATUTE.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, APRIL 21, 1945:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 17, 1945, REQUESTING "FURTHER ADVICE," IN THE LIGHT OF THE DISCLOSURES THEREIN MADE, CONCERNING THE APPLICABILITY OF SECTION 212 OF THE ACT OF JUNE 30, 1932, 47 STAT. 406, TO RETIRED OFFICERS EMPLOYED IN CIVILIAN POSITIONS BY ARMY POST EXCHANGES, THE EFFECT OF THE STATUTE BEING, IN GENERAL, TO LIMIT TO $3,000 PER ANNUM THE TOTAL COMPENSATION WHICH MAY BE RECEIVED AT ONE TIME BY ANY PERSON IN THE DUAL STATUS OF (1) A RETIRED OFFICER (WITH CERTAIN EXCEPTIONS) OF ONE OF THE SERVICES MENTIONED IN THE PAY READJUSTMENT ACT OF 1922, 42 STAT. 625 (TITLE 37, U.S. CODE), AND (2) "HOLDING A CIVILIAN OFFICE OR POSITION, APPOINTIVE OR ELECTIVE, UNDER THE UNITED STATES GOVERNMENT OR THE MUNICIPAL GOVERNMENT OF THE DISTRICT OF COLUMBIA OR UNDER ANY CORPORATION, THE MAJORITY OF THE STOCK OF WHICH IS OWNED BY THE UNITED STATES.' YOU REFER TO A DECISION OF THIS OFFICE OF AUGUST 2, 1940, B-10668, HOLDING THAT AN EMPLOYEE OF A POST EXCHANGE IS COVERED BY THE ACT OF 1932, AND TO A CONTRARY CONCLUSION REACHED IN 1941 BY THE SOLICITOR, VETERANS' ADMINISTRATION, BASED UPON CERTAIN EARLY OPINIONS OF THE JUDGE ADVOCATE (GENERAL REPORTED IN THE 1929 EDITION OF ARMY REGULATIONS 210-65 AND UPON CERTAIN DECISIONS OF THIS OFFICE CONCERNING COLLATERAL MATTERS. THE FULL FACTS OF THE MATTER NOW BEFORE YOU ARE NOT STATED, NAMELY, WHETHER THE CIVILIAN EMPLOYMENT OF A RETIRED OFFICER IN AN ARMY POST EXCHANGE COMES WITHIN THE PURVIEW OF SECTION 212 OF THE ACT OF JUNE 30, 1932, AS AMENDED, 5 U.S.C. 59A.

IN THE DECISION OF AUGUST 2, 1940, B-10668, AFTER REVIEWING, AMONG OTHER AUTHORITIES, OPINIONS OF THE COURT OF CLAIMS HOLDING THAT POST EXCHANGES ARE AN ENTERPRISE OF THE GOVERNMENT ESTABLISHED AND MAINTAINED BY IT, THAT AN EXCHANGE IS NOT A VOLUNTARY ASSOCIATION BUT A GOVERNMENTAL AGENCY, AND THAT ITS OPERATIONS ARE UNDER THE CONTROL OF THE GOVERNMENT ( DUGAN V. UNITED STATES, 34 C.1CLS. 458, 468; WOOG, ADM. V. UNITED STATES, 48 C.1CLS. 80, 88), IT WAS CONCLUDED---

IN VIEW OF THE UNIFORM AND CONSISTENT HOLDING OF THE COURTS, THE ATTORNEYS GENERAL, AND THE ACCOUNTING OFFICERS OF THE GOVERNMENT THAT POST EXCHANGES ARE INSTRUMENTALITIES OF THE GOVERNMENT, THE CONCLUSION APPEARS TO BE INESCAPABLE THAT A CIVILIAN EMPLOYED TO ASSIST IN THE CONDUCT AND OPERATION OF SUCH EXCHANGES IS A "PERSON HOLDING A CIVILIAN OFFICE OR POSITION * * * UNDER THE UNITED STATES GOVERNMENT," AS CONTEMPLATED BY SECTION 212 OF THE ACT OF JUNE 30, 1932, SUPRA, AND IF SUCH PERSON BE A RETIRED OFFICER WHO WAS NOT RETIRED FOR DISABILITY INCURRED IN COMBAT WITH AN ENEMY OF THE UNITED STATES AND HIS COMBINED CIVILIAN AND RETIRED PAY AGGREGATES MORE THAN $3,000 PER ANNUM, HIS RETIRED PAY IS REQUIRED TO BE ADJUSTED SO THAT THE TOTAL AMOUNT THEREOF SHALL NOT EXCEED $3,00 PER ANNUM.

SUBSEQUENT DEVELOPMENTS AFFECTING THE SUBJECT OF THAT DETERMINATION ARE REVIEWED BRIEFLY, AS FOLLOWS:

(1) IN 1940, AN EMPLOYEE OF THE NAVAL ACADEMY LAUNDRY WAS HELD SUBJECT TO THE RESTRICTION OF SECTION 212 UPON PERSONS HOLDING A POSITION "UNDER THE UNITED STATES GOVERNMENT," NOTWITHSTANDING THE FUND FROM WHICH HE WAS PAID WAS DERIVED FROM THE PRICES COLLECTED FROM INDIVIDUALS FOR SERVICES RENDERED, THE FUND WAS NOT ACCOUNTED FOR TO THIS OFFICE, AND THE PLAINTIFF WAS NOT SUBJECT TO THE CIVIL SERVICE RETIREMENT OR COMPENSATION ACTS. SULLIVAN V. UNITED STATES, 92 C.1CLS. 154.

(2) ACCORDING TO THE DIGEST, OPINIONS OF THE JUDGE ADVOCATE GENERAL (1940), POST EXCHANGES ARE GOVERNMENT AGENCIES OR INSTRUMENTALITIES, EXPRESSLY RECOGNIZED BY THE CONGRESS, DESIGNED TO CARRY OUT A GOVERNMENT PURPOSE, AND THEIR EMPLOYEES ARE SUBJECT TO THE ARTICLES OF WAR AND TO TRIAL BY COURT MARTIAL (PP. 2, 167). THE 1941 EDITION OF ARMY REGULATIONS 210-65 REPORTS (A) A FURTHER OPINION OF THE SAME OFFICER THAT AN EXCHANGE EXISTS AT THE PLEASURE OF THE GOVERNMENT, WHILE ITS PROPERTY IS OWNED BY THE OFFICERS OF THE ARMY (IN THEIR OFFICIAL CAPACITY) COMPRISING THE EXCHANGE COUNCIL AND (B) A RULING OF THE COMMISSIONER OF INTERNAL REVENUE EXEMPTING EXCHANGES FROM THE SOCIAL SECURITY TAX ON THE BASIS THAT THEY ARE GOVERNMENT INSTRUMENTALITIES "WHOLLY OWNED BY THE UNITED STATES" (PARS. 7 (B) AND 43).

(3) IN 1941, TWO DISTRICT COURTS HELD EXCHANGES TO BE GOVERNMENT INSTRUMENTALITIES (AS USED IN A STATUTE REGULATING STATE TAXATION IN FEDERAL AREAS), THE ONE UPON THE VIEW THAT THE EXCHANGE IS NOT A PURELY VOLUNTARY ORGANIZATION, BUT AN INTEGRAL PART OF AN ARMY ORGANIZATION,"A SUBORDINATE OR AUXILIARY AGENCY," AND THE OTHER CITING THE ANNUAL APPROPRIATIONS (SINCE 1903) FOR POST EXCHANGE BUILDINGS AND EQUIPMENT AS EVIDENCE OF CONGRESSIONAL VALIDATION OF THE ADMINISTRATIVE ACTION SETTING UP THE EXCHANGES. FALLS CITY BREWING CO. V. REEVES ( D.C., KY.), 40 F.1SUPP. 35; UNITED STATES V. QUERY ( D.C., S.C.), 37 F.1SUPP. 972, AFFD. ( C.C.A. 4) 121 F.2D 631; QUERY V. UNITED STATES, 316 U.S. 486.

(4) IN 1942, THE SUPREME COURT, CONSIDERING THE EFFECT OF A STATE TAX STATUTE EXEMPTING SALES TO THE UNITED STATES OR ANY DEPARTMENT THEREOF, REVIEWED THE BACKGROUND OF THE ORGANIZATION OF POST EXCHANGES UNDER WAR DEPARTMENT REGULATIONS OF 1895, NOTED THAT THE AUTHORITY TO MAINTAIN EXCHANGES IS IN THE COMMANDING OFFICER, THEIR SUPERVISION IS UNDER A COUNCIL OF OFFICERS, GOVERNMENT OFFICERS ARE RESPONSIBLE FOR EXCHANGE FUNDS, AND PROFITS FROM THE OPERATIONS DO NOT GO TO INDIVIDUALS, AND CONCLUDED THAT "POST EXCHANGES AS NOW OPERATED ARE ARMS OF THE GOVERNMENT DEEMED BY IT ESSENTIAL FOR THE PERFORMANCE OF GOVERNMENTAL FUNCTIONS. THEY ARE INTEGRAL PARTS OF THE WAR DEPARTMENT, SHARE IN FULFILLING THE DUTIES ENTRUSTED TO IT, AND PARTAKE OF WHATEVER IMMUNITIES IT MAY HAVE UNDER THE CONSTITUTION AND FEDERAL STATUTES.' STANDARD OIL CO. V. JOHNSON, 316 U.S. 481.

(5) IN 1943, THE SUPREME COURT OF ALABAMA DENIED A CLAIM FOR WORKMEN'S COMPENSATION FILED AGAINST A POST EXCHANGE AND ITS INSURANCE CARRIER UNDER STATE LAW. THE COURT OVERRULED THE PLAINTIFF'S CLAIM THAT THE DECEDENT WAS NOT AN EMPLOYEE OF THE UNITED STATES (BASED UPON A CERTIFICATE OF THE UNITED STATES EMPLOYEES COMPENSATION COMMISSION TO THAT EFFECT), SAYING,"IF DECEDENT WAS AN EMPLOYEE OF THE POST EXCHANGE, AND THE POST EXCHANGE IS AN INTEGRAL PART OF THE WAR DEPARTMENT, IT IS DIFFICULT TO UNDERSTAND WHY HE SHOULD NOT BE CONSIDERED A CIVIL EMPLOYEE OF THE UNITED STATES WHETHER APPEARING UPON THE PAYROLL OR NOT.' HUMPHREY V. POSS, 15 SO.2D 732.

(6) LATER VERSIONS OF THE ARMY REGULATIONS TEND TO CONFIRM THE FOREGOING. IN THE 1943 EDITION OF AR 210-65, THE EXCHANGE WAS DEFINED AS "A MILITARY ORGANIZATION ESTABLISHED AS A PART OF THE ARMY" AND "OPERATED BY CIVILIAN EMPLOYEES, WITH ARMY OFFICERS IN EXECUTIVE CONTROL.' ( PARS. 2 AND 15-A (1).) THE CURRENT (1944) REGULATION DEFINES THE EXCHANGE AS AN ADJUNCT OF THE ARMY, REQUIRES THAT ANY DIVIDENDS BE TURNED OVER TO THE POST TRUST FUNDS, NOTES THAT, AS GOVERNMENT INSTRUMENTALITIES RECOGNIZED (AND REGULATED--- SEE 58 STAT. 593) BY CONGRESS IN THE ANNUAL APPROPRIATION ACTS, THEY ARE EXEMPT FROM FEDERAL INCOME, SOCIAL SECURITY, AND EXCISE TAXES, PROVIDES THAT THEIR PROFITS SHALL BE USED FOR THE PROMOTION OF THE PHYSICAL AND SPIRITUAL WELFARE OF MILITARY PERSONNEL (IN TERMS COMPARABLE TO THOSE OF THE ANNUAL APPROPRIATION ITEM FOR "WELFARE OF ENLISTED MEN)," THAT GOVERNMENT-OWNED QUARTERS AND CERTAIN UTILITIES MAY BE FURNISHED WITHOUT CHARGE, GOVERNMENT FINANCING IS AVAILABLE, AND THAT, UPON LIQUIDATION, THE BALANCES ARE PAID NOT TO INDIVIDUALS BUT TO THE ARMY EXCHANGE FUND FOR DISPOSAL ACCORDING TO WAR DEPARTMENT POLICY. AR 210 65, PARS. 2, 15, 34, 3, 9, 6 AND 7.

THE ACT OF 1932, LIMITING THE COMBINED RATES OF COMPENSATION TO $3,000, SPEAKS OF PERSONS HOLDING POSITIONS UNDER THE UNITED STATES GOVERNMENT--- A PHRASE MUCH BROADER THAN EMPLOYEE OF THE UNITED STATES ( COMMONWEALTH V. ROUSE ( VA. 1935), 178 S.E. 37). ITS PURPOSE AS A PART OF THE ECONOMY ACT, EQUALLY IS SERVED WHETHER THE CIVILIAN EMPLOYMENT BE PAYABLE FROM APPROPRIATIONS OR FROM OTHER FUNDS, SINCE SECTION 214 PRIMARILY OPERATES TO REDUCE EXPENDITURES FROM THE APPROPRIATION FOR RETIRED PAY. THE FACT THAT THE FUNDS AVAILABLE FOR PAYMENT OF THESE CIVILIAN EMPLOYEES ARE LIMITED TO CERTAIN PARTICULAR SOURCES (THE RECEIPTS FROM SALES), OR THAT THE BALANCES OF SUCH FUNDS ARE SET ASIDE AND DEVOTED TO A PARTICULAR PUBLIC USE ( ARMY WELFARE) DOES NOT MAKE THE EMPLOYMENT ANY THE LESS PUBLIC WHEN IT IS IN A GOVERNMENT ENTERPRISE OR ESTABLISHMENT, UNDER THE COMPLETE DOMINATION, DIRECTION AND CONTROL OF GOVERNMENT OFFICERS ACTING IN THEIR OFFICIAL CAPACITY. NEITHER WOULD THE FACT THAT THE CIVILIAN EMPLOYEES OF POST EXCHANGES "ARE NOT NOW SUBJECT EITHER TO THE CIVIL SERVICE RETIREMENT ACT OF THE CLASSIFICATION ACT," AS STATED IN YOUR LETTER TO HAVE BEEN REPORTED BY THE CIVIL SERVICE COMMISSION, HAVE ANY BEARING WHATEVER UPON THE SITUATION.

ACCORDINGLY, IN THE LIGHT OF THE FOREGOING, I AGREE WITH THE CONCLUSION IN THE DECISION OF ACTING COMPTROLLER GENERAL ELLIOTT RENDERED AUGUST 2, 1940, B-10668, TO THE EFFECT THAT THE PROVISIONS OF SECTION 212 OF THE ACT OF JUNE 30, 1932, 47 STAT. 405, ARE APPLICABLE TO POST EXCHANGE EMPLOYEES.