B-48882, MAY 4, 1945, 24 COMP. GEN. 798

B-48882: May 4, 1945

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945: REFERENCE IS MADE TO YOUR LETTER OF MARCH 29. THE FACTS OF THE MATTER ARE RELATED IN YOUR LETTER AS FOLLOWS: MR. DANERI WAS INFORMED ON JULY 13. 1944 THAT THE AMOUNT OF HIS DEPOSIT WAS $1033.81. HE WAS SUBSEQUENTLY ADVISED. THAT FROM THE INFORMATION ON HAND HE WAS ENTITLED TO AN ANNUITY UNDER THE NONFORFEITURE PLAN OF $1669.56 WITH THE DEPOSIT. AN ACCURATE RATE OF ANNUITY COULD NOT BE FURNISHED HIM UNDER THE FORFEITURE PLAN AT THE TIME BECAUSE THERE WAS NOT AVAILABLE TO THE COMMISSION A RECORD OF HIS SERVICE AND AMOUNT OF RETIREMENT DEDUCTIONS CREDITED TO HIS ACCOUNT. UPON LATER LEARNING THAT THERE WAS ONLY A DIFFERENCE OF $86.26 IN THE RATES OF ANNUITY. HE WAS INFORMED THAT SINCE THE AMOUNT HAD ALREADY BEEN DEPOSITED IN THE RETIREMENT FUND.

B-48882, MAY 4, 1945, 24 COMP. GEN. 798

RETIREMENT - DEPOSITS FOR PAST SERVICE CREDIT - REFUND WHERE, PURSUANT TO SECTION 9 OF THE CIVIL SERVICE RETIREMENT ACT, AS AMENDED, AN EMPLOYEE MADE A DEPOSIT IN THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND FOR THE PURCHASE OF ADDITIONAL ANNUITY FOR A PERIOD OF PAST SERVICE NOT WITHIN THE PURVIEW OF THE ACT, WITHOUT BEING APPRISED BY THE CIVIL SERVICE COMMISSION THAT THE DEPOSIT WOULD NOT MATERIALLY INCREASE HIS RATE OF ANNUITY, THE MAKING OF SUCH DEPOSIT NEED NOT BE REGARDED AS CONSTITUTING AN "ELECTION" BARRING COMPLIANCE WITH HIS REQUEST, MADE PRIOR TO ADJUDICATION OF HIS CLAIM, FOR REFUND.

COMPTROLLER GENERAL WARREN TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, MAY 4, 945:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 29, 1945 (FILE CSA-146 195), REQUESTING DECISION AS TO WHETHER THERE MAY BE REFUNDED A DEPOSIT MADE BY AN EMPLOYEE PURSUANT TO SECTION 9 OF THE CIVIL SERVICE RETIREMENT ACT, 5 U.S.C. 736B, FOR A PERIOD OF PAST SERVICE NOT WITHIN THE PURVIEW OF THE SAID ACT. THE FACTS OF THE MATTER ARE RELATED IN YOUR LETTER AS FOLLOWS:

MR. AMBROSE E. DANERI EXECUTED AN APPLICATION FOR SERVICE CREDIT AND REQUESTED THE COMMISSION, ON JUNE 26, 1944, TO FURNISH THE AMOUNT HE SHOULD DEPOSIT IN ORDER TO PURCHASE OPTIONAL SERVICE FROM AUGUST 1, 1920 TO JUNE 30, 1926. HE ALSO DESIRED TO KNOW WHAT THE RATE OF HIS ANNUITY WOULD BE UNDER THE NONFORFEITURE AND FORFEITURE PLANS AND RETIRED WITH 29 AND 35 YEARS' SERVICE. MR. DANERI WAS INFORMED ON JULY 13, 1944 THAT THE AMOUNT OF HIS DEPOSIT WAS $1033.81. HE WAS SUBSEQUENTLY ADVISED, ON AUGUST 14, 1944, THAT FROM THE INFORMATION ON HAND HE WAS ENTITLED TO AN ANNUITY UNDER THE NONFORFEITURE PLAN OF $1669.56 WITH THE DEPOSIT, OR $1583.28 WITHOUT THE DEPOSIT. AN ACCURATE RATE OF ANNUITY COULD NOT BE FURNISHED HIM UNDER THE FORFEITURE PLAN AT THE TIME BECAUSE THERE WAS NOT AVAILABLE TO THE COMMISSION A RECORD OF HIS SERVICE AND AMOUNT OF RETIREMENT DEDUCTIONS CREDITED TO HIS ACCOUNT. MR. DANERI MAILED A CHECK FOR $1033.81 PRIOR TO RECEIVING THE COMMISSION'S LETTER OF AUGUST 14, 1944, AND UPON LATER LEARNING THAT THERE WAS ONLY A DIFFERENCE OF $86.26 IN THE RATES OF ANNUITY, REQUESTED THE COMMISSION TO REFUND HIS DEPOSIT BEFORE THE ADJUDICATION OF HIS APPLICATION FOR ANNUITY. HE WAS INFORMED THAT SINCE THE AMOUNT HAD ALREADY BEEN DEPOSITED IN THE RETIREMENT FUND, IT COULD NOT UNDER THE LAW BE REFUNDED.

AS STATED IN YOUR LETTER, THE ONLY SPECIFIC PROVISIONS IN THE CIVIL SERVICE RETIREMENT ACT FOR MAKING REFUND OF DEDUCTIONS ARE CONTAINED IN SECTIONS 7 AND 12, 46 STAT. 474, 476, THEREOF AND SUCH SECTIONS APPLY ONLY TO PERSONS WHO ARE SEPARATED FROM THE SERVICE BEFORE BECOMING ELIGIBLE FOR RETIREMENT OR WHO DIE IN THE SERVICE. YOUR LETTER SEEMS TO SUGGEST THE PRESENT CASE IS CONCLUDED BY SUCH LACK OF SPECIFIC PROVISION AUTHORIZING REFUND UNDER THE FACTS INVOLVED. TO ADOPT THAT VIEW WOULD BE TANTAMOUNT TO SAYING THAT ONCE MONEY HAS BEEN DEPOSITED IN THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND IT REQUIRES AN ACT OF CONGRESS BEFORE IT MAY BE REFUNDED--- UNLESS, OF COURSE, THE SITUATION IS COVERED BY SAID SECTIONS 7 OR 12--- REGARDLESS OF THE CIRCUMSTANCES ATTENDING THE DEPOSIT. IT IS TO BE NOTED THAT THE DEPOSIT HERE INVOLVED WAS NOT FOR COVERING INTO THE GENERAL FUND OF THE TREASURY.

IN 6 COMP. GEN. 95, THERE WAS PRESCRIBED THE PROPER PROCEDURE FOR EFFECTING ADJUSTMENTS WHERE RETIREMENT DEDUCTIONS WERE MADE FROM EMPLOYEES NOT SUBJECT TO THE RETIREMENT LAW. ALSO, IN THAT CONNECTION, SEE PARAGRAPH 8 OF GENERAL REGULATION NO. 54, SUPPLEMENT NO. 2, 8 COMP. GEN. 685, 686. AND IN 19 COMP. GEN. 52, IT WAS HELD THAT A FORMER EMPLOYEE WHO HAD RETIRED UNDER A DIFFERENT LAW WAS ENTITLED TO REFUND OF THE AMOUNT TO HIS CREDIT IN THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND. HENCE, IT MUST BE CONCEDED THAT IN CERTAIN SITUATIONS AUTHORITY TO REFUND AMOUNTS ERRONEOUSLY OR IMPROPERLY DEPOSITED IN SUCH FUND NECESSARILY IS IMPLIED IN THE LAW, AS OTHERWISE THERE WOULD RESULT HARDSHIPS AND INJUSTICES WHICH THE CONGRESS COULD NOT HAVE INTENDED. THEREFORE, THE PRESENT CASE WILL BE CONSIDERED ON OTHER GROUNDS THAN THE MERE LACK OF A SPECIFIC SECTION IN THE STATUTE AUTHORIZING A REFUND IN SUCH CASES.

SECTION 9 OF THE ACT, AS AMENDED, 5 U.S.C. 736B, PROVIDES:

ALL EMPLOYEES WHO MAY BE BROUGHT WITHIN THE PURVIEW OF THIS CHAPTER BY LEGISLATIVE ENACTMENT, OR BY APPOINTMENT, OR THROUGH CLASSIFICATION, OR BY TRANSFER, OR REINSTATEMENT, OR EXECUTIVE ORDER, OR OTHERWISE, SHALL BE REQUIRED TO DEPOSIT WITH THE TREASURER OF THE UNITED STATES TO THE CREDIT OF THE "CIVIL-SERVICE RETIREMENT AND DISABILITY FUND" A SUM EQUAL TO 2 1/2 PERCENTUM OF THE EMPLOYEE'S BASIC SALARY, PAY, OR COMPENSATION RECEIVED FOR SERVICES RENDERED AFTER JULY 31, 1920, AND PRIOR TO JULY 1, 1926, AND ALSO 3 1/2 PERCENTUM OF THE BASIC SALARY, PAY, OR COMPENSATION FOR SERVICES RENDERED FROM AND AFTER JULY 1, 1926, AND PRIOR TO JULY 1, 1942, AND ALSO 5 PERCENTUM OF SUCH BASIC PAY, SALARY, OR COMPENSATION FOR SERVICES RENDERED ON AND AFTER JULY 1, 1942 TOGETHER WITH INTEREST COMPUTED AT THE RATE OF 4 PERCENTUM PER ANNUM COMPOUNDED ON JUNE 30 OF EACH FISCAL YEAR, BUT SUCH INTEREST SHALL NOT BE INCLUDED FOR ANY PERIOD DURING WHICH THE EMPLOYEE WAS SEPARATED FROM THE SERVICE. ALL EMPLOYEES WHO MAY HEREAFTER BE BROUGHT WITHIN THE PURVIEW OF THIS CHAPTER MAY ELECT TO MAKE SUCH DEPOSITS IN INSTALLMENTS DURING THE CONTINUANCE OF THEIR SERVICE IN SUCH AMOUNTS AND UNDER SUCH CONDITIONS AS MAY BE DETERMINED IN EACH INSTANCE BY THE CIVIL SERVICE COMMISSION. THE AMOUNT SO DEPOSITED, LESS $1 FOR EACH MONTH, OR MAJOR FRACTION THEREOF, OR SERVICE AFTER JULY 1, 1930, SHALL BE CREDITED TO THE EMPLOYEE'S INDIVIDUAL ACCOUNT: PROVIDED, THAT FAILURE TO MAKE SUCH DEPOSIT SHALL NOT DEPRIVE THE EMPLOYEE OF CREDIT FOR ANY PAST SERVICE RENDERED PRIOR TO AUGUST 1, 1920, TO WHICH HE OR SHE WOULD OTHERWISE BE ENTITLED: AND PROVIDED FURTHER, THAT, NOTWITHSTANDING THE FAILURE OF AN EMPLOYEE TO MAKE SUCH DEPOSIT, CREDIT SHALL BE ALLOWED FOR THE SERVICE RENDERED, BUT THE ANNUITY OF SUCH EMPLOYEE SHALL BE REDUCED BY THE AMOUNT SUCH DEPOSIT WOULD PURCHASE IF MADE, UNLESS THE EMPLOYEE SHALL ELECT TO ELIMINATE SUCH SERVICE ENTIRELY FROM CREDIT UNDER THIS CHAPTER.

AS INDICATED IN YOUR LETTER THE EFFECT OF SAID SECTION 9, AS AMENDED, IS TO GIVE THE EMPLOYEE THE RIGHT TO ELECT WHETHER TO MAKE DEPOSITS FOR PAST SERVICE RENDERED SUBSEQUENT TO JULY 31, 1920, IN POSITIONS NOT COVERED BY THE CIVIL SERVICE RETIREMENT ACT. JUST WHAT DOES SUCH RIGHT ENTAIL? THE SUPREME COURT HAS SAID: "ELECTION IS SIMPLY WHAT ITS NAME IMPORTS; A CHOICE, SHOWN BY AN OVERT ACT, BETWEEN TWO INCONSISTENT RIGHTS, EITHER OF WHICH MAY BE ASSERTED AT THE WILL OF THE CHOOSER ALONE.' BIERCE V. HUTCHINS, 205 U.S. 340, 346. AND THE RULE IS THAT ONE WHO MAKES A SETTLED AND DELIBERATE CHOICE OF ONE OF TWO INCONSISTENT RIGHTS OR REMEDIES CANNOT GO BACK AND ELECT AGAIN. H. G. VOGEL CO. V. ORIGINAL CABINET CORPORATION, 233 N.W. 200, MOSELEY V. BOGY, 198 S.W. 847; MORAN V. UNION BANK OF CHICAGO, 186 N.E. 182. VIEWED OBJECTIVELY, AT LEAST, THE ACT OF THE EMPLOYEE HERE INVOLVED IN SENDING HIS DEPOSIT TO THE COMMISSION CERTAINLY CONSTITUTED AN OVERT AND UNEQUIVOCAL MANIFESTATION OF A DELIBERATE CHOICE.

HOWEVER, THERE IS, ALSO, A SUBJECTIVE SIDE TO THE RIGHT OF ELECTION. FEINBERG V. NEW ENGLAND MUTUAL LIFE INSURANCE CO. (168 S.W.2D 141), THE COURT SAID THAT THE ELECTION WHICH AN INSURED WAS AFFORDED IN A CERTAIN LIFE INSURANCE POLICY CONTEMPLATED "A MEETING OF MINDS ON THE MATTER AGREED UPON.' AND IN DUNN V. VINYARD (251 S.W. 1043, 1046) IT WAS STATED:

IN THE ABSENCE OF STATUTORY REGULATION, IT MAY BE GENERALLY SAID THAT TWO THINGS ARE NECESSARY IN ORDER THAT ACTS RELIED UPON WILL AMOUNT TO AN ELECTION: FIRST, THE PARTY MUST HAVE HAD KNOWLEDGE OF HIS RIGHT; THAT IS, HE MUST HAVE HAD KNOWLEDGE OF THE CONDITION AND EXTENT OF THE ESTATE, AND OF HIS DUTY TO CHOOSE BETWEEN THE INCONSISTENT RIGHTS; SECOND, THAT HE INTENDED TO ELECT, AS SHOWN BY HIS WORDS AND ACTS, VIEWED IN THE LIGHT OF ALL THE CIRCUMSTANCES. * * * ALSO, SEE MERCANTILE-1COMMERCE B. AND T. CO. V. EQUITABLE LIFE ASSUR. SOC., 48 F.1SUPP. 561.

IT IS THE DUTY OF THE CIVIL SERVICE COMMISSION UNDER SECTION 15 OF THE ACT, AS AMENDED, 5 U.S.C. 727, TO KEEP SUCH RECORDS OF INDIVIDUAL SERVICE AND OF OTHER INFORMATION AS MAY BE DEEMED ESSENTIAL TO A PROPER DETERMINATION OF RIGHTS UNDER SAID ACT. UNDER SECTION 17, AS AMENDED, 5 U.S.C. 709, THE COMMISSION IS AUTHORIZED AND DIRECTED TO PERFORM OR CAUSE TO BE PERFORMED ALL ACTS AND TO MAKE SUCH RULES AND REGULATIONS MAY BE NECESSARY IN CARRYING OUT THE PURPOSES OF SAID ACT. THERE IS SPECIFIC LANGUAGE EITHER IN THE ABOVE-MENTIONED SECTIONS OR ELSEWHERE IN THE ACT REQUIRING THE COMMISSION TO FURNISH TO AN EMPLOYEE REQUESTED INFORMATION CONCERNING MATTERS INVOLVING HIS OWN STATUS AND RIGHTS UNDER THE RETIREMENT LAW. AND YET, IT IS NOT OPEN TO SERIOUS QUESTION THAT SUCH COOPERATION ON THE PART OF THE COMMISSION IS AN ESSENTIAL FUNCTION AS WELL AS AN INHERENT FEATURE OF THE RETIREMENT SYSTEM.

IN FACT, SECTION 11 OF THE REGULATIONS PRESCRIBES THE CONDITIONS UNDER WHICH INFORMATION WILL BE DISCLOSED; ON PAGE 20 OF THE PUBLICATION ENTITLED " THE CIVIL SERVICE RETIREMENT ACT WITH ANNOTATIONS AND REGULATIONS" IT IS STATED: "AN APPLICANT FOR RETIREMENT SHOULD BE INFORMED OF THE PRACTICAL EFFECT OF THE OPERATION OF THE TWO PLANS OF ANNUITY--- LIFE AND FORFEITURE--- SINCE AFTER AN ANNUITY IS GRANTED, IT WILL NOT BE CHANGED TO ANOTHER FORM; " AND YOUR LETTER OF JANUARY 31, 1941 (FILE CSA- 108576), UPON WHICH THE DECISION IN 20 COMP. GEN. 474 WAS BASED, ADVISED THAT A CERTAIN EMPLOYEE, WHO HAD ELECTED TO RECEIVE A FORFEITURE FORM OF ANNUITY IN HIS APPLICATION WAS INFORMED BY THE CIVIL SERVICE COMMISSION--- "IN ACCORDANCE WITH THE COMMISSION'S POLICY IN SUCH CASES AND BEFORE ADJUDICATING HIS CLAIM UNDER THIS ELECTION"--- OF THE RATE PAYABLE UNDER THE FORFEITURE FORM AS COMPARED WITH THE RATE ALLOWABLE UNDER THE REGULAR LIFE ANNUITY OPTION. IN OTHER WORDS, IT APPARENTLY IS RECOGNIZED THAT AN EMPLOYEE COULD NOT BE EXPECTED TO MAKE AN INTELLIGENT ELECTION IN CONNECTION WITH ANY PHASE OF HIS RETIREMENT RIGHTS UNLESS HE IS FIRST APPRISED OF ALL MATERIAL FACTS PERTAINING THERETO.

IN THE PRESENT CASE, THE EMPLOYEE DID NOT KNOW, WHEN HE MADE THE DEPOSIT, THE VERY MATERIAL--- TO HIM--- FACT OF THE EFFECT SUCH DEPOSIT WOULD HAVE IN DOLLARS AND CENTS UPON THE AMOUNT OF HIS RETIREMENT ANNUITY. APPARENTLY, HE MISTAKENLY BELIEVED THAT SUCH DEPOSIT WOULD INCREASE HIS ANNUITY TO A MUCH GREATER EXTENT THAN IT ACTUALLY DID. OF COURSE, IF PROBABLY COULD BE SAID THAT HE DID NOT ACT UNDER A MISTAKE OF FACT IN THE USUAL SENSE IN THAT HE DELIBERATELY CHOSE NOT TO WAIT FOR THE INFORMATION HE PREVIOUSLY HAD REQUESTED. ON THE OTHER HAND, THE COMMISSION, IN RECEIVING THE DEPOSIT, KNEW BY VIRTUE OF THE EMPLOYEE'S UNANSWERED REQUEST FOR SUCH INFORMATION, THAT THE ELECTION HAD BEEN MADE WITHOUT KNOWLEDGE OF A MATERIAL FACT. AND, WHILE THE COMMISSION'S ACTION IN SO DOING WAS ENTIRELY PROPER, IT IS CLEAR THAT THE OCCASION FOR THE EMPLOYEE'S MISTAKE WAS CREATED BY THE COMMISSION IN FURNISHING ONLY PART OF THE INFORMATION REQUESTED IN HIS ORIGINAL LETTER OF JULY 13, 1944. FINALLY, IT APPEARS THAT REQUEST FOR REFUND OF THE SERVICE CREDIT DEPOSIT WILL RESULT IN NO FINANCIAL LOSS TO THE GOVERNMENT, SUCH DEPOSIT BEING SOLELY FOR THE PURCHASE OF AN ADDITIONAL ANNUITY.

THE CASE IS NOT ENTIRELY FREE FROM DOUBT BUT IN VIEW OF ALL THE CIRCUMSTANCES AND IN LIGHT OF THE PRINCIPLES SET FORTH ABOVE, I HAVE TO ADVISE THAT THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO A REFUND OF THE SERVICE CREDIT DEPOSIT MADE BY MR. DANERI.