B-86001 (A), I-17000-1338, DEC. 6, 1955

B-86001 (A), I-17000-1338, DEC. 6, 1955

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED JUNE 16, 1955, WITH ENCLOSURE, FROM THE CHIEF OF NAVAL PERSONNEL, FILE PERS B12D-MJZ 486492/1100, CONCERNING INCREASED RENTAL AND SUBSISTENCE ALLOWANCE PAYMENTS MADE TO LIEUTENANT GERALD J. AUGUST, USN, AS FOR AN OFFICER WITH A DEPENDENT MOTHER FOR THE PERIOD NOVEMBER 1, 1946, TO DECEMBER 16, 1949, WHICH WERE QUESTIONED IN A REPORT OF INVESTIGATION TRANSMITTED TO YOU WITH OUR LETTER OF JULY 29, 1953.

THE ORIGINAL INVESTIGATION IN THIS CASE, INCLUDING A PERSONAL INTERVIEW WITH THE OFFICER'S MOTHER, DISCLOSED THAT WHILE DURING THE PERIOD THE PAYMENTS WERE MADE THE OFFICER HAD IN EFFECT AN ALLOTMENT FROM HIS PAY IN THE AMOUNT OF $100 A MONTH IN HIS MOTHER'S FAVOR, SHE STATED THAT ONLY $50 OF THAT AMOUNT WAS USED FOR HER SUPPORT AND THAT SHE DEPOSITED THE BALANCE IN HIS PERSONAL CHECKING ACCOUNT. IT WAS ALSO DISCLOSED THAT THE MOTHER WAS EMPLOYED PART OF THE TIME AND EARNED AN AVERAGE OF ABOUT $79 A MONTH AND THAT IN ADDITION TO HER EARNINGS SHE RECEIVED A NATIONAL SERVICE LIFE INSURANCE PAYMENT OF $60 A MONTH. SHE ESTIMATED THAT HER LIVING EXPENSES AVERAGED $185 A MONTH. ON APRIL 20, 1954, THE CHIEF OF NAVAL PERSONNEL FORWARDED TO US A COPY OF THE OFFICER'S STATEMENT DATED DECEMBER 15, 1953, A PHOTOSTATIC COPY OF A TRANSCRIPT OF HIS CHECKING ACCOUNT, AND A RESTATEMENT OF HIS MOTHER'S LIVING EXPENSES. THE OFFICER CONTENDED THAT THE TRANSCRIPT OF THE CHECKING ACCOUNT DID NOT REFLECT DEPOSITS OF $50 A MONTH BY HIS MOTHER AND THAT HE ACTUALLY CONTRIBUTED $150 A MONTH FOR HER SUPPORT--- THE ALLOTMENT, PLUS ADDITIONAL REMITTANCES AVERAGING $50. ALSO CONTENDED THAT THE RESTATEMENT OF HIS MOTHER'S LIVING EXPENSES SHOWED THAT THEY WERE CONSIDERABLY MORE THAN THE AMOUNT ORIGINALLY ESTIMATED, AND THAT HER INCOME FROM SOURCES OTHER THAN HIS CONTRIBUTIONS CONSISTED ONLY OF THE NATIONAL SERVICE LIFE INSURANCE PAYMENT AND A SMALL SALARY FROM PERIODIC EMPLOYMENT. AFTER RECEIPT OF THE LETTER OF APRIL 20, 1954, ANOTHER INVESTIGATION WAS MADE AND, UPON REVIEW OF THE MATTER, THE CONCLUSION THAT THE INCREASED ALLOWANCE PAYMENTS WERE ERRONEOUS WAS AFFIRMED IN LETTER B-86001 (A), I-17000-1338, DATED MARCH 3, 1955, BECAUSE THE RECORD, AS SUPPLEMENTED BY THE ADDITIONAL EVIDENCE DEVELOPED, INCLUDING A PHOTOSTATIC COPY OF THE OFFICER'S SIGNATURE CARD FURNISHED THE BANK WHEN HE OPENED HIS CHECKING ACCOUNT, AND PHOTOSTATIC COPIES OF DEPOSIT SLIPS, SHOWED THAT HIS NET CONTRIBUTION TO THE SUPPORT OF HIS MOTHER NOT ONLY WAS LESS THAN HER OTHER INCOME BUT WAS LESS THAN HALF OF HER ADJUSTED AVERAGE MONTHLY LIVING EXPENSES. THE FACTS AND INFORMATION DEVELOPED AT THE TIME OF THE LATER INVESTIGATION ARE SET FORTH IN A SUPPLEMENTAL REPORT THREE COPIES OF WHICH WERE ENCLOSED WITH THE LETTER OF MARCH 3, 1955.

THE OFFICER NOW CONTENDS THAT THE AMOUNTS DEPOSITED IN HIS CHECKING ACCOUNT BY HIS MOTHER REPRESENTED ADDITIONAL REMITTANCES FOR THAT PURPOSE ONLY AND WERE IN ADDITION TO THE ALLEGED $150 PER MONTH CONTRIBUTED FOR HER SUPPORT. HE ADMITS THAT HE HAS NO DOCUMENTARY EVIDENCE TO OFFER IN SUBSTANTIATION OF THE ALLEGED ADDITIONAL REMITTANCES AND IMPLIES THAT AT LEAST A PART OF THE AMOUNTS DEPOSITED BY HIS MOTHER WERE WITHDRAWN FOR HER USE. HE STATES THAT "THE ACCOUNT MENTIONED WAS ONE WHEREBY MY MOTHER, SUSAN M. AUGUST, COULD MAKE DEPOSITS OR WITHDRAWALS AT HER WILL," AND THAT "MY BANKING WAS DONE THROUGH MY MOTHER, AND WHEN I SENT MONEY HOME SHE HAD THE LIBERTY OF USING IT FOR EXPENSES OR DEPOSITING THE ADDITIONAL AMOUNT TO MY BANKING ACCOUNT.' HE ALSO INDICATES THE BELIEF THAT THE NATIONAL SERVICE LIFE INSURANCE PAYMENTS SHOULD BE DISREGARDED IN THE COMPUTATION OF HIS MOTHER'S INCOME AND HE PROTESTS THE SUGGESTION IN THE SUPPLEMENTAL REPORT OF INVESTIGATION THAT HIS ALLEGED CONTRIBUTION OF $150 A MONTH SHOULD BE REDUCED BY THE AVERAGE MONTHLY AMOUNT DEPOSITED IN HIS CHECKING ACCOUNT BY HIS MOTHER AND THE PREMIUM PAID BY HER FOR INSURANCE ON HIS LIFE.

A FURTHER REVIEW OF THE MATTER, INCLUDING ANOTHER EXAMINATION OF THE EVIDENCE ASSEMBLED BY OUR INVESTIGATORS, APPEARS TO NEGATIVE THE OFFICER'S LATEST CONTENTIONS SINCE PHOTOSTATIC COPIES OF SOME OF THE BANK DEPOSIT SLIPS INDICATE THAT SOME OF THE AMOUNTS DEPOSITED IN HIS NAME IN THE BANK REPRESENTED ALL OR A PART OF THE PROCEEDS OF THE ALLOTMENT CHECKS AND, CONTRARY TO THE OFFICER'S IMPLICATION REGARDING WITHDRAWALS FROM HIS ACCOUNT BY HIS MOTHER, THE SIGNATURE CARD EXECUTED BY HIM WHEN HE OPENED HIS BANK ACCOUNT STATES THAT THE BANK IS AUTHORIZED TO RECOGNIZE ONLY HIS SIGNATURE IN THE PAYMENT OF FUNDS FROM THE ACCOUNT. MOREOVER, IT WILL BE NOTED THAT IN ARRIVING AT THE AVERAGE MONTHLY AMOUNT OF THE OFFICER'S CONTRIBUTION TO THE SUPPORT OF HIS MOTHER, AS DETERMINED IN THE LETTER OF MARCH 3, 1955, ONLY THE AVERAGE MONTHLY AMOUNT DEPOSITED BY HIS MOTHER IN HIS CHECKING ACCOUNT WAS DEDUCTED FROM HIS ALLEGED REMITTANCE OF $150 A MONTH.

RESPECTING THE NATIONAL SERVICE LIFE INSURANCE PAYMENTS, IT HAS BEEN HELD THAT SINCE INSTALLMENT PAYMENTS OF LIFE INSURANCE, LIKE ANNUITIES, ARE USUALLY PROVIDED TO FURNISH IMMEDIATE AND CONTINUING MEANS OF DIRECT SUPPORT FOR THE BENEFICIARY, RATHER THAN CAPITAL FUNDS FOR INVESTMENT BY THE BENEFICIARY, AS IN THE CASE OF A LUMP-SUM PAYMENT OF LIFE INSURANCE, SUCH INSTALLMENT PAYMENTS ARE PROPERLY TO BE REGARDED AS INCOME IN DETERMINING WHETHER A PERSON WAS, OR IS, IN FACT A "DEPENDENT" AS DEFINED IN THE DEPENDENCY ALLOWANCE STATUTES.

SUMMARIZING THE CASE AND EVEN GIVING THE OFFICER THE BENEFIT OF HIS CONTENTIONS CONCERNING THE AVERAGE MONTHLY AMOUNT OF HIS REMITTANCES AND THE AVERAGE MONTHLY AMOUNT OF HIS MOTHER'S LIVING EXPENSES THE RECORD, NEVERTHELESS, SHOWS THAT NO MORE THAN AN AVERAGE OF $112 OF THE TOTAL AMOUNT REMITTED WAS USED MONTHLY FOR HER SUPPORT. SINCE THE OFFICER'S AVERAGE MONTHLY CONTRIBUTION TO THE SUPPORT OF HIS MOTHER ($112) WAS NOT ONLY LESS THAN HER OTHER INCOME ($139) BUT WAS LESS THAN HALF OF HER ALLEGED AVERAGE MONTHLY LIVING EXPENSES ($308), THE DETERMINATION IN THE LETTER OF MARCH 3, 1955, THAT SHE WAS NOT IN FACT DEPENDENT ON HIM FOR CHIEF SUPPORT IS AFFIRMED.

WE WILL APPRECIATE INFORMATION AS TO THE AMOUNTS COLLECTED BY THE DEPARTMENT OF THE NAVY ON ACCOUNT OF THE IMPROPER PAYMENTS MADE TO LIEUTENANT AUGUST.