A-57620, FEBRUARY 12, 1935, 14 COMP. GEN. 628

A-57620, FEBRUARY 12, 1935, 14 COMP. GEN. 628

LEAVE OF ABSENCE - CASH REIMBURSEMENT AFTER SEPARATION FROM THE SERVICE PANAMA CANAL IN VIEW OF THE EXTENDED PERIOD OVER WHICH THE ERRONEOUS ADMINISTRATIVE PRACTICE HAS PREVAILED IN THE PANAMA CANAL OF REIMBURSING EMPLOYEES AFTER SEPARATION FROM THE SERVICE FOR LEAVE OF ABSENCE ACCRUED AND UNUSED AT DATE OF SEPARATION, NO OBJECTION WILL BE RAISED IN THE AUDIT OF THE ACCOUNTS TO PAYMENTS MADE PRIOR TO JULY 1, 1935, UNDER SUCH PROCEDURE AND IN CONNECTION WITH SEPARATIONS OCCURRING SINCE DATE OF DECISION, DECEMBER 8, 1934, WHERE IT IS SHOWN THAT IT WAS IMPOSSIBLE TO GRANT THE ACCRUED LEAVE PRIOR TO THE SEPARATION DATE IN THE PARTICULAR CASE.

COMPTROLLER GENERAL MCCARL TO THE GOVERNOR OF THE PANAMA CANAL, FEBRUARY 12, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF DECEMBER 31, 1934, AS FOLLOWS:

1. REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 8TH, NO. A-57620, IN WHICH IT IS HELD THAT ,WHILE IT IS PROPER TO GIVE EMPLOYEES OF THE PANAMA CANAL WHO ARE ABOUT TO RESIGN OR TO BECOME INVOLUNTARILY SEPARATED FROM THE SERVICE, THE BENEFIT OF ACCRUED LEAVE BY GRANTING THEM THE LEAVE THAT HAS BEEN EARNED AND MAKING THE SEPARATION EFFECTIVE AT THE EXPIRATION OF THE LEAVE GRANTED, IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, THE PRACTICE OF PAYING THE FORMER EMPLOYEES OR TO THE ESTATE OF FORMER EMPLOYEES, AFTER SEPARATION FROM THE SERVICE BY RETIREMENT, RESIGNATION, DEATH, OR OTHERWISE, THE COMMUTED VALUE OF LEAVE EARNED BUT NOT TAKEN PRIOR TO THE EFFECTIVE DATE OF SUCH SEPARATION, MUST BE DISCONTINUED.'

2. IN VIEW OF THE POSSIBILITY THAT CERTAIN PERTINENT FACTORS WERE NOT TAKEN INTO ACCOUNT IN ARRIVING AT THE DECISION IN QUESTION, IN VIEW OF THE LONG CONTINUED PRACTICE OF COMMUTING THE LEAVE ACCRUED TO EMPLOYEES OF THE PANAMA CANAL WHO BECOME SEPARATED FROM THE SERVICE, AND IN VIEW OF THE CONFIDENT FEELING THAT A REVIEW OF THE HISTORICAL BACKGROUND WILL CLEARLY REVEAL A VALID LEGAL BASIS FOR THE PRACTICE, IT IS FELT THAT A REQUEST FOR RECONSIDERATION OF THIS DECISION IS AMPLY WARRANTED.

3. IT IS STATED IN YOUR LETTER THAT, WITH RESPECT TO EMPLOYEES IN THE UNITED STATES, THERE IS NO AUTHORITY, IN THE ABSENCE OF SPECIFIC STATUTES SO PROVIDING, TO PAY THEM AFTER SEPARATION FROM THE SERVICE FOR LEAVE NOT TAKEN. IT IS SUBMITTED THAT IN NONE OF THE DECISIONS CITED WAS THE SITUATION UNDER CONSIDERATION ANALOGOUS TO THAT WHICH IS HERE INVOLVED. IN ALL THE DECISIONS CITED, PROVISION FOR LEAVE HAD BEEN MADE BY SPECIFIC STATUTORY ENACTMENT WHICH REGULATED THE GRANTING OF LEAVE, THE AMOUNT THEREOF, THE MANNER IN WHICH IT SHOULD BE TAKEN, OR, AS TO EMPLOYEES OF THE GOVERNMENT PRINTING OFFICE, THE MANNER OF COMMUTATION IN THE EVENT OF THE DEATH OF THE EMPLOYEE. AS HAS REPEATEDLY BEEN HELD BY YOUR OFFICE, THE EFFECT OF THESE SPECIFIC STATUTORY PROVISIONS HAS BEEN TO PLACE DEFINITE LIMITATIONS ON THEIR APPLICATION.

4. THE ESSENTIALLY IMPORTANT DISTINCTION BETWEEN THE CITED CASES AND THE SITUATION AS TO PANAMA CANAL EMPLOYEES IS THAT THERE ARE NO SPECIFIC STATUTORY PROVISIONS IN RESPECT TO LEAVE FOR EMPLOYEES OF THE PANAMA CANAL; SUCH LEAVE BEING REGULATED BY THE PRESIDENT UNDER GENERAL AUTHORITY VESTED IN HIM BY CONGRESS IN SECTION 4 OF THE PANAMA CANAL ACT TO REGULATE MATTERS OF PERSONNEL. THE EXISTING REGULATIONS GOVERNING CONDITIONS OF EMPLOYMENT, INCLUDING PROVISIONS FOR THE GRANTING AND ACCUMULATION OF LEAVE, AND FOR THE COMMUTATION OF ACCRUED LEAVE IN CERTAIN CASES, WERE PROMULGATED UNDER THAT BROAD AUTHORITY, AND WERE IN NO MANNER REGULATED OR RESTRICTED BY SPECIFIC STATUTORY PROVISIONS AS WAS THE CASE IN THE DECISIONS CITED IN YOUR LETTER OF DECEMBER 8TH. FOR A CLEAR UNDERSTANDING OF THE ORIGIN, NATURE, AND SCOPE OF THIS AUTHORITY, THERE FOLLOWS A BRIEF REVIEW OF THE HISTORICAL ASPECTS OF THE SITUATION.

5. THE SPOONER ACT (JUNE 30, 1902, C. 1302, 32 STAT. 481) ENABLED AND DIRECTED THE PRESIDENT TO BUILD AND COMPLETE THE CANAL AND FOR THIS PURPOSE GAVE HIM BROAD AUTHORITY, AMONG OTHER THINGS, TO EMPLOY SUCH PERSONS AS HE MIGHT DEEM NECESSARY AND TO FIX THEIR COMPENSATION. UNDER THIS BROAD GENERAL AUTHORITY THE PERSONNEL WAS RECRUITED AND COMPENSATION AND ALL MATTERS AFFECTING CONDITIONS OF EMPLOYMENT WERE REGULATED.

6. IT WAS FORESEEN EARLY IN 1912 THAT THE APPROACHING COMPLETION OF THE CONSTRUCTION OF THE CANAL AND THE TRANSITION TO THE OPERATION PERIOD WOULD GREATLY INCREASE THE ADMINISTRATIVE DIFFICULTIES IN CONNECTION WITH THE LEAVE OF EMPLOYEES, BECAUSE OF THE TERMINATION OF THE SERVICES OF A LARGE NUMBER AND THE ADJUSTMENT OF THE STATUS OF THE OTHERS WHO WERE TO BE TRANSFERRED TO THE PERMANENT OPERATING ORGANIZATION. IT WAS FELT THAT IF IT COULD BE ARRANGED TO COMMUTE ACCRUED LEAVE DUE THE EMPLOYEES IN CERTAIN CASES, THE RESULT WOULD BE ADVANTAGEOUS AS WELL TO THE GOVERNMENT AS TO THE EMPLOYEES. ACCORDINGLY, A RESOLUTION WAS DRAFTED BY THE ISTHMIAN CANAL COMMISSION AND, IN ORDER TO SECURE IN ADVANCE A DECISION AS TO ITS LEGALITY, A COPY OF A DRAFT THEREOF WAS SUBMITTED BY THE CHAIRMAN OF THE COMMISSION TO THE COMPTROLLER OF THE TREASURY. THE PROPOSED RESOLUTION READ AS FOLLOWS:

"RESOLVED, THAT ANY EMPLOYEE OF THE COMMISSION WHOSE SERVICE TERMINATES ON OR AFTER OCTOBER 1, 1912, WHETHER BY RESIGNATION OR DISCHARGE, AT A TIME WHEN HE HAS LEAVE PAY DUE HIM UNDER THE REGULATIONS OF THE COMMISSION, INSTEAD OF BEING GRANTED SUCH LEAVE OF ABSENCE WITH PAY SHALL, AT THE TIME OF TERMINATION OF HIS ACTUAL SERVICE AND IN ADDITION TO HIS REGULAR PAY FOR SUCH SERVICE, BE PAID AN AMOUNT EQUAL TO THE AMOUNT HE WOULD HAVE BEEN ENTITLED TO RECEIVE HAD HE BEEN GRANTED LEAVE UNDER THE REGULATIONS OF THE COMMISSION; AND THAT THERE SHALL BE PAID TO THE ESTATE OF AN EMPLOYEE WHOSE SERVICE IS TERMINATED BY DEATH AT A TIME WHEN LEAVE IS DUE HIM AN AMOUNT EQUAL TO THE AMOUNT HE WOULD HAVE RECEIVED HAD HIS SERVICE TERMINATED BY RESIGNATION OR DISCHARGE.'

7. WITH THE REQUEST FOR A DECISION THERE WERE ENCLOSED COPIES OF THE THEN EXISTING LEAVE REGULATIONS UNDER WHICH EMPLOYEES UPON SEPARATION FROM THE SERVICE WERE ENTITLED TO LEAVES OF ABSENCE WITH PAY FOR VARYING PERIODS DEPENDING UPON LENGTH OF SERVICE AND AMOUNT OF LEAVE PREVIOUSLY TAKEN. THE DIFFICULTIES WHICH HAD BEEN ENCOUNTERED AND WERE ANTICIPATED AT THE COMPLETION OF THE CONSTRUCTION OF THE PANAMA CANAL WERE FULLY SET FORTH AND IT WAS POINTED OUT WHEREIN THE ADOPTION OF THE PROPOSED RESOLUTION WOULD BE OF DECIDED BENEFIT TO THE COMMISSION.

8. ON JANUARY 31, 1912, THE COMPTROLLER OF THE TREASURY RENDERED A DECISION UPHOLDING THE LEGALITY OF THE PROPOSED RESOLUTION, IN WHICH HE REFERRED TO THE AUTHORITY OF THE PRESIDENT, THROUGH THE ISTHMIAN CANAL COMMISSION, TO FIX AND PAY SALARIES AND OBSERVED THAT THE RESOLUTION WAS SUBSTANTIALLY A REGULATION TO GRANT PAY FOR LEAVE INSTEAD OF LEAVE WITH PAY AS WAS THEN THE CASE. AFTER SECURING THE ABOVE-MENTIONED DECISION THE COMMISSION, AT ITS 162D MEETING ON APRIL 26, 1912, ADOPTED THE RESOLUTION REFERRED TO.

9. THE GENERAL AUTHORITY OF THE PRESIDENT TO REGULATE MATTERS OF PERSONNEL AND CONDITIONS OF EMPLOYMENT HAS HERETOFORE BEEN BROADLY EXERCISED BOTH THROUGH THE ISTHMIAN CANAL COMMISSION AND BY EXECUTIVE ORDER. BECAUSE OF THE UNUSUAL CHARACTER OF THE WORK IN WHICH THE EMPLOYEES WERE ENGAGED AND THE CONDITIONS UNDER WHICH IT WAS PERFORMED A NUMBER OF CONCESSIONS FAVORABLE TO THE EMPLOYEES WERE MADE FROM TIME TO TIME. SEVERAL OF THESE CONDITIONS OF EMPLOYMENT HAD NO COUNTERPART IN BRANCHES OF THE SERVICE IN CONTINENTAL UNITED STATES BUT WERE JUSTIFIED BECAUSE OF THE UNIQUE CHARACTER OF THE UNDERTAKING. THERE IS LITTLE DOUBT THAT CERTAIN OF THESE CONCESSIONS, NOTABLY THE FORMER PRIVILEGE OF FREE RENT, LIGHT, AND FUEL, COULD NOT HAVE BEEN GRANTED TO EMPLOYEES ELSEWHERE WITHOUT SPECIFIC STATUTORY AUTHORITY. BUT IN THE CANAL ZONE THESE CONDITIONS OF EMPLOYMENT WERE REGULATED SOLELY UNDER THE BROAD AUTHORITY OF THE PRESIDENT UNDER THE SPOONER ACT TO BUILD AND COMPLETE THE CANAL AND TO EMPLOY SUCH PERSONS AS HE MIGHT DEEM NECESSARY AND TO FIX THEIR COMPENSATION.

10. THE MATTER OF THE EXTENT AND LIMITATIONS OF THE PRESIDENT'SPOWERS UNDER THE SPOONER ACT AND THE EFFECT THEREON OF SECTIONS 2 AND 4 OF THE PANAMA CANAL ACT, PARTICULARLY AS CONCERNED THE RIGHT OF THE PRESIDENT TO CONTINUE TO REGULATE MATTERS OF PERSONNEL IN THE CANAL ORGANIZATION WAS CONSIDERED BY THE SUPREME COURT OF THE UNITED STATES IN MCCONAUGHEY V. MORROW ET AL. (1923), 263 U.S. 39. IT WAS CLAIMED BY THE APPELLANT IN THAT CASE THAT AN ORDINANCE OF THE ISTHMIAN CANAL COMMISSION, RELATING TO CONDITIONS OF EMPLOYMENT; PROVIDED THAT EMPLOYEES SHOULD BE FURNISHED QUARTERS ON THE ISTHMUS SO FAR AS THE SAME WERE AVAILABLE, AND THAT SINCE THE PANAMA CANAL ACT PRESCRIBED THAT "ALL LAWS, ORDERS, REGULATIONS, AND ORDINANCES ADOPTED AND PROMULGATED IN THE CANAL ZONE BY ORDER OF THE PRESIDENT * * * ARE HEREBY RATIFIED AND CONFIRMED AS VALID AND BINDING UNTIL CONGRESS SHALL OTHERWISE PROVIDE," THE PRESIDENT, AFTER THE EFFECTIVE DATE OF THE PANAMA CANAL ACT, WAS WITHOUT AUTHORITY TO CANCEL THE ALLEGED RIGHT TO FREE QUARTERS.

11. THAT PART OF THE OPINION OF THE SUPREME COURT WHICH DISCUSSES THE NATURE OF THE POWERS OF THE PRESIDENT UNDER THE SPOONER ACT, THE CHARACTER OF ORDINANCES AND REGULATIONS WHICH WERE CONFIRMED BY SECTION 2 OF THE PANAMA CANAL ACT, AND THE SCOPE OF THE POWERS WHICH REMAINED VESTED IN THE PRESIDENT AFTER THE EFFECTIVE DATE OF THE PANAMA CANAL ACT, FOLLOWS BELOW:

"FROM THIS REVIEW OF THE HISTORY OF THE CANAL ZONE GOVERNMENT, THE PURPOSE OF CONGRESS IN ENACTING THE SECOND SECTION OF THE CANAL ACT OF 1912 MUST BE APPARENT. THERE HAD BEEN NO LACK OF AUTHORITY IN THE PRESIDENT AFTER THE SPOONER ACT TO BUILD THE CANAL AND EMPLOY THOSE WHO WERE TO DO THE WORK. THE DEFECT WAS IN THE LACK OF DEFINITE AUTHORITY TO CREATE A GOVERNMENT, MAKE LAWS AND ENFORCE THEM, AND THIS HAD TO BE SPELLED OUT. CONGRESS DEEMED IT WISE, THEREFORE, AS IT CERTAINLY WAS, TO RATIFY AND CONFIRM EVERYTHING TWO PRESIDENTS HAD DONE IN CARRYING ON GOVERNMENT AND ENFORCING LAW IN THE ZONE. IT IS IN THE LIGHT OF THIS THAT THE SECOND SECTION MUST BE INTERPRETED. THE SECTION CONFIRMS "ALL LAWS, ORDERS, REGULATIONS, AND ORDINANCES ADOPTED AND PROMULGATED IN THE CANAL ZONE BY ORDER OF THE PRESIDENT FOR THE GOVERNMENT AND SANITATION OF THE CANAL ZONE AND THE CONSTRUCTION OF THE CANAL.' THIS MEANS LAWS NEEDED AND ENACTED TO CONSTITUTE THE GOVERNMENT, PROMOTE SANITATION, AND GENERALLY AID THE CONSTRUCTION OF THE CANAL. IT WAS INTENDED TO RATIFY THAT AS TO THE VALIDITY OF WHICH DOUBT HAD BEEN EXPRESSED. IT WAS ONLY THOSE REGULATIONS WHICH ROSE TO THE DIGNITY OF LAWS WHICH REQUIRED RATIFICATION. TO GIVE THE CONSTRUCTION TO SECTION 2 CONTENDED FOR BY APPELLANTS WOULD LEAD TO A MOST ABSURD RESULT IN VIEW OF ITS CLOSING WORDS WHICH RATIFIED AND CONFIRMED SUCH LAWS, RULES, REGULATIONS, AND ORDINANCES ,AS VALID AND BINDING UNTIL CONGRESS SHALL OTHERWISE PROVIDE.' THIS WOULD BE TO PUT INNUMERABLE ADMINISTRATIVE ORDERS AND RULES ADOPTED IN THE WORK WHICH WERE NECESSARILY SUBJECT TO CHANGE FROM TIME TO TIME AS CONDITIONS CHANGED, AND THE WORK PROGRESSED, INTO A STRAIT-JACKET,ENTIRELY INCONSISTENT WITH THE BROAD AUTHORITY OF THE PRESIDENT GRANTED IN THE SPOONER ACT AND RENEWED IN SECTION 4 OF THE SAME CANAL ACT OF 1912, AS FOLLOWS:

" "THAT WHEN IN THE JUDGMENT OF THE PRESIDENT THE CONSTRUCTION OF THE PANAMA CANAL SHALL BE SUFFICIENTLY ADVANCED TOWARD COMPLETION TO RENDER FURTHER SERVICES OF THE ISTHMIAN CANAL COMMISSION UNNECESSARY THE PRESIDENT IS AUTHORIZED BY EXECUTIVE ORDER TO DISCONTINUE THE ISTHMIAN CANAL COMMISSION, WHICH, TOGETHER WITH THE PRESENT ORGANIZATION SHALL THEN CEASE TO EXIST; AND THE PRESIDENT IS AUTHORIZED THEREAFTER TO COMPLETE, GOVERN, AND OPERATE THE PANAMA CANAL AND GOVERN THE CANAL ZONE, OR CAUSE THEM TO BE COMPLETED, GOVERNED, AND OPERATED THROUGH A GOVERNOR OF THE PANAMA CANAL AND SUCH OTHER PERSONS AS HE MAY DEEM COMPETENT TO DISCHARGE THE VARIOUS DUTIES CONNECTED WITH THE COMPLETION, CARE, MAINTENANCE, SANITATION, OPERATION, GOVERNMENT, AND PROTECTION OF THE CANAL AND CANAL ZONE.'"

12. AS THE FOREGOING OPINION CLEARLY POINTS OUT, THE EFFECT OF SECTION 2 OF THE PANAMA CANAL ACT WAS TO CONFIRM AND CONTINUE IN FORCE AS VALID AND BINDING UNTIL CONGRESS SHOULD OTHERWISE PROVIDE, THOSE REGULATIONS AND ORDINANCES WHICH ROSE TO THE DIGNITY OF LAW. AS TO THESE PARTICULAR MATTERS THE PRESIDENT WAS DEPRIVED BY THE PANAMA CANAL ACT OF HIS REGULATORY POWER. BUT AS TO MATTERS WHICH DID NOT RISE TO THE DIGNITY OF LAW, I.E., "ADMINISTRATIVE ORDERS AND RULES ADOPTED IN THE WORK WHICH WERE NECESSARILY SUBJECT TO CHANGE FROM TIME TO TIME AS CONDITIONS CHANGED," IT WAS HELD THAT THE BROAD AUTHORITY GRANTED TO THE PRESIDENT IN THE SPOONER ACT WAS RENEWED IN SECTION 4 OF THE PANAMA CANAL ACT. THE ORDINANCE GRANTING EMPLOYEES THE RIGHT TO QUARTERS WAS ENACTED UNDER THIS BROAD AUTHORITY OF THE PRESIDENT TO REGULATE MATTERS OF PERSONNEL AND THE RIGHT OF THE PRESIDENT TO REVOKE SUCH A REGULATION WAS CONFIRMED. HAD THE SUIT IN QUESTION INVOLVED THE RIGHT OF THE PRESIDENT TO REVOKE THE ORDINANCE RELATING TO THE COMMUTATION OF LEAVE, OR, ON THE OTHER HAND, THE RIGHT OF THE PRESIDENT TO PROMULGATE REGULATONS PERMITTING COMMUTATION OF ACCRUED LEAVE, THERE IS NO REASON TO BELIEVE THAT THE ACTION OF THE SUPREME COURT WOULD HAVE BEEN OTHERWISE.

13. FROM THE FOREGOING, THERE SEEMS LITTLE ROOM FOR DOUBT THAT IN PROMULGATING THE EXECUTIVE ORDERS OF FEBRUARY 2, 1914, AND JANUARY 15,1917, THE PRESIDENT WAS EXERCISING HIS GENERAL POWER TO REGULATE MATTERS CONCERNING THE PERSONNEL OF THE ORGANIZATION, WHICH POWERS WERE IDENTICAL IN SCOPE WITH THOSE FORMERLY EXERCISED BY HIM THROUGH THE ISTHMIAN CANAL COMMISSION; THE ORIGINAL POWERS HAVING BEEN RENEWED, AS EXPRESSLY STATED IN MCCONAUGHEY V. MORROW, SUPRA, BY SECTION 4 OF THE PANAMA CANAL ACT. 14. IT IS STATED IN THE FOURTH PAGE OF YOUR LETTER OF DECEMBER 8TH, THAT THE AUTHORITY OF THE PRESIDENT UNDER THE PANAMA CANAL ACT RESPECTING PERSONNEL "DOES NOT INCLUDE THE AUTHORITY TO GRANT CASH GRATUITIES TO FORMER EMPLOYEES OR TO THE ESTATES OF FORMER EMPLOYEES.' IS SUBMITTED THAT THE COMMUTATION OF ACCRUED LEAVE AND ITS PAYMENT TO THE EMPLOYEE AT THE TIME OF HIS SEPARATION FROM THE SERVICE IS IN NO SENSE A CASH GRATUITY TO A FORMER EMPLOYEE. THE PAYMENT IS NOTHING MORE OR LESS THAN A COMMUTATION OF LEAVE, IN THE SAME SENSE AS THE TERM IS USED IN THE STATUTE SPECIFICALLY PERMITTING THE COMMUTATION OF LEAVE IN THE CASE OF DECEASED EMPLOYEES OF THE GOVERNMENT PRINTING OFFICE. EXCEPT IN THE CASE OF DECEASED EMPLOYEES, THE PAYMENTS ARE MADE TO EMPLOYEES AT THE TIME OF THE TERMINATION OF THEIR EMPLOYMENT AND NEVER IN ANY CASE TO FORMER EMPLOYEES. NOR HAVE THESE PAYMENTS BEEN MADE AS A RESULT OF ADMINISTRATIVE PRACTICE, UNAUTHORIZED BY LAW, AS STATED IN THE FIFTH PAGE OF YOUR LETTER. ON THE CONTRARY, THE PAYMENTS HAVE BEEN MADE UNDER REGULATIONS WHICH HAVE BEEN SANCTIONED NOT ONLY BY LONG ESTABLISHED PRACTICE BUT BY SPECIFIC APPROVAL OF THE COMPTROLLER OF THE TREASURY PRIOR TO THE ESTABLISHMENT OF THE REGULATIONS. THE DISCONTINUANCE OF THE ESTABLISHED PRACTICE WOULD BE DECIDEDLY DISADVANTAGEOUS TO THE INTERESTS OF THE GOVERNMENT IN THE CANAL ZONE AND WILL RESULT IN A SERIOUS IMPAIRMENT OF THE MORALE OF THE ORGANIZATION. A GREAT NUMBER OF EMPLOYEES HAVE ACCUMULATED LEAVE AS PROVIDED IN THE REGULATIONS AND AS TO THOSE WHO ARE BEING SEPARATED FROM THE SERVICE DURING THE NEXT FEW MONTHS AT LEAST, BECAUSE OF RESIGNATION, RETIREMENT, OR DEATH, IT WILL BE NECESSARY TO DEPRIVE THEM OF PAYMENT FOR LEAVE WHICH HAS BEEN ACCUMULATED IN ENTIRE GOOD FAITH.

15. IN CONCLUSION, IT IS SUBMITTED THAT THE PAYMENTS WHICH HAVE HERETOFORE BEEN MADE IN COMMUTING ACCRUED LEAVE HAVE BEEN IN CONFORMITY WITH REGULATIONS MADE BY THE PRESIDENT IN THE LAWFUL EXERCISE OF AUTHORITY VESTED IN HIM ORIGINALLY BY THE SPOONER ACT AND CONTINUED IN FULL FORCE BY THE PANAMA CANAL ACT. THIS AUTHORITY HAS NOT BEEN DISTURBED BY CONGRESS AND IN THE ABSENCE OF SPECIFIC LEGISLATION ON THE SUBJECT OF LEAVE FOR PANAMA CANAL EMPLOYEES IT MUST BE CONTENDED THAT THE REGULATIONS OF THE PRESIDENT REMAIN IN FULL FORCE AND EFFECT.

16. A VERY STRONG ARGUMENT IN FAVOR OF THE POLICY OF COMPUTING LEAVE TO A CASH PAYMENT CAN BE MADE ON THE BASIS OF EQUITY AND COMMON SENSE IN BEHALF BOTH OF THE GOVERNMENT AND THE EMPLOYEES. HOWEVER, THE ABOVE CONCERNS ONLY THE MATTER OF LEGALITY, OUR BELIEF BEING THAT THE PRESIDENT IS FULLY AUTHORIZED TO MAKE SUCH REGULATIONS CONCERNING COMPENSATION, AND IT IS RESPECTFULLY REQUESTED THAT IN VIEW OF THE FACTS PRESENTED YOUR DECISION BE RECONSIDERED.

YOUR CONTENTION THAT THE DECISION OF DECEMBER 8, 1934, A-57620, 14 COMP. GEN. 443, ERRONEOUSLY REQUIRED DISCONTINUANCE OF THE ADMINISTRATIVE PRACTICE OF GRANTING CASH GRATUITIES ON SEPARATION FROM THE SERVICE TO COMPENSATE FOR LEAVE OF ABSENCE ACCRUED AND UNUSED AT DATE OF SEPARATION FROM THE SERVICE, IS BASED PRIMARILY ON (1) THE DECISION OF THE COMPTROLLER OF THE TREASURY DATED JANUARY 31, 1912, AND (2) THE DECISION OF THE SUPREME COURT OF THE UNITED STATES IN THE CASE MCCONAUGHEY V. MORROW ET AL., 263 U.S. 39, CONSTRUING SECTION 2 OF THE PANAMA CANAL ACT, AUGUST 24, 1912, 37 STAT. 561, PROVIDING AS FOLLOWS:

THAT ALL LAWS, ORDERS, REGULATIONS, AND ORDINANCES ADOPTED AND PROMULGATED IN THE CANAL ZONE BY ORDER OF THE PRESIDENT FOR THE GOVERNMENT AND SANITATION OF THE CANAL ZONE AND THE CONSTRUCTION OF THE PANAMA CANAL ARE HEREBY RATIFIED AND CONFIRMED AS VALID AND BINDING UNTIL CONGRESS SHALL OTHERWISE PROVIDE. THE EXISTING COURTS ESTABLISHED IN THE CANAL ZONE BY EXECUTIVE ORDER ARE RECOGNIZED AND CONFIRMED TO CONTINUE IN OPERATION UNTIL THE COURTS PROVIDED FOR IN THIS ACT SHALL BE ESTABLISHED.

THE CITED DECISION OF THE COMPTROLLER OF THE TREASURY WAS RENDERED PRIOR TO THE ACT OF AUGUST 24, 1912, AND IS NOT CONTROLLING HERE.

THE SUPREME COURT'S OPINION, CONSTRUING SECTION 2 OF THE PANAMA CANAL ACT, TENDS TO SUPPORT THE CONCLUSION OF THIS OFFICE IN THE DECISION HERE IN QUESTION. THE COURT'S OPINION MADE NO REFERENCE TO A LEAVE REGULATION OR TO A REGULATION GRANTING A CASH GRATUITY IN LIEU OF LEAVE. THE COURT WAS CAREFUL TO STATE "IT WAS ONLY THOSE REGULATIONS WHICH ROSE TO THE DIGNITY OF LAWS WHICH REQUIRED RATIFICATION.' ADMINISTRATIVE REGULATIONS SUCH AS THOSE CONCERNING THE EMPLOYMENT OF PERSONNEL, THE FIXING OF RATES OF COMPENSATION, AND THE GRANTING OF LEAVE OF ABSENCE WHILE EMPLOYED AS AN INCIDENT TO HOURS OF WORK AND COMPENSATION, WERE NOT WITHIN THE SCOPE OF SECTION 2 OF THE ACT BUT WERE WITHIN THE SCOPE OF SECTION 4. IN PARAGRAPH 12 OF YOUR LETTER, YOU APPEAR TO AGREE THAT THE LEAVE REGULATION HERE IN QUESTION WAS NOT ONE WHICH ROSE TO THE DIGNITY OF LAW BUT WAS AN ADMINISTRATIVE ORDER ADOPTED IN THE WORK SUBJECT TO CHANGE BY THE PRESIDENT. HOWEVER, THE CONCLUSION ANNOUNCED IN PARAGRAPH 13 OF YOUR LETTER DOES NOT FOLLOW, FOR THE REASONS STATED IN DECISION OF DECEMBER 8, 1934. SECTION 4 OF THE STATUTE DID NOT VEST IN THE PRESIDENT UNLIMITED AUTHORITY IN THE MATTER OF ISSUING REGULATIONS, BUT ONLY REGARDING SUCH MATTERS AS WERE THEREIN MENTIONED AND OTHERWISE AUTHORIZED BY LAW. NOTWITHSTANDING YOUR STATEMENT TO THE CONTRARY, PAYMENT FOR UNUSED LEAVE AFTER SEPARATION FROM THE SERVICE IS A GRATUITY OR BONUS WHICH IS NOT AUTHORIZED IN THE ABSENCE OF A SPECIFIC STATUTE. LEAVE OF ABSENCE, THAT IS, THE PERMISSION TO BE ABSENT FROM WORK WITHOUT LOSS OF COMPENSATION, IS A PRIVILEGE AUTHORIZED TO BE GRANTED ONLY DURING ACTUAL SERVICE, AND IN THE ABSENCE OF AN EXPRESS STATUTE SO PROVIDING, HAS NO MONETARY VALUE AFTER TERMINATION OF ACTUAL SERVICE. HENCE, ANY PAYMENT TO AN EMPLOYEE AFTER HE HAS LEFT THE SERVICE BASED ON THE FACT THAT HE DID NOT TAKE LEAVE DURING SERVICE CONSTITUTES A GRATUITY OR BONUS.

YOU ARE ADVISED, THEREFORE, THAT THE DECISION OF DECEMBER 8, 1934, MUST BE AND IS AFFIRMED. HOWEVER, IN VIEW OF THE EXTENDED PERIOD OVER WHICH THE ERRONEOUS ADMINISTRATIVE PRACTICE HAS PREVAILED NO OBJECTION WILL BE RAISED IN THE AUDIT OF THE ACCOUNTS TO PAYMENTS MADE PRIOR TO JULY 1, 1935, UNDER SUCH PROCEDURE AND IN CONNECTION WITH SEPARATIONS HEREAFTER OCCURRING OR THAT OCCURRED SINCE DATE OF DECISION, DECEMBER 8, 1934, WHERE IT IS SHOWN THAT IT WAS IMPOSSIBLE TO GRANT THE ACCRUED LEAVE PRIOR TO THE SEPARATION DATE IN THE PARTICULAR CASE.