B-90976, FEBRUARY 17, 1950, 29 COMP. GEN. 334

B-90976, FEBRUARY 17, 1950, 29 COMP. GEN. 334

COMPENSATION - POSTMASTERS - RETENTION OF EXCESS COMPENSATION BASED ON ERRONEOUS POSTAL RECEIPTS THE DE FACTO EMPLOYEE RULE DOES NOT APPLY TO PERMIT THE RETENTION OF COMPENSATION RECEIVED IN EXCESS OF A RATE FIXED BY STATUTE, AND A POSTMASTER WHO WAS PAID COMPENSATION BASED ON POSTAL RECEIPTS REPORTED FOR THE PRIOR YEAR BY A FORMER POSTMASTER, WHICH DID NOT EXCLUDE "OUTSIDE SALES" OF POSTAGE AS REQUIRED BY 39 U.S.C. 56, MAY NOT INVOKE THE RULE TO AVOID REFUNDING THE EXCESS, EVEN THOUGH HE WAS WITHOUT FAULT IN THE MATTER; HOWEVER, IN CASES OF FALSE BUSINESS RETURNS BY POSTMASTERS, THE POSTMASTER GENERAL IS AUTHORIZED BY THE ACT OF JUNE 18, 1934, TO ALLOW ANY COMPENSATION HE DETERMINES TO BE REASONABLE.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, FEBRUARY 17, 1950:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 23, 1949, REFERENCE 15, REQUESTING A DECISION WHETHER THE RULE APPLIED IN "PRIOR DECISIONS" OF THIS OFFICE, WHEREBY EMPLOYEES WHOSE APPOINTMENTS, PROMOTIONS, OR REINSTATEMENTS ARE FOUND TO HAVE BEEN ERRONEOUS UPON POST AUDIT BY THE CIVIL SERVICE COMMISSION ARE CONSIDERED AS HAVING SERVED IN A DE FACTO STATUS, THEREBY PERMITTING THEM TO RETAIN THE COMPENSATION RECEIVED, MAY BE APPLIED TO POSTMASTERS WHOSE SALARIES ARE REDUCED BECAUSE OF UNREPORTED OUTSIDE SALES HAVING BEEN MADE BY THEIR PREDECESSORS DURING A PREVIOUS CALENDAR YEAR. YOU FAIL TO CITE ANY PARTICULAR DECISIONS WHICH STATE THE REFERRED-TO RULE BUT PRESUMABLY THE PRINCIPAL ONE IS THAT RENDERED MARCH 14, 1949, 28 COMP. GEN. 514.

AN EXAMPLE IS CITED IN YOUR LETTER OF A POST OFFICE WHERE THE OUTSIDE SALES OF POSTAGE BY A FORMER POSTMASTER BEGINNING DURING THE CALENDAR YEAR 1944, WERE NOT ASCERTAINED UNTIL OCTOBER 27, 1949, AND WERE OF SUCH MAGNITUDE THAT THE PRESENT INCUMBENT POSTMASTER WHO ASSUMED CHARGE ON JUNE 1, 1949, MAY HAVE TO REFUND A CONSIDERABLE SUM OF MONEY BECAUSE THE UNREPORTED OUTSIDE SALES REDUCED THE GROSS RECEIPTS FOR THE CALENDAR YEAR, 1948, UPON WHICH HIS SALARY WAS BASED EFFECTIVE JULY 1, 1949, EVEN THOUGH "HE HAD NOTHING WHATEVER TO DO WITH THE MAKING OF THE SALES OR FAILURE TO REPORT THEM, AND WAS IGNORANT OF THE FACT THAT SUCH SALES WERE MADE.'

SECTION 8 (A) OF THE POSTAL PAY ACT OF JULY 6, 1945, PUBLIC LAW 134, 59 STAT. 437, AS AMENDED, PROVIDES THAT THE COMPENSATION OF POSTMASTERS SHALL BE FIXED UPON THE BASIS OF "THEIR RESPECTIVE QUARTERLY RETURNS FOR THE CALENDAR YEAR IMMEDIATELY PRECEDING THE ADJUSTMENT, BASED ON GROSS POSTAL RECEIPTS.' THE INCLUSION OF "OUTSIDE SALES" OF POSTAGE AS A PART OF THE GROSS POSTAL RECEIPTS UPON WHICH THE COMPENSATION OF A POSTMASTER IS BASED PURSUANT TO SAID SECTION 8 (A) IS SPECIFICALLY PROHIBITED. SEE 39 U.S.C. 56. THE RULE IN THE REFERRED-TO DECISION OF MARCH 14, 1949, HAS REFERENCE TO APPOINTMENTS, PROMOTIONS, OR REINSTATEMENTS WHICH ARE FOUND UPON POST AUDIT BY THE CIVIL SERVICE COMMISSION TO HAVE BEEN ERRONEOUS UPON THE BASIS OF THE STANDARDS PRESCRIBED BY CIVIL SERVICE REGULATIONS. SUCH RULE IS NOT FOR APPLICATION IN THE EXAMPLE ILLUSTRATED IN YOUR LETTER WHERE COMPENSATION IS PAID TO A POSTMASTER AT A RATE CONTRARY TO THE STATUTORY REQUIREMENTS OF SAID SECTION 8 (A) AND OF 39 U.S.C. 56. SEE 29 COMP. GEN. 75. ACCORDINGLY, YOUR SPECIFIC QUESTION IS ANSWERED IN THE NEGATIVE.

HOWEVER, IT IS NOTED THAT, UNDER THE PROVISIONS OF THE ACT OF JUNE 18, 1934, PUBLIC LAW 385, 48 STAT. 989, 39 U.S.C. 45, YOU HAVE DISCRETION TO ALLOW ANY COMPENSATION YOU MAY DETERMINE REASONABLE OR PROPER IN ANY CASE WHERE YOU ARE SATISFIED THAT A POSTMASTER HAS MADE A FALSE RETURN OF BUSINESS. SEE B-55833, FEBRUARY 12, 1946. WHILE THE ONLY CASES INVOLVING THE USE OF THAT AUTHORITY WHICH HAVE COME TO MY ATTENTION ARE CASES INVOLVING THE POSTMASTER WHO SUBMITTED THE FALSE RETURNS, IT WOULD APPEAR THAT THE SAID ACT IS SUFFICIENTLY BROAD TO INCLUDE THE CASE OF A SUCCEEDING POSTMASTER WHOSE COMPENSATION OTHERWISE IS REQUIRED TO BE BASED UPON THE GROSS RECEIPTS REPORTED BY A PRECEDING POSTMASTER AND WHO WAS IGNORANT OF THE FACT THAT OUTSIDE SALES WERE INCLUDED IN SUCH GROSS RECEIPTS. ACCORDINGLY, IN THE CASE OF THE POSTMASTER CITED AS AN EXAMPLE IN THE SAID LETTER OF NOVEMBER 23, 1949, THIS OFFICE WILL NOT OBJECT IF, IN THE EXERCISE OF YOUR DISCRETION, YOU DETERMINE THAT THE COMPENSATION RECEIVED BY THE INCUMBENT POSTMASTER FROM THE TIME WHEN HE ASSUMED CHARGE ON JUNE 1, 1949, TO OCTOBER 7, 1949, THE DATE WHEN THE UNREPORTED OUTSIDE SALES FOR THE PRIOR CALENDAR YEARS WERE FIRST ASCERTAINED, NEED NOT BE REDUCED.