Puglisi v. United States, 275-76 through 281-76

• Decision Date: 19 October 1977
• Docket Number: 386-76 through 388-76.,No. 275-76 through 281-76,275-76 through 281-76
• Citation: 564 F.2d 403
• Parties: Lt. Col. Vincent PUGLISI et al. v. The UNITED STATES.
• Court: U.S. Claims Court

564 F.2d 403

Lt. Col. Vincent PUGLISI et al. v. The UNITED STATES.

Nos. 275-76 through 281-76, 386-76 through 388-76.

United States Court of Claims.

October 19, 1977.

COPYRIGHT MATERIAL OMITTED

John A. Everhard, Washington, D.C., attorney of record, for plaintiffs; Thomas H. King, Washington, D.C., of counsel.

Richard J. Webber, Washington, D.C., with whom was Asst. Atty. Gen., Barbara Allen Babcock, Washington, D.C., for defendant.

Before DAVIS, NICHOLS and KASHIWA, Judges.

ON DEFENDANT'S MOTION TO DISMISS THE PETITION AND ON PLAINTIFFS' CROSS-MOTION FOR SUMMARY JUDGMENT

DAVIS, Judge:

Plaintiffs are retired regular officers of various components of the uniformed services who hold civilian positions with the federal government. As retired regular officers they are permitted to receive their full civilian pay but, pursuant to the Dual Compensation Act of 1964, now 5 U.S.C. § 5532(b) (1970), their retirement pay is substantially reduced.¹ Retired reserve officers, on the other hand, are exempted from the Dual Compensation Act and therefore allowed to receive their full civilian pay and full retirement pay simultaneously. 5 U.S.C. § 5534. In this suit for the amount of retirement pay withheld from them, claimants assert that the Act is unconstitutional, especially because it distinguishes between retired regular officers and retired reserve officers to the detriment of the former group. Defendant has moved to dismiss the petitions and plaintiffs have cross-moved for summary judgment. Only legal issues are raised, and the case is ready for disposition.

A.

Before we consider the arguments pro and con, we set forth a brief summary of the long history of the federal government's dual compensation legislation. The various forms of those laws date back to 1839. See 9 Op.Att'y Gen. 123 (1857) and 9 Op.Att'y Gen. 507 (1860); Sharp, Dual Compensation and Employment Study, American Law Division, Library of Congress, 109 Cong.Rec. 9546 (1963). The Supreme Court held that the primary purpose of the earlier provisions was to prevent a person holding a job setting definite compensation from receiving extra pay for additional services which might and should have become part of his regular duties. See, United States v. Saunders, 120 U.S. 126, 129, 7 S.Ct. 467, 30 L.Ed. 594 (1887). The Court there ruled that under the then prevailing law it was proper for someone to perform two distinct jobs concurrently and receive the salary for each; it was the Court's opinion, however, that the then-existing legislation prevented an officeholder adding on to his salary payments for "extra" duties which may not have been clearly designated in his original job description.

The next important dual compensation provision appeared in the Dual Office Act of 1894, ch. 174, § 2, 28 Stat. 162, 205, which the defendant sees as the forerunner of the 1964 Act with which we are now concerned. This 1894 statute declared that no one holding an office which paid $2,500 or more could be appointed to any other office to which compensation was attached. A retired officer of the regular armed forces was deemed an officeholder within the 1894 Act.² According to a modern-day observer, one reason for the 1894 law was to prevent abuse by officers using their military positions to obtain lucrative civil service jobs upon retirement.³ If that intent can be ascribed to the 1894 Congress, then the Act, at least in large measure, was a "dual office" act designed to prohibit the holding of more than one high federal office. As we judge it, however, the purpose of the 1894 Act was more than that — not only to prevent those abuses but also to limit the total compensation receivable by any one person from the Government. The 1894 Act, although called the Dual Office Act, did not expressly prohibit dual officeholding (by retired military officers or others) qua officeholding. Instead, the Act set dollar limits on total salary. Under it a retired regular officer receiving retirement pay of $2,500 or more could not hold any other paid federal office. But according to H.R.Rep. No. 890, 88th Cong., 1st Sess., p. 4 (Nov. 7, 1963), the 1894 Act, when passed, did not prevent many retired regular officers from holding dual office because retirement allowances and federal civilian salaries were most often less than $2,500 each. As time went on and compensation rose, the prohibition bit deeper.⁴ The next significant dual compensation provision, relevant here, was part of the Economy Act of 1932, Ch. 314, § 212, 47 Stat. 382, 406, which plaintiffs stress (it is discussed more fully, infra). This measure allowed a $3,000 maximum total federal compensation for retired officers holding civilian government jobs (an amount raised to $10,000 by amendment in 1955 (Act of Aug. 4, 1955, ch. 561, § 2, 69 Stat. 497, 498)); it also excepted retired reserve officers and regular officers retired for disability incurred in the line of duty.

Against this background, Congress passed the 1964 Act, part of which is now before us.⁵ According to 5 U.S.C. § 5533, no one (with some exceptions) may receive the basic pay of more than one full-time civilian position in the federal government. The statute, however, liberalized the previous restrictions on retired regular officers (such as plaintiffs here). 5 U.S.C. § 5532(b), as we have noted, provides that retired regular officers can receive full pay for their civilian positions, subject to an annual reduction in retirement pay equal to the first $2,000 of that pay plus one-half of any remainder.⁶ The Act continues the previous rule exempting retired reserve officers from dual compensation restrictions (5 U.S.C. § 5534).

Its legislation history teaches that the 1964 Act was designed to simplify and consolidate previous dual compensation laws (including the 1894 and 1932 Acts), regulations and administrative interpretations. Restrictions on retired regular officers were eased to give those officers a greater chance to fill civilian jobs, an opportunity Congress thought would benefit both the officers and the government.⁷ Congress intended, by easing the then restrictions on retired regular officers, to give such persons civilian employment opportunities more in line with those available to retired reserve officers completely unaffected by dual compensation limitations. Congress did not, however, entirely remove the restrictions on dual compensation for retired regular officers. It is this residue which is under attack in this suit.

B.

Plaintiff's first, and less substantial, challenge is that 5 U.S.C. § 5532(b) constitutes a direct tax upon them, not in proportion to the census, and therefore in violation of article I, section 9, clause 4 of the Constitution.⁸ This curious argument is rested on the purported purpose of the Economy Act of 1932, the true forerunner, plaintiffs insist, of the Dual Compensation Act of 1964. According to plaintiffs, the Economy Act was, in reality, a taxing statute designed to "increase" federal revenues during a time of great national financial distress. It is said that the 1932 limitations on dual compensation were a before-the-fact tax on certain officeholders and but for the goal of exacting this "tax" the compensation ceilings would have been lifted. The argument concludes that, since the 1964 dual compensation Act was a modernization and reenactment of the dual compensation provisions of the Economy Act of 1932, the later enactment is also unconstitutional on the same ground.

There are at least three conclusive answers to claimants' farfetched line of argument. First, the terms of the 1964 Act and its legislative history demonstrate that it was more than a mere application of the Economy Act of 1932. As we have spelled out in Part A, supra, one of the basic goals of the later statute was to consolidate and simplify all prior dual compensation laws and regulations in one manageable law. Over 50 separate statutes and 200 Comptroller General (or predecessor) opinions were involved. See S.Rep.No. 935, 88th Cong., 2d Sess. (1964), reprinted in 1964 U.S.Code Cong. & Admin.News p. 2834. The history also shows that both the 1894 and 1932 Acts were being revised and, in fact, the 1964 Act made more changes with an eye toward the 1894 statute than it did with respect to other prior pieces of legislation. We are convinced that it had a wider purpose and form than mere updating of the 1932 dual compensation legislation, and the sins, if any, of the latter should not be visited on the former.

But even if we were to agree with plaintiffs that the 1932 Economy Act was the direct forebear of and dominant influence upon the 1964 Act, we still could not agree that that statute was in any legal sense a tax measure. Of course, the Economy Act need not have been part of a "Tax Act of 1932" in order to impose, in reality, a direct tax. We assume that in applying article I, section 9, clause 4, the Supreme Court would look to substance rather than form. Cf., e.g., American Oil Co. v. Neill, 380 U.S. 451, 455, 85 S.Ct. 1130, 14 L.Ed.2d 1 (1965); Wisconsin v. J. C. Penney Co., 311 U.S. 435, 443, 61 S.Ct. 246, 85 L.Ed. 267 (1940); Western Union Tel. Co. v. Kansas, 216 U.S. 1, 30, 30 S.Ct. 190, 54 L.Ed. 355 (1910); Galveston, Harrisburg Ry. v. Texas, 210 U.S. 217, 227, 28 S.Ct. 638, 52 L.Ed. 1031 (1908); Henderson v. Mayor of New York, 92 U.S. 259, 268, 23 L.Ed. 543 (1876). But here the substance was in direct historical descent from a long-standing policy limiting dual opportunities to receive pay from the federal government — a qualification upon federal employment and compensation, rather than a tax, direct or otherwise. Moreover, the debates prove that the 1932 Act (which not only contained a stringent ceiling on dual compensation but also provided for compulsory retirements, impoundment of appropriations, and reduced federal travel allowances) was enacted not as, but in lieu of, stringent tax measures. The objective was to...