
    RUPERT BLUE v. THE UNITED STATES
    [No. E-598.
    Decided April 30, 1928]
    
      On the Proofs
    
    
      Income tax; seo. 213(b) (8), revenue a-ot of 1918; exemption; compensation for active military service; officer of XJ. S. Public Health Service.- — An officer of the U. S. Public Health Service, performing' no military duty, who is not subject to military orders, and who is not paid out of an appropriation for military services, is not in the “ active services ” of the Army or Navy, and is not entitled to the income-tax exemption provided in section 213(b) (8), revenue act of 1918.
    
      The Reporter’s statement of the case:
    
      Mr. M. C. Elliott for the plaintiff.
    
      Mr. Joseph H. Sheppard, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    
      The court made special findings of fact, as follows:
    I. Plaintiff is a citizen of the United States and at all times has borne true allegiance to the United States and has not in any way voluntarily aided, abetted, or given encouragement to rebellion against the United States.
    II. On or about March 3,1893, plaintiff was commissioned as an officer of the United States Public Health Service under authority of the act of January 4, 1889, 25 Stat. 639; and on or about January 13, 1912, he was commissioned as Surgeon General of the United States in charge of the Public Health Service, and continued as such until April 8, 1920, since which time he has remained in said service as assistant-surgeon general assigned to special duties in the United States and foreign countries as an officer of the United States Public Health Service.
    III. Within the time prescribed by law the plaintiff filed his income-tax returns for the calendar years 1918, 1919, 1920, and 1921, and claimed as an exemption in each of said returns from income tax the sum of $3,500.00 as compensation annually received by him from the United States Government for the years mentioned, for services rendered as an officer of the Public Health Service of the United States. After deducting thi£ amount from plaintiff’s income for each year, there remained a net taxable income and tax for each year as shown below, which tax was duly paid by plaintiff:
    
      
    
    IV.On or about July 22,1922, the Commissioner of Internal Revenue disallowed the exemption of $3,500.00 annually, claimed by plaintiff, holding that plaintiff did not receive such sum as compensation for actual services in the military or naval service of the United States, and assessed against plaintiff for said years additional income taxes with interest and penalty, which plaintiff, upon demand, paid under protest, as follows:
    
      
      
    
    V. Thereafter plaintiff filed on or about February 23,1925, a claim for refund for the additional taxes paid for all of said years, which claim was in the sum of $1,063.05. Said claim was rejected on or about November 30, 1925.
    VI. Plaintiff has not been paid the whole or any part of the sum sought to be recovered in this action.
    VII. The records of the Public Health Service do not show that the plaintiff was detailed for duty with either the Army or the Navy, or. that he received any compensation during the period of the World War from either the Army or the Navy. During the period involved in this suit plaintiff’s entire compensation for his official services was received from the Treasury Department.
    VIII. The plaintiff as Surgeon General was the head of the Bureau of Public Health under the Treasury Department, and this bureau had charge of sanitation and health matters in territory contiguous to and surrounding the camps and cantonments, but did not have charge of the sanitation and health matters, or any other matters, within the boundaries of such camps or cantonments.
    IX. On August 5, 1918, the Provost Marshal General issued the following ruling:
    WAR DEPARTMENT,
    Ofpice oe the Provost Marshal General,
    Washington, August 5,1918.
    
    From: Office of Provost Marshal General.
    To: Draft executives in all States.
    Subject: Amendment to section 79, note 3.
    1. Section 79, note 3, is amended to read as follows:
    The words “ persons in ,the military and naval service of the United States ” as employed in said-act of Congress and in these regulations shall be construed as including all officers and enlisted men of the Regular Army, the Regular Army Reserve, the Officers’ Reserve Corps, and the Enlisted Reserve Corps; all officers and enlisted men of the Navy, the Marine Corps, and ,the Coast Guard; all officers' and enlisted men of the Naval Militia, Naval Reserve Force, Marine Corps Reserve, and National Naval Volunteers recognized by the Navy Department; all officers of the Public Health Service commissioned under authority of the act of January 4, 1889; and any of the personnel of the Lighthouse Service and of the Coast and Geodetic Survey transferred by the President to the service and jurisdiction of the War Department or the Navy Department.
    Officers and enlisted men of the National Guard and National Guard Reserve not drafted into the military service of the United States, although their organizations may have been recognized by the Militia, Bureau, unless and until such organizations have been specially designated by orders' from the War Department to be drafted into the military service of the United States.
    A. H. Crowder,
    
      Provost Marshal General.
    
    By C. A. Hope,
    Captain, National Army,
    Chief, Administrative Division.
    
    Office, Provost Marshal General.
    (Seal.) Official copy, War Department.
    X. On or about February 28, 1919, in response to a request submitted by plaintiff for. a ruling, on the question whether officers of the Public Health Service were entitled to ,the exemption provided in section 213 (b) (8) of the revenue act of 1918, the then Commissioner of Internal Revenue, Hon. D. L. Roper, notified plaintiff in writing that “ the personnel of the Public Health Service are * * * persons in the military * * * forces of the United States within the meaning of section 213 (b) (8) of the revenue act of 1918.”
    The said ruling of the commissioner is as follows:
    “ The Executive order of April 3, 1917, contains the following explicit declaration:
    “ ‘ Under authority of the act of Congress, approved July 1, 1902, and subject to the limitations therein expressed, it is ordered that hereafter in times of threatened or actual war the Public Health Service shall constitute a part of the military forces of the United States, and in times of threatened or actual war, the Secretary of the Treasury may, upon request of the Secretary of War or the Secretary of the Navy, detail officers or employees of said service for duty either with the Army or the Navy.’
    “Inasmuch as the present is within the language of the Executive order at times of actual war ’ it is clear that the personnel of the Public Health Service constitutes a part of the military forces of the United States.’
    
      “ The definition found in the act expressly declares that it shall not be deemed to exclude other units ’ otherwise included within the term military forces of the United States.’
    “ The personnel of the Public Health Service are therefore persons in the military * * * forces of the United States ’ within the meaning of section 213 (b) (8) of the revenue act of 1918.”
    XI. The, following is a true copy of a letter from Hon. D. H. Blair to plaintiff dated November 28, 1925:
    Dr. Rupert Blue,
    % Mr. Milton G. Elliott,
    
    
      Southern, Bldg., 'Washington, D. G.
    
    SiR: Reference is made to a letter dated August 26, 1925, from Mr. Milton C. Elliott, Southern Building, Washington, D. C., requesting in your behalf reconsideration of a claim for the refunding of $1,063.05, consisting of $290.12 individual income tax, $14.50 penalty, and $8.10 interest for the year 1918; $235.05 individual income tax, $11.75 penalty, and $7.05 interest for the year 1919; $238.77 individual income tax, $11.94 penalty, and $7.16 interest for the year 1920; and $238.01 individual income tax for the year 1921, which claim was rejected by the collector of internal revenue, Baltimore, Maryland, on May 19, 1925.
    You are advised that all the facts and arguments presented in connection with your claim have been given careful consideration. It appears that the basis of the claim is that you should be allowed an exemption of $3,500.00 due to your position as Surgeon General in the United States Public Health Service during the years in question.
    It is held that the personnel of the United States Public Health Service was not a part of the military forces of the United States within the meaning of the term “ military and naval forces of the United States” contained in section 1 of the revenue act of 1918. The members thereof are not entitled to the exemption granted to such forces in section 213 (b) (8) of such act.
    In view of the foregoing, the action of the collector is sustained.
    
      A copy of this letter is being mailed to the collector of internal revenue, Baltimore, Maryland.
    Respectfully,
    (Signed) D. H. Blair,
    
      Commissioner.
    
    XII. The Hon. D. L. Roper, as Commissioner of Internal Revenue, was succeeded by the Hon. W. W. Williams, who served in that' capacity until his successor, Hon. D. H. Blair, was appointed.
    XIII. The President by proclamation dated November 14, 1921, declared the war with Germany to be terminated as of July 2, 1921.
    The court decided that plaintiff was not entitled to recover.
   GreeN, Judge,

delivered the opinion of the court:

The petition avers and the proof shows that on or about March 3, 1893, the plaintiff was commissioned as an officer of the United States Public Health Service under authority of the act of January 4, 1889; that on or about January 13, 1912, he was commissioned as Surgeon General of the United States in charge of the Public Health Service and continued as such until April 8,1920, since which time he has remained in said service as Assistant Surgeon General assigned to special duties in the United States and in foreign countries.

For each of the years 1918 to 1921, inclusive, the plaintiff filed income-tax returns as required by law and in these returns claimed an exemption of $3,500.00 out of the compensation received by him from the United States for services rendered in his official capacity. This exemption was claimed under the provisions of section 213 (b) (8) of the revenue acts of 1918 and 1921 which exclude from gross income and exempt from taxation “ so much of the amount received during the present war by a person in the military or naval forces of the United States as salary or compensation in any form from the United States for active services in such forces, as does not exceed $3,500.00.” The Commissioner of Internal Revenue disallowed this claim for exemp-. tion on the ground that the plaintiff was not entitled thereto under the provisions of the act above quoted. The issue in the case is whether this ruling was correct.

The plaintiff rests his claim largely upon the order made by the President under date of April 3, 1917, set forth in Finding X above, by which “ it is ordered that hereafter in times of threatened or actual war the Public Health Service shall constitute a part of the military forces of the United States.” The claim is made that by virtue of this order the Public Health Service constituted a part of the military forces of the United States and that plaintiff is not required to show anything further in order to entitle him to the exemption provided by the statute.

Section 4 of the act of Congress of July 1, 1902, provides:

“ The President is authorized, in his discretion, to utilize the Public Health and Marine Hospital Service in times of threatened or actual war to such extent and in such manner as shall in his judgment promote the public interest, without, however, in anywise impairing the efficiency of the service for the purposes for which the same was created and is maintained.”

It is insisted on behalf of the defendant that the language of the act does not confer upon the President the authority to convert the Public Health and Marine Hospital Service into the military or naval forces of the United States, and that the order of the President set out above did not have the effect of incorporating the Public Health Service into the military or naval forces of the United States. In view of the decision of the court upon another matter which is controlling in the case, we do not find it necessary to express an opinion upon this question. A reading of the statute that creates the exemption relied upon plainly shows another provision that must be complied with in order to entitle the plaintiff to the benefits of the exemption. To bring himself within the provisions of the statute, the plaintiff must show that the exemption is claimed out of a salary received from the United States for “ active service in such forces.” It would not, of course, be required of plaintiff that he should show that he took part, even in the smallest degree, in the activities of any of the fighting units of such forces. It would be sufficient if he .participated in any of the proceedings of the military or naval forces, but the facts necessary to sustain plaintiff’s case in this respect are not shown. It does not appear that the plaintiff was detailed for duty with either the Army or the Navy, or that he received any compensation during the period of the World War from either the Army or the Navy. In the absence of being detailed to military duty, it is quite obvious that the plaintiff performed no such duty, and it is conceded that he received his compensation from the Treasury Department and not from the Army or Navy. Not having been detailed to the military forces, he was at no time subject to the orders of the military authorities. It is clear that a person who performs no military duty of any kind, who is not subject to the orders of the military authorities, and who is not paid out of the appropriation for military purposes, is not in the “ active service ” of either the Army or the Navy regardless of any ruling made by the former Commissioner of Internal Revenue. The ruling of the Provost Marshal General had no application to the statute in question.

The Commissioner of Internal Revenue rightly refused plaintiff’s claim for exemption under this statute and his petition should be dismissed. It is so ordered.

Moss, Judge; Graham, Judge; and Booth, Chief Justice, concur.  