
    HERMANN R. HABICHT v. THE UNITED STATES
    [No. 102-55.
    Decided June 7, 1961.
    Plaintiff’s motion for rehearing denied October 4, 1961] 
    
    
      
      Lewis W. Evans for plaintiff. Samuel T. Ansell, Jr., and Martin E. Oarlson were on the briefs.
    
      Oerson B. Kramer, with whom was Assistant Attorney General William H. Orriak, Jr., for defendant.
    
      
      See opinion' of the court decided June 6, 1962, post, p. 852, amending this opinion and denying plaintiffs motion for relief from judgment and for a rehearing.
    
   Whitaker, Judge,

delivered the opinion of the court:

Plaintiff, a former Foreign Service employee, sues for back pay and for payment of accrued annual leave for a portion of the period during which he was suspended from duty for security reasons.

On October 16, 1949, plaintiff was appointed to a “sensitive” position as Chief, Eeports Branch, Eeports and Statistics Division, Office of Administration, United States High Commissioner for Germany (hereinafter referred to as hicog) . Plaintiff’s appointment was limited to a period not to exceed four years, and was subject to the following conditions: “Continuance of program, functions of assignment, and availability of funds therefor.”

Pursuant to the Security Act of August 26, 1950, P.L. 733, 64 Stat. 476, 5 U.S.C. § 22-1, plaintiff was suspended from active duty on June 6,1951, in the interest of national security, and, therefore, was placed in a leave status without pay pending the adjudication of his case. During July 1951 bearings were held in Germany by the Loyalty Security Board, hicog, to determine whether plaintiff was a security risk.

Plaintiff remained in a leave without pay status pending the outcome of the Loyalty Security Board hearings. On September 2, 1951, he was transferred from the Reports Branch, Reports and Statistics Division, Office of Administration, hicog, to the Replacement Pool, Personnel Division, Office of Administration, hicog, and continued in the status of leave without pay. The following day, September 3, the Reports and Statistics Division was abolished and the functions which had been performed by plaintiff’s office were either eliminated or transferred to other offices. Plaintiff at this time received no official notification that his former position had been abolished.

The proceedings before the Loyalty Security Board culminated in a letter, dated January 25, 1952, to plaintiff from the Deputy Under Secretary of State stating that it had been determined that plaintiff was a security risk and his removal was deemed advisable in the interest of national security. Plaintiff appealed from this decision to the Secretary of State.

On February 19, 1952, while plaintiff’s appeal was pending, the Chief of Personnel, hicog, wrote plaintiff that the position he had formerly held had been abolished, and his limited appointment was terminated, subject to final disposition of his case under the Security Act of August 26,1950. This letter stated that should his appeal to the Secretary be successful, his termination would be effective on the day after the date on which the Secretary rendered his decision. If plaintiff’s appeal was unsuccessful, he was instructed to disregard the notice.

Plaintiff’s appeal was heard on April 18, 1952, and on January 19,1953, the Deputy Under Secretary of State wrote plaintiff that “the evidence does not warrant an adverse security finding * * * [and] does not warrant your dismissal as a security risk to the Department of State.” The letter continued:

The Secretary has reviewed and concurred in his des-ignee’s finding and has determined that the termination of your employment in the Foreign Service is not necessary or advisable in the interest of the national security of the United States.

Two days later, on January 21,1953, the State Department sent hicog the following telegram:

Favorable LSB finding H. R. Habicht upheld. Dept, authorizing hicog reimburse for period from 6/6/51 to 3/19/52. Term, lwop 1/20/53. Ltr. fols.

That same day, the Department wrote plaintiff that the Secretary had approved the recommendation of the Deputy Under Secretary that:

* * * reimbursement be made you pursuant to provisions under [the Act of August 26,1950] for the period from June 6,1951, to March 19,1952, (February 19,1952, the date your hicog position was abolished, plus thirty days notice of separation provided for in hicog regulations) during which you have been carried in a leave without pay status.

On January 27, 1953, the Chief of Personnel, hicog, wrote plaintiff that his service with hicog was officially terminated effective January 20,1953, and plaintiff was issued a Notice of Personnel Action advising plaintiff as follows:

Nature of Action: Termination of Limited Appointment E.0.10180 and Restoration to Duty.
Effective Date: cob: Jan. 20,1953 see remarks.
Remarles: Restored to duty for period June 6,1951 to March 19, 1952. Ref.: Letter to Mr. Habicht from Chief, Division of Foreign Service Personnel dated January 21, 1953, and classified cable dated January 22, 1953. Placed on lwop effective March 20,1952 to January 20,1953 cob.

Plaintiff has received from defendant salary for the period June 7,1951 to March 19,1952, and a lump sum payment for 994 hours of annual leave accrued through December 31,1951. However, plaintiff claims he is entitled to back pay for the period March 20,1952 to February 20,1953, and payment for annual leave for the period J anuary 1, 1952 to J anuary 27, 1953, based upon the premise that the Security Act of August 26,1950, supra, required that he be paid for the entire period between the date of his suspension from active duty and the date his employment with the Foreign Service was officially terminated. Defendant, on the other hand, says that the Act gave the Secretary of State authority to restore plaintiff to duty for the period from the date of his suspension to the date his position was abolished, and that it was only required to pay plaintiff for this period.

Section 22-1 of the Security Act of August 26,1950, supra, provides in pertinent part as follows:

That any person whose employment is so suspended or terminated under the authority of this Act may, in the discretion of the agency head concerned, be reinstated or restored to duty, and if so reinstated or restored shall be allowed compensation for all or any part of the period of such suspension or termination m an amount not to exceed the difference between the amount such person would normally have earned during the period of such suspension or termination, at the rate he was receiving on the date of suspension or termination, as appropriate, and the interim net earnings of such person: * * *. [Italics supplied.]

By this section, Congress granted discretion to the Secretary to right a possible wrong committed under the Act by ordering reinstatement or restoration. Once an employee is reinstated or restored to duty, this section made mandatory the payment of back pay. Leiner v. United States, 143 Ct. Cl. 806; Schwartz v. United States, 149 Ct. Cl. 145. However, this section did not, as plaintiff urges us to hold, require that the Secretary must allow compensation for the full period of the suspension. Section 22-1 required the payment of compensation for “all or any part” of the period of suspension. It was within the discretion of the Secretary to determine whether justice required payment for the full period of suspension or only for a part of it.

This question was not presented in Leiner v. United States, supra, or in Schwartz v. United States, supra, but it was the basis of the dissent by the Chief Judge in Vitarelli v. United States, 150 Ct. Cl. 59, 68.

In the case at bar the Secretary was of the opinion that plaintiff should be paid from the date of his suspension to the date of the abolishment of the job to which he had been appointed. We cannot say that this was an abuse of the discretion conferred upon him. We would be slow to say it was in any case, but in this case we see no warrant at all for saying that it was. Plaintiff’s appointment was subject to the “continuance” of the “functions of assignment.” This means, we suppose, if the functions of the position to which plaintiff had been assigned were discontinued, plaintiff’s appointment was terminated, or, at least, could be terminated. His position was abolished on September 3, 1951, but, since plaintiff was not notified thereof until February 19, 1952, he was compensated until 30 days after the latter date.

It is true that on the date prior to the abolishment of his position plaintiff had been transferred to the Replacement Pool, but there was no obligation on the Department to take plaintiff out of this pool and assign him to some other position.

We think the action the Secretary took was within the discretion conferred on him.

On January 21, 1953, the Secretary approved the allowance of compensation to plaintiff for the period June 6,1951 to March 19,1952, and plaintiff has received the pay to which he was entitled for this period. Under the statute the Secretary had the discretion to determine the period for which plaintiff was to be compensated, and he cannot recover more.

However, it appears that plaintiff has not received payment for all leave accrued during the period for which he was restored to duty. Defendant refused to pay plaintiff for any accrued leave in excess of 994 hours, which was his annual leave “ceiling” as of January 1, 1952. In Hynning v. United States, 141 Ct. Cl. 486, we held that an employee continues to accumulate annual leave during a period of suspension under the Act of August 26, 1950, even though his individual “ceiling” is exceeded. Since plaintiff was entitled to and received back pay for the period June 7,1951 to March 19, 1952, he was also entitled to payment for any annual leave which accrued to him during this same period. Plaintiff only received payment for accrued leave up to and including December 31,1951,; hence, he is entitled to recover for any annual leave which accrued during the period January 1,1952 to March 19,1952.

The plaintiff is entitled to recover, and judgment will be entered to that effect. The amount of recovery will be determined pursuant to Eule 38 (c).

It is so ordered.

Dtjreee, Judge; Laramore, Judge; and Jones, OMef Judge, concur.

Madden, Judge,

dissenting:

When the plaintiff was, on September 2, 1951, transferred from the Eeports Branch, Eeports and Statistics Division, to the Eeplacement Pool, Personnel Division, he was, like all other employees of the Eeports Branch, placed in a reserve on which the High Commissioner could draw for assignment to any necessary personnel work. The reason these employees were placed in the replacement pool was that the High Commissioner, on the day following their transfer to the Eeplacement Pool, abolished the Eeports Branch and thereby abolished the jobs of the employees who worked in the Eeports Branch. But the other employees who were so transferred were not discharged nor separated from the payroll. Nor was the plaintiff discharged. The only reason for his not being paid, and not being assigned from the pool to specific work, was that he was under suspension as a security risk.

Section 22-1 of the Security Act of August 26,1950, quoted in the opinion of the court, says that if one whose employment is suspended or terminated as a security risk is reinstated, he “shall be allowed compensation for all or any part of the period of such suspension or termination * * [Emphasis supplied.] As the court says in the instant opinion:

Once an employee is reinstated or restored to duty, this section made mandatory the payment of back pay. Leiner v. United States, 143 Ct. Cl. 806; Schwartz v. United States, 149 Ct. Cl. 145.

However, the court, in the language just quoted, having given the plaintiff relief, proceeded immediately to take back what it had just given by saying:

However, this section did not, as plaintiff urges us to hold, require that the Secretary must allow compensation for the full period of the suspension.

And the court goes on to hold that compensation for only a part of the period of suspension satisfied the requirements of the statute.

To hold, as we did in Leiner, that the back-pay provision of the statute is mandatory, once reinstatement has been made, and to say, as the court does in the instant case, that this mandatory requirement is satisfied by giving back pay for a fraction of the period, is, in effect, to overrule Leiner. The Secretary can, under this decision, reinstate an employee after two years of suspension, saying that he never should have been suspended in the first place, but at the same time saying that he should receive back pay for only one day of the two years of his suspension.

The court’s opinion urges that there is some equity in the fractional relief awarded in the instant case because the job to which the plaintiff had been appointed had been abolished. But the plaintiff had not been discharged. He had been transferred to other employment, and the only reason he was not worked or paid was because of the security suspension. There is not the slightest doubt about “the amount which * * * [the plaintiff] would normally have earned during the period of such suspension * *

In Leiner we said:

Congress recognized that the statute, lodging arbitrary and final power in department heads, was a departure from normal Government personnel practice, justifiable only in the interest of national security. It tempered the severity of the statute by granting discretion to the department heads to right possible wrongs committed under the statute by ordering reinstatement. Then it made mandatory the payment of back pay to such reinstated employees. 143 Ct. Cl. 806, 811.

“Equity delights to do justice, and that not by halves.” Story, Equity Pleading, Section 72. I think Leiner was right, and I would not fractionalize the equity which the court accomplished in that case.

FINDINGS OF FACT

The court, having considered the evidence, the report of Trial Commissioner W. Ney Evans, and the briefs and argument of counsel, makes findings of fact as follows:

1. (a) Effective October 16,1949, plaintiff was appointed a Foreign Service Staff Officer, Class 2 (fss-2), Department of State, and was assigned to duty as Chief, Eeports Branch, Eeports and Statistics Division, Office of Administration, United States High Commissioner for Germany (hereinafter referred to as hicog), Department of State, Frankfurt, Germany.

(b) His appointment was limited to a period not to exceed 4 years after its effective date, and was subject to the following condition: “Continuance of program, functions of assignment, and availability of funds therefor.”

(c) He entered upon the performance of the duties of the position hereinabove described on the effective date of his appointment (October 16, 1949), and served on active duty therein until June 6, 1951.

2. (a) On June 6,1951, plaintiff was advised by the Chief of Personnel, hicog, that in the interest of national security he was suspended from active duty pending the adjudication of his case.

(b) Plaintiff was further advised that unless he elected to be carried in an annual leave status during all or part of the period of his suspension, he would be carried in leave-without-pay status for the duration of his suspension. Pursuant to such advice he requested that during the period of his suspension from active duty he be placed on leave without pay. The request was granted.

(c) Plaintiff was suspended from active duty and pay effective at tbe close of business on June 6,1951.

(d) On tbe date of bis suspension plaintiff was receiving an annual salary of $9,450.

3. (a) During July 1951, hearings were held on tbe charges by tbe Loyalty Security Board (hicog) in Germany.

(b) By letter dated January 25,1952, plaintiff was advised by tbe Deputy Under Secretary of State that, upon tbe basis of all of tbe evidence, the Loyalty Security Board of tbe Department of State “has determined that no reasonable doubt exists as to your loyalty to tbe Government of tbe United States,” but that “it has been determined that you constitute a security risk to tbe Department of State, * * * and that your removal from employment is advisable in tbe interest of national security.”

(c) Tbe same letter further advised plaintiff (1) that be had a right to appeal this decision to tbe Secretary of State within 10 days, and (2) that be would remain in tbe suspended status pending a final determination of tbe matter.

(d) Plaintiff did appeal to tbe Secretary of State and tbe appeal was heard on April 18, 1952.

(e) By letter of January 19, 1953, plaintiff was advised by tbe Deputy Under Secretary of State that: “After consideration of all tbe evidence, including that adduced at tbe appeal bearing, tbe Secretary’s designee has found that the evidence does not warrant an adverse security finding under section 393 of Departmental Begulations and Procedures,” and “does not warrant your dismissal as a security risk to tbe Department of State.” Tbe letter continued: “Tbe Secretary has reviewed and concurred in bis designee’s finding and has determined that the termination of your employment in the Foreign Service is not necessary or advisable in tbe interest of tbe national security of tbe United States.”

4. (a) Effective September 2, 1951, while plaintiff was suspended from active duty without pay, be was transferred from tbe Beports Branch, Beports and Statistics Division, Office of Administration, hicog, to tbe Beplacement Pool, Personnel Division, Office of Administration, hicog.

(b) Staff Announcement 213 (undated), issued by the Director, Office of Administration, hicog, announced the abolition, effective September 3, 1951, of the Eeports and Statistics Division, Office of Administration, and the transfer of the Division’s functions in economic reporting, statistics, reports management, and reports coordination in the non-economic field to other divisions or offices.

(c) hicog was then in the process of relinquishing some of its military government functions, including the area of reports and statistics thereto related, to the newly established West German Government, in the course of restoring sovereignty to that government. It was contemplated that after the turnover of most military government functions, the remaining offices and divisions of hicog would be transformed into a normal embassy organization to resume diplomatic relations with the new government.

(d) Accordingly, some of the functions that had been performed by plaintiff as Chief, Eeports Branch, Eeports and Statistics Division, were in process of liquidation at the time of plaintiff’s transfer to the Eeplacement Pool and were thereafter terminated. Other functions of the position were transferred to other offices. While the performance of the functions so transferred was continued, no specific individual or office performed all of them.

5. (a) On February 19, 1952, hicog’s Chief of Personnel wrote to plaintiff:

In the reorganization of hicog, the Division of Ee-ports and Statistics has been abolished with the resulting elimination of your position. Because of this fact, it is necessary that your limited appointment be terminated subject to final determination of the hearing in your case under Public Law 733, 81st Congress, Executive Order 9835, as amended by Executive Order 10241 and appropriate Departmental regulations.
In the event that your appeal to the Secretary in respect of this matter is successful, you will be terminated on the day following the date on which the Secretary of State gives his decision. In the event that your appeal to the Secretary of State is unsuccessful, this notice will be null and void and without legal effect.

(b) No prior, formal notification had been given to plaintiff of the abolition of the Division of Reports and Statistics.

6. (a) On January 21,1953, the Department of State sent to hicog the following telegram:

Favorable LSB finding H. R. Habicht upheld. Dept, authorizing hicog reimburse for period from 6/6/51 to 3/19/52. Term lwop 1/20/53. Ltr. fols.

(b) By letter dated the same day, the Department wrote plaintiff that the findings of the Secretary’s designee included “a recommendation that reimbursement be made to you, pursuant to provisions under [the Act of August 26, 1950], for the period from June 6,1951, to March 19,1952, (February 19,1952, the date your hicog position was abolished, plus thirty days notice of separation provided for in hicog regulations) during which you have been carried in a leave without pay status,” and that the Secretary had approved this recommendation.

7. (a) On January 27, 1953, hicog’s Chief of Personnel wrote to plaintiff (in pertinent part):

Reference is made to my letter of February 19, 1952, concerning your termination from hicog, dependent upon the final outcome of your appeal to the Department of State.
I have been advised that your case has now been concluded. Therefore, I am writing this letter to officially notify you of the termination of your service with hicog, effective January 20, 1953.

(b) On the same day, January 27, 1953, hicog’s Chief of Personnel issued a Notice of Personnel Action advising plaintiff of the following action concerning his employment:

Nature of Action: Termination of Limited Appointment E.O. 10180 and Restoration to Duty.
Effective Date: cob: Jan. 20, 1953 see remarks.
Remarles: Restored to duty for period June 6,1951 to March 19,1952. Ref.: Letter to Mr. Habicht from Chief, Division of Foreign Service Personnel dated January 21, 1953 and classified cable dated January 22, 1953. Placed on lwop effective March 20,1952 to J anuary 20, 1953 cob.

(c) From the time of his transfer from the Eeports Branch to the Eeplacement Pool, on September 2, 1951, plaintiff remained in the Eeplacement Pool in a suspension from active duty and pay status until J anuary 27, 1953. On the latter date his appointment as a Foreign Service Staff Officer, Class 2, was terminated effective J anuary 20, 1953.

8. During the period plaintiff was in a suspension status (from June 6,1951, to January 19, 1953), he was on the rolls of hicog and was accorded the emoluments or privileges that went with employment by hicog, including the purchasing of (1) food at the United States Army Commissary; (2) other articles stocked at the United States Army Post Exchange; and (3) gasoline at United States Government stations. He also received housing at government expense during the suspended period, but, other than this and the emoluments described in the preceding sentence, he received no compensation of any sort from hicog during the period from June 7, 1951, to January 27, 1953.

9. (a) In February 1953, plaintiff received from defendant an amount representing salary for the period June 7,1951, to March 19, 1952.

(b) In March 1953, he received from defendant a lump sum payment for 994 hours of annual leave which he had accrued up to and including December 31,1951. His annual leave ceiling as of January 1, 1952, was 994 hours. If any annual leave accrued to him during the period January 1, 1952, to January 27,1953, he has not been paid for it.

(c) Plaintiff has received no compensation of any sort from defendant for the period March 20,1952, to January 27, 1953.

10. (a) On March 3, 1953, plaintiff wrote the Secretary of State requesting reimbursement in full for the entire period of his suspension from active duty without pay.

(b) On May 8, 1953, the Department of State advised plaintiff that, in its opinion, “there is no basis for payment of further compensation since Public Law 733 provides that * * * [a suspended employee reinstated or restored to duty] shall be allowed compensation for all or amy fart of the period of suspension.”

11. (a) In September 1953, plaintiff submitted to the General Accounting Office claims for compensation for (1) salary, (2) accumulated annual leave, and (3) “statutory” leave.

(b) The claims for compensation for salary and annual leave credit during the period March 20, 1952, to February 20,1953, were denied for the assigned reason that “the compensation provision of the Act of August 26, 1950, is discretionary rather than mandatory.”

(c) The claim for compensation for “statutory” leave was denied for the assigned reasons that “such leave is for granting in kind * * * and there is a specific prohibition * * * against such leave being made the basis for any terminal leave or lump-sum payment.”

12. (a) During the period of his suspension, from June 6, 1951, through January 20, 1953, plaintiff did not obtain other employment and did not receive any income as compensation for services.

(b) Following his suspension, his first effort to find other employment was in November 1951, when he had a job interview in Frankfurt. He was requested by his interviewer to furnish a biographical sketch and references, but made no response to the request.

(c) In December 1951, he discussed employment, informally, with an interested person at a social gathering.

(d) During March and April 1952, while in the United States for security hearings, plaintiff made several tentative inquiries of possible employers in New York, but nothing came of them.

(e) Plaintiff’s reasons for not making more intensive efforts to obtain employment were his sensitivity over his suspension as a security risk, his belief that the suspension rendered such efforts all but futile from the outset, and his preoccupation with trying to have his record cleared of the charges.

13. At all times herein material:

(a) Plaintiff had more than 8 bnt less than 15 years of service as a civilian officer or employee of the United States.

(b) Plaintiff was a veterans’ preference eligible within the meaning of section 851 (4) of title 5, United States Code.

(c) Plaintiff’s position, as a regular part of the duties therein, required the handling of security information and was classified as a sensitive position.

CONCLUSION OF LAW

Upon the foregoing findings of fact which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover, and judgment will be entered to that effect. The amount of recovery will be determined pursuant to Rule 38(c). 
      
       Internally, hicog considered plaintiff’s position to Rave been abolished upon the termination of the Division. It nevertheless selected the date of formal notification, February 19, 1952, as the cutoff date for subsequent reference to the abolition of his position.
     
      
       Plaintiff is a citizen of the United States and a resident of New Jersey.
     
      
       The advice was given pursuant to a letter dated May 31, 1951, addressed to plaintiff, from the Loyalty Security Board of the Department of State, containing a Notification of Charges, and directing his suspension from active duty in the interest of national security. The action was taken under the provisions of Public Law 773, approved August 26, 1950, 64 Stat. 476.
     
      
       By letter of that Sate, signed by tbe Chief of Personnel, hicog, be was advised of his suspension from active duty without pay pending the adjudication of his case.
     
      
       Plaintiff’s duties as Chief, Reports Branch, had been concerned with reports in the non-economic field.
     
      
       Internally, hicog’s Office of Administration considered plaintiff’s position to have been abolished upon the termination of the Division. It nevertheless selected the date of formal notification, February 19, 1952, as the cutoff date for subsequent reference to the abolition of his position. See finding 6(b).
     
      
       In theory, plaintiff’s suspension status ended on January 19, 1953, and his appointment was terminated the next day.
     
      
       Plaintiff understood that any response he might mate to the request would encompass disclosure of his suspension status and the reasons therefor.
     