Interior, and Agriculture. The act of May 16, 1928, 45 Stat. 579, quoted in your submission, made an appropriation under the heading "Federal Power Commission " for personal services in the District of Columbia in accordance with the classification act of 1923, with the following express proviso:

Provided, That the transfer of civilian employees to the rolls of the Federal Power Commission on July 1, 1928, may be made without reduction in salary.

Evidently this proviso was intended to have the effect of qualifying the use of the appropriation provided for personal services under the Federal Power Commission "in accordance with the classification act of 1923," by authorizing the detailed employees working in existing positions under the commission and paid under appropriations for other departments, to be transferred to the rolls of the commission and paid under the appropriation thus provided for the commission. Decision of June 8, 1928, A-23203. To accomplish this result there was authorized only a change in the appropriation under which the salaries were to be paid, and not the creation of new positions with identical duties, such as might require submission thereof to the Personnel Classification Board for original allocation. The commission appears to have erred in assuming that the enactment of this appropriation provision required submitting to the Personnel Classification Board new sheets for such of these positions as had been allocated under the original classification act of 1923. In view thereof, the recent action of the Personnel Classification Board with respect to those positions which, prior to July 1, 1928, had been allocated under the original classification act, was unnecessary and instead the appropriation authority must prevail, and also as to all of such positions the automatic provisions of the act of May 28, 1928, are applicable. The placement of such positions in grades P-5 and CAF-12 and the fixing of the salary rates therein as of July 1, 1928, should be accomplished under the act of May 28, 1928, as construed by this office in decision of June 2, 1928, 7 Comp. Gen. 760. The result will be as follows:

But the positions held by Richard W. Cushing and Nelson B. Keeler on June 30, 1928, appear to have been field positions and not subject to the original classification act of 1923, prior to July 1, 1928. This being true, the automatic provisions of the act of May 28, 1928, could not be applied, and the positions were properly for submission to the Personnel Classification Board for original allocations in the same manner as newly created positions. Accordingly the salary of the employees holding these two positions should be paid at a rate in the grade to which heretofore allocated by the Personnel Classification Board under the act of May 28, 1928-subject to the provision that they shall suffer no reduction in compensation by reason of their transfer to the rolls of the commission as of July 1, 1928-unless and until reallocated upon review at the request of the administrative office or upon appeal by the employees. Thus, the salary rate of Richard W. Cushing, who received $3,400 on the field roll prior to July 1, 1928, should be fixed at the rate of $3,800, effective July 1, 1928, the minimum salary rate of new grade P-4. The salary rate. of Nelson B. Keeler, who received $4,200 on the field roll prior to July 1, 1928, may be fixed at the same rate in new grade P-4, under the proviso to the appropriation act for the Federal Power Commission, which provides that the transfers "may be made without reduction in salary."

(A-23678)

RECOVERY OF UNLAWFUL PAYMENTS MADE UNDER THE WORLD WAR ADJUSTED COMPENSATION ACT FROM WAR RISK INSURANCE

In all cases involving unlawful payments under the World War adjusted compensation act resulting from an error in the War Department, and not from an error in judgment or change in construction of statute by the Secretary of War, the unlawful payments are recoverable by application of war-risk insurance payments due the same person to whom the unlawful payments were made.

Comptroller General McCarl to the Director, United States Veterans' Bureau, July 24, 1928:

Consideration has been given to your letter of July 13, 1928, requesting decision of a question presented as follows:

There is pending for adjudication before this bureau the case of Linzy A. Goodwin, XC-25568, which is typical of a number of other cases presenting the general question whether overpayments arising by reason of the actual payments of certain installments of adjusted-service credit made in the past may be recouped by the Veterans' Bureau from sums due under an award of term insurance.

In the Goodwin case the veteran applied while in the service, on November 13, 1917, for $5,000 term insurance in favor of his wife. The first report received from the War Department showed that the veteran died in the service on June 20, 1918, not in line of duty. Nevertheless, an award of death compensation

was approved in favor of the widow in September, 1918, and she was so notified. Later, on January 12, 1925, the War Department rendered another report, indicating death in line of duty, so that the award of death compensation was not disturbed. An award of term insurance in the sum of $28.75 a month was approved in her favor as the designated beneficiary.

The widow made application for the benefits of the World War adjusted compensation act, the War Department certified to the Veterans' Bureau an adjustedservice credit, and in reliance upon this certificate the bureau awarded and paid to the widow eight installments of $35.57 each, a total of $284.56.

On June 21, 1927, The Adjutant General advised the Veterans' Bureau that the certification of the adjusted-service credit to the Veterans' Bureau by the War Department in this case had been made in error, and it was then requested that the certificate be voided and returned to the War Department for cancellation, because it had been determined that the veteran had been separated from the service under conditions other than honorable.

The War Department was requested to review its files, but adhered to its report that the death of the veteran was not in line of duty, and the Judge Advocate General, on October 12, 1927, declined to reopen the case. As a matter of information, it may be stated that the veteran met his death in France when he attempted to alight from a freight train on which he rode without authority.

As to the death compensation phase of the case, since the World War veterans' act, 1924, as amended, does not make a line of duty status a prerequisite of an award of death compensation, it is submitted that the award of such death compensation in this case to the widow need not be disturbed, even though it has now been found that the death of the soldier was not in line of duty. With reference to the benefits under the World War adjusted compensation act, it would appear that the certification of the War Department would be binding upon the Veterans' Bureau and that, as the War Department has withdrawn its certification and voided the certificate for the reason indicated, it would naturally follow that no further payments of benefits under the World War adjusted compensation act may be made.

This presents the question upon which your decision is requested, namely, whether any payments of benefits under the World War adjusted compensation act made in the past and being based upon a voided certificate are subject to recovery, and, if so, whether they may be recouped from any award of warrisk insurance.

The record in the case has been examined, also, to determine the facts in connection with the action of the War Department and the nature of the error in first certifying to the Veterans' Bureau that Linzy A. Goodwin was a "veteran " within the meaning of the World War adjusted compensation act and in certifying an adjusted-service credit in his favor.

It appears that on June 24, 1918, a board of Army officers, convened for the purpose, found that the death of Goodwin was due to his own misconduct and not in line of duty. These findings were approved by the then Secretary of War June 2, 1919. The report of the War Department, dated January 12, 1925, to which you refer, wherein it was indicated that death occurred in line of duty, was made out on a blank form furnished by the Veterans' Bureau for that purpose, and apparently was based on the hospital records in the case, without reference to the approved findings of the board of officers to the contrary. The subsequent action of the War Department in certifying that Goodwin was a "veteran" within the meaning of the World War adjusted compensation act and certifying an adjusted-service credit in his favor to the Veterans' Bureau, on the

basis of which the widow has been paid the sum of $284.56, appar- . ently was likewise made without reference to the approved findings of the board of officers that the soldier died as a result of his own misconduct and not in line of duty, and, therefore, was separated from the service under conditions other than honorable. This apparently is the nature of the error in forwarding certificate in the case to the Veterans' Bureau. At the request of the Veterans' Bureau the War Department reviewed this matter, but refused to reopen the case for the reason that the prior findings as to the cause of death had been approved by a former Secretary of War, citing 2 Op. Atty. Gen. 9.

Under the definition of the term "veteran" appearing in section 2 of the World War adjusted compensation act, dated May 19, 1924, 43 Stat. 121, there is expressly excepted "(1) any individual at any time during such period or thereafter separated from such forces under other than honorable conditions." Section 605 of the same statute, 43 Stat. 130, requires the Secretary of War to certify to the Director, Veterans' Bureau

(2) That the individual upon whom the applicant bases his claim to payment was a veteran;

(4) The amount of the adjusted service credit of the veteran, together with the facts of record in the department upon which such aboye conclusions are based.

In view of the record in the War Department, the certificate of the Secretary of War that Goodwin was a "veteran" within the meaning of this statute and stating an amount of adjusted service credit in his favor, resulted from an administrative error in the War Department, thereafter corrected, and can form no legal basis for the payment to the widow. The certificate of the Secretary of War being unlawfully issued, the widow acquired no vested rights thereunder. This case is to be distinguished from a case where the error of the War Department was one of judgment or involved a change in the construction of the controlling statute where a certificate by the Secretary of War might vest rights in the beneficiary. See 11 Pension Decisions 395; 13 id. 13; 20 id. 191; 2 Comp. Gen. 462, 463; 3 id. 41, 43.

Accordingly, the amount of the unlawful payments to the widow in this case constitutes a sum due the United States, which sum, under the general authority of the Government to offset credits against debits of the same individual, is recoverable from any sum due the widow from the United States unless there is some express provision in the controlling statutes prohibiting the recovery of the amounts. unlawfully paid or exempting the amounts due the widow from debts due the Government under the general rule.

66677°-29- 4

There appears no provision in the World War adjusted compensation act to prohibit recovery of these unlawful payments made thereunder. The widow is receiving war risk insurance on account of the death of her husband. Section 22 of the World War veterans' act of June 7, 1924, 43 Stat. 613, provides as follows:

That the compensation, insurance, and maintenance and support allowance payable under Title II, III, and IV, respectively, shall not be assignable; shall not be subject to the claims of creditors of any person to whom an award is made under Titles II, III, or IV; and shall be exempt from all taxation: Provided, That such compensation, insurance, and maintenance and support allowance shall be subject to any claims which the United States may have, under Titles I, III, IV, and V, against the person on whose account the compensation, insurance, or maintenance and support allowance is payable.

There is nothing in this section having a direct bearing on the present case; that is, the statute neither prohibits nor expressly authorizes the application of insurance to liquidate indebtedness due the United States by reason of unlawful payments under the World War adjusted compensation act. The proviso would relate only to claims against the veteran under the provisions of the World War veterans' act. As stated by the Comptroller of the Treasury in his decision of May 26, 1920, 26 Comp. Dec. 949, 950, to which you refer, the exemption from claims of creditors relates to claims of creditors other than the United States. Section 28 of the statute authorizing the director to waive recovery of payments from any beneficiary under certain conditions would not be for application to unlawful payments made under the provisions of the World War adjusted compensation act.

Answering your question specifically you are advised that in all cases, including the present one, involving unlawful payments made under the World War adjusted compensation act resulting from an erroneous action by the War Department, and not from an error in judgment or change in the construction of the statute by the Secretary of War, the amount of the unlawful payments is recoverable by application of war risk insurance due the same person to whom the unlawful payments were made under the World War adjusted compensation act.

(A-23404)

VETERANS' BUREAU-REVIVAL OF CONVERTED INSURANCE

In the absence of controlling facts to the contrary, the cash surrender of a converted insurance policy of one mentally incompetent may prima facie be considered a normal transaction in the same manner as the reinstatement and conversion is considered, and therefore not necessarily invalid. The cash surrender of a converted policy of insurance is equivalent to a cancellation of the insurance within the meaning of section 305 of the World War veterans' act as amended by the act of July 2, 1928, 44 Stat. 799, which may be considered as applicable to converted insurance as well as term insurance.