Opinion of the Court 114 C. Cls. had been no debentures the market value of the stock would have been much higher and no doubt would have far exceeded 50 percent of the value of the assets transferred. Since the debentures decreased the market value of the stock, they should be deducted from the market value of the assets to determine whether a 50-percent interest was retained. The view we take of the case makes it unnecessary to decide whether or not there should be taken into consideration in valuing the interest remaining in the hands of the transferor all or any part of the 31,500 shares of stock of the Republic Steel Corporation which Steel and Tubes No. 1 received in consideration of the transfer. However, we call attention to the fact that although these shares of stock represent an interest in the property of the Republic Steel Corporation, nevertheless that property consisted in part of the Republic Steel Corporation's interest in the transferred assets. Inasmuch as we are of the opinion that an interest of more than 50 percent remained in the hands of the transferor, the basis for depreciation of these patents was their basis in the hands of the transferor, and the Commissioner of Internal Revenue was not in error in computing the allowance for depreciation on this basis. One further question relating solely to the year 1939 remains. In a claim for refund filed October 19, 1942, plaintiff claimed that it was entitled to a dividends-paid credit for that part of the calendar year 1939 which ended September 30, 1939. It is agreed by the parties that this credit should be allowed and that it amounts to $27,698.67, if it be held that the depreciation is to be computed on the basis of the cost to the transferor. We have so held. Plaintiff is entitled to recover the overpayment of tax and interest on account of the disallowance of this item, together with interest in the amount provided by law. The entry of judgment will be suspended until the filing of a stipulation by the parties, or, in the absence of a stipulation, until the incoming of a report by a commissioner showing the correct amount due computed in accordance with this opinion.* HOWELL, Judge; MADDEN, Judge; WHITAKER, Judge; and JONES, Chief Judge, concur. *See page 733. Syllabus RALPH L. PECK v. THE UNITED STATES [No. 47851. Decided October 3, 1949. Plaintiff's motion for new trial overruled November 7, 1949] On the Proofs Suit for salary; reduction in force by reason of lack of funds; jurisdiction.-Plaintiff, a war service employee in the Interior Department, and a nonveteran, whose services were terminated on May 17, 1947, by order of the Secretary of the Interior, on the ground of a reduction in force for lack of funds, is not entitled to recover where it is shown by the evidence adduced that the termination of plaintiff's services was accomplished in accordance with the provisions of the applicable statute (5 U. S. C. 861) and the Civil Service Regulations promulgated thereunder. United States 39 (4) Same; exercise of discretion by executive officers under the statute not reviewable.-Where it is shown by the evidence that there was reasonable cause for the Department's action in terminating plaintiff's service; and where such action by the authorized executive officers involved the exercise of discretion and judgment; it is held that the decisions made with respect to the termination of plaintiff's service, and his application for reinstatement, are not subject to review by the courts. Courts 449 (1) Same; action not arbitrary nor capricious.-There is, in the instant case, no evidence to establish that the decisions of which plaintiff complains were in any manner arbitrary or capricious. United States 39 (4) Same; nonveteran employees; reemployment.-Where it is shown that it was the policy, as well as the practice, of the Interior Department to treat nonveteran war service employees, whose services had been terminated, as being in the same class with applicants for employment without previous service, and where this policy is not contrary to the statute or the regulations which are silent on this subject; it is held that the establishment of this policy was within the sound discretion of the head of the department and is not subject to review by the Court of Claims. United States 36 Same; veterans' preference not applicable to plaintiff.—Since plaintiff is not a veteran nor a regular Civil Service employee, he cannot assert for his benefit the alleged unfairness of the regulations to veterans. United States 36 Reporter's Statement of the Case The Reporter's statement of the case: Mr. Ralph L. Peck pro se. 114 C. Cls. Mr. Francis X. Daly, with whom was Mr. Assistant Attorney General H. G. Morison, for the defendant. Plaintiff sues to recover the salary of the position of adjudicator, Grade P-3, in the Bureau of Land Management, Department of the Interior, held by him on and prior to May 17, 1947, from the end of his accumulated annual leave on August 1, 1947, following the termination of his services in the reduction of force, to date of judgment. The salary rate of the position was $4,400.40 per annum. The question presented is whether plaintiff's services were legally terminated on May 1, 1947, effective May 17, 1947, with terminal pay. The court, having made the foregoing introductory statement, entered special findings of fact as follows: 1. On April 25, 1947, the House of Representatives passed a bill (H. R. 3123, 80th Congress, 1st session) making appropriations for the Department of the Interior for the fiscal year ending June 30, 1948. The amount appropriated thereby was substantially less than the amount that had been requested by the President in the Budget of the United States, 1948, and also substantially less than the amount that had been appropriated for the department for the fiscal year ending June 30, 1947.1 2. On April 28, 1947, the Secretary of the Interior addressed two memoranda to the heads of all bureaus and offices in the department, as follows: In view of the action taken by the House on the Department of the Interior appropriation bill for the fiscal year 1948, it seems clear that substantial reductions in personnel will have to be made throughout the Department which will in any event exceed the number of war service and temporary employees on the rolls. It is also necessary to effect dismissals at once in order to finance terminal leave costs. Considerable thought the bill as passed by the House is 38 percent under the appropriations for the current fiscal year, and • 45 percent under the budget estimates for the fiscal year 1948." From Senate Report No. 278, 80th Cong., 1st sess. 551 Reporter's Statement of the Case has been given to the process of accomplishing the dismissals promptly. Consistent with the policy of the Federal Government and regulations of the Civil Service Commission it has been decided that as a first step in accomplishing these dismissals in the Washington metropolitan area the respective bureaus and offices shall give a 30-day notice of separation to all war service and temporary employees in retention groups below B-1 (B-1 covers war service employees with veteran preference serving under appointments not limited to one year or less), such separation to be effective at the close of May 31. So far as possible employees shall be continued in an active duty status for the 30-day period, but if the condition of funds will not permit such continuation then they shall be placed on annual leave for such part of the period as may be necessary. So far as possible carrying employees in a nonpay status during the notice period shall be avoided. This program shall apply uniformly except where a position held by such a war service or temporary employee must be continued and it is shown that a suitable replacement with higher retention preference is not available in the Department in the Washington metropolitan area. Report of such exceptions shall be made immediately to the Director of Personnel. This is a first step in the reduction process and the bureaus and offices are responsible for planning and executing such other steps as the exigencies of the situation require, both in Washington and the field. By earlier memorandum you were called upon to separate war service and temporary employees in retention groups below B-1 as a first step in accomplishing necessary reductions in force in the Washington metropolitan area. The action taken by the House of Representatives on the Department of the Interior appropriation bill for the fiscal year 1948 will obviously require reductions in the force in many parts of the Department that will not be met by the separation of war service and temporary employees. I know that you are already considering ways and means of best meeting the situation but I think that you should work out immediately very definite plans based on the House action to determine where and what cuts will have to be made. These plans should be complete and detailed covering each position affected. They should be announced to the employees concerned as soon as possible. Reporter's Statement of the Case 114 C. Cls. In effecting such further reductions in force as are necessary, selections for separation will be made in each bureau or competitive area in accordance with the retention preference regulations of the Civil Service Commission, and the following personnel policies and procedures will govern so far as practicable: 1. Where it is determined that the present appropriation will permit carrying employees and the discharge of the terminal leave obligations out of the 1947 appropriations, the employees reached for separation will be given at least 30 days' notice, such separation from active duty to be effective June 30, 1947. 2. Where the present appropriation is not sufficient to pay terminal leave at the close of June 30, employees will be given a 30-day notice of separation, such notice to expire at the close of May 31, June 14, or such other date in this fiscal year as funds permit. So far as possible employees shall be continued in an active duty status for the 30-day period, but if the condition of funds will not permit such continuation then they shall be placed on annual leave for such part of the period as may be necessary. So far as possible carrying employees in a nonpay status during the notice period shall be avoided. * 3. On May 1, 1947, plaintiff and 75 other employees 2 in the Washington office of the Bureau of Land Management were summoned to the office of the Director of the Bureau, where each was handed a notice of impending separation. The notices were identical except for the name and retention preference classification of the individual employee. The notice handed to plaintiff was addressed to "Mr. Ralph L. Peck (B-2)" and contained the following advice: 3 Because of action taken by the House Appropriations Committee on the 1948 Interior Appropriation Bill, the Bureau of Land Management is forced to reduce its present staff. After careful review of the operating situation, it has been determined that positions in your competitive level must be eliminated. As a result of reduction in force conducted in positions comparable to yours we find that your active service must be terminated The 76 employees comprised approximately 22 percent of the staff employed in the Washington office. The retention preference regulations for use in reductions in force which were in effect on May 1, 1947, were published in 12 F. R. 2819, at p. 2849. |