Legal Aspects of Konappropriated Fund Activities
Military Law Review › Nbr. 1, September 1958
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Legal Aspects of Konappropriated Fund Activities
Anyone connected with the Armed Forces far any period of time is at least superficially acquainted with the "nonappropriated fund activity." The post exchange, post welfare fund, officers' and NCOs' clubs, special service funds and the like are familiar activities on a military reservation. However, whenever dealings of a legal nature with nonappropriated fund activities become necessary, the seemingly commonplace image of these activities blurs considerably. What is their derivation? What is their liability to the Federal Gorernment, far Federal taxes, to state governments, to employees, to third persons? What is the nature of the liability of Army personnel to such activities? For what purposes may nonappropriated funds he expended? This paper will attempt to answer these questions, so far as possible, or at least point out the basic premises necesaary to an informed legal conclusion.
A word of caution-8 will he developed, nonappropriated fund activities are creatures of regulations. Therefore, a lawyer with a problem relating to such an activity would be well advised to initially read Army Regulation8 230-5 through 230-117 providing in detail for the administration and supervision of nonappropriated fund activities at Army installations and activities. The principal regulation setting forth the general policies to be applied in the administration of nonappropriated funds is Army Regulations 230-5. I. HISTORYNonappropriated funds as we know them today did not exist at the time of the Revolutionary War when OUT Armed Forces first came into existence. Howerer, the necessity for some type of establishment to fulfill the needs of the members of our newly formed Army in regard to their recreation, welfare and morale * This article vas adapted from B thesis presented to the Fourth Advanced Class, The Judge Advocate General's School, Chsrlottesville, Va. The opinions and eanclusions eapreiaed herein are those of the author and do not neees~8rily rapresent the viewe of The Judge Advocate Gem eral'i Sehaal or any other governmental a~eney. *' Member, Staff and Paeulty, The Judge .4dvoeate General's School, Chsrlottesville, Va. *eo 1,668 MILITARY L.ZW REVIEW was recognized by the founding fathers of our countr:-. Recognition and in fact authorization of an organization was contained in the American Articles of War of 1IlV n-hich provided for sutlers whose mission was to provide for the individual personal needs of service personnel. Although sutlers were not established as a component part of the Army, Congress placed upon commanding offi. cers the responsibility of seeing that the needs of the troops were satisfied and that their rights were protected.* This reiDanaibility has been carried over and today is specifically set out in Armyregulation^.^ The sutlers, itinerant merchants who provided many of the services of the present day post exchange, could be considered as legalized camp followers, possessing concessions from the Army which authorized them to sell liquor, subsistance necessities, and other incidentals to soldiers in the field. Since the Rules and Articles of War of 1806* provided in Article 60, Section I that: "Ali suttlers and retainers to the camp, and all persons whatsoever, serving with the armies of the United States in the fieid, though not enlisted soldiers, are to be subject to orders, according to the rules and discipline of war."it is apparent that numerous orders and regulations were promui-gated both by the War Department and commanding officers in addition to those contained in the Rules and Articles of War. The principal rule contained in the Articles of War pertaining to sutlers was one applying to hours of operation. It forbad such establishments from being open or making sales during hours of religious services or between nine in the evening and reveille the following morning.z Article 41 of The General Regulations for the Army of 1821, ahich were approved by Congress,e contained specific regulations concerning sutlers. These regulations in general provided that each post or regiment was authorized the service8 of one sutler. He was authorized to sell on credit and allowed to appear at the pay table where, when the indebtedness was acknowledged, the Arts. XXXII, LXIV, LXV, and LXVI, Rules and Arts. of War 1775, App. IX, Winthrop, Military Law and Precedents 953 (2d ed., 1920reprint1* Ibid. a Pars. 47, 48, AR 210-10, 8 Jun 1954. as changed. d Aet a i 10 Apr 1806, 2 Stat. 359. ' See. VIII, Apt. 1, Rules and Arts. ai War 1776, Military Lam of the United States 1176-1863, P. 67. ' Act of 2 Mar 1821, S Stat. 615. *oo ,,em NONAPPROPRIATED FUNDS paymaster was authorized to deduct the amount from the soldier's pay and turn this amount over directly to the sutler. For these and other privileges the sutler was assessed a monthly charge of not less than 100 nor more than 16$ per man baaed upon the aver-age number of officers and enlisted men assigned to the unit during ...See the full content of this document
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