allowance, they are not entitled to such allowance while entitled to per diem. These general subsistence allowances provisions, however, have no application to cadets and midshipmen at the service academies, they being assimilated for subsistence allowance purposes to a "midshipman in the Navy."

Midshipmen in the Navy were first provided for in the act of March 27, 1794, 1 Stat. 350, and were denominated warrant officers. By the act of July 16, 1862, 12 Stat. 583, they were made ninth in grade in the active list of line officers of the Navy. The same act declared that students at the Naval Academy should be styled midshipmen. Section 12 of the act of July 15, 1870, 16 Stat. 321, later embodied in section 1512 of the Revised Statutes, changed the title of Naval Academy students to cadet-midshipmen. Subsequently, the act of August 5, 1882, 22 Stat. 284, changed their title to naval cadets. Section 1362 of the Revised Statutes named the active list of officers of the Navy and made midshipmen, which then included academy students, eleventh of the list of officers. The naval appropriation act of March 3, 1883, 22 Stat. 472, however, changed the title of midshipmen to ensign thereby discontinuing the grade of midshipman in the Navy and such grade has not since been included in the statutory listing of officers. The act of July 1, 1902, 32 Stat. 686, 34 U.S.C. 1031 (1952 Ed.), changed the title of Naval Academy students from naval cadet to midshipman. Thus, since the act of March 3, 1883, there has been no such rank as midshipman in the Navy except as it may refer to students at the Naval Academy.

Section 1577 of the Revised Statutes provided that midshipmen in the Navy should be entitled to one ration, or to commutation therefor. This provision was in substance the same as that contained in section 1578 of the Revised Statutes there providing the ration for other officers. The composition of this ration and its commuted value in money were specifically fixed by statute. The ration was not then authorized for enlisted men. Following the change of the title of Naval Academy students from midshipman to naval cadet, section 1577 of the Revised Statutes was superseded by the act of January 30, 1885, 23 Stat. 291, providing that enlisted men, boys and naval cadets shall be allowed a ration, or commutation thereof in money, under such limitations and regulations as the Secretary of the Navy may prescribe. The act of July 1, 1902, supra, amended such provisions to change the term "naval cadet" to "midshipman" to make it agree with the change which it had effected in the title of Naval Academy students. Section 1578 of the Revised Statutes providing the ration for officers of the Navy was repealed by the Navy Personnel Act of 1899 and section 13 of that act, 30 Stat. 1007, 34 U.S.C. 865 (1952 Ed.), assimilated the Navy officers, other than midshipmen in the Navy (which grade then no longer existed), to officers of the Army

for payment and allowance purposes. Navy officers accordingly became entitled to the daily money subsistence allowance authorized for Army officers but Naval Academy students did not and, while subsequent laws have converted enlisted men from a ration to a subsistence allowance basis (see the note to 10 U.S.C. 6081 (1958 Ed.)), the ration provisions for students at the Naval Academy are still substantially the same as those contained in the former section 1577 of the Revised Statutes.

The ration authorized for a midshipman in the Navy was not subsistence in kind and, hence, midshipmen at the Naval Academy are not and, at least since the enactment of section 1577 of the Revised Statutes, have not been subsisted in kind; they are and have been authorized to receive the statutory ration allowance or the commuted value thereof in money. Such commuted value when fixed in the appropriation acts usually was larger than the commuted value of the daily subsistence in kind authorized for enlisted men and compared favorably with the daily monetary subsistence allowance authorized for officers. For example, the daily subsistence allowance provided by section 5 of the Pay Readjustment Act of 1942, 56 Stat. 361, 37 U.S.C. 105 (1946 Ed.), for officers was 70 cents and the commuted values of the daily subsistence allowance of enlisted men and ration allowance authorized for midshipmen by the 1943 Navy Appropriation Act approved February 7, 1942 (56 Stat. at page 62), were 55 cents and 80 cents, respectively.

In the light of such historical background, the conclusion appears required that the ration presently provided for midshipmen is in all respects an allowance and that they are entitled to receive without reduction the full amount of the commuted value of the ration when they are not furnished the ration itself. Cadets at the other three service academies have similar entitlements.

In decision of May 19, 1933, A-49018, it was held that unlike the commutation of subsistence for enlisted men (considered in 12 Comp. Gen. 620), the commuted ration as fixed in the appropriation acts at that time for midshipmen of the Naval Academy was not primarily a ration furnished in kind but was an allowance. A similar result was reached in 13 Comp. Gen. 41, involving the ration allowance of cadets at the United States Military Academy. Being entitled to credit for the commuted value of the ration on an allowance basis, and being entitled under the provisions of paragraph 044785, Navy Comptroller Manual, to one ration or commutation thereof at all times, the midshipmen's situation with respect to entitlement to a basic allowance for subsistence more nearly approaches that of officers than enlisted personnel.

While by virtue of the provisions of Executive Order No. 10119 enlisted men in receipt of per diem are regarded as being subsisted

at Government expense for purposes of their subsistence allowance, there are no similar statutory or regulatory provisions applicable to midshipmen and cadets and it seems apparent that the per diem allowance authorized for travel and temporary duty may not be viewed as being the ration allowance authorized for midshipmen and cadets. Accordingly, the question presented is answered in the affirmative. If it is the opinion of the military departments that cadets and midshipmen should be subsisted on the same basis as enlisted personnel, it is suggested that consideration be given to repealing the present provisions for their rations and amending the provisions of 37 U.S.C. 402(b) to include them.

[B-151860]

Maritime Matters Mortgage Insurance-Refinancing Prohibition A proposal to modify a vessel mortgage that was insured under Title X of the Merchant Marine Act, 1936, 46 U.S.C. 1271, et seq., containing a prohibition against refinancing existing mortgages, to permit reduced payments over a longer period of time which proposal will not involve a new mortgage but will improve the financial position of the Government is not a refinancing transaction within the prohibition but is merely the rescheduling of payments under the original mortgage and, therefore, under the authority in section 207 of the act, 46 U.S.C. 1117, requiring the Martime Administrator to take necessary steps to protect the collateral for mortgage debts, the proposal is properly for adoption. To the Administrator, Maritime Administration, July 30, 1963:

Reference is made to your letter of June 21, 1963, requesting to be advised whether we concur in the view of your Administration that you have legal authority under Title XI of the Merchant Marine Act, 1936, 46 U.S.C. 1271, et seq., as amended, to continue to insure an existing mortgage on the S.S. Matsonia in the event such mortgage is modified to provide for an extension of its present maturity date of December 31, 1966, to May 9, 1969.

In brief, the circumstances which give rise to your question are understood to be as follows:

The S.S. Matsonia, along with a sister ship the S.S. Lurline, has been operated by the Matson Navigation Company in the West CoastHawaiian service. The operation is reported to be no longer profitable, at least with two ships. In view thereof, the Company has proposed the possibility of a sale of the Lurline and retention of the Matsonia in the existing service, provided, however, the existing mortgage indebtedness on the Matsonia can be rescheduled to provide for reduced payments of the existing principal indebtedness over a longer period of time with the balance payable at maturity. In the event this cannot be accomplished, it is anticipated that the operator will surrender the Matsonia and continue the existing service with the Lurline.

The present total principal mortgage indebtedness outstanding on the Matsonia is approximately $7,185,000, of which about $1,027,000 is under a first mortgage held by your Administration, and $6,158,000

is under a second mortgage held by the Crocker-Anglo National Bank and others, which is insured by your Administration. Both mortgages are "sole recourse", which means that the only security therefor is the vessel itself. The Matsonia at the present time is reported to be worth substantially less than the combined balances of the mortgages, and its surrender by the operator would result in an immediate considerable loss to your Administration. Provided the second mortgage can be extended to May 9, 1969, it is understood that the Matson Company is willing, notwithstanding the "sole recourse" provision, to pay $1,800,000 of the final payment due under the mortgage. In the light of this situation, therefore, it would appear that the financial position of the Government with respect to the Matsonia would be substantially improved should payments on the second mortgage be extended as proposed. You also advise that one of the features of the proposal, as you understand it, may be the payment of a deferral fee on the indebtedness payable after the present maturity date of the mortgage which, in essence, would amount to consideration for the rescheduling of payments required for a loan which already exists and does not indicate, or serve to create, a new loan.

The doubt as to your authority to agree to Matson's proposal appears to arise from the provisions of section 1106 of the act, 46 U.S.C. 1276, which reads as follows:

No provision of this title shall be construed to authorize the Secretary of Commerce to insure a mortgage securing any loan or advance made prior to the enactment of this title, and no mortgage shall be insured for refinancing in whole or in part any existing mortgage except- [Italics supplied.]

There then follow four exceptions which are (1) where a substantial part of the new mortgage is applied to new construction, reconditioning or reconstruction of one or more of the mortgaged vessels; (2) where the new mortgage secures the amount of an outstanding insured mortgage on a vessel plus the amount of an additional loan for reconditioning or reconstructing the mortgage vessel; (3) where the Secretary insures a new mortgage for the purpose of refunding an insured mortgage; and (4) where the mortgage is given to finance the purchase of vessels acquired by the insurance fund and to secure loans for reconditioning and reconstructing such vessels. In addition, there are other conditions applicable to the exceptions among which is the condition here applicable to exceptions (1), (2), and (3) that the new mortgage not extend beyond the maturity of the existing mortgage.

In view of the above, therefore, and since in your opinion the proposal in question appears not to fall within any of the exceptions to section 1106 of the act, the question is whether, because of the limitation of section 1106 that "no mortgage shall be insured for refinancing in whole or in part any existing mortgage indebtedness" except as therein stated, the Secretary would be precluded from continuing the

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insurance of a mortgage under a rescheduling of payments. That is to say, does the rescheduling of the payment of an existing indebtedness amount to a refinancing within the meaning of the act?

As originally enacted, section 1106 did not include the abovereferred-to exception (3), the so-called "refunding" exception. The Committee Report (H. Rept. No. 2168, 75th Cong., 3d Sess., April 20, 1938, pp. 28-29) refers to the establishment of a revolving fund of $1,000,000, the limit of $200,000,000 on outstanding insurance, and then states:

To the extent of $20,000,000 mortgages securing existing loans or advances may be insured if coupled with new loans or advances in a substantial amount of the total indebtedness. Otherwise, no authority is given to insure mortgages securing any loan or advance made prior to enactment of this title or any refinancing thereof.

The report thereafter continues by stating that the insurance provisions of Title XI follow substantially similar provisions of the National Housing Act as recently amended, 12 U.S.C. 1701, et seq., and the five sections preceding section 1106 and the two following sections are specifically mentioned as being substantially the same as similar provisions of the National Housing Act. Section 1106 is then specifically mentioned, together with the $20,000,000 limitation on existing indebtedness. In a paragraph dealing specifically with section 1106, the report calls attention to the $20,000,000 limitation on existing indebtedness, and states that the section provides for insurance of “mortgages securing loans in addition to these secured by mortgages theretofore existing and insured." The report continues:

No such "bailing out" limitations are imposed under the National Housing Act. However, the proposed legislation is experimental and for that reason the committee has thought it wise to impose these limitations and other restrictions not found in that act.

You state that in your opinion if the Secretary of Commerce has insured a mortgage under Title XI, and if the action proposed is merely the rescheduling of payments of existing indebtedness under such mortgage and does not involve the making of a new mortgage and a new loan in whole or in part, and if the rescheduled mortgage payments, like the original mortgage payments, are satisfactory to the Secretary and fall within the specified eligibility requirements of Title XI, such action would not be prohibited by section 1106 but would be justified under the authority granted for the administration of Title XI. We concur in this view for the following reasons:

As observed by you, other than the above references to the Congressional files, a thorough review of the legislative history fails to disclose any conclusive.evidence as to whether the quoted provisions of section 1106 were intended to apply in a situation of this kind. Under the circumstances, therefore, we believe the question can only be resolved by consideration of the language of the statute itself, and by placing on that language the interpretation which, in our view,