John J. Costello v. United States of America, Floyd E. Stevens v. United States

Before 1963, the compensation of retired military personnel was calculated with reference to the pay received by those on active duty; when the active duty pay scales increased or decreased, retirement pay was correspondingly recomputed. In 1963, Congress changed the statute so that adjustment of retirement compensation was tied to the cost of living index, rather than to the active duty pay scales. Appellants are military personnel who retired before the 1963 statutory changes went into effect. They brought suit under the Tucker Act, 28 U.S.C. § 1346 (a)(2), claiming that they had suffered a monetary loss under the 1963 computation system and that the 1963 Act denies them their property without due process in violation of the fifth amendment. The district court dismissed the complaints for failure to state a claim, finding that appellants did not have any vested right which was denied by the government. On appeal, appellants renew their contentions made below that they have a vested right to recompute their retirement pay in accordance with the law in effect at the time they retired and that the 1963 Act retroactively deprived them of that vested right.

As to vested rights, the…