Shortly before Christmas in 1979, D.C. police officer Vernon Henderson had worked his last shift before a planned trip to Alabama to visit his ailing grandmother. But as he walked out of the station house on Georgia Avenue NW, fellow officers told him he was under arrest.

They charged Henderson with grand larceny for allegedly taking $106.43 that had been dusted with "thief powder" and placed in a woman's handbag that Henderson had been dispatched to find. Police set up the ruse to determine if Henderson was a thief.

As it turned out, Henderson had the 43 cents -- he says he pocketed the loose change for safekeeping while examining the purse and forgot about it -- but he had not found the $106 in marked bills. The currency was still in the purse. A D.C. Superior Court judge threw out the grand larceny charge for lack of evidence.

In the aftermath, however, Henderson, now 37, was suspended for 18 months without pay and denied a promotion. He was brought before a police trial board and convicted of two minor offenses, failure to properly log the contents of the purse and failure to return the 43 cents, and he was fined $450.

Henderson thought he had been wronged, and now, 5 1/2 years later, he has won a measure of vindication. The D.C. Court of Appeals, describing the saga as "less than the finest hour" for the police department, yesterday said the city government and several top police officials, including former chief Burtell M. Jefferson and current Chief Maurice T. Turner, owe Henderson damages and back pay that could total $60,000.

With the 3-to-0 decision in his favor, Henderson said, "I feel real nice after all these years. I needed to hear from somebody in authority that I wasn't guilty. I never felt guilty of anything. To some degree, I feel relieved that the same system that locked me up has now vindicated me.

"The people I've worked with for years were extremely supportive of me," he said, "but those who were assigned to the 4th police district where Henderson works as a training officer while I was suspended have been reluctant to get close. They always wondered in the back of their minds whether I was guilty."

The 39-page decision, written by Judge Theodore R. Newman Jr. and concurred in by Chief Judge William C. Pryor and Judge John A. Terry, said evidence in the case "discloses that the District of Columbia and police officials had to be brought kicking and screaming to the bar of justice."

Police and city officials declined to comment on yesterday's ruling.

Henderson came under initial suspicion after a D.C. resident reported in March 1979 that her sons had given a handbag that they had found to a police officer in scout car 129. Henderson turned out to be the officer. But when police could not find the purse that the boys reported turning in, they concocted the scheme to see whether Henderson would take $106.43 planted in a purse he was dispatched to find.

After his suspension and trial board hearing, Henderson was reinstated to the police department by Jefferson in July 1981, but Henderson pursued his suit.

A Superior Court jury in April 1982 awarded Henderson "$30,000 plus court costs" in damages against the city, $200 each against Jefferson, Turner, Assistant Chief Marty Tapscott and Inspector Horatius W. Wilson, who is now retired, and $100 against three other officers.

Henderson contended that the jury intended for him to receive back pay, and all 12 jurors agreed in affidavits that that was their intention.

But Superior Court Judge Sylvia Bacon denied Henderson's request and trimmed the legal fees sought by Henderson's attorneys.

The appellate court not only upheld the damages the jury awarded to Henderson but also ordered Bacon to award him back pay and benefits and to raise the attorneys' fees.

Independent of the court case, Henderson was promoted to master patrol officer last fall, the rank he was scheduled to receive when he encountered the purse with the marked money.