Sergeant First Class Gracey was a member of Service Battery, 38th Field Artillery Battalion, 2nd Infantry Division. He was taken Prisoner of War while fighting the enemy near Kunu-ri, North Korea, on 30 November 1950 and died while a prisoner on 11 March 1951. His remains were not recovered. His name is inscribed on the Courts of the Missing at the Honolulu Memorial.

For his leadership and valor, Sergeant First Class Gracey was awarded the Bronze Star Medal, the Prisoner of War Medal, the Korean Service Medal, the United Nations Service Medal, the National Defense Service Medal, the Korean Presidential Unit Citation and the Republic of Korea War Service Medal.