B-93924, JULY 26, 1950, 30 COMP. GEN. 28

B-93924, JULY 26, 1950, 30 COMP. GEN. 28

BUILDING, ETC., PERMIT FEES - ASSESSMENTS BY STATE OR LOCAL AUTHORITIES IN CONNECTION WITH GOVERNMENT HOSPITAL CONSTRUCTION; RIGHT OF GOVERNMENT TO SUE FOR RECOVERY OF FEES PAID BY CONTRACTOR THE USE OF LAND ACQUIRED BY THE UNITED STATES WITH THE CONSENT OF A STATE IS NOT SUBJECT TO STATE OR LOCAL BUILDING LAWS OR ORDINANCES, AND WHERE A GOVERNMENT CONTRACTOR, IN CONNECTION WITH THE CONSTRUCTION OF A VETERANS HOSPITAL ON SUCH LAND, WAS REQUIRED TO PAY BUILDING AND OTHER PERMIT FEES UNDER A STATUTE PROVIDING FOR THE PAYMENT OF SAID FEES BY THE OWNERS OF THE PROPERTY INVOLVED, THE CONTRACTOR IN MAKING SUCH PAYMENTS WAS ACTING SOLELY AS THE AGENT OF THE GOVERNMENT AND THE GOVERNMENT MAY SUE AND BE RECOGNIZED AS THE PARTY IN INTEREST IN AN ACTION TO RECOVER THE FEES SO PAID.

ACTING COMPTROLLER GENERAL YATES TO THE ADMINISTRATOR OF VETERANS AFFAIRS, JULY 26, 1950:

REFERENCE IS MADE TO LETTER OF MARCH 21, 1950, FROM THE DEPUTY ADMINISTRATOR, REQUESTING A DECISION AS TO THE LEGALITY OF CHARGES FOR BUILDING AND OTHER PERMIT FEES CLAIMED BY THE CITY OF BIRMINGHAM, ALABAMA, IN CONNECTION WITH CONSTRUCTION OF THE BIRMINGHAM VETERANS ADMINISTRATION HOSPITAL, AND ALSO REQUESTING TO BE ADVISED AS TO THE ACTION, IF ANY, WHICH IT IS BELIEVED SHOULD BE TAKEN TO PROTECT THE FINANCIAL INTERESTS OF THE GOVERNMENT.

IT IS STATED THAT THE HOSPITAL IN QUESTION IS PRESENTLY UNDER CONSTRUCTION PURSUANT TO CONTRACT NO. DA-01-076-ENG-136, UNDER THE SUPERVISION OF THE UNITED STATES ARMY ENGINEERS; THAT THE CITY HAS REQUIRED THE CONTRACTOR TO PAY CERTAIN FEES, INCLUDING A BUILDING PERMIT FEE OF $28,618.80; THAT IT IS THE CONCLUSION OF YOUR AGENCY THAT SUCH FEES ARE NOT LEGALLY PAYABLE FROM APPROPRIATED FUNDS; BUT THAT THE OFFICE OF THE CHIEF OF ENGINEERS, IN REPLY TO YOUR REQUEST THAT ACTION BE TAKEN LOOKING TOWARD THE REFUNDING OF SUCH FEES TO THE CONTRACTOR, HAS TAKEN THE POSITION THAT SUCH ACTION WOULD BE THE SOLE CONCERN OF THE CONTRACTOR AND THAT NO ACTION MAY BE TAKEN BY THE GOVERNMENT.

IT HAS BEEN ASCERTAINED INFORMALLY FROM YOUR OFFICE THAT THE SITE ON WHICH THE HOSPITAL IS BEING CONSTRUCTED WAS ACQUIRED BY THE UNITED STATES BY GENERAL WARRANTY DEED FROM THE UNIVERSITY OF ALABAMA DATED MARCH 24, 1947. UPON APPLICATION IN WRITING THE GOVERNOR OF ALABAMA, BY DEED OF CESSION DATED JANUARY 12, 1949, AND RECORDED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF ALABAMA, CEDED TO THE UNITED STATES "EXCLUSIVE JURISDICTION" OVER THE LAND IN QUESTION, FOR USE IN CONNECTION WITH A MILITARY RESERVATION, DESIGNATED AS A VETERANS ADMINISTRATION HOSPITAL; AND UNDER DATE OF JANUARY 28, 1949, YOU FORMALLY ACCEPTED JURISDICTION ON BEHALF OF THE UNITED STATES. THE CESSION OF JURISDICTION WAS STATED TO BE MADE UNDER THE PROVISIONS OF SECTIONS 18 AND 19, TITLE 59, OFFICIAL CODE OF ALABAMA, 1940, AND IT APPEARS THAT THE PROCEEDINGS WERE IN CONFORMITY WITH THOSE PROVISIONS.

IN AND BY THE DEED OF CESSION THERE WAS RESERVED TO THE STATE OF ALABAMA THE RIGHT TO EXECUTE CIVIL OR CRIMINAL PROCESS OF THE STATE ON THE CEDED LAND, AND THE RIGHT TO TAX PERSONS RESIDING OR LOCATED THEREON, THE PROPERTY THEREON OF PERSONS, AND THE EXERCISE BY ANY PERSONS OF RIGHTS, PRIVILEGES, AND FRANCHISES THEREON.

SUCH RESERVATIONS, TO THE EXTENT THAT THEY DO NOT INTERFERE WITH THE FULL AND FREE USE OF THE PROPERTY OF THE UNITED STATES FOR THE PURPOSES TO WHICH IT IS DEVOTED, HAVE BEEN RECOGNIZED AS NOT PROHIBITED BY ARTICLE 1, SECTION 8, CLAUSE 17, OF THE CONSTITUTION. JAMES V. DRAVO CONTRACTING O., 302 U.S. 134, 114 A.L.R. 318. IT HAS BEEN SQUARELY HELD, HOWEVER, THAT THE USE OF LAND ACQUIRED BY THE UNITED STATES, WITH THE CONSENT OF A STATE, MAY NOT BE SUBJECTED TO STATE OR LOCAL BUILDING LAWS OR ORDINANCES AND THAT FEES OR CHARGES THEREBY PRESCRIBED AS INCIDENT TO THEIR ENFORCEMENT MAY NOT BE IMPOSED WITH RESPECT TO BUILDING OPERATIONS OF THE UNITED STATES. OKLAHOMA CITY V. SANDERS, 94 F. (2) 323, 115 A.L.R. 363; SEE ALSO UNITED STATES V. CITY OF CHESTER, 144 F. (2) 415.

SINCE THE PERMIT FEES CHARGED BY THE CITY OF BIRMINGHAM, UNDER THE AUTHORITY OF TITLE 37, SECTION 436, OF THE CODE OF ALABAMA, APPEAR TO BE RELATED SOLELY TO THE ENFORCEMENT OF THE BUILDING REGULATIONS THEREBY AUTHORIZED, THEY MAY NOT PROPERLY BE REGARDED AS TAXES AS TO WHICH JURISDICTION WAS RESERVED IN THE STATE BY THE DEED OF CESSION REFERRED TO. IT IS ACCORDINGLY CONCLUDED THAT THERE WAS AND IS NO LEGAL BASIS FOR THE COLLECTION OF SUCH FEES.

IN VIEW OF THE FACT THAT THE STATUTE REFERRED TO PROVIDES THAT THERE MAY BE EXACTED, IN CONNECTION WITH THE BUILDING PERMITS AUTHORIZED TO BE REQUIRED,"FEES TO BE PAID BY THE OWNERS OF THE PROPERTY INSPECTED," AND THE CITY ORDINANCE REQUIRES THE APPLICATION TO BE SIGNED "BY THE OWNER OR HIS AUTHORIZED AGENT" ( BUILDING CODE OF THE CITY OF BIRMINGHAM, SEC. 105.2), IT SEEMS OBVIOUS THAT THE CONTRACTOR IN OBTAINING THE PERMIT AND PAYING THE REQUIRED FEE THEREFOR WAS ACTING SOLELY AS THE AGENT OF THE GOVERNMENT. THUS, THE SITUATION IS NOT THE ONE BEFORE THE SUPREME COURT IN UNITED STATES V. STANDARD RICE CO., 323 U.S. 106, WHERE THE CONTRACTOR BECAME RELIEVED, AFTER THE EXECUTION OF A LUMP-SUM CONTRACT, OF AN OBLIGATION IMPOSED BY LAW UPON HIM WITH RESPECT TO AN ITEM OF COST FIGURED IN HIS BID. HERE, THE OBLIGATION--- IF THERE WERE ONE--- WOULD BE THAT OF THE UNITED STATES, NOT THE CONTRACTOR. THE CONTRACTOR KNEW, THE CITY OF BIRMINGHAM KNEW, AND THE GOVERNMENT REPRESENTATIVES KNEW THAT THE PAYMENT OF THE BUILDING PERMIT FEES, THOUGH MADE PHYSICALLY BY THE CONTRACTOR, WAS MADE FOR AND ON ACCOUNT OF THE GOVERNMENT OF THE UNITED STATES. IN OTHER WORDS, THAT KNOWLEDGE PERVADED, FIRST, THE PRECONTRACT NEGOTIATIONS TO HAVE THE FEES WAIVED; SECOND, THE PRICES BID FOR THE WORK; AND FINALLY, THE ACTUAL PAYMENT OF THE FEES TO THE CITY BY THE CONTRACTOR.

UNDER THOSE CIRCUMSTANCES, IT IS CONCLUDED THAT THE GOVERNMENT HAS A LEGAL RIGHT TO SUE AND BE RECOGNIZED AS THE PARTY IN INTEREST WITH RESPECT TO RECOVERY OF THE BUILDING PERMIT FEES.

ACCORDINGLY, I AM TODAY ISSUING INSTRUCTIONS TO THE CLAIMS DIVISION OF THIS OFFICE OF STATE FORTHWITH A DEBT SETTLEMENT AGAINST THE CITY OF BIRMINGHAM FOR THE AMOUNT OF THE FEES PAID--- $28,618.80 FOR BUILDING PERMIT, $857.25 FOR PLUMBING PERMIT, AND $1 FOR BLASTING PERMIT--- AND WILL PROMPTLY TRANSMIT THE SAME TO THE ATTORNEY GENERAL WITH MY RECOMMENDATION THAT APPROPRIATE ACTION BE TAKEN THEREON.

A COPY OF THIS LETTER IS ALSO BEING TRANSMITTED TO THE DEPARTMENT OF THE ARMY, AS THE CONTRACTING AGENCY.