A-10726, SEPTEMBER 5, 1925, 5 COMP. GEN. 172

A-10726: Sep 5, 1925

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TERMINATION - VETERANS' BUREAU WHERE AN AGREEMENT FOR THE RENTAL OF PREMISES BY THE GOVERNMENT FOR A TERM OF FIVE YEARS IS CANCELED AT THE END OF A FISCAL YEAR WITH THE UNDERSTANDING THAT THE GOVERNMENT IS TO OCCUPY THE PREMISES ONLY FOR A SHORT PERIOD THEREAFTER. THE HOLDING OVER IS FROM MONTH TO MONTH. THERE IS NO LIABILITY ON THE GOVERNMENT FOR RENT FOR ANY PERIOD SUBSEQUENT TO THE END OF THE MONTH IN WHICH THE PREMISES ARE VACATED. WHERE AN AGREEMENT FOR THE RENTAL OF PREMISES BY THE GOVERNMENT FOR A TERM OF FIVE YEARS IS CANCELED AT THE END OF A FISCAL YEAR. THE GOVERNMENT IS NOT LIABLE FOR THE COST OF IMPROVEMENTS. WHICH UNDER THE AGREEMENT WERE TO BE MADE BY THE LESSOR. WHEREIN WAS ALLOWED $22.

A-10726, SEPTEMBER 5, 1925, 5 COMP. GEN. 172

LEASES, TERMINATION - VETERANS' BUREAU WHERE AN AGREEMENT FOR THE RENTAL OF PREMISES BY THE GOVERNMENT FOR A TERM OF FIVE YEARS IS CANCELED AT THE END OF A FISCAL YEAR WITH THE UNDERSTANDING THAT THE GOVERNMENT IS TO OCCUPY THE PREMISES ONLY FOR A SHORT PERIOD THEREAFTER, UNTIL OTHER QUARTERS BECOME AVAILABLE, THE HOLDING OVER IS FROM MONTH TO MONTH, AND THERE IS NO LIABILITY ON THE GOVERNMENT FOR RENT FOR ANY PERIOD SUBSEQUENT TO THE END OF THE MONTH IN WHICH THE PREMISES ARE VACATED. WHERE AN AGREEMENT FOR THE RENTAL OF PREMISES BY THE GOVERNMENT FOR A TERM OF FIVE YEARS IS CANCELED AT THE END OF A FISCAL YEAR, THE GOVERNMENT IS NOT LIABLE FOR THE COST OF IMPROVEMENTS, ETC., TO THE PREMISES, WHICH UNDER THE AGREEMENT WERE TO BE MADE BY THE LESSOR.

DECISION BY COMPTROLLER GENERAL MCCARL, SEPTEMBER 5, 1925:

THE GOODYEAR TIRE AND RUBBER CO. REQUESTED, JULY 2, 1925, REVIEW OF SETTLEMENT NO. 079949-V, DATED MAY 16, 1925, WHEREIN WAS ALLOWED $22,852.94 AS RENT DURING THE PERIOD FROM DECEMBER 1, 1923, TO JUNE 30, 1924, FOR THE FIRST TO THE FOURTH FLOORS, INCLUSIVE, OF A BUILDING LOCATED AT 415 EAST SIXTH STREET, CINCINNATI, OHIO, AND WHEREIN WAS DISALLOWED ITS CLAIM FOR $19,965.50 AS AMORTIZATION OF THE COST OF REPAIRS, ETC., TO THE FLOORS OCCUPIED. THE REQUEST MAKES IT NECESSARY TO CONSIDER THE WHOLE OF THE SETTLEMENT.

IT APPEARS THAT IN THE NEGOTIATIONS FOR THE USE OF THE FOUR FLOORS OF THE BUILDING, WHICH WAS ORIGINALLY WAREHOUSE SPACE, THE LESSOR REQUESTED A RENTAL OF 65 CENTS A SQUARE FOOT PER ANNUM "AS IS.' LATER A DEFINITE PROPOSAL WAS REDUCED TO WRITING PROVIDING FOR AN ANNUAL RENTAL OF 80 CENTS PER SQUARE FOOT PER ANNUM, THE LESSOR TO FURNISH ADEQUATE AND SATISFACTORY WATER, LIGHT, HEAT, ELEVATOR AND JANITOR SERVICE. THE NEED FOR CERTAIN ALTERATIONS TO FIT THE PREMISES FOR THE OCCUPANCY INTENDED WAS THEN MENTIONED AND THE LESSOR WAS ASKED WHETHER IT WOULD MAKE THE SAME. AT ITS REQUEST PLANS AND SPECIFICATIONS OF THE ALTERATIONS NECESSARY WERE THEN PREPARED BY THE GOVERNMENT AND THE PROPOSAL WAS AMENDED SO AS TO PROVIDE FOR A RENTAL OF $2 PER SQUARE FOOT FOR THE FIRST YEAR OF OCCUPANCY AND 80 CENTS A SQUARE FOOT THEREAFTER. SAID AMENDED PROPOSAL WAS UNSATISFACTORY TO THE GOVERNMENT, AND THE LESSOR SUBMITTED ANOTHER PROPOSAL FOR AN ANNUAL RENTAL OF $1 PER SQUARE FOOT DURING THE FIRST TWO YEARS OF OCCUPANCY AND 80 CENTS PER SQUARE FOOT THEREAFTER. THIS PROPOSAL WAS ALSO UNSATISFACTORY, AND UNDER DATE OF JULY 27, 1921, A THIRD PROPOSAL WAS SUBMITTED FOR AN ANNUAL RENTAL OF $33,412.83 FOR THE FIRST, SECOND, AND THIRD FLOORS AND $10,739.75 PER ANNUM FOR THE FOURTH FLOOR FOR FIVE YEARS, WHICH APPEARS TO BE AT THE RATE OF APPROXIMATELY 95 CENTS PER SQUARE FOOT PER ANNUM, THE LESSOR TO FURNISH ALL ALTERATIONS AND ALL SERVICES OF EVERY NATURE. THIS PROPOSAL WAS ACCEPTED AUGUST 23, 1921.

THE PREMISES WERE OCCUPIED AND THE STIPULATED RENTAL PAID UNTIL NOVEMBER 30, 1923. UNDER DATE OF APRIL 27, 1923, THE DIRECTOR OF THE UNITED STATES VETERANS' BUREAU NOTIFIED THE LESSOR THAT THE PREMISES WOULD BE VACATED, RELINQUISHED, AND RETURNED ON JUNE 30, 1923, AND THAT RENTAL THEREFOR WOULD CEASE ON THAT DATE. HOWEVER, IT DEVELOPED THAT THE PREMISES SELECTED BY THE GOVERNMENT FOR THE REMOVAL OF THE OFFICES AND PERSONNEL LOCATED IN THE PREMISES OF THE LESSOR WOULD NOT BE READY FOR OCCUPANCY ON JULY 1, 1923, AND IT WAS AGREED WITH THE LESSOR RELATIVE TO USE OF SAID PREMISES SUBSEQUENT TO JUNE 30, 1923, IN SUBSTANCE:

(1) THAT THE VETERANS' BUREAU SHOULD CONTINUE TO OCCUPY THE PREMISES FOR THREE MONTHS FROM JULY 1, 1923, AT THE RISK OF BEING LIABLE FOR A YEAR'S RENTAL UNDER THE OHIO LAW.

(2) THAT BOTH PARTIES SHOULD SEEK TO RENT THE SPACE, ALTHOUGH THE DIRECTOR ACKNOWLEDGED NO OBLIGATION FOR RENT BEYOND THE PERIOD OF OCCUPANCY NOR ANY DUTY OF SECURING A TENANT.

(3) THE GOODYEAR TIRE AND RUBBER CO. IS NOT TO OBJECT TO THE BUREAU OCCUPYING THE PREMISES, BUT IF A TENANT IS SECURED THE BUREAU WILL ENDEAVOR TO VACATE AT AN EARLIER DATE THAN OCTOBER 1, IF DESIRED. WHEN THE BUREAU MOVES OUT, AN EFFORT WILL BE MADE TO ESTABLISH THE ARRANGEMENT OF DAMAGES FOR WHICH THE BUREAU IS RESPONSIBLE, IF ANY.

THE PREMISES WERE VACATED DECEMBER 20, 1923, AND THE UNITED STATES HAS PAID RENTAL OF $18,396.95 FOR THE PERIOD FROM JULY 1 TO NOVEMBER 30, 1923, THE MONTHLY RENTAL BEING $3,679.39. THERE WAS ALLOWED $22,852.94 IN THE SETTLEMENT UNDER REVIEW AS RENTAL FROM DECEMBER 1, 1923, TO JUNE 30, 1924, PRESUMABLY ON THE GROUND THAT THERE WAS LIABILITY THEREFOR UNDER THE OHIO LAW.

SECTIONS 4198 AND 4106, REVISED STATUTES OF OHIO, PROVIDE THAT:

4198. NO LEASE, ESTATE, OR INTEREST, EITHER OF FREEHOLD OR TERM OF YEARS, OR ANY UNCERTAIN INTEREST OF, IN, OR OUT OF LANDS, TENEMENTS, OR HEREDITAMENTS, SHALL BE ASSIGNED OR GRANTED EXCEPT BY DEED, OR NOTE IN WRITING, SIGNED BY THE PARTIES SO ASSIGNING OR GRANTING IT, OR HIS AGENT THEREUNTO LAWFULLY AUTHORIZED BY WRITING, OR BY ACT AND OPERATION OF LAW.

4106. A DEED, MORTGAGE, OR LEASE OF ANY ESTATE OR INTEREST IN REAL PROPERTY MUST BE SIGNED BY THE GRANTOR, MORTGAGOR, OR LESSOR, AND SUCH SIGNING BE ACKNOWLEDGED BY THE GRANTOR, MORTGAGOR, OR LESSOR IN THE PRESENCE OF TWO WITNESSES, WHO SHALL ATTEST THE SIGNING AND SUBSCRIBE THEIR NAMES TO THE ATTESTATION. SUCH SIGNING ALSO MUST BE ACKNOWLEDGED BY THE GRANTOR, MORTGAGOR, OR LESSOR BEFORE A JUDGE OF A COURT OF RECORD IN THIS STATE, OR A CLERK THEREOF, A COUNTY AUDITOR, COUNTY SURVEYOR, NOTARY PUBLIC, MAYOR, OR JUSTICE OF THE PEACE, WHO SHALL CERTIFY THE ACKNOWLEDGMENT ON THE SAME SHEET ON WHICH THE INSTRUMENT IS WRITTEN OR PRINTED AND SUBSCRIBE HIS NAME THERETO.

THERE WAS IN THIS CASE NO SUCH NOTE OR WRITING WITNESSED AND ACKNOWLEDGED, AS REQUIRED BY THE OHIO LAW. SEE WALTER V. HARPER, 170 FED.REP. 37; CONEY ISLAND COMPANY V. MCINTYRE COMPANY, 200 FED.REP. 901. FURTHERMORE, IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY THEREFOR, NO LEASE CAN BE ENTERED INTO BY THE UNITED STATES FOR A PERIOD IN EXCESS OF THE FISCAL YEAR THEN CURRENT, AND A LEASE PURPORTING TO EXTEND BEYOND SUCH FISCAL YEAR MUST BE HELD TO BE A LEASE FOR SAID FISCAL YEAR ONLY WITH OPTION IN THE GOVERNMENT TO RENEW FROM YEAR TO YEAR TO THE END OF THE STATED PERIOD. THEREFORE TERMINATION OF THE LEASE AT THE END OF SUCH FISCAL YEAR DOES NOT CONSTITUTE A BREACH THEREOF. CHASE V. UNITED STATES, 155 U.S. 489; SMOOT V. UNITED STATES, 38 CT.CLS. 418; 1 COMP. GEN. 10. IN THE INSTANT CASE THE UNITED STATES TERMINATED THE TENANCY AS OF JUNE 30, 1923, AND THERE WAS NO LIABILITY FOR RENT UNDER THE AGREEMENT OF AUGUST 23, 1921, FOR ANY SUBSEQUENT PERIOD.

THE LIABILITY, IF ANY, FOR RENT FOR THE PERIOD SUBSEQUENT TO THE VACATION OF THE PREMISES; THAT IS, FOR THE PERIOD SUBSEQUENT TO DECEMBER 31, 1923, MUST REST ON THE HOLDING OVER BY THE GOVERNMENT DURING THE PERIOD FROM JULY 1 TO DECEMBER 20, 1923. IN BALTIMORE AND OHIO RAILROAD CO. V. WEST, 5 OHIO STATE REPORTS 161, A LEASE FOR A TERM OF YEARS WAS INVALID AND THE QUESTION WAS AS TO LIABILITY FOR HOLDING OVER. THE COURT SAID:

THE TENANT BY HOLDING OVER, IS REGARDED AS CONSENTING OR PROPOSING TO ENTER UPON A NEW TERM FOR ANOTHER YEAR AT THE SAME RENT AND UPON THE CONDITIONS OF THE PRIOR OCCUPANCY, AND THE LANDLORD'S ACCEPTANCE OF THE PROPOSED TENANCY IS PRESUMED BY HIS RECEIVING THE RENT, OR OTHER ACQUIESCENCE. THE AGREEMENT ARISES BY IMPLICATION OF LAW BY THE CONDUCT OF THE PARTIES AFTER THE EXPIRATION OF THE FORMER TENANCY.

THE CONDUCT OF THE PARTIES HERE NEGATIVES ANY PRESUMPTION THAT THE HOLDING OVER WAS FOR ANOTHER FISCAL YEAR. BOTH PARTIES KNEW OF THE CONDITION OF THE BUILDING TO WHICH THE GOVERNMENT WAS TO MOVE THE OFFICES, AND IT APPEARS TO HAVE BEEN CLEARLY UNDERSTOOD THAT THE HOLDING OVER WAS TO BE FROM MONTH TO MONTH, THE GOVERNMENT ENDEAVORING TO VACATE EARLIER THAN OCTOBER 1 IF TENANTS WERE SECURED,"AT THE RISK OF BEING LIABLE FOR A YEAR'S RENTAL UNDER THE OHIO LAW.' THE PARTIES TO EVEN VALID LEASE FOR A TERM OF YEARS MAY, BY MUTUAL AGREEMENT, CONVERT IT INTO A TENANCY FROM MONTH TO MONTH. CORBIN V. SHAFER, 8 O.N.P. 560. SEE ALSO ARMSTRONG V. KATTENHORN, 11 OHIO 265. THERE WAS CLEARLY NO LIABILITY ON THE UNITED STATES FOR RENTAL OF THESE PREMISES EXCEPT TO THE END OF THE MONTH IN WHICH THEY WERE VACATED; THAT IS, TO DECEMBER 31, 1923. SINCE THE LESSOR HAS BEEN PAID TO INCLUDE NOVEMBER 30, 1923, THE AMOUNT DUE IS $3,679.39 FOR THE MONTH OF DECEMBER INSTEAD OF $22,852.94, ALLOWED IN THE SETTLEMENT.

IT IS REPORTED THAT THE CLAIM FOR $19,965.50 DISALLOWED IN THE SETTLEMENT UNDER REVIEW, REPRESENTS A PART OF THE COST OF PERMANENT IMPROVEMENTS TO THE PREMISES, BUT HOWEVER THAT MAY BE, THE CLAIM FINDS NO BASIS IN THE AGREEMENT OF AUGUST 23, 1921, FOR THE REASON THAT THE LIABILITY OF THE GOVERNMENT WAS FOR A FIXED RENTAL, THE LESSOR TO MAKE ALL INSTALLATIONS, ALTERATIONS, IMPROVEMENTS, AND REPAIRS; NOR CAN IT BE MAINTAINED ON THE GROUND THAT THE GOVERNMENT CANCELED THE LEASE ON JUNE 30, 1923, PRIOR TO THE EXPIRATION OF THE FIVE-YEAR PERIOD. SEE CHASE V. UNITED STATES AND SMOOT V. UNITED STATES, SUPRA.

THE CHECK FOR $22,852.94 WILL BE DEPOSITED IN THE TREASURY OF THE UNITED STATES TO THE CREDIT OF THE APPROPRIATION CHARGED AND A SETTLEMENT STATED FOR $3,679.39 AS THE CORRECT RENTAL DUE CLAIMANT.