A-11120, NOVEMBER 30, 1925, 5 COMP. GEN. 395

A-11120: Nov 30, 1925

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PAYMENTS MADE TO THE LESSOR AT AN INCREASED RATE UNDER A NEW LEASE ARE VALID. 1 COMP. WHEREIN WAS DISALLOWED THE SUM OF $48 IN THE ACCOUNTS OF COL. THAT UPON TENDER OF A NEW LEASE TO THE LESSOR AT THE SAME RATES CONTAINED IN THE OLD LEASE THE LESSOR REFUSED TO EXECUTE SAME CLAIMING THAT THE RATES GOVERNING THE OLD LEASE WERE NOT COMMENSURATE WITH THE PREVAILING RATES FOR SIMILAR SERVICES IN THE VICINITY. A NEW LEASE WAS PREPARED COVERING THE PERIOD BEGINNING NOVEMBER 1. WHICH WAS TO INCLUDE THE FOLLOWING: TABLE FOR BEDDING. THE LEASE WAS APPROVED BY THE QUARTERMASTER GENERAL. THE PREMISES WERE OCCUPIED AND USED DURING THE PERIOD STIPULATED IN THE LEASE AND THE LEASE WAS RENEWED IN ACCORDANCE WITH THE TERMS THEREOF FOR THE MONTHS OF MARCH AND APRIL.

A-11120, NOVEMBER 30, 1925, 5 COMP. GEN. 395

LEASES - RENEWAL WHERE THE GOVERNMENT ENTERED INTO A LEASE AGREEMENT FOR THE RENTAL OF A PART OF A STABLE AND SPECIFICALLY RESERVED THE RIGHT TO RENEW THE LEASE AT THE SAME RENTAL UPON EXPIRATION THEREOF, CONDITIONED UPON THE GIVING OF 30 DAYS' NOTICE IN WRITING TO THE LESSOR OF ITS INTENTION TO RENEW, THE FAILURE TO GIVE SUCH NOTICE PRECLUDES THE RENEWAL AT THE OLD RENTAL, IF OBJECTED TO BY THE LESSOR, AND PAYMENTS MADE TO THE LESSOR AT AN INCREASED RATE UNDER A NEW LEASE ARE VALID. 1 COMP. GEN. 579; 2 COMP. GEN. 66; ID. 812, DISTINGUISHED.

DECISION BY COMPTROLLER GENERAL MCCARL, NOVEMBER 30, 1925:

THE CHIEF OF FINANCE, WAR DEPARTMENT, REQUESTED, SEPTEMBER 4, 1925, REVIEW OF SETTLEMENT NO. M-11464-W, DATED FEBRUARY 10, 1925, WHEREIN WAS DISALLOWED THE SUM OF $48 IN THE ACCOUNTS OF COL. R. S. OFFLEY, FINANCE DEPARTMENT, FOR PAYMENTS MADE ON VOUCHERS 344 AND 471, JUNE, 1924, TO ROBERT WALKER, UNDER CONTRACT OF RENTAL DATED NOVEMBER 1, 1923.

UNDER DATE OF JULY 1, 1923, THE UNITED STATES, ACTING THROUGH THE CAMP QUARTERMASTER, CAMP HOLABIRD, MD., LEASED A PART OF A STABLE FROM ROBERT WALKER FOR THE PURPOSE OF STABLING AND FORAGING THE PRIVATE MOUNT OF CAPT. G. H. TOTTEN, QUARTERMASTER CORPS, FOR THE PERIOD JULY 1, 1923, TO OCTOBER 31, 1923, AT A MONTHLY RENTAL OF $24, WHICH INCLUDED THE FOLLOWING:

TABLE

FOR BEDDING, $4 PER MONTH.

FOR STALL ROOM, $10 PER MONTH.

FOR FORAGE, $10 PER MONTH.

CARE OF ONE MOUNT (TO BE PAID BY OWNER), $6.

THE UNITED STATES EXPRESSLY RESERVED THE RIGHT IN PARAGRAPH 5, TO RENEW THE LEASE AT THE EXPIRATION THEREOF FOR THE PERIOD NOVEMBER 1, 1923, TO JUNE 30, 1924, AT THE RENTAL OF $24 PER MONTH PROVIDED NOTICE OF THE GOVERNMENT'S INTENTION TO SO RENEW BE GIVEN IN WRITING TO THE LESSOR AT LEAST ONE MONTH PRIOR TO THE EXPIRATION OF SAID LEASE. IT APPEARS THAT THE GOVERNMENT DID NOT GIVE THE REQUIRED NOTICE TO THE LESSOR; THAT UPON TENDER OF A NEW LEASE TO THE LESSOR AT THE SAME RATES CONTAINED IN THE OLD LEASE THE LESSOR REFUSED TO EXECUTE SAME CLAIMING THAT THE RATES GOVERNING THE OLD LEASE WERE NOT COMMENSURATE WITH THE PREVAILING RATES FOR SIMILAR SERVICES IN THE VICINITY. A NEW LEASE WAS PREPARED COVERING THE PERIOD BEGINNING NOVEMBER 1, 1923, AND ENDING WITH FEBRUARY 29, 1924, WITH PRIVILEGE OF RENEWAL UNTIL JUNE 30, 1924, AT A MONTHLY RENTAL OF $35 PER MONTH, WHICH WAS TO INCLUDE THE FOLLOWING:

TABLE

FOR BEDDING, $5 PER MONTH.

FOR STALL ROOM, $15 PER MONTH.

FOR FORAGE, $15 PER MONTH.

CARE ONE MOUNT (TO BE PAID BY THE OWNER), $5.

THE LEASE WAS APPROVED BY THE QUARTERMASTER GENERAL. THE PREMISES WERE OCCUPIED AND USED DURING THE PERIOD STIPULATED IN THE LEASE AND THE LEASE WAS RENEWED IN ACCORDANCE WITH THE TERMS THEREOF FOR THE MONTHS OF MARCH AND APRIL, 1924. THE LESSOR WAS PAID THE INCREASED RENTAL, BUT CREDIT FOR THE AMOUNT IN EXCESS OF THE RENTAL SPECIFIED IN THE LEASE OF JULY 1, 1923 ($24 PER MONTH), WAS DISALLOWED IN THE DISBURSING OFFICER'S ACCOUNTS FOR THE REASON THAT THE LEASE OF NOVEMBER 1, 1923, WAS IN REALITY A RENEWAL OF LEASE OF JULY 1, 1923, WHICH CONTAINED A PROVISION THAT AT THE OPTION OF THE GOVERNMENT IT MIGHT BE RENEWED AT A RENTAL OF $24 PER MONTH.

AS PREVIOUSLY NOTED, THE GOVERNMENT SPECIFICALLY RESERVED THE RIGHT TO RENEW THE LEASE OF JULY 1, 1923, AT THE EXPIRATION THEREOF CONDITIONED, HOWEVER, UPON GIVING THE LESSOR 30 DAYS' NOTICE OF ITS INTENTION. THE GOVERNMENT FAILED TO GIVE THE NOTICE. THE QUESTION FOR CONSIDERATION, THEREFORE, IS WHETHER OR NOT THE FAILURE TO GIVE THE REQUIRED NOTICE DEPRIVED THE GOVERNMENT OF ITS RIGHT TO RENEWAL OF THE LEASE AT THE MONTHLY RENTAL AGREED UPON IN THE LEASE OF JULY 1, 1923.

IT HAS BEEN UNIFORMLY HELD THAT FORMAL NOTICE OF ELECTION IS NOT NECESSARY UNDER A LEASE GIVING AN OPTION FOR AN EXTENSION OR RENEWAL IN THE ABSENCE OF A PROVISION IN THE LEASE OR OF SOME SPECIAL STATUTE REQUIRING NOTICE. BROWN V. SANDERS, 70 S.W. 1047; CUSACK V. GUNNING SYSTEM, 109 ILL. 588.

IN THE ABSENCE OF A SPECIFIC PROVISION IN A LEASE FIXING A TIME FOR EXERCISE OF AN ELECTION TO RENEW, THE OPTION CONTINUES DURING THE WHOLE OF THE ORIGINAL TERM OR TENANCY, BUT WHERE THE TENANCY OR THE RIGHT OF EXERCISING AN OPTION TO TAKE A RENEWAL IS DEPENDENT UPON THE PERFORMANCE OF A CONDITION, PERFORMANCE OF SUCH CONDITION IS A PREREQUISITE TO THE EXERCISE OF THE RIGHT TO REQUIRE A RENEWAL AND NON PERFORMANCE WILL DEFEAT THE RIGHT. IN OTHER WORDS, WHERE THE OPTION TO CONTINUE OR RENEW IS EXPRESSLY CONDITIONED UPON A REQUEST OR NOTICE AS IN THE INSTANT MATTER, THE RIGHT CAN NOT BE ENFORCED OVER AN OBJECTION OF A FAILURE OR OMISSION TO SO DO. DONOVAN MOTOR CAR CO. V. NILES, 140 N.E. 304; ATLANTIC PRODUCT COMPANY V. DUNN, 142 N.C. 471; KLEIN V. AUTO PARCEL DELIVERY CO., 192 KY. 593.

THE GOVERNMENT HAVING FAILED TO GIVE THE NOTICE AS REQUIRED BY THE LEASE THEREBY LOST ITS RIGHT TO RENEWAL THEREOF, AND IT MUST BE HELD THAT THE PAYMENT TO THE LESSOR AT THE INCREASED RENTAL WAS LEGAL.

THE DECISIONS OF THIS OFFICE WITH REFERENCE TO THE GOVERNMENT'S RIGHT TO THE RENEWAL OF A LEASE--- 1 COMP. GEN. 579; 2 COMP. GEN. 66; ID. 812--- ARE TO BE DISTINGUISHED FROM THE LEASE IN QUESTION IN THAT IN SAID DECISIONS THERE WAS NO PROVISION REQUIRING THAT NOTICE BE GIVEN AS A CONDITION PRECEDENT TO THE EXERCISE OF THE OPTION AS IN THE CASE HEREIN PRESENTED.

UPON REVIEW THE SUM OF $48 IS CERTIFIED FOR CREDIT IN THE ACCOUNTS OF COL. R. S. OFFLEY.