A-33930, NOVEMBER 26, 1930, 10 COMP. GEN. 236

A-33930: Nov 26, 1930

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PAYMENT ON A QUANTUM MERUIT BASIS AS FOR A TENANCY BY SUFFERANCE FROM MONTH TO MONTH IS AUTHORIZED FOR THE PERIOD BETWEEN TERMINATION OF THE OLD LEASE AND THE EFFECTIVE DATE OF A NEW LEASE. P.B.P. 286 (NOT NO. 273 AS STATED IN SOME OF THE CORRESPONDENCE) WAS ENTERED INTO JUNE 29. WHICH IS STATED BOTH IN YOUR REPORT AND BY CLAIMANT COMPANY AS BEING AT THE RATE OF $1.43 PER SQUARE FOOT. IT IS DISCLOSED THAT THE CONTINENTAL BUILDINGS(INC.). YOU ADVISED CLAIMANT COMPANY AS FOLLOWS: THE TERM OF OCCUPANCY UNDER THE PROVISIONS OF THE ABOVE-MENTIONED LEASE WILL EXPIRE ON JUNE 30. IN ALL PROBABILITY THE GOVERNMENT WILL DESIRE TO CONTINUE OCCUPANCY OF THIS SPACE FOR THE YEAR COMMENCING JULY 1. THIS QUESTION IS TO BE DECIDED AT A MEETING OF THE PUBLIC BUILDINGS COMMISSION IN THE NEAR FUTURE.

A-33930, NOVEMBER 26, 1930, 10 COMP. GEN. 236

LEASES - RENEWAL WHERE THE GOVERNMENT ENTERED INTO A LEASE AGREEMENT FOR THE OCCUPANCY OF SPACE IN A BUILDING IN THE DISTRICT OF COLUMBIA COVERING ONE FISCAL YEAR, WITH OPTION TO RENEW AT THE SAME RENTAL UPON THE EXPIRATION THEREOF, CONDITIONED UPON THE GIVING OF 30 DAYS' NOTICE IN WRITING TO THE LESSOR OF INTENTION TO RENEW, THERE MUST BE A DEFINITE DECLARATION OF INTENTION TO RENEW WITHIN THE TIME SPECIFIED, NOTICE THAT THE GOVERNMENT "IN ALL PROBABILITY" WOULD DESIRE TO CONTINUE OCCUPANCY NOT BEING SUFFICIENT, AND THE FAILURE TO GIVE SUCH NOTICE PRECLUDES THE RENEWAL AT THE OLD RENTAL, IF OBJECTED TO BY THE LESSOR, AND PAYMENT ON A QUANTUM MERUIT BASIS AS FOR A TENANCY BY SUFFERANCE FROM MONTH TO MONTH IS AUTHORIZED FOR THE PERIOD BETWEEN TERMINATION OF THE OLD LEASE AND THE EFFECTIVE DATE OF A NEW LEASE.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR OF PUBLIC BUILDINGS AND PUBLIC PARKS OF THE NATIONAL CAPITAL, NOVEMBER 26, 1930:

THERE HAS BEEN RECEIVED IN THIS OFFICE A LETTER FROM THE CONTINENTAL BUILDINGS (INC.), THROUGH THE ATTORNEYS FOR H. L. RUST CO., AGENT, RELATIVE TO THE RENTAL FOR SPACE ON THE FOURTH AND SIXTH FLOORS OF THE INVESTMENT BUILDING, FIFTEENTH AND K STREETS NW., OCCUPIED BY THE UNITED STATES EMPLOYEES' COMPENSATION COMMISSION, SINCE JUNE 30, 1930, AND ALSO YOUR LETTER OF NOVEMBER 6, 1930, ACCOMPANIED BY COPIES OF CORRESPONDENCE, RELATIVE THERETO.

LEASE NO. P.B.P. 286 (NOT NO. 273 AS STATED IN SOME OF THE CORRESPONDENCE) WAS ENTERED INTO JUNE 29, 1929, BETWEEN THE WARDMAN CONSTRUCTION CO., LESSOR, AND THE UNITED STATES, LESSEE, FOR THE FISCAL YEAR ENDED JUNE 30, 1930, AT A MONTHLY RENTAL OF $2,720.50, WHICH IS STATED BOTH IN YOUR REPORT AND BY CLAIMANT COMPANY AS BEING AT THE RATE OF $1.43 PER SQUARE FOOT. IT IS DISCLOSED THAT THE CONTINENTAL BUILDINGS(INC.) HAS BECOME THE SUCCESSOR IN INTEREST TO THE WARDMAN CONSTRUCTION CO., UNDER THIS LEASE.

THE LEASE CONTAINED THE FOLLOWING RENEWAL PROVISION:

THIS LEASE MAY, AT THE OPTION OF THE GOVERNMENT, BE RENEWED ANNUALLY AT A MONTHLY RENTAL OF TWO THOUSAND SEVEN HUNDRED AND TWENTY DOLLARS AND FIFTY CENTS ($2,720.50), AND OTHERWISE UPON THE TERMS AND CONDITIONS HEREIN SPECIFIED, PROVIDED NOTICE BE GIVEN IN WRITING TO THE LESSOR AT LEAST ONE MONTH BEFORE THIS LEASE WOULD EXPIRE: PROVIDED THAT NO RENEWAL THEREOF SHALL EXTEND THE PERIOD OF OCCUPANCY OF THE PREMISES BEYOND THE THIRTIETH DAY OF JUNE, 1931.

UNDER DATE OF MAY 29, 1930, YOU ADVISED CLAIMANT COMPANY AS FOLLOWS:

THE TERM OF OCCUPANCY UNDER THE PROVISIONS OF THE ABOVE-MENTIONED LEASE WILL EXPIRE ON JUNE 30, 1930. IN ALL PROBABILITY THE GOVERNMENT WILL DESIRE TO CONTINUE OCCUPANCY OF THIS SPACE FOR THE YEAR COMMENCING JULY 1, 1930. HOWEVER, THIS QUESTION IS TO BE DECIDED AT A MEETING OF THE PUBLIC BUILDINGS COMMISSION IN THE NEAR FUTURE. IN THE EVENT THAT IT IS DESIRED TO CONTINUE OCCUPANCY OF ANY OR ALL OF THE SPACE COVERED IN THE ABOVE- MENTIONED LEASE, YOU WILL BE ADVISED ACCORDINGLY.

THE CLAIMANT'S REPRESENTATIVES ALLEGE THAT THIS LETTER WAS POSTMARKED JUNE 2 AND RECEIVED JUNE 3, 1930. HOWEVER, REGARDLESS OF WHEN THE LETTER WAS RECEIVED BY CLAIMANT COMPANY, THE SAME MAY NOT REASONABLY BE REGARDED AS A NOTICE OF INTENT TO EXERCISE THE OPTION TO RENEW, IN COMPLIANCE WITH THE TERMS OF THE LEASE, AS THERE WAS THEREIN NO DEFINITE DECLARATION OF SUCH INTENT, BUT ONLY A STATEMENT AS TO THE PROBABILITY THAT THE GOVERNMENT WOULD CONTINUE TO OCCUPY THE SPACE, IT BEING SPECIFICALLY STATED THAT FINAL DECISION IN THE MATTER HAD NOT BEEN REACHED AND THAT WHEN REACHED THE COMPANY WOULD BE ADVISED.

UNDER DATE OF JUNE 3, 1930, CLAIMANT ACKNOWLEDGED RECEIPT OF THE LETTER FROM YOU AND ADVISED AS FOLLOWS:

WE DESIRE, AT THIS TIME, TO ADVISE YOU, HOWEVER, THAT UNDER OUR OPERATION, THE RATES FOR SPACE IN THE INVESTMENT BUILDING WILL HAVE TO BE ADVANCED SO AS TO CONFORM WITH OUR SCHEDULE.

ON JULY 1, 1930, YOU WERE FURTHER ADVISED BY THE AGENT FOR CLAIMANT COMPANY THAT THE NOTICE OF RENEWAL AT THE OLD RENTAL WAS NOT CONSIDERED AS A SUFFICIENT COMPLIANCE WITH THE TERMS OF THE LEASE BUT THAT THE OWNERS OF THE BUILDING WERE WILLING TO ACCEPT $1.60 PER SQUARE FOOT, IT BEING ALLEGED THAT THE GOVERNMENT WAS THEN PAYING $1.75 PER SQUARE FOOT FOR OTHER SPACE IN THE SAME BUILDING. UNDER DATE OF JULY 18, 1930, YOU ADVISED THE AGENT FOR CLAIMANT COMPANY THAT THE OFFER OF $1.60 PER SQUARE FOOT WAS REJECTED BY THE PUBLIC BUILDINGS COMMISSION WHICH HAD "UNANIMOUSLY APPROVED THE RENEWAL OF THE OLD LEASE OF $1.43 PER SQUARE FOOT.'

UNQUESTIONABLY THE GOVERNMENT HAD THE RIGHT TO RENEW THE LEASE FOR THE FISCAL YEAR 1931 AT THE RENTAL STIPULATED IN THE LEASE FOR 1930, MERELY BY COMPLYING WITH THE TERMS OF THE LEASE IN THE MATTER OF GIVING THE REQUIRED NOTICE OF INTENT TO EXERCISE THAT RIGHT BUT THIS IT FAILED TO DO. THAT IS TO SAY, THROUGH FAILURE TO GIVE THE REQUIRED NOTICE THE GOVERNMENT HAS LOST A VALUABLE RIGHT. THERE WAS, OF COURSE, NO POWER IN THE PUBLIC BUILDINGS COMMISSION AFTER THE EXPIRATION OF THE TIME WITHIN WHICH THE REQUIRED NOTICE OF RENEWAL COULD BE GIVEN, TO REGAIN THE RIGHT SO LOST TO THE UNITED STATES, AND ITS ACTION THEREAFTER PURPORTING TO "UNANIMOUSLY APPROVE THE RENEWAL OF THE OLD LEASE OF $1.43 PER SQUARE FOOT" WAS, WITHOUT THE CONSENT OF THE LESSOR, OF NO AVAIL IN THE MATTER. IN OTHER WORDS, SUCH ACTION WAS OF NO FORCE OR EFFECT AFTER THE RIGHT TO RENEW HAD BEEN LOST.

IT IS THE GENERALLY ACCEPTED RULE WHERE A LEASE REQUIRES THE LESSEE TO GIVE NOTICE OF HIS INTENTION TO RENEW, THAT HIS FAILURE TO DO SO WITHIN THE TIME SPECIFIED WILL GIVE TO THE LESSOR THE RIGHT TO TREAT THE LEASE AS NOT EXTENDED OR RENEWED.

IN DECISION OF NOVEMBER 30, 1925, 5 COMP. GEN. 395, 396, IT WAS HELD AS FOLLOWS:

IN THE ABSENCE OF A SPECIFIC PROVISION IN A LEASE FIXING THE 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 NONPERFORMANCE 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.

SEE, ALSO, 7 COMP. GEN. 191, AND DECISION OF JUNE 8, 1928, A-22628.

THEREFORE, THE LEASE OF JUNE 29, 1929, INCLUDING THE TERMS FIXING THE RATE OF RENTAL, SHOULD BE CONSIDERED AS TERMINATED JUNE 30, 1930. SEE SECTION 1218 OF THE CODE OF THE DISTRICT OF COLUMBIA PROVIDING THAT "WHEN REAL ESTATE IS LEASED FOR A CERTAIN TERM NO NOTICE TO QUIT SHALL BE NECESSARY, BUT THE LANDLORD SHALL BE ENTITLED TO THE POSSESSION WITHOUT SUCH NOTICE, IMMEDIATELY UPON THE EXPIRATION OF THE TERM.'

ON AND AFTER JULY 1, 1930, THE OCCUPANCY BY THE GOVERNMENT OF THE SPACE IN QUESTION SHOULD BE CONSIDERED AS CREATING A TENANCY BY SUFFERANCE FROM MONTH TO MONTH. SEE ACTION 1034 OF THE CODE OF THE DISTRICT OF COLUMBIA.

FOR THE PERIOD FROM JULY 1, 1930, TO THE EFFECTIVE DATE OF A NEW LEASE, RENTAL FOR THE SPACE IN QUESTION OCCUPIED BY THE GOVERNMENT MAY BE PAID ON A QUANTUM MERUIT BASIS. SEE DECISION OF DECEMBER 30, 1926, A-14318. THERE ARE OF RECORD IN THIS OFFICE SEVERAL OTHER LEASES BETWEEN THE GOVERNMENT AND CLAIMANT COMPANY FOR SPACE IN THE INVESTMENT BUILDING, BUT AS THE SPACE IS IDENTIFIED THEREIN BY ROOM NUMBERS ONLY, WITHOUT MENTION OF SQUARE FEET, THE ACCURACY OF THE STATEMENT OF CLAIMANT'S REPRESENTATIVES THAT THE GOVERNMENT IS NOW PAYING $1.75 PER SQUARE FOOT FOR OTHER SPACE IN SAID BUILDING CANNOT BE READILY VERIFIED. BUT IF THAT BE A FACT, AND IF THE GOVERNMENT IS PAYING AN AVERAGE OF AT LEAST $1.60 PER SQUARE FOOT FOR OTHER SPACE IN SAID BUILDING, PAYMENT AT THE RATE OF $1.60 PER SQUARE FOOT AS CLAIMED BY THE COMPANY FOR THE SPACE OCCUPIED FROM JULY 1, 1930, TO THE PRESENT TIME IS AUTHORIZED, AND THE SPACE SHOULD NOT CONTINUE TO BE OCCUPIED HEREAFTER WITHOUT A DEFINITE AGREEMENT WITH THE LESSOR AS TO TERMS, INCLUDING THE AMOUNT OF RENT, ETC. ..END :