A-67499, JANUARY 22, 1936, 15 COMP. GEN. 648

A-67499: Jan 22, 1936

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1936: THERE WAS RECEIVED YOUR LETTER OF NOVEMBER 8. WHEN A FORMAL LEASE WAS PREPARED AND FORWARDED TO THE LESSOR FOR EXECUTION OBJECTION WAS RAISED TO THE INCLUSION THEREIN OF THE CODE COMPLIANCE CERTIFICATE. THE LESSOR HAS BEEN INFORMED THAT SINCE CODE COMPLIANCE WAS AGREED TO BY IT AS A PART OF THE ORIGINAL CONTRACT THERE IS NO WAY IN WHICH THE PROVISION MIGHT BE ELIMINATED FROM THE FORMAL LEASE. THE TUXEDO PARK ASSOCIATION IS INSISTENT THAT THE PROVISION BE OMITTED IN VIEW OF THE DECISION OF THE SUPREME COURT HOLDING THE NATIONAL INDUSTRIAL RECOVERY ACT UNCONSTITUTIONAL. YOUR DECISION IS ACCORDINGLY REQUESTED AS TO WHETHER IN THE CIRCUMSTANCES THE CODE COMPLIANCE CLAUSE MAY BE ELIMINATED FROM THIS LEASE.

A-67499, JANUARY 22, 1936, 15 COMP. GEN. 648

LEASES - RENTAL REDUCTION BECAUSE OF CODE COMPLIANCE ELIMINATION A LESSOR MAY NOT BE RELIEVED FROM THE OBLIGATION IMPOSED BY A CODE COMPLIANCE CLAUSE INCLUDED IN A LEASE ENTERED INTO PRIOR TO THE DECISION OF THE SUPREME COURT OF THE UNITED STATES HOLDING UNCONSTITUTIONAL THE CODE PROVISIONS OF THE NATIONAL INDUSTRIAL RECOVERY ACT, WITHOUT ADEQUATE CONSIDERATION TO THE UNITED STATES. UNLESS UNDESIRABLE ADMINISTRATIVELY, THE COMPLIANCE REQUIREMENT MAY BE ELIMINATED PROVIDED PROPER RENTAL REDUCTION BE MADE AS CONTEMPLATED AND REQUIRED BY PUBLIC RESOLUTION DATED AUGUST 29, 1935, 49 STAT. 990, SUCH REDUCTION TO BE SUBJECT TO THE APPROVAL OF THE GENERAL ACCOUNTING OFFICE.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, JANUARY 22, 1936:

THERE WAS RECEIVED YOUR LETTER OF NOVEMBER 8, 1935, AS FOLLOWS:

ON NOVEMBER 7, 1934, THE DEPARTMENT ACCEPTED A PROPOSAL OF THE TUXEDO PARK ASSOCIATION DATED SEPTEMBER 1, 1934, AS AMENDED OCTOBER 13, 1934, FOR THE CONTINUED USE OF THE QUARTERS OCCUPIED BY THE TUXEDO PARK, NEW YORK, POST OFFICE FOR AN ADDITIONAL TERM OF FIVE YEARS AT A RENTAL OF CUSTOMARY PROVISION REGARDING N.R.A. CODE COMPLIANCE. HOWEVER, WHEN A FORMAL LEASE WAS PREPARED AND FORWARDED TO THE LESSOR FOR EXECUTION OBJECTION WAS RAISED TO THE INCLUSION THEREIN OF THE CODE COMPLIANCE CERTIFICATE.

THE LESSOR HAS BEEN INFORMED THAT SINCE CODE COMPLIANCE WAS AGREED TO BY IT AS A PART OF THE ORIGINAL CONTRACT THERE IS NO WAY IN WHICH THE PROVISION MIGHT BE ELIMINATED FROM THE FORMAL LEASE. THE TUXEDO PARK ASSOCIATION IS INSISTENT THAT THE PROVISION BE OMITTED IN VIEW OF THE DECISION OF THE SUPREME COURT HOLDING THE NATIONAL INDUSTRIAL RECOVERY ACT UNCONSTITUTIONAL.

YOUR DECISION IS ACCORDINGLY REQUESTED AS TO WHETHER IN THE CIRCUMSTANCES THE CODE COMPLIANCE CLAUSE MAY BE ELIMINATED FROM THIS LEASE.

THE PROPOSAL AND ACCEPTANCE WHICH APPEAR TO HAVE BEEN PRIOR TO THE DECISION OF MAY 27, 1935, OF THE SUPREME COURT OF THE UNITED STATES IN THE SCHECHTER CASE, CONSTITUTED A CONTRACT BINDING ON TUXEDO PARK ASSOCIATION TO PERFORM THE CONTRACT IN ACCORDANCE WITH ITS TERMS OR TO PAY THE UNITED STATES ANY DAMAGES RESULTING FROM DEFAULT IN PERFORMANCE. SEE PURCELL ENVELOPE CO. V. UNITED STATES, 249 U.S. 313; 15 COMP. GEN. 233.

IT IS, THEREFORE, A CONTRACT OBLIGATION OF THE TUXEDO PARK ASSOCIATION IN CARRYING OUT THE TERMS OF THE LEASE TO DO AND PERFORM ALL THINGS REQUIRED BY THE APPLICABLE CODE OF FAIR COMPETITION OR IF THERE WAS NO SUCH CODE, THEN WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT--- AND PRESUMABLY THE RENTAL WAS FIXED IN THE PROPOSAL AND ACCEPTANCE, OR CONTRACT, ON SUCH BASIS. THE LESSOR CANNOT BE RELEASED FROM SUCH OBLIGATION WITHOUT ADEQUATE CONSIDERATION TO THE UNITED STATES FOR SUCH RELEASE.

IF THERE ARE NO ADMINISTRATIVE REASONS WHY THE LESSOR MAY NOT BE RELEASED FROM SUCH OBLIGATION TO PERFORM IN ACCORDANCE WITH THE CODE OR IF NO CODE AT THIS TIME APPLICABLE, THEN WITH THE REEMPLOYMENT AGREEMENT, IT IS SUGGESTED THAT THE REQUIREMENT FOR SUCH COMPLIANCE MAY BE ELIMINATED FROM THE ACCEPTED PROPOSAL, PROVIDED THE PROPER ADJUSTMENT BE MADE AS CONTEMPLATED AND REQUIRED BY PUBLIC RESOLUTION NO. 65, SEVENTY-FOURTH CONGRESS, APPROVED AUGUST 29, 1935, 49 STAT. 990, APPLICABLE TO CERTAIN CLASSES OF UNACCEPTED PROPOSALS--- BY REDUCING THE RENTAL IN AN AMOUNT EQUAL TO THE ADDITIONAL COSTS ESTIMATED OR OTHERWISE FIXED WHICH WERE INCLUDED IN THE ACCEPTED PROPOSAL FOR COMPLIANCE WITH THE CODE OR REEMPLOYMENT AGREEMENT AS THE CASE MAY BE. 15 COMP. GEN. 170. HOWEVER, SUCH REDUCTION IS SUBJECT TO THE APPROVAL OF THIS OFFICE. 15 COMP. GEN. 374.