A-7703, FEBRUARY 14, 1925, 4 COMP. GEN. 694

A-7703: Feb 14, 1925

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WAS ACQUIRED FOR A CERTAIN PERIOD AS A TRAINING SCHOOL FOR DISABLED WAR VETERANS. WAS ENTERED INTO WITH THE NEW OWNER OF THE REALTY. WHICH WERE SHOWN TO HAVE LITTLE OR NO RENTAL VALUE TO THE GOVERNMENT. WERE PERMITTED TO REMAIN ON THE PREMISES AFTER TERMINATION OF THE PRIOR LEASE. THERE IS NO OBLIGATION ON THE GOVERNMENT TO PAY FOR THE REASONABLE USE AS MAY HAVE BEEN MADE OF SUCH PERSONALTY. ONE OF WHICH WAS OWNED BY HER HUSBAND. WHO WAS PRESIDENT OF THE CORPORATION AND MANAGER OF THE SCHOOL. THE SCHOOL WAS IN ACTIVE OPERATION AS A MILITARY COLLEGE WITH. IT IS ALLEGED. WAS LEASED TO THE GOVERNMENT FOR USE BY THE FEDERAL BOARD FOR VOCATIONAL EDUCATION AS A TRAINING SCHOOL FOR DISABLED VETERANS.

A-7703, FEBRUARY 14, 1925, 4 COMP. GEN. 694

LEASES, RENT - COMPENSATION FOR USE OF FURNITURE, EQUIPMENT, ETC. WHERE UNDER A LEASE BY THE UNITED STATES THE ENTIRE PLANT OF A PRIVATE MILITARY COLLEGE INCLUDING FURNITURE, EQUIPMENT, ETC., WAS ACQUIRED FOR A CERTAIN PERIOD AS A TRAINING SCHOOL FOR DISABLED WAR VETERANS, AND AFTER THE TERMINATION OF SAID LEASE AND THE TRANSFER OF TITLE TO THE REAL PROPERTY, A NEW LEASE, WHICH DID NOT COVER THE PERSONAL PROPERTY, WAS ENTERED INTO WITH THE NEW OWNER OF THE REALTY, AND THE FURNITURE, EQUIPMENT, ETC., WHICH WERE SHOWN TO HAVE LITTLE OR NO RENTAL VALUE TO THE GOVERNMENT, WERE PERMITTED TO REMAIN ON THE PREMISES AFTER TERMINATION OF THE PRIOR LEASE, WITHOUT ANY AGREEMENT AS TO COMPENSATION FOR ITS USE, THERE IS NO OBLIGATION ON THE GOVERNMENT TO PAY FOR THE REASONABLE USE AS MAY HAVE BEEN MADE OF SUCH PERSONALTY.

DECISION BY COMPTROLLER GENERAL MCCARL, FEBRUARY 14, 1925:

THE PEACOCK MILITARY COLLEGE (INC.) HAS SUBMITTED THROUGH THE UNITED STATES VETERANS' BUREAU A CLAIM DATED DECEMBER 30, 1924, FOR RENT OR COMPENSATION FOR USE SINCE JULY 1, 1922, OF CERTAIN PERSONAL PROPERTY, THE CIRCUMSTANCES AND CONDITIONS GIVING RISE TO THE CLAIM BEING HEREINAFTER SET FORTH.

IT APPEARS FROM THE RECORD THAT FOR A NUMBER OF YEARS PRIOR TO MARCH 1, 1921, THE CLAIMANT CORPORATION HAD OWNED AND OPERATED A SCHOOL PLANT AT SAN ANTONIO, TEX. IT MAY BE STATED HERE THAT EDITH W. PEACOCK OWNED ALL OF THE CAPITAL STOCK OF THE CORPORATION EXCEPT TWO QUALIFYING SHARES, ONE OF WHICH WAS OWNED BY HER HUSBAND, WESLEY PEACOCK, WHO WAS PRESIDENT OF THE CORPORATION AND MANAGER OF THE SCHOOL, THE OTHER QUALIFYING SHARE BEING OWNED BY MR. PEACOCK'S ATTORNEY. THE SCHOOL WAS IN ACTIVE OPERATION AS A MILITARY COLLEGE WITH, IT IS ALLEGED, AN ENROLLMENT OF ABOUT 200 STUDENTS WHEN, BY LEASE AGREEMENT DATED FEBRUARY 5, 1921, THE ENTIRE PLANT, INCLUDING THE RESIDENCE OF MR. AND MRS. PEACOCK, AND ANOTHER RESIDENCE, COVERING IN ALL 59 CITY LOTS, TOGETHER WITH ALL FURNITURE, EQUIPMENT, PARAPHERNALIA, ETC., WAS LEASED TO THE GOVERNMENT FOR USE BY THE FEDERAL BOARD FOR VOCATIONAL EDUCATION AS A TRAINING SCHOOL FOR DISABLED VETERANS. THIS LEASE COVERED THE PERIOD FROM MARCH 1, 1921, TO JUNE 20, 1922, WITH AN OPTION IN THE GOVERNMENT TO RENEW FOR ONE YEAR THEREAFTER UPON THE SAME TERMS AND CONDITIONS, BUT IT ALSO RESERVED TO THE GOVERNMENT THE RIGHT TO TERMINATE THE LEASE AT THE END OF ANY MONTH UPON 30 DAYS' NOTICE. THE RENT STIPULATED IN THE LEASE WAS AT THE RATE OF $12,950 PER ANNUM, PAYABLE MONTHLY. THE LESSOR WAS REQUIRED TO MAKE ALL NECESSARY REPAIRS; AND WHILE THE LEASE DID NOT EXPRESSLY REQUIRE THE LESSOR TO MAKE IMPROVEMENTS OR ALTERATIONS, IT SEEMS THAT THERE WAS AN ORAL UNDERSTANDING THAT IT WOULD, IMMEDIATELY UPON APPROVAL OF THE LEASE, PROCEED TO MAKE IMPROVEMENTS AND ALTERATIONS AS DIRECTED BY THE GOVERNMENT OFFICER IN CHARGE TO THE EXTENT OF ABOUT $9,000. ACCORDINGLY, ON OR ABOUT MARCH 1, 1921, THE LESSOR VACATED THE PREMISES, MOVING THE MILITARY STUDENTS TO MR. PEACOCK'S RANCH TO FINISH OUT THE SEMESTER UNDER CAMPING CONDITIONS, AND THE REPAIRS, ALTERATIONS, AND IMPROVEMENTS WERE PROCEEDED WITH AND WERE PRACTICALLY COMPLETED IN JUNE, 1921. IT IS UNDERSTOOD THAT NO TRAINEES ARRIVED AT THE SCHOOL UNTIL AFTER JULY 1, 1921.

IT APPEARS THAT THE COST OF IMPROVEMENTS MADE BY THE LESSOR AT THE DIRECTION OF THE OFFICER IN CHARGE WAS VASTLY IN EXCESS OF $9,000, WHICH AMOUNT THE LESSOR HAD AGREED TO EXPEND, AND AS THE LEASE AGREEMENT OF FEBRUARY 5, 1921, CONTAINED NO PROVISION AUTHORIZING THE GOVERNMENT TO REIMBURSE THE LESSOR FOR SUCH ADDITIONAL EXPENDITURES, THE MATTER WAS TAKEN UP PRIOR TO JULY 1, 1921, WITH A VIEW TO THE MODIFICATION OF THE TERMS OF THE LEASE, AND AN ADJUSTMENT WAS EFFECTED BY A SUPPLEMENTAL AGREEMENT DATED DECEMBER 8, 1921, WHEREBY THE RENT WAS INCREASED BY $2,975.48, EFFECTIVE FROM JULY 1, 1921, A PART OF THE CONSIDERATION FOR SUCH INCREASE BEING THE USE BY THE GOVERNMENT SINCE JULY 1, 1921, OF THE INCREASED FACILITIES PROVIDED BY THE LESSOR'S EXPENDITURES IN EXCESS OF $9,000, WHICH SAID EXPENDITURES WERE STATED IN THE AGREEMENT AS CONSISTING OF A SHOP BUILDING AT A COST OF $4,083.38 AND THE CONSTRUCTION OF 50 TENT HOUSES AT A COST OF $6,745. THERE WAS ALSO EMBRACED IN THIS SUPPLEMENTAL AGREEMENT AND MENTIONED AS A PART OF THE CONSIDERATION FOR THE INCREASE IN RENT A TRACT OF FARM LAND, SAID TO CONSIST OF ABOUT 20 ACRES, WHICH WAS NOT COVERED BY THE ORIGINAL LEASE OF FEBRUARY 5, 1921.

THE AGGREGATE AMOUNT PAID TO CLAIMANT AS RENT UNDER THE LEASE OF FEBRUARY 5, 1921, AND THE SUPPLEMENTAL AGREEMENT OF DECEMBER 8, 1921, FOR THE ENTIRE PERIOD FROM MARCH 1, 1921, WHEN THE LEASE BECAME EFFECTIVE, TO JUNE 30, 1922, WHEN IT TERMINATED, WAS $20,242.13; AND WHILE THE SUPPLEMENTAL AGREEMENT OF DECEMBER 8, 1921, MAY BE ACCEPTED AS ESTABLISHING THAT THE ENTIRE AMOUNT EXPENDED BY THE LESSOR FOR IMPROVEMENTS AS DISTINGUISHED FROM REPAIRS WAS ONLY ($9,000 PLUS $10,828.38) $19,828.38, WHICH IT MAY BE NOTED IS ONLY $413.75 LESS THAN THE ENTIRE AMOUNT OF RENT RECEIVED BY THE LESSOR, IT IS ALSO DISCLOSED FROM OTHER EVIDENCE ON FILE THAT THE AGGREGATE AMOUNT EXPENDED BY THE LESSOR AT THE DIRECTION OF THE GOVERNMENT OFFICER IN CHARGE FOR REPAIRS, ALTERATIONS, AND IMPROVEMENTS DURING THE FIRST SIX MONTHS COVERED BY THE LEASE WAS APPROXIMATELY $10,000 IN EXCESS OF THE TOTAL AMOUNT OF RENT RECEIVED BY THE LESSOR FOR THE ENTIRE PERIOD OF 16 MONTHS COVERED BY THE LEASE. AS A RESULT OF THIS FACT AND THE FACT THAT MR. PEACOCK DEVOTED PRACTICALLY HIS ENTIRE TIME TO THE INTEREST OF THIS SCHOOL UNTIL ABOUT JANUARY 1, 1922, THE CLAIMANT-CORPORATION COULD NOT MEET CERTAIN OF ITS FINANCIAL OBLIGATIONS AND ACCORDINGLY ALL OF THE REAL PROPERTY COVERED BY THE ORIGINAL LEASE OF FEBRUARY 5, 1921, EXCEPT THE THREE LOTS ON WHICH ONE OF THE RESIDENCE WAS LOCATED, WAS SOLD AT SHERIFF'S SALE JULY 4, 1922, BY ORDER OF A COURT, TO SATISFY THREE JUDGMENTS AGGREGATING $27,742.02 WITH INTEREST FROM APRIL 28, 1922, DATE OF SAID JUDGMENTS, AND ALL COST OF SUIT AND SALE TOGETHER WITH THE FORECLOSURE OF ALL MECHANIC-S, MATERIALMAN-S, AND OTHER LIENS EXISTING ON APRIL 28, 1922. THE PRICE AT WHICH THE PROPERTY WAS SOLD AT SAID SHERIFF'S SALE IS NOT SHOWN IN THE PAPERS BEFORE ME BUT IT IS UNDERSTOOD FROM REPRESENTATIONS MADE ON BEHALF OF CLAIMANT THAT THE ENTIRE AMOUNT OF THE PROCEEDS WAS APPLIED TO THE PAYMENT OF THE JUDGMENTS AND COSTS OF SUIT AND SALE, NO PART OF SAID PROCEEDS BEING RECEIVED BY CLAIMANT.

THE GOVERNMENT DID NOT DISCONTINUE OPERATION OF THE SCHOOL ON JUNE 30, 1922, THE DATE OF TERMINATION OF THE LEASE OF FEBRUARY 5, 1921, AS SUPPLEMENTED BY THE AGREEMENT OF DECEMBER 8, 1921, BUT INSTEAD, THE UNITED STATES VETERANS' BUREAU, WHICH, UNDER THE PROVISIONS OF THE ACT OF AUGUST 9, 1921, 42 STAT. 147, HAD SUCCEEDED TO THE DUTIES AND RESPONSIBILITIES OF THE FEDERAL BOARD FOR VOCATIONAL EDUCATION WITH RESPECT TO SUCH SCHOOLS, UNDER DATE OF JULY 5, 1922, ENTERED INTO A LEASE AGREEMENT WITH JOHN T. WILSON, THE NEW OWNER OF THE PROPERTY SOLD AT THE SHERIFF'S SALE, AS HEREINBEFORE STATED, WITH RENT AT THE RATE OF $12,153 PER ANNUM, AND UNDER DATE OF JULY 1, 1922, ENTERED INTO A LEASE AGREEMENT WITH EDITH W. PEACOCK FOR THE THREE LOTS COMPRISING A RESIDENCE PROPERTY OWNED BY HER BUT WHICH HAD BEEN INCLUDED IN THE ORIGINAL LEASE OF FEBRUARY 5, 1921, AND THREE LOTS ADJOINING WHICH HAD BEEN PURCHASED IN HER NAME IN 1921 AT A COST OF $1,000 AS A SITE FOR THE SHOP BUILDING REFERRED TO IN THE SUPPLEMENTAL AGREEMENT OF DECEMBER 8, 1921, SUPRA. THE RENT STIPULATED IN MRS. PEACOCK'S LEASE WAS $6,000 PER ANNUM. EACH OF THESE TWO LEASES PURPORTED TO COVER A PERIOD OF FOUR YEARS, OR UNTIL JUNE 30, 1926. THE APPRAISED VALUATION OF THE PROPERTY COVERED BY MRS. PEACOCK'S LEASE WAS $11,700, AND IT NOW CLEARLY APPEARS THAT BOTH THE VETERANS' BUREAU AND MRS. PEACOCK UNDERSTOOD AT THE TIME THE LEASE WAS MADE THAT THE APPARENTLY EXORBITANT RENTAL OF $6,000 PER ANNUM FOR PROPERTY REPRESENTING AN APPRAISED INVESTMENT OF ONLY $11,700 WAS INTENDED NOT ONLY TO GIVE HER A FAIR RETURN FOR THE USE OF SAID PROPERTY BUT ALSO TO REIMBURSE HER TO THE EXTENT OF APPROXIMATELY $20,000 FOR THE LOSS SHE HAD SUSTAINED ON OTHER PROPERTY, AS HEREINBEFORE AND HEREINAFTER INDICATED. WHATEVER JUSTIFICATION THERE MAY HAVE BEEN FOR THIS ARRANGEMENT FROM AN EQUITABLE STANDPOINT, THE IRREGULARITY AND, IN FACT, ILLEGALITY OF THE TRANSACTIONARE APPARENT. WHILE THERE MAY HAVE BEEN A MORAL OBLIGATION ON THE PART OF THE GOVERNMENT TO MRS. PEACOCK ON ACCOUNT OF THE LARGE EXPENDITURES HER COMPANY WAS INDUCED TO MAKE IN 1921 UNDER THREATS THAT THE GOVERNMENT WOULD TAKE ADVANTAGE OF THE 30-DAY TERMINATION CLAUSE IN THE LEASE OF FEBRUARY 5, 1921, IF SUCH EXPENDITURES WERE NOT MADE, AND INTIMATIONS THAT THE PROPERTY WOULD BE RENTED BY THE GOVERNMENT FOR MANY YEARS IF SUCH EXPENDITURES WERE MADE, IT DOES NOT APPEAR THAT THERE WAS ANY LEGAL OBLIGATION ON THE GOVERNMENT TO REIMBURSE HER FOR ANY PART OF SAID EXPENDITURES; AND REGARDLESS OF ANY MORAL OR LEGAL OBLIGATIONS IN THE MATTER, THERE APPEARS TO HAVE BEEN NO JUSTIFICATION FOR THE ATTEMPTED ADJUSTMENT RESORTED TO BY THE BUREAU.

HAD THE LEASE OF JULY 1, 1922, BEEN PERMITTED TO CONTINUE FOR THE FULL PERIOD WHICH IT ORIGINALLY PURPORTED TO COVER, TO WIT, UNTIL JUNE 30, 1926, MRS. PEACOCK WOULD HAVE BEEN REIMBURSED FOR THE GREATER PORTION OF THE EXPENDITURES MADE BY HER COMPANY IN 1921 AT THE DIRECTION OF THE GOVERNMENT OFFICER IN CHARGE, WHICH EXPENDITURES, IT APPEARS, CAUSED HER COMPANY TO LOSE TITLE TO THE 56 LOTS AND THE IMPROVEMENTS THEREON AS HEREINBEFORE STATED. BUT THE LEASE WAS TERMINATED EFFECTIVE JUNE 30, 1924, THE GOVERNMENT HAVING NO FURTHER USE FOR THE PROPERTY, AS IT HAD BEEN VACATED IN MAY, 1924, IN ACCORDANCE WITH PLANS FOR FINAL CLOSING OF THE SCHOOL. IT MAY BE STATED IN THIS CONNECTION THAT THERE WAS NO AUTHORITY OF LAW FOR ENTERING INTO A FOUR-YEAR LEASE IN THIS CASE AS THERE WAS AT THAT TIME NO APPROPRIATION ADEQUATE FOR ITS FULFILLMENT AND NO STATUTE SPECIFICALLY AUTHORIZING A LEASE FOR MORE THAN ONE FISCAL YEAR IN SUCH A CASE. IT IS NOW WELL ESTABLISHED THAT A LEASE PURPORTING TO BE FOR MORE THAN ONE YEAR UNDER SUCH CIRCUMSTANCES MUST BE CONSTRUED TO BE A LEASE FOR THE FISCAL YEAR CURRENT WHEN IT BECOMES EFFECTIVE, WITH AN OPTION IN THE GOVERNMENT TO RENEW FROM YEAR TO YEAR TO THE END OF THE STATED TERM. SEE 1 COMP. GEN. 10, AND AUTHORITIES THEREIN CITED. THE LEASE IN THIS CASE WAS RENEWED FOR THE FISCAL YEAR 1924 ONLY.

THE CLAIM HERE UNDER CONSIDERATION WAS NOT FILED UNTIL AFTER JUNE 30, 1924, WHEN SAID LEASE OF JULY 1, 1922, WAS TERMINATED, AND IT IS RATHER SIGNIFICANT THAT THE AMOUNT IN WHICH IT IS STATED, TO WIT, $9,075, IS APPROXIMATELY THE AMOUNT WHICH MRS. PEACOCK WOULD HAVE RECEIVED IN EXCESS OF THE FAIR RENTAL VALUE OF HER PROPERTY IF THE LEASE HAD NOT BEEN TERMINATED.

THE BASIS OF THE CLAIM APPEARS TO BE THAT SOME OF THE FURNITURE, EQUIPMENT, ETC., COVERED BY THE LEASE OF FEBRUARY 5, 1921, REMAINED ON THE PREMISES AND WAS USED BY THE GOVERNMENT AFTER THE TERMINATION OF SAID LEASE ON JUNE 30, 1922, ALTHOUGH NEITHER OF THE TWO LEASES COVERING THE REAL PROPERTY FOR THE PERIOD SUBSEQUENT TO SAID DATE CONTAINED ANY PROVISION WITH REFERENCE TO THE SAID PERSONAL PROPERTY.

THERE WAS NO LEASE, CONTRACT, OR STIPULATION OF ANY KIND PROVIDING FOR THE PAYMENT BY THE GOVERNMENT OF ANY RENT OR COMPENSATION FOR THE USE OF THE FURNITURE, EQUIPMENT, ETC., AFTER JUNE 30, 1922. THAT NO SUCH PAYMENT WAS CONTEMPLATED BY THE GOVERNMENT OR THE CLAIMANT IS APPARENT FROM THE FACT THAT NO SUCH PAYMENTS WERE MADE AND NO CLAIM THEREFOR WAS PRESENTED UNTIL MORE THAN TWO YEARS HAD ELAPSED. THAT THIS PERSONAL PROPERTY WAS OF BUT LITTLE USE TO THE GOVERNMENT AND HAD PRACTICALLY NO RENTAL VALUE IS INDICATED BY THE STATEMENTS MADE BY W. A. ROBERTS IN A LETTER DATED APRIL 21, 1921, TRANSMITTING THE PROPERTY INVENTORY AS MADE BY HIM AND J. C. JOHNSTON (ROBERTS REPRESENTING THE GOVERNMENT AND JOHNSTON REPRESENTING THE LESSOR). THE STATEMENTS REFERRED TO ARE AS FOLLOWS:

2. THIS PROPERTY AS A WHOLE IS IN VERY POOR CONDITION, A MAJORITY BEING ENTIRELY UNSERVICEABLE AT THE PRESENT TIME.

3. ALL OF THE MATTRESSES NEED OVERHAULING AND MOST OF THE SPRINGS WILL BE SERVICEABLE A VERY SHORT TIME.

4. THE AUTOMOBILES AS A WHOLE ARE USEFUL ONLY FOR INSTRUCTION PURPOSES UNLESS COMPLETELY OVERHAULED.

THE INVENTORY PLACED NO VALUE ON THE ARTICLES LISTED. IT WILL BE NOTED THAT THIS STATEMENT AS TO THE UNSERVICEABLENESS OF THIS EQUIPMENT WAS MADE IN APRIL, 1921, SOON AFTER THE GOVERNMENT TOOK OVER THE PROPERTY AND BEFORE ANY USE HAD BEEN MADE OF IT BY THE GOVERNMENT, AND IT IS BUT REASONABLE TO ASSUME THAT THE VALUE TO THE GOVERNMENT WAS EVEN LESS ON JULY 1, 1922, THE BEGINNING OF THE PERIOD COVERED BY THIS CLAIM. ANOTHER EVIDENCE THAT THIS PERSONAL PROPERTY HAD PRACTICALLY NO RENTAL VALUE TO THE GOVERNMENT IS THE FACT THAT THE RENT RESERVED IN THE THREE LEASES COVERING ALL OF THE REAL PROPERTY, BUT NO PERSONAL PROPERTY, FOR THE PERIOD SUBSEQUENT TO JUNE 30, 1922, WAS $2,677.52 PER ANNUM IN EXCESS OF THE RATE PAID UP TO JUNE 30, 1922, UNDER THE AGREEMENTS OF FEBRUARY 5 AND DECEMBER 8, 1921, FOR THE IDENTICAL REAL PROPERTY AND ALL OF THE PERSONAL PROPERTY. IN THIS CONNECTION IT MAY BE NOTED ALSO THAT THE MESS HALL, WHICH WAS ONE OF THE IMPROVEMENTS ON THE REAL PROPERTY COVERED BY THE LEASE WHICH TERMINATED JUNE 30, 1922, WAS DESTROYED BY FIRE IN JUNE, 1922; THEREFORE THE VALUE OF THE REAL PROPERTY COVERED BY SAID LEASE WAS GREATER THAN THE VALUE OF THE PROPERTY COVERED BY THE LEASES BEGINNING IN JULY, 1922.

IT IS SHOWN THAT MUCH OF THE PROPERTY LISTED ON THE INVENTORY OF APRIL, 1921, WAS REMOVED BY MR. PEACOCK IN DECEMBER, 1921, AND THAT CERTAIN OTHER PROPERTY WAS THERETOFORE AND THEREAFTER REMOVED BY HIM. IT IS ALSO SHOWN IN A REPORT SUBMITTED UNDER DATE OF NOVEMBER 13, 1924, BY WILLIAM A. STOLLER, THE VETERANS' BUREAU OFFICER IN CHARGE OF THE PROPERTY AT THE SCHOOL, THAT NUMEROUS ARTICLES, WHICH HE SPECIFICALLY INDICATED BY REFERENCE TO THE INVENTORY, WERE DESTROYED IN THE FIRE WHICH OCCURRED AT THE SCHOOL IN JUNE, 1922. MRS. PEACOCK, IN AN AFFIDAVIT MADE FEBRUARY 3, 1925, STATED, IN SUBSTANCE, THAT THE FIRE WHICH OCCURRED IN JUNE, 1922, WAS IN THE MESS HALL AND KITCHEN OF THE SCHOOL; THAT IN MAY, 1921, THE FURNITURE AND EQUIPMENT BELONGING TO HER COMPANY AND WHICH WERE COVERED BY THE GOVERNMENT'S LEASE OF FEBRUARY 5, 1921, WERE REMOVED FROM THE SAID MESS HALL AND KITCHEN AND STORED IN OTHER BUILDINGS ON THE PREMISES; AND THAT THE PERSONAL PROPERTY DESTROYED IN THE FIRE WAS PROPERTY WHICH HAD BEEN INSTALLED TO TAKE THE PLACE OF HER PROPERTY, AND BELONGED TO THE NATIONAL SUBSISTENCE CORPORATION, WHICH HAD SOME KIND OF AN ARRANGEMENT WITH THE GOVERNMENT FOR BOARDING AND CATERING TO THE TRAINEES. REGARDLESS OF WHETHER CLAIMANT'S MESS HALL AND KITCHEN EQUIPMENT WAS OR WAS NOT DESTROYED BY THE FIRE, IT IS EVIDENT THAT IT WAS NOT USED BY THE GOVERNMENT AT ANY TIME SUBSEQUENT TO JUNE 30, 1922, THE PERIOD COVERED BY THIS CLAIM.

THE SITUATION WITH RESPECT TO THIS PERSONAL PROPERTY WOULD APPEAR TO BE THAT PRACTICALLY ALL OF WHAT WAS LEFT THEREOF ON JUNE 30, 1922, WAS LOCATED ON THE PREMISES ACQUIRED BY WILSON AT THE SHERIFF'S SALE: THAT THE PROPERTY WAS PERMITTED TO REMAIN THERE AFTER THE PREMISES HAD BEEN LEASED BY THE GOVERNMENT FROM WILSON; THAT CLAIMANT HAD THE RIGHT, IN SO FAR AS THE GOVERNMENT WAS CONCERNED, TO REMOVE AT ANY TIME AFTER JUNE 30, 1922, ALL OR ANY PART OF SAID PROPERTY; AND THAT THE CLAIMANT, HAVING NO IMMEDIATE USE FOR THE PROPERTY WHICH HAD LITTLE OR NO SALE VALUE, PREFERRED TO LEAVE IT ON THE PREMISES AT CLAIMANT'S OWN RISK RATHER THAN TO REMOVE IT AND PAY EXPENSES INCIDENT TO MOVING AND STORING ELSEWHERE. IF SUCH WERE THE FACTS, IT IS CLEAR THAT THERE IS NO LEGAL OBLIGATION ON THE GOVERNMENT TO PAY FOR ANY REASONABLE USE THAT MAY HAVE BEEN MADE OF SAID PROPERTY WITH THE KNOWLEDGE AND SANCTION OF THE OWNERS SO LONG AS IT WAS PERMITTED TO REMAIN ON THE PREMISES.

FURTHERMORE, IT APPEARS THAT IN MAY, 1923, MRS. PEACOCK WAS NOTIFIED BY THE VETERANS' BUREAU THAT HER LEASE OF JULY 1, 1922, UNDER WHICH RENT WAS BEING PAID AT THE RATE OF $6,000 PER ANNUM ON PROPERTY OF THE APPRAISED VALUE OF ONLY $11,700, WOULD TERMINATE ON JUNE 30, 1923, AND WOULD NOT BE RENEWED FOR ANY PERIOD THEREAFTER AT SUCH AN EXORBITANT RENTAL. WITH REFERENCE THERETO, MRS. PEACOCK, FOR THE CORPORATION, HER HUSBAND AND HERSELF, SUBMITTED TO THE DIRECTOR OF THE VETERANS' BUREAU A STATEMENT SWORN TO UNDER DATE OF MAY 28, 1923, READING IN PART AS FOLLOWS:

IN LEASING THE PREMISES DEMISED BY THE PRESENT LEASE OF JULY 1, 1922, THE AMOUNT OF RENT RESERVED WAS NOT FIXED SOLELY IN ACCORDANCE WITH THE REASONABLE RENTAL VALUE OF SAID REAL ESTATE. IT WAS THE PURPOSE IN ARRIVING AT SAID RENTAL TO EXTINGUISH ALL CLAIMS WHICH THE CORPORATION, MY HUSBAND AND MYSELF MIGHT HAVE AGAINST THE UNITED STATES ON ACCOUNT OF THE MATTERS RELATED ABOVE AND FOR WHICH NO REIMBURSEMENT HAD BEEN MADE BY THE GOVERNMENT, THEREBY CAUSING THE PROPERTY TO BE SOLD BY FORECLOSURE PROCEEDINGS, ALL TO A GREAT LOSS TO THE PEACOCK MILITARY COLLEGE, TO MY HUSBAND AND TO MYSELF. THIS UNDERSTANDING WAS HAD ORALLY WITH THE AGENTS OF THE UNITED STATES AND WAS NOT CARRIED INTO THE PROVISIONS OF THE WRITTEN LEASE. THE ORAL UNDERSTANDING AND AGREEMENT UPON THE PART OF MY HUSBAND AND MYSELF AND AFORESAID CORPORATION WAS THAT IN CONSIDERATION OF A FOUR YEAR LEASE AT A RESERVED RENT OF $6,000.00 PER YEAR SAID CORPORATION, MY HUSBAND AND MYSELF RELEASED AND EXTINGUISHED ALL CLAIMS FOR REIMBURSEMENT OF MONEYS ADVANCED FOR IMPROVEMENTS FOR THE UNITED STATES ANYWHERE AND ALL CLAIMS ON ACCOUNT OF THE USE AND OCCUPATION OF THE PERSONAL PROPERTY OR THE CONTINUED USE AND OCCUPATION OF SAID PERSONAL PROPERTY UNTIL THE EXPIRATION OF THIS PRESENT LEASE OF JULY 1, 1922, RESERVING HOWEVER, TO OURSELVES THE RIGHT TO HAVE SAID PERSONAL PROPERTY OR ITS EQUIVALENT RETURNED TO US IN GOOD CONDITION, ORDINARY WEAR AND TEAR EXCEPTED.

AT THE TIME OF THE MAKING OF SAID LEASE OF JULY 1, 1922, THE SAID REAL ESTATE MENTIONED IN THE LEASE OF FEBRUARY 5, 1921, HAVING BEEN SOLD, THE UNITED STATES WAS OCCUPYING SAID PREMISES UNDER A LEASE FROM THE NEW OWNER AND WAS OCCUPYING A PART OF THE PREMISES MENTIONED IN SAID LEASE OF JULY 1, 1922, AND WAS HOLDING AND USING THE FURNITURE, FIXTURES, PARAPHERNALIA AND OTHER PERSONAL PROPERTY HEREINABOVE MENTIONED WHICH HAD NOT BEEN SOLD UNDER FORECLOSURE. THE PURPOSE AND INTENT OF THE LEASE OF JULY 1, 1922, THEREFORE, WAS TO LEASE AND LET TO THE UNITED STATES THE SPECIFIC REAL PROPERTY THEREIN MENTIONED BELONGING WHOLLY TO MYSELF, AND ALSO THE FURNITURE, FIXTURES AND PARAPHERNALIA HERETOFORE MENTIONED AND ALREADY THEN IN POSSESSION OF THE GOVERNMENT, AND TO EXTINGUISH ALL CLAIMS WHICH THE LESSOR AND LESSEE MIGHT HAVE AGAINST EACH OTHER GROWING OUT OF SAID ORIGINAL LEASES AND THE MATTERS HEREINABOVE RELATED, AND WAS MADE WITH THE UNDERSTANDING THAT THE UNITED STATES WOULD FAITHFULLY AND FULLY PAY THE RENTAL THEREIN RESERVED FOR THE FULL FOUR-YEAR TERM MENTIONED IN SAID LEASE OF JULY 1, 1922, AND AT THE END OF SAID PERIOD WOULD DELIVER UP SAID PREMISES AND SAID PERSONAL PROPERTY TO MYSELF IN GOOD ORDER AND CONDITION, REASONABLE USE AND WEAR THEREOF EXCEPTED.

BY LETTER OF THE SAME DATE, MAY 28, 1923, THE DIRECTOR OF THE VETERANS' BUREAU ADVISED MRS. PEACOCK THAT, IN VIEW OF THE STATEMENTS MADE BY HER, THE PREMISES WOULD CONTINUE TO BE OCCUPIED BY THE VETERANS' BUREAU AT THE RENTAL OF $6,000 PER ANNUM UNTIL JUNE 30, 1924. THEREAFTER THE LEASE WAS FORMALLY RENEWED "FOR THE TERM BEGINNING JULY 1, 1923, AND ENDING JUNE 30, 1924," WHICH RENEWAL MRS. PEACOCK "ACKNOWLEDGED AND UNQUALIFIEDLY ACCEPTED" OCTOBER 13, 1923. RENT HAS BEEN PAID UNDER SAID LEASE AT THE RATE OF $6,000 PER ANNUM FOR THE ENTIRE PERIOD FROM JULY 1, 1922, TO JUNE 30, 1924, DATE OF TERMINATION, AND IT DOES NOT APPEAR THAT ANY PART OF SAID PROPERTY HAS BEEN USED BY THE GOVERNMENT SINCE SAID DATE, IT APPEARING THAT THE SCHOOL WAS CLOSED AT OR ABOUT THAT TIME.

FROM THE FACTS HEREIN SET FORTH IT IS CLEAR THAT THE CLAIMANT HAS NO LEGAL CLAIM AGAINST THE GOVERNMENT FOR RENT OR COMPENSATION FOR USE OF THE PERSONAL PROPERTY IN QUESTION, AND THEREFORE SAID CLAIM MUST BE AND IS DISALLOWED.

FROM THE RECORDS AND REPORTS TRANSMITTED TO THIS OFFICE IN CONNECTION WITH THIS CLAIM, IT IS APPARENT THAT THE VETERANS' BUREAU WAS ATTEMPTING TO COMPENSATE CLAIMANT IN SOME WAY FOR THE LOSS SUSTAINED AS A RESULT OF EXPENDITURES MADE FOR IMPROVEMENTS IN 1921. THE FIRST ATTEMPT AT AN ADJUSTMENT ON ACCOUNT OF SAID EXPENDITURES WAS THE SUPPLEMENTAL AGREEMENT OF DECEMBER 8, 1921. THAT AGREEMENT PURPORTED TO ALLOW A RENTAL OF $2,975.48 FOR INCREASED FACILITIES THAT WERE STATED TO HAVE COST $10,828.38 AND FOR THE FARM LAND WHICH THE BUREAU INDUCED THE CLAIMANT TO INCLUDE IN THE LEASE ON THE BASIS OF A VALUATION OF $10,000 WHEN, AS A MATTER OF FACT, CLAIMANT DID NOT OWN BUT WAS ONLY LEASING SAID LAND, PROBABLY AT A NOMINAL RENTAL, AND HAD EXPRESSED A WILLINGNESS THAT THE GOVERNMENT SHOULD MAKE SUCH USE THEREOF AS WAS CONTEMPLATED WITHOUT CHARGE. IT MAY BE STATED HERE THAT THAT SAME TRACT OF LAND HAS BEEN LEASED BY THE GOVERNMENT FROM THE OWNER THEREOF FOR THE PERIOD SUBSEQUENT TO JUNE 30, 1922, AT $450 PER ANNUM. IT THUS APPEARS THAT IF THE GOVERNMENT HAD CONTINUED TO OCCUPY THE PROPERTY UNDER LEASE FROM CLAIMANT UPON THE TERMS OF THE LEASE OF FEBRUARY 5, 1921, AS MODIFIED BY THE SUPPLEMENTAL AGREEMENT OF DECEMBER 8, 1921, UP TO JUNE 30, 1925, AS APPARENTLY CONTEMPLATED, THE INCREASE IN RENT PAID UNDER THE SAID SUPPLEMENTAL AGREEMENT IN EXCESS OF THE REASONABLE RENTAL VALUE OF THE FARM LAND WOULD HAVE REIMBURSED CLAIMANT FOR APPROXIMATELY THE ENTIRE COST OF THE IMPROVEMENTS REFERRED TO IN SAID SUPPLEMENTAL AGREEMENT, AND SUCH, NO DOUBT, WAS THE INTENT OF THE PARTIES, ALTHOUGH THE TERMS OF THE AGREEMENT AND THE ADMINISTRATIVE REPORT SUBMITTED WITH THE REQUEST FOR APPROVAL OF SAID AGREEMENT WOULD INDICATE OTHERWISE. BUT AS HEREINBEFORE SHOWN THIS ARRANGEMENT TERMINATED JUNE 30, 1922.

THE NEXT ATTEMPT OF THE BUREAU TO MAKE RESTITUTION IN THE MATTER WAS IN THE LEASE OF JULY 1, 1922, WHEN IT UNDERTOOK TO PAY MRS. PEACOCK, WITHIN A PERIOD OF FOUR YEARS, RENT TO THE AMOUNT OF $24,000 FOR THE USE OF PROPERTY REPRESENTING AN INVESTMENT OF ONLY $11,700, WITH A RENTAL VALUE OF PROBABLY LESS THAN $1,000 PER ANNUM. AS THAT LEASE WAS PERMITTED TO RUN FOR ONLY TWO YEARS, CLAIMANT EVIDENTLY FEELS THAT THE GOVERNMENT IS STILL MORALLY AND EQUITABLY INDEBTED TO IT IN THE SUM OF APPROXIMATELY $10,000 ON ACCOUNT OF ITS LOSS RESULTING FROM EXPENDITURES MADE FOR IMPROVEMENTS IN 1921. IT IS TRUE THAT THE IMPROVEMENTS WERE MADE TO CLAIMANT'S OWN PROPERTY BUT FOR THE MOST PART THEY WERE OF SUCH CHARACTER AS TO ADD LITTLE OR NOTHING TO THE VALUE OF THE PROPERTY EXCEPT FOR THE EXTRAORDINARY PURPOSES FOR WHICH THE GOVERNMENT WAS USING THE PROPERTY; FOR INSTANCE, THE THREE SHOP BUILDINGS ERECTED ON MRS. PEACOCK'S PROPERTY AT A COST TO CLAIMANT OF OVER $7,000 ADD LITTLE TO THE VALUE OF HER PROPERTY AND THE SALVAGE VALUE THEREOF IS SHOWN TO BE APPROXIMATELY $500.

IT MAY BE STATED, ALSO, THAT PAPERS ON FILE IN THIS CASE INDICATE THAT THE GOVERNMENT OFFICERS IN CHARGE OF THE SCHOOL ACCEPTED VOLUNTARY SERVICES FROM THE CLAIMANT IN THE FORM OF A LOAN OF CERTAIN LIVESTOCK (CHICKENS, RABBITS, AND HOGS) IN VIOLATION OF THE PROVISIONS OF SECTION 3679, REVISED STATUTES, AS AMENDED BY SECTION 3 OF THE ACT OF FEBRUARY 27, 1906, 34 STAT. 48, 49.

WHILE I AM INCLINED TO THE VIEW THAT MRS. PEACOCK HAS A MORAL AND EQUITABLE CLAIM AGAINST THE GOVERNMENT GROWING OUT OF THE VARIOUS TRANSACTIONS HEREIN REFERRED TO, THERE HAS BEEN ESTABLISHED NO LEGAL CLAIM SUCH AS COULD BE ALLOWED AND CERTIFIED BY THIS OFFICE. THE MATTER WOULD APPEAR TO BE PROPER FOR PRESENTATION TO CONGRESS WITH A VIEW TO OBTAINING RELIEF BY MEANS OF SPECIAL LEGISLATION.

THERE IS ANOTHER MATTER REQUIRING CONSIDERATION IN CONNECTION WITH THIS CLAIM. THE LEASE AGREEMENT OF FEBRUARY 5, 1921, STIPULATED THAT THE LESSOR SHOULD FURNISH LIGHT, WATER, AND JANITOR SERVICE AND THAT THE GOVERNMENT SHOULD PAY THEREFOR IN ADDITION TO THE RENTAL, THE SUM OF $8,000 PER ANNUM. THE SUPPLEMENTAL AGREEMENT OF DECEMBER 8, 1921, CONTAINED THE FOLLOWING PROVISIONS:

WHEREAS THE FURNISHING OF LIGHT, WATER, AND JANITOR SERVICE BY THE SAID PEACOCK MILITARY COLLEGE HAS RESULTED IN CONFUSION AND UNSATISFACTORY SERVICE BY REASON OF THE FACT THAT THE JANITORS ARE EMPLOYED BY ONE PARTY AND DIRECTED BY THE OTHER, AND

WHEREAS IT IS THE DESIRE OF THE PARTIES HERETO, FOR THIS REASON, TO RELIEVE THE SAID PEACOCK MILITARY COLLEGE FROM ITS OBLIGATION TO FURNISH SUCH SERVICE AND TO DEDUCT THE AMOUNT PAID THEREFOR FROM THE RENT STIPULATED BY SAID AGREEMENT,

NOW, THEREFORE, THIS SUPPLEMENTAL AGREEMENT, MADE AND ENTERED INTO THIS 8TH DAY OF DECEMBER, 1921, * * * WITNESSETH:

THAT FOR AND IN CONSIDERATION OF THE PREMISES AS HEREIN ABOVE SET FORTH PARTIES HERETO AGREE AS FOLLOWS:

FOURTH. THAT EXCEPT AS HEREIN OTHERWISE PROVIDED THE PREMISES AND PROPERTY HEREBY LEASED SHALL BE SUBJECT IN ALL RESPECTS TO THE TERMS AND CONDITIONS CONTAINED IN THE AGREEMENT OF LEASE DATED FEBRUARY 5, 1921, HEREIN REFERRED TO, AND TO WHICH THIS AGREEMENT IS SUPPLEMENTAL; PROVIDED, HOWEVER, THAT FROM AND AFTER THE 1ST DAY OF JANUARY, ONE THOUSAND NINE HUNDRED AND TWENTY-TWO, THE SAID PARTY OF THE FIRST PART SHALL BE RELIEVED OF THE OBLIGATION ASSUMED BY IT UNDER SAID AGREEMENT OF LEASE DATED FEBRUARY 5, 1921, AND UNDER THIS LEASE, FOR FURNISHING LIGHT, WATER, AND JANITOR SERVICE TO THE PREMISES AND PROPERTY COVERED BY SAID LEASES, AND THAT FROM AND AFTER SAID DATE SUCH SERVICE SHALL BE FURNISHED BY THE PARTY OF THE SECOND PART, IT BEING UNDERSTOOD AND AGREED THAT IN CONSIDERATION THEREFOR THERE SHALL BE DEDUCTED THEREAFTER FROM THE SUM STIPULATED TO BE PAID TO THE SAID PARTY OF THE FIRST PART UNDER SAID AGREEMENT OF LEASE DATED FEBRUARY 5, 1921, THE AMOUNT STIPULATED THEREIN TO BE PAID FOR FURNISHING SUCH LIGHT, WATER, AND JANITOR SERVICE.

NOTWITHSTANDING THESE PLAIN PROVISIONS OF THE AGREEMENT AND THE FACT THAT THE CLAIMANT FURNISHED NO LIGHT, WATER, OR JANITOR SERVICE AFTER DECEMBER 31, 1921, THE VETERANS' BUREAU INADVERTENTLY CONTINUED TO MAKE PAYMENTS TO THE CLAIMANT FOR LIGHT, WATER, AND JANITOR SERVICE AT THE RATE OF $8,000 PER ANNUM UNTIL THE TERMINATION OF THE LEASE, JUNE 30, 1922, RESULTING IN AN OVERPAYMENT AGGREGATING $4,000, WHICH SAID AMOUNT IS ADMITTED IN THE CLAIM OF DECEMBER 30, 1924, TO BE DUE THE UNITED STATES. IT THEREFORE BECOMES NECESSARY TO CERTIFY A CHARGE AGAINST CLAIMANT IN THE SUM OF $4,000.