A-81468, MARCH 6, 1937, 16 COMP. GEN. 820

A-81468: Mar 6, 1937

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LEASES - AUTHORITY OF EXECUTORS AND ADMINISTRATORS - RENTAL PAYMENTS UNDER UNAUTHORIZED LEASES AN EXECUTOR OR ADMINISTRATOR IS WITHOUT AUTHORITY TO LEASE HIS DECEDENT'S REAL ESTATE TO THE GOVERNMENT IN THE ABSENCE OF A TESTAMENTARY OR STATUTORY PROVISION. TO HAVE HAD JURISDICTION OF BOTH THE SUBJECT MATTER OF THE ACTION AND THE PARTIES. THE COURT ORDER WAS MADE A MATTER OF RECORD. IS ILLEGAL AND VOID AS CONSTITUTING OR TENDING TO CONSTITUTE A FRAUD ON THIRD PERSONS. THE ESTATE IS ENTITLED TO A REASONABLE RENTAL FOR THE PREMISES INVOLVED UNTIL A VALID LEASE IS EXECUTED OR OTHER PREMISES LOCATED. AT A RENTAL OF $300 PER ANNUM WAS THE SUBJECT OF LETTER OF JULY 18. IT APPEARS THAT THE PROPERTY WAS OWNED BY MRS.

A-81468, MARCH 6, 1937, 16 COMP. GEN. 820

LEASES - AUTHORITY OF EXECUTORS AND ADMINISTRATORS - RENTAL PAYMENTS UNDER UNAUTHORIZED LEASES AN EXECUTOR OR ADMINISTRATOR IS WITHOUT AUTHORITY TO LEASE HIS DECEDENT'S REAL ESTATE TO THE GOVERNMENT IN THE ABSENCE OF A TESTAMENTARY OR STATUTORY PROVISION, OR AN ORDER OF THE COURT, AND THEN ONLY IN STRICT CONFORMITY WITH THE AUTHORITY SO CONFERRED, AND A TESTAMENTARY PROVISION AUTHORIZING A SALE "WITHOUT ORDER OF THE COURT, BUT WHICH TRANSACTION SHALL BE SUBJECT TO THE EXPRESS APPROVAL OF COURT" MAY NOT BE CONSTRUED AS AUTHORIZING A LEASE OF THE PROPERTY INVOLVED. WHERE AN EXECUTOR WITHOUT TESTAMENTARY OR STATUTORY AUTHORITY TO LEASE HIS DECEDENT'S REAL ESTATE, EXECUTES A LEASE IN FAVOR OF THE GOVERNMENT FOR POST OFFICE QUARTERS AT A RENTAL RATE LESS THAN THAT STIPULATED BY ORDER OF A COURT OF GENERAL JURISDICTION, PRESUMED, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY, TO HAVE HAD JURISDICTION OF BOTH THE SUBJECT MATTER OF THE ACTION AND THE PARTIES, AND THE COURT ORDER WAS MADE A MATTER OF RECORD, THE LEASE, UNDER THE LAWS OF IOWA, IS ILLEGAL AND VOID AS CONSTITUTING OR TENDING TO CONSTITUTE A FRAUD ON THIRD PERSONS, AND THE ESTATE IS ENTITLED TO A REASONABLE RENTAL FOR THE PREMISES INVOLVED UNTIL A VALID LEASE IS EXECUTED OR OTHER PREMISES LOCATED--- IN THIS CASE AT THE RATE STIPULATED IN THE COURT ORDER UNTIL DATE OF ADMINISTRATIVE NOTIFICATION OF PAYMENT AT A HIGHER RATE. COHEN V. HAYDEN, 180 IOWA 232, HOLDING THE EXECUTOR PERSONALLY LIABLE TO THE ESTATE IN CONNECTION WITH AN UNAUTHORIZED LEASE, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE POSTMASTER GENERAL, MARCH 6, 1937:

A LEASE DATED JUNE 8, 1935, SIGNED IN THE NAME OF THE ESTATE OF ELIZA A. BUTLER, DECEASED, BY FRANK P. BUTLER, AS EXECUTOR, COVERING POST OFFICE QUARTERS AT NORTH ENGLISH, IOWA, FOR THE TERM OF 5 YEARS BEGINNING MAY 1, 1935, AND ENDING APRIL 30, 1940, AT A RENTAL OF $300 PER ANNUM WAS THE SUBJECT OF LETTER OF JULY 18, 1936, FROM THE FOURTH ASSISTANT POSTMASTER GENERAL, AND SUBSEQUENT CORRESPONDENCE.

IT APPEARS THAT THE PROPERTY WAS OWNED BY MRS. BUTLER AND THAT SHE DIED ON OR ABOUT JULY 20, 1934, LEAVING A LAST WILL AND TESTAMENT BEARING DATE MARCH 7, 1931, NAMING HER SON, FRANK P. BUTLER, EXECUTOR, GIVING HIM AS SUCH EXECUTOR A POWER OF SALE OF ALL HER REAL ESTATE WITH THE PROVISION THAT THE PROCEEDS OF THE SALE OF SUCH REAL ESTATE SHOULD, SUBJECT TO THE PAYMENT OF THE BALANCE OF CERTAIN LEGACIES THEREIN REFERRED TO, IF THEY SHOULD NOT BE PAID IN FULL FROM THE PERSONALTY, BE DIVIDED EQUALLY AMONG FOUR CHILDREN--- OF WHOM SAID FRANK P. BUTLER IS ONE--- ONE GRANDCHILD AND ONE STEPCHILD.

IT APPEARS, ALSO, THAT PRIOR TO HER DEATH THE PROPERTY HAD BEEN LEASED BY MRS. BUTLER TO THE GOVERNMENT FOR USE AS A POST OFFICE AT A RENTAL OF $43 A MONTH, THE LEASE EXPIRING ON OR ABOUT APRIL 30, 1935. UNDER DATE OF OCTOBER 23, 1934, UPON THE PETITION OF THE EXECUTOR, THE DISTRICT COURT OF IOWA, IN AND FOR IOWA COUNTY, ENTERED AN ORDER AUTHORIZING AND DIRECTING THE EXECUTOR TO MAKE A BID FOR THE FURTHER RENTAL OF THE PREMISES TO THE GOVERNMENT FOR POST OFFICE PURPOSES FOR A PERIOD OF 5 OR 10 YEARS FROM AND AFTER MAY 1, 1935, AT A RENTAL OF $30 PER MONTH AND TO ENTER INTO A LEASE ON THAT BASIS IF SAID BID SHOULD BE ACCEPTED. NOTWITHSTANDING THE COURT ORDER, IT APPEARS THAT THERE WAS EXECUTED THE LEASE OF JUNE 8, 1935, PROVIDING A RENTAL OF $300 A YEAR, OR $25 A MONTH, WHICH LEASE THE COURT DECLINED TO APPROVE.

IT FURTHER APPEARS FROM A LETTER OF JULY 18, 1936, FROM THE FOURTH ASSISTANT POSTMASTER GENERAL THAT SOME OF THE HEIRS OBJECTED TO ACCEPTING RENTAL AT LESS THAN $420 A YEAR AND THAT "THE LESSOR HAS BEEN ADVISED THAT THE LEASE MUST BE CONSIDERED INVALID AND THE POSTMASTER HAS BEEN AUTHORIZED TO PAY RENTAL AT THE RATE OF $420 A YEAR," OR $35 A MONTH FROM JANUARY 1, 1936. THE EXECUTOR WAS NOTIFIED TO THAT EFFECT IN YOUR LETTER OF JULY 18, 1936.

THEREAFTER, IN A LETTER OF OCTOBER 14, 1936, TO THIS OFFICE FROM THE FOURTH ASSISTANT POSTMASTER GENERAL, RECEIPT OF WHICH WAS ACKNOWLEDGED NOVEMBER 3, 1936, INFORMATION WAS REQUESTED WHETHER PAYMENT SHOULD BE MADE UNDER THE RENTAL APPROPRIATION OF ONLY $25 A MONTH OR WHETHER THE RENTAL SHOULD BE PAID AT THE RATE OF $30 PER MONTH, AND WHAT PROCEDURE SHOULD BE FOLLOWED IN MAKING COLLECTIONS OF THE DIFFERENCE FROM THE EXECUTOR AND HOW TO ACCOUNT FOR COLLECTIONS.

THE GENERAL RULE IS THAT, IN THE ABSENCE OF A TESTAMENTARY OR STATUTORY PROVISION OR AN ORDER OF THE COURT, AN EXECUTOR OR AN ADMINISTRATOR IS WITHOUT AUTHORITY TO LEASE HIS DECEDENTS' REAL ESTATE. 24 C.J. 190. AND WHERE SUCH AUTHORITY HAS BEEN CONFERRED IT MUST BE STRICTLY OBSERVED. COHEN V. HAYDEN, 180 IOWA 232. THE LAST WILL AND TESTAMENT OF THE DECEASED CONTAINED NO AUTHORIZATION FOR THE EXECUTOR TO LEASE THE PREMISES. PARAGRAPH 4 THEREOF AUTHORIZED HIM TO SELL AND DISPOSE OF THE REAL ESTATE, AFTER APPRAISEMENT,"WITHOUT ORDER OF THE COURT, BUT WHICH TRANSACTION SHALL BE SUBJECT TO THE EXPRESS APPROVAL OF COURT.' HOWEVER, THIS PROVISION MAY NOT BE CONSTRUED AS AUTHORIZING THE MAKING OFA LEASE OF THE PROPERTY. 24 C.J. 191.

THE COURT ORDER OF OCTOBER 23, 1934, AUTHORIZED THE EXECUTOR TO MAKE A BID FOR RENTAL OF THE PREMISES AT $30 PER MONTH AND, IN THE EVENT SUCH BID SHOULD BE ACCEPTED, TO ENTER INTO A LEASE. IN THIS CONNECTION, CHAPTER 477 OF THE IOWA CODE, 1935, PROVIDES:

10761. GENERAL JURISDICTION.--- THE DISTRICT COURT SHALL HAVE GENERAL, ORIGINAL, AND EXCLUSIVE JURISDICTION OF ALL ACTIONS, PROCEEDINGS, AND REMEDIES, BOTH CIVIL AND CRIMINAL, * * * AND SHALL HAVE AND EXERCISE ALL THE POWERS USUALLY POSSESSED AND EXERCISED BY COURTS OF RECORD.

10764. EXECUTORS AND TRUSTEES.--- IT SHALL HAVE JURISDICTION IN ALL MATTERS IN RELATION TO THE APPOINTMENT OF EXECUTORS AND TRUSTEES, AND THE MANAGEMENT AND DISPOSITION OF THE PROPERTY OF AND SETTLEMENT OF SUCH ESTATES; * * *.

IT IS WELL ESTABLISHED AS A GENERAL RULE THAT, WHERE A COURT OF GENERAL JURISDICTION HAS EXERCISED ITS POWERS, IT WILL BE PRESUMED, UNLESS THE CONTRARY APPEARS OF RECORD, THAT IT HAS JURISDICTION BOTH OF THE SUBJECT MATTER OF THE ACTION AND OF THE PARTIES. SEE 15 C.J. 827, CITING, AMONG OTHERS, NUMEROUS IOWA CASES.

IN EFFECTING A RENEWAL OF THE LEASE IT WAS MANDATORY UPON THE EXECUTOR TO ABIDE BY THE CONDITIONS STIPULATED IN THE LAWFUL ORDER OF THE COURT AND IF HE FAILED IN THIS RESPECT, HE WAS SUBJECT TO A SURCHARGE FOR THE BENEFIT OF THE HEIRS, BUT IT HAS BEEN HELD UNDER THE LAWS OF IOWA THAT CONTRACTS, THE TENDENCY OF WHICH IS TO CONSTITUTE A BREACH OF TRUST OR A BREACH OF DUTY ON THE PART OF ONE WHO STANDS IN A FIDUCIARY OR CONFIDENTIAL RELATION, ARE ILLEGAL AND VOID AS CONSTITUTING OR TENDING TO CONSTITUTE A FRAUD ON THIRD PERSONS. GLEASON V. CHICAGO, ETC. R. CO., 43 N.W. 517; CRITTENDEN V. ARMOUR, 80 IOWA 221.

AT THE TIME THE NEGOTIATIONS FOR RENEWAL OF THE LEASE WERE CONCLUDED BETWEEN THE EXECUTOR AND THE GOVERNMENT REPRESENTATIVE, THE COURT ORDER HAD BEEN A MATTER OF RECORD FOR OVER 7 MONTHS, AND APPARENTLY THE LEASE WAS SUBJECT TO APPROVAL OF THE COURT AND WAS NOT APPROVED BY THE COURT. THE GOVERNMENT OFFICIALS NECESSARILY MUST HAVE KNOWN THE EXECUTOR WAS ACTING IN A REPRESENTATIVE CAPACITY AND ITS LIMITATIONS. UNDER SUCH CIRCUMSTANCES, NO VALID LEASE RESULTED FROM THE NEGOTIATIONS, AND THERE IS NO CLEAR BASIS FOR THE UNITED STATES ASSERTING THE EXECUTOR IS PERSONALLY LIABLE. THE CASE CITED IN THIS CONNECTION, COHEN V. HAYDEN, 180 IOWA 232, IS TO BE DISTINGUISHED AS THERE THE EXECUTOR, WHO WAS ALSO A TENANT IN COMMON, ATTEMPTED TO BIND THE ESTATE AND, SINCE SHE ACTED WITHOUT AUTHORITY OF EITHER A TESTAMENTARY PROVISION OR A COURT ORDER, HER UNAUTHORIZED ACTION COULD NOT BIND THE ESTATE, ALTHOUGH THE RESULTING LEASE RENDERED HER PERSONALLY LIABLE AS A TENANT IN COMMON.

DURING THE PERIOD MAY 1, 1935, TO JULY 18, 1936, THE ESTATE IS ENTITLED TO THE REASONABLE RENTAL OF THE PREMISES. IT APPEARS TO BE MUTUALLY AGREED BETWEEN THE PARTIES THAT THE RENTAL NAMED IN THE LEASE WHICH EXPIRED APRIL 30, 1935, DOES NOT REPRESENT THE REASONABLE VALUE, NOR MAY THE ADMINISTRATIVE LETTER OF JULY 18, 1936, ADDRESSED TO THE EXECUTOR, BE ACCEPTED AS FIXING RETROACTIVELY THE REASONABLE VALUE. SEE BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 CT.CLS. 584, 607; AND A-81042, FEBRUARY 19, 1937.

ACCORDINGLY, YOU ARE ADVISED THAT FOR THE PERIOD MAY 1, 1935, TO JULY 17, 1936, INCLUSIVE, THE RATE OF RENTAL STIPULATED IN THE COURT ORDER IS FOR OBSERVING AND PAYMENT BE MADE AT THE RATE OF $30 PER MONTH. BEGINNING JULY 18, 1936, AND CONTINUING UNTIL SUCH TIME AS A VALID LEASE SHALL HAVE BEEN ENTERED INTO OR OTHER PREMISES LOCATED, PAYMENT IS AUTHORIZED AT THE RATE OF $35 PER MONTH, AS STIPULATED IN YOUR LETTER OF SAID DATE TO THE EXECUTOR.