B-126232, DEC. 19, 1955

B-126232: Dec 19, 1955

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TO THE HONORABLE SECRETARY OF COMMERCE: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 30. DOUBT AS TO THE VALIDITY APPEARS TO HAVE ARISEN BECAUSE OF THE "NO LIMIT" RENEWAL OPTION GRANTED THE GOVERNMENT IN PARAGRAPH 5 OF THE LEASE. UNDER PARAGRAPH 5 THE GOVERNMENT IS GRANTED THE OPTION TO RENEW THE LEASE FROM YEAR TO YEAR AT THE SAME RENTAL. THE WORDS "NO LIMIT" WERE INSERTED. PRESUMABLY BECAUSE THOSE ARE THE IDENTICAL WORDS USED IN THE LESSOR'S BID OF MAY 9. THE GENERAL RULE IS THAT A LEASE PROVIDING FOR MORE THAN ONE RENEWAL WILL BE GIVEN EFFECT AND ENFORCED. 32 AM.JR. WHILE GENERALLY PERPETUAL RENEWALS ARE NOT FAVORED BY THE COURTS ON THE GROUND THEY TEND TO EFFECT A PERPETUITY. YET COURTS HAVE UPHELD THE RIGHT OF LESSEES UNDER SUCH RENEWALS WHERE.

B-126232, DEC. 19, 1955

TO THE HONORABLE SECRETARY OF COMMERCE:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 30, 1955, WITH ENCLOSURES, REQUESTING DECISION CONCERNING THE VALIDITY OF LEASE C8CA2324, DATED MAY 16, 1947, AS RENEWED, AND WHETHER THE CIVIL AERONAUTICS ADMINISTRATION MAY CONTINUE TO RENEW IT AT THE MONTHLY RATE OF $117.50. DOUBT AS TO THE VALIDITY APPEARS TO HAVE ARISEN BECAUSE OF THE "NO LIMIT" RENEWAL OPTION GRANTED THE GOVERNMENT IN PARAGRAPH 5 OF THE LEASE.

THE LEASE PROVIDES FOR AN ORIGINAL TERM BEGINNING JUNE 1, 1947, AND ENDING JUNE 30, 1947, AT A MONTHLY RENTAL OF $117.50. UNDER PARAGRAPH 5 THE GOVERNMENT IS GRANTED THE OPTION TO RENEW THE LEASE FROM YEAR TO YEAR AT THE SAME RENTAL. INSTEAD OF LIMITING THE RENEWAL PERIOD TO A SPECIFIC TIME BEYOND WHICH THE LEASE COULD NOT BE EXTENDED, THE WORDS "NO LIMIT" WERE INSERTED, PRESUMABLY BECAUSE THOSE ARE THE IDENTICAL WORDS USED IN THE LESSOR'S BID OF MAY 9, 1947, SUBMITTED IN RESPONSE TO A BID INVITATION DATED MAY 5, 1947. THE GENERAL CONDITIONS IN THE INVITATION REQUIRED THE BIDDERS TO INDICATE THE DATE BEYOND WHICH RENEWAL OF THE LEASE COULD NOT BE MADE AND IN RESPONSE TO SUCH REQUIREMENT THE LESSOR INSERTED THE WORDS "NO LIMIT" IN THE SPACE PROVIDED THEREFOR.

THE GENERAL RULE IS THAT A LEASE PROVIDING FOR MORE THAN ONE RENEWAL WILL BE GIVEN EFFECT AND ENFORCED. 32 AM.JR. LANDLORD AND TENANT SEC. 966. WHILE GENERALLY PERPETUAL RENEWALS ARE NOT FAVORED BY THE COURTS ON THE GROUND THEY TEND TO EFFECT A PERPETUITY, YET COURTS HAVE UPHELD THE RIGHT OF LESSEES UNDER SUCH RENEWALS WHERE, CONSTRUING ALL THE PROVISIONS OF THE INSTRUMENT INDICATING A PERPETUITY--- SUCH AS "FOREVER," "FROM TIME TO TIME PERPETUALLY," "AS LONG AS THEY WANT IT"- - THE INTENT TO GRANT SUCH A RIGHT WAS CLEARLY EVIDENT. 31 A.L.R. 2D 631; 32 AM.JUR., LANDLORD AND TENANT, SEC. 969; 51 C.J.S., LANDLORD AND TENANT SEC. 61.

IN THE PRESENT INSTANCE THE LANGUAGE USED BY THE PARTIES EVINCES A CLEAR INTENTION THAT THE GOVERNMENT SHOULD HAVE A PERPETUAL RENEWAL RIGHT FROM YEAR TO YEAR UPON THE TERMS AND CONDITIONS SPECIFIED, SUBJECT TO TIMELY NOTICE; OTHERWISE, THE PARTIES WOULD HAVE INSERTED IN THE SPACE PROVIDED THEREFOR A DATE BEYOND WHICH THE LEASE COULD NOT HAVE BEEN EXTENDED IN ACCORDANCE WITH THE USUAL PRACTICE IN SUCH CASES.

ACCORDINGLY, PARAGRAPH 5 MUST BE CONSTRUED AS CONFERRING A VALID RIGHT IN THE GOVERNMENT TO PERPETUAL RENEWALS UPON THE SAME TERMS AND CONDITIONS OF THE ORIGINAL LEASE, SUBJECT, OF COURSE, TO TIMELY NOTICE. THEREFORE, SO LONG AS THE NEED FOR THE PROPERTY CONTINUES, THE LEASE PROPERLY MAY BE RENEWED INDEFINITELY BY THE UNITED STATES, UPON APPROPRIATE WRITTEN NOTICE. OF COURSE, IF YOU SHOULD DETERMINE THAT IT WOULD BE ADVANTAGEOUS TO THE UNITED STATES, BOTH FINANCIALLY AND ADMINISTRATIVELY, NOT TO CONTINUE THE LEASE BEYOND THE CURRENT FISCAL YEAR AND TO SEEK OTHER QUARTERS IN KEEPING WITH CHANGED ADMINISTRATIVE REQUIREMENTS, WE WOULD NOT BE REQUIRED TO OBJECT TO SUCH ACTION, PROVIDED THERE BE COMPLIANCE WITH THE USUAL STATUTORY REQUIREMENTS RELATING TO THE EXECUTION OF LEASES. IF, ON THE OTHER HAND, THE PRESENT QUARTERS SATISFACTORILY MEET THE ADMINISTRATIVE REQUIREMENTS, EXCEPT FOR THE LESSOR'S FAILURE TO FURNISH SATISFACTORY SERVICE AS PROVIDED IN PARAGRAPH 6 OF THE LEASE, THE GOVERNMENT MAY, AFTER PROPER NOTICE TO LESSOR, FURNISH OR OTHERWISE OBTAIN SUCH SERVICES AND DEDUCT THE COST OF SAME FROM CURRENT RENTAL VOUCHERS. 15 COMP. GEN. 1064.