B-126285, DEC. 27, 1955

B-126285: Dec 27, 1955

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PUBLIC HOUSING ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 6. YOU STATE THAT PRESUMABLY THE FIGURES IN INK IN THE LOWER RIGHT HAND CORNER OF THE DUPLICATE TAX BILL REPRESENTING THE PENALTY AND LIEN COSTS WERE ADDED BY MR. YOU STATE THAT BOROUGH AND COUNTY TAXES ARE LEVIED ON A CALENDAR YEAR BASIS AND THAT SCHOOL TAXES ARE FOR THE YEAR BEGINNING JULY 1 AND ENDING JUNE 30. EXECUTORS AND TRUSTEES UNDER THE WILL OF WILLIAM A. THE LESSORS WERE NOTIFIED THAT THE LEASE WAS TERMINATED AS OF JUNE 30. THAT SINCE THE LEASE WAS TERMINATED ON THAT DAY. IN WHICH SOME PRIOR DECISIONS OF THAT STATE ARE DISTINGUISHED. THE COURT NEVERTHELESS HELD THAT THE TAXES PAID BY THE LESSEE WERE PAID AS TAXES AND NOT AS RENT.

B-126285, DEC. 27, 1955

TO H. R. DUCKETT, AUTHORIZED CERTIFYING OFFICER, PUBLIC HOUSING ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 6, 1955, TRANSMITTING A VOUCHER, TOGETHER WITH RELATED PAPERS, STATED IN FAVOR OF THE WILLIAM A. BAUER ESTATE IN THE AMOUNT OF $606.30 AND ADMINISTRATIVELY APPROVED TO THE EXTENT OF $401.92. YOU REQUEST OUR DECISION AS TO WHETHER IT MAY PROPERLY BE CERTIFIED FOR PAYMENT.

THE AMOUNT CLAIMED ON THE VOUCHER REPRESENTS DELINQUENT BOROUGH, SCHOOL, AND COUNTY TAXES WHICH BECAME DUE AND PAYABLE ON JULY 1, 1950, IN THE AGGREGATE AMOUNT OF $450, TOGETHER WITH PENALTIES AND LIEN COSTS TOTALING $156.30, ASSESSED AGAINST THE PROPERTY OCCUPIED UNDER LEASE HA-2019-H137, DATED JULY 29, 1943. YOU STATE THAT PRESUMABLY THE FIGURES IN INK IN THE LOWER RIGHT HAND CORNER OF THE DUPLICATE TAX BILL REPRESENTING THE PENALTY AND LIEN COSTS WERE ADDED BY MR. BAUER OR THE TAX COLLECTOR. ALSO, YOU STATE THAT BOROUGH AND COUNTY TAXES ARE LEVIED ON A CALENDAR YEAR BASIS AND THAT SCHOOL TAXES ARE FOR THE YEAR BEGINNING JULY 1 AND ENDING JUNE 30.

BY THE LEASE REFERRED TO, ANTHONY BAUER AND LAWRENCE BAUER, EXECUTORS AND TRUSTEES UNDER THE WILL OF WILLIAM A. BAUER, DECEASED, AND OTHERS, LOT THE PROPERTY TO THE GOVERNMENT FOR A TERM OF SEVEN YEARS BEGINNING ON AUGUST 9, 1943, AT AN ANNUAL RENTAL OF $1 PAYABLE IN ADVANCE ON THE NINTH DAY OF AUGUST EACH YEAR OF THE TERM. UNDER PARAGRAPH 6, THE GOVERNMENT AGREED TO PAY EACH YEAR DURING THE TERM ALL OF THE TAXES, WATER RATES, ASSESSMENTS, AND MUNICIPAL OR GOVERNMENTAL RATES LEVIED AND IMPOSED ON THE LEASED PREMISES AND WHICH BECAME DUEAND PAYABLE DURING THE LEASE TERM. PARAGRAPH 11 GRANTED THE GOVERNMENT THE RIGHT TO CANCEL THE LEASE AT ANY TIME DURING THE TERM UPON 30 DAYS' WRITTEN NOTICE. THE SAME PARAGRAPH PROVIDED THAT IN THE EVENT OF SUCH TERMINATION THE INSTALLMENT OF RENT PAYABLE FOR THE PERIOD DURING WHICH THE TERMINATION OCCURRED WOULD BE PRORATED.

YOU STATE THAT BY LETTER DATED MAY 31, 1950, THE LESSORS WERE NOTIFIED THAT THE LEASE WAS TERMINATED AS OF JUNE 30, 1950, PURSUANT TO PARAGRAPH 11, AND THAT SINCE THE LEASE WAS TERMINATED ON THAT DAY, OR ONE DAY BEFORE THE TAXES BECAME DUE AND PAYABLE, THE GOVERNMENT DID NOT PAY THE TAXES.

SINCE CANCELLATION OF THE LEASE AS OF JUNE 30, 1950, TERMINATED ALL OBLIGATIONS FOR TAXES ACCRUING THEREAFTER, THE ONLY BASIS UPON WHICH PAYMENT OF THE TAXES CLAIMED COULD BE AUTHORIZED WOULD BE TO REGARD THE TAXES AS PART OF THE RENT TO BE PRORATED IN ACCORDANCE WITH PARAGRAPH 11. THE COURT DECISIONS ON THE QUESTION OF WHETHER TAXES, PAID BY A LESSEE UNDER A PROVISION OF HIS LEASE REQUIRING HIM TO DO SO, MAY BE VIEWED AS PART OF THE RENT APPEAR NOT TO BE UNIFORM, BEING GOVERNED BY THE INTERPRETATION OF THE INTENT OF THE PARTICULAR PROVISIONS OF THE LEASE IN EACH CASE. SEE, AMONG OTHER CASES, THE FOLLOWING: EASTON COAL CORPORATION V. YOKE, 67 F.SUPP. 166; MILES CORPORATION V. LINDEL, 107 F.2D 729; GILBERTSON FUELS V. PHILADELPHIA AND READING C.ANDI. ., 20 A.2D 217 (SUPREME COURT OF PENNSYLVANIA, MAY 12, 1941); GRANT COMPANY V. MCLAUGHLIN, 129 CONN. 663; 30 A.2D 921; GUILD V. SAMPSON, 232 MASS. 509, 122 N.E. 712. THE PENNSYLVANIA CASE CITED, IN WHICH SOME PRIOR DECISIONS OF THAT STATE ARE DISTINGUISHED, APPEARS CLEARLY TO PRECLUDE THE CONCLUSION THAT THE TAXES PAYABLE BY THE GOVERNMENT IN THIS INSTANCE MAY BE CONSIDERED AS RENT. IN THAT CASE THE LEASE PROVIDED THAT THE LESSEE SHOULD PAY TAXES IMPOSED DURING THE LEASE TERM "TO THE LESSORS * * * WHO SHALL PAY THE SAME TO THE PROPER AUTHORITIES; " AND FURTHER PROVIDED THAT IF THE LESSEE FAILED TO PAY THE TAXES PROMPTLY THE LESSORS COULD PAY THE SAME "AND DISTRAIN THEREFOR/E) AS RENT OR ROYALTY IN ARREAR, SUCH UNPAID TAXES BEING CONSIDERED AS PART OF THE RENT RESERVED BY THIS LEASE.' THE COURT NEVERTHELESS HELD THAT THE TAXES PAID BY THE LESSEE WERE PAID AS TAXES AND NOT AS RENT, AND THAT THE LESSEE HAD NO CLAIM AGAINST THE LESSORS FOR THE AMOUNT OF SUCH TAXES WHICH HAD BEEN DETERMINED TO BE EXCESSIVE, THE LESSORS NOT HAVING RECOVERED SUCH EXCESS FROM THE TAXING AUTHORITY.

IT IS TRUE THAT, SINCE THE OWNER HAD ALREADY PAID THE TAXES FOR 1943 WHEN THE GOVERNMENT ACQUIRED THE LEASEHOLD ON AUGUST 9, 1943, THE EFFECT OF THE NONPAYMENT BY THE GOVERNMENT OF THE 1950 TAXES IS THAT THE GOVERNMENT HAD THE USE OF THE PROPERTY FOR NEARLY SEVEN YEARS, BUT PAID TAXES FOR ONLY SIX. THE EXPRESS TERMS OF THE LEASE ARE TOO EXPLICIT, HOWEVER, TO PERMIT OF ANY MODIFICATION. HAD THE LESSOR NOT PAID THE 1943 TAXES THE GOVERNMENT WOULD HAVE BEEN ENTITLED--- BUT NOT REQUIRED--- UNDER THE TERMS OF PARAGRAPH 5 TO PAY THEM AND DEDUCT THE FULL AMOUNT FROM ANY RENTS DUE THE LESSOR.

UNDER PARAGRAPH 11 LIABILITY FOR TAXES WAS DEFINITELY AND UNEQUIVOCALLY MADE DEPENDENT UPON THE TAXES BEING PAYABLE DURING THE TERM OF THE LEASE. THE TAXES IN QUESTION WERE NOT PAYABLE PRIOR TO TERMINATION OF THE LEASE, AND THEREFORE NO PART OF THEM MAY BE PAID. IT MAY BE REMARKED, HOWEVER, THAT BY THE TERMINATION OF THE LEASE THE LESSOR RECEIVED THE COMPENSATING BENEFIT OF COMING INTO THE ENJOYMENT OF THE PROPERTY AND THE RIGHT TO THE INCOME THEREFROM 40 DAYS EARLIER ..END :