B-126485, MAY 7, 1956

B-126485: May 7, 1956

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THE CLAIM WAS ADMINISTRATIVELY APPROVED FOR PAYMENT "IN THE AMOUNT FOUND LEGALLY DUE.'. THE PREMISES WERE REPAIRED BY THE POLISH MINISTRY OF RECONSTRUCTION AT A REPORTED COST OF APPROXIMATELY OLD ZLOTYS 617. SO FAR AS THE RECORD SHOWS THE POLISH GOVERNMENT HAS NOT BEEN REIMBURSED FOR SUCH REPAIRS ALTHOUGH IT IS REPORTED THAT THE CLAIMANTS WERE REQUESTED TO DO SO BY THE POLISH AUTHORITIES. THE ALLOCATION APPEARS TO HAVE BEEN MADE ON OR ABOUT JULY 1. SUCH ALLOCATION NEVER WAS REVOKED OR MODIFIED DURING THE PERIOD COVERED BY THE CLAIM. THE RECORD INDICATES THAT THE CLAIMANTS FLED POLAND IN 1939 AND THAT DURING THE PERIOD COVERED BY THEIR CLAIM THEY HAVE RESIDED IN ENGLAND. PARAGRAPH WAS IMPLEMENTED BY PROTOCOL.

B-126485, MAY 7, 1956

TO THE SECRETARY OF STATE:

BY LETTER OF DECEMBER 8, 1955, YOUR DEPARTMENT FORWARDED TO THE CLAIMS DIVISION, GENERAL ACCOUNTING OFFICE, FOR SETTLEMENT THE CLAIM OF WADYSLAW AND MARIE CHUDZYNSKI (CLAIM NO. 6-186) FOR $38,125 AS RENT FOR THE PREMISES LOCATED AT 17 EMILJA PLATER, WARSAW, POLAND, FOR THE PERIOD BEGINNING SEPTEMBER 1, 1945, AND ENDING SEPTEMBER 1, 1955. THE CLAIM WAS ADMINISTRATIVELY APPROVED FOR PAYMENT "IN THE AMOUNT FOUND LEGALLY DUE.'

THE RECORD SHOWS THAT AT THE CONCLUSION OF THE WAR THE MUNICIPAL BUILDINGS ADMINISTRATION OF THE CITY OF WARSAW, A COMPONENT OF THE POLISH GOVERNMENT, REQUISITIONED THE ABOVE PROPERTY UNDER EXISTING REGULATIONS. THE PREMISES WERE REPAIRED BY THE POLISH MINISTRY OF RECONSTRUCTION AT A REPORTED COST OF APPROXIMATELY OLD ZLOTYS 617, 567 ($1,544). SO FAR AS THE RECORD SHOWS THE POLISH GOVERNMENT HAS NOT BEEN REIMBURSED FOR SUCH REPAIRS ALTHOUGH IT IS REPORTED THAT THE CLAIMANTS WERE REQUESTED TO DO SO BY THE POLISH AUTHORITIES. AFTER MAKING THE REPAIRS THE POLISH GOVERNMENT, ACTING THROUGH ITS FOREIGN OFFICE, ALLOCATED THE PROPERTY TO THE UNITED STATES FOR CONSULAR AND RESIDENTIAL PURPOSES. THE ALLOCATION APPEARS TO HAVE BEEN MADE ON OR ABOUT JULY 1, 1945, OR PRIOR TO THE INITIAL DATE OF THE TERM FORMING THE BASIS OF THE PRESENT CLAIM AND, SO FAR AS THE RECORD SHOWS, SUCH ALLOCATION NEVER WAS REVOKED OR MODIFIED DURING THE PERIOD COVERED BY THE CLAIM. THE RECORD INDICATES THAT THE CLAIMANTS FLED POLAND IN 1939 AND THAT DURING THE PERIOD COVERED BY THEIR CLAIM THEY HAVE RESIDED IN ENGLAND.

DURING THE LATTER PART OF 1945 OUR EMBASSY IN WARSAW EXPRESSED INTEREST IN ACQUIRING REAL PROPERTY IN WARSAW, INCLUDING THE INVOLVED PREMISES, IN EXCHANGE FOR SURPLUS PROPERTY. THEREAFTER, THE UNITED STATES AND POLAND ENTERED INTO A SURPLUS PROPERTY AGREEMENT WHEREBY THE UNITED STATES EXTENDED POLAND A CREDIT OF $50,000,000 FOR THE PURCHASE OF SURPLUS PROPERTY OF THE UNITED STATES. PARAGRAPH 6 OF THE AGREEMENT PROVIDES, IN EFFECT, FOR ACQUISITION OF REAL OR PERSONAL PROPERTY BY POLAND OR THE UNITED STATES FOR THE USE OF THE UNITED STATES AT THE EXPENSE OF THE POLISH GOVERNMENT, THE COST TO BE CREDITED AGAINST THE ABOVE $50,000,000 CREDIT. PARAGRAPH WAS IMPLEMENTED BY PROTOCOL, DATED SEPTEMBER 17, 1947. PARAGRAPH 1 OF THIS INSTRUMENT REQUIRES THE MINISTRY OF FINANCE TO BE NOTIFIED IN THE EVENT THAT THE UNITED STATES SHOULD ACQUIRE THE USE OF LAND IN WARSAW EITHER UNDER THE LEASE OR A DEED. PARAGRAPH 4 OBLIGATES THE POLISH GOVERNMENT TO PLACE AT THE DISPOSAL OF THE UNITED STATES SUFFICIENT POLISH CURRENCY TO CARRY OUT ITS OBLIGATIONS UNDER PARAGRAPH 1. PARAGRAPH 7 PROVIDES FOR CREDITING THE POLISH GOVERNMENT WITH THE AMOUNTS PLACED AT THE DISPOSAL OF THE UNITED STATES.

ON MAY 21, 1948, THE EMBASSY ENTERED INTO AN AGREEMENT WITH THE CLAIMANTS' ATTORNEY TO PURCHASE THE PROPERTY, WHICH AGREEMENT REQUIRED THE CLAIMANTS TO OBTAIN PERMISSION OF THE POLISH AUTHORITIES AS A CONDITION PRECEDENT TO THE PROPOSED CONVEYANCE. FOLLOWING THE EMBASSY'S NOTICE TO THE POLISH AUTHORITIES THAT THE EMBASSY WAS INTERESTED IN ACQUIRING THE FEE TO THE INVOLVED PREMISES, THE EMBASSY WAS NOTIFIED THAT SAID PREMISES AND OTHERS LOCATED IN THE SAME AREA WERE EARMARKED BY THE CITY PLANNING COMMISSION FOR DIPLOMATIC PURPOSES AND WERE NOT AVAILABLE FOR OUTRIGHT ACQUISITION BUT COULD BE LEASED. AT THAT TIME THE STATE DEPARTMENT NOTIFIED THE EMBASSY THAT PARAGRAPH 6 OF THE SURPLUS PROPERTY AGREEMENT WAS FOR APPLICATION IN ACQUIRING A LEASEHOLD INTEREST IN THE PROPERTY. THE MEANTIME, ON MAY 19, 1947, THE CLAIMANTS OBTAINED A COURT ORDER RESTORING JOINT OWNERSHIP OF THE PROPERTY IN THEM. AFTER PROLONGED NEGOTIATIONS A LONG-TERM LEASE WAS EXECUTED WITH THE CLAIMANTS AND SUBMITTED TO THE POLISH GOVERNMENT FOR APPROVAL, WHICH APPROVAL WAS REFUSED BECAUSE THE OWNERS HAD NOT BEEN ISSUED A PROMESA (A DOCUMENT GRANTING USE RIGHTS IN THE PROPERTY). THE RECORD SHOWS THAT THE CLAIMANTS AS WELL AS THE EMBASSY MADE NUMEROUS UNSUCCESSFUL EFFORTS TO OBTAIN A PROMESA. THE POLISH AUTHORITIES EXPLAINED THAT SINCE THE CLAIMANTS DID NOT HAVE A PROMESA THEY HAD NO RIGHT TO LEASE THE PREMISES AND SHOULD HAVE BEEN SO INFORMED BY THE NOTARY WHO REGISTERED THE LEASE. IT WAS FURTHER EXPLAINED THAT SINCE THE NOTARY ERRED IN THIS RESPECT THE LEASE COULD NOT BE CONSIDERED AN ENFORCEABLE DOCUMENT. THE RECORD SHOWS THAT THE CLAIMANTS WERE FULLY INFORMED, AT THE TIME OF THE FAILURE OF THE LEASING NEGOTIATIONS, OF THE NECESSITY OF THEIR OBTAINING A PROMESA AS A CONDITION PRECEDENT TO A VALID LEASE AND THAT THEY WERE REQUESTED TO OBTAIN THE NECESSARY DOCUMENT. HOWEVER, AFTER REPEATED SIMILAR REQUESTS THE CLAIMANTS ACKNOWLEDGED THEY COULD NOT OBTAIN SUCH DOCUMENT APPARENTLY BECAUSE THEY WERE RELUCTANT TO APPEAR BEFORE THE POLISH AUTHORITIES. THE RECORD SHOWS THAT AS A RESULT OF SUCH FAILURE THE DEPARTMENT AND THE EMBASSY CONSIDERED THAT THE LEASE WAS NOT LEGALLY ENFORCEABLE.

UPON FAILURE OF THE LEASING NEGOTIATIONS, THE PRESIDENT OF THE CITY OF WARSAW AUTHORIZED THE EMBASSY TO CONTINUE OCCUPANCY OF THE PREMISES UNTIL A PERMANENT RESIDENCE COULD BE MADE AVAILABLE TO THE UNITED STATES. WAS POINTED OUT THAT, WHILE THE PREMISES WERE PRIVATELY OWNED, THE OWNERS WOULD BE COMPENSATED IN THE FORM OF CITY OF WARSAW SECURITIES AT THE TIME THE PROPERTY WAS TAKEN OVER BY THE MINISTRY OF COMMUNICATIONS. WHILE QUESTIONS SUBMITTED BY THE EMBASSY TO POLISH AUTHORITIES AS TO THE STATUS OF THE PROPERTY WERE UNANSWERED AND AVOIDED THE RECORD SHOWS THAT THEY CONSISTENTLY TOOK THE POSITION THAT UNDER THE POLISH LAW THE CLAIMANTS WERE NOT IN A POSITION TO EITHER LEASE OR SELL THE PROPERTY. AS POINTED OUT IN THE CONCLUSIONS IN YOUR OFFICE MEMORANDUM OF NOVEMBER 30, 1955, THE POLISH AUTHORITIES HAVE EXERCISED AN INFLUENCE OVER THE PROPERTY FROM THE DATE OF ITS FIRST ALLOCATION TO THE EMBASSY TO THE PRESENT TIME, EXCEPT FOR A BRIEF PERIOD 1947-1948 WHEN NEGOTIATIONS WERE BEING CONDUCTED DIRECTLY WITH THE CLAIMANTS. PURSUANT TO POLISH FOREIGN OFFICE NOTE OF MAY 14, 1953, THE EMBASSY APPEARS TO HAVE BEEN REQUIRED TO APPLY TO THE MUNICIPAL ADMINISTRATION OF BUILDINGS FOR A FORMAL ALLOCATION OF THE PREMISES FOR USE OF THE EMBASSY. PURSUANT TO SUCH APPLICATION THE MUNICIPAL ADMINISTRATION SUBMITTED TO THE EMBASSY A LEASE TO BECOME EFFECTIVE AS OF JANUARY 1, 1951, AND TO CONTINUE IN EFFECT UNTIL CANCELLED. THE RENTAL RATE WAS LATER FIXED AT ZLOTYS 19, 114.56 ANNUALLY OR APPROXIMATELY $766 PER ANNUM. THE RECORD FAILS TO SHOW WHAT PAYMENTS HAVE BEEN MADE BY THE UNITED STATES UNDER THAT LEASE.

THE CLAIM WAS DISALLOWED BY SETTLEMENT OF JANUARY 25, 1956, AND THE CLAIMANT'S ATTORNEY BY LETTER OF APRIL 9, 1956, HAS REQUESTED REVIEW OF THAT SETTLEMENT. A COPY OF THAT LETTER IS ENCLOSED. IN SUPPORT OF THE ABOVE REQUEST THE ATTORNEY STATES, IN EFFECT, THAT IF THE ABOVE SETTLEMENT SHOULD BE SUSTAINED SUCH ACTION WOULD HAVE THE EFFECT OF TAKING CLAIMANTS' PROPERTY WITHOUT JUST COMPENSATION THEREBY RESULTING IN UNJUST ENRICHMENT OF THE UNITED STATES. IT IS CONTENDED THAT SINCE THE POLISH GOVERNMENT RECOGNIZED THE COURT DECREE OF MAY 19, 1947, THE CLAIMANTS ARE ENTITLED TO RENT UP UNTIL 1954, WHEN THE PROPERTY WAS EXPROPRIATED BY THE POLISH GOVERNMENT. AS EVIDENCE OF SUCH RECOGNITION, REFERENCE IS MADE TO THE LEASE AND SALE NEGOTIATIONS CONDUCTED WITH THE KNOWLEDGE OF THE POLISH AUTHORITIES, AND TO CERTAIN INSTANCES IN WHICH THE POLISH AUTHORITIES REFERRED TO THE PROPERTY AS BEING PRIVATELY OWNED. VARIOUS ARGUMENTS ARE ADVANCED TO SHOW THAT THE POLISH GOVERNMENT DID NOT CLAIM OWNERSHIP OF THE PROPERTY UNTIL IT WAS EXPROPRIATED IN 1954, AND THAT THE POLISH AUTHORITIES RECOGNIZED THE CLAIMANTS' RIGHTS TO RECEIVE RENTAL PAYMENTS UP UNTIL THAT TIME. IT IS ASSERTED THAT UNDER THE PRINCIPLES ANNOUNCED INSEERY V. UNITED STATES, 127 F.SUPP. 601, IT IS IMMATERIAL THAT BEGINNING AS OF JANUARY 1, 1951, THE UNITED STATES MADE RENTAL PAYMENTS TO THE POLISH GOVERNMENT. ALSO, IT IS ASSERTED THAT THE ABOVE SURPLUS PROPERTY AGREEMENT MAY NOT BE REGARDED AS BARRING PAYMENT OF THE CLAIM.

SINCE THE CLAIM WAS NOT RECEIVED IN THIS OFFICE UNTIL DECEMBER 12, 1955, IT IS CLEAR THAT THE CLAIM FOR RENT ACCRUING FOR ANY PERIOD PRIOR TO DECEMBER 12, 1945, IS BARRED BY THE ACT OF OCTOBER 9, 1940, 54 STAT. 1061, 31 U.S.C. 71/A). THE CITED ACT FOREVER BARS EVERY CLAIM OR DEMAND AGAINST THE UNITED STATES COGNIZABLE BY THE GENERAL ACCOUNTING OFFICE UNLESS THE CLAIM SHALL BE RECEIVED IN THIS OFFICE WITHIN 10 FULL YEARS AFTER THE DATE SUCH CLAIM FIRST ACCRUED. CONTRARY TO THE ATTORNEY'S CONTENTION, ANY ACTION ON THE CLAIM BY THE DEPARTMENT IS NOT CONTROLLING ON THE GENERAL ACCOUNTING OFFICE AND GIVES NO RIGHT TO THE CLAIMANTS SUCH AS TO REMOVE THE REQUIREMENT THAT A CLAIM FOR OUR CONSIDERATION SHALL BE FILED HERE WITHIN 10 YEARS FROM THE DATE SUCH CLAIM FIRST ACCRUED. THE STATUTE IS NOT MERELY A STATUTE OF LIMITATION,IT IS A CONDITION PRECEDENT TO CONSIDERATION OF CLAIMS BY THIS OFFICE.

AS TO THE RENT ACCRUING AFTER DECEMBER 12, 1945, IT IS TO BE NOTED THAT THE UNITED STATES DID NOT--- AS ASSERTED BY THE ATTORNEY--- TAKE POSSESSION OF THE PREMISES. ON THE CONTRARY, THE RECORD SHOWS THAT THE PREMISES FIRST WERE REQUISITIONED BY THE POLISH AUTHORITIES UNDER EXISTING REGULATIONS, REPAIRED TO SOME EXTENT BY THEM AND THEN ALLOCATED TO THE EMBASSY. IT WOULD APPEAR THAT, INSOFAR AS THE UNITED STATES IS CONCERNED, SUCH ALLOCATION SUPERSEDED THE CLAIMANTS' RIGHT TO RENTAL OF THE PROPERTY, AT LEAST UNTIL MAY 19, 1947, WHEN THE CLAIMANTS' OWNERSHIP WAS RECOGNIZED BY THE COURT. THUS, IT WOULD APPEAR THAT THE PRESENT CASE IS CLEARLY DISTINGUISHABLE FROM THE SEERY CASE SINCE THE FACTS AS REPORTED IN THAT CASE SHOW THAT "THE PROPERTY WAS TAKEN IN JULY 1945 BY THE UNITED STATES ARMY FOR AN OFFICERS CLUB FOR SOCIAL AND RECREATIONAL PURPOSES.'

AS TO THE RENT ACCRUING AFTER MAY 19, 1947, THE RECORD INDICATES THAT THERE WAS AN ADMINISTRATIVE DETERMINATION THAT PARAGRAPH 6 OF THE ABOVE SURPLUS PROPERTY AGREEMENT WAS APPLICABLE TO THIS PROPERTY. THE RECORD SHOWS THAT THE EMBASSY REQUESTED THE POLISH AUTHORITIES TO ENTER INTO NEGOTIATIONS WITH THE OWNERS OR THE REPRESENTATIVES OF THE OWNERS FOR SALE OR LEASE OF THE PROPERTY TO THE UNITED STATES. THE RECORD FURTHER SHOWS THAT THIS EFFORT AND ALL OTHERS DIRECTED TOWARDS CONSUMMATION OF FORMAL ARRANGEMENTS WITH THE CLAIMANTS FOR OCCUPANCY OF THE PROPERTY BY THE EMBASSY WERE UNSUCCESSFUL AND ENDED WITH THE EXPROPRIATION OF THE PROPERTY BY THE POLISH GOVERNMENT EFFECTIVE AS OF JANUARY 1, 1951. IN SUCH CIRCUMSTANCES, AND CONSIDERING THE FACT THAT THE PREMISES WERE ALLOCATED TO THE EMBASSY BY THE POLISH AUTHORITIES, DISALLOWANCE OF THE CLAIM WOULD APPEAR TO BE JUSTIFIED.

EVEN IF AN ALLOWANCE COULD BE OTHERWISE JUSTIFIED FOR THE PERIOD FROM MAY 17, 1947, THE DATE OF THE COURT ORDER, UNTIL JANUARY 1, 1951, THE EFFECTIVE DATE OF THE EXPROPRIATION OF THE PROPERTY, THERE NECESSARILY WOULD BE FOR CONSIDERATION CERTAIN PAYMENTS HERETOFORE MADE BY THE GOVERNMENT INCIDENT TO ITS OCCUPANCY OF THE PROPERTY. SUCH PAYMENTS CONSIST OF CERTAIN AMOUNTS PAID TO CLAIMANTS' ATTORNEY AND TO CERTAIN AMOUNTS PAID BY THE EMBASSY FOR REPAIRS AND MAINTENANCE OF THE PROPERTY. THE PAYMENTS MADE TO THE CLAIMANTS' ATTORNEY ORIGINALLY WERE COMPUTED AS TOTALING $6,874.98; HOWEVER, ACCORDING TO THE STATEMENT ON PAGE 12 OF YOUR OFFICE MEMORANDUM OF NOVEMBER 30, 1955, THIS AMOUNT SUBSEQUENTLY WAS REDUCED TO $1,874.98. PAYMENTS FOR IMPROVEMENTS MADE BY THE EMBASSY ORIGINALLY WERE REPORTED AS TOTALING $20,000. THIS AMOUNT WAS PROTESTED BY THE CLAIMANTS' SON ON THE GROUND THAT A PORTION OF THE EXPENDITURES REPRESENTED EXPENSES OVER AND ABOVE ACTUAL REPAIRS MADE FOR THE PARTICULAR USE OF THE EMBASSY AND COULD NOT BE REGARDED AS HABITABLE REPAIRS. FOLLOWING THE ABOVE PROTEST THIS AMOUNT APPARENTLY WAS REDUCED TO $8,750, AS EVIDENCED BY THE DEPARTMENT'S AUTHORIZATION APPROVING THE ACQUISITION OF THE PREMISES UNDER A 99-YEAR LEASE, THE TERMS OF WHICH WOULD HAVE AUTHORIZED A DEDUCTION IN THE LATTER AMOUNT FOR IMPROVEMENTS MADE BY THE UNITED STATES. HOWEVER, THE NOTARIAL DEED OF SEPTEMBER 23, 1948 (NO. S43 FA 54), PROVIDED THAT THE STIPULATED RENTAL SHOULD TAKE INTO CONSIDERATION THE SUM OF $21,466.59 PAID BY THE UNITED STATES FOR REHABILITATION OF THE PROPERTY. ALSO, PAGE 11 OF THE ABOVE OFFICE MEMORANDUM OF NOVEMBER 30, 1955, QUOTES IN PART FROM DEPARTMENTAL LETTER OF JUNE 12, 1952, TO THE CLAIMANTS' ATTORNEY STATING THAT SINCE OCCUPANCY OF THE PREMISES THE UNITED STATES EXPENDED THE EQUIVALENT OF $39,137.12, WHICH AMOUNT INCLUDES $21,303.64 FOR ALTERATIONS, $10,958.50 FOR MAINTENANCE, AND $6,874.98 FOR THE ACCOUNT OF THE CLAIMANTS' ATTORNEY. AS INDICATED ABOVE, THE LATTER AMOUNT SUBSEQUENTLY WAS REDUCED TO $1,874.98, FOLLOWING THE ATTORNEY'S PROTEST RELATIVE TO THE PREVAILING RATE OF EXCHANGE. ON THE BASIS OF THE AMOUNT ADMINISTRATIVELY DETERMINED TO REPRESENT A FAIR RENTAL FOR THE PROPERTY, NAMELY, $2,000 PER ANNUM, THE CLAIMANTS WOULD BE ENTITLED TO $7,416.70, AS RENT FROM MAY 17, 1947, UNTIL DECEMBER 31, 1950. IF THE RENT WERE COMPUTED FROM DECEMBER 12, 1945, UNTIL DECEMBER 31, 1950, THE CLAIMANTS WOULD ONLY BE ENTITLED TO APPROXIMATELY $10,102.25. SINCE EITHER OF THESE AMOUNTS IS LESS THAN THE AGGREGATE OF THE LOWEST AMOUNT ADMINISTRATIVELY DETERMINED TO BE PROPER FOR SETOFF ON ACCOUNT OF PAYMENTS BY THE EMBASSY MADE TO CLAIMANTS' ATTORNEY AND FOR REPAIRS AND MAINTENANCE, THEN, OF COURSE, NO ADDITIONAL ALLOWANCE WOULD BE JUSTIFIED. HOWEVER, IT HAS BEEN INFORMALLY CONTENDED BY CLAIMANTS' ATTORNEY THAT THE RENTAL OF $2,000 PER ANNUM WAS RECOMMENDED AS PROPER BY YOUR DEPARTMENT AFTER TAKING INTO CONSIDERATION THE ALTERATIONS MADE BY YOUR DEPARTMENT TO THE PROPERTY AND, THEREFORE, OFFSET OF THAT ITEM AGAINST ANY RENTAL FOUND DUE WOULD NOT BE PROPER. WE WOULD APPRECIATE YOUR COMMENTS AND RECOMMENDATIONS ON THIS POINT AND THE CONCLUSIONS HEREINABOVE SUGGESTED BEFORE TAKING FINAL ACTION ON THE ATTORNEY'S REQUEST FOR REVIEW. THE ENCLOSED FILE IN THE CASE SHOULD BE RETURNED WITH YOUR REPLY.