B-133682, OCT. 10, 1957

B-133682: Oct 10, 1957

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 4. A PORTION OF WHICH IS CONCERNED IN THE PRESENT MATTER. WAS LEASED BY THE VETERANS ADMINISTRATION FROM THE HARBOR BOARD UNDER LEASE CONTRACTS NOS. THESE TWO LEASES WERE EXTENDED BY ORDER OF THE HARBOR BOARD TO MARCH 31. NEGOTIATIONS WERE CONDUCTED BETWEEN THE HARBOR BOARD AND GSA FOR THE EXECUTION OF A NEW LEASE TO EXTEND BEYOND MARCH 31. PROVIDED FOR THE RENTAL OF WHAT WAS THOUGHT TO BE 60 ACRES. THE HARBOR BOARD ADVISED GSA THAT "SUFFERANCE RENTAL WILL BE BILLED AGAINST THE GENERAL SERVICES ADMINISTRATION RETROACTIVE TO THE EXPIRATION DATE OF THE ORIGINAL LEASES. BASED ON THE RATE OF COMPENSATION AS IS PRESENTLY IN EFFECT IN LEASE GS-09B-370.'.

B-133682, OCT. 10, 1957

TO THE HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 4, 1957, WITH INCLOSURES, REQUESTING ADVICE OF OUR OFFICE AS TO THE ACCEPTANCE OR REJECTION OF A FINAL OFFER OF SETTLEMENT IN THE AMOUNT OF $55,494.26 SUBMITTED BY THE BOARD OF HARBOR COMMISSIONERS OF THE CITY OF LOS ANGELES, CALIFORNIA, IN SATISFACTION OF ITS CLAIM AGAINST THE GOVERNMENT AS RENTAL FOR THE USE OF APPROXIMATELY 45.8 ACRES OF LAND LYING ADJACENT TO THE 52-ACRE TRACT NOW OCCUPIED BY GENERAL SERVICES ADMINISTRATION UNDER LEASE CONTRACT NO. GS- 19B-370, DATED JUNE 10, 1955.

ORIGINALLY, THE 52-ACRE TRACT AND OTHER LAND TOTALING APPROXIMATELY 262 ACRES, A PORTION OF WHICH IS CONCERNED IN THE PRESENT MATTER, WAS LEASED BY THE VETERANS ADMINISTRATION FROM THE HARBOR BOARD UNDER LEASE CONTRACTS NOS. GS-09B-252 AND -253, DATED SEPTEMBER 13, AND APRIL 1, 1943, RESPECTIVELY. ON JULY 22, 1953, THESE TWO LEASES WERE EXTENDED BY ORDER OF THE HARBOR BOARD TO MARCH 31, 1954, AT A RENTAL OF $12,500 PER YEAR OR $128 PER ACRE PER YEAR. AT VARIOUS TIMES DURING 1953 AND 1954, NEGOTIATIONS WERE CONDUCTED BETWEEN THE HARBOR BOARD AND GSA FOR THE EXECUTION OF A NEW LEASE TO EXTEND BEYOND MARCH 31, 1954, FOR THE LEASING OF 97.7573 ACRES, WHICH NEGOTIATIONS CULMINATED IN A DETERMINATION BY THE HARBOR BOARD THAT AN APPRAISAL OF THE LAND REQUIRED A FAIR RENTAL VALUE OF $870 PER ACRE PER YEAR.

THE NEW LEASE NUMBERED GS-08B-370, PROVIDED FOR THE RENTAL OF WHAT WAS THOUGHT TO BE 60 ACRES--- LATER FOUND TO BE 52 ACRES--- AT $36,000 ANNUALLY OR AT THE RATE OF $692.38 PER ACRE PER YEAR FOR THE PERIOD APRIL 1, 1954, TO MARCH 31, 1959. HOWEVER, CONSIDERABLE DISPUTE EXISTED AS TO THE RATE OF RENTAL APPLICABLE TO THE REMAINING 45 PLUS ACRES OCCUPIED BY GSA AFTER MARCH 31, 1954, THE DATE OF EXPIRATION OF LEASES 252 AND 253. ON FEBRUARY 28, 1956, THE HARBOR BOARD ADVISED GSA THAT "SUFFERANCE RENTAL WILL BE BILLED AGAINST THE GENERAL SERVICES ADMINISTRATION RETROACTIVE TO THE EXPIRATION DATE OF THE ORIGINAL LEASES, BASED ON THE RATE OF COMPENSATION AS IS PRESENTLY IN EFFECT IN LEASE GS-09B-370.' BY LETTER OF MARCH 22, 1956, GSA REJECTED THAT BASIS OF PAYMENT AND STATED THAT ANY RENTAL DUE FOR OCCUPANCY OF THE 45 PLUS ACRES AFTER MARCH 31, 1954, MUST BE BASED ON A HOLD-OVER TENANCY UNDER LEASES 252 AND 253 AND AT THE RENTAL RATE PROVIDED THEREIN, BUT NOT AT THE RATE PROVIDED IN LEASE 370. THEREAFTER, GSA COUNTERED WITH AN OFFICER OF $10,069.78, COMPUTED AT THE SAME RATE PROVIDED IN LEASE 252 OR ABOUT $127 PER ACRE PER YEAR.

ON APRIL 19, 1957, THE HARBOR BOARD GAVE ITS RESUME OF THE NEGOTIATIONS AS FOLLOWS:

"ON OCTOBER 21, 1954, NEGOTIATIONS WERE ENTERED INTO FOR A NEW LEASE OF THE SOUTHERLY PORTION OF THE ACREAGE, COVERING APPROXIMATELY 52 ACRES, AT A FLAT RENTAL OF $36,000.00 ANNUALLY, AT THE RATE OF $692.38 PER ACRE PER YEAR. AT THAT TIME THE GOVERNMENT WAS ADVISED IN WRITING THAT IN ADDITION TO THE RENTAL CHARGED ON THE 52 ACRES, RENT WOULD BE DUE ON THE REMAINING ACREAGE COVERED BY THE SUBJECT LEASES, FROM THEIR TERMINATION DATE, APRIL 1, 1954, IN AN AMOUNT TO BE NEGOTIATED. * * *"

SUBSEQUENTLY, ON JUNE 11, 1957, THE HARBOR BOARD TENDERED ITS FINAL OFFER OF SETTLEMENT IN FULL SATISFACTION OF ALL CLAIMS IN THE AMOUNT OF $55,494.26, REPRESENTING RENTAL FOR 45.8 ACRES AT $692.38 PER ACRE FOR 1.75 YEARS (MARCH 31, 1954 - DECEMBER 31, 1955).

THE FILE TRANSMITTED WITH YOUR LETTER REASONABLY ESTABLISHES THAT THE GOVERNMENT DID, IN FACT, REMAIN IN POSSESSION BEYOND THE EXPIRATION DATE OF LEASES 252 AND 253; THAT THE ONLY WRITTEN DEMAND BY THE HARBOR BOARD FOR RENTAL OTHER THAN UNDER THE ORIGINAL LEASES, WHICH WAS IN CONFIRMATION OR ORAL DEMANDS, WAS MADE ABOUT SEVEN MONTHS AFTER EXPIRATION OF THE LEASES; AND THAT THE NEGOTIATIONS ALWAYS REVOLVED AROUND A RENEWAL LEASE FOR THE ENTIRE TRACT UP TO THE DATE OF LEASE EXPIRATION.

THE QUESTION OF CONSIDERATION HERE IS THE AMOUNT OF RENTAL AUTHORIZED FOR THE PERIOD OF THE GOVERNMENT HOLD-OVER OCCUPANCY AS DETERMINED BY THE CHARACTER OF THE GOVERNMENT'S "HOLDING OVER.' THE GENERAL RULE, OF COURSE, IS THAT A TENANT "HOLDING OVER" AFTER EXPIRATION OF HIS LEASE CONTINUES BY IMPLICATION OF LAW TO BE A TENANT UPON THE SAME TERMS WITHOUT ANY OTHER AGREEMENT WITH HIS LANDLORD. SEE SHENSON V. SHENSON, ET AL; , 269 P.2D 170; CONNER V. GARRET, 224 P. 786, 787; GARRITY V. UNITED STATES, 67 F.SUPP. 821; COWELL V. SNYDER, 11 P.2D 961; 51 C.J.S., LANDLORD AND TENANT, 136; 19 COMP. GEN. 222.

HOWEVER, IT HAS BEEN HELD THAT THE FOREGOING RULE IS NOT FOR APPLICATION WHERE THE "HOLDING OVER" IS WITH THE CONSENT OF THE LANDLORD PENDING NEGOTIATION FOR A NEW LEASE. SEE 32 AM.JUR., LANDLORD AND TENANT, 922, 036. WHILE THE CHARACTER OF THE GOVERNMENT'S "HOLDING OVER" IN THE INSTANT CASE IS NOT ENTIRELY CLEAR, AND WHILE THERE IS NO DEFINITE SHOWING THAT THE BOARD DEMANDED AN INCREASED RENTAL PRIOR TO MARCH 31, 1954, IT IS INDICATED BY THE FILE ACCOMPANYING YOUR LETTER THAT THE "HOLDING OVER" WAS WITH THE CONSENT OF THE HARBOR BOARD PENDING THE CONCLUSION OF NEGOTIATIONS FOR A NEW LEASE. SUCH CIRCUMSTANCES TEND TO REBUT ANY PRESUMPTION OF A RENEWAL OF THE TENANCY UNDER THE SAME RENTAL TERMS OF THE EXPIRED LEASES. THEREFORE, UNDER THE CIRCUMSTANCES HERE INVOLVED, THE GOVERNMENT BY "HOLDING OVER" MAY BE REGARDED AS CONSENTING OR PROPOSING TO ENTER INTO AN AGREEMENT FOR A NEW LEASE AT A RENTAL RATE TO BE AGREED UPON BY THE PARTIES FOLLOWING NEGOTIATIONS. HENCE, THE "HOLDING OVER" MAY BE REGARDED AS EQUIVALENT TO A NEW ENTRY. 32 AM.JUR., LANDLORD AND TENANT, 947; 98 ALR 216.

THE HARBOR BOARD OFFER OF SETTLEMENT IS BASED UPON THE RENTAL VALUES ESTABLISHED BY THE LATEST LEASE (GS-09B-370) COVERING A PORTION OF THE ACREAGE FORMERLY COVERED BY THE EXPIRED LEASES. THUS, SUCH RENTAL RATE MUST BE REGARDED AS BASED UPON THE FAIR VALUE OF THE ACREAGE INVOLVED AND, AT LEAST, SUCH RATE IS EVIDENTIARY TO THE VALUE OF THAT PORTION RELEASED BY THE GOVERNMENT ON DECEMBER 31, 1955. ACCORDINGLY, OUR OFFICE PERCEIVES OF NO LEGAL OBJECTION TO THE ACCEPTANCE OF YOUR ADMINISTRATION OF THE HARBOR BOARD'S FINAL OFFER OF SETTLEMENT IN THE AMOUNT OF $55,494.26, IS OTHERWISE PROPER.