B-140706, OCT. 1, 1959

B-140706: Oct 1, 1959

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 9. REQUESTING A DECISION AS TO WHETHER THE VIRGIN ISLANDS CORPORATION IS AUTHORIZED TO REFUND THE BID DEPOSIT OF $3. THE SITE ON WHICH THE INSTALLATION WAS TO BE CONSTRUCTED WAS SPECIFICALLY DESCRIBED IN THE INVITATION WHICH PROVIDED FOR THE LEASING OF THE SITE TO THE SUCCESSFUL BIDDER FOR A FIVE-YEAR TERM WITH RENEWAL OPTION FOR AN ADDITIONAL FIVE- YEARS SUBJECT TO RENEGOTIATED TERMS. THE REPORTED FACTS SHOW THAT THE BIDS WERE OPENED AS SCHEDULED ON JULY 30. THE TWO OTHER BIDS WERE IN THE AMOUNTS OF $210 AND $150 PER MONTH. IT IS STATED THAT OFFICIALS OF THE VIRGIN ISLANDS CORPORATION. WAS THE SUCCESSFUL BIDDER AND IT IS REPORTED INFORMALLY THAT CENTER WAS NOTIFIED ORALLY THAT ITS BID HAD BEEN ACCEPTED.

B-140706, OCT. 1, 1959

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 9, 1959, FROM THE ADMINISTRATIVE ASSISTANT, SECRETARY OF THE INTERIOR, REQUESTING A DECISION AS TO WHETHER THE VIRGIN ISLANDS CORPORATION IS AUTHORIZED TO REFUND THE BID DEPOSIT OF $3,090 SUBMITTED BY CENTER THEATRE, INC.,WITH ITS BID FOR THE CONSTRUCTION AND OPERATION OF AN OUTDOORDRIVE-IN MOVIE CONCESSION AT THE FORMER UNITED STATES NAVAL SUBMARINE BASE, ST. THOMAS, VIRGIN ISLANDS.

THE INVITATION, ISSUED IN JUNE 1958, BY THE VIRGIN ISLANDS CORPORATION SOLICITED BIDS TO BE OPENED JULY 30, 1958, FOR THE CONSTRUCTION AND OPERATION OF AN OUTDOOR MOTION PICTURE THEATER ON GOVERNMENT-OWNED LAND LOCATED ON THE FORMER NAVAL SUBMARINE BASE. THE SITE ON WHICH THE INSTALLATION WAS TO BE CONSTRUCTED WAS SPECIFICALLY DESCRIBED IN THE INVITATION WHICH PROVIDED FOR THE LEASING OF THE SITE TO THE SUCCESSFUL BIDDER FOR A FIVE-YEAR TERM WITH RENEWAL OPTION FOR AN ADDITIONAL FIVE- YEARS SUBJECT TO RENEGOTIATED TERMS. IT FURTHER PROVIDED, AMONG OTHER THINGS, THAT WITHIN FIFTEEN DAYS AFTER THE AWARD THE SUCCESSFUL BIDDER WOULD BE REQUIRED TO SUBMIT FOR APPROVAL DETAILED DRAWINGS OF THE PROPOSED INSTALLATION WITH ALL PERTINENT SPECIFICATIONS; THAT THE MINIMUM COST OF THE INSTALLATION WOULD BE $15,000; THAT ALL INTERESTED BIDDERS WOULD BE REQUIRED TO ACCOMPANY THEIR PROPOSALS WITH A GOOD FAITH DEPOSIT IN THE FORM OF A CERTIFIED CHECK FOR SIX MONTHS' RENT AS BID; AND THAT IN ADDITION TO THE FOREGOING CONDITIONS ALL APPLICABLE PARTS OF THE STANDARDIZED LEASE FORM USED IN THE OPERATION OF PROPERTIES UNDER THE ADMINISTRATION OF THE DEVELOPMENT DEPARTMENT WOULD BE INCLUDED AS PART OF THE STIPULATION.

THE REPORTED FACTS SHOW THAT THE BIDS WERE OPENED AS SCHEDULED ON JULY 30, 1958. CENTER THEATRE, INC., SUBMITTED THE HIGHEST BID IN THE AMOUNT OF $515 PER MONTH AND DEPOSITED A CERTIFIED CHECK IN THE AMOUNT OF $3,090. THE TWO OTHER BIDS WERE IN THE AMOUNTS OF $210 AND $150 PER MONTH, RESPECTIVELY. IT IS STATED THAT OFFICIALS OF THE VIRGIN ISLANDS CORPORATION, AFTER STUDYING AND EVALUATING THE BIDS, DETERMINED THAT CENTER THEATRE, INC., WAS THE SUCCESSFUL BIDDER AND IT IS REPORTED INFORMALLY THAT CENTER WAS NOTIFIED ORALLY THAT ITS BID HAD BEEN ACCEPTED. THEREAFTER, THERE WERE DISCUSSIONS BETWEEN OFFICIALS OF THE VIRGIN ISLANDS CORPORATION AND CENTER CONCERNING DETAILS OF THE TRANSACTION AND BY LETTER OF NOVEMBER 3, 1958, A COPY OF A FORMAL LEASE WAS TRANSMITTED TO CENTER FOR REVIEW AND COMMENT. ABOUT THIS TIME THE OFFICIALS OF CENTER BEGAN TO RAISE OBJECTIONS TO THE SITE. BY LETTER DATED NOVEMBER 21, 1958, THE PRESIDENT OF CENTER NOTIFIED THE VIRGIN ISLANDS CORPORATION THAT IT WOULD NOT GO THROUGH WITH THE CONSTRUCTION OF THE DRIVE-IN THEATER. IT WAS EXPLAINED THAT THIS DETERMINATION WAS BASED UPON THE FINDINGS OF ITS ENGINEERS AND NEW MANAGER, AS FOLLOWS:

"1. THE LOW ELEVATION OF THE LAND IS SUBJECT TO SEVERE FLOODING DURING HEAVY RAINS. ENORMOUS QUANTITIES OF EARTH FILL WILL BE NECESSARY TO CORRECT THIS SITUATION.

"2. THE EXISTING ENTRANCE TO THIS LAND THROUGH THE SUBBASE WOULD HAVE TO BE RELOCATED.

"3. RELOCATION OF THE ENTRANCE UNTO THE MAIN HIGHWAY IN ADDITION TO BEING AN ENGINEERING PROBLEM WOULD CREATE A SERIOUS AND DANGEROUS TRAFFIC CONGESTION ON THE MAIN HIGHWAY IN ST. THOMAS.

"4. THE EXISTING DRAINAGE SYSTEM IS ENTIRELY INADEQUATE TO ACCOMMODATE THE RUNOFF FROM THE HILLS DURING HEAVY RAINS AND THIS WOULD HAVE TO BE DIVERTED FROM ITS PRESENT LOCATION.

"5. THE PROXIMITY TO THE SEA AND THE BREEDING PLACES FOR SAND FLIES AND OTHER INSECTS WOULD MAKE IT VERY UNCOMFORTABLE TO THE PATRONS OF THE DRIVE -IN-THEATER.'

IN REQUESTING RETURN OF THE BID DEPOSIT IT IS CONTENDED THAT EXTRAORDINARY CAPITAL, NEVER CONTEMPLATED, WOULD BE REQUIRED TO ELIMINATE THE ABOVE DEFECTS AND TO MAKE THE SITE SUITABLE FOR A DRIVE IN MOVIE AND THAT THE INVITATION FOR BIDS CARRIED WITH IT AN IMPLIED WARRANTY THAT THE SITE WAS SUITABLE FOR SUCH PURPOSE. IN LETTER OF MAY 11, 1959, CENTER EMPHASIZES THE EQUITIES OF THE SITUATION AND THE INTERNAL WORKINGS OF ITS ORGANIZATION LEADING UP TO THE SUBMISSION OF ITS BID.

THE PROPOSAL SUBMITTED BY CENTER IS AS FOLLOWS:

"IN ACCORDANCE WITH YOUR ADVERTISEMENT AND OFFERING REGARDING A LEASEHOLD ON AN OUTDOOR MOVIE IN ST. THOMAS, V.I., WE DO HEREBY BID A MONTHLY RENTAL OF $515.00 AND WE ARE ENCLOSING HEREWITH OUR CERTIFIED CHECK TO YOUR ORDER IN THE SUM OF $3,090 REPRESENTING 6 MONTHS RENTAL AS REQUIRED UNDER YOUR ADVERTISEMENT.'

THE ACCEPTANCE OF THIS OFFER RESULTED IN A BINDING AGREEMENT FOR A LEASE. 51 C.J.S. LANDLORD AND TENANT SECS. 180-190; 32 AM.JUR. LANDLORD AND TENANT, SECS. 28. AS TO CENTER'S CONTENTION THAT THE INVITATION FOR BIDS CARRIED WITH IT AN IMPLIED WARRANTY THAT THE SITE WAS SUITABLE FOR A DRIVE-IN MOVIE AND THAT IT IS ENTITLED TO RETURN OF THE BID DEPOSIT FOR THE REASONS STATED IN ITS LETTER OF NOVEMBER 21, 1958, THE GENERAL RULE IS THAT THERE IS NO COVENANT OR WARRANTY IMPLIED THAT THE PREMISES SHALL BE SUITABLE FOR THE INTENDED USE AND IN SUCH CASES THE RULE OF CAVEAT EMPTOR GENERALLY APPLIES. 32 AM.JUR. LANDLORD AND TENANT SEC. 654: DOYLE V. UNION PACIFIC RAILWAY CO., 147 U.S. 413; JONES V. CITY OF ABERDEEN, MD., 138 F.SUPP. 727, AFFIRMED 241 F.2D 26. IN ANY EVENT, OTHER THAN CENTER'S ALLEGATIONS IN ITS LETTER OF NOVEMBER 21, 1958, IT HAS NOT BEEN ESTABLISHED THAT THE PREMISES ARE UNSUITABLE FOR THE INTENDED PURPOSE OR THAT THERE WAS ANY MISREPRESENTATION BY GOVERNMENT OFFICIALS AS TO THEIR SUITABILITY. ON THE CONTRARY, IT IS STATED THAT THE OFFICIALS OF THE VIRGIN ISLANDS CORPORATION CONSIDER THE TRACT TO BE AN EXCELLENT ONE FOR AN OUTDOOR THEATER, AND MR. GRAY, AN OFFICIAL OF THE VIRGIN ISLANDS CORPORATION, HAS REPORTED THAT THERE IS NO TRUTH TO THE ALLEGATION THAT THE AREA IS SUBJECT TO FLOODING.

AS TO CENTER'S REPRESENTATION THAT IT WOULD REQUIRE EXTRAORDINARY CAPITAL INVESTMENT TO MAKE THE SITE SUITABLE FOR THE INTENDED PURPOSES, IT IS WELL ESTABLISHED THAT WHERE A PERSON CHARGES HIMSELF WITH AN OBLIGATION POSSIBLE TO BE PERFORMED SUCH PERFORMANCE IS NOT EXCUSED BY UNFORESEEN DIFFICULTIES OR BY UNUSUAL OR UNEXPECTED EXPENSE. MEGAN V. UPDIKE GRAIN CORP., 94 F.2D 551; WICKHAM AND BURTON COAL CO. V. MINNESOTA COAL CO., 7 F.2D 873; 17 C.J. CONTRACTS SEC. 459.

IT HAS BEEN HELD THAT WHERE THE PROPOSED LESSEE REFUSES TO TAKE A LEASE PURSUANT TO HIS AGREEMENT TO DO SO HE IS LIABLE FOR DAMAGES FOR HIS BREACH AND THE GENERAL RULE IS THAT THE MEASURE OF DAMAGES FOR SUCH BREACH IS THE DIFFERENCE BETWEEN THE RENT THE PROPOSED LESSEE AGREED TO PAY AND THE RENTAL VALUE OF THE PREMISES. 54 A.L.R. 1355, 1358, 1359; 32 AM.JUR. LANDLORD AND TENANT SEC. 33; 51 C.J.S. LANDLORD AND TENANT SEC. 200, 201; STARK V. NATIONAL RESEARCH AND DESIGN CORP. 110 A.2D 143. SEE ALSO STATE HOUSE V. UNITED STATES, CONG. NO. 14-55, DECIDED BY THE COURT OF CLAIMS JANUARY 15, 1958.

ACCORDINGLY, YOU ARE ADVISED THAT THE REQUEST OF THE VIRGIN ISLANDS CORPORATION FOR THE RETURN OF ITS DEPOSIT OF $3,090 SHOULD BE DENIED AND THAT THE DEPOSIT SHOULD BE RETAINED PENDING A DETERMINATION OF ANY DAMAGES THAT MAY BE SUSTAINED UPON READVERTISEMENT OF THE PREMISES FOR THE CONSTRUCTION AND OPERATION OF A DRIVE-IN MOVIE. 51 C.J.S. LANDLORD AND TENANT SEC. 201; 32 AM.JUR. LANDLORD AND TENANT SEC. 33; 54 A.L.R. 1362.