B-144236, NOVEMBER 17, 1960, 40 COMP. GEN. 300

B-144236: Nov 17, 1960

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BECAUSE NEGOTIATIONS WITH THE LESSOR FOR CONTINUED OCCUPANCY WERE BEING CONDUCTED UNTIL SHORTLY BEFORE EXPIRATION OF THE LEASE. DOES NOT DEFEAT THE LESSOR'S RIGHT TO RESTORATION PARTICULARLY WHEN THE FACTS INDICATE THAT THE COST OF RESTORATION COULD HAVE BEEN DETERMINED AT THE TIME THE LESSOR NOTIFIED THE GOVERNMENT THAT RESTORATION WOULD BE REQUIRED. TO HOLD THAT THE LESSOR SHOULD HAVE REQUIRED RESTORATION PRIOR TO THE EXPIRATION OF THE TERMS OF THE FIRST TWO LEASES WOULD HAVE RESULTED IN VAIN AND USELESS SITUATIONS. THE GOVERNMENT'S OBLIGATION TO RESTORE THE PREMISES IS FOR DETERMINATION ON THE BASIS OF THE CONDITION OF THE PREMISES AT THE BEGINNING OF THE FIRST LEASE RATHER THAN AT THE BEGINNING OF THE LAST LEASE.

B-144236, NOVEMBER 17, 1960, 40 COMP. GEN. 300

LEASES - RESTORATION - SUCCESSIVE LEASES - NOTICE THE FAILURE OF A LESSOR TO GIVE TIMELY WRITTEN NOTICE TO THE GOVERNMENT PURSUANT TO THE TERMS OF THE LEASE THAT RESTORATION OF THE PREMISES WOULD BE REQUIRED BEFORE THE LEASE EXPIRED, BECAUSE NEGOTIATIONS WITH THE LESSOR FOR CONTINUED OCCUPANCY WERE BEING CONDUCTED UNTIL SHORTLY BEFORE EXPIRATION OF THE LEASE, DOES NOT DEFEAT THE LESSOR'S RIGHT TO RESTORATION PARTICULARLY WHEN THE FACTS INDICATE THAT THE COST OF RESTORATION COULD HAVE BEEN DETERMINED AT THE TIME THE LESSOR NOTIFIED THE GOVERNMENT THAT RESTORATION WOULD BE REQUIRED. WHERE THE GOVERNMENT CONTINUED TO OCCUPY A BUILDING FOR A PERIOD OF YEARS UNDER THREE SEPARATE LEASE AGREEMENTS ALL OF WHICH PROVIDED FOR RESTORATION BY THE GOVERNMENT UPON WRITTEN REQUEST OF THE LESSOR, TO HOLD THAT THE LESSOR SHOULD HAVE REQUIRED RESTORATION PRIOR TO THE EXPIRATION OF THE TERMS OF THE FIRST TWO LEASES WOULD HAVE RESULTED IN VAIN AND USELESS SITUATIONS, LIKEWISE TO HOLD THAT THE LESSOR BY AGREEING TO THE GOVERNMENT'S CONTINUED OCCUPANCY UNDER NEW LEASES FOLLOWING EXPIRATION OF THE TERMS OF THE ORIGINAL AND SUCCEEDING LEASES LOST RIGHT TO THE RESTORATION WOULD BE UNREASONABLE; THEREFORE, THE GOVERNMENT'S OBLIGATION TO RESTORE THE PREMISES IS FOR DETERMINATION ON THE BASIS OF THE CONDITION OF THE PREMISES AT THE BEGINNING OF THE FIRST LEASE RATHER THAN AT THE BEGINNING OF THE LAST LEASE.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, NOVEMBER 17, 1960:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 12, 1960, REQUESTING A DECISION AS TO THE PROPRIETY OF PAYMENT OF THE RESTORATION CLAIM SUBMITTED BY T. E. GREEN, JR., INDIVIDUALLY, AND AS AGENT AND ATTORNEY IN-FACT FOR THE OTHER LESSORS OF THE PREMISES AT 116-120 WEST HARGETT STREET, RALEIGH, NORTH CAROLINA, FORMERLY OCCUPIED BY THE GOVERNMENT UNDER LEASE NO. GS-04B -5044, DATED JUNE 25, 1958.

IT HAS BEEN ASCERTAINED INFORMALLY THAT THIS BUILDING ORIGINALLY WAS OCCUPIED BY THE ARMY UNDER LEASE NO. DA-09-133-ENG-175, DATED NOVEMBER 25, 1949, FOR THE TERM BEGINNING FEBRUARY 1, 1950, AND ENDING JUNE 30, 1950, WITH AUTOMATIC RENEWAL OPTION THROUGH JUNE 30, 1955. OCCUPANCY THUS APPEARS TO HAVE BEEN CONTINUOUS FROM FEBRUARY 1, 1950, TO JUNE 30, 1959. PARAGRAPH 16 OF THE FIRST LEASE CONTAINED SUBSTANTIALLY THE SAME PROVISIONS AS PARAGRAPH 8 OF THE STANDARD FORM NO. 2 ( REVISED) GOVERNMENT LEASE CONCERNING THE GOVERNMENT'S RIGHT TO ATTACH FIXTURES, AND ERECT ADDITIONS, ETC; AND THE LESSORS' RIGHT TO REQUIRE RESTORATION SUBJECT TO 30 DAYS WRITTEN NOTICE BEFORE EXPIRATION OF LEASE, WITH THE ADDITIONAL RESERVATION TO THE GOVERNMENT OF THE RIGHT TO MAKE A CASH SETTLEMENT IN LIEU OF RESTORATION, BUT IN NO EVENT TO EXCEED THE AMOUNT OF ANY DIMINUTION IN VALUE RESULTING FROM THE GOVERNMENT'S USE AND OCCUPANCY. SUPPLEMENTAL AGREEMENT NO. 1, DATED FEBRUARY 2, 1950, PROVIDED FOR CERTAIN ALTERATIONS AND ADDITIONS TO BE MADE BY THE LESSORS IN CONSIDERATION OF A PAYMENT OF $9,163.58 BY THE GOVERNMENT. IT IS UNDERSTOOD THAT THE ORIGINAL LEASE WAS TRANSFERRED TO GSA PURSUANT TO REORGANIZATION PLAN NO. 18 OF 1950, 64 STAT. 1270 (5 U.S.C. 133Z-15 NOTE).

IT IS STATED IN YOUR LETTER THAT GSA ENTERED INTO A NEW LEASE (GS 04B- 2957) FOR THE SAME BUILDING FOR A THREE YEAR TERM FROM JULY 1, 1955, TO JUNE 30, 1958, AND IT IS REPORTED INFORMALLY THAT ON MARCH 18, 1955, A CONTRACT WAS ENTERED INTO BY THE GOVERNMENT FOR EFFECTING CERTAIN ALTERATIONS TO THE LEASED BUILDING AT A COST OF $4,457. PARAGRAPH 8 OF THIS LEASE CONTAINED THE STANDARD PROVISIONS GRANTING THE GOVERNMENT THE RIGHT TO MAKES ALTERATIONS, ATTACH FIXTURES AND ERECT ADDITIONS, STRUCTURES, AND SIGNS, TOGETHER WITH THE STANDARD PROVISION REQUIRING RESTORATION OF THE PREMISES BY THE GOVERNMENT PRIOR TO THE TERMINATION OF THE LEASE, SUBJECT TO 40 DAYS WRITTEN NOTICE BY THE LESSORS BEFORE TERMINATION IN THE EVENT OF THEIR ELECTION TO REQUIRE SUCH RESTORATION. PARAGRAPH 19 OF THIS LEASE PROVIDED THAT---

ANY AND ALL FIXTURES, ADDITIONS, STRUCTURES, AND SIGNS PLACED BY THE GOVERNMENT IN OR UPON THE PREMISES COVERED BY THIS LEASE DURING THE OCCUPANCY THEREOF UNDER FORMER LEASE MAY BE REMOVED BY THE GOVERNMENT AT ANY TIME DURING THE TENANCY, HEREBY CREATED, IN ACCORDANCE WITH THE PROVISIONS OF THE LEASE UNDER WHICH THEY WERE MADE OR INSTALLED.

AS POINTED OUT IN YOUR LETTER, HOWEVER, NEITHER OF THE LEASES REFERRED TO IN YOUR LETTER CONTAINED A RENEWAL OPTION IN FAVOR OF EITHER PARTY. LEASE NO. GS-04B-5044, WHICH CONTAINS SUBSTANTIALLY THE SAME TERMS AND CONDITIONS AS LEASE NO. GS-04B-2957, PROVIDED FOR A TERM BEGINNING JULY 1, 1958, AND ENDING JUNE 30, 1959. IT TOO CONTAINED THE STANDARD PROVISIONS IN PARAGRAPH 8 PERMITTING THE GOVERNMENT TO MAKE ALTERNATIONS, AD TO ATTACH FIXTURES UPON THE LEASED PREMISES TOGETHER WITH THE USUAL RESTORATION OBLIGATION SUBJECT TO 40 DAYS WRITTEN NOTICE BY THE LESSORS BEFORE TERMINATION OF THE LEASE. ALSO, PARAGRAPH 19 WAS IDENTICAL TO PARAGRAPH 19 OF PRIOR LEASE. THUS, AT ANY TIME PRIOR TO THE EXPIRATION OF LEASE NO. GS-04B-5044 THE GOVERNMENT HAD THE RIGHT TO REMOVE ANY AND ALL FIXTURES, ADDITIONS, STRUCTURES, AND SIGNS PLACED BY IT ON THE PREMISES DURING ITS OCCUPANCY UNDER THE PRIOR LEASES IN ACCORDANCE WITH THE PROVISIONS OF THE LEASE UNDER WHICH SUCH INSTALLATIONS WERE EFFECTED.

YOU REPORTED THAT DURING A PERIOD OF SEVERAL MONTHS PRIOR TO JUNE 1, 1959, MR. T. E. GREEN, JR., CALLED THE CHIEF OF ACQUISITION AND DISPOSAL BRANCH IN THE REGIONAL OFFICE OF GSA AT ATLANTA, GEORGIA, CONCERNING THE POSSIBILITY OF THE GOVERNMENT'S REMAINING IN THE LEASED PREMISES AFTER JUNE 30, 1959; THAT GSA WAS THEN AWAITING APPROVAL OF THE ARMED SERVICES COMMITTEES OF CONGRESS FOR MORE ADEQUATE AND BETTER FACILITIES OFFERED BY ANOTHER LESSOR AS QUARTERS FOR THE ARMED SERVICES EXAMINING STATION THEN OCCUPYING THE LEASED PREMISES; THAT THIS APPROVAL WAS NOT RECEIVED UNTIL MAY 29, 1959, ON WHICH DATE THE REGIONAL OFFICE OF GSA WAS NOTIFIED; AND THAT MR. GREEN WAS, IN TURN, IMMEDIATELY NOTIFIED BY TELETYPE DATED MAY 29, 1959, THAT THE GOVERNMENT WAS LEASING OTHER PREMISES AND THAT IT WOULD VACATE HIS PREMISES ON OR BEFORE JULY 1, 1959.

ON JUNE 5, 1959, MR. GREEN ORALLY NOTIFIED MR. CHRISTIE, A GSA REGIONAL OFFICE REPRESENTATIVE HANDLING LEASING MATTERS, THAT THE LESSORS EXPECTED RESTORATION OF THE LEASED BUILDING TO ITS ORIGINAL CONDITION, WITHOUT BEING SPECIFIC AS TO THE PARTICULAR ITEMS. THE FIRST ITEMIZATION OF THE RESTORATION REQUIRED BY THE LESSORS IS SAID TO HAVE BEEN DERIVED FROM A COPY OF A LETTER DATED SEPTEMBER 3, 1959, FROM MR. DANIELSON, A GENERAL CONTRACTOR, TO MR. GREEN WHEREIN THE CONTRACTOR ON THE BASIS OF A SURVEY APPARENTLY MADE ON OR ABOUT AUGUST 19, 1959, ESTIMATED THAT IT WOULD COST $8,037 TO RESTORE THE LEASED BUILDING TO ITS FORMER CONDITION AS OF FEBRUARY 1950 WHEN THE GOVERNMENT ENTERED INTO OCCUPANCY OF THE BUILDING. IT IS EXPLAINED THAT MR. DANIELSON'S COST ESTIMATE IS BASED PRIMARILY ON THE REMOVAL OF IMPROVEMENTS INSTALLED BY THE GOVERNMENT SUCH AS PARTITIONS, SUSPENDED CEILINGS, ASPHALT TILE FLOORS, THE REPAIR OF STEEL SASH WHERE FANS WERE INSTALLED, AND THE REARRANGEMENT OF THE ELECTRICAL SYSTEM.

YOU STATE THAT ON JUNE 30, 1959, THE LEASED PREMISES WERE PHYSICALLY VACATED BY THE GOVERNMENT; THAT ON JULY 15, 1959, THE GSA AREA MANAGER IN RALEIGH RECEIVED A TELEPHONE CALL FROM MR. GREEN REQUESTING INFORMATION AS TO WHEN GSA INTENDED TO EFFECT RESTORATION OF HIS BUILDING; AND THAT ON JULY 16, 1959, THE CHIEF, ACQUISITION AND DISPOSAL DIVISION, PBS REGIONAL OFFICE IN ATLANTA WROTE TO MR. GREEN, AS FOLLOWS:

YOUR MESSAGE TO OUR NORTH CAROLINA AREA MANAGER, MR. MURRIS C. SMITH, RALEIGH, NORTH CAROLINA, HAS BEEN RELAYED TO THIS OFFICE.

PARAGRAPH 8 OF THE LEASE PROVIDED THAT IF THE LESSOR REQUIRED ANY RESTORATION OF THE PREMISES, WRITTEN NOTICE MUST BE GIVEN TO THE GOVERNMENT AT LEAST 40 DAYS PRIOR TO THE TERMINATION OF THE LEASE.

THE SUBJECT LEASE EXPIRED OF ITS OWN LIMITATION ON JUNE 30, 1959; AND AS WE HAD PREVIOUSLY ADVISED YOU BY TELEGRAM THAT WE INTENDED TO VACATE THE BUILDING ON THAT DATE, AND AS A WRITTEN REQUEST WAS NOT RECEIVED IN COMPLIANCE WITH PARAGRAPH 8 OF THE LEASE, ANY OBLIGATION THAT THE GOVERNMENT MIGHT HAVE HAD FOR RESTORATION OF THE PREMISES TERMINATED ON JUNE 30, 1959.

YOU HAVE FORWARDED A COPY OF AN AFFIDAVIT EXECUTED ON SEPTEMBER 3, 1959, BY MR. M. K. GREEN IN WHICH REFERENCE IS MADE TO A RECOMMENDATION TO A CONGRESSIONAL COMMITTEE FOR SPACE IN ANOTHER BUILDING MADE IN FEBRUARY 1959, BY MR. BAKER, CHIEF, ACQUISITION AND DISPOSAL DIVISION, PBS REGIONAL OFFICE IN ATLANTA. MR. GREEN ASSERTS THAT THE LESSORS WERE UNAWARE OF THIS RECOMMENDATION UNTIL SOMETIME IN JUNE 1959 WHEN MR. CHRISTIE, A GSA REGIONAL OFFICE REPRESENTATIVE, SHOWED HIM A CARBON COPY OF SUCH RECOMMENDATION; THAT HE TOLD MR. CHRISTIE IT APPEARED THAT THE LESSORS HAD BEEN LED UP A BLIND ALLEY BY MR. BAKER AND INTENTIONALLY KEPT IN A STATE OF NEGOTIATION IN ORDER TO DEFEAT THE LESSOR'S RIGHT TO RESTORATION, BESIDES LOSING VALUABLE TIME IN OBTAINING A NEW TENANT; THAT HE RECEIVED NO REPLY FROM MR. CHRISTIE WHEN HE ASKED HIM WHY MR. BAKER HAD NOT ACKNOWLEDGED THE LESSOR'S PHONE CALLS ON MAY 10, 1959, TO ATLANTA AND BIRMINGHAM AT WHICH TIME THE LESSORS HAD INTENDED TO GIVE A WRITTEN RESTORATION NOTICE IF THEY WERE NOT TO RECEIVE THE AWARD; THAT HE INFORMED MR. CHRISTIE THAT HE HAD RECENTLY RECEIVED INFORMATION TO THE EFFECT THAT CAMERON VILLAGE CORPORATION, APPARENTLY THE SUCCESSFUL BIDDER AND PRESENT LESSOR OF THE QUARTERS OCCUPIED BY THE INVOLVED ACTIVITY, HAD STARTED REPAIR WORK TEN DAYS BEFORE MAY 29, 1959; AND THAT WHEN MR. CHRISTIE ASKED WHAT THE LESSORS WANTED HE INFORMED HIM THAT THEY WANTED SOMEONE SENT TO RALEIGH SO THEY COULD POINT OUT WHAT INSTALLATIONS THEY WANTED REMOVED TOGETHER WITH SOME CONSIDERATION FOR THE SEVERAL MONTHS THEY HAD LOST IN OBTAINING A NEW TENANT. MR. GREEN ASSERTS THAT WHILE MR. CHRISTIE INFORMED HIM THAT HE WOULD SEE MR. BAKER IN TWO DAYS AND THAT HE ( MR. GREEN) WOULD HEAR FROM MR. BAKER, NOTHING WAS HEARD FROM THE GOVERNMENT REPRESENTATIVES UNTIL JULY 15, 1959, WHEN HE RECEIVED A TELEPHONE CALL FROM MR. SMITH'S SECRETARY (OF THE LOCAL GSA OFFICE) INFORMING HIM THAT MR. CHRISTIE HAD PHONED HER TO OBTAIN THE KEYS FROM THE ARMY AND TURN THEM OVER TO THE LESSORS. MR. GREEN STATES, IN EFFECT, THAT HE INFORMED THE SECRETARY THAT WHILE HE DIDN-T THINK THE LEASE HAD BEEN PROPERLY TERMINATED HE COULDN-T PREVENT HER FROM MAILING THE KEYS TO HIM; THAT SINCE HE HAD NOT HEARD FROM MR. BAKER AS EXPECTED PERHAPS SHE WOULD TALK TO HIM ABOUT THE MATTER; THAT THIS CONVERSATION WAS FOLLOWED BY MR. BAKER'S LETTER OF JULY 16, 1959; AND THAT SOMETIME DURING THE LATTER PART OF JULY OR THE FIRST OF AUGUST HE DROPPED BY MR. SMITH'S OFFICE AND OBTAINED THE KEYS.

THE REQUIREMENT FOR TIMELY NOTICE OF THE LESSOR'S DEMAND FOR RESTORATION UNDER PARAGRAPH 8 OF THE STANDARD FORM NO. 2 ( REVISED) GOVERNMENT LEASE IS A CONDITION PRECEDENT TO THE LESSORS' RESTORATION RIGHTS UNDER THIS PARAGRAPH. 6 COMP. GEN. 533. IT HAS BEEN HELD, HOWEVER, THAT WHERE THERE HAS BEEN SUBSTANTIAL COMPLIANCE WITH THE WRITTEN NOTICE REQUIREMENT AND WHERE THE LESSOR'S FAILURE TO STRICTLY COMPLY WITH THE REQUIREMENT HAS NOT BEEN PREJUDICIAL TO THE GOVERNMENT'S INTEREST, SUCH FAILURE ON THE PART OF THE LESSOR WILL NOT OPERATE TO DEFEAT AN OTHERWISE PROPER RESTORATION CLAIM BY THE LESSOR. ELIZABETH SMITH V. UNITED STATES, 96 CT. CL. 326; 26 COMP. GEN. 585. AS POINTED OUT BY THE COURT IN THE SMITH CASE, THE MAJOR PURPOSE OF THIS TYPE OF NOTICE IS TO CONVEY KNOWLEDGE OF THE LESSOR'S DEMAND TO THE LESSEE BEFORE THERE IS ANY CHANGE IN THE PREMISES, TO THE END THAT THE DAMAGES AND COST OF RESTORATION CAN BE ACCURATELY DETERMINED.

IN THE LIGHT OF THE FACTS AS REPORTED IN YOUR LETTER AND THE STATEMENTS MADE IN MR. GREEN'S AFFIDAVIT OF SEPTEMBER 3, 1959--- WHICH WE MUST ACCEPT IN THE ABSENCE OF ANY CONTRADICTION THEREOF--- WE FEEL THAT THERE WAS SUBSTANTIAL COMPLIANCE WITH THE NOTICE REQUIREMENT IN THIS CASE, PARTICULARLY IN VIEW OF THE GOVERNMENT'S CONTINUOUS OCCUPANCY OF THE LEASED BUILDING OVER A PERIOD OF TEN YEARS INVOLVING THREE SEPARATE LEASES, AND THE CIRCUMSTANCES LEADING UP TO THE GOVERNMENT'S NOTICE OF MAY 29, 1959. WHILE THERE WAS NO REQUIREMENT IN LEASE GS-04B-5044 OBLIGATING THE GOVERNMENT TO NOTIFY THE LESSORS OF ITS INTENTION NOT TO CONTINUE OCCUPANCY OF THE PREMISES AFTER JUNE 30, 1959, THE RECORD INDICATES THAT THE LESSORS HAD, UNTIL MAY 29, 1959, SOME REASONABLE BASIS FOR ANTICIPATING FURTHER OCCUPANCY BY THE GOVERNMENT, AND THE ACTIONS OF THE GOVERNMENT REPRESENTATIVES IN CONTINUING NEGOTIATIONS WITH THE LESSORS MAY HAVE CONTRIBUTED TO THE FAILURE TO COMPLY STRICTLY WITH THE NOTICE REQUIREMENT. ACCORDINGLY, SINCE THERE IS NOTHING IN THE FACTS AS REPORTED BY YOU INDICATING THAT THE COST OF RESTORATION COULD NOT HAVE BEEN DETERMINED AT THE TIME THE LESSORS' REPRESENTATIVE FIRST NOTIFIED THE GSA REGIONAL OFFICE THAT RESTORATION WOULD BE REQUIRED, OUR OFFICE WOULD NOT BE REQUIRED TO OBJECT TO PAYMENT OF SUCH AMOUNT IN SETTLEMENT OF THE LESSORS' CLAIM AS MAY BE ADMINISTRATIVELY DETERMINED TO BE REASONABLE, IN THE LIGHT OF THE GOVERNMENT'S OBLIGATION UNDER PARAGRAPH 8 OF THE LEASE NO. GS-04B 5044 AND PARAGRAPH 16 OF LEASE NO. DA-09-133-ENG-175.

IN CONSIDERING THE PRESENT CLAIM THERE NECESSARILY ARISES THE QUESTION AS TO WHETHER THE GOVERNMENT'S OBLIGATION TO RESTORE THE PREMISES IS TO BE DETERMINED BY THE CONDITION OF THE PREMISES AT THE BEGINNING OF THE LAST LEASE OR AT THE BEGINNING OF THE FIRST LEASE. PARAGRAPH 8 OF THE LAST TWO LEASES STIPULATES THAT PRIOR TO THE TERMINATION OF THE LEASE, THE GOVERNMENT, IF REQUIRED BY THE LESSOR, SHALL, BEFORE THE EXPIRATION OF THE LEASE, OR ANY RENEWAL THEREOF, RESTORE THE PREMISES TO THE SAME CONDITION AS THAT EXISTING AT THE TIME OF ENTERING UPON THE SAME "UNDER THIS LEASE," REASONABLE AND ORDINARY WEAR AND TEAR AND DAMAGES BY THE ELEMENTS OR BY CIRCUMSTANCES OVER WHICH THE GOVERNMENT HAS NO CONTROL EXCEPTED, PROVIDED, HOWEVER, THAT IF THE LESSOR REQUIRES SUCH RESTORATION, HE SHALL GIVE WRITTEN NOTICE THEREOF TO THE GOVERNMENT A SPECIFIED NUMBER OF DAYS BEFORE TERMINATION OF THE LEASE. THE GOVERNMENT'S RESTORATION OBLIGATION UNDER PARAGRAPH 16 OF LEASE NO. DA-09-133-ENG-175 IS SUBSTANTIALLY THE SAME AS ITS RESTORATION OBLIGATION UNDER THE LAST LEASES EXCEPT THAT UNDER THE ORIGINAL LEASE PROVISION IS MADE FOR A CASH SETTLEMENT IN LIEU OF RESTORATION WHICH SETTLEMENT, HOWEVER, SHALL NOT EXCEED ANY DIMINUTION IN VALUE OF THE PREMISES RESULTING FROM THE GOVERNMENT'S OCCUPANCY. RESTORATION PROVISIONS OF THE THREE LEASES STANDING ALONG WOULD SEEM TO INDICATE THAT IN A SITUATION WHERE THE LESSEE DESIRES TO CONTINUE OCCUPANCY OF THE LEASED PREMISES AT THE EXPIRATION OF THE TERM EITHER BY AN EXTENSION OR RENEWAL THEREOF THE LESSOR'S RIGHT TO RESTORATION IS LOST UPON THE TAKING OF A NEW TERM OR RENEWAL LEASE, UNLESS PRIOR TO THE EXPIRATION OF THE ORIGINAL TERM HE MEETS THE REQUIREMENTS OF THE LEASE FOR RESTORATION AND REQUIRES COMPLIANCE THEREOF. CF. RICHARD G. DAVENPORT, EXECUTOR OF GRAHAM V. UNITED STATES, 26 CT. CL. 338. AN ANALOGOUS SITUATION INVOLVING THE TENANT'S OBLIGATION FOR RESTORATION BECAUSE OF ALTERNATIONS MADE BY IT DURING THE TERM OF THE ORIGINAL LEASE, WHICH WAS FOLLOWED BY THREE OTHER SIMILAR LEASES, WAS CONSIDERED BY THE COURT OF APPEALS OF NEW YORK IN MCGREGOR V. BOARD OF EDUCATION, 14 N.E. 420, WHEREIN THE COURT AT PAGE 422, STATED---

* * * THE SECOND GROUND OF NONSUIT IS ONE WHICH THE GENERAL TERM SUSTAINED IN THEIR REVERSAL OF THE VERDICT. IT WAS THAT NO VIOLATION OF THE COVENANT IN THE LAST LEASE (OBLIGATING THE LESSEE TO SURRENDER PREMISES IN THE SAME CONDITION AS THEY WERE IN AT THE EXECUTION OF THE LEASE, REASONABLE USE AND WEAR THEREOF AS A PUBLIC SCHOOL, AND DAMAGES BY THE ELEMENTS EXCEPTED) HAD BEEN SHOWN, AND THERE WAS A WAIVER OF SUCH VIOLATION OF THE COVENANTS IN THE PRIOR LEASES. THE FOURTH AND LAST LEASE WAS DATED APRIL 16, 1881, AND ITS COVENANT OF RESTORATION WAS TO THE CONDITION OF THAT DATE, AND SUCH CONDITION WAS WHOLLY UNPROVED. BUT THE COMPLAINT RELATES TO A CONTINUOUS POSSESSION UNDER ALL THE LEASES; AND WHILE THE PLAINTIFF DID NOT SHOW THE SEPARATE DAMAGE AT THE CLOSE OF EACH TERM, AND SO PROVE A BREACH OF COVENANT REFERABLE TO SOME ONE OR MORE OR ALL OF THE LEASES, AND IT IS QUITE IMMATERIAL WHICH, SINCE THE COVENANT EXISTED AND WAS THE SAME IN EACH. THE ALLEGED ACTS OF WAIVER MAY BE CONSIDERED IN CONNECTION WITH THE SECOND OR THIRD GROUNDS OF THE DEFENDANT'S MOTION, WHICH WERE, IN SUBSTANCE, THAT EACH NEW LEASE WAS A SURRENDER ACCEPTED OF THE PRIOR ONE, AND SHE IS ESTOPPED FROM ASSERTING A VIOLATION OF THE COVENANTS IN THE LEASES ENDED BY SUCH ACCEPTED SURRENDER. IT IS PERHAPS TRUE THAT EACH NEW LEASE INVOLVED A SURRENDER TO THE LANDLORD OF THE LESSEE'S POSSESSION, THOUGH THEY ALL RAN TO THEIR TERMINATION, AND THERE WAS NO SURRENDER OF THE LEASES THEMSELVES UNDER THE PRIOR ONE. LIVINGSTON V. POTTS, 16 JOHNS, 28; SPRINGSTEIN V. SCHERMERHORN, 12 JOHNS, 357. BUT SUCH SURRENDER, INSTEAD OF BEING ACTUAL, WAS IMPLIED FROM THE PRESUMED INTENTION OF THE PARTIES, AND DEVISED TO GIVE CONSISTENCY TO THE NEW LEASE. I THINK IT NEVER SHOULD BE MADE TO WORK AN INJUSTICE TO THE CONTRACTING PARTIES IN HOSTILITY TO THEIR REAL AGREEMENT. IT IS ALSO TRUE THAT, WHERE THERE HAS BEEN SUCH IMPLIED SURRENDER, THE TENANT LOSES ALL RIGHTS DEPENDENT UPON THE CONTINUED EXISTENCE AND VALIDITY OF THE SURRENDERED LEASE. LOUGHRAN V. ROSS, 45 N.Y. 792. BUT THAT IS BECAUSE THE RIGHT LOST OR EXTINGUISHED COULD NOT SURVIVE THE DESTRUCTION OF THE LEASE AND THE ENDING OF ITS TERM, AND COULD EXIST ONLY WHILE THE LEASE CONTINUED. TAKING THE NEW LEASE, AND ENDING THE OLD ONE, DESTROYED THE RIGHT TO REMOVE BUILDINGS, OR THE RIGHT TO ESTOVERS, DEPENDENT WHOLLY UPON THE ENDED LEASE. AND I CANNOT DISCOVER THAT THE DOCTRINE EVER WENT FURTHER, AND SUFFICIENTLY TO INCLUDE THE PRESENT CASE. CERTAINLY, A SURRENDER OF THE LEASE DURING THE TERM, AND ITS ACCEPTANCE BY THE LANDLORD, DOES NOT EXTINGUISH RIGHTS OF ACTION ALREADY ACCRUED. WE HAVE HELD THAT AS TO RENT IN ARREARS AND OVERDUE. SPERRY V. MILLER, 16 N.Y. 407. AND WHERE, AT THE CLOSE OF A TERM, THERE IS SURRENDER OF POSSESSION BY A TENANT IN SUCH CONDITION AS TO VIOLATE A COVENANT IN THE LEASE, AND AN ACCEPTANCE OF POSSESSION BY THE LANDLORD, AND TWO THINGS OCCURRING EO INSTANTI, I AM NOT READY TO ADMIT THAT THE RIGHT OF ACTION FOR A BREACH DIES AT THE MOMENT OF ITS BIRTH. IT IS TRUE THAT THE LANDLORD, ACCEPTING THE POSSESSION WITH KNOWLEDGE OF THE FACTS OR FULL OPPORTUNITY TO KNOW, AND WITHOUT PROTEST OR CLAIM OF INJURY OR OF VIOLATED COVENANTS, MAY BE DEEMED TO HAVE ADMITTED PERFORMANCE OF THE COVENANT, AND WAIVED ANY RIGHT OF ACTION FOR ITS BREACH; BUT THE MERE ACCEPTANCE OF POSSESSION, IN AND OF ITSELF DISSEVERED FROM THE SURROUNDING CIRCUMSTANCES WHICH CHARACTERIZE AND QUALIFY IT, I THINK SHOULD NOT PRODUCE THAT RESULT. AT LEAST, IF IT SHOULD NOT FLOW FROM A MERE TECHNICAL OR IMPLIED SURRENDER, WHERE THERE IS OF COURSE NEITHER OPPORTUNITY OR KNOWLEDGE NOR OCCASION FOR PROTEST, AND WHERE, AS HERE, CONSECUTIVE LEASES OPERATE, IN EFFECT, AS RENEWALS, AND PRODUCE, IN SUBSTANTIAL RESULT, ONE UNBROKEN AND CONTINUOUS TERM. WE ARE OF OPINION THAT THE QUESTION OF BREACH IN THE PREMISES SHOULD TO THE FINAL AND ACTUAL SURRENDER, AND NOT BE CONTROLLED BY THE LEGAL AND TECHNICAL SURRENDERS OCCURRING ALONG THE LINE. ( ITALICS SUPPLIED.) SEE ALSO MEGERELL V. STATE, 46 N.Y.S.2D 685; LAZARUS V. LUDWIG, 61 N.Y.S. 365.

AS WE HAVE INDICATED, THE GOVERNMENT'S OCCUPANCY WAS CONTINUOUS AND THE PROVISIONS OF THE THREE LEASES WERE SUBSTANTIALLY THE SAME EXCEPT FOR AN INCREASED RENTAL UNDER THE LAST TWO LEASES AND THE PROVISION UNDER THE FIRST LEASE FOR A CASH SETTLEMENT IN LIEU OF RESTORATION. IN SUCH CIRCUMSTANCES, TO HAVE REQUIRED RESTORATION OF THE BUILDING PRIOR TO THE EXPIRATION OF THE TERMS OF THE FIRST TWO LEASES OR A CASH SETTLEMENT IN LIEU THEREOF WOULD HAVE RESULTED IN VAIN AND USELESS SITUATIONS. IT WOULD OFFEND REASON TO SAY THAT UNDER CIRCUMSTANCES SUCH AS HERE INVOLVED THE LESSORS BY AGREEING TO THE GOVERNMENT'S CONTINUED OCCUPANCY UNDER THE NEW LEASES FOLLOWING EXPIRATION OF THE TERMS OF THE ORIGINAL AND SUCCEEDING LEASES THEREBY LOST THEIR RESTORATION RIGHTS. CF. ANDERSON-TULLEY CO. V. UNITED STATES, 189 F.2D 192 AND CASES REPORTED IN 6 A.L.R.2D 338 AND 110 A.L.R. 507 INVOLVING THE TENANT'S RIGHT TO REMOVE TRADE FIXTURES AND IMPROVEMENTS UPON EXTENSION OR CONTINUANCE OF THE ORIGINAL LEASE.

WE THEREFORE CONCLUDE THAT OUR OFFICE WOULD NOT BE REQUIRED TO OBJECT TO SETTLEMENT OF THE LESSORS' CLAIM FOR RESTORATION IN SUCH AMOUNT AS YOU MAY FIND DUE NOTWITHSTANDING THEIR FAILURE TO GIVE TIMELY NOTICE. SUCH SETTLEMENT SHOULD, HOWEVER, BE SUBJECT TO THE SPECIFIC PROVISIONS OF PARAGRAPH 16 OF THE ORIGINAL LEASE, PARTICULARLY THE DIMINUTION IN VALUE PROVISION; AND SHOULD NOT INCLUDE ANY ALLOWANCE FOR RENTAL OR LOSS OF USE SUBSEQUENT TO JUNE 30, 1959.