B-144744, MAR. 16, 1961

B-144744, MAR. 16, 1961

TO MAJOR E. L. GIPSON, DISBURSING, ACCOUNTING AND FINANCE OFFICER:

YOUR LETTER OF DECEMBER 28, 1960, REQUESTS AN ADVANCE DECISION AS TO WHETHER PAYMENTS FOR RESTORATION UNDER CERTAIN LEASES SHOULD BE MADE UNDER SUPPLEMENTAL AGREEMENTS TO THE CURRENT LEASES AS DIRECTED IN PARAGRAPH 2 OF ATTACHMENT NO. 2 OR UNDER SUPPLEMENTAL AGREEMENTS TO THE EXPIRED LEASES AS INDICATED IN ATTACHMENT NO. 1.

VOUCHERS COVERING THE PROPOSED PAYMENTS WERE NOT PRESENTED WITH YOUR REQUEST FOR DECISION. ORDINARILY, THE VOUCHER INVOLVED MUST ACCOMPANY THE REQUEST FOR A DECISION. 1 COMP. GEN. 276; 22 COMP. GEN. 588. HOWEVER, BECAUSE OF THE CIRCUMSTANCES REFERRED TO IN PARAGRAPH 5 OF YOUR LETTER THE REQUIREMENT FOR VOUCHERS IN THIS PARTICULAR PRESENTATION WILL BE WAIVED AS IT APPEARS THE CLAIMS REPRESENTED BY THE PROPOSED PAYMENTS ARE ACTUALLY BEFORE YOU FOR CONSIDERATION.

IT IS STATED, IN EFFECT IN ATTACHMENT NO. 2 (LETTER OF SEPTEMBER 22, 1960, FROM THE DEPUTY DIRECTOR OF ENGINEERING PROGRAM, AC/S CIVIL ENGINEERING) THAT SINCE COSTS ARE A PROPER CHARGE TO THE SUCCESSOR "M" ACCOUNT, RESTORATION PAYMENTS COULD BE EFFECTED EITHER UNDER SUPPLEMENTAL AGREEMENTS TO THE CURRENT OR THE PRIOR LEASES BUT THAT IN VIEW OF THE ARRANGEMENTS MADE WITH THE LESSORS AT THE TIME OF EXECUTION OF THE CURRENT LEASES IN 1958, AS SPECIFIED IN PARAGRAPH 3 OF THE LETTER OF JUNE 22, 1960, (AFCJA-13) TO THE REAL ESTATE DIVISION, DIRECTOR OF CIVIL ENGINEERING, DCS/0, HEADQUARTERS, USAF, IT WAS RECOMMENDED THAT PAYMENTS SHOULD BE MADE UNDER SUPPLEMENTAL AGREEMENTS TO THE CURRENT LEASES.

IT IS STATED IN ATTACHMENT NO. 1 (LETTER OF MAY 12, 1960, FROM THE ASSISTANT CHIEF, REAL ESTATE DIVISION, DIRECTORATE OF CIVIL ENGINEERING, DCS/0) THAT THE VALID RESTORATION CLAIMS OUTSTANDING SINCE TERMINATION OF THE LEASES IN 1958 AND NOT PREVIOUSLY PAID BY THE FOREIGN CLAIMS COMMISSION SHOULD BE MADE UNDER SUPPLEMENTAL AGREEMENTS TO THE EXPIRED LEASES.

IN VIEW OF THE CONFLICTING VIEWS SET FORTH IN ATTACHMENTS NOS. 1 AND 2, THE MATTER WAS REFERRED TO THE SECRETARY OF THE AIR FORCE FOR SUCH COMMENTS AND RECOMMENDATIONS AS HE MIGHT CARE TO MAKE. IN REPLY OF FEBRUARY 8, 1961, FROM THE DEPUTY SPECIAL ASSISTANT FOR INSTALLATIONS IT IS STATED THAT THE INVOLVED CLAIMS WERE PRESENTED BY SIX PROPERTY OWNERS INCIDENT TO THE GOVERNMENT'S USE AND OCCUPANCY OF THEIR PROPERTY UNDER NEGOTIATED LEASES; THAT THE ALLEGED DAMAGES ARE BASED PRIMARILY ON THE DESTRUCTION OF COMMERCIAL FRUIT BEARING TREES RESULTING FROM THE CONSTRUCTION OF FUEL STORAGE TANKS ON THE LEASED PREMISES; THAT THE LEASES AS EXTENDED BY AMENDMENTS THERETO, COVERED THE PERIOD FROM JUNE 1, 1945, TO JUNE 30, 1961; AND THAT THE GOVERNMENT'S RESTORATION OBLIGATION PROVIDED AS FOLLOWS:

"THE GOVERNMENT SHALL SURRENDER POSSESSION OF THE PREMISES UPON THE EXPIRATION OR TERMINATION OF THIS LEASE, AND IF SO REQUIRED BY THE LESSOR, SHALL RETURN THE PREMISES IN SUBSTANTIALLY 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, THAT IF THE LESSOR REQUIRED THE RETURN OF THE PREMISES IN SUCH CONDITION, THE LESSOR SHALL GIVE WRITTEN NOTICE THEREOF TO THE GOVERNMENT AT LEAST TWENTY (20) DAYS BEFORE THE TERMINATION OF THE LEASE; AND PROVIDED FURTHER, THAT SHOULD THE LESSOR GIVE SUCH NOTICE WITHIN THE TIME SPECIFIED ABOVE, THE GOVERNMENT SHALL HAVE THE RIGHT AND PRIVILEGE TO COMPENSATE THE LESSOR AT THE FAIR VALUE, OR EQUIVALENT, IN LIEU OF PERFORMANCE OF ITS OBLIGATION, IF ANY, TO RESTORE THE PREMISES. FAIR VALUE IS TO BE DETERMINED AS THE VALUE AT THE DATE OF OCCUPANCY LESS FAIR WEAR AND TEAR AND DEPRECIATION DURING THE PERIOD OF THIS LEASE.'

IT WAS STATED FURTHER THAT THE LEASES WERE TERMINATED BY THE GOVERNMENT IN 1957; THAT NEW LEASES WERE SUBSEQUENTLY NEGOTIATED COVERING THE SAME PROPERTY AND PROVIDING FOR GOVERNMENT OCCUPANCY UNTIL JUNE 30, 1967; THAT AT THE TIME THE ORIGINAL LEASES WERE TERMINATED JOINT CONDITION SURVEYS WERE MADE AND THE OWNERS WERE ADVISED THAT THEY COULD FILE CLAIMS FOR DAMAGES ALLEGED TO HAVE BEEN CAUSED BY THE GOVERNMENT'S USE AND OCCUPANCY AND SUCH DAMAGES AS AROSE UNDER THE GOVERNMENT'S RESTORATION OBLIGATION; THAT THE CLAIMS WERE ORIGINALLY REFERRED TO THE FOREIGN CLAIMS COMMISSION NO. 8 IN THE PHILIPPINES FOR CONSIDERATION AND SETTLEMENT; AND THAT THREE SETTLEMENTS IN THE AGGREGATE AMOUNT OF $2,401.50 WERE EFFECTED PURSUANT TO THE FOREIGN CLAIMS ACT. IT IS STATED, HOWEVER, THAT ORDINARILY CLAIMS ARISING UNDER A LEASE ARE SETTLED IN ACCORDANCE WITH THE PROCEDURES AGREED TO THEREIN BY THE PARTIES AND THAT UNDER SUCH PROCEDURES THE TERMS OF THE SETTLEMENT, INCLUDING A COMPLETE RELEASE, ARE NEGOTIATED PRIOR TO TERMINATION AND EMBODIED IN SUPPLEMENTAL AGREEMENT TO THE LEASE. IT IS EXPLAINED THAT THESE PROCEDURES WERE NOT FOLLOWED IN THE PRESENT CLAIMS AND THAT THE LETTER OF MAY 12, 1960 (ATTACHMENT NO. 1), TO THE PACIFIC AIR FORCE AUTHORIZING NEGOTIATION OF SETTLEMENTS, CONTEMPLATED THE EXECUTION OF SUCH SUPPLEMENTAL AGREEMENTS BASED UPON THE OUTSTANDING RESTORATION OBLIGATION OF THE GOVERNMENT AS CONTAINED IN THE ORIGINAL LEASES. IT IS FURTHER EXPLAINED THAT SINCE THE GOVERNMENT'S RESTORATION OBLIGATIONS UNDER THE CURRENT LEASES RELATE ONLY TO THE CONDITION OF THE PREMISES AS OF JULY 1, 1957, THE DATE SUCH LEASES WERE EXECUTED, THE DEPARTMENT'S INSTRUCTIONS IN THE LETTER OF MAY 12, 1960, TO THE PACIFIC AIR FORCE HAVE BEEN CONFIRMED AND THAT ITS LETTER OF SEPTEMBER 22, 1960, TO THE 13TH AIR FORCE HAS BEEN REVISED ACCORDINGLY.

SINCE IT IS REPORTED THAT AT THE TIME THE LEASES WERE TERMINATED JOINT CONDITION SURVEYS WERE MADE AND THE OWNERS WERE ADVISED THAT THEY COULD FILE CLAIMS FOR DAMAGES ARISING FROM THE GOVERNMENT'S USE AND OCCUPANCY AND SINCE THE GOVERNMENT'S OBLIGATIONS UNDER THE CURRENT LEASES ARE STATED TO RELATE ONLY TO THE CONDITION OF THE PREMISES AT THE TIME SUCH LEASES WERE EXECUTED, THAT IS, JULY 1, 1957, OUR OFFICE WOULD NOT BE REQUIRED TO OBJECT TO EXECUTION OF SUPPLEMENTAL AGREEMENTS TO THE ORIGINAL LEASES PROVIDING FOR ALLOWANCE OF THE OUTSTANDING CLAIMS FOR RESTORATION BASED UPON THE CONDITION OF THE PROPERTY AS OF THE DATE OF THE TERMINATION O THE LEASES IN 1957, IF OTHERWISE PROPER AND IN ACCORDANCE WITH THE RESTORATION PROVISIONS QUOTED ABOVE.

AS TO THE MERITS OF THE CLAIMS IT MAY BE STATED THAT GENERALLY THE RIGHTS AND LIABILITIES OF THE PARTIES TO A LEASE ARE GOVERNED BY THE LAWS OF THE PLACE WHERE THE PREMISES ARE LOCATED AND THE LEASE WAS EXECUTED. SEE 51 C.J.S., LANDLORD AND TENANT, 205, 231; B-120286, JULY 12, 1954. IN THIS PARTICULAR INSTANCE, IN THE ABSENCE OF ANY LOCAL LAW TO THE CONTRARY OR ANY SHOWING OF AN ADVANCE UNDERSTANDING THAT THE DESTRUCTION OF THE TREES WAS NOT WITHIN THE CONTEMPLATION OF THE LEASES THERE WOULD APPEAR TO BE FOR APPLICATION THE GENERAL RULE IN SUCH CASES TO THE EFFECT THAT IF SUCH DESTRUCTION WERE AN OUTCOME FAIRLY TO HAVE BEEN ANTICIPATED FROM THE ANNOUNCED OR STATED USE OF THE PREMISES, THE RISK WOULD DEVOLVE UPON THE LESSORS AS "REASONABLE AND ORDINARY WEAR AND TEAR" AS USED IN RESTORATION PROVISIONS OF THE LEASES.

IN THE EVENT OF PAYMENT OF ANY OF THE PENDING CLAIMS A COPY OF THIS DECISION SHOULD BE ATTACHED TO THE PAYMENT VOUCHER.