B-148312, MAR. 21, 1962

B-148312: Mar 21, 1962

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WAS DELETED BEFORE EXECUTION THEREOF. FOR THE CALENDAR YEAR 1962 THE LEASE WAS REVOKED AS OF DECEMBER 31. YOU FURTHER STATE THAT A CHECK IN THE AMOUNT OF $12.50 WAS RECEIVED FROM THE LESSEE ON JANUARY 8. NOTIFIED THE CHIEF OF ENGINEERS THAT ACTION TO READVERTISE THE LAND HAS NOT BEEN INITIATED BUT THAT IT IS BEING HELD IN ABEYANCE PENDING OUR DECISION ON YOUR REQUEST. IT WAS STATED THAT THE FORMER LESSEE VACATED THE PREMISES AS OF DECEMBER 31. THE GENERAL RULE IS THAT. UNLESS SUCH TERMINATION WAS WRONGFUL AGAINST HIM. THE THEORY OF THIS RULE IS THAT RENT PAYABLE IN ADVANCE IS CONSIDERED AS ACCRUING ON THE DAY ON WHICH IT IS DUE. 58 A.L.R. 906. THE COURTS HAVE HELD THAT THE RULE IS APPLICABLE EVEN IN A SITUATION WHERE PAYMENT IS MADE AS ADVANCE RENT FOR PART OF A TERM IN THE FUTURE AFTER THE RELATIONSHIP HAS CEASED.

B-148312, MAR. 21, 1962

TO DISBURSING OFFICER, CORPS OF ENGINEERS, U.S. ARMY:

YOUR LETTER OF JANUARY 19, 1962 (SWLFE), REQUESTS OUR DECISION AS TO WHETHER THE AMOUNT OF $12.50 REPRESENTING RENTAL PAID BY MR. DALLAS L. HERD UNDER LEASE NO. DA-03-050-CIVENG-58-348, FOR THE TERM BEGINNING JANUARY 1, 1962, SHOULD BE REFUNDED TO HIM OR DEPOSITED INTO THE TREASURY AS A FORFEITURE FOR BREACH OF THE LEASE.

THE LEASE PROVIDED FOR A FIVE YEAR TERM BEGINNING JANUARY 1, 1958. PARAGRAPH 1 OF THE LEASE PROVIDED FOR AN ANNUAL RENTAL OF $12.50, PAYABLE ANNUALLY 31 DAYS IN ADVANCE. PARAGRAPH 16 PROVIDED FOR TERMINATION BY THE LESSEE AT ANY TIME UPON AT LEAST 10 DAYS WRITTEN NOTICE PROVIDED, HOWEVER, THAT IN CASE OF SUCH TERMINATION, NO REFUND BY THE UNITED STATES OF ANY RENTAL THERETOFORE PAID WOULD BE MADE. PARAGRAPH 28, WHICH PROVIDED FOR AN EQUITABLE ADJUSTMENT OF RENT PAID OR THEREAFTER TO BE PAID IN THE EVENT OF PREMATURE REVOCATION BY THE UNITED STATES AND THAT SUCH PROVISION WOULD NOT APPLY IN THE EVENT OF REVOCATION BECAUSE OF THE LESSEE'S BREACH OF ANY TERMS AND CONDITIONS OF THE LEASE, WAS DELETED BEFORE EXECUTION THEREOF.

YOU STATE THAT UPON FAILURE OF THE LESSEE TO REMIT THE RENT WHICH BECAME DUE AND PAYABLE ON DECEMBER 1, 1961, FOR THE CALENDAR YEAR 1962 THE LEASE WAS REVOKED AS OF DECEMBER 31, 1961, BY NOTICE DATED DECEMBER 4, 1961, FOR NONPAYMENT OF RENT. THE REVOCATION NOTICE STATED THAT IT DID NOT RELEASE THE LESSEE FROM THE OBLIGATION TO PAY ANY RENTAL DUE UNDER THE LEASE. YOU FURTHER STATE THAT A CHECK IN THE AMOUNT OF $12.50 WAS RECEIVED FROM THE LESSEE ON JANUARY 8, 1962. WHILE YOU STATE THAT ACTION HAS BEEN TAKEN TO READVERTISE THE LAND THE RECORD SHOWS THAT SUBSEQUENT TO YOUR LETTER THE DIVISION ENGINEER, SOUTHWESTERN DIVISION, DALLAS, TEXAS, ON FEBRUARY 26, 1962, NOTIFIED THE CHIEF OF ENGINEERS THAT ACTION TO READVERTISE THE LAND HAS NOT BEEN INITIATED BUT THAT IT IS BEING HELD IN ABEYANCE PENDING OUR DECISION ON YOUR REQUEST. ALSO, IT WAS STATED THAT THE FORMER LESSEE VACATED THE PREMISES AS OF DECEMBER 31, 1961.

THE GENERAL RULE IS THAT, IN THE ABSENCE OF PROVISION THEREFOR, RENTS ACCRUED AND PAID IN ADVANCE CANNOT BE RECOVERED BY THE TENANT UPON SURRENDER OR TERMINATION OF THE LEASE, UNLESS SUCH TERMINATION WAS WRONGFUL AGAINST HIM. HOUSEHOLDER V. BLACK, 62 SO.2D 50; COLLIER V. WAGES, 246 S.W. 743 (TEX); SEE, ALSO, AMERICAN BONDING CO. V. PUEBLO INVEST.CO., 150 F.17; 32 AM.JUR., LANDLORD AND TENANT, SEC. 915, P. 777; 52 C.J.S. LANDLORD AND TENANT SEC. 494; SILBERT V. KETON, 29 S.W. 2D 824; HINDIN V. CAINE, 231 P.2D 83.

THE THEORY OF THIS RULE IS THAT RENT PAYABLE IN ADVANCE IS CONSIDERED AS ACCRUING ON THE DAY ON WHICH IT IS DUE. 58 A.L.R. 906. AND, THE COURTS HAVE HELD THAT THE RULE IS APPLICABLE EVEN IN A SITUATION WHERE PAYMENT IS MADE AS ADVANCE RENT FOR PART OF A TERM IN THE FUTURE AFTER THE RELATIONSHIP HAS CEASED. IN SUCH A CASE, SLINE PROPERTIES V. COLVIN, 190 F.2D 401, THE COURT QUOTED FROM SCHOEN V. NEW BRITAIN TRUST CO., 150 A. 696, 699, AS FOLLOWS:

"RENT PAID IN ADVANCE AT THE BEGINNING OF THE LEASE IN CONFORMITY WITH ITS TERMS BECOMES UPON SUCH PAYMENT THE PROPERTY OF THE LESSOR. THE SAME CONCLUSION MUST BE REACHED AS TO ANY RENT PAID IN ADVANCE, WHETHER IT BE FOR A PERIOD OF TIME AT THE MIDDLE OF THE LEASE OR FOR THE LAST YEAR OF THE LEASE. IN EITHER CASE IT BECOMES THE PROPERTY OF THE LESSOR AS SOON AS THE PERIOD TO WHICH THE RENT IS APPLICABLE ARRIVES. WHEN THE DEFAULT OF THE LESSEE MAKES IMPOSSIBLE HIS PERFORMANCE OF THE CONTRACT OF LEASE, THE LAW ACCELERATES THE TIME WHEN THE ADVANCE RENTAL BECOMES THE PROPERTY OF THE LESSOR TO THE TIME OF TERMINATION OF THE LEASE. THE LARGE MAJORITY OF OUR COURTS WHICH HAVE BEEN REQUIRED TO PASS UPON THIS QUESTION HAVE ESTABLISHED THE RULE TO WHICH WE SUBSCRIBE: THE TERMINATION OF A LEASE BY THE DEFAULT OF A LESSEE, WHO HAS IN ACCORDANCE WITH THE TERMS OF THE LEASE MADE AN ADVANCE PAYMENT OF RENT BEFORE SUCH PAYMENT WAS TO BE APPLIED AS RENT, AUTOMATICALLY VESTS THE OWNERSHIP OF SUCH ADVANCED PAYMENT OF RENT IN THE LESSOR UPON THE OCCURRENCE OF THE TERMINATION IN THE ABSENCE OF PROVISION IN THE LEASE LEADING TO A CONTRACT DISPOSITION.'

IN THE PRESENT CASE THE LESSEE'S ACCEPTANCE OF THE TERMINATION NOTICE, EFFECTIVE AS OF DECEMBER 31, 1961, AND HIS COMPLIANCE WITH SUCH NOTICE BY VACATING THE PREMISES AS OF THAT DATE MAY BE REGARDED AS A SURRENDER OF THE LEASED PREMISES. SELTS INV.CO. V. PROMOTERS OF THE FEDERAL NATIONS, 220 N.W. 220.

UNDER THE PROVISIONS OF PARAGRAPH 16 OF THE LEASE THE LESSEE COULD HAVE TERMINATED THE LEASE AT ANY TIME UPON 10 DAYS' WRITTEN NOTICE BUT SINCE THERE IS NO SHOWING THAT HE TOOK ADVANTAGE OF THIS OPTION PRIOR TO DECEMBER 1, 1961, WHEN THE RENT FOR THE YEAR BEGINNING JANUARY 1,1962, BECAME DUE AND PAYABLE, THERE IS NO LEGAL BASIS FOR REFUNDING THE $12.50 COLLECTED FROM HIM. ACCORDINGLY, THE AMOUNT COLLECTED SHOULD BE DEPOSITED IN THE TREASURY IN THE APPROPRIATE ACCOUNT AS MISCELLANEOUS RECEIPTS.