B-151372, JUN. 5, 1963

B-151372, JUN. 5, 1963

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO LETTER OF APRIL 23, 1963, FROM YOUR GENERAL COUNSEL REQUESTING OUR DECISION AS TO THE PROPRIETY OF REFORMATION OF LEASE NO. GS -O7B-5372, DATED MAY 10, 1961, AS REQUESTED BY THE LESSORS, J AND B BUILDERS, INCORPORATED, SO AS TO PROVIDE FOR AN INCREASE IN THE MONTHLY RENTAL FROM $407.02 TO $425.

INVITATION FOR BIDS NO. R7-49-61 DATED MARCH 1, 1961, SOLICITED PROPOSALS FOR "1,950 SQUARE FEET OF NET USABLE AIR CONDITIONED OFFICE SPACE" FOR AN INITIAL TERM NOT TO EXCEED THREE YEARS. THE NUMBER OF ROOMS REQUIRED AND THE AREAS THEREOF TOTALING 1,950 SQUARE FEET WERE SHOWN UNDER THE SPECIAL REQUIREMENTS. BY PARAGRAPH 11 OF THE INSTRUCTIONS TO BIDDERS THEY WERE INFORMED THAT ,THE UNCONDITIONAL ACCEPTANCE OF A BID RECEIVED IN RESPONSE TO THE INVITATION ESTABLISHES A VALID CONTRACT EXTENDING TO ALL COVENANTS OF THE INVITATION, BID, AND ACCEPTANCE, BETWEEN THE BIDDER AND THE GOVERNMENT.' ATTACHMENT NO. 1, TO THE INVITATION DEFINED THE TERM "NET USABLE SPACE" AS FOLLOWS:

"NET USABLE SPACE IS SPACE THAT WILL BE OCCUPIED BY FEDERAL PERSONNEL AND/OR EQUIPMENT, AND DOES NOT INCLUDE REST ROOMS, LOUNGES, STAIR WELLS, STACKS, ELEVATOR SHAFTS, BUILDING EQUIPMENT AREAS, COLUMNS IN EXCESS OF (1) SQUARE FOOT, SERVICE AREAS, PARTITIONED CORRIDORS, COMMON USE SPACE, SUCH AS LOBBIES, AREAS IN WHICH YEAR ROUND AIR CONDITIONING REQUIREMENTS CANNOT BE MET, OR AREAS WHICH ARE NOT USABLE AS OFFICES, STORAGE AND RELATED USAGES.'

GEORGE MASON, JR., WHO THE RECORD INDICATES PLANNED TO FORM A PARTNERSHIP, SUBMITTED THE ONLY RESPONSIVE BID OF THE TWO RECEIVED. HIS BID, DATED MARCH 16, 1961, IN THE SPACE PROVIDED IN THE BID FORM FOR STATEMENT OF "TYPE AND AMOUNT OF NET USABLE SPACE AND IDENTIFICATION OF SPACE OFFERED," "A. OFFICE" SHOWED 1,950 SQ.FT.

IN RESPONSE TO THE REQUIREMENT OF PARAGRAPH 10 OF THE INVITATION WHICH CALLED FOR A DESCRIPTION OF THE BUILDING OFFERED, THE BIDDER STATED THAT THE BUILDING IN WHICH THE 1,950 NET USABLE SPACE WAS BEING OFFERED "IS 25 BY 100 FEET; IT HAS A BASEMENT AND A SECOND FLOOR" AND THAT "WE OFFER YOU THE GROUND FLOOR.' WHILE THE INVITATION REQUESTED BIDDERS TO ATTACH A FLOOR LAYOUT, PLAN OR SKETCH SHOWING THE SIZE AND LOCATION OF THE SPACE OFFERED, THE BIDDER APPARENTLY FAILED TO COMPLY WITH THIS REQUIREMENT BUT STATED THAT THE SPACE OFFERED WAS VACANT AND OPEN AND THAT IT WOULD BE PARTITIONED TO GSA SPECIFICATIONS.

BY LETTER DATED MAY 10, 1961, THE CONTRACTING OFFICER ACCEPTED THE BID "OFFERING THE ENTIRE FIRST FLOOR" SUBMITTED BY MR. MASON AT A MONTHLY RENTAL OF $425 UNDER PROPOSITION "A" EXCLUDING COUNTER AND SHELVING,AND THE BIDDER WAS REQUESTED TO FURNISH PLANS AND SPECIFICATIONS SHOWING THE METHOD INTENDED FOR IMPROVING THE PREMISES. BY LETTER OF JUNE 21, 1961, THE CONTRACTING OFFICER ACKNOWLEDGED RECEIPT OF THE PLANS AND SPECIFICATIONS FURNISHED BY MR. MASON AND THE BIDDER WAS ADVISED THAT THE PARTITION PLAN FORWARDED WITH GSA'S LETTER OF MAY 10, 1961, WAS BASED ON AN AREA SHOWN IN THE BIDDER'S PLANS OF 3.5 FEET BY 15.7 FEET, OR APPROXIMATELY 55 SQUARE FEET, FOR A STAIRWAY TO THE SECOND FLOOR, BUT THAT IT WAS NOTED THAT HIS LETTER OF JUNE 14 INDICATED AN AREA OF ABOUT 11 FEET BY 14 FEET, OR APPROXIMATELY 154 SQUARE FEET, EXCLUDED FOR USE AS A LOBBY, ELEVATOR AND STAIRWAY. MR. MASON WAS ADVISED THAT IF HE PROPOSED TO REDUCE THE LEASED AREA BY 99 SQUARE FEET IT WOULD BE NECESSARY TO ADJUST THE RENTAL. IN REPLY OF JUNE 28, 1961, MR. MASON ADVISED THE CONTRACTING OFFICER THAT THEY WERE CERTAIN THEY WERE GIVING GSA 1,950 NET SQUARE FEET OF FLOOR SPACE AS REQUESTED BUT THAT IF THEY WERE IN ERROR THEY WOULD REVISE THEIR PLANS AND CORRECT THEM TO GSA'S SPECIFICATIONS. BY LETTER OF JULY 7 THE CONTRACTING OFFICER ADVISED MR. MASON THAT THE PLANS FURNISHED BY HIM ESSENTIALLY MET WITH GSA APPROVAL BUT SUGGESTED THAT A DOOR BE INSTALLED TO PROVIDE INGRESS AND EGRESS FROM THE LOBBY TO THE LEASED PREMISES TO AVOID DISCOMFORT TO THE OCCUPANTS OF THE LEASED PREMISES DURING INCLEMENT WEATHER AND TO SAVE HEAT. MR. MASON WAS ADVISED, HOWEVER, THAT SINCE THE ENTIRE GROUND FLOOR AREA HAD BEEN REDUCED IT WOULD BE NECESSARY TO REDUCE THE RENTAL BY $215.76 PER ANNUM, OR $17.98 PER MONTH.

BY LETTER OF JULY 11, 1961, MR. MASON ADVISED THE CONTRACTING OFFICER THAT THEY WOULD BE GLAD TO PROVIDE A DOOR OPENING INTO THE LOBBY AS REQUESTED AND THAT IF THE NET AREA OFFERED IN THE ACCEPTED BID HAD BEEN REDUCED THEY WOULD BE AGREEABLE TO A RENTAL REDUCTION OF $17.98 PER MONTH SUBJECT TO THE ACCURACY OF THAT FIGURE. THE CONTRACTING OFFICER WAS ADVISED, HOWEVER, THAT THE AREA OF THE RENTED SPACE AVAILABLE WAS BEING CHECKED AND THAT IT WAS HOPED THAT GSA WOULD BE FURNISHED THE FULL 1,950 NET SQUARE FEET OF OFFICE SPACE SINCE THERE WAS AVAILABLE FOR USE SIX ADDITIONAL FEET OF LAND AT THE REAR OF THE BUILDING. THERE IS NO SHOWING AS TO THE OUTCOME OF RESURVEY BY THE SUCCESSFUL BIDDER BUT THE RECORD SHOWS THAT SOMETIME THEREAFTER THE J AND B BUILDINGS, INC., PURCHASED THE INVOLVED BUILDING FROM MR. MASON. BY LETTER DATED OCTOBER 18, 1961, AFTER A FURTHER EXCHANGE OF CORRESPONDENCE WITH THE NEW OWNER, A LEASE WAS EXECUTED AND IT WAS RETURNED TO THE CONTRACTING OFFICER ON NOVEMBER 16, 1961. THE LEASED SPACE WAS DESCRIBED IN THE LEASE AS CONTAINING APPROXIMATELY 2,256 SQUARE FEET OF FLOOR SPACE AND THE MONTHLY RENTAL RATE WAS STATED AS $407.02. THE RECORD SHOWS THAT THE AREA STATED WAS DETERMINED BY INSPECTIONS OF THE PREMISES ON APRIL 11 AND APRIL 12, 1961, MADE BY A GSA REPRESENTATIVE AND MR. MASON. SUCH INSPECTIONS DISCLOSED THAT THE GROUND FLOOR CONTAINED 2,355 SQUARE FEET (INSIDE MEASUREMENT NOT INCLUDING THE STAIRWAY LEADING FROM THE STREET ENTRANCE TO THE SECOND FLOOR) FROM WHICH AREA THERE WAS DEDUCTED THE 99 SQUARE FEET REQUIRED FOR THE ELEVATOR, STAIRWAY AND LOBBY.

FOLLOWING A PROTEST OF THE TRANSACTION BY THE LESSOR, THE GSA REGIONAL ADMINISTRATOR CONDUCTED A COMPLETE REVIEW OF THE MATTER AND IN LETTER OF NOVEMBER 8, 1962, TO THE LESSORS HE CONCLUDED THAT THE LEASE AS DRAWN AND EXECUTED BY THE PARTIES WAS CORRECT AND THAT, THEREFOR, NO REVISION WAS AUTHORIZED.

BY LETTER DATED DECEMBER 10, 1962, THE LESSOR APPEALED THE ACTION TAKEN ON ITS REQUEST FOR REFORMATION OF THE LEASE. THE LESSOR STATED IT OBJECTED TO THE CANCELLATION OPTION IN FAVOR OF THE GOVERNMENT BUT THAT SUCH PROVISION WAS RETAINED IN THE LEASE AT THE INSISTENCE OF GSA. AS TO THE REDUCTION IN THE RENTAL RATE THE LESSOR STATED THAT THE LEASE WAS EXECUTED BY IT AND RETURNED IN THE FORM SUBMITTED UNDER THE BELIEF THAT PARAGRAPH NO. 11 OF THE INSTRUCTIONS TO BIDDERS WHICH PROVIDED THAT "THE UNCONDITIONAL ACCEPTANCE OF A BID RECEIVED IN RESPONSE TO THE INVITATION ESTABLISHES A VALID CONTRACT EXTENDING TO ALL COVENANTS OF THE INVITATION, BID AND ACCEPTANCE" WOULD PERMIT REFORMATION OF THE LEASE TO REFLECT THE CORRECT RENTAL AND SPACE COVERED THEREBY SO THAT SAME WOULD CONFORM COMPLETELY WITH THE INVITATION AND BID; THAT SUBSEQUENT TO THE EXECUTION OF THE LEASE THE LESSOR DISCOVERED THAT INSTEAD OF $425 PER MONTH AS PROVIDED FOR IN THE ACCEPTED BID IT WAS RECEIVING ONLY $407.02 PER MONTH AND THAT SINCE THE NET USABLE SPACE OCCUPIED BY THE UNITED STATES EXCEEDED THE AMOUNT OFFERED AT $425 BY 306 SQUARE FEET THE UNITED STATES WAS THEREBY BEING UNJUSTLY ENRICHED IN THE SUM OF $1,037.76 PER YEAR TO THE DETRIMENT OF THE LESSOR. IN CONCLUSION, THE LESSOR STATED THAT IT HAS FURNISHED 2,256 SQUARE FEET IN ACCORDANCE WITH THE PLANS AND SPECIFICATIONS AS SUBMITTED AND REQUIRED BY GSA INSTEAD OF 1,950 SQUARE FEET PROVIDED FOR IN THE ACCEPTED BID. IN THE CIRCUMSTANCES, THE LESSOR STATED THAT IF THE UNITED STATES DESIRES TO USE THE ENTIRE 2,256 SQUARE FEET THE LEASE SHOULD BE AMENDED EFFECTIVE AS OF THE DATE THEREOF TO PROVIDE FOR A RENTAL RATE COMMENSURATE WITH THE RATE OFFERED IN THE ACCEPTED BID FOR 1,950 SQUARE FEET. OTHERWISE, THE LESSOR STATED THAT IF THE UNITED STATES DESIRES TO RESTRICT ITS OCCUPANCY TO THE 1,950 SQUARE FEET OFFERED IN THE ACCEPTED BID, THEN THE LEASE SHOULD BE APPROPRIATELY AMENDED TO PROVIDE FOR A MONTHLY RENTAL OF $425 TOGETHER WITH AN ADJUSTMENT OF THE RENTAL FROM THE DATE OF OCCUPANCY AND WITH PERMISSION TO THE LESSOR TO EFFECT THE NECESSARY PHYSICAL CHANGES SO THAT THE ADDITIONAL 306 SQUARE FEET MAY BE PARTITIONED OFF AND SEGREGATED FROM THE 1,950 SQUARE FEET.

IN THE LETTER OF APRIL 23, 1963, FROM YOUR GENERAL COUNSEL IT IS STATED THAT AN INVESTIGATION HAS DISCLOSED THAT THE GROUND FLOOR SPACE IN ITS ENTIRETY IS GREATER THAN THE AMOUNT REQUESTED IN THE INVITATION FOR BIDS; THAT THERE IS AN AGGREGATE OF 1,952 SQUARE FEET OF NET USABLE OFFICE SPACE AS DEFINED IN THE INVITATION; AND THAT THE GOVERNMENT IS ACTUALLY USING THAT AMOUNT OF SPACE. AS TO THE DESCRIPTION OF THE PREMISES AS CONTAINED IN PARAGRAPH 2 OF THE LEASE, NAMELY 2,256 SQUARE FEET OF FLOOR SPACE, YOUR GENERAL COUNSEL REFERS TO THE LESSOR'S LETTER OF DECEMBER 10, 1962, WHEREIN THE LESSOR OBJECTED TO THE TERMINATION OPTION IN FAVOR OF THE GOVERNMENT AND HE CALLS ATTENTION TO THE FACT THAT THE LESSOR FAILED TO OBJECT TO ANY OTHER PROVISIONS OF THE LEASE SUCH AS THE DESCRIPTION OF THE LEASED PREMISES IN PARAGRAPH 2 AS CONTAINING APPROXIMATELY 2,256 SQUARE FEET AND THE MONTHLY RENTAL OF $407.02. ON THE CONTRARY, IT IS STATED THAT THE REGIONAL COUNSEL HAS REPORTED THAT BEFORE THE LEASE WAS EXECUTED BY THE LESSOR THE REASON FOR THE REDUCTION IN RENTAL FROM $425 TO $407.02 PER MONTH WAS EXPLAINED IN DETAIL TO THE LESSOR AND ITS ATTORNEY AND THAT THEY APPARENTLY ACCEPTED THE EXPLANATION AND THEN EXECUTED THE LEASE.

IT IS, OF COURSE, ELEMENTARY THAT PRIOR NEGOTIATIONS, IN THE ABSENCE OF FRAUD OR MUTUAL MISTAKE, FORM NO PART OF THE WRITTEN LEASE UNLESS INCORPORATED THEREIN. GOLDSTEIN V. UNITED STATES, 79 CT.CL. 477; 32 AM.JUR., LANDLORD AND TENANT SEC. 134. IN ORDER TO CREATE A LEASE, HOWEVER, THERE MUST BE AN OFFER LOOKING TO THE CREATION OF A LEASE AND AN ACCEPTANCE OF SUCH OFFER AND THE ACCEPTANCE MUST BE IDENTICAL WITH THE OFFER AND UNCONDITIONAL. 51 C.J.S., LANDLORD AND TENANT SEC. 208B.

WITH RESPECT TO THE BID SUBMITTED BY MR. MASON AND THE ACCEPTANCE THEREOF IT IS OUR VIEW THAT THERE WAS NO MEETING OF THE MINDS SO AS TO CONSTITUTE A BINDING CONTRACT WITHIN THE RULE STATED ABOVE. IN EFFECT, THE BID SUBMITTED BY MR. MASON OFFERING TO LEASE 1,950 SQUARE FEET OF NET USABLE SPACE UNDER PROPOSITION "A," EXCLUDING COUNTER, RAILING AND SHELVING FOR A MONTHLY RENTAL OF $425 WAS REJECTED WHEN THE CONTRACTING OFFICER IN EFFECT COUNTER-OFFERED BY UNDERTAKING TO ACCEPT ON THE BASIS OF "THE ENTIRE FIRST FLOOR," WHICH TO US IT IS OBVIOUS WAS NEVER INTENDED AS OTHER THAN AN INDICATION OF THE LOCATION OF THE 1,950 NET USABLE SQUARE FEET OF OFFICE SPACE. WHILE IT IS TRUE MR. MASON CONSENTED TO A REDUCTION OF RENT TO THE EXTENT OF $17.98, SUCH CONSENT WAS CONDITIONED UPON A SHOWING THAT "WE HAVE REDUCED YOUR NET AREA," WHICH WAS NEVER ESTABLISHED. ON THE CONTRARY, IT IS NOW STATED THAT THE GOVERNMENT IS ACTUALLY USING 1,952 SQUARE FEET OF NET USABLE SPACE AS DEFINED IN THE INVITATION FOR BIDS.

IN THE LIGHT OF SUCH CIRCUMSTANCES, THE RIGHTS AND OBLIGATIONS OF THE PARTIES MUST BE DETERMINED ON THE BASIS OF THE LEASE ALONE. SINCE THE RECORD INDICATES THAT THE PREMISES WERE PURCHASED BY J AND B BUILDERS THE LESSOR UNDOUBTEDLY WAS AWARE OF THE PRELIMINARY NEGOTIATIONS INCLUDING THE BID SUBMITTED BY MR. MASON AND THE PURPORTED ACCEPTANCE THEREOF. HOWEVER, AT THE TIME THE LEASE WAS TENDERED FOR SIGNATURE THERE WAS IN FACT NO BINDING AGREEMENT IN FORCE, AND IT APPEARS FROM THE RECORD FURNISHED THAT THE LESSOR SIGNED THE LEASE WITHOUT ANY PROTEST OR RESERVATION, FOLLOWING A DETAILED EXPLANATION OF THE REASON FOR THE REDUCTION IN THE MONTHLY RENTAL FROM $425 TO $407.02. THE LEASE AS EXECUTED IS PRESUMED IN LAW TO EXPRESS THE FINAL UNDERSTANDING OF THE PARTIES. SEE BRAWLEY V. UNITED STATES, 96 U.S. 168, 173; AND SIMPSON V. UNITED STATES, 172 U.S. 372. THE TIME THE J AND B BUILDERS EXECUTED THE LEASE THERE WAS NO OCCASION FOR ANY LACK OF KNOWLEDGE ON ITS PART AS TO THE TERMS OF THE LEASE, INCLUDING THE AREA OF THE RENTAL INVOLVED, AND THE LESSOR IS PRESUMED TO HAVE UNDERSTOOD SUCH TERMS AND IS BOUND THEREBY, PARTICULARLY SINCE IT IS SHOWN THAT BEFORE THE LEASE WAS EXECUTED BY THE LESSOR THE REASON FOR THE REDUCTION IN THE MONTHLY RENTAL FROM $425 TO $407.02 WAS EXPLAINED IN DETAIL TO THE LESSOR AND ITS ATTORNEY AND THAT THERE WAS NO OBJECTION THERETO UNTIL AFTER THE LEASE WAS EXECUTED. 51 C.J.S. LANDLORD AND TENANT SEC. 224; SEE, ALSO, THE MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 CT.CL. 699, CERTIORARI DENIED 325 U.S. 866.

FOR THE FOREGOING REASONS WE FIND NO LEGAL BASIS FOR AUTHORIZING REFORMATION OF THE LEASE EITHER BY INCREASING THE MONTHLY RENTAL TO $425 OR BY INCREASING THE MONTHLY RENTAL ON A PRO RATA BASIS FOR THE SPACE ACTUALLY OCCUPIED OVER AND ABOVE 1,950 NET SQUARE FEET OF USABLE SPACE. THE ENCLOSURES WITH THE GENERAL COUNSEL'S LETTER OF APRIL 23, ARE RETURNED.