B-15556, FEBRUARY 24, 1955, 34 COMP. GEN. 398

B-15556: Feb 24, 1955

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SEWER SERVICE CHARGE - GOVERNMENT LIABILITY A CITY WHICH PROVIDED FREE SEWAGE DISPOSAL SERVICE TO A VETERANS ADMINISTRATION HOSPITAL FACILITY FOR MORE THAN TWELVE YEARS UNDER AN AGREEMENT WHICH DID NOT SPECIFY ANY TIME LIMIT IS NOT REQUIRED TO CONTINUE SUCH FREE SERVICE INDEFINITELY. 1955: REFERENCE IS MADE TO LETTER OF DECEMBER 31. REQUESTING A DECISION AS TO WHETHER ANNUAL APPROPRIATIONS FOR THE OPERATION OF VETERANS ADMINISTRATION HOSPITALS FOR THE FISCAL YEAR 1954 AND THEREAFTER ARE AVAILABLE FOR THE PAYMENT OF CHARGES FOR THE DISPOSAL OF SEWAGE AT THE VETERANS ADMINISTRATION HOSPITAL. IT IS STATED THAT IT HAS HERETOFORE BEEN THE POSITION OF THE VETERANS ADMINISTRATION THAT UNDER AN AGREEMENT MADE WITH THE CITY OF MONTGOMERY IN 1938.

B-15556, FEBRUARY 24, 1955, 34 COMP. GEN. 398

CONTRACTS - DURATION - INDEFINITE; SEWER SERVICE CHARGE - GOVERNMENT LIABILITY A CITY WHICH PROVIDED FREE SEWAGE DISPOSAL SERVICE TO A VETERANS ADMINISTRATION HOSPITAL FACILITY FOR MORE THAN TWELVE YEARS UNDER AN AGREEMENT WHICH DID NOT SPECIFY ANY TIME LIMIT IS NOT REQUIRED TO CONTINUE SUCH FREE SERVICE INDEFINITELY, AND, THEREFORE, THE VETERANS ADMINISTRATION MAY PAY FROM CURRENT APPROPRIATIONS A SEWER CHARGE BASED ON THE QUANTITY OF WATER USED.

ASSISTANT COMPTROLLER GENERAL WEITZEL TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, FEBRUARY 24, 1955:

REFERENCE IS MADE TO LETTER OF DECEMBER 31, 1954, FROM DEPUTY ADMINISTRATOR JOHN S. PATTERSON, REQUESTING A DECISION AS TO WHETHER ANNUAL APPROPRIATIONS FOR THE OPERATION OF VETERANS ADMINISTRATION HOSPITALS FOR THE FISCAL YEAR 1954 AND THEREAFTER ARE AVAILABLE FOR THE PAYMENT OF CHARGES FOR THE DISPOSAL OF SEWAGE AT THE VETERANS ADMINISTRATION HOSPITAL, MONTGOMERY, ALABAMA.

IT IS STATED THAT IT HAS HERETOFORE BEEN THE POSITION OF THE VETERANS ADMINISTRATION THAT UNDER AN AGREEMENT MADE WITH THE CITY OF MONTGOMERY IN 1938, DURING THE CONSTRUCTION OF THE HOSPITAL, THE CITY IS REQUIRED TO DISPOSE OF THE SEWAGE WITHOUT FURTHER CHARGE. HOWEVER, THE SEWAGE SYSTEM OF THE CITY IS NOW OPERATED BY THE WATER WORKS AND SANITARY SEWER BOARD OF THE CITY OF MONTGOMERY, AND NOT BY THE CITY OF MONTGOMERY ITSELF. IT IS FURTHER STATED THAT THE BOARD IS NOW DEMANDING PAYMENT OF A SEWAGE CHARGE BASED ON THE VOLUME OF WATER USED BY THE HOSPITAL, AND ADVICE IS REQUESTED WHETHER PAYMENT OF SUCH CHARGE COMPUTED ON SUCH BASIS IS PROPER.

THE AGREEMENT INVOLVED, CONTRACT VAM-15599, 1938, WAS ARRIVED AT THROUGH AN EXCHANGE OF CORRESPONDENCE BETWEEN THE ADMINISTRATOR, VETERANS ADMINISTRATION, AND THE MAYOR OF MONTGOMERY EARLY IN 1938. THE PERTINENT PROVISIONS OF SUCH CONTRACT ARE AS FOLLOWS:

LETTER FROM THE ADMINISTRATOR TO MAYOR GUNTER, JANUARY 20, 1938:

I AM IN RECEIPT OF YOUR LETTER OF DECEMBER 31, 1937, WITH REFERENCE TO THE EXTENSION OF THE MECHANICAL SERVICES TO THE FLOWERS TRACT WHICH HAS BEEN PREVIOUSLY CONSIDERED IN CONNECTION WITH THE ESTABLISHMENT OF A VETERANS ADMINISTRATION FACILITY AT MONTGOMERY, ALABAMA.

I APPRECIATE VERY MUCH THE COOPERATION SHOWN BY THE CITIZENS OF MONTGOMERY; HOWEVER, I EXCEEDINGLY REGRET TO NOTE YOUR STATEMENT TO THE EFFECT THAT COMPLETE MECHANICAL SERVICE LINES, INCLUDING THE EXTENSION OF THE SANITARY SEWER, CANNOT BE PROVIDED TO THIS SITE.

SINCE THEN I HAVE BEEN ADVISED OF THE POSSIBILITY OF THE CITY BRINGING THE SEWER LINE TO THE PROPERTY LINE OF THE FLOWERS TRACT, PROVIDED THE GOVERNMENT WOULD CONTRIBUTE TOWARD THIS EXPENDITURE BY FURNISHING THE NECESSARY MATERIALS CONSISTING OF TWELVE INCH PIPE, TOTALING, APPROXIMATELY, FIVE TO SIX THOUSAND DOLLARS. WHILE I DO NOT BELIEVE IT WOULD BE PRACTICABLE FOR THE GOVERNMENT TO CONTRIBUTE IN THIS WAY EVEN THOUGH ADEQUATE AUTHORITY WERE HAD FOR CONTRIBUTING SOME RELIEF TOWARD THIS EXPENDITURE, NEVERTHELESS, I WOULD LIKE TO HAVE YOUR CONFIRMATION OF THIS IDEA SO THAT THIS PHASE OF THE PROBLEM MAY BE FURTHER CONSIDERED.

IT MAY BE POSSIBLE TO ARRIVE AT AN AGREEMENT WHEREBY THE GOVERNMENT WOULD CONTRIBUTE SIX THOUSAND DOLLARS TO BE LOOKED UPON AS A CONNECTION CHARGE TO THE SEWER AT THE PROPERTY LINE. THIS, OF COURSE, WOULD BE UPON THE UNDERSTANDING THAT THE CONNECTIONS WOULD BE MADE TO A CITY OR COUNTY OWNED SEWER AND THAT ALL MAINTENANCE IN THE FUTURE WOULD BE ACCOMPLISHED BY THE CITY OR COUNTY AS THE CASE MAY BE AND THAT THE SEWERAGE FROM THE HOSPITAL WOULD BE RECEIVED WITHOUT FURTHER CHARGE.

LETTER FROM MAYOR GUNTER TO THE ADMINISTRATOR, JANUARY 25, 1938:

WITH REFERENCE TO THE SEWER I AM PLEASED TO ADVISE THAT THE SPIRIT AND INTENTIONS OF THE FOURTH PARAGRAPH OF YOUR LETTER IS AGREEABLE AND ACCEPTABLE TO THE CITY OF MONTGOMERY.

LETTER FROM THE ADMINISTRATOR TO MAYOR GUNTER, FEBRUARY 8, 1938:

I AM GLAD TO NOTE YOUR STATEMENT TO THE EFFECT THAT A SATISFACTORY SEWER WILL BE PROVIDED AT THE PROPERTY LINE UPON THE PAYMENT OF $6,000.00 TO BE LOOKED UPON AS A CONNECTION CHARGE AND THAT THE MAINTENANCE OF THIS SEWER WILL BE UNDERTAKEN BY OTHERS IN THE FUTURE.

FROM THE LANGUAGE QUOTED, IT IS CLEAR THAT THE PARTIES CONSIDERED THE PAYMENT TO BE MADE UNDER THE CONTRACT AS A "CONNECTION CHARGE," AND INTENDED THAT FUTURE MAINTENANCE WOULD BE WITHOUT EXPENSE TO THE GOVERNMENT. FROM A LITERAL READING OF SUCH LANGUAGE IT ALSO APPEARS THAT THE CITY AGREED TO RECEIVE THE SEWAGE FROM THE FACILITY WITHOUT FURTHER CHARGE. NOTHING IN THE CORRESPONDENCE INDICATES AN INTENT BY EITHER PARTY TO PLACE A TIME LIMIT ON SUCH OBLIGATION.

IT IS A WELL ESTABLISHED RULE OF LAW THAT CONTRACTS OF A MUNICIPAL CORPORATION MADE TO CONTINUE FOR AN UNLIMITED TIME, IF CONSIDERED TO CONTINUE IN PERPETUAL, ARE INVALID. SEE BOISE CITY, IDAHO, V. BOISE ARTESIAN HCT AND COLD WATER CO., 186 F. 705 (CERTIORARI DENIED 220 U.S. 616); HORKAN V. CITY OF MOULTRIE, 71 S.E. 785; WESTMINSTER WATER CO. V. WESTMINSTER, 56 A. 990; STATE V. MINNESOTA RAILROAD CO., 83 N.W. 32; CITY COUNCIL OF AUGUSTA V. RICHMOND COUNTY, 173 S.E. 140; STEVENSON V. CITY OF ABILENE, 67 S.W. 2D 645. A MUNICIPAL CONTRACT FOR AN INDEFINITE TIME HAS BEEN CONSTRUED AS CONTINUING IN FORCE FOR A REASONABLE TIME ONLY, AND HAS BEEN SUSTAINED ON THAT BASIS. CITY OF BARRE V. PERRY AND SCRIBNER, 73 A. 574. THE CITED DECISION ALSO HOLDS THAT ONE WHO DEALS WITH A MUNICIPAL CORPORATION IS BOUND TO KNOW THE EXTENT OF ITS AUTHORITY, WHETHER DETERMINED BY STATUTORY PROVISIONS OR BY COMMON-LAW RULES. HENCE, IT MAY BE REGARDED AS THE INTENT OF THE PARTIES TO THE INSTANT AGREEMENT THAT THE SEWAGE FROM THE HOSPITAL WOULD BE RECEIVED WITHOUT ADDITIONAL CHARGE FOR REASONABLE TIME.

THE RECORD HERE INDICATES THAT THE SEWAGE HAS BEEN RECEIVED WITHOUT ADDITIONAL CHARGE FOR A PERIOD OF SOME TWELVE YEARS AND THAT THE SEWERAGE SYSTEM INVOLVED HAS BECOME SO INADEQUATE AS TO REQUIRE THE CONSTRUCTION OF A TREATMENT PLANT AT AN OUTLAY OF SOME $1,700,000. UNDER SUCH CIRCUMSTANCES, WE WOULD NOT APPEAR TO BE JUSTIFIED IN CONCLUDING THAT A "REASONABLE TIME" PERIOD HAS NOT BEEN FULFILLED AND THAT THE CITY OF MONTGOMERY IS STILL REQUIRED BY THE CONTRACT TO ACCEPT SEWAGE FROM THE HOSPITAL WITHOUT CHARGE. ALSO, INASMUCH AS THE CITY OF MONTGOMERY ITSELF IS NO LONGER REQUIRED BY THE CONTRACT TO ACCEPT THE SEWAGE WITHOUT CHARGE, IT FOLLOWS THAT THE SUCCESSOR WATER BOARD IS NOT REQUIRED TO DO SO.

THE QUESTION AS TO WHETHER THE SEWAGE CHARGE MAY PROPERLY BE BASED ON THE AMOUNT OF WATER USED IS SUBSTANTIALLY SIMILAR TO THAT INVOLVED IN OUR DECISION B-32265, OF MARCH 27, 1943, TO THE ADMINISTRATOR OF VETERANS AFFAIRS. IN THAT DECISION IT WAS HELD THAT THE CHARGES THERE INVOLVED--- AN ORDINANCE RATE BASED ON THE QUANTITY OF WATER USED--- APPEARED TO BE A SERVICE CHARGE RATHER THAN A TAX AND, THEREFORE, MIGHT BE PAID. SUCH REASONING SEEMS EQUALLY APPLICABLE HERE. SEE, ALSO, 29 COMP. GEN. 120.

ACCORDINGLY, AS THE SERVICES WERE RECEIVED DURING THE FISCAL YEAR 1954 AND SUBSEQUENT THERETO, THE APPROPRIATIONS FOR OPERATION OF VETERANS ADMINISTRATION HOSPITALS WERE AVAILABLE FOR PAYMENT OF THE SEWAGE CHARGES HERE INVOLVED, IF OTHERWISE CORRECT.