B-174461, DEC 29, 1971

B-174461: Dec 29, 1971

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THE LEASE MAY BE REFORMED SINCE IT SEEMS EVIDENT THAT THE ACTUAL INTENT OF THE PARTIES WAS MISSTATED IN THE PREPARATION OF THE AGREEMENT. BAKER: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 22. ENCLOSURES ACCOMPANYING YOUR LETTER INCLUDE A GOVERNMENT MEMORANDUM REPORTEDLY PREPARED DURING LEASE NEGOTIATIONS TO THE EFFECT THAT THE MONTHLY RENTAL WAS NOT TO INCLUDE UTILITIES. THIS DOCUMENT WAS PREPARED BY MR. ALSO STATES THAT THE MONTHLY RENTAL WAS NOT TO INCLUDE UTILITIES AND WAS SIGNED BY MR. VALLIANT KNEW THAT THE LESSOR DID NOT INTEND TO INCLUDE UTILITIES IN THE MONTHLY RENTAL AGREEMENT AND THAT THE LESSEE WAS TO PAY FOR THE UTILITIES. THAT THE RENTAL MIGHT HAVE INCLUDED THE COST OF FURNISHING UTILITIES IS OBVIATED BY THE FACT THAT THE ESTIMATED COST OF UTILITIES AND OTHER EXPENSES WOULD EXCEED THE MONTHLY RENTAL.

B-174461, DEC 29, 1971

LETTER REPORT DECISION ALLOWING THE REFORMATION OF A LEASE AGREEMENT BETWEEN MR. E. J. TARBOX AND THE UNITED STATES TO EXCLUDE THE COST OF UTILITIES AS PART OF THE RENTAL CONSIDERATION. THE LEASE MAY BE REFORMED SINCE IT SEEMS EVIDENT THAT THE ACTUAL INTENT OF THE PARTIES WAS MISSTATED IN THE PREPARATION OF THE AGREEMENT.

TO MR. HAROLD R. BAKER:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 22, 1971, REQUESTING OUR DECISION AS TO WHETHER OR NOT A LEASE AGREEMENT BETWEEN MR. E. J. TARBOX, LESSOR, AND THE UNITED STATES OF AMERICA, LESSEE, MAY BE REFORMED TO EXCLUDE THE FURNISHING OF UTILITIES AS A PART OF THE RENTAL CONSIDERATION.

ENCLOSURES ACCOMPANYING YOUR LETTER INCLUDE A GOVERNMENT MEMORANDUM REPORTEDLY PREPARED DURING LEASE NEGOTIATIONS TO THE EFFECT THAT THE MONTHLY RENTAL WAS NOT TO INCLUDE UTILITIES. THIS DOCUMENT WAS PREPARED BY MR. VALLIANT, THE DISTRICT CONSERVATIONIST, SOIL CONSERVATION SERVICE, WHO OBTAINED THE LEASE TERMS QUOTED ON AVAILABLE PROPERTY. ANOTHER DOCUMENT, THE "PRERENEWAL CANVASS STATEMENT", ALSO STATES THAT THE MONTHLY RENTAL WAS NOT TO INCLUDE UTILITIES AND WAS SIGNED BY MR. VALLIANT. OUR OPINION, THESE DOCUMENTS SHOW THAT MR. VALLIANT KNEW THAT THE LESSOR DID NOT INTEND TO INCLUDE UTILITIES IN THE MONTHLY RENTAL AGREEMENT AND THAT THE LESSEE WAS TO PAY FOR THE UTILITIES. THAT THE RENTAL MIGHT HAVE INCLUDED THE COST OF FURNISHING UTILITIES IS OBVIATED BY THE FACT THAT THE ESTIMATED COST OF UTILITIES AND OTHER EXPENSES WOULD EXCEED THE MONTHLY RENTAL.

REFORMATION MAY BE GRANTED WHERE THE EVIDENCE CLEARLY ESTABLISHES THAT THE ACTUAL INTENT OF THE PARTIES WAS MISSTATED IN THE PREPARATION OF THE AGREEMENT. 76 C.J.S., REFORMATION OF INSTRUMENTS, SEC. 82, 84 (1952); ACKERLIND V UNITED STATES, 240 U.S. 531 (1916); 39 COMP. GEN. 660, 664 (1960).

THE LEASE AGREEMENT WHICH PROVIDES FOR THE LESSOR TO PAY THE UTILITIES IS INCONSISTENT WITH THE ACTUAL INTENT OF THE NEGOTIATING PARTIES. CONSEQUENTLY, THE LEASE MAY BE REFORMED.