B-44244, OCTOBER 19, 1944, 24 COMP. GEN. 307

B-44244: Oct 19, 1944

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RENTAL AGREEMENTS - EQUIPMENT - "CALENDAR MONTH" INTERPRETATION WHILE THE TERM "CALENDAR MONTH" ORDINARILY IS REGARDED AS DENOTING A PERIOD OF TIME TERMINATING WITH THE DAY OF THE SUCCEEDING MONTH NUMERICALLY CORRESPONDING TO THE DAY OF ITS BEGINNING. WHERE IT IS APPARENT FROM THE CONDUCT OF THE PARTIES TO AN EQUIPMENT RENTAL CONTRACT PROVIDING FOR PAYMENT OF RENTAL "ON OR ABOUT THE 10TH OF THE MONTH FOR THE PREVIOUS CALENDAR MONTH" THAT PAYMENT ON THE BASIS OF A MONTH AS DESIGNATED AND DELIMITED BY THE CALENDAR RATHER THAN ON THE BASIS OF A CONTRACT MONTH WAS CONTEMPLATED. PAYMENT ON SUCH CONTEMPLATED PAYMENT ON SUCH CONTEMPLATED BASIS IS PROPER. AS FOLLOWS: REFERENCE IS MADE TO VARIOUS EXCEPTIONS ISSUED BY THE GENERAL ACCOUNTING OFFICE RELATIVE TO PAYMENTS FOR THE RECAPTURE OF EQUIPMENT UNDER RENTAL AGREEMENTS.

B-44244, OCTOBER 19, 1944, 24 COMP. GEN. 307

RENTAL AGREEMENTS - EQUIPMENT - "CALENDAR MONTH" INTERPRETATION WHILE THE TERM "CALENDAR MONTH" ORDINARILY IS REGARDED AS DENOTING A PERIOD OF TIME TERMINATING WITH THE DAY OF THE SUCCEEDING MONTH NUMERICALLY CORRESPONDING TO THE DAY OF ITS BEGINNING, LESS ONE, WHERE IT IS APPARENT FROM THE CONDUCT OF THE PARTIES TO AN EQUIPMENT RENTAL CONTRACT PROVIDING FOR PAYMENT OF RENTAL "ON OR ABOUT THE 10TH OF THE MONTH FOR THE PREVIOUS CALENDAR MONTH" THAT PAYMENT ON THE BASIS OF A MONTH AS DESIGNATED AND DELIMITED BY THE CALENDAR RATHER THAN ON THE BASIS OF A CONTRACT MONTH WAS CONTEMPLATED, PAYMENT ON SUCH CONTEMPLATED PAYMENT ON SUCH CONTEMPLATED BASIS IS PROPER.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, OCTOBER 19, 1944:

THERE HAS BEEN CONSIDERED YOUR LETTER OF AUGUST 30, 1944, AS FOLLOWS:

REFERENCE IS MADE TO VARIOUS EXCEPTIONS ISSUED BY THE GENERAL ACCOUNTING OFFICE RELATIVE TO PAYMENTS FOR THE RECAPTURE OF EQUIPMENT UNDER RENTAL AGREEMENTS. A REPRESENTATIVE CASE IS THE EXCEPTION ISSUED WITH RESPECT TO D.O. VOUCHER NO. 32133, SEPTEMBER 1942, ACCOUNTS OF COLONEL W. GRITZ, CREDIT FOR PAYMENT OF THIS VOUCHER HAVING BEEN WITHHELD FOR THE FOLLOWING STATED REASONS:

WORD-524, DA WORD-10 SUBCONTRACT 1:

ERA 1035, EQUIP. 14-16007------------------------------ $122.25

THE 1 PERCENT CHARGE FOR RECAPTURE OF EQUIPMENT WAS

PAID FOR A PERIOD IN EXCESS OF THE TOTAL NUMBER

OF MONTHS OR FRACTION THEREOF SUCH EQUIPMENT

WAS IN USE ON A RENTAL BASIS. ERA 1045,

EQUIP. 4-16021------------------------------- 59.60

THE INTEREST OF THE GOVERNMENT WAS NOT PROPERLY

PROTECTED BY ALLOWING THE RENTAL TO RUN FIVE DAYS

PAST THE END OF THE NORMAL MONTHLY RENTAL

PERIOD BEFORE RECAPTURE THEREBY CAUSING THE

PAYMENT OF AN ADDITIONAL ONE PERCENT ON THE STATED

VALUE OF THE EQUIPMENT AS PART OF THE COST OF

RECAPTURE.

CONCERNING THE ITEM OF $122.25 INVOLVING EQUIPMENT RENTAL AGREEMENT NO. 1035, ATTENTION IS INVITED TO ARTICLE 7 OF THE AGREEMENT WHICH PROVIDES, IN PART: "PLUS 1 PERCENT PER MONTH FOR EACH MONTH OR PART THEREOF SUCH PIECE OF EQUIPMENT SHALL HAVE BEEN IN USE.'

ATTENTION IS INVITED FURTHER TO ARTICLE 5A OF THE ABOVE AGREEMENT WHICH PROVIDES: "RENTAL PAYMENT WILL BE MADE MONTHLY, ON OR ABOUT THE TENTH OF THE MONTH, FOR THE PREVIOUS CALENDAR NTH.' (ITALICS SUPPLIED.)

IT THUS APPEARS THAT THE AGREEMENT CONTEMPLATES PAYMENTS ON THE BASIS OF THE CALENDAR MONTH, AND IT WAS SO CONSTRUED BY THE CONTRACTING OFFICER. PAYMENT ON THE ABOVE VOUCHER WAS MADE IN ACCORDANCE WITH SUCH CONSTRUCTION OF THE AGREEMENT BY THE CONTRACTING OFFICER, AS IS INDICATED BY HIS ADMINISTRATIVE APPROVAL OF THE VOUCHER. IT IS BELIEVED THAT IT WOULD BE MANIFESTLY UNFAIR TO ALL CONCERNED AT THIS TIME TO PLACE A CONSTRUCTION UPON THE AGREEMENT THAT THE ABOVE-QUOTED PROVISIONS OF THE AGREEMENT PERMIT PAYMENTS ONLY ON THE BASIS OF THE CONTRACT MONTH, SUCH APPARENTLY BEING THE CONSTRUCTION ON WHICH THE NOTICE OF EXCEPTION IS BASED.

CONCERNING THE ITEM OF $59.60 INVOLVING EQUIPMENT RENTAL AGREEMENT NO. 1045, IT APPEARS THAT THE JUDGMENT OF THE CONTRACTING OFFICER IS BEING QUESTIONED ON THE GROUND THAT HE DID NOT PROTECT THE INTEREST OF THE GOVERNMENT BY "ALLOWING" THE RENTAL TO RUN FIVE DAYS PAST THE END OF THE NORMAL MONTHLY RENTAL PERIOD BEFORE RECAPTURE. THE RENTAL AGREEMENT DOES NOT REQUIRE THE CONTRACTING OFFICER OFFICER TO RECAPTURE AT THE END OF ANY PARTICULAR RENTAL PERIOD, AND IT IS BELIEVED THAT IN ANY EVENT THE PAYMENT OF THIS AMOUNT WAS PROPERLY IN ACCORD WITH THE TERMS OF THE AGREEMENT. IS POINTED OUT THAT THE PAYMENT OF THIS SUM WAS CORRECT REGARDLESS WHETHER THE PROPER METHOD OF COMPUTATION IS THE CALENDAR MONTH OR THE CONTRACT MONTH.

IN VIEW OF THE ABOVE IT IS REQUESTED THAT YOU REMOVE THIS AND SIMILAR SUSPENSIONS FROM THE ACCOUNTS OF THE FINANCE OFFICER.

D.O. VOUCHER NO. 32133, TO WHICH YOU REFER, COVERS REIMBURSEMENT TO THE BECHTEL-1MCCONE-1PARSONS CORPORATION UNDER COST-PLUS-A-FIXED-FEE SUBCONTRACT NO. 1 TO COST-PLUS-A-FIXED-FEE CONTRACT NO. W-ORD-524 DA-W ORD -10, FOR THE AMOUNTS OF $781.70 AND $527.27 PAID BY THE SUBCONTRACTOR TO THE DALRYMPLE EQUIPMENT COMPANY AND THE INDUSTRIAL MACHINERY COMPANY TO EFFECT RECAPTURE OF TWO CRANES, NOS. 14-16007 AND 4-16021, LEASED UNDER RENTAL AGREEMENTS NOS. 1035 AND 1045, RESPECTIVELY.

THE SAID AGREEMENTS CONTAINED THE FOLLOWING PERTINENT PROVISIONS:

THE LESSOR SHALL BE PAID AT THE RATE PRESCRIBED IN SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF. THE RENTAL PERIOD SHALL BEGIN ON THE DELIVERY OF SUCH EQUIPMENT TO A COMMON CARRIER FOR SHIPMENT TO THE SITE OF THE WORK, AS EVIDENCED BY BILL OF LADING COVERING SUCH SHIPMENT OR OTHER EVIDENCE SATISFACTORY TO THE CONTRACTING OFFICER, AND SHALL TERMINATE, UNLESS TITLE TO THE EQUIPMENT PASSES TO THE GOVERNMENT AT AN EARLIER DATE, ON THE DATE OF REMOVAL OF SUCH EQUIPMENT FROM THE SITE OF THE WORK, AS EVIDENCED BY A RECEIPT SIGNED BY THE LESSOR, PROVIDED SUCH EQUIPMENT IS REMOVED WITHIN A REASONABLE LENGTH OF TIME AFTER NOTICE BY THE LESSEE OR THE CONTRACTING OFFICER TO THE LESSOR THAT SUCH EQUIPMENT IS NO LONGER REQUIRED. IF THE EQUIPMENT IS NOT REMOVED WITHIN A REASONABLE LENGTH OF TIME, THE RENTAL SHALL TERMINATE ON THE DATE OF THE NOTICE THAT SUCH EQUIPMENT IS NO LONGER REQUIRED. IF SUCH EQUIPMENT DOES NOT MEET THE REQUIREMENTS OF ARTICLE I WHEN IT ARRIVES AT THE WORK SITE THE RENTAL PERIOD THEREFOR SHALL NOT BEGIN UNTIL SUCH EQUIPMENT SHALL HAVE BEEN PLACED, AT THE EXPENSE OF THE LESSOR, IN CONDITION TO SATISFY ALL THE REQUIREMENTS OF ARTICLE I. NO TRANSPORTATION CHARGES FOR THE SHIPMENT THEREFOR SHALL BE PAID BY THE LESSEE FOR ANY PIECE OF EQUIPMENT WHICH ARRIVES AT THE WORK SITE IN OTHER THAN SOUND AND WORKABLE CONDITION IF SUCH PIECE OF EQUIPMENT CANNOT BE PLACED IN SOUND AND WORKABLE CONDITION WITHIN A REASONABLE LENGTH OF TIME. THE DETERMINATION AS TO WHETHER SUCH EQUIPMENT IS IN SOUND AND WORKABLE CONDITION AND WHAT IS CONSIDERED A REASONABLE LENGTH OF TIME, SHALL IN EVERY INSTANCE, BE MADE BY THE CONTRACTING OFFICER. RENTAL PAYMENTS WILL BE MADE MONTHLY ON OR ABOUT THE 10TH OF THE MONTH FOR THE PREVIOUS CALENDAR MONTH. (ITALICS SUPPLIED.)

WHEN AND IF THE TOTAL RENTAL PAID TO THE LESSOR FOR ANY PIECE OF EQUIPMENT SHALL EQUAL THE VALUE THEREOF, PLUS ONE PERCENT PER MONTH FOR EACH MONTH OR FRACTION THEREOF SUCH PIECE OF EQUIPMENT SHALL HAVE BEEN IN USE, NO FURTHER RENTAL SHALL BE PAID TO THE LESSOR AND TITLE TO THE EQUIPMENT SHALL VEST IN THE GOVERNMENT, THE LESSOR DELIVERING TO THE GOVERNMENT FREE OF ANY AND ALL LIENS AND ENCUMBRANCES TITLE TO SUCH PIECE OF EQUIPMENT. AT THE COMPLETION OF THE WORK BEING PERFORMED BY THE LESSEE UNDER THE CONSTRUCTION SUBCONTRACT, OR UPON TERMINATION OF OF THE CONSTRUCTION SUBCONTRACT, AS PROVIDED IN THE CONSTRUCTION CONTRACT, THE GOVERNMENT MAY AT ITS OPTION PURCHASE ANY PIECE OF EQUIPMENT BY PAYING THE LESSOR THE DIFFERENCE BETWEEN THE VALUATION OF SUCH PIECE OF EQUIPMENT, PLUS ONE PERCENT PER MONTH FOR EACH MONTH OR PART THEREOF SUCH PIECE OF EQUIPMENT SHALL HAVE BEEN IN USE AND THE TOTAL RENTAL THERETOFORE PAID FOR SUCH PIECE OF EQUIPMENT, PROVIDED THAT IF SUCH PAYMENT IS MADE BY THE GOVERNMENT, THE LESSOR SHALL DELIVER TO THE GOVERNMENT, FREE OF ANY AND ALL LIENS AND ENCUMBRANCES TITLE TO SUCH PIECE OF EQUIPMENT.

ARTICLE XVII OF AGREEMENT NO. 1035 PROVIDES:

IT IS AGREED THAT $6,082.52 PAID TO THE LESSOR ON ITEM NO. 2, NAMELY PAWLING AND HARNISCHFEGER SHOVEL AND DRAGLINE MODEL 255A SERIAL 6639 BY DUNN CONSTRUCTION COMPANY, INC. AND JOHN S. HODGSON AND COMPANY -- JOINT VENTURERS, SHALL BE CONSIDERED TO HAVE BEEN PAID BY THE LESSEE NAMED IN THIS AGREEMENT IN COMPUTING THE TOTAL RENTAL PAID BY THE LESSEE UNDER THE PROVISION OF ARTICLE VII OF THIS AGREEMENT.

ARTICLE XVI OF AGREEMENT NO. 1045 PROVIDES:

IT IS AGREED THAT $2,513.33 HERETOFORE PAID TO THE LESSOR BY WEITZ, MCLAUGHLIN, CENTRAL ENGINEERING AND PRIESTON SHALL BE CONSIDERED TO HAVE BEEN PAID BY THE LESSEE NAMED IN THIS AGREEMENT IN COMPUTING THE TOTAL RENTAL PAID BY THE LESSEE UNDER THE PROVISIONS OF ARTICLE VII OF THIS AGREEMENT.

THE ORIGINAL AGREEMENTS UNDER WHICH THE RENTAL IN THE AMOUNTS OF $6,082.52 AND $2,513.33 PREVIOUSLY HAD BEEN PAID CONTAINED PROVISIONS IDENTICAL TO THE ABOVE-QUOTED PROVISIONS OF ARTICLES V A. AND VII OF THE INSTANT AGREEMENTS. SCHEDULES "A" FORMING A PART OF THE INSTANT AGREEMENTS, SHOW THE AGREED VALUATION OF CRANE NO. 14-16007 AS $12,225 AND OF CRANE NO. 4-16021 AS $5,960, AND STIPULATE THAT THE RENTAL TO BE PAID THEREFOR DURING ANY ONE "CALENDAR MONTH" SHALL BE AT THE RATES OF $1,222.50 AND $650 PER MONTH, RESPECTIVELY. THE INVOICES ATTACHED TO THE VOUCHER SHOW THAT THE CRANES WERE LEASED AS OF JULY 26, 1941, AND SEPTEMBER 20, 1941, RESPECTIVELY, AND THAT THEY REMAINED IN A CONTINUOUS RENTAL STATUS THEREAFTER UNTIL RECAPTURED. IT IS SHOWN FURTHER BY THE SAID INVOICES THAT FOR PAYMENT PURPOSES THE RENTAL PERIODS FOR THE EQUIPMENT WERE CONSIDERED AS EXTENDING FROM THE FIRST TO THE LAST DAY OF EACH MONTH OR FRACTIONAL PART THEREOF WITH THE RESULT THAT IN DETERMINING WHEN THE RENTAL PAID EQUALED THE VALUATION OF THE EQUIPMENT PLUS ONE PERCENT THEREOF PER MONTH OR FRACTION OF A MONTH THE EQUIPMENT WAS IN USE, THE MONTH IN WHICH THE RENTAL COMMENCED AS WELL AS THE MONTH IN WHICH IT TERMINATED WAS INCLUDED. THE NOTICE OF EXCEPTION WAS ISSUED AGAINST THE VOUCHER PRIMARILY ON THE THEORY THAT THE RENTAL PAYMENTS SHOULD HAVE BEEN MADE ON THE BASIS OF PERIODS BEGINNING ON THE DATES THE CRANES WERE PLACED IN USE AND ENDING ON THE CORRESPONDING DATES IN THE NEXT MONTH, LESS ONE, AND SIMILARLY THEREAFTER, AND THAT HAD THIS BEEN DONE THE ONE PERCENT CHARGES OF $122.25 AND $59.60 FOR THE INITIAL FRACTIONAL PERIODS THE CRANES WERE NOT IN USE WOULD HAVE BEEN ELIMINATED.

THE TERM "CALENDAR MONTH" ORDINARILY IS REGARDED AS DENOTING A PERIOD OF TIME TERMINATING WITH THE DAY OF THE SUCCEEDING MONTH NUMERICALLY CORRESPONDING TO THE DAY OF ITS BEGINNING, LESS ONE. MCGINN V. STATES, 46 NEB. 427, 65 N.W. 46, 30 L.R.A. 450; DALEY V. ANDERSON, 7 WYO. 1, 48 P. 839, 840; COTTON V. COMMONWEALTH LOAN CO., IND. APP., 184 N.E. 578, 579. HOWEVER, THE COURTS CONSISTENTLY HAVE HELD THAT WHERE THE TERM IS EMPLOYED IN A CONTRACT IT WILL NOT BE SO CONSTRUED IF THE INSTRUMENT AS A WHOLE INDICATES IT WAS USED IN ANOTHER SENSE OR IT SHOULD APPEAR THAT BY THEIR COURSE OF DEALING UNDER THE CONTRACT THE PARTIES PLACED ANOTHER CONSTRUCTION UPON IT. IN THE CASE OF WARFIELD NATURAL GAS CO. V. CLARK, 257 KY. 724, 79 S.W.2D 21, 97 A.L.R. 971, WHEREIN THERE WERE CONSIDERED PROVISIONS OF A CONTRACT TO THE EFFECT THAT THE AMOUNT PAYABLE FOR GAS FURNISHED DURING EACH MONTH WOULD BE DUE ON THE FIRST DAY OF THE FOLLOWING MONTH AND, UNLESS PAID ON OR BEFORE THE FIFTEENTH OF EACH MONTH, THE GAS WOULD BE SHUT OFF WITHOUT NOTICE, IT WAS STATED:

* * * THE USE OF THE KINDRED TERMS "EACH MONTH," "ON THE FIRST DAY OF THE FOLLOWING MONTH," AND "THE 15TH OF EACH MONTH," AS SAID IN FAIRCHILD- 1GILMORE-1WILTON CO. V. SOUTHERN REFINING CO., SUPRA, INDICATES NOT ONLY A "CALENDAR MONTH" BUT "A MONTH OF THE CALENDAR" WAS MEANT AND UNDERSTOOD. * * * IN THE CASE OF FAIRCHILD-1GILMORE 1WILTON CO. V. SOUTHERN REFINING CO., 158 CAL. 264, 110 P. 951, REFERRED TO IN THE ABOVE CASE, THERE WERE INVOLVED TWO CONTRACTS WHICH CONTAINED PROVISIONS FOR PAYMENTS THEREUNDER ON THE TENTH DAY OF EACH MONTH FOR ALL MATERIAL DELIVERED DURING THE PRECEDING MONTH, AND WITH RESPECT TO THE CONSTRUCTION TO BE GIVEN THOSE PROVISIONS IT WAS SAID:

WE THINK THE PROPER CONSTRUCTION OF THE CONTRACT OF MAY 16TH IS THAT BY THE "ONE MONTH," THEREIN REFERRED TO, A CALENDAR MONTH WAS INTENDED AND UNDERSTOOD. THIS IS SHOWN BY THE CLAUSE IMMEDIATELY FOLLOWING, TO THE EFFECT THAT PAYMENTS WERE TO BE MADE ON THE 10TH OF EACH MONTH FOR ALL THE ASPHALT DELIVERED DURING THE PRECEDING MONTH. EVIDENTLY BOTH OF THESE KINDRED PROVISIONS REFER TO THE MONTHS OF THE CALENDAR.

THE PERTINENT PROVISIONS OF THE RENTAL AGREEMENTS HERE INVOLVED ARE SUBSTANTIALLY THE SAME AS THOSE CONSIDERED IN THE ABOVE-QUOTED OPINIONS IN CALLING FOR PAYMENT "ON OR ABOUT THE 10TH OF THE MONTH FOR THE PREVIOUS CALENDAR MONTH," AND, AS YOU POINT OUT, IT SEEMS APPARENT FROM THE CONDUCT OF ALL THE PARTIES CONCERNED, INCLUDING THE CONTRACTING OFFICER, THAT THEY CONTEMPLATED PAYMENT UNDER THE SAID AGREEMENTS ON THE BASIS OF A MONTH AS DESIGNATED AND DELIMITED BY THE CALENDAR RATHER THAN ON THE BASIS OF A CONTRACT MONTH. HENCE, IT REASONABLY MAY BE CONCLUDED THAT THE PARTIES USED THE TERM "CALENDAR MONTH" IN THE INSTANT AGREEMENTS IN THAT SENSE.

ACCORDINGLY, I HAVE TO ADVISE THAT THE REIMBURSEMENT MADE ON D.O. VOUCHER NO. 32133 AND OTHER SIMILAR VOUCHERS WILL NOT BE QUESTIONED FURTHER BY THIS OFFICE.