B-7760, FEBRUARY 3, 1940, 19 COMP. GEN. 700

B-7760: Feb 3, 1940

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

AGREEMENTS AS TO ARBITRATION OF GOVERNMENT'S RIGHTS - NECESSITY FOR SPECIFIC AUTHORITY - PURCHASE PRICE OF REAL ESTATE THERE IS NO AUTHORITY FOR THE ESTABLISHING OF BOARDS OF ARBITRATION TO DETERMINE THE RIGHTS OF THE UNITED STATES IN THE ABSENCE OF STATUTORY PROVISION. SHALL HAVE THE OPTION "TO PURCHASE THE PREMISES SUBJECT TO THE SAME USES AND PURPOSES AS ARE SET FORTH IN THIS DEED.'. ALL OF THEM SHOULD BE APPOINTED NOT LATER THAN TWO WEEKS AFTER THE DATE THE PARTIES HAVE FAILED TO REACH AN AGREEMENT. ADVISED AS FOLLOWS: IT WAS THE ASSUMPTION OF THIS ADMINISTRATION THAT THE INCLUSION OF A PROVISION FOR A BOARD OF ARBITRATION IN THE ABOVE CONTRACT WAS JUSTIFIED BY THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 AND EXECUTIVE ORDER NO. 7057 OF MAY 28.

B-7760, FEBRUARY 3, 1940, 19 COMP. GEN. 700

AGREEMENTS AS TO ARBITRATION OF GOVERNMENT'S RIGHTS - NECESSITY FOR SPECIFIC AUTHORITY - PURCHASE PRICE OF REAL ESTATE THERE IS NO AUTHORITY FOR THE ESTABLISHING OF BOARDS OF ARBITRATION TO DETERMINE THE RIGHTS OF THE UNITED STATES IN THE ABSENCE OF STATUTORY PROVISION, AND NEITHER THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935, NOR EXECUTIVE ORDER NO. 7057, OF MAY 28, 1935, ESTABLISHING THE PUERTO RICO RECONSTRUCTION ADMINISTRATION PURSUANT THERETO, AUTHORIZES A PROVISION IN A LEASE CONTAINING A PURCHASE OPTION, THAT IN CASE OF DISAGREEMENT AS TO THE SELLING OR PURCHASE PRICE ARBITRATORS SHALL BE APPOINTED TO DETERMINE SAME.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, FEBRUARY 3, 1940:

THERE HAS BEEN FILED IN THIS OFFICE LEASE NUMBERED ER-PR-157, ENTERED INTO MARCH 4, 1939, BETWEEN THE UNITED STATES, BY GUILLERMO ESTEVES VOLCKERS, AND JAIME BOSCH, CAYEY, PUERTO RICO, COVERING THE RENTAL OF PREMISES FOR THE CONSTRUCTION OF A BUILDING TO BE USED AS A GROCERY STORE FOR A TERM OF 10 YEARS EFFECTIVE AS OF THE DATE OF THE LEASE AND EXPIRING ON MARCH 4, 1949, AT AN ANNUAL RENTAL OF $56.02 PAYABLE ANNUALLY IN ADVANCE.

ARTICLE 10 OF THE LEASE PROVIDES THAT UPON THE EXPIRATION OF THE LEASE TERM THE LESSEE, UPON GIVING WRITTEN NOTICE 6 MONTHS IN ADVANCE OF THE EXPIRATION OF SAID TERM, SHALL HAVE THE OPTION "TO PURCHASE THE PREMISES SUBJECT TO THE SAME USES AND PURPOSES AS ARE SET FORTH IN THIS DEED.'

ARTICLE 13 OF THE LEASE PROVIDES:

IN THE EVENT THE ADMINISTRATOR DECIDES TO EXERCISE THE ALTERNATIVE RECITED UNDER SUBPARAGRAPH (A) OF PARAGRAPH ELEVEN HEREOF OR THE LESSEE DECIDES TO EXERCISE THE OPTION PROVIDED UNDER SUBPARAGRAPH (A) OF PARAGRAPH TEN AND PARAGRAPH FIFTEEN HEREOF, THE SELLING OR PURCHASE PRICE, AS THE CASE MAY BE, SHALL BE FIXED BY AGREEMENT BETWEEN THE PARTIES HERETO. IF THE PARTIES FAIL TO REACH AN AGREEMENT AS TO THE SELLING OR PURCHASE PRICE, EACH ONE OF SAID PARTIES SHALL APPOINT ONE PERSON, WHO TOGETHER WITH A THIRD PERSON APPOINTED BY THE TWO SO DESIGNATED, SHALL ACT AS ARBITRATORS TO DETERMINE THE SELLING OR PURCHASE PRICE OF THE PROPERTY TO BE SOLD. IF THE APPOINTMENT OF SUCH ARBITRATORS BECOMES NECESSARY, ALL OF THEM SHOULD BE APPOINTED NOT LATER THAN TWO WEEKS AFTER THE DATE THE PARTIES HAVE FAILED TO REACH AN AGREEMENT. THE DECISION OF THE MAJORITY OF SAID ARBITRATORS WHICH SHALL BE RENDERED NOT LATER THAN ONE MONTH AFTER THEIR APPOINTMENT SHALL BE BINDING UPON THE PARTIES. IN ANY EVENT, THE FEES AND EXPENSES OF THE SAID THREE ARBITRATORS SO APPOINTED SHALL BE PAID BY THE LESSEE.

IN REPLY TO A REQUEST BY THIS OFFICE FOR A SHOWING OF THE AUTHORITY OF LAW FOR INCLUDING IN THE LEASE THE PROVISION ABOVE QUOTED, THE PUERTO RICO RECONSTRUCTION ADMINISTRATION, IN LETTER OF NOVEMBER 22, 1939, ADVISED AS FOLLOWS:

IT WAS THE ASSUMPTION OF THIS ADMINISTRATION THAT THE INCLUSION OF A PROVISION FOR A BOARD OF ARBITRATION IN THE ABOVE CONTRACT WAS JUSTIFIED BY THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 AND EXECUTIVE ORDER NO. 7057 OF MAY 28, 1935, ISSUED PURSUANT THERETO.

THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 AUTHORIZED THE PRESIDENT OF THE UNITED STATES, IN ORDER TO CARRY OUT THE PROVISIONS OF SAID ACT,"TO ACQUIRE BY PURCHASE OR BY THE POWER OF EMINENT DOMAIN ANY REAL PROPERTY OR INTEREST THEREIN AND IMPROVE, DEVELOP, GRANT, SELL, LEASE (WITH OR WITHOUT THE PRIVILEGE OF PURCHASING) OR OTHERWISE DISPOSE OF ANY SUCH PROPERTY OR INTEREST THEREIN.'

BY EXECUTIVE ORDER NO. 7057 OF MAY 28, 1935, THE ADMINISTRATOR IS AUTHORIZED "TO INITIATE, FORMULATE, ADMINISTER AND SUPERVISE A PROGRAM OF APPROVED PROJECTS FOR PROVIDING RELIEF AND WORK RELIEF AND FOR INCREASING EMPLOYMENT IN PUERTO RICO.' SAID ORDER FURTHER AUTHORIZES THE ADMINISTRATOR "TO THE EXTENT NECESSARY TO CARRY OUT THE PROVISIONS" THEREOF "TO ACQUIRE BY PURCHASE OR BY THE POWER OF EMINENT DOMAIN ANY REAL PROPERTY OR ANY INTEREST THEREIN AND IMPROVE, DEVELOP, GRANT, SELL, LEASE (WITH OR WITHOUT THE PRIVILEGE OF PURCHASING) OR OTHERWISE DISPOSE OF ANY SUCH PROPERTY OR INTEREST THEREIN.'

PURSUANT TO THE AUTHORITY OF THE ABOVE ACT AND EXECUTIVE ORDER, THE ADMINISTRATOR OF THE PUERTO RICO RECONSTRUCTION ADMINISTRATION PURCHASED THE LAND WHICH IS A PART OF THE LEASE IN QUESTION. IT WAS DETERMINED THAT THE EXECUTION OF THE ABOVE LEASE WAS NECESSARY TO CARRY OUT PROVISIONS OF EXECUTIVE ORDER NO. 7057 AND INASMUCH AS THE ADMINISTRATOR'S AUTHORITY TO DISPOSE OF SUCH PROPERTY IS EXTREMELY BROAD, IT WAS ASSUMED THAT THE APPOINTMENT OF A BOARD OF ARBITRATION TO DETERMINE THE VALUE OF THE PROPERTY IN THE EVENT THE ADMINISTRATOR AND THE LESSEE WERE UNABLE TO AGREE, WOULD NOT BE OBJECTIONABLE.

THERE IS NO GENERAL AUTHORITY FOR THE ESTABLISHING OF BOARDS OF ARBITRATION TO DETERMINE THE RIGHTS OF THE UNITED STATES IN THE ABSENCE OF STATUTORY AUTHORITY (8 COMP. GEN. 96, AND A-24846, OCTOBER 29, 1928) AND THERE IS NO SPECIFIC AUTHORITY IN THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935, OR EXECUTIVE ORDER NO. 7057 OF MAY 28, 1935, FOR THE DETERMINATION OF THE SELLING OR PURCHASE PRICE OF LAND ACQUIRED BY THE UNITED STATES UNDER SAID ACT BY THE APPOINTMENT OF ARBITRATORS AS PROVIDED BY PARAGRAPH 13 OF THE LEASE. ALSO, SEE SECTION 9 OF THE ACT OF MARCH 4, 1909, 35 STAT. 1027.

THIS LEASE WILL NOT BE FURTHER QUESTIONED AT THIS TIME IN THIS RESPECT. HOWEVER, SHOULD ANY DISPUTE ARISE THEREUNDER WITH RESPECT TO THE SELLING OR PURCHASE PRICE, AS THE CASE MAY BE, UNDER PARAGRAPH 13 OF THE LEASE, THE SAME SHOULD NOT BE SUBMITTED TO ARBITRATION.