B-28638, SEPTEMBER 23, 1942, 22 COMP. GEN. 260

B-28638, SEPTEMBER 23, 1942, 22 COMP. GEN. 260

CONTRACTS - MODIFICATION - HARDSHIP UNLESS OTHERWISE PROVIDED, VALID CONTRACTS, INCLUDING LEASES, ARE TO BE ENFORCED AND PERFORMED AS WRITTEN AND THE FACT THAT SUPERVENING EVENTS OR UNFORESEEN CAUSES RENDER PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE, OR EVEN OCCASION A LOSS, IS NOT SUFFICIENT TO EXCUSE PERFORMANCE OR TO ENTITLE A CONTRACTOR TO AN ADJUSTMENT IN THE CONTRACT PRICE. IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, ACCOUNTING AND ADMINISTRATIVE OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO GIVE AWAY OR SURRENDER A RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER A CONTRACT, AND CONSIDERATIONS OF SYMPATHY FOR THE POSSIBLE MISFORTUNE OF A CONTRACTOR DO NOT AUTHORIZE ANY EXCEPTION TO THE RULE. 15 COMP. GEN. 238, AND 20 COMP. GEN. 782, DISTINGUISHED. WHERE PREMISES WERE LEASED FROM THE GOVERNMENT AT A STIPULATED PER ANNUM RENTAL FOR USE AS A PARKING LOT AND THE LESSEE'S VOLUME OF BUSINESS SUBSEQUENTLY DECREASED DUE TO THE GASOLINE RATIONING PROGRAM INSTITUTED BY THE GOVERNMENT IN ITS CAPACITY AS A SOVEREIGN, THERE IS NO LEGAL BASIS, IN THE ABSENCE OF A CONTRACT PROVISION TO THE CONTRARY, FOR MODIFICATION OF THE LEASE BY REDUCING THE RENTAL TO BE PAID THEREUNDER.

COMPTROLLER GENERAL WARREN TO THE EXECUTIVE OFFICER, THE ALLEY DWELLING AUTHORITY OF THE DISTRICT OF COLUMBIA, SEPTEMBER 23, 1942:

I HAVE YOUR LETTER OF AUGUST 26, 1942, AS FOLLOWS:

ON MAY 16, 1941, THE ALLEY DWELLING AUTHORITY ENTERED INTO A LEASE AGREEMENT ( CONTRACT NO. AD-386) WITH THE TRIANGLE PARKING CENTER, INC., OF 2135 PENNSYLVANIA AVENUE NW., WASHINGTON, D.C., WHEREBY A PART OF SQUARE 104, BOUNDED BY 20TH, 21ST, E AND F STREETS, NORTHWEST, IN THE DISTRICT OF COLUMBIA, WAS LEASED TO THE TRIANGLE PARKING CENTER, INC., FOR USE AS A PARKING LOT. THE LEASE IS FOR A PERIOD OF TWO YEARS, BEGINNING MAY 17, 1941, AND ENDING MAY 16, 1943, AT A RENTAL OF $28,800, PAYABLE IN ADVANCE IN EQUAL MONTHLY INSTALLMENTS OF $1,200. THE LEASE CONTRACT IS BASED UPON PUBLIC BIDS SUBMITTED TO THE ALLEY DWELLING AUTHORITY IN RESPONSE TO AN ADVERTISEMENT FOR BIDS DATED MAY 7, 1941. (A COPY OF THE BID DOCUMENT AND A COPY OF THE CONTRACT ARE ENCLOSED.)

THE NORMAL CAPACITY OF THE PARKING LOT IS APPROXIMATELY 350 AUTOMOBILES. SINCE THE GASOLINE RATIONING PROGRAM, THE ALLEY DWELLING AUTHORITY HAS MADE PERIODIC INSPECTIONS TO DETERMINE THE DECREASE IN BUSINESS AT THE LOT. IT IS NOW ESTIMATED THAT THE TRIANGLE PARKING CENTER, INC., IS RECEIVING FIFTY TO SIXTY PERCENT OF THE BUSINESS THEY RECEIVED PRIOR TO THE GASOLINE RATIONING PROGRAM. THE LESSEE REPRESENTS TO THIS AUTHORITY THAT ITS OVERHEAD EXPENSE IS APPROXIMATELY $300 PER MONTH. AT THE PRESENT TIME THIS AUTHORITY HAS DETERMINED THAT THERE IS AN AVERAGE OF 140 AUTOMOBILES PARKED ON THE LOT PER DAY, AND THAT THE AVERAGE FEE FOR PARKING IS $7 PER MONTH, OR A GROSS INCOME OF $980 MONTHLY TO THE LESSEE.

AS A MATTER OF EQUITY, THE ALLEY DWELLING AUTHORITY RECOMMENDS A REDUCTION TO THE EXTENT OF FIFTY PERCENT IN THE CONTRACT PRICE, BELIEVING THIS TO BE FAIR AND REASONABLE DUE TO CONDITIONS BEYOND THE CONTROL OF THE LESSEE.

THE LESSEE REPRESENTS THAT IT IS IMPOSSIBLE FOR IT TO CONTINUE ITS TENANCY UNDER THE CONTRACT, AND THAT IT MUST ABANDON ITS OPERATIONS UNLESS AN ADJUSTMENT CAN BE MADE. IN COMPTROLLER GENERAL'S OPINIONA 4025 (17), DATED SEPTEMBER 23, 1935, IT WAS SAID," WITHOUT REPEATING AT LENGTH THE STATEMENTS MADE IN MY LETTER OF JULY 1, 1935, IT SEEMS SUFFICIENT TO SAY THAT ADMINISTRATIVE OFFICERS OF THE GOVERNMENT ARE WITHOUT AUTHORITY TO REFORM CONTRACTS UNDER WHICH THE UNITED STATES HAS OBTAINED VESTED RIGHTS AS IN THE INSTANT CASE. REFORMATION OF CONTRACTS IS A JUDICIAL, AND NOT AN ADMINISTRATIVE FUNCTION, AND MAY BE EFFECTED ONLY WHEN THE ESTABLISHED FACTS FULLY JUSTIFY SUCH ACTION. SEE HYGIENIC FIBRE CO. V. UNITED STATES, 59 CT. CLS. 892, AND AMERICAN SALES CO. CASE, 27 FED. (2D) 389, AFFIRMED 32 ID. 141, AND CERTIORARI DENIED, 280 U.S. 574. WITH RESPECT TO OBLIGATIONS OF, AND THOSE IN FAVOR OF, THE UNITED STATES, HOWEVER, THE JURISDICTION BEING IN THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO MAKE FINAL SETTLEMENT, THE PROCEDURE HAS LONG BEEN AND OPERATES TO SAVE THE COST AND DELAY OF LITIGATION, ON SUBMISSION TO THEM OF THE FACTS FULLY JUSTIFYING, TO AUTHORIZE ADJUSTMENTS HAVING LIKE EFFECT.'

IN VIEW OF THE FACTS INVOLVED AS APPLIED TO THE ABOVE STATEMENT, WE RESPECTFULLY ASK YOUR AUTHORIZATION TO REFORM THE SUBJECT CONTRACT.

IT IS A WELL SETTLED PRINCIPLE OF LAW THAT VALID CONTRACTS, INCLUDING LEASES, ARE TO BE ENFORCED AND PERFORMED AS WRITTEN AND THAT THE FACT THAT SUPERVENING OR UNFORESEEN CAUSES RENDER PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE, OR EVEN OCCASION A LOSS, IS NOT SUFFICIENT TO EXCUSE PERFORMANCE OR TO ENTITLE A CONTRACTOR TO A REDUCTION IN RENTAL. COLUMBUS RY. POWER AND L. CO. V. COLUMBUS 249 U.S. 399, 412; 19 COMP. GEN. 903, AND CASES THEREIN CITED.

SINCE THE LEASE HERE INVOLVED MAKES NO PROVISION FOR ANY DECREASE IN RENTAL FOR ANY CAUSE OR CONTINGENCY, THE PRINCIPLE OF LAW STATED ABOVE IS APPLICABLE HERE, AND THE TRIANGLE PARKING CENTER, INC., IS BOUND TO PERFORM THE CONTRACT IN ACCORDANCE WITH ITS TERMS AND THE RENTAL STIPULATED THEREIN. SATTERLEE ADMX. V. UNITED STATES, 30 C.1CLS. (1985).

IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER A RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER A CONTRACT. SIMPSON V. UNITED STATES, 172 U.S. 372 (1899); 14 COMP. GEN. 897, 900. THIS RULE IS APPLICABLE TO THE ACCOUNTING AS WELL AS THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT; AND CONSIDERATIONS OF SYMPATHY FOR THE POSSIBLE MISFORTUNE OF A CONTRACTOR DO NOT AUTHORIZE ANY EXCEPTION TO THE RULE. 20 COMP. GEN. 703.

EVEN THOUGH THE DECREASE IN THE LESSEE'S VOLUME OF BUSINESS APPEARS TO HAVE BEEN CAUSED BY THE GASOLINE RATIONING PROGRAM, IT CANNOT BE SAID THAT SUCH GOVERNMENTAL ACTION CONSTITUTES A LEGAL EXCUSE FOR FAILURE TO PERFORM IN ACCORDANCE WITH THE TERMS OF THE LEASE. GASOLINE RATIONING WAS INSTITUTED BY THE UNITED STATES, NOT AS A CONTRACTOR, BUT AS A SOVEREIGN, AND THE PROGRAM AFFECTS EQUALLY ALL WITHIN ITS SCOPE. IT IS THE ESTABLISHED RULE THAT THE UNITED STATES AS A CONTRACTOR IS NOT LIABLE FOR ITS ACTS AS A SOVEREIGN, AND THAT INDIVIDUAL HARDSHIP RESULTING THEREFROM DOES NOT ESTABLISH GROUNDS FOR THE RELIEF OF A GOVERNMENT CONTRACTOR FROM THE OBLIGATIONS OF A CONTRACT FREELY AND FAIRLY ASSUMED BY HIM. 20 COMP. GEN. 703, SUPRA.

THE DECISION CITED BY YOU, A-4025 (17), SEPTEMBER 23, 1935, 15 COMP. GEN. 238, DOES NOT HOLD TO THE CONTRARY AS TO THE POWER OF THE ACCOUNTING OFFICERS, FOR THE QUESTION THERE PRESENTED WAS NOT ONE OF RELIEVING A CONTRACTOR FROM AN ONEROUS CONTRACT, BUT OF RE-FORMING THE AGREEMENT TO CONFORM WITH THE INTENT OF THE PARTIES. THE SAME SITUATION WAS PRESENTED IN 20 COMP. GEN. 782, AND A SIMILAR RESULT ARRIVED AT. BUT IN NEITHER OF THOSE DECISIONS WAS THERE AN ATTEMPT MADE TO WAIVE UNDISPUTED VESTED RIGHTS OF THE UNITED STATES UNDER AN AGREEMENT AS TO THE MEANING OR INTENT OF WHICH THERE WAS NO POSSIBLE DISPUTE.

ACCORDINGLY, YOU ARE ADVISED THAT, UPON THE FACTS PRESENTED, THERE APPEARS NO LEGAL BASIS FOR MODIFICATION OF THE LEASE OF MAY 16, 1941, BY REDUCING THE RENTAL TO BE PAID THEREUNDER.