Brooklyn Waterfront Term. Corp. v. United States, 48679.

• Decision Date: 05 June 1950
• Docket Number: No. 48679.,48679.
• Citation: 90 F. Supp. 943
• Parties: BROOKLYN WATERFRONT TERMINAL CORPORATION v. UNITED STATES.
• Court: U.S. Claims Court

90 F. Supp. 943

BROOKLYN WATERFRONT TERMINAL CORPORATION v. UNITED STATES.

No. 48679.

United States Court of Claims.

June 5, 1950.

Chester T. Lane, Washington, D. C., for plaintiff.

David D. Hochstein, Washington, D. C., with whom was Assistant Attorney General A. Devitt Vanech, for defendant.

Before JONES, Chief Judge, and HOWELL, WHITAKER and LITTLETON, Judges.

HOWELL, Judge.

This action was instituted to recover damages in the sum of $350,000 for the alleged breach of covenants by the United States to maintain the plaintiff's premises in good repair and tenantable condition and to restore the premises to the same condition as that existing at the time the defendant entered upon the property, in accordance with the terms of Lease No. NOy (R)-32260, dated January 5, 1943, as amended, and Lease No. NOy (R)-42962, dated July 1, 1947.

On January 5, 1943, the plaintiff leased to the United States certain commercial warehouse property located in Brooklyn, New York, which consisted of approximately 17.464 acres of land, 33 buildings having a total of 436,800 square feet of storage space, and two slips. The lease provided that the premises were to be used exclusively for "naval purposes" and ran from January 5, 1943, to June 30, 1944, at an annual rental of $200,000, and was renewable by the United States from year to year upon 60 days' notice in writing and was subject to cancellation by the defendant upon 30 days' notice in writing. The United States duly renewed and extended the lease for successive annual periods to and including June 30, 1947.

On July 1, 1947, the parties entered into a new lease, designated as NOy (R)-42962 which covered buildings Nos. 1 through 15, containing approximately 228,120 square feet of storage space, two open areas together with the north half of the larger slip. This lease was for the period July 1, 1947, to June 30, 1948, at an annual rental of $77,333.55, and provided that the premises were to be used exclusively for "naval purposes." It contained the same provisions as to renewal and cancellation as the previous lease of January 5, 1943. The lease was duly terminated by the United States on December 31, 1947, by written notice dated December 1, 1947, and a confirming notice of termination dated December 16, 1947. The lease of January 5, 1943, and the lease of July 1, 1947, contained the following provisions:

"8. The Government shall have the right, during the existence of this lease, to make alterations, attach fixtures, and erect additions, structures, or signs, in or upon the premises hereby leased * * *; which fixtures, additions, or structures so placed in or upon or attached to the said premises shall be and remain the property of the Government and may be removed therefrom by the Government prior to the termination of this lease, and the Government, if required by the Lessor, shall, before the expiration of this lease or renewal thereof, restore the premises to the same condition as that existing at the time of entering upon the same under this lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the Government has no control, excepted: * * *.

* * * * * *

"12. The Government shall maintain the said premises, buildings, equipment, piers, bulkheads, slips, and appurtenances in good repair and tenantable condition during the continuance of this lease."

During 1946 and 1947 the lease of January 5, 1943, was modified on seven separate occasions by formal written agreement of the parties, whereby certain portions of the premises were eliminated from the operation of the lease as of specified dates, and the original rental reduced proportionately. The lease of January 5, 1943, was cancelled by paragraph 4 of the seventh modification which provided as follows:

"It is agreed that lease NOy (R)-32260 is hereby cancelled by agreement of the parties as of June 30, 1947."

Each of the first six modifications of the lease of January 5, 1943, contained a formal provision releasing and discharging the defendant from any liability or claim arising out of the defendant's use and occupancy of the portions of the premises eliminated from the lease and as to which the lease was cancelled by the modification. The property involved in this proceeding, therefore, consists of those portions of the plaintiff's premises which were not surrendered pursuant to the first six modifications. This constitutes the property covered by the seventh modification, that property covered by the new lease of July 1, 1947, and that portion of the plaintiff's property included in the 1943 lease, not covered by any modifications to the 1943 lease nor included specifically in the 1947 lease and to which the plaintiff never did give the defendant a release, all described with more particularity in our Finding 12.

The buildings varied considerably as to age, type of construction and condition when the defendant took possession in 1943. Ten of the buildings were two-story brick warehouses having concrete first floors and heavy wood plank second floors. Four of the buildings were one-story brick structures with concrete floors. The other buildings were made of corrugated steel or iron and had concrete or wood plank floors except Building No. 20 which was a one-story stucco warehouse. The pavement adjacent to the buildings and throughout the property was macadam, asphalt or concrete.

The premises were used by the United States exclusively for the storage of naval supplies and throughout the period involved in this suit were under jurisdiction of the Supply Department of the New York Naval Shipyard, Brooklyn, New York. During the defendant's occupancy of the premises, the supply officer made an inspection three or four times weekly for the purpose of observing the general condition of the storage and the condition of the buildings and outside areas and to ascertain whether the property was being kept in a good state of repair. In addition, the storehouse superintendent visited the property every day for two or three hours and accompanied the supply officer on his regular formal inspection of the premises every Friday. The storehouse supervisor also inspected the premises every other day.

Defective conditions requiring repairs inside or outside the buildings were reported to the supply officer or were noted by him on his inspection of the property and all minor repairs to the premises were authorized by him and were made by the maintenance crew of his department. Defects of a substantial nature requiring major repairs were reported to the Public Works Department by the supply officer and those repairs were made by that department. In each instance when defects requiring major or minor repairs were reported to or noted by the supply officer, the repairs were made. During the defendant's occupancy of the plaintiff's premises, the sum of $100,851.66 was expended by the Public Works and Supply Departments of the New York Naval Shipyard to improve the property and maintain it in good repair and tenantable condition for naval purposes, covering in part repairs to those portions of the premises not here in controversy, the same having been released as described in Finding 8.

On March 17, 1947, and May 21, 1947, the plaintiff wrote to the Commandant, Third Naval District, New York, requesting that repairs be made to the leased premises, and on December 10, 1947, in acknowledging the Commandant's letter of December 1, 1947, giving notice of termination of the lease, the plaintiff made demand for restoration and requested that repairs be undertaken. On January 13, 1948, the plaintiff demanded prompt restoration and repair of the property and particularly the repair of leaders, gutters and roofs. This letter was acknowledged on January 19, 1948, by the assistant to the public works officer who stated:

"With respect to the alleged damaged condition of leaders, gutters, and roofs you are advised that the Navy Department does not propose to make any repairs to the premises but, should it be determined that a legal responsibility exists for such repairs to be made, you will be reimbursed for a reasonable cost of making such repairs to the property as are deemed necessary."

Although the plaintiff alleged in its petition that the defendant failed to comply with paragraph 8 of the leases requiring the defendant, upon proper demand, to restore the premises to the same condition as that existing at the inception of the leases and failed to maintain the premises in good repair as required by paragraph 12 of the leases, the plaintiff elected to try this case upon the issue of whether the defendant had maintained the premises in good repair and tenantable condition in accordance with the requirements of paragraph 12 of the leases. The plaintiff also waived all claims with respect to the premises covered by the first six modifications of the 1943 lease.

The evidence establishes that the defendant subjected the premises to heavy use and that while it had a maintenance and repair policy under which it spent considerable sums, the premises here in issue were not in good and tenantable condition when the second lease was terminated on December 31, 1947. It is found that to put the premises in good repair and tenantable condition for the purposes for which leased, namely, naval purposes, would require an expenditure of $33,319. The plaintiff, however, contends that the covenant by the defendant to maintain the premises in good repair and tenantable condition renders the defendant liable for the cost of putting the property in such repair and condition for the plaintiff's purposes or use, namely, the conduct of commercial terminal and warehousing operations involving storage of bagged and perishable foodstuffs such as cocoa, sugar and coffee. To put the property in good repair and tenantable condition for the purposes required in the conduct of the plaintiff's business would...