U.S. Trust Co. v. Com.

• Decision Date: 28 January 1965
• Citation: 348 Mass. 378,204 N.E.2d 300
• Parties: UNITED STATES TRUST COMPANY v. COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 300

204 N.E.2d 300

348 Mass. 378

UNITED STATES TRUST COMPANY v. COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 10, 1964.

Decided Jan. 28, 1965.

Lawrence A. Sullivan, Boston, for petitioner.

John W. Wright, Asst. Atty. Gen., for the Commonwealth.

Before WILKINS, C. J., and WHITTEMORE, CUTTER, KIRK and REARDON, JJ. WILKINS, Chief Justice.

In this petition against the Commonwealth pursuant to G.L. (Ter.Ed.) c. 258, § 1, a landlord seeks to enforce a claim under a written lease for failure to honor a covenant to restore the premises prior to the end of the term. A demurrer to the petition for failure to state a cause of action was sustained. The case is here both on the petitioner's bill of exceptions and on its appeal. We consider the appeal and dismiss the exceptions. Caissie v. City of Cambridge, 317 Mass. 346, 347, 58 N.E.2d 169.

We summarize the allegations of the petition. On June 8, 1956, the petitioner entered into a lease with the Commonwealth in compliance with G.L. c. 8, § 10A, as amended, whereby the Commonwealth rented the second to the seventh floors, inclusive, of a building on Court Street, Boston, owned by the petitioner and known as the United States Trust Company building. The lease was for a term of five years commencing on July 1, 1956, rent being $124,068.56 yearly, payable monthly in arrears. There was a covenant obligating the Commonwealth to restore five floors of the premises prior to the termination of the lease, which read, 'THE LESSEE AGREES that it will, subject to available appropriation, at its expense, prior to the termination of this lease, restore the third, fourth, fifth, sixth and seventh floors of the demised premises to a typical floor arrangement of offices as shown on the attached 'Typical Floor Plan' which is made a part hereof, using material and finish generally used in offices in other parts of the building of which the demised premises form a part.'

A copy of the lease annexed to the petition bears the signatures of the president and the treasurer on behalf of the petitioner and on behalf of the Commonwealth the signature of the Commissioner of Corporations and Taxation, the approval in Council attested by the Executive Secretary on June 28, 1956, and the signatures in approval of the State Superintendent of Buildings, of an Assistant Attorney General as to form, and of the complete membership of the Commission on Administration and Finance. ¹

The lease has terminated, and the respondent had vacated, but refuses to recognize any obligation to restore. The damages, entirely for breach of the restoration clause, are $250,000 with interest.

The demurrer was 'to the claim of the petitioner on the gound that the facts alleged in the petition do not set forth a cause of action against the Commonwealth of Massachusetts in that the lease attached to the petition and made a part thereof expressly conditions respondent's liability upon an appropriation and it does not appear from the petition that such appropriation has ever been made.' An 'appropriation' plainly refers to that mentioned in the covenant to restore and not to an appropriation for rent as required by G.L. c. 8, § 10A, as amended.

General Laws c. 29, § 26 (as amended through St.1947, c. 636, § 1), provides in part, 'No obligation incurred by any officer or servant of the commonwealth for any purpose in excess of the appropriation [by the General Court] or allotment [by the Governor] for such purpose for the office, department or institution which he represents, shall impose any liability upon the commonwealth.' As was said in Baker v. Commonwealth, 312 Mass. 490, 493, 45 N.E.2d 470, 472, with respect to § 26 (as amended through St.1939, c. 502, § 12), 'This broad provision was designed to require an official or a department to keep expenditures within the amount appropriated and to protect the public credit by preventing the incurring of any indebtedness against the Commonwealth for the payment of which no provision had been made by the Legislature.' ² See Opinion of the Justices, 323 Mass. 764, 767, 79 N.E.2d 881.

Leases are governed by another and less rigid statute. This is G.L. c. 8, § 10A (as amended through St.1955, c. 317, § 1 ³), where the first sentence is: 'The commonwealth, acting through the executive or administrative head of a state department, commission or board and with the approval of the superintendent and of the governor and council and of the commission on administration and finance, ⁴ may lease for the use of such department, commission or board, for a term not exceeding five years, premises outside of the state house or other building owned by the commonwealth, if provision for rent of such premises for so much of the term of the lease as falls within the then current fiscal year has been made by appropriation.' This provision grants general authority to execute such a lease. Such authority, first granted by St.1924, c. 356, ⁵ was inspired by the report of the Attorney General, Pub.Doc. No. 12, 1923, p. 15, where it was stated: 'There is no statute conferring authority on any official to excute leases in behalf of the Commonwealth. * * * I therefore recommend the passage of an act authorizing the execution of leases by the heads of departments, such leases, however, not to be effective without the approval of the Governor and Council.' See 1924 House Docs. Nos. 1406 and 1567.

A later report of the Attorney General, Pub.Doc. No. 12, 1932, p. 22, advised: 'There is no present authority as to the form of tenancy by the different State departments, commissions or boards, of other than State-owned property; and when leases are authorized the period for such is not prescribed. Uniformity in such authorization is desirable, and, in my opinion, the power to lease will result in a saving to the Commonwealth of rental costs.' It was recommended (Id. fn. 1) that § 10A be amended by adding two provisions: (1) 'after appropriation has been made for the payment of rent for the current year' and (2) 'for a term or terms not exceeding five years each.' This led to St.1933, c. 170, which contained such clauses.

In St.1941, c. 267, the first sentence of § 10A was enacted in almost the same language as now (see supra, p. 302). A second sentence was added with respect to now leases where a term 'expires between the beginning of a fiscal year and the effective date of the general appropriation act for such fiscal year' in certain circumstances authorizing 'such department, commission or board' to hire or lease 'the same or different premises, for a term not exceeding five years, obligating the commonwealth to pay no greater aggregate amount of rent for any period than was paid for a corresponding period under the expiring lease.' ⁶ It does not appear from the petition and so is not raised by demurrer, that the lease is a renewal made under circumstances rendering material the second sentence of § 10A. The respondent's attempted argument in this respect lacks foundation in the record.

Statute 1943, c. 440, § 2, amended the first sentence of § 10A, by adding the requirement of approval by the Commission on Administration and Finance. ⁷ This amendment was inspired by the Report of the Joint Committee on Ways and Means 'for the purpose of making an investigation and study of any or all matters pertaining to the finances of the...