
    The Freedman’s Savings and Trust Company et al. v. The United States.
    
      On the Proofs.
    
    
      Congress direct the superintendent of the Treasury building to provide suitable rooms for the new Department of Justice. By another statute Congress appropriate $10,000 for rent for the remainder of the current fiscal year. The superintendent procures a lease of three floors of the Freedman’s Banle building. The rent is $15,000 a year; the term oneyear toith the right re- - served to the government of continuing the occupancy for ten years with the further right of terminating it by notice at the end of any year. Congress appropriate for this rent. Subsequently the Attorney-Generalrecom-mends that the fourth floor be rented at $2,000 a year, and Congress there-tipon appropriate for the total rent $17,000. Finally another Congress refuses to appropriate more than $14,000 a year for the rent. But the department continues to oeeupy the building, and the landlord receipts for the amount appropriated as money paid on account.
    
    I.Where Congress authorize an executive officer to procure suitable rooms for a new executive department, and he enters into a lease "for the term of one year with the right reserved to the government of continuing the occupancy for a term of years, it is a proper exercise of his discretion.
    II.Where Congress authorize an executive officer to procure suitable rooms for a newly established executive department, and subsequently appropriate for the rent of the building, the precise rent reserved in the lease, it must be deemed a ratification.
    III.Where the government goes into possession as tenant under an express lease, it is liable lor rent at the rate of the rent reserved in the lease should it continue to hold over after the expiration of the term, unless there be a new condition of things such as would imply a new tenancy at a different rent.
    IY. A failure by Congress to appropriate the full amount of the rent reserved in a valid lease does not imply a new lease, nor relieve the government from liability for the rent reserved in the old lease.
    Y. The distinction between this case and Bradley's (98 U. S. R., 104) pointed out.
    
      The Reporters’ statement of the case:
    The terms of the lease on which this action was brought involved no interpretation and are sufficiently set forth in the opinion of the court. The following are the facts found :
    I. Some time in the summer or fall of 1871, the then super-iintendent of tlie Treasury building engaged from or contracted with, tbe claimants for the rental of the four upper floors of their bank building for the use of the officers and clerks of the Department of Justice, at and for the sum of $17,500 per annum; but upon information from the Attorney-General that his department did not then need the upper floor, a change was made in the original agreement, and the second, third, and fourth floors only were rented by the said superintendent, at an annual rental of $15,000, and on the 7th day of October, A. D. 1871, the United States, by B. H. Bristow, Solicitor-General and Acting Attorney-General, and the claimants, The Freedman’s Savings and Trust Company, by J. W. Alvord, their president, made and executed the lease set forth in the petition, covering the said second, third, and fourth floors.
    II. Subsequently, the Attorney-General, finding the three floors referred to in the preceding paragraph not sufficiently commodious, and objecting to the occupancy of the fifth floor by other parties, that floor was also rented for the use of his ' department at an annual rent of $2,000, and on the 1st day of April, A. D. 1873, the United States, by George H. Williams, Attorney-General, and the claimants, the Freedman’s' Savings and Trust Compauy, by J. W. Alvord, their president, made and executed the lease covering the said floor, set forth in the petition.
    III. John A. J. Oreswell, Robert Purvis, and Robert H. T. Leipold were duly selected and qualified as commissioners of 1she Freedman’s Savings and Trust Company under the provisions of an act of Congress approved June 20, 1874.
    IY. The premises described in the first lease above referred to were used and occupied by the United States for the purposes ®f the Department of Justice'from the 23d day of October, 1871, until and including March 31,1870, as well as subsequent thereto, and those described in the second lease were occupied and used by the United States for the same purposes from the 1st day of January, 1873, until and including March 31, 1870, as well as subsequent thereto.
    Y. The claimants have been paid the rents of said premises, as stipulated for in said leases, to and including June 30,1874.
    YI. From the 1st day of July, 1874, to and including June SO, 1878, the United States have paid the claimants the sum of $14,000 per annum only on account of rent; and from the 1st day of July, 1878, until and including the 31st day of March, 1879, the United States have paid the claimants $7,500, or at the rate of annum only.
    YII. The claimants received the first payment of the reduced rent under a verbal protest addressed by them at the time t© the disbursing officer of the Department of Justice who made the payment. They have receipted for all payments.of the reduced rents as on account and not as in full.
    YIII. No notice of a desire or an election to terminate the occupation of the premises has ever been given to the claimants by the United. States or the Attorney-General.
    IX. The rents reserved in the said leases were not unreasona- • ble or exorbitant at the time the leases were executed, due regard being given to the fact that the lessors were to heat and light the building, and that the lessees had an exclusive option of retaining the premises for ten years or of surrendering them at the expiration of any year.
    X. Up to the commencement of this suit, and at no time since the appropriations were reduced as alleged did claimants make any demand or request for the possession or surrender of the premises unless the full amount of the rent mentioned in the leases was paid, or for any cause.
    XI. Claimants presented the facts of the case to the Committee on Appropriations in December, 1874 (the first reduction having been made June 20, 1874,18 Stat. L., 109), reciting the appropriation of $14,000 only, and requesting an appropriation to cover the deficiency and for the full rent for the next fiscal year; and other similar representations were made t® Congress by the commissioners from time to time.
    XII. On the 2d December, 1872, the Attorney-General addressed the following communication to the Committee on Appropriations of the House of Representatives:
    “Department oe Justice,
    “ Washington, Deo. 2,1872.
    “ Hon. James A. Garfield,
    “ Chairman Committee on Appropriations,
    
    
      Souse of Representatives :
    
    “ Sir : The Department of Justice is now occupying the second, third, and fourth floors of the building known as the “ Freedman’s Savings Bank building,” and the fifth story is at present unoccupied. Having been informed by the president of the bank that it was contemplated to rent out the rooms on that floor to private parties, I requested him before doing so to inform me what rent would be asked for the entire floor for the government. He notified me last week that at a meeting of the directors of the bank they had authorized him to offer said floor to the government for $2,000 per annum.
    “ If this floor is occupied by private parties it will necessitate the employment of two watchmen for each floor by the department; At present two watchmen are all that are required, but if this floor is occupied by private parties it will necessitate the employment of two watchmen by the department for each floor occupied by it. There will, therefore, have to be four more .watchmen, two to come on duty at 4 o’clock p. m. and remain till 12 p. m., and two from 12 p. m. till 7 a. m., when they would be relieved by the messengers of the department.
    
      u I have, thorefore, the honor to request that the estimates for the rent of the building be increased from $ 16,000 to $ 17,000 per annum, and that an item of $1,000 be inserted in the deficiency bill for the present fiscal year for additional rent from January 1 to June 30,1873.
    “ The increased rent would not amount to as much as the pay of the additional watchmen if the floor was occupied by parties not connected with the department; besides, having the building open at all times to such persons to whom the rooms on that floor may be rented would take the hall and stairways out of the control of the department, which would be a cause of serious inconvenience and annoyance. All the rooms are occupied, and some on the fifth floor could be advantageously used at present for store-rooms for documents and the old files of the department. ,
    “ For the reasons above stated I would respectfully request that the additional amount required for the rent of the upper floor be appropriated.
    “ I have the honor to be, very respectfully, your ob’t servant,
    “G-eo. H. WILLIAMS,
    “ Attorney- General.”
    
      Mr. B. M. T. Leipold for the claimants:
    From the general and discretionary authority conferred by the thirteenth section of the act establishing the Department of Justice, approved June 22,1870 (16 Stat. L., 162), and from the permanent character of said department, the claimants had a right; to infer a sufficiency of authority on the part of the superintendent of the Treasury building to procure the premises, and on the part of the Department of Justice to execute the leases in controversy. {Thompsons Case, 9 O. Cls. It., 187.) They were, therefore, justified in executing them, and looking to the defendants for a full compliance with their terms in good faith, and this notwithstanding the provisions of the seventh section of the Act July 12,1870 (16 Stat. L., 251; Rev. Stat., 3679), prohibiting the several departments of the government from involving the government in contracts for the future payment of money in excess of appropriations.
    In the execution of these leases, there was no attempt by the Department of Justice to involve the government in contracts for the future payment of moneys. They were both carefully drawn for the then current year only, with the privilege, however, and that for its own convenience and advantage, of a continued tenancy from year to year for a period of ten years, should the defendants so elect. Congress was fully advised of the obligations assumed, and, if dissatisfied, should have directed the termination of the tenancy by proper notice. But no such action was taken, and no notice of a desire to terminate the tenancy has ever been given to the petitioners. On the contrary, Congress in recognizing with full knowledge of the nature and contents of the.leases, which must be pre- ■ sumed, the obligations of the defendants created thereby and appropriating the rents therein stipulated for to June 30,1874, fully ratified their several provisions, and established beyond all question their validity and binding force until terminated in the manner therein provided for. (1 Chitty, 11 Am. ed., 23; Story on Agency, 242, 244, 248; 2 Kent, 615, N. 2; Adams’s Case, 2 C. Cls. R., 70; Fremont & Jackson’s Case, 2 C. Cls. R., 461; Bradley’s Case, 98 Otto, 104.)
    Continued possession of the premises, under these circumstances, and a failure to give notice of a desire to terminate the tenancy, is equivalent to an annual renewal of the contracts or leases upon the same terms, and as such annual renewals there can be no question of their validity; this continued possession or tenancy by the defendants, moreover, when by due notice they might have terminated it during any one year, must be construed to have been for the benefit and advantage of the United States, and the defendants are therefore bound to pay the full rent stipulated for. (4 Kent, 112; Eeugler’s Case, 4 C. Cls. R., 407; Gross’s Case, 1 O. Cls. R., 353.)
    It is a well-settled principle of law that continued possession of demised premises, after the termination of a valid lease, constitutes a tenancy from year to year on the terms of said lease, ■subject to legal notice (4 Kent, 112; Will R. P., 361; Eeugler’s 
      
      Case, 4 O. Cls. R., 407), and possession of premises obtained under a lease and tbe payment of an annual rent is evidence from wbicb a tenancy from year to year, upon tbe terms of said lease, will be presumed, even should tbe lease itself be declared void (1 Ohitty Con., 11 Am. ed., 455), and this tenancy from year to year continues until legal notice of its termination is given. (4 Kent, 112; Will E. P., 360, 361, N. 1; 1 Chitty Con., 11 Am. ed., 474; Vugsley v. Aiken, 1 Kernan, 494.)
    In either event, therefore, whether the court should hold the leases in controversy originally valid, valid throughout, or invalid, the continued possession of the premises acquired under tlieir provisions renders the defendants liable for the entire rents therein stipulated for. A contract or lease entered into by an officer of the government, under the authority of an existing statute, or subsequently ratified by Congress, cannot be annulled or changed, except in the manner therein provided for, if any, or by the consent of all the contracting parties. In this respect the United States occupy the same position and are subject to the same rules of law as individuals. They cannot evade or escape contract obligations and liabilities thus acquired by a failure on the part of Congress to mate the necessary appropriations. (Ohitty, 10 Am. ed., 233; Story, Agency, 8 ed., 239; Fremont and Jackson's Case, 2 C. Cls. R., 461; Miss Fnglish’s Case, 5 O. Cls. R., 108; Martin’s Case, ib., 216; Thorne’s Case, ib., 242.) The claimants having no option, under the terms of the leases, to determine the tenancy before the expiration of the whole term, are compelled to rely upon their rights under said leases. Being temporarily unable, for want of adequate provision, to secure the entire rents due them, they reluctantly,, and under protest, accepted the amounts appropriated by Congress, and gave their receipt therefor on account. The acceptance of a part of the rent under protest or on account does not constitute payment of the whole rent, nor does it amount to a. waiver of the balance, or an acquiescence in the reduced amount, or bar the claimants right of action for such balance. (Wilcox’s Case, 7 C. Cls. R., 586.)
    
      Mr. A. I). Robinson (with whom was the Assistant Attorney-General) for the defendants:
    The leases were for a single year, and no more can be recovered than the appropriation for each fiscal year. This appears by the leases, and such was the understanding of the Attorney-General.
    If the language is capable of a different construction, then the leases were both void, so far as they exceeded the appropriations for each fiscal year in which the premises were occupied, and except so far as Congress should approve.
    The statute of 1861 says “no contract or purchase shall hereafter be made unless the same be authorized by law, or,” &c.. (12 Stat. L., 220.)
    On and after July 12, 1870, all contracts and purchases came under the provisions of both said laws. Therefore, the superintendent could not bind the government by any contract unless-“authorized by law, or be under an appropriation adequate to-its fulfillment.”
    It is conceded that there was no appropriation “ adequate,”' for the very gravamen of the suit is that “adequate” appropriations were not made.
    Were the leases “authorized by law”?
    The Supreme Court has declared the proper construction off that clause of the statute in Bradley’s Case. (98 U. S. R., 113.)
    The act of 1820 (9 Stat. L., 179) directed the Secretary of the Navy “ to cause to be constructed a floating dry dock,” and appropriated money “towards said docks,” and yet it was held prohibited.
    “The object of the law of 1820 was to prohibit the executive department from involving the government in contracts for the-payment of money beyond the amount appropriated by the lawmaking power.”
    That is, there must be an express authority given by Congress to “ contract ” to take the case out of the statutes referred to, unless there is a sufficient appropriation.
    This construction is reasonable, and gives a proper effect to the statutes cited. If it shall be held that the word “provide” authorized a contract for ten years, what shall prevent a contract for double such rent, and for twenty years?
    Claimants assented to the rent appropriated as a satisfaction of the leases for the times so paid as between them and the department.
   Nott, J.,

delivered the opinion of the court:

In 1870, Congress established the Department of Justice, and directed the superintendent of the Treasury building to provide rooms for tbe new department. With tbe approval and co-operation of tbe bead of tbe department, tbe Attorney-General, tbe superintendent rented for that purpose a portion of tbe building known as tbe Freedman’s Bank. Tbe rent reserved by tbe lease under wbicb tbe government entered, and by virtue of wbicb it continues to bold, was duly appropriated by Congress in full up to the 30th June, 1874; but from tbe 1st of July, 1874, to tbe present time tbe stipulated rent has not been paid in full, and this action is brought to recover tbe balance or deficit remaining unpaid.

We have frequently bad occasion, when looking for analogies by which to ascertain tbe legal rights of claimants and liabilities of tbe government, to treat Congress as tbe principal and tbe executive officers as tbe agent. And if this were an action against an ordinary principal, not a shadow of doubt could arise in any court as to bis liability upon this lease. But tbe legislative branch of tbe government is not an ordinary principal, and is not in all cases chargeable with knowledge of tbe acts of its agents, and tbe questions wbicb lie at tbe bottom of this case are, whether tbe agent bad authority to bind tbe government by tbe execution of tbe lease; or whether bis act, if without such authority, has been ratified by bis principal, wbicb here is Congress?

The authority under wbich the executive officers acted is to be found in the Act to establish the Department of Justice, 22d June, 1870 (16 Stat. L., 162, ch. 150, § 13), and the Legislative Appropriation Act, 1871. (Ibid., 475-494, ch. 113.) By the former statute tbe superintendent of the Treasury building was directed to provide suitable rooms in that building for tbe officers and clerks of the department; or, if that should be found impracticable, "to provide such rooms in some other building in the vicinity of said Treasury.” By the latter statute Congress appropriated "For rent of building, ten thousand dollars.”

This authority to tbe superintendent of tbe Treasury was exceedingly vague. It authorized him to do nothing but procure suitable rooms; it limited him in nothing but that they should be in the vicinity of tbe Treasury. On tbe one band a great department of the government is not a transient or trivial board or commission to be provided for temporarily by tbe month or tbe year; on tbe other band tbe superintendent was not authorized to provide for it permanently. In this dilemma be did precisely wbat he should have done, and exactly all that he could properly have done. He selected suitable rooms in the vicinity of the Treasury at an annual rent of $15,000 for the term of one year, with the right reserved to the government of continuing the occupancy for a term of ten years, with the further right reserved to the government of terminating the lease by notice at the expiration of any year of the term. It is manifest that the obligation of these covenants was all on one side; that the tenant had a double option where the landlord had none; that the lessor was bound for ten years, and the lessee for only one. In other words, the agent, by a highly judicious exercise of his discretion, cast a positive obligation upon his principal for only one year, and left his principal frée to extend the lease for one year into a lease for a term of years, or to terminate the holding at the end of the first year. It is manifest that such an exercise of his discretion by an agent involves no strain of his authority; and that if a principal thus circumstanced should continue to hold and occupy the leased premises after the expiration of the first year, the holding under the extended term of the lease would be his act and not his agent’s.

What was the action of the principal in this easel

Before the first year of the lease had expired, Congress, by the Legislative Appropriation Act, 1872 (17 Stat. L., 61-82, ch. 140), appropriated "For rent of building, fifteen thousand dollars,” the precise amount reserved in the lease, and gave no direction and took no step toward procuring another building for the Department of Justice, nor for terminating the existing occupancy. Furthermore, in December, 1872, the Attorney-General addressed an official communication to the Committee on Appropriations of the House of Representatives, setting forth the necessity of the department’s occupying an additional floor of the same building, at a rent of $2,000 a year, and requesting an appropriation of $1,000 in a pending deficiency bill to pay for the occupancy during the current fiscal year. Congress accordingly, by the Deficiency Act, 3d March, 1873 (17 Stat. L., 530-541, ch. 228), appropriated "For rent of the fifth story of the building occupied by the Department of Justice, from January 1 to June 30, 1873, two thousand dollars.” Furthermore, at the same session, Congress, by the Legislative Appropriation Act, 1873 (ib., 485-508, ch. 226), recognized the augmented rent of the two leases for the ensuing fiscal year, and appropriated for both one sum in gross, viz, "For rent of building, seventeen thousand dollars.” Under tbe assumed authority of tbe appropriation acts, a lease for tbe fifth floor was executed similar in terms to tbe first; and under these two-leases, tbe government has ever since occupied and enjoyed tbe demised premises.

Now, it is not to be assumed that tbe legislative' branch of tbe government is chargeable with knowledge of tbe details of the executive business. It cannot be safely maintained that. Congress are chargeable with knowledge of tbe fact that a certain building is used for government purposes by subordinate • officers and clerks, or that when 'Congress appropriate for rents of buildings in gross, they, as a legislative body, are presumed to know tbe terms and conditions of every lease made by every executive officer; but there are some things of which the legislative branch must be presumed to have actual knowledge.. Congress must be presumed to know, and every member actually does know, that the chief executive departments of the government occupy certain buildings; that the .Department of Justice has its specific quarters, and that they are in a leased, building. When, moreover, Congress make a specific appropriation for the rent of a building thus occupied by an executive department, it is likewise manifest that Congress must be presumed to have actual knowledge of the terms and conditions of the lease for which they appropriate the rent.

In a word, the characteristics of this case are threefold: 1st.. An express authority by Congress to procure a building for a specific purpose. 2d. Actual and constructive knowledge that a building has been procured for that purpose, viz, the official headquarters of one of the executive departments. 3d. A series, of appropriations of the precise rent reserved in the leases under-which the government entered upon the premises. This combination of circumstances makes the case as clearly one of legislative ratification as it can be, short of a statute employing express words of approval, and brings it within the principle recognized in Grisar v. McDowell (6 Wall., 381), where it is said, “The action of the President in making the reservation in question was indirectly approved by the legislation of Congress in appropriating moneys for the construction of fortifications and other public works upon them.”

But if this were not the fact; if the leases under which the-defendants entered were to be beld valid for but a single year, •or if tliey by their own terms bad expired at the expiration of tbe first year, in wbat manner would that condition of things affect'this case?

It is a familiar principle of landlord and tenant law, that a lessee holding over continues to hold upon the terms and conditions of the express lease, and to be liable as before for the rent reserved — unless some new condition of things should arise which would imply a new tenancy at a different or reduced rent. Is there any such new condition of things here “2

In the first place, there are no receipts in full, and, on the contrary, the landlord here has uniformly given for every payment of the reduced rent a receipt on account.

In the second place, there has been no arbitration, or quasi arbitration, or reference of a disputed demand to a commission which would take the case within the decision of the Supreme Court in Justice's Case (14 Wall., 535).

In the third place, the only thing which has occurred, it being moreover the only thing which occasions this litigation, is a simple failure of Congress to appropriate the full amount of the rent; and of this action of Congress two things 'are to be observed:

First. The appropriation of a less amount for the rent of the building than the rent reserved by the leases is a simple case of reduction unaccompanied by proviso or condition. The Legislative Appropriation Act, 1874 (18 Stat. L., p. 109, ch. 328), says simply "For rent of the portion (four floors) of the building occupied by the Department of Justice, fourteen thousand dollars,” and\ the succeeding appropriations are in, substantially, the same language. There is no provision that the amount appropriated shall be “ in full compensation” of the rent, analogous to the statutory provision in Fisher's Case (15 C. Cls. R., 323). Neither] is there any provision directing the Attorney-General “ to deliver i up the possession of saidpremises” at the expiration of the current! year, if the lessors should be unwilling to continue the lease at j a reduced rent, such as there was in Bradley's Case (13 C. Cls., R., 166; 98 U. S. R., 104). In a word, this is a naked case of an inadequate appropriation, as to which it has been again and again held that it affects no legal right. Collins’ Case (15 C. Cls. R., 22); Briggs' Case (ib., 48).

Secondly. This case bears, in principle, no resemblance to that of Bradley (supra). There the lease upou which the action was brought was without precedent authority of Congress to procure a building; it was in terms made subject to an appropriation by Congress”; Congress disapproved or rejected it, and appropriated a less amount for the ensuing year as under an implied lease, and accompanied this with a specific direction to the Postmaster-General to vacate and restore possession of the premises to the lessors, if they were not willing to continue the holding at the reduced rent. Upon those facts both this court and the Supreme Court were divided in opinion upon the question whether Congress could exercise this power of rejection or disapproval at the time when they first essayed to exercise it; that is to say, whether Congress, after having approved the lease for two years of the term by making specific appropriations for the rent, could turn around and reject it for the third year of the term. A majority of both courts thought that the lease was subject all the way through its term to the annual appropriations of Congress; the minority thought that Congress was bound ab initio to ratify or reject, and that a ratification once given was an entirety which could not be renounced by a subsequent Congress; but the question in both courts was one of construction of the lease, and it was never supposed or intimated by either the majority or minority of the judges in either court that the rent could have been reduced if the lease had not been in terms subject to the appropriations of Congress.

The judgment of the court is that the claimants recover of the defendants the sum of $17,250.  