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X-7981 COPY 70 TO: Secretary Morgenthau. FROM: Mr. Oliphant. Be: Sale of "building s i t e to F e d e r a l Reserve Board, I t i s my opinion t h a t you a r e given a u t h o r i t y "by s e c t i o n 5 of t h e Act of May 25, 1926, as amended, (44 S t a t . 633; Feb. 24, 1928, d 94, 45 S t a t . 137; Feb. 16, 1931, c . 203, sec. 2, 46 S t a t . 1164; U. S. C., T i t l e 40, s e c . 345) t o s e l l a t p r i v a t e s a l e t o the Federal Reserve Board, p r o p e r t y of t h e United S t a t e s described as squares E-87 and £-88, l o c a t e d on C o n s t i t u t i o n Avenue between 20th and 21st S t r e e t s , 2T»W., Washington, D. C. The Federal Reserve Board i s a u t h o r i z e d to purchase t h i s p r o p e r t y under t h e p r o v i s i o n s of s e c t i o n 4 of the Act approved June 19, 1934, (Public ITo. 417, 73rd Congress) which reads as f o l l o w s : "SEC. 4 . Section 10 of t h e Federal Reserve Act, as amended, i s f u r t h e r amended by changing t h e p e r i o d a t t h e end of the t h i r d paragraph thereof t o a comma and i n s e r t i n g t h e r e a f t e r the f o l l o w i n g : "and such assessments may i n c l u d e amounts s u f f i c i e n t t o p r o v i d e f o r the a c q u i s i t i o n by. the Board i n i t s own name of such s i t e or b u i l d i n g i n the D i s t r i c t of Columbia as i n i t s judgment alone s h a l l be necessary f o r the purpose of providing s u i t a b l e and adequate q u a r t e r s f o r t h e performance of i t s f u n c t i o n s . A f t e r approving such p l a n s , e s t i m a t e s , and s p e c i f i c a t i o n s as i t s h a l l have caused to be prepared, t h e Board may, notwithstanding any o t h e r p r o v i s i o n of law, cause t o be constructed on t h e s i t e so acquired by i t a tra.ildi.ng s u i t a b l e and adequate i n i t s judgnent f o r i t s purposes and proceed to take a l l such s t e p s as i t may deem necessary or a p p r o p r i a t e i n connection with the c o n s t r u c t i o n , equipment, and f u r n i s h i n g of such b u i l d i n g . The Board may m a i n t a i n , e n l a r g e , or remodel any b u i l d i n g so acquired or constructed and s h a l l have s o l e c o n t r o l of such b u i l d i n g and space t h e r e i n . " 71 — 2 — The p r o p e r t y i n question had "been leased by the Government i n 1918 and upon t h i s p r o p e r t y the Government had constructed c e r t a i n temporary "buildings. Authority f o r the purchase of the p r o p e r t y was given by t h e following p r o v i s i o n s of t h e Act of June 12, 1922, (42 S t a t . 646): "The commission i n charge of the S t a t e , War and Navy Departments Buildings * * * i s hereby authorized and d i r e c t e d t o a c q u i r e * * * t h e following squares of land f o r p u b l i c p u r p o s e s , t o w i t , the whole of squares known a s numbers east of e i g h t y - s e v e n ; e a s t of e i g h t y - e i g h t ; * * * Provided f u r t h e r , That the squares authorized t o be acquired h e r e i n s h a l l be under t h e c o n t r o l of the Superintendent of the S t a t e , War, and Navy Departments Buildings. 1 1 By the Act of February 26, 1925 (43 S t a t . 983) t h e commission i n charge of t h e S t a t e , War and Navy Department Buildings and the o f f i c e of Public Buildings and Grounds were consolidated to form t h e o f f i c e of Public Buildings and Public Parks of the N a t i o n a l C a p i t a l , The Superintendent of the S t a t e , War and Navy Departments B u i l d i n g s , under whose control t h e p r o p e r t y i n question had been p l a c e d , was i n v e s t e d with the powers and d u t i e s formerly h e l d by t h e commission and was designated D i r e c t o r of Public Buildings and P u b l i c Parks of the National C a p i t a l . Subsequently, by Executive Order 6166 of June 10, 1933, the f u n c t i o n s of t h e o f f i c e of P u b l i c Buildings and P u b l i c Parks were t r a n s f e r r e d to t h e O f f i c e of National P a r k s , Buildings and Reservations of t h e National C a p i t a l , which o f f i c e by t h e Act of Congress approved March 2 , 1934 (Public No. 109 - 73rd Congress) became known as t h e N a t i o n a l Park S e r v i c e . I t w i l l appear from the s t a t u t e s here o u t l i n e d t h a t t h e p r o p e r t y which t h e Government proposes t o s e l l t o the Federal Reserve Board i s now under t h e " c o n t r o l " of the National Park S e r v i c e . I t does not n e c e s s a r i l y f o l l o w from t h i s t h a t the National Park Service has a u t h o r i t y t o dispose of the p r o p e r t y . In t h e case of Farmers Bond and Mortgage Company v . Walker (1929 ) 207 Iowa 696 , 223 N. W. 497, the Court used t h e following language; "The word ' c o n t r o l ' has v a r i o u s s i g n i f i c a t i o n s , dependi n g on t h e circumstances and connection i n which i t i s u s e d . 2 Words and P h r a s e s , F i r s t S e r i e s , p . 1549; 1 Words and P h r a s e s , Second S e r i e s , p . 1021. The word may "be so used a s w i t h t h e context t o imply and confer complete dominion and ownership with t h e consequent power of d i s p o s i t i o n . Welsh v . G i s t , 101 Md. 606, 61 A. 665. Of i t s e l f , however, t h e word i s o r d i n a r i l y t h e equivalent of 'manage', ' d i r e c t ' , ' g o v e r n ' , • s u p e r v i s e ' , as c o n f e r r i n g the u s u a l power of a t r u s t e e , and, w i t h r e s p e c t to r e a l property a t l e a s t , without power of d i s p o s i t i o n . Bramell v . Cole. 136 Mo. 201, 37 S. W. 924, 58 Am. S t . Rep. 619; Randall v . J o s s e l y n . 59 Vt. 557, 10 A. 577; Wolffe v . Loe"b. 98 Ala. 426, 13 So. 744." The question "before t h e Court i n In r e Lyman (D. C., S. D. New York - 1893) 55 F. 29, concerned t h e r i g h t of the United S t a t e s Trea- sury Department to i n t e r f e r e with t h e C o u r t ' s p o s s e s s i o n of a c e r t a i n room i n the Post O f f i c e Building. I n defense of i t s a c t i o n t h e Treasury Department r e l i e d upon the f a c t t h a t i n a p p r o p r i a t i o n a c t s the b u i l d i n g was r e f e r r e d t o as "under control of the Treasury Department". I t was determined "by the Court, however, t h a t the " c o n t r o l " i n v e s t e d i n t h e Treasury r e l a t e d only to the " c a r e , maintenance and r e p a i r " of t h e b u i l d i n g and did not expend to s u p e r v i s i o n over i t s u s e and occupation. That the word " c o n t r o l " as used i n t h e Act of June 12, 1922, was intended to i n c l u d e only the duty of care and maintenance, becomes evident upon examination of s e c t i o n 1 of the Act of March 3, 1883, which c r e a t e d the commission i n charge of the S t a t e , War and Navy Department Building. This s e c t i o n provided as f o l l o w s : "The P r e s i d e n t i s hereby authorized and d i r e c t e d t o d e s i g n a t e from the Engineer Corps of the Army or t h e Navy, an o f f i c e r well q u a l i f i e d f o r the purpose, who s h a l l "be d e t a i l e d to a c t as superintendent of t h e completed p o r t i o n s of the S t a t e , War, and Navy Department B u i l d i n g , under the d i r e c t i o n of the S e c r e t a r i e s of S t a t e , War, and Navy, who a r e hereby c o n s t i t u t e d a commission f o r the purposes of t h e care and s u p e r v i s i o n of s a i d "building, a s h e r e i n a f t e r s p e c i f i e d . Said o f f i c e r s h a l l l a v e charge of s a i d "building, and a l l the engines, machinery, steam and water supply, h e a t i n g , l i g h t i n g , and v e n t i l a t i n g a p p a r a t u s , e l e v a t o r s , and a l l other f i x t u r e s i n s a i d "building, and a l l necessary r e p a i r s and a l t e r a t i o n s t h e r e o f , a s w e l l a s t h e d i r e c t i o n and c o n t r o l of such f o r c e of e n g i n e e r s , watchmen, l a b o r e r s , and others engaged about t h e b u i l d i n g or t h e apparatus under h i s s u p e r v i s i o n ; of the c l e a n i n g of t h e c o r r i d o r s and water c l o s e t s ; of t h e approaches, sidewalks, lawns, c o u r t y a r d s , and a r e a s of the b u i l d i n g , and of a l l rooms i n t h e sub-basement which contain t h e b o i l e r s and other machinery, or so much of s a i d rooms as may be i n d i s p e n s a b l e t o t h e proper performance of h i s d u t i e s as h e r e i n p r o v i d e d . " The "maintenance and p r o t e c t i o n " of t h e other temporary b u i l d i n g s e r e c t e d during t h e War had been e n t r u s t e d to the commission by t h e Act of March 28, 1918 (40 S t a t . 483; June 4 , 1918, c . 93, 40 S t a t . 588) and convenience r e q u i r e d t h a t , when i n 1922 the temporary b u i l d i n g s on squares E-87 and E-88 were a c q u i r e d , the "maintenance and p r o t e c t i o n " of t h e s e b u i l d i n g s a l s o should be given to the commission. It i s necessary to conclude t h a t the u s e of t h e word " c o n t r o l " was a shorthand method of accomplishing t h i s r e s u l t , In view of t h e f a c t t h a t the commission never had any powers other than t h o s e necessary i n t h e care and maintenance of p u b l i c b u i l d i n g s , i t i s absurd t o suppose t h a t Congress intended t h a t as t o c e r t a i n i s o l a t e d p r o p e r t y the commission should have a l s o t h e power of d i s p o s i t i o n . I t i s my opinion t h a t the power to s e l l t h e p r o p e r t y i n question i s n o t , t h e r e f o r e , i n t h e National Park Service, but i n y o u r s e l f by •"5** v i r t u e of the Act of May 25, 1926, as amended. Pertinent provisions of t h i s Act a r e as f o l l o w s : "Be i t enacted "by t h e Senate and House of R e s p r e s e n t a t i v e s of t h e United S t a t e s of America I n Congress assembled. That, to enable the S e c r e t a r y of the Treasury t o provide s u i t a b l e accomodations i n the D i s t r i c t of Columbia f o r the executive departments, and independent establishments of the Government not under any executive department, and f o r courthouses, p o s t o f f i c e s , immigration s t a t i o n s , customhouses, marine h o s p i t a l s , q u a r a n t i n e s t a t i o n s , and other p u b l i c b u i l d i n g s of the c l a s s e s under t h e c o n t r o l of the Treasury Department i n t h e S t a t e s , T e r r i t o r i e s , and possessions of the United S t a t e s , he i s hereby authorized and d i r e c t e d to a c q u i r e , by purchase, condemnation, or otherwise, such s i t e s and a d d i t i o n s to s i t e s as he may deem necessary, and t o cause t o be c o n s t r u c t e d thereon, and upon lands belonging t o the Government convenientl y l o c a t e d and a v a i l a b l e f o r the purpose (but exclusive of m i l i t a r y or naval r e s e r v a t i o n s ) , adequate and s u i t a b l e b u i l d i n g s f o r any of the foregoing purposes, g i v i n g p r e f e r e n c e , where he considers c o n d i t i o n s j u s t i f y such a c t i o n , t o cases where s i t e s f o r p u b l i c b u i l d i n g s have h e r e t o f o r e been acquired o r a u t h o r i z e d t o be acquired, and to e n l a r g e , remodel, and extend e x i s t i n g p u b l i c b u i l d i n g s under the c o n t r o l of t h e Treasury Department, and t o purchase b u i l d i n g s , i f found t o be adequate, adaptable, and s u i t a b l e f o r t h e purposes of t h i s Act, t o g e t h e r with t h e s i t e s t h e r e o f , and t o remodel, e n l a r g e , or extend such b u i l d i n g s and provide proper approaches and o t h e r necessary improvements to the s i t e s t h e r e o f . When a b u i l d i n g i s about t o be constructed on a s i t e h e r e t o f o r e acquired and such s i t e i s found by the Secretary of t h e Treasury t o be u n s u i t a b l e f o r i t s intended purpose, he i s hereby f u r t h e r a u t h o r i z e d and empowered t o acquire a new s i t e i n l i e u thereof by purchase, condemnation, exchange. or otherwise, and except i n case of exchange to dispose of the p r e s e n t s i t e by p u b l i c s a l e and to execute t h e necessary q u i t c l a i m deed of conveyance:* * * * "Sec. 5. * * * " I n c a r r y i n g i n t o e f f e c t the p r o v i s i o n s of t h i s Act, i f the S e c r e t a r y of the Treasury deems i t to be to the b e s t i n t e r e s t s of the Government to c o n s t r u c t Federal b u i l d i n g s to take the p l a c e of e x i s t i n g Federal b u i l d i n g s , he i s hereby authorized t o cause the present b u i l d i n g s to be demolished, i n order t h a t t h e s i t e s may be u t i l i z e d i n whole or i n p a r t f o r such b u i l d i n g s , or where i n h i s .judgment i t i s more advantageous to c o n s t r u c t a Federal b u i l d i n g on a d i f f e r e n t s i t e i n tho same c i t y , t o s o i l any such b u i l d i n g or b u i l d i n g s and t h e s i t e or s i t e s t h o r o o f , a t such time and on such terms as ho deems proper, and t o convey ttio same t o tho r e s p e c t i v e purchasers thereof by the usual q u i t c l a i m deed, and t o d e p o s i t t h e proceeds of t h e s a l e s thereof i n t h e Treasury as m i s c e l l a neous r e c e i p t s , and t o charge a g a i n s t t h e t o t a l sum of $150,000,000 h e r e i n b e f o r e authorized only t h e r e s p e c t i v e n e t excess c o s t , i f any, over and above the proceeds of s u c h s a l e s , of providing such new s i t e s and b u i l d i n g s . " (Underscoring supplied) I t w i l l be observed t h a t t h e r e are two p r o v i s i o n s of t h i s Act which give t h e S e c r e t a r y of t h e Treasury a u t h o r i t y t o s e l l p r o p e r t y of t h e Government under c e r t a i n circumstances. The question as t o which of those two provisions i s applicable t o t h e f a c t s of t h e p r e s e n t case may f o r t h e moment be d e f e r r e d . Let i t be assumed t h a t , a c t i n g i n r e - l i a n c e on t h e a u t h o r i t y of ono of those p r o v i s i o n s , you wore to give a q u i t c l a i m deed t o tho Federal Rosorvo Board covering tho p r o p e r t y i n question and i t wore then determined t h a t t h e necessary a u t h o r i t y f o r the execution of t h i s deed e x i s t e d not i n you but i n an o f f i c i a l of the National Park S e r v i c e . Even i n t h a t case, I b e l i e v e i t extremely doubt- f u l t h a t you would have submitted yourself t o any danger of p e r s o n a l liability. I t i s well established t h a t a public o f f i c e r i s not l i a b l e f o r mistakes of judgment i n t h e performance of a d i s c r e t i o n a r y a c t . Kendall v . Stokes (1845) 3 How. 87, 11 L.Ed. 506. And t h e S e c r e t a r y of t h e I n t e r i o r Department, of which t h e National Park Service i s a p a r t , i n h i s w i r e l e s s t o t h e President dated J u l y 13, 1934, would seem t o have expressed h i s approval of your giving such a deed. In view of t h e s t a t u s of t h e Federal Reserve Board as an independent establishment of the Government, i t i s d o u b t f u l i f t h e Board could show any damage from t h e o f f i c i a l a c t of an o f f i c e r of the Government. C e r t a i n l y i n executing a q u i t c l a i m deed you would warrant n o t h i n g , except perhaps by i m p l i c a t i o n that you had a u t h o r i t y to execute t h e deed, and i t has been h e l d t h a t a p u b l i c o f f i c e r i s not l i a b l e f o r d e c e i t i f i n executing a c o n t r a c t he r e p r e s e n t s t h a t the c o n t r a c t may he v a l i d l y made "by him, since the other c o n t r a c t i n g p a r t y i s equally "bound to know the law and to know i t c o r r e c t l y . Commercial Trust Company v . Burch (D.C., S. D., G-a. — 1920) 367 F. 907. Of course, the Federal Reserve Board may r e f u s e to accept t h e deed u n l e s s i t i s accompanied by another deed executed by an authorized o f f i c e r of the National Parks S e r v i c e . Of. United S t a t e s v. Jonas (La. 1874) 19 Wall. 598, 22 L.Ed. 177. But t h a t q u e s t i o n i s not involved i n t h i s memorandum. The q u e s t i o n remains as to whether a u t h o r i t y t o s e l l the p r o p e r t y i n q u e s t i o n i s given you by s e c t i o n 1 or s e c t i o n 5 of the Act of May 25, 1926. These s e c t i o n s appear t o be mutually e x c l u s i v e . Section 1 provides t h a t when p r o p e r t y acquired as a s i t e f o r a Federal b u i l d ing i s determined by you t o be u n s u i t a b l e , you may dispose of t h a t property at p u b l i c s a l e and acquire other p r o p e r t y . Section 5 provides t.aat i n c o n s t r u c t i n g a new Federal b u i l d i n g to r e p l a c e an e x i s t i n g one, you may s e l l the e x i s t i n g Federal b u i l d i n g and s i t e at such time and upon such terms as you may deem proper. The scope of each of these provision^ becomes apparent i n the l i g h t of t h e purpose f o r which the p r o v i s i o n was enacted. At t h e time of the passage of t h e Act of May 23, 1926, t h e r e had been no r e g u l a r a p p r o p r i a t i o n f o r p u b l i c b u i l d i n g s since 1913. During the War i t was necessary t o put the monies provided f o r p u b l i c b u i l d i n g s l a r g e l y t o other purposes, and as a consequence the Government found i t s e l f the owner of numerous b u i l d i n g s i t e s which, i n t h e course of y e a r s , had become u n s u i t a b l e f o r t h e purposes f o r which they were o r i g i n a l l y acquired. I t was, t h e r e f o r e , provided i n s e c t i o n 1 t h a t when a new b u i l d i n g was about t o be b u i l t and t h e S e c r e t a r y of t h e Treasury determined t h a t t h e b u i l d i n g s i t e provided t h e r e f o r had become u n s u i t a b l e , he might dispose of t h a t s i t e a t p u b l i c s a l e . In contrast t o t h i s , t h e p r o v i s i o n under c o n s i d e r a t i o n i n s e c t i o n 5 was not designed t o care f o r an unusual s i t u a t i o n ; i t was enacted t o enable t h e S e c r e t a r y g e n e r a l l y t o rcplaco Federal b u i l d i n g s which had bocome o b s o l e t e . Provision was made t h a t the S e c r e t a r y might s o i l e x i s t i n g b u i l d i n g s and t h e s i t e s thereof i n connection with t h e c o n s t r u c t i o n of now b u i l d i n g s on d i f f e r e n t s i t e s i n t h e same c i t y . I t w i l l be soon t h a t t h e p r e s e n t case c l e a r l y f a l l s w i t h i n t h e provisions of s e c t i o n 5, since i t i s contemplated t o s e l l t o t h e Federal Reserve Board not only a b u i l d i n g s i t e but t h e Federal b u i l d i n g s now standing upon t h a t s i t e . These b u i l d i n g s are l a r g e l y occupied, I under- stand, by t h e Federal Trade Commission, f o r which a new b u i l d i n g i s being provided. That t h i s p r o p e r t y may v a l i d l y be sold t o t h e Federal Reserve Board a t p r i v a t e s a l e I have l i t t l e doubt. Section 5 provides t h a t s a l e s s h a l l be made by t h e S e c r e t a r y " a t such times and upon such terms as he deems proper", and i t sooms h a r d l y probable t h a t any court would apply t h e requirement of p u b l i c s a l e contained i n s e c t i o n 1 t o s a l e s under t h e provisions of s e c t i o n 5 . In t h i s connection t h e case of United S t a t e s v . Jonas, supra, should bo noted and d i s t i n g u i s h e d . I t was decided i n t h a t case t h a t t h e a c t of March 3, 1863, providing f o r the s a l e of p r o p e r t y acquired by the United S t a t e s i n the c o l l e c t i o n of debts had t h e e f f e c t of amending the Act of May 29, 1930, i n s o f a r as i t r e q u i r e d t h a t t h e S o l i c i t o r of t h e Treasury should obtain t h e Secret a r y ' s approval t o t h e s a l e of such p r o p e r t y . I t was contended by the Government t h a t t h e r e was no c o n f l i c t between t h e s t a t u t e s , s i n c e t h e l a t e r s t a t u t e might be confined i n i t s e f f e c t t o unproductive property. The court dismissed t h i s contention with the statement t h a t "no good reason can be assigned why the d i s p o s i t i o n of unproduct i v e lands should be s u b j e c t t o t h e approval of t h e s e c r e t a r y , and other p r o p e r t y , which, i n t h i s case, consisted of valuable r e a l e s t a t e i n the City of New Orleans, with b u i l d i n g s on i t , be l e f t t o t h e s o l e d i s p o s a l of t h e subordinate o f f i c e r , " I t i s p l a i n l y evident t h a t t h i s language i s not a p p l i c a b l e t o t h e present case, since t h e r e i s a v a l i d reason f o r supposing t h a t Congress intended t o r e q u i r e t h a t s a l e s under s e c t i o n 1 should be p u b l i c , while p e r m i t t i n g s a l e s under s e c t i o n 5 t o be made i n such manner as t h e S e c r e t a r y might deem proper# The b u i l d i n g s t o be sold under s e c t i o n 5 are government b u i l d i n g s which are customarily purchased by S t a t e s or m u n i c i p a l i t i e s , many of which are f o r b i d d e n by law t o b i d a t public p a l e s , while t h e s i t e s t o be sold under s e c t i o n 1 are e i t h e r vacant lande or lands containing b u i l d i n g s s u i t a b l e f o r pubchase by anyone, T/Vhile i t has been t h e general p r a c t i c e of t h e Procurement Division i n a c t i n g under s e c t i o n 5 t o s e l l Federal Buildings and s i t e s a t p u b l i c s a l e , yet exceptions have r e g u l a r l y been made when t h e circumstances r e q u i r e d t h a t p r i v a t e sales should be h e l d . In view of t h e f a c t t h a t -10- t h e Federal Reserve Board was c r e a t e d by Act of Congress, and is# as has been s t a t e d , an independent establishment of t h e Government, i t would seem evident t h a t i n t h e p r e s e n t case an exception t o the g e n e r a l a d m i n i s t r a t i v e p r a c t i c e might a p p r o p r i a t e l y be made*
@FedFRASER