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107 C. Cis.

RENTAL OF PROPERTY BY GOVERNMENT.

L It is a well settled general principle of law that when a

tenant bolds over after the expiration of his lease with
the express or implied consent of the landlord, and
without any new or different agreement as to rent,
the terms of the old lease will apply. The Comptroller
General invoked this well-known principle and denied
plaintiffs claim for increased rent. It is held that
the principle does not apply in the instant case, since
the landlord had given timely notice of an increase
in rent, and plaintiffs are accordingly entitled to recover.
Garrity, 92.
Where before the termination of the lease and in ac-

cordance with the terms thereof, the tenant is notified
by his landlord that if he holds over he will be re
quired to pay a higher rent than that required by the
terms of the prior tenancy, the terms of the lease to
that extent will not apply, and the tenant will be
bound by the terms of the notification, unless he gives
timely notice to the landlord of his refusal to be so
bound. Moore v. Harter, 67 Ohio St. 250, 65 N. E. 883;
Ameden v. Floyd, 60 Vt. 386, 15 Atl. 332; Williams v.
F088-Armstrong Hardware Co., 135 Wis. 280, 115 N. W.

803; 36 C. J. 1164. Id.
III. Upon the authorities cited, and more particularly from

those authorities which hold that this result will fol-
low even though the tenant objects to the new condi-
tions, provided the hold-over is voluntary and not
unavoidable, and the tenant does not explicitly refuse
to be bound by the new terms; (Griffen v. Knisely, 75
I11. 411; Commercial Cable Bldg. Co. v. McKenna, 168
N. Y. S. 13; Stee: v. Bergmeier, 91 Minn. 513, 98 N. W.
648, 649) it is held to be well established that the land-
lord and his tenant shall have arrived at an express
new agreement, either written or oral, for continued
occupancy beyond the expiration of the lease, in order
to rebut the presumption that the holding over is upon
the same terms as in the original agreement. See

Griffen v. Knisely, 75 III. 411. Id.
IV. In the instant case, upon the evidence adduced, it is estab-

lished that the plaintiffs not only notified the tenants
(May 6, 1941) almost two months in advance of the
expiration (June 30, 1941) of the written lease that
continued possession of the premises after expiration
would be at an increased rental, together with the cost
to the defendant of certain facilities contrary to what
had been provided for in the original lease, but the
defendant did nothing either before or after the ex-

107 C. Cls.

RENTAL OF PROPERTY BY GOVERNMENT—Continued

piration of the lease (at least until after its vacation
of the premises on August 17, 1941) to indicate in the
slightest degree that it had any objection to the new

terms stipulated by the plaintiffs. Id.
V. Having remained in possession of the premises after

termination of the original lease, as amended, without
protest or disavowal of the new terms imposed by the
lessor, defendant had shown an acceptance of those
terms, except as to a slight suggested modification of
verbiage; a contract thus existed between the parties
whereby defendant was bound to pay not only the in-
creased rental demanded but in addition whatever
electric current and janitor service it might require
in the use of the leased premises, and plaintiffs are en-

titled to recover. Id.
VI. After the plaintiffs' notice of May 6, defendant was not

entitled to hold the premises under the terms of the old
lease; and in the absence of a complete agreement on
terms of a new lease plaintiffs would be entitled, on a
quantum meruit basis, to recover the reasonable rental
value of the premises for the period they were actually
occupied by the defendant after the termination date
of the old lease, which rental value, on the evidence
adduced, the court finds to be the amount determined
for the period in question, in accordance with plain-
tifts' letter of May 6, 1941. Semmes and Barbour v.
United States, 26 C. Cls. 119; Arnold Realty Co. v.

William K. Toole Co., 46 R. I. 204, 125 Atl. 363. Id.
REQUISITION OF PROPERTY BY GOVERNMENT.

I. Regulations, priorities and controls are vital in wartime

and have been repeatedly approved. Boroles v. Willing-
ham, 321 U. S. 503, 517; United States v. Delano Park
Homes, 146 Fed. (20) 473, 474. These wartime rules
necessarily affect values, and these conditions, as well
as the consequent limitation of the market, must be
taken into consideration in arriving at just compensa.
tion for goods requisitioned. Illinois Pure Aluminum

Co., 1.
II. While the Government in wartime has the right to requisi-

tion essential materials, nevertheless fine materials are
not to be valued along with scrap materials for melting
purposes, on a general basis, regardless of cost, inish,
or value to the holder. On the other hand, a manufac-
turer whose material has been requisitioned cannot
justly claim a value that would have prevailed had
no wartime regulations or controls existed or been
necessary. Id.

107 C. Cls.

REQUISITION OF PROPERTY BY GOVERNMENT—Continued

III. The actual value of goods requisitioned by the Govern-

ment under its war powers must be determined from
all the facts and circumstances disclosed by the record

in each case. Id.
IV. Just compensation must be determined on the basis laid

down by the authorities. Monongahela Navigation Co.
v. United States, 13 Sup. Ct., 622; Seaboard Air Line
Ry. Co. v. United States, 261 U. S. 299; Olson v. United
States, 292 U. S. 246; United States v. Nero River Col-
lieries Co., 262 U. S. 341; Brooks-Scanlon Corporation

v. United States, 265 U. S. 106. Id.
SEA DUTY DEFINED.

See Pay and Allowances I, II, III, IV.
SUBCONTRACTORS, CLAIMS OF.

See Contract Settlement Act I, II;

Contracts XVII.
SUBROGATION.

See Contracts VII.
SURETY, RIGHTS OF.

See Contracts I, II, VII, VIII, IX, X, XI.
TAKING.

I. Plaintiff, an irrigation district organized under Cali-

fornia laws, owns and operates a concrete storage dam
across the Bear river by which water is stored during
the winter and spring months and released during the
summer and fall to points where it is diverted to the
land of the irrigation district. In 1932 and each year
thereafter plaintiff customarily constructed across Bear
river, below the reservoir dam, a temporary diversion
dam by scraping up the gravel on either side and
placing it across the river so as to back up the water
to a level where it would flow into the irrigation canals
on each side of the river. Plaintiff did not own the
land from which the gravel was taken. Each fall
after the irrigation season, plaintiff would cut the
temporary dam and allow the winter floods to wash
away the gravel. When the plaintiff constructed and
used the gravel diversion dam in 1932 and subsequent
years it did so under a claim of right based upon the
assumption that it was entitled to do so, its action was
open and notorious, and it acquired a prescriptive right
or easement under the laws of California. Camp Far

West Irrigation District, 263.
II. From the fall of 1942 to June 1, 1943, a considerable

quantity of gravel was removed from the bed of the
Bear river below plaintiff's diversion dam by the
defendant and its contractors and used for construction

107 C. Cla.

TAKINGContinued

purposes, some of the construction work, being per-
formed by contractors and some by the Army. All of
the gravel taken from the area pertinent to this action
was removed either from land owned by another or
from land acquired by the defendant on February 29,
1944. The bed of the Bear river is composed entirely
of gravel, and although none of the gravel was removed
from the river bed itself but from the gravel bars on
each side, nevertheless the bed of the stream was so
lowered as to render useless for its purpose the cus-
tomary gravel diversion dam and after several experi-
ments, in which the defendant gratuitously assisted, it
was necessary for plaintiff to construct a concrete

diversion dam, for the cost of which it sues.
- III. Held: There was no taking within the meaning of the

Fifth Amendment of the prescriptive easement
acquired by plaintiff :

(1) The removal of gravel by defendant could not be
construed as a taking of plaintiff's natural rights, even
if plaintiff were the owner of the land, which it was not.

(2) There was no taking in the constitutional sense
of the easement acquired by plaintiff to erect and main-
tain a dam upon land owned by others; and plaintiff's
prescriptive easement included no right restrictive of
the servient owner's right to remove gravel from its land
downstream, the interference with which by defendant
would constitute a taking of plaintiff's property.

(3) There was no physical invasion of plaintiff's
corporeal property as represented by the diversion dam,
nor such alteration of the servient tenement as to ren-
der ineffective or to destroy the privilege plaintiff had
acquired therein to accumulate the waters at the point
of the dam site at sufficient level to divert them into
its diversion canals; and hence defendant's removal of
gravel from the lower stream bed did not constitute a
taking of plaintiff's affirmative easement...

(4) The prescriptive easement acquired by plaintiff
did not include a withdrawal of the right in the servi-
ent land owners to use the gravel in the stream below
the dam beyond the amount plaintiff might reason-
ably require to restore its gravel dam each year. The
ultimate effect of removal of gravel downstream, un-
foreseen at the time and not intended, was at most
not a destruction of plaintiff's easement but simply an
injury which could be, and was, remedied at an ex-
pense. Id.

107 C. Ols.

TAKING— Continued

IV. The cost of replacing plaintiff's gravel dam with a per-

manent concrete structure would not be a proper basis
upon which to fix just compensation even if the dam-
age to the dam site was deemed to be a taking, since
It is not shown that the removal of gravel by defend-
ant was the sole cause of the necessity to replace the

gravel dam by concrete. Id.
See also Just Compensation II, III, IV, V, VI, VII, VIII,

IX, X, XI, XII; Requisition by Government I, II, III,

IV.

TAXES.

INCOMK Tax.
1. (1) Where plaintiff, a holding company, owning either di-

rectly or through wholly owned subsidiaries, all or sub-
stantially all of the capital stock of a large number
of corporations engaged in banking, insurance, real
estate and other enterprises, following the 1930 de
pression and following a bitter stockholders' fight
which caused dissatisfaction among its stockholders
and impaired the confidence of the public in its enter-
prises, with adverse effects upon the business of its sub-
sidiaries, organized a corporation for the purpose of
carrying on an advertising and publicity campaign to
restore public confidence in the corporation and its
subsidiaries, to recapture business, to secure new
business, to improve the financial condition of the
consolidated group and to improve the relationship
of the taxpayer and its subsidiaries with the public;
it is held that the reimbursements made by the hold-
ing company of the amounts expended by the subsidi-
ary for these purposes were ordinary and necessary
expenses in connection with carrying on the taxpayer's
business within the meaning of the provisions of see-
tion 23(a) of the Revenue Act of 1936, and plaintiff

is entitled to recover. Transamerica Corporation, 177.
: II. (2) Where the Commissioner, in his final determination with

respect to taxpayer's return for 1936 allowed as a
deduction from gross income only the amount of $319,-
348.02 of the total claimed deduction of $1,124,724.78
and disallowed as a deduction the amount of $800,-
376.76; and where both amounts were expended for the
same purpose, in carrying out a definite advertising
and publicity plan and campaign to accomplish speci-
fic business objectives; it is held that the determination
of the Commissioner was erroneous and plaintiff is
entitled to recover. Helvering v. Winmill, 305 U. S. 79;
Spreckels v. Commissioner, 315 U. S. 626; Burnet v.

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