No. 13728
IN THE SUPREME COURT OF THE STATE OF MONTANA
1977
MONTANA WILLIAMS DOUBLE DIAMOND
CORPORATION, a Montana corporation,
Plaintiff and Respondent,
RONALD HILL and JAYLENE HILL,
Defendants and Appellants.
Appeal from: District Court of the Eighteenth Judicial
District,
Honorable W. W. Lessley, Judge presiding.
Counsel of Record:
For Appellants:
Brown, Pepper and Kommers, Bozeman, Montana
Gene I. Brown argued, Bozeman, Montana
For Respondent :
Goetz and Madden, Bozeman, Montana
William L. Madden argued, Bozeman, Montana
Submitted: October 3, 1977
Decided : 1g 1978
Filed: :35&
."
Mr. Justice Gene B. Daly delivered the Opinion of the Court.
Defendants appeal from the final judgment of the District
Court, Gallatin County, sitting without a jury. Plaintiff brought
action against defendants on the grounds of breach of lease and
unlawful detainer. Defendants answered and counterclaimed seeking
damages for plaintiff's alleged breach of the covenant of peaceful
and quiet possession. The District Court found for plaintiff and
awarded $6,102 in damages, plus costs and reasonable attorney fees
in the amount of $1,500.
This cause arose out of a lease agreement drafted by defend-
ants' counsel and executed by the parties on January 2, 1976. The
lease instrument provided for the letting of premises known as the
Korner Klub, a bar located at Four Corners, Gallatin County, Montana,
and a modular home located on the premises beside the bar. The term
of the lease was five years and the monthly rent consideration was
$678. The lease specified that: (1) the payment of rent was to be
made monthly, in advance, on the first day of each month; (2) the
lessors were released from liability for personal injuries occur-
ing to persons on the premises, the lessees agreeing to obtain a
liability insurance policy in the amount of $50,000; (3) any improve-
ments or alterations on the premises were to be made at the expense
of the lessees; (4) the payment of monthly rent was of the essence
of the lease and if not paid when due, on or before the tenth of
each month, lessor would have the option of terminating the lease
and obtaining possession and damages for nonpayment of rent by
giving lessees 30 days notice in writing; (5) lessor grants to
lessee the first right of refusal to purchase the premises; (6)
lessor would effectuate a transfer of beer and liquor licenses to
lessees; (7) all license fees incurred during the term of the lease
would be borne by lessees; (8) lessees agreed to comply with all
rules and regulations of the Montana Liquor Control Board pertaining
to the use of the premises as a bar and entertainment business; and,
(9) in the event of any violations by the lessees of the rules and
regulations of the Montana Liquor Control Board, or in the event
of any violation by lessee of any state law, lessor would have the
right, at lessor's expense, to do all things reasonably necessary
to correct or remedy or terminate the violation, provided that lessor
and lessee would cooperate with each other to correct or terminate
any such violation.
On August 12, 1976, plaintiff executed and delivered to
defendants a notice of default and termination of lease. Plaintiff
listed the grounds for default as defendants' failure to comply
with the laws of Unemployment Compensation, Workmen's Compensation,
Federal and State Revenue laws and applicable county license laws,
and defendants' failure to make payment of the monthly rent due on
or before August 10, 1976. Plaintiff stated its election to consi-
der the lease terminated pursuant to the default provisions of the
lease agreement, effective 30 days from the date of notice, compel-
ling defendants to forfeit and relinquish the premises in the manner
set forth in the lease and to execute the necessary documents of
assignment revesting the beer and liquor licenses with plaintiff.
On September 13, 1976, plaintiff delivered to defendants a notice
to quit and vacate the premises within three days, in accordance
with the provisions of section 67-525, R.C.M. 1947.
When defendants failed to vacate the premises, plaintiff
filed a complaint and motion for expedited hearing and answer in
the District Court seeking a declaration of termination and forfei-
ture of the lease; restitution of the premises and eviction of
defendants; all rent due under the provisions of the lease; statu-
tory penal damages in the sum of three times the amount of rent due
under the provisions of the lease agreement; specific performance
of the lease provision ordering defendants to execute those docu-
ments of assignment necessary to transfer to plaintiff the Montana
beer and liquor licenses used upon the leased premises; costs of
suit and reasonable attorney fees as provided for in the lease
agreement. Defendants filed their answer on September 27, 1976,
generally denying plaintiff's allegations and setting forth their
counterclaim seeking an order declaring defendants had not breached
the lease agreement; an order declaring that possession of the prem-
ises remain with defendants; and judgment in favor of defendants
awarding $5,000 for actual damages, $5,000 for punitive damages and
reasonable attorney fees.
The matter of the breach of the lease agreement was heard
by the District Court on October 5, 1976. On October 13, 1976, the
District Court issued its findings of fact and conclusions of law
holding defendants had breached their lease with plaintiff entitling
plaintiff to termination of the lease, ejectment of defendants and
restitution of the premises in plaintiff; plaintiff had not breached
the covenant of peaceful and quiet possession; and plaintiff was
entitled to dismissal of defendants1 counterclaim. Plaintiff was
awarded the sum of $678 as rent due in the month of August, this
sum having been paid into the court registry subsequent to the
notice of default and termination of the lease agreement; rent in
the sum of $678 per month for the months of September and October
as damages for defendants' willful holding over after expiration
of the lease term, the remaining sum of $678 which had been paid
into the court registry as rent for September to be allocated toward
the total sum due; statutory penal damages in the sum of three times
the rent due and owing for the months of September and October; spe-
cific performance of the lease provision ordering defendants to
execute those documents of assignment necessary to transfer back
to plaintiff the Montana beer and liquor licenses used on the leased
premises; costs, disbursements and reasonable attorney fees.
Judgment, decree and order of the District Court was entered on
October 15, 1976. Reasonable attorney fees were assessed in the
sum of $1,500. Notice of entry of judgment was filed on October 18,
1976.
A writ of restitution was executed on October 18, 1976, and
the sheriff of Gallatin County placed a padlock on the front door
of the Korner Klub on the morning of October 19, 1976. Defendants'
filed a motion to stay execution of judgment. The District Court
granted the motion for stay order pending the disposition of defend-
ants' motion to amend and make additional findings of fact and con-
clusions of law and motion for new trial. In accordance, the sheriff
removed the padlock from the Korner Klub in the afternoon of October
19, 1976. On October 20, 1976, plaintiff filed a motion to vacate
stay or, in the alternative, for security on the grounds plaintiff
would suffer irreparable harm if execution of judgment was stayed
without the posting of adequate security by defendants.
On October 25, 1976, the District Court conducted a hearing
on plaintiff's motion to vacate stay or, in the alternative, for
security. On November 1, 1976, the District Court conducted a
hearing on defendants' motion to amend and make additional findings
of fact and conclusions of law and motion for new trial. The matter
was deemed submitted to the court and taken under advisement. Sub-
sequently, on November 8, 1976, plaintiff filed a motion to dismiss
or, in the alternative, to strike defendants' motion for new trial.
On November 15, 1976, plaintiff filed a motion for additional security
and for restraining order, with supporting affidavit, on the grounds
defendants were removing and disposing of movable items of property
situate on the Korner Klub premises during the pendency of the stay
order and defendants had abandoned the premiese on or about November
10, 1976.
On November 15, 1976, the District Court issued an order
to show cause and restraining order compelling defendants to appear
and show cause why the relief prayed for in plaintiff's motion for
additional security and restraining order should not be entered
against defendants. The District Court further ordered defendants
be restrained from removing or disposing of any property situate on
the Korner Klub premises or from taking any other action which might
injure plaintiff's revestiture interest. On November 17, 1976, the
District Court issued its order denying defendants' motion to amend
and make additional findings of fact and conclusions of law and
motion for new trial.
Hearing on the District Court's order to show cause and
restraining order was held on November 22, 1976. The matter was
deemed submitted to the court and taken under advisement. On
December 6, 1976, the court issued an order vacating its previous
order of October 19, 1976, staying execution of judgment; enjoined
defendants to deliver immediate possession of the premises to plain-
tiff; and continued for further hearing, upon a date to be set by
the court, the matter of damages sustained by plaintiff during the
pendency of the stay order. Writ of Restitution was issued on
December 6, 1976. Notice of appeal was filed in the District Court
on December 16, 1976. Pursuant to Rule 6(a), M.R.App.Civ.P., defend-
ants have posted $500 for costs on appeal. No supersedeas bond
has been posted.
Four issues are presented for review:
1. Whether there is sufficient evidence to sustain the
District Court's finding that defendants are guilty of unlawful
detainer?
2. Whether there is sufficient evidence to sustain the
District Court's award of monetary damages to plaintiff?
3. Whether the District Court erred in denying defendants'
motion to amend and make additional findings of fact and conclusions
of law and motion for new trial?
4. Whether the District Court, sitting as a court of equity,
erred in failing to grant defendants relief from forfeiture under
the lease agreement?
A resolution of Issues 1 and 2 is found in an examination of
the legal remedies available to the plaintiff/lessor. Plaintiff's
complaint sought termination of the lease agreement and forfeiture
on the ground of breach of lease. Defendants filed an answer
generally denying plaintiff's allegations and counterclaimed alleging
plaintiff breached the lease agreement's covenant of peaceful and
Court,
quiet- possession. The District/ in its findings of fact and con-
clusions of law filed October 13, 1976, held defendants in default
of the lease agreement relating back to August 10, 1976, because
of defendants':
" * * * failure (1) to pay the monthly rental when
due, (2) to comply with the covenants and provisions
of the lease concerning compliance with the laws of
the state of Montana, and (3) to comply with the
lease term requiring their purchase of a liability
insurance policy."
The District Court concluded as a matter of law:
"Defendants have breached their lease with Plain-
tiff entitling Plaintiff to a termination of the
lease, and ejectment of Defendants and restitution
of the premises in Plaintiff."
The District Court then went on to assess damages, including:
" * * * statutory penal damages in the sum of
three times the rent due and owing for the months
of September and October, 1976."
The critical distinction presented in the instant fact
situation is that unlawful detainer and statutory treble damages
awarded pursuant to a finding of unlawful detainer, are not viable
remedies available to a plaintiff/lessor until either expiration
of the lease term with a finding of lessees wrongful holding over
or termination of the lease agreement and forfeiture are established
by judicial proceedings. This last requirement was not accomplished
until the District Court issued its findings of fact and conclusions
of law, and judgment, and notice of entry of judgment was filed,
with execution on the judgment following. Upon such events occur-
ing, an action for unlawful detainer would arise if defendants failed
to relinguish possession of the leased premises.
Prior to a finding that the lease is terminated, defendants
remain liable for unpaid rent, pursuant to the lease agreement.
After the lease is terminated by judicial proceedings, what survives
is a liability, not for rent, but for damages to the lessor. Sanders
v. Kahn (1957), (D.C. Mun. App.) 134 A.2d 107; Hermitage Co. v.
Levine (1928), 248 N.Y. 333, 162 N.E. 97, 59 A.L.R. 1015; 50 Am Jur 2d,
Landlord and Tenant, § 1224. It is these damages, found to exist
after expiration of the lease term or after termination of the lease
agreement, and a finding of unlawful detainer, which may be trebled.
See: Section 93-6105 and 93-9715, R.C.M. 1947.
We hold the District Court erred when it awarded treble
damages in the instant case. Notice of entry of judgment was filed
on October 18, 1976. The District Court's order staying execution
of judgment was issued on October 19, 1976 and remained in effect
until December 6, 1976. Since plaintiff was restrained from executing
on the District Court's judgment, which terminated the lease agree-
ment, until December 6, 1976, plaintiff is entitled to rents under
the lease agreement for the period August 1, 1976 through December 6,
1976. Plaintiff is further entitled to a hearing in the District
Court to determine any damages sustained by plaintiff during the
pendency of the stay order, such damages to be determined by the
District Court upon remand from this Court.
Defendants contend, and we agree, the District Court erred
when it awarded plaintiff $1,500 in attorney fees after plaintiff's
counsel submitted to the District Court an affidavit representing
plaintiff's claim for attorney fees in the amount of $1,057. This
Court has set forth the criteria to be followed in awarding attorney
fees. First Security Bank of Bozeman v. Tholkes (1976), Mont.
, 547 P.2d 1328, 33 St.Rep. 341; Crncevich v. Georgetown
Recreation Corp. (1975), 168 Mont. 113, 541 P.2d 56; Forrester &
MacGinniss v. B & M. Co. (19041, 29 Mont. 397, 74 P. 1088.
Defendants' Issue 3 challenges the District Court's denial
of their motion to amend and make additional findings of fact and
conclusions of law, and motion for new trial. We are in agreement
defendants' motion to amend should have been granted to the extent
of excluding from the findings of fact and conclusions of law, and
judgment any treble damages based upon unlawful detainer, consistent
with this opinion. However, defendants' motion for new trial was
properly denied.
A motion for new trial is controlled by Rules 7 ( b ) (1) and
59, M.R.Civ.P., and section 93-5602, 93-5603, and 93-5604, R.C.M.
1947. Rule 7 (b)(1), M. R.Civ.P., requires that the grounds for any
motion, including a motion for new trial, be stated with particu-
larity. Rule 59, M.R.Civ.P., provides a "motion for new trial shall
state with particularity the grounds therefor, it not being suffi-
cient merely to set forth the statutory grounds." Defendants'
motion for new trial was inadequate and defective in its essential
elements because it merely recited the statutory language of sec-
tion 93-5603, R.C.M. 1947, without stating with particularity the
precise facts or circumstances being relied upon in support of
their motion. Defendants neither filed an affidavit or memorandum
in support of the motion for new trial nor provided this Court with
a transcribed record of the hearing on the motion for new trial in
the District Court. Halsey v. Uithof (1975), 166 Mont. 319, 532
P.2d 686; Kdrtello v. Darlow and Lovely (1968), 151 Mont. 232, 441
P.2d 175.
Defendants' Issue 4 attacks the District Court's failure to
relieve defendants from forfeiture under the lease agreement. The
only applicable authority cited by defendants for the proposition
a lessee may be relieved from a forfeiture under a lease agreement
is Gamble-Skogmo, Inc. v. McNair Realty Co. (1951), 98 F.Supp. 440.
Gamble-Skogmo held that a lessee may be relieved from a forfeiture
resulting from default in the payment of rent when the lessee tenders
the rent due plus interest and costs before execution of the judg-
ment for possession, provided this is done while the tenant is in
lawful possession under the lease agreement.
In the instant case, defendants tendered late rent payments
to the District Court for the months of August and September, 1976.
However, neither interest nor plaintiff's costs were tendered. The
grounds for termination of the lease agreementwerenot limited to
the failure to pay rent. The additional grounds of failure to comply
with state laws and failure to procure liability insurance in com-
pliance with a covenant of the lease agreement were plead and proved
by plaintiff. At the time the District Court rendered judgment
some of the alleged violations had not been remedied.
Upon these findings and the fact defendants abandoned the
lease premises, executed instruments transferring the Montana beer
and liquor licenses back to plaintiff, and the premises being re-let,
we hold the District Court did not err when it denied defendants
relief from forfeiture under the lease agreement.
The findings of fact and conclusions of law and judgment of
the District Court are reversed in part as to an award of treble
damages, discussed herein, as well as the attorney fees. The cause
is remanded to the District Court for hearing on the matter of
damages sustained by plaintiff during pendency of the stay order
and attorney fees, consistent with this Opinion.
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Justice
W e Concur:
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Chief J u s t i c e