Kosena v. Eck

                                 No. 80-205

               IN THE SUPREME COURT OF THE STATE OF MONTANA
                                     1981




BRUCE A. KOSENA, d/b/a THE PUB,
                        Plaintiff and Appellant,



NORMAN E. ECK, TRUSTEE OF
JOHN A. ECK, TRUST,
                        Defendants and Respondents.




Appeal from:    District Court of the First Judicial District,
                In and for the County of Lewis & Clark, The
                Honorable H. William Coder, Judge presiding,

Counsel of Record:
      For Appellant:
               Robert T. Cumrnins, Helena, Montana
               Charles A. Smith, Helena, Montana

     For Respondent:
               Jackson, Oitzinger     &   Pflurdo,Helena, Montana




                                  Submitted on Briefs:     April 15, 1981
                                                Decided:   October 29, 1951


Filed: OCT   2 9 1981
Mr. J u s t i c e D a n i e l J .         Shea d e l i v e r e d      the        Opinion       of     the
Court.

            P l a i n t i f f a p p e a l s , and d e f e n d a n t s c r o s s - a p p e a l ,      from

a judgment e n t e r e d i n Lewis and C l a r k County D i s t r i c t C o u r t
declaring           the    rights      of    the     plaintiff          as       tenant       and    the
defendants a s landlords.
            The t r i a l c o u r t r u l e d i n f a v o r o f t e n a n t t h a t a v a l i d

l e a s e agreement e x i s t e d , t h a t t h e r e n t a l due under t h e l e a s e

was     $650      per      month,      and       that    landlords           must       pay       tenant
$5,000       as     their       share       of    the     costs       of     repairs          made    by
tenant.         The t r i a l c o u r t       ruled i n favor of                 landlords that
tenant       did     not       have   a     v a l i d mechanics'            lien      for     repairs
w h i c h h e had c o m p l e t e d on t h e p r e m i s e s ,          and t h a t t h e l a n d -

l o r d s were e n t i t l e d t o p r e j u d g m e n t         i n t e r e s t on t h e r e n t a l
payments.           The t r i a l c o u r t f u r t h e r r u l e d t h a t b o t h p a r t i e s
m u s t b e a r t h e i r own c o s t s and a t t o r n e y f e e s .
            W e a f f i r m t h e f i r s t two r u l i n g s a s t o t h e e x i s t e n c e

of    t h e l e a s e a g r e e m e n t and t h e amount t o be paid--$650                           per
month.       W remand t o t h e t r i a l c o u r t f o r f u r t h e r f i n d i n g s a s
              e

to    the      amount          awarded      to     tenant       to    compensate            him      for

repairs        to    the       premises.           We    reverse           the    trial       court's
ruling       that         no    mechanics'          lien       existed,           the     award       of
p r e j u d g m e n t i n t e r e s t , and t h e o r d e r t h a t e a c h s i d e b e a r i t s

own c o s t s a n d a t t o r n e y f e e s .
            On F e b r u a r y 29, 1 9 6 8 , J. A . E c k and M a r i e A. E c k , t h e

p a r e n t s and p r e d e c e s s o r s o f t h e l a n d l o r d s , l e a s e d a p o r t i o n
of    a Helena b u s i n e s s          building         to    Reginald          L.     Brewer       and
W i l l i a m 0 . Bahny.         The o t h e r p o r t i o n o f t h i s b u i l d i n g , known
a s "Howard's P i z z a , " was e x p r e s s l y e x c e p t e d from t h e l e a s e
agreement.           The l e a s e a g r e e m e n t had a p r i m a r y t e r m o f f i v e

y e a r s w i t h a n o p t i o n t o renew f o r f i v e a d d i t i o n a l y e a r s .             It
f u r t h e r p r o v i d e d f o r a r e n t a l r a t e o f $275 p e r month, t o b e

a d j u s t e d by any i n c r e a s e i n t a x e s on t h e p r e m i s e s a b o v e t h e
1967 t a x e s .        The l e a s e d p r e m i s e s ,       known a s "The P u b , "            was

o p e r a t e d a s a b a r by Brewer and Bahny.                        The l e a s e a g r e e m e n t
r e q u i r e d t h a t an a s s i g nm e n t o f t h e l e a s e be s u b j e c t t o t h e
w r i t t e n consent of t h e l a n d l o r d s .             On A p r i l 24, 1 9 6 8 , o n e o f
the original tenants,                     Bahny,       s o l d h i s one-half         interest in
"The Pub" t o B r u c e A.               Kosena, t h e t e n a n t i n v o l v e d h e r e .         As

part     of     this      agreement              the     tenant        obtained        a    written

a s s i g n m e n t o f l e a s e f r o m Bahny, a s w e l l a s a w r i t t e n c o n s e n t
t o a s s i g n m e n t of l e a s e from t h e l a n d l o r d s .
            The      tenant        and Brewer           continued        to jointly         operate
"The     Pub"      until       January           15,     1971,     when      Brewer        sold     his

interest        in      "The       Pub"     to    the        tenant,     and    so    the     tenant

became t h e s o l e p r o p r i e t o r and l e s s e e .              The w r i t t e n c o n s e n t
of    the     landlords            was    not o b t a i n e d f o r t h i s t r a n s a c t i o n .
However,          the     tenant          made         the    rent     payments,           and     the
l a n d l o r d s a c c e p t e d t h e payments w i t h o u t o b j e c t i o n .         Sometime
i n 1 9 7 2 , t h a t p a r t o f t h e b u i l d i n g known a s " H o w a r d ' s P i z z a "

was t a k e n o v e r by t h e t e n a n t and made a p a r t of "The P u b . "
The    tenant         and      landlords          verbally         agreed        to    make        this

additional           area      a    part         of     the     leased      premises         and     to
i n c r e a s e t h e r e n t a l t o $500 p e r month.                The t e n a n t c o n t i n u e d
t o o p e r a t e "The Pub" w i t h o u t f u r t h e r p r o b l e m s u n t i l J a n u a r y
1 9 7 4 , when t h e b u i l d i n g was s u b s t a n t i a l l y d e s t r o y e d by f i r e .

The l e a s e a g r e e m e n t c o n t a i n e d a f i r e c l a u s e , which s t a t e d i n
part:
            "AND PROVIDED, ALSO t h a t i n c a s e t h e b u i l d i n g
            on s a i d demised p r e m i s e s , o r any p a r t
            t h e r e o f , s h a l l d u r i n g s a i d t e r m be d e s t r o y e d
            o r d a m a g e d by f i r e o r o t h e r u n a v o i d a b l e
            c a s u a l t y , s o t h a t t h e same s h a l l be u n f i t f o r
            use, then s a i d r e n t or proportionate p a r t
           t h e r e o f s h a l l be a b a t e d u n t i l s a i d p r e m i s e s
           s h a l l h a v e b e e n p u t i n p r o p e r r e p a i r by t h e
           L e s s o r s , o r t h i s l e a s e s h a l l have been
           determined, a t t h e i r election."
           After      the     fire,       the tenant        found o t h e r         employment,
and    considered          relocating         h i s business.               I n June or       July
1 9 7 4 , a p p r o x i m a t e l y s i x months a f t e r       the        fire,    n o t having

found     a place          t o relocate,           the tenant discussed with                    the
landlords           the     possibility             of     restoring           the       original

building.           The l a n d l o r d s e l e c t e d t o r e s t o r e t h e b u i l d i n g ,
and t h e t e n a n t v e r b a l l y a g r e e d t o r e s t o r e o r r e i n s t a l l t h e
things necessary t o operate h i s business.                                The r e p a i r s w e r e
completed,          and    the    tenant       reopened         "The Pub"           i n November

1974.       The p a r t i e s had a l s o v e r b a l l y a g r e e d t h a t t h e r e n t
r e m a i n a t $500 p e r month i n November and December 1 9 7 4 , b u t

t o be i n c r e a s e d     t o $650 i n J a n u a r y 1 9 7 5 .            The t e n a n t p a i d
t h e s e amounts and t h e l a n d l o r d s a c c e p t e d them a s t h e y became
due.      However,         i n e a r l y January 1975, t h e l a n d l o r d s advised
tenant that,          commencing i n F e b r u a r y 1 9 7 5 , t h e m o n t h l y r e n t
would i n c r e a s e t o $ 1 , 1 7 5 .      This s t a r t e d the dispute.

           The      tenant       refused      to    pay    the    $1,175           and   filed     a
mechanics'          lien      against        the     premises          in     the    amount      of
$ 7 4 , 0 0 0 , a l l e g e d l y t o r e c o v e r t h e l a b o r and m a t e r i a l s h e had

expended       in     restoring        the      premises        after        the     fire.        In
F e b r u a r y 1 9 7 5 , t h e t e n a n t t e n d e r e d a c h e c k f o r $650 w h i c h
was r e f u s e d by t h e l a n d l o r d s , who s t i l l demanded $ 1 , 1 7 5 p e r

month.       The t e n a n t      then f i l e d a lawsuit              t o determine t h e
e x i s t e n c e and t e r m s of        t h e l e a s e and t o a l s o f o r e c l o s e o n
t h e mechanics'          lien.      The t e n a n t c o n t i n u e d t o p a y $650 p e r
month     into court          and     he o b t a i n e d    a    temporary          restraining
order t o prevent h i s eviction.
           T r i a l was h e l d on F e b r u a r y 1 6 and 1 7 ,                1 9 7 8 , and o n
A p r i l 26,    1 9 7 8 , t h e t r i a l c o u r t i s s u e d a n o r d e r f r o m which

t h i s appeal is taken.

           B e c a u s e o n e r u l i n g d e p e n d s on t h e o t h e r , we d i s c u s s

the issues i n the following order.                             First,         t h e v a l i d i t y of

t h e l e a s e agreement; second, t h e l e g a l i t y of t h e l a n d l o r d s '

demand i n c r e a s i n g r e n t t o $ 1 , 1 7 5 p e r month f r o m $650; t h i r d ,

t h e award o f i n t e r e s t t o t h e l a n d l o r d s o n e a c h $650 payment

t h e t e n a n t h a s been v o l u n t a r i l y d e p o s i t i n g i n c o u r t s i n c e he

filed     the lawsuit;            fourth,       the validity              of    t h e mechanics'

l i e n f i l e d by t h e t e n a n t ;     f i f t h , t h e award o f $ 5 , 0 0 0 t o t h e

t e n a n t a s compensation f o r r e p a i r s ;              s i x t h and f i n a l l y ,     the

t r i a l c o u r t ' s r u l i n g s on a t t o r n e y f e e s .



VALIDITY OF LEASE AGREEMENT

           The l a n d l o r d s c o n t e n d t h a t t h e t r i a l c o u r t e r r e d i n

not holding           that     the    l e a s e was      terminated            a s a matter         of

law.         This       contention            is     based          in    part      on     section

70-1-607(4),             MCA,      which        states         in    part:        "When h i r i n g

terminates.           The h i r i n g o f a t h i n g t e r m i n a t e s :        . . .      ( 4 ) by

t h e d e s t r u c t i o n of t h e t h i n g h i r e d . "

           T h i s s t a t u t e p r o v i d e s , d i s j u n c t i v e l y , s e v e r a l ways by

which     hiring       can      terminate.           However,            the    landlords        urge

t h a t s u b s e c t i o n ( 4 ) be a p p l i e d e x c l u s i v e l y t o t e r m i n a t e t h e

l e a s e agreement.            I n S o l i c h v.     H a l e ( 1 9 6 7 ) , 1 5 0 Mont.         358,

435 P . 2d 8 8 3 , i n t e r p r e t i n g t h e p r e d e c e s s o r o f s e c t i o n 70-1-

6 0 7 , MCA, t h i s C o u r t s t a t e d :

           "If        it is found t h a t t h e b u i l d i n g i s
           d e s t r o y e d , by o p e r a t i o n o f law t h e l e a s e
           would -be t e r m i n a t e d .          Only an agreement t o
           t h e c o n t r a r y b e t w e e n t h e two p a r t i e s c o u l d
           prevent t h e a c t i o n of t h i s s t a t u t e [section
           70-1-607,           MCA]    ."     1 5 0 Mont. a t 361-362.
           (Emphasis added.)
           Here,       the      lease       agreement       does    contain           an    express

a g r e e m e n t t o t h e c o n t r a r y which p r e c l u d e s t h e o p e r a t i o n o f

s e c t i o n 70-1-607,         MCA.

           The     landlords           a l s o contend      that    the       original        lease

had    been      "so    long      abandoned,         disregarded,          and      repudiated"

that      i t was      void      and     ineffective        before       the     time        of    the

fire.       T h i s c o n t e n t i o n i s a p p a r e n t l y b a s e d on t h e f o l l o w i n g

allegations:

           (1) T h a t t h e t e n a n t f a i l e d t o o b t a i n t h e
           w r i t t e n consent t o t h e assignment of l e a s e
           f r o m t h e l a n d l o r d s when t h e t e n a n t b o u g h t o u t
           Brewer's one-half               i n t e r e s t i n "The Pub" o n
           J a n u a r y 15, 1971.

           ( 2 ) T h a t t h e p a r t i e s , by v e r b a l l y m o d i f y i n g
           t h e l e a s e agreement, i n v a l i d a t e d t h e e n t i r e
           lease.

           ( 3 ) Finally, t h a t the tenant did not properly
           e x e r c i s e h i s option t o extend t h e l e a s e term
           when t h e p r i m a r y t e r m e x p i r e d i n 1 9 7 3 .

           These       contentions a r e supported                  neither         by      the    law

n o r by t h e f a c t s .       I n t h e i r b r i e f , counsel for the landlords

f a i l s t o c i t e any l e g a l a u t h o r i t y t o s u p p o r t t h e t h e o r y t h a t

the     written         consent         of    the     landlords          is      an        absolute

prerequisite           t o a v a l i d a s s i g n m e n t of t h e l e a s e .            In fact,

t h e g r e a t weight of a u t h o r i t y is t o t h e c o n t r a r y .                 First,    a

restriction            imposed          in    a     lease     agreement             against         an

assignment of            t h e l e a s e is a        restraint       against          alienation

and     is n o t     looked       upon       with    favor     by    the      courts.             Such

restrictions            are      to    be    construed        strictly           against          the

lessor.         Gazlay v .        Williams          (6th Cir.       1 9 0 6 ) , 1 4 7 F.          678,

aff 'd,    210 U.S.        41, 28 S . C t .       687,    52 L.Ed.       950.         Such t e r m s

must be g i v e n a l i m i t e d e f f e c t .          Here, t h e l e a s e agreement,

d a t e d F e b r u a r y 29,    1 9 6 8 , and s i g n e d by t h e p r e d e c e s s o r s o f

b o t h t h e t e n a n t and l a n d l o r d s , s t a t e s a s f o l l o w s :
             "The L e s s e e s a g r e e n o t t o s u b l e a s e o r a s s i g n
             a l l o r any p a r t o f t h e d e m i s e d p r e m i s e s
             d u r i n g t h e term of t h i s l e a s e without f i r s t
             o b t a i n i n g t h e w r i t t e n c o n s e n t of t h e L e s s o r s
             thereto."           ( S e e page 5 of l e a s e a g r e e m e n t . )

             In     April          1968,      the     predecessors             of      the     landlords
consented i n w r i t i n g t o Bahny's assignment of                                   his interest
in     the     lease          to     the      tenant.            The        landlords'         argument,
however,          centers          on    the    later        departure          of      the     tenant's
co-lessee,          B r e w e r , on J a n u a r y 1 5 , 1 9 7 1 , when t h e t e n a n t t o o k
over t h e s o l e o p e r a t i o n of t h e leased premises.
             The t e n a n t had no l e g a l d u t y t o o b t a i n t h e l a n d l o r d s '
w r i t t e n c o n s e n t t o h i s agreement w i t h Brewer.                              The n a r r o w
i n t e r p r e t a t i o n demanded o f             such r e s t r i c t i o n s p r o h i b i t s t h e
application             of    the       provision          to    a     subsequent         assignment.
Lipsker        v.    B i l l i n g s Boot Shop ( 1 9 5 5 ) , 1 2 9 Mont.                       420,    288
P.2d     660.            In        Lipsker,         this        Court       declared         that,    "The

landlord's consent t o the                          [ o r i g i n a l ] a s s i g n m e n t of a l e a s e
obviates          the        necessity         of     consent          to     subsequent         assign-
ments."           1 2 9 Mont. a t 427.
             The r e c o r d a l s o r e v e a l s t h a t t h e l a n d l o r d s knew t h a t

t h e t e n a n t had become t h e s o l e p r o p r i e t o r                      and l e s s e e l o n g
before t h i s dispute arose.                        And, t h e l a n d l o r d s c o n t i n u e d t o

r e c e i v e r e n t a l payments from t h e t e n a n t f o r a t l e a s t f o u r
y e a r s and n e v e r o b j e c t e d t o t h e a s s i g n m e n t .                The l a n d l o r d s
have      long       waived             any    right        to       assert         breach       of    the

restriction.             Crossman v . F o n t a i n b l e a u H o t e l C o r p . ( 5 t h C i r .

1 9 5 9 ) , 273 F.2d 720.
             The     landlords'               counsel        has       also     ignored          section
28-2-1602,          MCA,       which e x p r e s s l y s a n c t i o n s v e r b a l m o d i f i c a -
t i o n of w r i t t e n c o n t r a c t s ,         i n c l u d i n g , of course,           a written
lease.         R o d g e r s v . S a u n d e r s ( 1 9 6 4 ) , 1 4 4 Mont.             424, 396 P.2d
817.         Here, t h e executed v e r b a l agreements t o i n c r e a s e t h e
r e n t a l p a y m e n t s and t o expand t h e l e a s e d p r e m i s e s , m o d i f i e d
t h e l e a s e agreement.

             Finally,         w e hold t h a t         the tenant validly exercised
h i s o p t i o n t o renew t h e l e a s e when t h e o r i g i n a l t e r m e x p i r e d
i n 1973.          The a g r e e m e n t d o e s n o t r e q u i r e t h a t s u c h a n o p t i o n

m u s t be e x e r c i s e d by w r i t t e n n o t i c e t o t h e l a n d l o r d s .              The
o p t i o n may be e x e r c i s e d v e r b a l l y o r e v e n by c o n d u c t o f t h e
parties         which       exhibits          a     clear      intent         to    exercise         the

option,        F l i n t v.      Mincoff          ( 1 9 6 0 ) , 1 3 7 Mont.        549,        353 P.2d
340,     a     question         of    fact        to   be   determined             by   all     of   the
circumstances.                Fun P r o d u c t s D i s t r i b u t o r s ,    Inc.       v.    Martens
(Alaska         1977),        559      P.2d        1054.          Here,       the       trial     court
correctly ruled               that      the tenant          effectively exercised                    his
option        to     renew.          Considering            the    substantial             amount o f

l a b o r and m a t e r i a l s p r o v i d e d by t h e t e n a n t a f t e r t h e f i r e ,
all    with        the    knowledge           and      consent      of    the       landlords,        it

would be l u d i c r o u s t o i n f e r t h a t t h e p a r t i e s b e l i e v e d t h a t

the    primary           lease       term     had      expired      and       that       tenant      had
become        o n l y a month-to-month                  tenant.          The       tenant       clearly

demonstrated h i s i n t e n t t o e x e r c i s e t h e option.
             W hold, t h e r e f o r e , t h a t t h e o r i g i n a l l e a s e agreement
              e

o f F e b r u a r y 1 9 6 8 was s t i l l v a l i d and i n e f f e c t a t a l l times
relevant t o t h i s case,                  until      t h e e x p i r a t i o n of       the option

t e r m i n 1 9 7 8 , s u b j e c t t o t h e v e r b a l m o d i f i c a t i o n s made by
the parties.


THE LANDLORDS' DEMAND FOR $ 1 , 1 7 5 P E R MONTH RENTAL

             Our d e c i s i o n d e c l a r i n g t h a t t h e l e a s e a g r e e m e n t was
v a l i d a n d e f f e c t i v e d i s p o s e s a l s o t h e l a n d l o r d s ' demand t h a t
t h e r e n t be i n c r e a s e d t o $ 1 , 1 7 5 p e r month.         The t e n a n t a t no

t i m e c o n s e n t e d t o r a i s e t h e m o n t h l y r e n t a l beyond $650, and

t h e r e f o r e t h e l a n d l o r d s had no r i g h t t o i n c r e a s e t h e r e n t t o
$ 1 , 1 7 5 p e r month.           The t e r m s of t h e l e a s e ,      a s m o d i f i e d by
t h e p a r t i e s , had s e t t h e r e n t a l p a y m e n t s a t $650 p e r month.


T R I A L COURT'S AWARD OF INTEREST

           The t r i a l c o u r t awarded t h e l a n d l o r d s i n t e r e s t on t h e

r e n t a l p a y m e n t s " a t t h e r a t e o f 6 p e r c e n t p e r annum f r o m t h e
d u e d a t e o f e a c h payment a s r e n t on t h e p r e m i s e s . "               Essen-

tially,       the     trial        court      determined         that    interest        should
a c c r u e a s of t h e t i m e t h a t e a c h r e n t a l payment became d u e .
The     record        clearly            shows    that      in   February         1975,       the
l a n d l o r d s r e f u s e d t o a c c e p t t h e $650 m o n t h l y r e n t payment
t e n d e r e d by t h e t e n a n t .     The t e n a n t t h e n f i l e d a l a w s u i t and
t e n d e r e d t h e $650 m o n t h l y p a y m e n t s    into court.            He   had no

o t h e r c h o i c e , a s t h e l a n d l o r d s p r e v e n t e d him f r o m p a y i n g h i s
debt     as     it    came      due.          Section       27-1-211,        MCA,       clearly

r e l e a s e s t h e t e n a n t from any o b l i g a t i o n t o pay i n t e r e s t :

           "27-1-211.            Right t o i n t e r e s t .     Every person
           who i s e n t i t l e d t o r e c o v e r damages c e r t a i n o r
           c a p a b l e o f b e i n g made c e r t a i n by c a l c u l a t i o n
           and t h e r i g h t t o r e c o v e r w h i c h i s v e s t e d i n
           him upon a p a r t i c u l a r d a y i s e n t i t l e d a l s o t o
           r e c o v e r i n t e r e s t t h e r e o n from t h a t day e x c e p t
           d u r i n g such time a s                                prevented
           b y ------ r by t h e a c t o f t h e c r e d i t o r f r o m
           -      law o
           paying t h e debt."               (Emphasis added.)

           B e c a u s e t h e l a n d l o r d s were e n t i t l e d t o no more t h a n
$650 p e r      month,        it    was     their     own    refusal       to    accept       the
tendered        payment,        which       resulted        in   the    tenant       filing      a
l a w s u i t and p r e v e n t e d them f r o m r e c e i v i n g e a c h payment a s i t
became d u e .        By any s t a n d a r d s , t h e c o n d u c t of t h e l a n d l o r d s

p r e v e n t e d t h e t e n a n t from making t h e r e q u i r e d p a y m e n t s .       The
t e n a n t s h o u l d n o t be p e n a l i z e d f o r a t t e m p t i n g t o comply w i t h

t h e terms of          t h e l e a s e agreement,           nor should t h e l a n d l o r d s
be     rewarded         for     unjustifiably             refusing         to     accept      the
payments.         The o r d e r a l l o w i n g i n t e r e s t i s r e v e r s e d .


THE V A L I D I T Y OF PLAINTIFF'S MECHANICS' L I E N
           Upon t h e i r      election to repair,                 t h e l a n d l o r d s became
bound     under        the    lease     agreement         to      make    such     repairs      as

necessary t o provide                the tenant with s u i t a b l e premises t o
operate his            business.          The      landlords        willfully           abrogated
t h e i r d u t y u n d e r t h i s c o n t r a c t when t h e y r e f u s e d t o c o m p l e t e
the repairs.            T h i s r e f u s a l compelled t h e t e n a n t t o complete

the r e p a i r s himself,           and h e d i d s o w i t h t h e knowledge and
consent of t h e l a n d l o r d s .          These f a c t s e s t a b l i s h an i m p l i e d

contract         between       the      parties.             An    implied       contract       is

s u f f i c i e n t t o support a v a l i d mechanics' l i e n .                 M & R Const.

Co. v . S h e a ( 1 9 7 9 ) ,    - Mont .                ,   589 P.2d 1 3 8 , 36 S t . R e p .
37.    (See a l s o cases c i t e d t h e r e i n . )             T h i s Court has noted

that    a mechanics'            lien      ". . .        is a      c r e a t u r e of     statute,
remedial         in     nature,       with      its     foundation          in    equity      and
natural justice,              not contract."            Beck v . Hanson ( 1 9 7 8 ) ,         -
Mont.            ,    589 P.2d 1 4 1 , 1 4 4 .        The e q u i t i e s w e r e c l e a r l y i n
favor of t h e t e n a n t .
           The        landlords      willfully         breached          their     promise      to
repair,      and t h e y w e r e f u l l y a w a r e t h a t t h e t e n a n t was t h e n

compelled        to        complete     the     work.          After      the     tenant      had
completed            the     repairs,        the      landlords          then     attempted,
contrary t o t h e terms of the l e a s e , t o d r a s t i c a l l y increase
t h e r e n t a l payments.           T h a t c a n h a r d l y be c l a s s i f i e d a s f a i r
dealing.
             I n denying        t h e mechanics'              lien,         however,       the    trial

court     relied        on a       clause      in    the      l e a s e which        required       the

tenant t o          "pay and d i s c h a r g e " a n y l i e n s f i l e d a g a i n s t t h e

premises.           That clause required t h e tenant:

             "1. To p a y a n d d i s c h a r g e p r o m p t l y , a l l l i e n s
             and o b l i g a t i o n s o f any n a t u r e and kind
             w h a t s o e v e r which may a t t a c h t o o r be imposed
             upon s a i d p r e m i s e s , o r t o s a i d l e a s e h o l d ,
             c r e a t e d o r i n c u r r e d by s a i d Lessees, t o p a y
             a l l r e a s o n a b l e c o s t s , a t t o r n e y ' s f e e and
             e x p e n s e s t h a t s h a l l be made a n d - o c c u r r e d by
             t h e L e s s o r s i n e n f o r c i n g t h e c o v e n a n t s of t h e
             agreements i n t h i s l e a s e . "           (Emphasis added.)

             The c l e a r    i n t e n t of    t h i s c l a u s e is t o p r o h i b i t          the

t e n a n t from h a v i n g work d o n e which would                         result       in a lien

filed     against the premises,                     or    t o pay t h e l i e n s i f            filed.

But    here      i t was      the     l a n d l o r d s who       initiated          the    repairs.

The l a n d l o r d s , by e l e c t i n g t o r e p a i r t h e p r e m i s e s a f t e r t h e

fire,     " c r e a t e d o r incurred" t h e o b l i g a t i o n t o complete such

repairs.            The t e n a n t was c o m p e l l e d t o do t h e work when t h e

l a n d l o r d s f a i l e d t o complete it a f t e r e l e c t i n g t o r e p a i r t h e

p r e m i s e s under t h e f i r e c l a u s e i n t h e l e a s e .

             The t r i a l c o u r t a l s o n o t e d s e v e r a l a l l e g e d t e c h n i c a l

defects        in     t h e mechanics'         lien.            Specifically,              the    trial

c o u r t r e f e r r e d t o t h e f a c t t h a t t h e l i e n was f i l e d by " B r u c e

A.     Kosena"        whereas        this      action         was       filed       by     "Bruce    A.

Kosena,         d/b/a        The    Pub."           This        is      an        inconsequential

technical            discrepancy,           and          it   w i l l       not    invalidate        an

otherwise valid l i e n .              The l i e n s t a t u t e m u s t be i n t e r p r e t e d

l i b e r a l l y t o p r o t e c t t h e r i g h t of t h e l i e n .            Morrison-Maierle

Inc.    v.     Selsco        (1980),     -        Mont.                 ,    606 P.2d       1085,    37

St.Rep.       299; F a u s e t t v . B l a n c h a r d ( 1 9 6 9 ) , 1 5 4 Mont.            301, 463

P.2d     319.         Furthermore,          the      fact       that        some    of     the    items

c l a i m e d i n t h e l i e n may n o t be l i e n a b l e d o e s n o t i n v a l i d a t e
the entire lien.                Smith v.         Gunniss        ( 1 9 4 4 ) , 1 1 5 Mont.        362,

144     P.2d      186;     Caird      Engineering           Works       v.       Seven-Up        Gold

Mining Co.         ( 1 9 4 0 ) , 111 Mont. 471, 111 P.2d 267.

           The l a n d l o r d s ' c o n d u c t t h r o u g h o u t t h i s t r a n s a c t i o n i s

inexcusable.              Their      willful        breach        of    an       obligation        to

repair         the     premises,          and      their        ratification               of     the

significant            repairs        made        by     the     tenant,           is     alone     a

s u f f i c i e n t l e g a l b a s i s f o r t h e f i l i n g of a mechanics'                 lien.

Further,        their      totally       unjustified            demand       for    drastically

increased          rental       payments          after        the     completion          of     the

r e p a i r s p r e s e n t s an even s t r o n g e r e q u i t a b l e b a s i s t o uphold

the lien.            The t e n a n t i s e n t i t l e d t o a m e c h a n i c s '         lien in

t h e f u l l amount o f t h e v a l u e of              any permanent r e p a i r s t h a t

were t h e d u t y of t h e l a n d l o r d s t o p r o v i d e .



TRIAL COURT AWARD OF $ 5 , 0 0 0 TO TENANT AS COMPENSATION FOR
REPAIRS

           The t r i a l c o u r t o r d e r e d t h e l a n d l o r d s t o pay a sum o f

$ 5 , 0 0 0 t o c o m p e n s a t e t h e t e n a n t f o r r e p a i r s t h a t h e made t o

restore        the     premises       af t e r    the     fire.            The     trial        court

a r r i v e d a t t h i s f i g u r e i n a m y s t e r i o u s way.         The t r i a l c o u r t

listed      items which were i n s t a l l e d by t h e t e n a n t and w h i c h
were of        b e n e f i t b o t h t o t h e t e n a n t and t h e l a n d l o r d s .          The

court     valued        these     items      at    $10,000,          and     then       determined

that the parties              should "share equally"                   t h e c o s t of         these

items.         B u t no b a s i s e x i s t s      in     the    record       for        the    trial

court's        valuation        of     the       items     at     $10,000,          or    for     the

d e t e r m i n a t i o n t h a t t h i s c o s t s h o u l d be s h a r e d e q u a l l y by t h e

parties.          We reverse         t h i s p a r t of     t h e c o u r t ' s judgment a n d

remand      for      further     findings a s t o              t h e exact value of               the

r e p a i r s f o r which t h e t e n a n t may r e c o v e r .
           A b s e n t an a g r e e m e n t t o t h e c o n t r a r y ,          t h e common l a w

rule     is      that     the     lessor         h a s no d u t y t o        repair.           Solich,

supra.          Here t h e r e i s an agreement t o r e p a i r                      contained          in

the     lease        agreement,            and    when      the      landlords          elected         to

r e p a i r and r e s t o r e t h e p r e m i s e s ,        t h e y became bound by t h i s

agreement           to    make       the     repairs        necessary           to    restore         the

premises t o a tenantable condition.                              The l a n d l o r d s f a i l e d t o

do t h i s ,     and t h e t e n a n t was c o m p e l l e d t o c o m p l e t e t h e work.

Under t h e a g r e e m e n t , t h e l a n d l o r d s a r e l i a b l e f o r t h e c o s t s

i n c u r r e d by t h e t e n a n t i n c o m p l e t i n g t h e r e p a i r s t h a t w e r e

the landlords' duty t o provide.



THE TENANT I S ENTITLED TO ATTORNEY FEES INCURRED I N
ENFORCING THE LEASF AGEEE?IZ1JT AiJD ATTORNEYS FZES '
FORECLOSING THE MECHANICS L I E N

           I n i t s o r i g i n a l f i n d i n g s o f f a c t and c o n c l u s i o n s o f

law,    t h e t r i a l c o u r t h e l d t h a t (1) t h e t e n a n t was e n t i t l e d
                                                                  43
t o a t t o r n e y f e e s p u r s u a n t t o s e c t i o n .83-8601.1,             R.C.M.      1947,

f o r e n f o r c i n g t h e c o v e n a n t s o f t h e l e a s e , and ( 2 ) t h a t t h e

l a n d l o r d s w e r e e n t i t l e d , u n d e r s e c t i o n 93-8614,           R.C.M.       1947

(now s e c t i o n 71-3-124,             MCA),        t o recover reasonable c o s t s of

defending          against        t h e mechanics'            l i e n pursuant          to     section

93-8614,         R.C.M.       1947.         But l a t e r ,     the     t r i a l court ordered

t h a t each p a r t y bear             i t s own c o s t s and a t t o r n e y f e e s .              We

reverse t h i s order.

           The       tenant       is e n t i t l e d t o       the     reasonable            c o s t s of

a t t o r n e y f e e s i n c u r r e d i n e s t a b l i s h i n g t h e v a l i d i t y of          his
lease.         By d e m a n d i n g , u n j u s t i f i a b l y , a d r a s t i c a l l y i n c r e a s e d

r e n t a l payment f r o m t h e t e n a n t and by t a k i n g l e q a l a c t i o n t o

f o r c e t h e tenant t o q u i t the premises, the landlords refused

t o recognize            t h e e x i s t e n c e of      the      lease.         The t e n a n t was
forced t o sue to determine                      t h e v a l i d i t y of        the lease,          and

s e c t i o n 28-3-704,         MCA,     p r o v i d e s t h a t t h e t e n a n t is e n t i t l e d

t o attorney fees so incurred.

             B e c a u s e t h e o r i g i n a l l e a s e a g r e e m e n t was e n t e r e d i n t o

before        the      "effective          date"       (July        1,       1971)      of     section

28-3-704,         MCA,    counsel for the landlords contends t h a t t h i s

s t a t u t e does not apply here.                     Undoubtedly c o n f u s i o n e x i s t s

a s t o the         "effective date" provision.                          See Belgrade            State

Bank     v.     Swainson         (1978),         176 Mont.          444,        578     P.2d     1166;

B e l g r a d e S t a t e Bank v .        S w a i n s o n ( 1 9 7 7 ) , 1 7 2 Mont.           350,   564

P.2d    174.        B u t w e need n o t r e c o n s i d e r t h a t i s s u e h e r e .             The

d a t e of      the    agreement         at    issue        is t h e     date       on which         the

l e a s e a g r e e m e n t was r e n e w e d , March 3 , 1 9 7 3 .             The s t a t u t e was

then     in effect.             Because t h e         l a n d l o r d s have        asserted that

t h e t e n a n t d i d n o t p r o p e r l y e x e r c i s e h i s o p t i o n t o renew t h e

lease,        the      tenant      was        forced     to      sue       to     establish          the

v a l i d i t y of h i s o p t i o n .     S e c t i o n 28-3-704,           MCA,     applies.       We

have p r e v i o u s l y r e j e c t e d      the landlords'             argument t h a t t h i s

s t a t u t e d o e s n o t a p p l y t o a p a r t y who s t a r t e d t h e l a w s u i t .

Compton v . A l c o r n ( 1 9 7 6 ) , 1 7 1 Mont. 230, 235, 557 P.2d 2 9 2 .

           Because         we    have      ruled      that       the     t e n a n t had      a valid
mechanics'          lien, the landlords are not entitled t o attorney

f e e s f o r d e f e a t i n g a mechanics' l i e n .              Rather, the tenant is

entitled          to     attorney          fees       for     the      costs          incurred        in

establishing             the    validity         of    the       mechanics'           lien.          See

s e c t i o n 71-3-124,         MCA.

           The      record       does      not    establish            the      exact    amount       of

a t t o r n e y f e e s i n c u r r e d by t h e t e n a n t and t h e r e f o r e we m u s t

remand        for      further         proceedings          to    establish             the     proper

amount.          The t e n a n t       is e n t i t l e d t o recover            the reasonable
attorney fees incurred in establishing the validity of the

lease   and     in   foreclosing   on   his   mechanics'   lien.      This

includes also the attorney fees incurred in presenting this

appeal.
          The   District   Court   judgment    is   af firmed   in   part,

reversed in part, and remanded for further proceedings.




We concur:


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    Chief '3ustice
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