Lemley v. Bozeman Community Hotel Co., 82-117
| Decision Date | 30 September 1982 |
| Docket Number | No. 82-117,82-117 |
| Citation | 200 Mont. 470,39 St.Rep. 1877,651 P.2d 979 |
| Parties | Michael J. LEMLEY and Joan F. Lemley, Plaintiffs and Appellants, v. BOZEMAN COMMUNITY HOTEL COMPANY, a Montana corp., and Roger L. Craft, President, Defendants and Respondents. |
| Court | Montana Supreme Court |
Joseph Mudd, Bridger, for plaintiffs and appellants.
Edmund Sedivy, Bozeman, for defendants and respondents.
Michael and Joan Lemley appeal the February 5, 1982, judgment of the District Court of the Eighteenth Judicial District adopting the landlord, Bozeman Community Hotel Company's interpretation of the rent clause of a November 29, 1976, assigned lease between the parties. We affirm the judgment of the District Court.
On May 19, 1975, Paul Carter, President of RX Enterprises, Inc., entered into a lease with respondents for premises in the "Baxter Hotel," Bozeman, Montana. The lease was for the period from January 11, 1976 to January 10, 1981. With respondent landlord's permission, Paul Carter assigned his lease to Michael and Joan Lemley on November 29, 1976.
The lease contains a clause allowing for its renewal for two additional five-year consecutive terms. That clause states:
Mr. Lemley notified Roger Craft, president of Bozeman Community Hotel Company, that he wished to renew the lease for an additional five-year period beginning on the 10th of January, 1981. Mr. Craft informed Mr. Lemley that pursuant to Clause 19 of the lease, the monthly rent would increase from $400.00 to approximately $1250.00.
Mr. Craft arrived at the $1250 figure by using the following formulas, pursuant to Clause 19:
(a) Amount of Base Percentage of Increase or
Rent x Decrease Cost of Living Index
and
(b) Amount of Monthly Percentage of Increase or
Rental Derived x Decrease Cost of Property Taxes
Mr. Lemley disagreed. He argued that although formula (b) above correctly reflects the language of the formula set forth in Clause 19(b), the language of the formula is not consistent with the stated intent of Clause 19(b). The intent is found in the first sentence of Clause 19(b), "to reflect the yearly increase or decrease in the cost to Landlord of property taxes and utilities."
On February 26, 1981, Lemley filed a complaint in the Eighteenth Judicial District Court requesting, among other things, a declaratory judgment construing the terms of the lease. As an alternative and in keeping with Lemley's perceived intent of the clause, he suggested that the percentage increase be added to the new base rent rather than be multiplied by it. He presented no formula by which to accomplish that result.
Lemley presented two other causes of action in his complaint. He requested credit for utilties paid by him contrary to the terms of the lease and compensation by Bozeman Community Hotel for loss of income suffered when the landlord unreasonably denied Lemley's requests to sublet the premises.
A hearing was held October 19, 1981, following which the District Court issued a judgment February 5, 1982, ordering:
1. That landlord recover from Lemley, "the sum of $3,908.01, being the sum of $1,257.60 per month for rent from January, 1981, through October, 1981, for a total rental of $12,576.00, less the sum of $7,220.00 as paid through date of October, 1981, and less the sum of $1,477.99 for electrical bills paid by Plaintiffs."
2. That Lemleys pay to landlord "the sum of $1,257.60 per month from November 11, 1982 and on the 11th day of each month thereafter, for the remaining term of the Lease of the premises in the Baxter Hotel, referred to as the Baxter Pharmacy, through January 9, 1986."
3. That Lemley's claim for damages caused by landlord's failure to consent to several proposed subletters be dismissed.
4. That attorney fees and costs totaling $3,263.00 be awarded landlord.
In appealing the judgment, Lemley presents the following issues for our review:
1. What is the proper interpretation of Clause 19 of the lease and agreement?
2. Did the District Court properly determine the amount of rent owing and to be paid?
3. Was landlord's denial of consent to sublease unreasonable?
4. Was Lemley entitled to recover attorney fees incurred with regard to his claim for credit for the payment of the electrical bills?
We affirm the decision of the District Court in all respects.
The District Court properly interpreted Clause 19 of the lease. Courts have no authority to change a contract when its intent is clear. Williams v. Insurance Company of North America (1967), 150 Mont. 292, 295, 434 P.2d 395, 397. Courts do interpret contracts when an ambiguity exists. An ambiguity exists "when the contract taken as a whole in its wording or phraseology is reasonably subject to two different interpretations." Williams v. Insurance Company of North America, supra.
No ambiguity exists in Clause 19(b). The first sentence states the intent of the clause. The formula following dictates how the intent shall be accomplished. Taken as a whole, the contract is reasonably subject to only one interpretation.
The formula is clear and express. Courts may not disregard the express language of a contract. Williams v. Insurance Company of North America, supra. Therefore, the District Court properly adopted the formula for rent increase stated within Clause 19.
Lemley further complains that he requested only a declaratory judgment construing the terms of the lease, not a court determination of the rent amount owed pursuant to the lease. At trial, Bozeman Community Hotel introduced many exhibits concerning the cost of living index from 1976 to 1981 and the hotel's property tax and utility expenditures from 1975 to 1980. It then presented the following chart applying the figures derived from the other exhibits to the formulas set forth in...
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