Riis v. Day, 80-61
| Decision Date | 01 July 1980 |
| Docket Number | No. 80-61,80-61 |
| Citation | 613 P.2d 696,37 St.Rep. 1093,188 Mont. 253 |
| Parties | Irvin G. RIIS and Charlotte Riis, husband and wife, Plaintiffs and Appellants, v. Robert J. DAY and Donna Rae Day, husband and wife, Defendants and Respondents. |
| Court | Montana Supreme Court |
Hooks & Budewitz, Townsend, for appellants.
Peter Michael Meloy, Helena, for respondents.
Appellants, Irvin G. and Charlotte A. Riis, commenced action in the District Court, First Judicial District, Broadwater County, for damages for breach of a renewal provision in a lease. The appellants appeal the District Court's order granting summary judgment to the respondents, Robert J. and Donna Rae Day.
On June 1, 1976, the appellants entered a two year lease agreement with Ned George, the father of respondent Donna Rae Day and the then owner of the subject property. The lease was typed by appellant Charlotte Riis. It contained a renewal provision which reads as follows:
On December 28, 1976, Ned George sold the subject property to his daughter and son-in-law, the respondents. The conveyance was expressly made subject to the 1976 lease between appellants and Ned George. More than a year prior to the termination date of the lease, the respondents advised appellants the lease would not be renewed. The respondents wanted the property for their own use.
Appellants later gave respondents written notice of their decision to exercise the renewal provision. The notice was given within the prescribed time period for exercising the renewal provision, but the respondents refused to recognize the renewal request. The appellants vacated the property upon the expiration of the lease on May 31, 1978.
On or about June 4, 1978, the respondents entered into an oral agreement with Joe Clark regarding the subject property. In exchange for caring for respondents' cattle on the subject property and an additional $8.00 per animal unit, Clark was permitted to graze ten head of his cattle with those of the respondents.
On August 30, 1978, appellants brought this cause for damages for breach of the renewal provision. After discovery and submission of affidavits, both parties moved for summary judgment. On December 28, 1979, the District Court entered its opinion and order. The District Court found the renewal provision void for lack of certainty regarding rent and granted summary judgment in respondents' favor.
The sole issue for review is whether the summary judgment entered was proper. We affirmed the District Court. Under the facts at hand, no genuine issues of material fact remain unresolved, and the respondents rather than appellants were entitled to judgment as a matter of law. Rule 56, M.R.Civ.P.
As a general rule, an agreement must contain all its essential terms in order to be binding. Monahan v. Allen (1913), 47 Mont. 75, 130 P. 768. In this cause, we find the District Court was correct in holding the renewal provision void for lack of certainty regarding the essential term of rent.
We have never ruled on the validity of a renewal provision which is open to negotiation regarding rent, and the other jurisdictions are divided on this issue. After a review of the authorities, we find three views prevail.
Under the old rule, a provision for the renewal of a lease must specify the time the lease is to extend and the rate of rent to be paid with such certainty that nothing is left to future determination. If it falls short of this requirement, the agreement is not enforceable. Slayter v. Pasley (1953), 199 Or. 616, 264 P.2d 444, 446. Jurisdictions following this view reason that courts cannot make contracts for the parties nor can they compel parties to agree upon one. Thus, if an essential term depends upon later agreement, the contract is void ab initio. Hall v. Weatherford (1927), 32 Ariz. 370, 259 P.2d 282, 285.
Under another view, which the parties here characterize as the "first minority view", a renewal provision will be enforced if it expressly contemplates a clear and definite mode for determining future rent. Thus, if a definite mode for renewal rent is provided by the lease agreement or by operation of law, which can be determined at the time of renewal without negotiation, the court is not making a new contract for the parties but merely compelling the parties to do what they plainly contemplated in the beginning. Slayter v. Pasley, supra, 264 P.2d at 446, 448.
Under the third and most liberal view, even if no mode for determining future rent is provided in the agreement, a renewal provision is valid if the contract shows the parties mutual consent to meet in the future for the purpose of making further provisions for a reasonable rent. If so, the court will imply a mutual agreement for a reasonable rent. According to the jurisdiction following this view, this rule effectuates the parties' intent. The provision must have been included for a reason, and if one party agreed only in the secret belief the provision would later be held unenforceable, then the equities compel enforcement. Voluntary consideration often already has been paid for it as an inducement for the original lease. To this extent, the landowner has benefited from the tenants' reliance on the...
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