No. 12969 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1975 

STC , INC., a Montana Corpora tion, 

Plaintiff and Appellant, 

CITY OF BILLINGS, MONTANA, 

a municipal corporation, 

Defendant and Respondent. 

Appeal from: District Court of the Thirteenth Judicial District, 

Honorable M. James Sorte, Judge presiding, 

Counsel of Record: 

For Appellant : 

Anderson, Symmes, Forbes, Peete and Brown, 

Billings, Montana 

Benjamin N. Forbes argued, Billings, Montana 

For Respondent : 

William J, Speare argued, Billings, Montana 

Submitted : September 25, 1975 

Decided : DEC 2 1175 
Mr. Justice Frank I. Haswell delivered the opinion of the Court. 

Plaintiff building owner sued the City of Billings for 

damages based on an alleged anticipatory breach of a lease. 

Following a nonjury trial the district court of Yellowstone 

County entered judgment for defendant city. Plaintiff appeals 

from this judgment. 

The controlling issue on appeal is whether a vote by the 

Billings city council on February 5, 1973 "to not re-affirm the 

provisions of the original lease" with STC constituted a repudiation or anticipatory breach of the lease agreement. The district 

court held it did not. We agree. 

The facts are largely undisputed. Plaintiff is a Montana 

nonprofit corporation named STC., 1NC.- It was formed for the 

purpose of renovating and preserving the Old Chamber Building in 

downtown Billings as a historical landmark. Its funds were derived essentially from donations and loans. It had no capital 

stock. 

In 1972 plaintiff corporation purchased the land and a 

building known as the Old Chamber Building. It was purchased 

from a group known as the Executive Investors by paying it about 

$37,000 and assuming an indebtedness of $115,000 on a contract 

for deed with the Billings Chamber of Commerce. 

In June 1972, a written lease agreement was executed between plaintiff corporation and the City of Billings covering a 

part of the Old Chamber Building. The agreement provided that 

plaintiff corporation agreed to remodel the premises to suit the 

needs of the city, and the city agreed to lease the remodeled 

premises for ten years at a monthly rental of $3,290. The remodeling was to be done generally in accordance with exhibits 

attached to the agreement, and was required to begin by the end 

of March 1973. The agreement was subject to the following condition; 
"This Lease is subject to the condition subsequent that Lessor is able to obtain the necessary financing to remodel the premises in 

accordance with the needs of Lessee as aforesaid. 

In the event the Lessor is unable to obtain such 

financing in order to satisfactorily remodel the 

same premises, then this Lease shall be deemed 

void and of no effect, and neither of the parties 

shall have any obligation to the other. Such 

refinancing and remodeling shall be obtained 

and commenced, respectively, by the end of March, 

1973, or this condition shall be deemed to have 

occurred." 

The lease covered the main floor, second floor, and part 

of the basement of the Old Chamber Building. It did not cover 

the third floor. The city was also given an option to purchase 

the land and building during the term of the lease by assuming 

the indebtedness against the property and agreeing to preserve 

the building. 

On June 5, 1972, the lease was approved by the city council 

by a 5-4 vote. Plaintiff corporation then proceeded with attempts 

to secure the financing necessary for remodeling. It attempted 

to secure funds from HUD, a federal agency, but found there were 

no funds available from this source. It applied to the Billings 

Clearing House, an association of local banks, and received this 

letter dated November 28, 1972: 

"The Billings Clearing House Association is 

willing to consider a real estate loan application on the former Chamber of Commerce Building, 

located at 301 North 27 Street, subject to completion of the following: 

"1. Firm ten-year leases sufficient to cover 

operating expenses and loan amortization. Leases 

to be acceptable to lender. 

"2. Outstanding indebtedness to the Billings 

Chamber of Commerce be paid in full, and there be 

no secondary real estate financing, all equity funds 

in first. 

"3. Acceptable plans and specifications. 

"4. Firm bids from acceptable contractors. 

"5. Structural engineers report. 

"The maximum loan considered would be $250,000.00 
based on an economic valuation, with a 10-year 

term and 17-year amortization. The interest 

rate on the loan would be based on the prevailing commercial real estate loan rate at the 

time the above conditions had been accomplished. 

Presently that rate is 8 1/2% to 9%. 

"This letter is not to be construed to be a 

commitment. " 

Plaintiff corporation also had a letter of intent dated 

December 8, 1972 from a Billings law firm to lease the entire 

third floor of the building for a 10-year term at $1,650 per 

month, subject to remodeling and availability of the remodeled 

premises by approximately July 1, 1973. 

Plaintiff corporation had additional prospects of securing financing from a Seattle firm, a local limited partnership, 

and through the sale of limited partnership interests in the 

enterprise. None of these prospects was beyond the talking stage. 

The architect's estimate of the projected cost of the 

necessary remodeling was originally $288,980, later reduced to 

approximately $285,000. 

On February 5, 1973 at a meeting of the City Council the 

minutes indicate the following proceedings: 

"REPORT OF COUNCIL OF THE WHOLE that the 

Council not re-affirm provisions of the original lease with the Save-The-Chamber Committee. 

Moved by alderman Lidderdale, seconded by 

alderman Leuthold that the recommendation of the 

Council of the Whole be approved. A substitute 

motion was made by alderman Schoenthal, seconded 

by alderman Fillner that the Council approve reaffirming the provisions of the original lease. 

The substitute motion lost. The Council then 

proceeded to vote upon the original motion to 

not re-affirm the provisions of the original 

lease. Upon roll call alderman Leuthold, Lidderdale, Rye, Riedl, Lesniak, Schoenthal voted aye. 

Alderman Fillner, Chapel voted no. Motion carried 

6 to 2." 

Thereafter no further efforts to secure financing were 

pursued by plaintiff corporation, remodeling was never done, 

and the city never went into possession under the lease. 

On February 22, 1973, plaintiff corporation sued the 
city for specific performance of the lease agreement, or in the 

alternative for damages for breach of the lease. The complaint 

alleged that the city repudiated its lease with plaintiff corporation by the action of the city council on February 5, 1973; 

that this repudiation of the lease constituted an anticipatory 

breach of contract by the city; and that plaintiff was entitled 

to judgment. Subsequently plaintiff abandoned its claim for 

specific performance. 

Defendant answered, in effect contending (1) the original 

lease was invalid, (2) plaintiff corporation was never ready, 

willing and able to proceed with the required financing and remodeling, (3) the action of the city council on February 5, 1973, 

did not repudiate or breach the lease, and (4) denying the claimed 

damages. 

A nonjury trial was held on September 5, 1974, in the 

district court of Yellowstone County before the Hon. M. James 

Sorte, district judge presiding. Following trial, both parties 

submitted proposed findings of fact, conclusions of law and briefs. 

Judge Sorte adopted the proposed findings and conclusions of defendant city and entered judgment in its favor. 

The basis of the district court's decision is focused in 

two findings of fact and two conclusions of law: 

"FINDINGS OF FACT 

I**** 

"7. That the evidence revealed the only loan 

obtainable by the plaintiff at times material 

to this action was in the maximum amount of 

$250,000.00 and it was conditioned upon plaintiff 

having free and clear title to the subject premises, 

which premises were then encumbered by contract 

for deed in the amount of $114,616.80 and that 

necessary remodeling costs were estimated to be not 

less than $288,980.00. 

"8. That plaintiff was not ready, willing and able 

to perform the financing and remodeling requirements 

on its part to be performed on February 5, 1973, 
March 31, 1973 or at any other time material to 

this action. 

"CONCLUSIONS OF LAW 

It*** 

"2. That the action of the defendant City Council 

on February 5, 1973 did not amount to a repudiation 

or an anticipatory breach of said written agreement 

of June 30, 1972. 

"3. That plaintiff failed to perform the conditions 

of obtaining financing and commencing remodeling as 

prescribed by the terms of said written agreement 

of June 30, 1972 and therefore said agreement by its 

terms is void. 

Plaintiff corporation has appealed from the judgment, 

assigning two issues for review: (1) Did the city breach the 

lease agreement? (2) Is plaintiff entitled to damages? 

Plaintiff corporation's contentions on appeal can be 

summarized in this manner: (1) the original lease of June 30, 

1972 is valid and enforceable; (2) the action of the city council 

on February 5. 1973 amounted to an anticipatory repudiation and 

breach of the lease; (3) because of the city's breach on February 

5, 1973, the lease was terminated and further performance by 

plaintiff corporation thereunder was excused; and (4) that plaintiff corporation is entitled to damages of $95.340 representing 

the difference between the rental provided in the lease and the 

reasonable rental value of the premises, discounted to its present 

worth. 

The contentions of the city can be summarized as follows: 

(1) The original lease agreement is invalid because it was not 

approved by a vote of the people, the city loaned its credit to a 

private corporation in violation of the Montana Constitution, and 

the agreement lacks mutuality of obligation and remedy. (2) The 

action of the city council on February 5, 1973 did not constitute 
a repudiation of the lease nor a breach of its provisions. 

(3) That at no time was plaintiff ready, willing and able to 

perform the financing and remodeling requirements on its part 

to be performed under the lease so the lease became void by its 

terms and neither party has any obligation to the other. (4) 

Plaintiff corporation is entitled to no damages because there 

was no breach by the city, and in any event the measure of 

damages claimed by plaintiff corporation is incorrect. 

Our decision in this appeal is bottomed squarely on one 

issue: Did the action of the city council on February 5, 1973 

constitute a breach of the lease? 

Plaintiff claims the council's action constituted an 

anticipatory repudiation of the lease giving rise to an immediate 

action for damages against the city. This Court has never ruled 

directly one way or the other on whether such action is maintainable in Montana. 

An anticipatory breach of contract by the promisor is a 

repudiation of his contractual duty before the time fixed in the 

contract for his performance has arrived. 4 Corbin on Contracts 

g 959, p. 855; New York Life Ins. Co. v. Viglas, 297 U.S. 672, 

56 S.Ct. 615, 80 L ed 971. The legal effect of an anticipatory 

breach of contract is described in 17A C.J.S. Contracts §472(1), 

pp. 653-655, in this language: 

"Where a party bound by an executory contract 

repudiates or renounces his obligation before the 

time for performance, the promisee has, according 

to the great weight of authority, an option to 

treat the contract as ended, as far as further 

performance is concerned, and to maintain an 

action at once for the damages occasioned by such 

anticipatory breach, repudiation, or renunciation, 

even in the absence from the contract of a specific provision authorizing the maintenance of an 

action or the declaring of a forfeiture." 

To like effect see: 11 Williston on Contracts Section 1324, 

p. 139; 17 Am Jur 2d, Contracts 910; 14 Cal Jur 3d Contracts 
/§295, p. 625; 4 Corbin on Contracts 

S959,pp. 852-853. Also see the leading English case from which 

the doctrine arose, Hochster v. De La Tour, 2 El. & B1. 678, 

and the leading American case adopting the English rule, Roehm 

v. Horst, 178 U.S. 1, 20 S.Ct. 780, 44 L Ed 953. 

The reasons supporting an action for anticipatory breach 

of contract have been variously stated to be: the uselessness 

and inequity of requiring the promisee to hold himself in readiness to perform his contractual obligation on the date performance is due where the promisor has already repudiated his reciprocal 

obligations under the contract; the present injury to the implied 

right of each of the contracting parties to refrain from impairing the ability or willingness of the other to perform when performance is due; the duty of the promisee to mitigate damages by 

withholding expenditures in preparation for carrying out his contractual obligations where the promisor will not perform in any 

event; the social and economic waste incident to prolonging a 

contractual status that is effectively at an end; and the necessity that the law recognize the commercial desirability of fixing 

legal rights, liabilities and damages as promptly as possible. 

This doctrine has been specifically applied to anticipatory repudiation of leases by the lessee. Hawkinson v. Johnston, 

122 F.2d 724; dalin v. Lovell, 257 Wis. 82, 42 N.W.2d 456, 49 

Am Jur 2d Landlord & Tenant, S178, p. 202; 51C C.J.S. Landlord & 

Tenant S250 (2) , p. 653. 

In Montana there is language in one prior decision of 

this Court indicating that an anticipatory repudiation by one 

party to a contract excuses further performance by the other, 

this rule being quoted with approval in McCaull-Dinsmore Co. v. 

Jackson, 57 Mont. 555, 560, 189 P. 771: 

"'Where one party repudiates in advance his 

obligations under the contract and refuses to 

be longer bound thereby, communicating such 
repudiation to the other party, the latter party 

is excused from further performance on his part.'" 

This case strongly suggests recognition in Montana of an action 

based on anticipatory repudiation of a contract. 

Montana statutes and case law generally support the bases 

on which the doctrine of anticipatory breach rests, for example, 

"The law neither does nor requires idle acts." Section 49-124, 

R.C.M. 1947; "For every wrong there is a remedy." Section 49-115, 

R.C.M. 1947; and the duty to mitigate damages in an action for 

breach of contract, Brown v. First Fed. Svgs. & Loan, 154 Mont. 

79, 460 P.2d 97. We find no reason in policy or in law for denying an immediate action for damage based on an anticipatory repudiation of a contract. 

The crux of the instant case is whether the action of 

the city council on February 5, 1973 constituted an anticipatory 

repudiation of the lease agreement. The city council voted to 

"not re-affirm provisions of the original lease". Plaintiff 

treats this as a repudiation or renunciation of the city's obligations under the lease. But was it? 

It appears to us that the action of the city council 

was subject to different interpretations. It might have meant 

the new mayor and council did not want to go on record as approving 

the original lease, xt might have meant the new mayor and council 

refused to assist plaintiff corporation in its efforts to secure 

the necessary financing for remodeling by an affirmative expression 

of support. It might have meant the new mayor and council were 

repudiating the lease and refused to perform the city's obligations thereunder. 

The language of the proposition on which the council voted 

is significant in our view. The council voted "not to re-affirm". 

The council did not vote "not to affirm". The council did not 

vote to repudiate, renounce, or cancel the lease, nor adopt any 
language manifesting an intention not to carry out its obligations under the lease. The language of the proposition on 

which the council voted was equivocal, ambiguous, and subject 

to conflicting interpretations. 

The circumstances support a like conclusion. A city 

election intervened between the execution of the lease and the 

vote of the council on February 5, 1973. Some new aldermen and 

a new mayor had been elected who opposed the lease. STC, INC. 

had not secured the necessary financing despite some seven month's 

effort. Time was running out. Less than two months remained before the lease agreement would expire by its own terms if financing was not secured. No rational basis existed for the city to 

repudiate the lease at this time and under these circumstances, 

while a good reason did exist for the new mayor and council to 

refuse to go on record as approving the lease negotiated by their 

predecessors, or to refuse to assist STC, INC. in obtaining financing. At the very least the circumstances are equally consistent with this interpretation of the council's intention. The 

collective intention of the city council remains ambiguous and 

equivocal. 

A repudiation or renunciation must be entire, absolute 

and unequivocal to support an action for anticipatory breach. 

17A C.J.S. Contracts 5472(2), p. 659; 17 Am Jur 2d, Contracts 

5450, p. 914; 14 Cal Jur 3d, Contracts 8298, p. 630; 4 Corbin 

on Contracts 5 973, p. 905; Restatement, '48 Supp. Contracts, 

5318(a), p. 251; 5 Williston on Contracts (Revised Edition) 

51324, p. 3724; Dingley v. Oler, 117 U.S. 490, 6 S.Ct. 850, 29 

L ed 984; Kimel v. Missouri State Life Ins. Co., 71 F.2d 921; 

Palmiero v. Spada Distributing Co., 217 F.2d 561. 

"The doctrine of breach of contract by anticipatory 

repudiation works harsh results, and for its 

application, there must be a 'positive statement 
to the promisee or other person having a right 

under the contract, indicating that the promisor 

will not or cannot substantially perform his 

contractual duties; * * *.I" 

Regional Enterprises, Inc. v. Teachers Insurance 

and Annuity Ass'n, 352 F.2d 768, 775, and cases 

cited therein. 

Anticipatory breach must appear only in the clearest 

terms of repudiation of the contractual obligation. Guerrieri v. 

Severini, 51 Cal.2d 12, 330 P.2d 635; Hertz Drive-Ur-Self Stations, 

v. Schenley Distill. Corp., 119 C.A.2d 754, 260 P.2d 93. An 

expression of intent not to perform, or not to be bound, standing alone, is not enough. Campos v. Olson, 241 F.2d 661; Rehart v. Klossner, 48 C.A.2d 46, 119 P.2d 148; nor is a mere 

assertion that a party will be unable, or will refuse, to perform his contract an anticipatory renunciation. City of Buena 

Park v. Boyar, 186 C.A.2d 61, 8 Gal-Rptr. 674. 

Applying these rules, we hold the action of the city 

council on February 5, 1973 to "not re-affirm provisions of 

the original lease" was not a positive, unequivocal, absolute 

expression of intention by the city not to perform its contractual obligations under the lease. Accordingly, it will not 

support an action for anticipatory breach and plaintiff's action 

must fail. 

Our ruling on the first issue renders consideration of 

the second issue unnecessary. 

The judgment of the district court is affirmed. 

Justice 
We concur: 

............................. Chiey Justice A