### No. 82-117 INTHE SUPREMECOURT OF THE STATEOF MONTANA 1982

MICHAEL J. LEPKLEY and JOANF. LEMLEY, PlaintiffsandAppellants,

VS. 

### BOZEMANCOMMUNITYHOTEL COMPANY,a Montana corp., and ROGER L. CRAFT, President, Defendantsand Respondents.

Appeal from: District Court of the EighteenthJudicialDistrict, Inand for the County of Gallatin HonorableW.W. Lessley,Judgepresiding. Counsel of Record: For Plaintiffs: JosephMudd,Bridger,Montana For Defendants: Edmund Sedivy, Bozeman,Montana

Submitted onbriefs: July 15,1982 Decided: September 30, 

### 1982



### Filed:

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ClerkMr. JusriceFrank 8. Morrison, Jr., delivered theOpinion of the Court. Nichael 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 leasebetween the parties. 

### We affirmthe judgment of theDistrictCourt. On May 19, 1975, Paul Carter, President of RX Enterprises, Inc., entered into a lease with respondents for premises inthe "Baxter Hotel," Bozeman, Montana. The lease

was for the period from January 11, 1976 to January 10, 1961. With respondent landlord's permission, Paul Carter assigned his lease to Michael and Joan Lemley on November

The lease contains a clause allowing for 

### its renewal for two additional five-year consecutive 

### terms. That clause states: "19. That upon the expiration of the primary term of thisLease and Agreement, that 

### is to say from January 11, 1976, through and including January 10, 1981, Tenant 

### is granted the option to lease these premises for two (2) additional five (5)year consecutive terms with the same terms and conditions ashereinabove 

### set forth for each of the five 

### (5)year consecutive periods, with the exception that theamount of minimum base rental in the sum of Four Hundred Dollars ($400.00) as 

### set forth nereinabove, shall at the expiration of the first five (5) year leaseperiod be changed asfollows: 

### "(a)The sum of thebase rental shallbe changed to reflect the increase or decrease inthecostof living index occurring during the first five (5)years for the term of this Lease and Agreement shall either increase or decrease the amount of base rental tobe paid (inthe sum of $400.60 per month) by the same percentage which the consumer price index

### has risen or fallenduring the first five (5 j 

### years of this lease. "'l'hepercentage of increase or decrease, if any, at the end of said five (5)year period shallbe multiplied by themonthly rental of $400.00 and theproduct of such multiplication shallbe the amount of the Tenant's minimum rental for each month during the second five (5)year period of this lease, subject to paragraph 

### (b) below. "The consumer price index is and shall be the price index computed by the United States Bureau of Labor Statistics, being the national consumer price index for the urban wages and clerical workers, generally referred to as the 'Cost of Living Index'. "(b) 

### The sum of the base rental shall also be changed to reflect the yearly increase or decrease in the cost to Landlord of property taxes and utilities. The percentage of any increase or decrease of these items from date hereof until the termination of the first five (5)year period shall be multiplied by monthly rental derived under paragraph

(a)above, and such multiplication shall be the amount of the Tenant's monthly rental for each month during the second five (5)year period commencing with the first month to the second five (5)year period." Mr. Lemley notified Roger Craft,president of Bozeman Community Hotel Company, that he wished to renew the lease for an additionai 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 Increaseor Rental Derived x Decrease Cost of Property From 

### (a) Taxes and 

### Utilities Mr. Lemley disagreed. He argued thatalthough formula (b)above correctlyreflectsthe 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 increaseordecrease inthecosttoLandlord of property taxesand 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 

### tnat the percentage increase be added to the new base rent rather than be multiplied by it. Hepresented no formula by which toaccomplish thatresult. Lemley presented two other causes of action in his complaint. He requested credit for utilities paid by him contrary to the terms of the lease and compensation by Bozeman Community Hotel for lossof income sufferedwhen the landlordunreasonably denied Lemley's requeststosubletthe 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 surn of $7,220.00 

### as paidthrough dateof October, 1981, and lessthe sum of $1,477.99 for electricalbillspaid by Plaintiffs." 2. That Lemleyspay tolandlord "the sum of $1,257.60 per month from November 11, 1982and on the 11thday of each month thereafter, for the remaining 

### term of theLease of the premises in the baxter Hotel, referred to as the i3axter 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 attorneyfeesand costs totaling $3,263.00 be awarded landlord. Inappealing thejudgment, Lemley presents the following issues for our review: 1. What 

### is theproper interpretationof Clause 19 of the iease and agreement? 2. Did the District Court properly determine the amount of rentowing and tobe paid? 3. Was landlord's denial of consent to sublease unreasonable? 4. Was Lemley entitled to recover attorney fees incurred with regard tohisclaimfor creditfor thepayment of the electricalbills? 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), 150Mont. 292, 295, 434 P.2d 395, 397. Courts do interpret contractswhen an ambiguity exists. An

### ambiguity exists "wnen the

### contract taken asa 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 asa whole, thecontract is 

### reasonably subjecttoonly

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. 'I'herefore, the District 

### Court properly adopted the formula for rent increasestatedwithinClause 19. Lemley further complains that he requested only a declaratoryjudgment 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 totheformulas set

### forthinClause 19: (a)Amount of Base Percentageof Increaseor Rent 

### x Decrease Cost of Living Index

Amount of 

### aase Cost of Living January 1981 Rent x Cost of Living January 1976

(b)

### Amount of Monthy Percentage of Increaseor Rental Derived x Decrease Cost of Property From (a) Taxes and UtilitiesAmount otMonthly Cost of Property -Taxesand Rental Derived 

### x Utilities 1980 From (a) Cost of PropertyTaxes and 

### Utilities 1975

No objectionswere made totheadmission of those exhibits. Lemley did request only a declaratoryjudgment in his complaint. However, by failing toobject tothe admittance of the above evidence used by the court to determine the proper rent amount, he impliedly consented to the rent amount being determined by the court. Rule 15(b), 1ul.K.Civ.P.; Reilly v. Maw (1965), 146 Mont. 145, 155, 405 P.2d 440, 446. Therefore, we affirm the District Court's determination of the amount of rent owing and to be paid. The court acted within the scope of the pleadings, as amended. Clause 9 of the lease in question requires landlord consent prior to the subletting of the premises. It also requires that landlord not unreasonably withhold such consent. Lemley provided the court with the following information concerning his attempts to sublease the premises. With landlord's approval, Cactus Records sublet the basement of Lemley's pharmacy. Lemley later approached landlord inJanuary 1978regarding CactusRecords subletting themain floor also. Landlord disapproved ashe was wary of Cactus Records' business practices. Lemley next approached landlord regarding King-Gallatin expanding the Point After

a into the main floor space. Landlord disapproved as there were already two bars in the Hotel and he wanted no

### more bar area. Landlord next disapproved Lemley's proposed sublease to an art gallery as he objected to brick work proposed by the gallery owners. Landlord agreed to approve a sublease to Heritage Booksprovided nopornographic material would be sold. Heritage refused to agree to that term. Finally, in January 1980,Four Seasons TravelAgency sublet the premises with landlord's approval. Lemley vacated the premises in July 1979. Lemley asserted at trial that the premises remained empty for the intervening period due to landlord's unreasonably withneld consent to various proposed subletters. Therefore, Lemley requested a refund of the rent money he lost during the interveningperiod. The District Court found that the landlord's refusals to permit subletting were reasonable. There is substantial evidence in the record to support such a finding. The landlord was familiar with Cactus Records as tenants. It did not approve of Cactus Records' business operations or business character. Landlord did not wish to have more bar space within the Hotel as two bars already existed on the premises. Another proposal for subletting was disapproved because landlord did not wish to have a brick wall constructed on its premises. Given the permanency of such a wall, we cannot find that to be an unreasonable decision. 

### And finally, landlord chose not to have pornography sold on its premises. Given the controversial nature ofpornography, it is fair and reasonable for landlord to choose not to be associatedwith it. Landlord did not contest Lemley's request for compen-

### sation for the electricity bills Lemley erroneously paid. The bills totaled $1,477.99. The District Court offset the amount of rent owed landlord by $1,477.99. Lemley now requests attorney fees for this successful claim. We deny Lemley's request. Clause 21 of the lease in question provides that in any action for the enforcement of the terms of the lease,or for abreach thereof, theprevailing party shall be entitled to reasonable attorney fees. Landlord is clearly the prevailing party in this action. It is irrelevant that the issue on which attorney feeshave been requested was submitted as 

### a separate count. See Dooling v. Bright-Holland Co. (1969), 152Mont. 267, 281, 448 P.2d 749, 757. For the reasons discussed above, we affirm the decision of the District Court.

We 

### concur: 

# 7L-U%,va~q Chief Justice