No. 14435 

IN THE SUPRElME COURT OF THE STATE OF MONTANA 

1979 

IDABEL McLEISH JORDAN, ARTHUR McLEISH 

JORDAN and ROSEMARY J. JORDAN, 

Plaintiffs and Appellants, 

ELIZABETHAN MANOR, et al., 

Defendants and Respondents. 

Appeal from: ~istrict Court of the Thirteenth Judicial District, 

Honorable Charles Luedke, Judge presiding. 

Counsel of Record: 

For Appellants: 

Towe, Ball, Enright & Mackey, Billings, Montana 

Gerald Neely argued, Billings, Montana 

For Respondents: 

Crowley, Haughey, Hanson, Toole & Dietrich, Billings, 

Montana 

Ronald Lodders argued, Billings, Montana 

Submitted: February 6, 1979 

Decided: APR 2 1979 

Filed: @R 2 F 1Q?s -, - 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Plaintiffs appeal from an order of the District Court, 

Yellowstone County, granting partial summary judgment in 

favor of defendant Elizabethan Manor in an action against it 

and one other party. 

Elizabethan Manor is a condominium project conceived by 

three Billings developers. Desiring to obtain financing for 

their project, the developers entered into subscription and 

purchase agreements with interested individuals in which the 

individuals agreed to purchase certain units of the condominium 

to be constructed. In these agreements the prospective unit 

owners acknowledged receipt of copies and subscribed to the 

condominium declaration and bylaws. Plaintiff Jordan signed 

her agreement on September 21, 1971 as indicated by the 

record before this Court. 

On November 21, 1971, the developers purchased the land 

upon which the condominium units were eventually constructed. 

On June 1, 1972, pursuant to section 67-2315, R.C.M. 1947, 

now section 70-23-302 MCA, the developers filed as a preliminary 

declaration and bylaws, the documents represented by the 

copies attached to the subscription and purchase agreements. 

These documents indicated how the condominium would be 

operated once it was completed and had formal existence, and 

were virtually identical to the final documents later certified 

and filed. Between June 15, 1972 and November 9, 1972 the 

developers executed warranty deeds to the separate units to 

individuals who had signed the purchase agreements. 

The developers on March 22, 1973 filed the final signed 

declaration, and a certificate that the bylaws had been 

adopted and signed by two of the developers, one as chairman 
of the board of directors of the association of unit owners 

and one as secretary of the association. This action was 

pursuant to section 67-2303, R.C.M. 1947, now section 70-23- 

103 MCA, and section 67-2320, R.C.M. 1947, now section 70- 

23-307 MCA. As indicated above, these documents were virtually 

identical to the copies of documents attached to the subscription 

and purchase agreements which were acknowledged and subscribed 

to by each individual subscriber and future owner. On 

December 11, 1973, at the annual meeting of the defendant 

association a majority of the association approved the 

bylaws filed on March 22, 1973, and further ratified all 

acts of the directors to December 11, 1973. 

After the condominium had been functioning for sometime 

in a communal living arrangement involving plaintiff and the 

Idabel Jordan 

other apartment owners, plaintifdbecame dissatisfied with 

certain aspects of the situation and stopped paying her 

assessed share of the common expenses as provided for in the 

bylaws. A series of unpleasant encounters between plaintiff 

and other members of the association followed. 

On August 20, 1974, plaintiff filed a two-count 

complaint in the District Court for Yellowstone County. 

Count one named Elizabethan Manor Association as defendant 

and alleged the statutory procedure for establishing a 

condominium had not been correctly followed. The first 

count sought a declaratory judgment as to the rights, status 

and legal relation between plaintiffs and the association, 

a complete financial accounting from the association to 

plaintiff, and an injunction enjoining the association 

from "acting in a manner contrary to the law and to the 

rights of plaintiffs with respect to the operation and 
maintenance of said condominium." Count two named as 

defendant a property management firm which was administering 

the affairs of the condominium. The partial summary judgment 

entered by the District Court does not address the second 

count and that count is therefore not involved in this 

appeal. 

Elizabethan Manor filed an answer and counterclaim 

denying any failure to comply with the condominium laws 

and claiming damages for arrearages in the assessment of 

common expenses. The counterclaim prayed for judgment for 

the arrearages and foreclosure and sale of plaintiff's 

interest in the condominium unit pursuant to sections 67- 

2326 and 2327, R.C.M. 1947, now sections 70-23-607 and 70-23-608 

MCA . 

Motion for partial summary judgment as to the matters 

concerning them was made by Elizabethan Manor Association 

on October 28, 1976. After briefs had been submitted by 

both parties, the District Court entered an order of partial 

summary judgment in favor of the association to the extent 

the final declaration and bylaws of the condominium were 

valid and enforceable and the association was entitled to 

judgment against Mrs. Jordan for arrearages in the assessment 

for admitted common expenses. The court reserved judgment 

on expenditures not admitted by plaintiff. Foreclosure was 

granted but stayed on the condition the amount of admitted 

common expenses due be made current forthwith and thereafter 

paid regularly when due. The order of partial summary judgment 

was made final by certification pursuant to Rule 54(b), 

M0nt.R.Civ.P. on April 24, 1978. This appeal followed. 

Elizabethan Manor cross-appealed from that portion of 

the partial summary judgment entered by the District Court 

which denied respondent its attorney fees as claimed in its 

motion for summary judgment. 
Before proceeding with a discussion of the merits in 

this appeal it is necessary to indicate the scope of our 

consideration of this case. This matter is before this 

Court on an appeal from a partial summary judgment, properly 

certified as final, declaring only that the final declaration 

and bylaws were valid and thus the condominium had proper 

existence, defendant Elizabethan Manor was entitled to a 

judgment for plaintiffs'share of admitted expenditures, and 

that defendant Elizabethan Manor was entitled to a foreclosure 

of its lien for such expenditures. Such foreclosure was 

stayed upon the condition the plaintiff pay her share of 

expenses determined as due and owing and thereafter regularly 

pay the assessed share of common expenses. These are the 

only matters which have been finally determined by the 

District Court. It has reserved issues on the remaining 

challenged expenses and thus still has jurisdiction over 

these two parties. We therefore decline plaintiff Jordan's 

invitation to rule on issues not addressed by the District 

Court, preferring to wait until a final judgment on those 

issues has been presented to us. See Rule 1, M0nt.R.App.Civ.P. 

In reviewing an appeal from a summary judgment this 

Court's concern is whether the moving party is entitled to 

judgment on the law applicable to the facts established by 

the pleadings, depositions, answers to interrogatories and 

admissions on file together with affidavits appearing in the 

record. Audit Services, Inc. v. Haugen (19791, Mont . 

, 591 P.2d 1105, 36 St.Rep. 451; State v. Jennings 

(Alaska 1976), 555 P.2d 248; Cherry v. Vanlahi, Inc. (19751, 

216 Kan. 195, 531 P.2d 66; Rule 56(c), M0nt.R.Civ.P. Reviewing 

the record it is apparent the only issue in this appeal 

between these parties is the validity of the procedure 

establishing the condominium project. Plaintiff has admitted 

expenditures forming the basis of the judgment, questioning 

only their validity as to the authority of the condominium 

-5- 
to make the assessment, alleging it was not properly formed. 

Thus, we are able to frame the issues presented by this 

appeal in the following manner. First, was the District 

Court correct in ruling the final declaration and bylaws 

were valid? Second, was it proper for the District Court to 

stay the foreclosure of the lien upon the condition plaintiff 

Idabel Jordan regularly pay the future charges not yet 

assessed? Third, was the amount of the judgment here 

correctly computed? Finally, is defendant Elizabethan Manor 

entitled to attorney fees in this action? 

The initial issue presents a question of first impression 

to this Court which involves the statutory construction of 

provisions of the Montana Unit Ownership Act, sections 

67-2301, et seq., R.C.M. 1947, now sections 70-23-101, et 

seq., MCA. Section 67-2303, R.C.M. 1947, as it read at the 

times pertinent hereto stated that in order to submit any 

property to the provisions of the act a "declaration" must 

be recorded by the owner of the property. Section 67- 

2304, R.C.M. 1947, now section 70-23-401 MCA, indicates that 

once the property is submitted to the act the individual 

units may be conveyed, encumbered or subjected to other 

"juridic acts". Section 67-2302, now section 70-23-102 MCA, 

defines "unit" as a part of the property intended for independent use; "unit owner" as a person owning a unit in fee 

simple; and "association" as all the unit owners acting in 

accordance with the declaration and bylaws. 

Plaintiff argues the statutory requirements for establishment of a condominium project have not been complied 

with and therefore the assessments made against her unit are 

without legal authority. This argument is based on the 

contention that when the final declaration, which was 
signed by the developers, was filed in March 1973 the 

developers were not "owners" and thus not capable of 

executing that document. The developers had previously 

executed subscription agreements and warranty deeds to 

the units to the prospective grantees and thus, contends 

plaintiffs were not owners of the property entitled to 

file the declaration. Plaintiffs aaso contend the bylaws 

were improperly adopted and certified. These bylaws were 

signed and certified by the developers as owners and 

officers of the association and were filed simultaneously 

with the final declaration on March 22, 1973. Because 

the developers were not owners as plaintiffs have previously 

argued, and because the bylaws were not adopted by each of 

the persons to whom the developers had executed warranty 

deeds and were not certified by officers of an association 

of those persons, plaintiffs contend the bylaws were ineffectual and actions taken pursuant to those bylaws were 

without legal authority. We do not agree with this argument. 

The filing of the final declaration is the most 

significant event in the establishment of a condominium. 

It is this action which subjects the property in question to 

the provisions of the act and it is this subjection which 

allows the units of the condominium to be conveyed as 

"individual" units. In construing an act very similar to 

Montana's, the Hawaii Supreme Court stated that the filing 

of the final declaration submitting the property to the 

provisions of the act "makes the property susceptible 

- to conveyance - of individual units." State Savings & Loan 

Association v. Kauaian Development Co. (1969), 50 Haw. 540, 

445 P.2d 109, 116 (emphasis added.) Our own statute indicates, 

as did the Hawaiian provision, that it is only while the 
property is submitted to the Unit Ownership Act, via 

the final declaration, that a unit may be individually 

conveyed and encumbered. Section 67-2304, R.C.M. 1947, 

now section 70-23-401 MCA. We therefore conclude that 

until the final declaration is filed those who are the 

fee owners of the condominium project are the fee owners 

of the units of the project. As such, these persons are 

the parties contemplated by statute to sign and file the 

final declaration. Section 67-2303, R.C.M. 1947, now 

section 70-23-103 MCA. In the present case the developers 

of the project were such parties and did so validly file 

the final declaration. Because no units may be individually 

conveyed, or encumbered until the final declaration is filed 

submitting the property to the act, the subscription agreements and warranty deeds divested the developers of no 

interest in the property until the final declaration was 

filed;, thus they remained the fee owners until that time. 

See, 15A Arn.Jur.2d Condominiums S26, p. 855. 

Having determined the final declaration was properly 

executed and recorded, we now consider plaintiffs: 

arguments with respect to the bylaws. As we have stated 

above, the fee owners of the units until the final declaration is recorded, and thus "unit owners" by statutory 

definition (section 67-2302(14), R.C.M. 1947, now section 

70-23-102(17) MCA), are those persons who own the condominium 

project, here the developers. The statutory scheme requires 

all unit owners to adopt the bylaws by which the association 

of unit owners is governed and for the presiding officer 

and secretary of the association to certify these bylaws. 

This certification must be recorded simultaneously with 

the recording of the final declaration. Section 67-2320(2), 

R.C.M. 1947, now section 70-23-307(2) MCA. The developers 

- 8- 
in this case signed the bylaws as unit owners and certified 

the bylaws as officers of the association of unit owners 

of which they were the sole members. Appellant argues 

this procedure was not valid. We conclude it was - valid. 

Until the final declaration is filed, the fee owners of 

the project are the fee owners of the units and thus the 

"unit owners". As "unit owners" they are the "association" 

who must adopt bylaws and whose officers must certify the 

bylaws, such certificate to be recorded simultaneously 

with the final declaration. This is what happened in the 

present case and which we determine was not improper. We 

note, moreover, that in the present case all future unit 

owners, including plaintiff, affirmed virtually the same 

declaration and bylaws when they signed the subscription 

and purchase agreements. Furthermore, once the final 

declaration was recorded thus giving life to the otherwise 

inert warranty deeds to the individual purchasers, these 

owners then constituted the association and could amend 

the bylaws if they desired. 

We therefore hold the District Court was correct in 

its conclusion the condominium was properly formed and 

affirm the summary judgment on this point. 

We now must consider whether the District Court could 

correctly stay the foreclosure of the lien provided for by 

statute upon the condition the plaintiff pay all overdue 

assessments determined to be owing and to regularly pay 

all future assessments for common expenses. We note 

preliminarily that section 67-2326 (1) , R.C.M. 1947, now 

section 70-23-607(1) MCA provides for a lien against the 

individual unit for common expenses. This lien is perfected 

by filing a claim containing a true statement of the account 

due for such common expenses. Section 67-2326(2), R.C.M. 1947, 

-9- 
now section 70-23-607(2) MCA. The lien in this case was 

properly perfected to the extent of the supporting 

account. Because the condominium project was validly 

Idabel Jordan 

established the expenditures plaintiff/has admitted are 

proper as against her and thus the lien could be foreclosed. 

The question that remains is whether the District Court 

could impose a stay with respect to the payment of 

current and future assessments. 

Section 67-2326(1), R.C.M. 1947, now section 70-23-607(1) 

MCA, provides for a lien upon the individual unit for all 

common expenses chargeable to that unit. The defendant 

association perfected its lien in the manner provided for 

in section 67-2326 (2) , R.C.M. 1947, now section 70-23-607 (2) 

MCA and it is this lien defendant association sought to 

foreclose in its counter-claim. The District Court granted 

the foreclosure but stayed its execution upon the condition 

Idabel 

set forth above. However, if plaintiff/Jordan complies 

with that part of the condition requiring payment of common 

expenses currently due and owing, the lien of the defendant 

association is extinguished. Payment of the debt upon which 

a lien is based extinguishes the lien, and thus here also 

the foreclosure based upon it. Bushman Construction Co. 

v. Air Force Academy Housing, Inc. (10th Cir. 1964), 327 

F.2d 481, 485; Richter v. Walker (1951), 36 Cal.2d 634, 

226 P.2d 593, 599; 57 C.J.S. ~echanid Liens S247. The 

debt in this case obviously consists only of those assessments due up until the time of judgment of foreclosure or 

otherwise as any future assessments are undetermined 

and not yet in issue. In this circumstance there is 

nothing to stay with respect to payment of future assessments, 

as payment of currently due and owing assessments extinguishes 

-10- 
the lien and thus the basis for foreclosure. We therefore 

modify the District Court's partial summary judgment by 

striking that portion of the judgment staying the execution 

of foreclosure on the condition the plaintiff "thereafter 

regularly pay the common expenses as assessed when due . . ." 

and by limiting the stay to the condition plaintiff pay 

those expenses determined by the District Court as currently 

owing. 

We are next asked to consider the correctness of the 

Idabel 

District Court's computation of plaintiff/Jordants share of 

admitted expenditures. Defendant Elizabethan Manor has 

Idabel 

agreed with plaintiff/Jordanls argument that the amount of 

common expenses plaintiff has paid should be deducted from 

her assessed share and not from the total common expenditures 

before computing her share as was done by the District Court. 

The only question remaining are the numbers to be used in 

Idabel 

this computation. ~laintiff/Jordan argues she has been 

assessed twice for amounts placed in reserve accounts and 

would therefore not include those amounts in her computation. 

The bylaws of the association, which we have upheld herein, 

clearly provide for such reserves. See, Bylaws, Art. VI, 

Sl(d). The maintenance of such reserves by condominium 

associations has been judicially sanctioned. Association 

of Unit Owners of the Inn of the Seventh Mountain v. Gruenfeld 

(1977), 277 Ore. 259, 560 P.2d 641, 644. Because 

plaintiff has not paid any expenses except for the amount 

credited below, she could not have already made her contribution 

to the reserve account and thus is not being twice assessed 

for the same expense. The judgment of the District Court 

is therefore modified to comport with the following computation. 
Total of association checks 

for common expenditures 

Sept. 1972 - October 1976 

Less: 

Total of checks not "admitted" 

reserved by the court 4,840.44 

Total to be divided fourteen ways 

(Fourteen individual units) 26,326.87 

One-fourteenth of above 1,880.49 

Less: 

Jordan payment 

Total due by Jordan under judgment 

dated April 24, 1978 $1,225.74 

The final matter in this appeal is defendant association's 

claim for attorney fees. Defendant is correct in its 

statement that this Court has held attorney fees are 

available when provided for in an agreement between the 

parties to a lawsuit. Kintner v. Harr (1965), 146 Mont. 

461, 408 P.2d 487. In this cause the declaration provided 

for recovery of attorney fees by the prevailing party in 

litigation resulting from the default of payment of common 

expenses. Final Declaration, 516 (a) , (c) . The operative 

words are "the prevailing party". As this action now stands 

we do not perceive a prevailing party with respect to a 

final, complete judgment. The District Court has only 

decided, and we have affirmed, that the condominium was 

validly formed and that the defendant is entitled to a 

judgment of $1,225.74. There remains to be decided the 

validity of plaintiffs' assessed share of over $4,80O,.QO in 

common expenses and the necessity of an accounting. A 

prevailing party is the one who has an affirmative judgment 

rendered in his favor at the conclusion of the entire case. 

Ennis v. Ring (1959), 56 Wash.2d 465, 341 P.2d 885, 889. The 

entire case here has not - been concluded as between these two 

parties. We therefore affirm the District Court's ruling 
at this point that each party bear their own attorney fees. 

Judgment modified in part and affirmed in part, and 

remanded for further proceedings in accordance with this 

opinion. The parties shall bear their own appeal costs. 

-- 

Justice 

We Concur: 

Chief Justice