No. 12817 INTHE SUPREME 

### COURT OF THE STATE OF MONTANA 1974

EMMA LOIdE

## , Plaintiff and Appellant,

-vs

# - FRED C. ROOT, et a]-., Defendants and Respondents.

Appeal from: District Court of the Fourth Judicial District, Honorable Jack L. Green, Judge presiding. Counsel of Record: For Appellant: Richard J. Conklin argued, White Sulphur Springs,

Montana For Respondents: Garlington, Lohn and Robinson, Missoula, Montana Sherman V. Lohn argued and Gary L. Graham argued,

Missoula

## ,Montana

Submitted: November 

### 22, 1974 Decided: rrR 

# - .c 

## -@ 13TZ 

## --- Filed: -rb 6 -''k!k .d .I, Y'Mr. Justice Wesley Castles delivered the Opinion of the Court.

This isan appeal by the lessee, Emma Lowe, from a summary judgment of the district court, Missoula County, granted in favor of lessors, Fred C. Root, Carl E. Dragstedt, Evelyn Dragstedt, Ella R. Clausen, Elmer S. Dragstedt and Elinor R. Dragstedt. On April 9, 1970, Emma Lowe entered into two nearly identical leaseswith the lessors, each involving an undivided one half interest in the same real property described as the Belmont Hotel inthe cityof Missoula. One lease identified Fred Root as the lessor, the other identified the Dragstedts and Ella Clausen as lessors. Each leaseprovided that the term of the lease should run up to and including March 31, 1974. The lessor expressly covenanted for the lessee the quiet enjoyment of said term. Lessee agreed to: 

# "* ?

# * care forand maintain the interior of said premises and the exterior casings of allwindows located on said premises; topermit no unlawful use of said premises; tomake no major alterations without permission of the lessor; tomaintain and repair the heating plant and hot water heater,

# *** and tocarry adequate insurance toprotect the lower floor tenants from any water damage." The lessors, for their part, were: 

# "*** tokeep and maintain the exteriorwalls of said premises and the roof, and tobe responsible for the care and repair of said roof

# ** yc." Allparties expressly understood and agreed that they had examined the premises and knew the condition thereof. While in possession of the premises lesseeEmma Lowe received

a letter for the firemarshal, dated January 23, 1973, outlining

a number of violations of the Life Safety and Electrical Codes of the cityof Missoula and state of Montana. With the sole exception of deficiences with respect tothe fireescape, alldeficiencies enumerated in the letter involved the interior portion of the building. The letterreferred to a letterdated December 23, 1970 which listedmany of the same deficiencies. Emma Lowe admitted receiving this 1970 letter. The January 1973 letter ordered the violations tobe correctedby August 1, 1973.Lessor Root contacted the county attorney and requested him to initiatean action to condemn the premises from further use

as a hotel, boarding house or rooming house. On May 14, 1973,

an order of condemnation was filed in the district court declaring the premises tobe a firehazard and a public nuisance and ordering allparties to this instant action to alter and repair thebuilding

on orbefore August 

### 1, 1973. On August 3, 1973, the district court granted summary judgment, affirming the order of condemnation and directing the statefiremarshal toproceed with its enforcement. On June 19, 1973, Lowe filed a complaint indistrict court against Fred Root seeking lost profits for the remainder of the lease term and renewal term. The pertinent grounds of the complaint

were: The premises were unfit for the purpose forwhich they were rented. Defendant Root had failed tomaintain the premises ina good and proper fashion so that they could be operated for the purpose forwhich the leasewas intended. Plaintiff Lowe had demanded that defendant Root perform according to the terms of the contract torestore the premises to a good and proper condition for the purpose forwhich theywere rented and that defendant refused. Emma Lowe had been caused tobecome the defendant inthe condemnation actionbecause of the failure of defendant torepair. In Count VIIIof her complaint Lowe alleged in the following garbled fashion: 

# "*** That they [the defendants] fraudulently concealed informntion concerning the defects on the premises, from the plaintiff and fraudiientlywithheld the same information, which was known to them concerning the defective condition of the premises and that said defectswere concealed unobservable by a common examination of the premises, and that the plaintiff, inreliance on the assurance of the defendants that the premises were, in fact, in fitand proper order, basis for the performing of the business of a hotel rental as they had been leases for, entered into the agreement. It Count 

### IX of the complaint alleged: 

### hat the defendant has wilfully, wrongfully, unlawfully, and intentionally attempted to drive the plaintiff from the full and quiet enjoyment of the premises, under the lease. That the defendant, Fred C. Root, isthe City Attorney of the City of Missoula, and was privity toknowledge concerning the defects above alleged in the premises. 

# ***That said defendant, Fred C. Root, has acted willfully, maliciously, and wrongfully inan attempt tovex, harass, annoy and intimidate the plaintiff gc

# **. The defendant has, as an agent for the

# *** [Dragstedts and Clausen] and for himself used the position of his office to exert, through the County Attorney's Office, caused tobe filed a complaint alleging that theplaintiff is guilty of allowing the premises to fallintodecay, and further the defendant has, athis specific request and intent, caused the County through the County Attorney's office, toissue an Order declaring the premises a firehazard and attempting toabate the same." Three days laterLowe fileda nearly identical complaint against the remaining defendants. The only substantial difference inthis second complaint was she alleged that Root acted as the agent of the other defendants. Subsequent to the condemnation, Lowe vacated the premises and

no further rentalswere paid. The two actions heretofore mentioned, plus an unlawful detainer action filedby defendants against plaintiff Lowe were consolidated. Defendants moved for summary judgment. In 

### itsjudgment and order granting defendants

## ' motion, the district court held that under the terns of the leases defendants were not obligated tomake the substantial changes and alterations required; that section 42-202, R.C.M. 1947, limitsrecourse by a tenant tovacating the premises

orperforming repairs up to the amount of one month's rentalwhere,

ashere, the leased premises are forhuman habitation; that punitive damages cannot be awarded without a showing of actual damages; and, that plaintiff inspected the leased premises and knew 

### itscondition. Plaintiff appeals from the district court

## 's granting defendants' motion for summary judgment. Three issues are presented for consideration on appeal: Was the district court correct granting summary judgment to the defendants on the issue of fraud? Was the district court correct initsdetermination that sections 42-201 and 42-202, R.C.M. 1947, constitute a bar to the claim of plaintiff? 

### (3) Was the district court correct initsdetermination that plaintiff's complaint did not present a factual question of wrongful disruption of possession?We answer allquestions in the affirmative. As to the issue of fraud, the previously quoted Count VIII of the complaint alleged fraudulent concealment of certain information as todefects inthe property prior to the leases. Although appellant appears tohave abandoned any argument that shewas defrauded as to the physical condition of the premises,

we shalldiscuss that issueinorder to show that summary judgment in favor of respondents was proper with respect to that level of fraud. In support of her misrepresentation argument, appellant citesLee v. Stockmen's National Bank, 63 Mont. 262, 284, 207 P. 623. 

# - Lee setsforth the elements necessary toprove actual fraud. it goes further, however, and states:

I11When it appears that a party, who claims tohave been deceived tohis prejudice,has investigated for himself, or that the means were athand to ascertain the truth

# * 9; 

# * of any representations made tohim, his reliance upon such representations made tohim, however false they may have been, affords no ground of complaint. 1 (Grinrod v. Anglo-American Bond Co., 34 Mont. 169, 85 Pac. 891; Power & Bros. v. Turner, 37 Mont. 521, 97 Pac. 950; 26 C.J. 1149.)I' (Emphasis supplied). In otherwords, ifappellant's inspection of the premises revealed orwould have revealed the true physical condition of the premises, shewould have no right to relyupon any concealment by respondents with respect tothe physical condition of the premises. Both leases provide that the parties "agree that they have examined the premises and know the condition thereof1'. Appellant admits she inspected the premises. A review of the deficiencies as cited in the order of condemnation, reveals that allof the alleged defectswere open and notorious. A superficial inspection'of the building would reveal those deficiencies. Applying the facts of this case toLee, and particularly to the language quoted heretofore, necessitates a finding that an actionable case of fraud as to the physical condition of the premises could not be found under the circumstances. The claimed misrepresentation was not argued by appellant Lowe inthe trialcourt, except inwhat may be described as an oblique

manner. The rather garbled allegation in Count VIIIof the complaintdid not, by itself, allege fraud as to legal consequences flowing from the physical condition of the premises. Following the granting of summary judgment, appellant filed what she called a motion forrehearipg. For the first time, not 

### in the motion, but in the brief filedwith the motion, appellant Lowe rather obliquely states that: 

# "*** the premises were not in fact, fitfor the purpose of leasing the same as a hotel and that the knowledge that the premises were not fit for the purpose forwhich they were leased was a special and peculiar knowledge available to the defendants through their agent, and not readily available to the plaintiff by mere examination of the premises. That it required an expertise, that the defendant possessed and the plaintiff did not.* 

# * *.I1 With thisbare reference at this point in time, the trialcourt willnot be put inerror. It isdifficult to lend credence to the claim of Emma Lowe of fraudulent misrepresentation in light of the information contained in the exhibit attached to the order of condemnation. The letter dated January 1973 toLowe recites that in a letter dated December 23, 1970, many of the discrepancies were pointed out. This much later, beyond the period of the statuteof limitations, more than an oblique reference ina brief on a motion for rehearing would be necessary toresurrect a fact issue on motion for summary judgment

# . Appellant's second issue iswhether sections 42-201 and 42-202, R.C.M. 1947, constitute a bar to the claim of appellant. Those sections provide: "42-201. The lessor of a building intended for the occupation of human beings must, in the absence of an agreement to the contrary, put it into a condition fit for such occupation, and repair allsubsequent dilapidations thereof which render ituntenantable, except such asarementioned in section42-105." "42-202. If, within a reasonable time afternotice to the lessor of dilapidationswhich he ought to repair, he neglects to do so, the lessee may repair the same himself, where the costs of such repairs do not require an expenditure greater than one month's rent of the premises, and deduct the expenses of such repairs from the rent, or the lessee may vacate the premises. inwhich case he shallbe dischargeh from further payment of rent, or performance of other conditions.I ISection42-105, R.C.M. 1947, simply states: "The hirer of a thing must repair alldeteriorations or injuries thereto occasioned by his ordinarynegligence.tI In Landt v. Schneider, 31Mont. 15, 17,18, 

### 77 P. 307, the Court said:

11

It is an elementary principle of law that, in the absence of a statute or agreement, there isno implied warranty that leased premises are suitable for the purposes forwhich they are demised, or that the lessor willkeep the property inrepair. 11 See also: Kintner v. Harr, 146Mont. 461, 482, 408 P.2d 487. ~ontana's statuteswere derived from the California Civil Code, sections 1941and 1942. In 1881, inVan Every v. Ogg, 59 Cal. 563, 566, the California Supreme Court well stated the reasons for the two statutes: "It is insisted that the section last cited [42-2011, by operation of law, inserts in every lease a covenant on the part of the landlord torepair. But bearing in mind that atthe common law no such covenant was implied, and reading the two sections together, the intent seems clear that the obligation of the landlord should be limited by the extent of the privilege conferred upon the tenant; that it isthe duty of the landlord torepair upon notice, and ifhe does not perform this duty he is tobe compelled topay, by deduction from the rent, to the extent of a month's rental---or, atthe option of the tenant, the term be concluded without redress to the landlord." Then the California Court went on topoint out that prior to an amendment in 1874, section 1942 of their civilcode read: ""1f. within a reasonable time afternotice to the

lesior of dilapidations which he ought torepair, he neglects todo so, the lesseemay repair the same himself, and deduct the expenses of such repairs from the rent, or otherwise recover it from the lessor. I I1 In 1922, this Court decided Noe v. Cameron, 62 Mont. 527, 532, 205 P. 256, a case almost identical to the instant appeal. In 

# - Noe

an actionwas brought to recover damages alleged tohave been sustained by plaintiff as the lessee of a hotelbecause of the failureof defendant tomake repairs afternoticewas given by plaintiff. This Court, citingBush v. Baker, 51Mont. 326, 152 P. 750, said:"'2

# *

# * These sections [42-201 and 42-2021, aswe are told in the report of the Code Commission, were taken from California, and investigation discloses that they came tous with a constructionupon them which leaves no room for doubt. [Cases cited]. This construction 

### is to the effect that, if the landlord fails torepair after notice, the tenant may himself repair, within a certain limit, ormove out; but he has no redress indamages for injury to person or property consequent upon the landlord's failure torepair. Whether this construction be right ornot, itwas presumably adopted with the sections themselves, it constitutes a rule of property, and the courts of this statearewithout authority toalter it. 111 Beyond a doubt a hotel is "a building intended for the occupation of human beings" and thus within the scope of sections 42-201 and 42-202, 

### R.C.M. 1947. Appellant had the choice of making the repairs called forby the letter of the firemarshal and deducting the cost from the rent payments, to the extent of one month's rent,

or to vacate the premises. She cannot, however, recover damages from respondents for their failure toput thehotel into a condition fitfor the occupation of human beings. This result 

### isnot affectedby the fact that one of the discrepancies alleged in the letter of the firemarshal was the fireescape and that the lessors had covenanted "to keep and maintain the exteriorwalls of said premises". Conceding for the sake of argument that the fireescape was within the definition of "exterior walls" and thus the duty of respondents torepair it, such clause inthe lease added nothing to the statutory duty of the lessors imposed by section42-201, R.C.M. 1947. Since the language of the lease added nothing to the statutoryduty, the limitation of section42-202, R.C.M. 1947, remains applicable. We do not want tobe understood asholding that the parties could

never contract inexcess of the statutory dutieswith respect to dilapidations which rendered the premises untenantable. We merely statethat this isnot such a case. In appellant's third issue on appeal she asserts the complaint states a cause of action in tort and breach of contractbased upon the disturbance of her contract right toquiet enjoyment of the premises. She intimates that respondents are liableunder thistheory of action because respondent Root allegedly requested the county attorney tobring action against her for the purpose of ousting her from the leased premises. Her complaint alsohints atan action for malicious prosecution and that ~oot's position as city attorney had some relevance toher cause of action. Any hint of an action formalicious prosecution can be quickly disposed of. Elements of that action, among others, are: (1) the prior proceeding must have terminated in favor of the present plaintiff, and (2) there must be an absence of probable cause for the institution of such proceeding. 54 

### C.J.S. 14alicious Prosecution, 

### $4. Here, the condemnation action terminated in summaryjudgment in favor of the state. Cases cited inthe Annotation, 41ALR2d 1414, 1442, illustrate the rule that where a tenant's enjoyment isinterferedwith in the exercise of the police power, and 

### isnot caused by the breach of any obligation owed by the landlord to the tenant, such interference does not constitute a breach of the covenant for quiet enjoyment. Appellant seems to accept this as a general rulebut contends that the affirmative actions of Root in instigating the condemnation action constitute a breach of the quiet enjoyment covenant. After exhaustive search, we find only one case having similar facts. In Dolman v. United States Trust Co. of N.Y., 134N.Y.S.2d 508,510, the trialcourt denied the defendant's motion to dismiss the complaint, stating: "For, if the plaintiff can support his claim that the defendant by itsaffirmative act instigated and facilitated the condemnation proceedings [eminent domain] and the consequent eviction, then in my view the plaintiff has presented a cause of action forbreach of the covenant of quiet enjoyment

# .1I However, on appeal Dolman was reversed, 2N.Y.2d 110, 138 N.E.2d 784, 157 N.Y.S.2d 537,541, the Court of Appeals held "the tenant was evictedby reason only of the exercise of the sovereign power of eminent domain" and that the lessor's cooperation with the city did not constitute a breach of the covenant of quiet enjoyment.

### We areunwilling to hold that the scope of the covenant of quiet enjoyment precludes a lessor,knowing ofviolations of ordinances and statutes, from reporting suchviolations to the authorities. We shouldnot requirea lessor to risk damages being assessed against him because he has taken it upon himself to protect the public by reporting the facts to the authorities. Here, the district court in the condemnation action established that the defects on these premises constituted a firehazard. The public interest is served by allowing any person who has knowledge of a risk to public health of safety,be he lessor or otherwise, to feel free to report such risk to the authorities without fear of having later to respond in damages. The intent of the lessor in reporting such a risk to public health and safety is immaterial, the public interest being paramount. The fact that lessorwas the city attorney is likewise immaterial, therebeing no privity between the city and county attorneys. Root was in the position of any other private lessor. Having examined the issues raised and findingno merit,we affirm the judgment.

We Concur:

Justices /



### Hon. Gordon Bennett, sitting for Chief Justice James T. Harrison.