No. 83-24 IN THE SUPREPIE:COURTOF THE STATE OF MONTANA 1984

FALLON COUNTY, a political subdivision of Montana, Plaintiff and Respondent,

-vsHUGH BRINDLEY, DefendantandAppellant.

APPEAL FROM: DistrictCourtof the Sixteenth JudicialDistrict, Inand for the County of Fallon, The HonorableAlfred 

### B. Coate,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: Robert L. Johnson, Lewistown,Montana

For Respondent: Denzil R. Young, Baker,Montana

Submitted on Briefs: February 9, 1984 Decided: SepteElber 6,1384

Filed

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ClerkMr. Justice Fred J. Weber delivered the Opinion of the Court. This is an appeal from a judgment of the DistrictCourt of the Sixteenth Judicial District of FallonCounty,awarding $500 per month rental from November 17, 1979 until the County's scraper is returned. We vacate the judgment and remand the cause for furtherproceedings. The issues presented on appeal-are: 1. Did lessee's obligation to pay rent terminate when the scraper was rendered useless? 2. Did lessee's attempt to return the scraper terminate his rental obligation? 3. Did the District Court err in holding that the lessee was responsible for monthly rental payments until the scraperwas returned to the County storage yard? 4. Was the lessor obligated tomitigate damages? Hugh Brindley, an earth-moving contractor from Winnett, Montana, rented a Caterpillar Model 435 pull-type scraper fromFallonCounty on October 15, 1979. He signed a contract presented to him by the County and paid one month's rent of $500 in advance. The County's shop foremanwatched Brindley load the scraper onto his truck to transport it from the County storage yard. Brindley winched the scraper's front wheels up and safety chained the scraper to his truck. He transported the scraper in this manner without incident to a worksite outside of FallonCounty. Brindley testified that he attempted to transport the scraper hack to the Fallon County storage yard in Baker at the end of the prepaid, one-month period. He secured the scraper to his truck in the samemanner in which he had left the storage yard. Approximately 24 miles from Raker, the scraper separated from the truck and sustained majorstructural damage. Separated parts of the scraper came to rest in apasture owned by Richard Reiger. Unequipped to transport the separated scraper, Brindley helped Reiger repair the fence, returned to Winnett, and telephoned County Commissioner Gary Lang to report the accident. Commissioner Lang viewed the accident scene two days later. Neither Brindley nor the Countymade any effort to tow the scraperparts to Baker after the accident. During months of negotiation following the accident, the County made no demand that Brindley pay additional rental or that he return the scraper to the County storage yard. The County refused Brindley's offer tobuy and transport to Baker

a used scraper of the same age and model, which he had discovered for sale in Idaho. The October 15, 1979 rental agreement between Brindley a.ndFallon County provides inpertinent part: "Lessee shall pick up the scraper and upon termination of this contract, shall return it to Fal-lonCounty. Lessee shallnot be responsible for major structural damage to the scraper unless it canbe shown that thisdamagewas occasionedby his abuse

# . . .I1 The agreement is silentas toduty to repair, fitness foruse or destructionof the thing hired. On October 17, 1980, approximately one year after renting the scraper to Brindley, the County filed suit against Brindley claiming that "the scraper was wrecked and virtually destroyed, and has never been returned." The complaint further alleged that "the scraper, before its destruction, had a value in excess of $10,000.

### " The County asked "for the value of the scraper and for the value of its

use at $500.00 per month from and after November 15, 1979The case wa.s tried before the court on April 21, 1982. The record contains no explanation as to why trial was scheduled more than a year after the last pleading was filed with the District Court. In the meantime, the scraper remained inReiger's pasture. The District Court found that Brindley paid $500 to the County before takingpossession of the scraperon October 17, 1979; that the accident occurred in January, 1980; and that,

a.s a result of the accident, the scraper sustained serious structural damage. The court concluded that the County had failed to prove the scraper was being tra-nsported in a negligent manner or that the defendant's method of transporting the scraper caused the accident. Having failed to prove that the damage to the scraper was "occasioned by his [the lessee's] abuse," the County was not entitled under its contract to recover for the damage to the scraper. The court further concluded that defendant's obligation to pay a monthly rental of $500 continued until defendant returned the scraper to Fallon County's possession. The court awarded the County $500 per month rental from November 17, 1979 until the scraper is returned. The record contains no evidence that the scraper has ever been returned to the Fallon County storageyard. Appellant's counsel alleges that the County sold the scraper "as is" from Reiger's pasture after judgmentwas entered against Brindley. The record includes testimony by Commissioner Lang that the estimated value of the scraper at the time of the accident was $8,000. We note the amount of past due rental awarded to the County at the time of the August 16, 1982 judgment was more than twice the estimated value of the scraper.Hon-.Fred J. Weber Justice, Supreme Court Room 414 Justice Building 215 North Sanders Helena, Montana 59620 CORRECTION.Inpreparingthis opinionforpublication,wenoted inourverificationoftitlesand citations thematters listed below.Correctionshave been madeonourcopyoftheopinion.

October 4, 1984 Fallon County 

### v. Brindley, No. 83-24, Sept. 6, 1984

Page 5, line 12 from bottom 

## --- 150 Mont. at 261-62 should read 150 Mont. at 361-62.

-. WESTPUBLISHINGCOMPANY Box43526 St.Paul,MN55164While the parties have raised several issues on appeal, we consolidate the first three issues into one question: Did the lease terminate on the date of the accident? We find this issue to be determinative. We need not address the issue ofmitigation at this time. Section 70-1-607(4)

## , MCA provides: "When hiring terminates. The hiring of a thing terminates 

# . 

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# . by the destruction of the thing hired.

### " This section and its predecessor apply to all things hired. In American Ma-chine Company 

### v. Johnson (1971), 157 Mont. 226, 483 P.2d 921, we held that section 42-109, R.C.M. 1947 controlled termination of the lease of a "skidder" machine. In Solich v. Hale

(1967)

### , 150 Mont. 358, 435 P.2d 883, the statute controlled termination of a lease ofpremises in a building. Absent a contractual provision to the contrary, the lease terminates by law upon the destruction of the thing hired. Only express agreement to the contrary can preclude operation of the sta-tute. Kosena v. Eck (1981.), 195 Mont. 12, 18, 635 P.2d 1287, 1290-91, citing Solich, 150 Mont. at 341 -2-63-62, 435 P.2d at 885. No such agreement exists in this

case.In Solich, supra, the only factual issue presented, other than damages, was whether a building that had been partially gutted by firewas repairable or destroyed. Lessor argued that the building was destroyed and plaintiff's lease terminated by operation of law. This Court set forth two tests for determining whether section 42-109, R.C.M. 1947

(thepredecessor to section 70-1-607, MCA) applied. The first test, which the Court labeled an "untenability" test, is essentially a test for fitness for

use:"Under this test the thing hired is considered destroyed: 'When destruction of the demised premises is of such a nature that it cannotbe used for thepurposes forwhich itwas rented and cannot he restored to a fit conditionby ordinary repairs, made without unreasonable interruption of the lessee's use.' Presbyterian Distribution Services v. Chicago National Bank, 28 Ill.App.2d 147, 171 N.E.2d 86, 90." Solich, 150Mont. at 362, 435 P.2d at 885. Under the second test, the Court considered the thing destroyed "if the cost of restoration 

# . . . as it was immediately before the fire is more than one-half of the value of the property at the time of the fire." Solich, 150 Mont. at 362, 435 P.2d at 885. The Court held that under both tests the evidence lead to the conclusion that the building was destroyed. The Court observed that "partsof respondent'sbusinesswere located in both buildings. A destruction of even the 'so-called' north building would be sufficientto terminate the lease under the statute involved." Solich, 150 Mont. at 364, 435 P.2d at 886. Under both the fitness-for-use and cost-of-repairs tests, "destruction" can mean less than complete obliteration. The record here indicates that the scraper's fitness for use ceased when it separated from Brindley's truck and "sustained serious structural d.amage." The County's complaintalleged that the "scraperwaswrecked and virtually destroyed"by the accident. CommissionerLang testified that the scraper was not fit for use, but that he had not investigated the cost of repairs. The record is silent as to the salvagevalue of the scraper, the cost of repairs,or how long it might take to return the scraper to fitness for use. The District Court failed to issue findings of fact on the fair market value of the scraper before the accident and the cost, time and feasibility of repairs to restore thescraper to fitness for use after the accident. Absent such findings, this Court cannot rule on whether the scraperwas destroyed on the date 

### of the accident and whether the lease terminatedby operation of law. We vacate the judgment of the District Court and remand for appropriate findings and such proceedings as are necessary.

We concur: 

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### LbPD-Q Chief Justice