Court Opinion

ID: 3839318
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:08:21.191066+00
Date Added: 2024-06-11T14:14:20.522320
License: Public Domain

Motion for attorney fee allowed April 18, 1933                   ON MOTION FOR ATTORNEY FEE                          (21 P.2d 187)
Department 1.
Action by Leslie William Spicer and another, minors, by Mary E. Crandall, guardian, against Benefit Association of Railway Employees. Judgment for plaintiff was affirmed on appeal, and plaintiff's move for allowance of reasonable compensation to their attorney for services performed subsequent to the filing of appellant's notice of appeal.
MOTION ALLOWED.
The plaintiff (respondent), having prevailed upon the appeal, moves for the allowance of such sum as will constitute reasonable compensation to her attorney for the services performed by him subsequent to the filing of appellant's notice of appeal. Section 46-134, Oregon Code 1930, provides that in all actions upon policies of insurance, whether issued by an insurance company or a fraternal society, the plaintiff shall recover, in addition to the judgment upon the policy, reasonable compensation for his attorney, if it appears that the insurer failed to effect a settlement of its liability within six months from the day the proof of loss was filed, or failed to tender into court the amount recovered in the action. The foregoing and its antecedents have been the law of this *Page 589 
state since the 1919 legislative assembly. Pursuant to the provisions of that law, the circuit court allowed the plaintiff $300 as compensation for the services performed by her attorney in that court. In Lewis v. Continental Casualty Co., 135 Or. 170
(295 P. 450), this court held that the act did not authorize the Supreme Court to award the insured compensation for the services performed by his attorney in sustaining in this court a judgment in his favor. Immediately thereafter the act was amended (1931 Session Laws, Chap. 355) by adding the following: "If attorney fees are allowed as herein provided and on appeal to the Supreme Court by the defendant the judgment is affirmed the Supreme Court shall allow to the respondent such additional sum as the court shall adjudge reasonable as attorney fees of the respondent on such appeal".
It will be observed that the amendment, like the act which it amended, subjects only insurers to the payment of attorney fees. Since only insurance companies are dealt with in that manner, and since the insurer is not permitted to recover a fee when it prevails, the defendant argues that the act violates article I, section 20, Oregon Constitution. That section of our constitution, based upon the conviction that in democracies discrimination by public bodies in their treatment of individuals similarly situated should not be tolerated, prohibits class legislation. However, whenever experience shows that an evil arises from the activities of some specific group, a remedy may be prescribed by legislative action, applicable only to those who form the evil-producing group, without violating constitutional restrictions. Hence, the question arises whether experience has shown that insurers display such a hostile attitude towards the payment of lawful *Page 590 
claims arising out of their undertakings that the legislature can properly subject them to the payment of attorney fees when their defense is unsuccessful, even though others are not dealt with similarly. Such legislation has generally been held valid: Cooley's Briefs on Insurance (2d Ed.), p. 6669; 6 R.C.L., Constitutional law, § 418, p. 422; 12 C.J., Constitutional Law, § 930, p. 1178; and annotation, 11 A.L.R., p. 900. The various reasons suggested in the decisions in favor of and against the validity of such legislation are reviewed in the above authorities. The decisions which have sustained the validity of such legislation mention the public interest in the prompt payment of insurance money, the vexatious attitude which some companies assume towards claims presented by policyholders after a loss has occurred, declare a belief that liability to the attorney fee is intended to spur the insurer to a prompt performance of its bounden duty, and still others find in such legislation an effort to overcome the economic advantage possessed and ofttimes improperly exercised by the insurers when the insured seeks payment of a claim. The reasons assigned in support of such legislation are criticized in Williamson v.Liverpool  L.  G. Ins. Co., 105 Fed. 31, wherein the court held a Missouri statute, which permitted the court to add to the judgment 10 per cent damages and a reasonable attorney fee whenever it appeared that the insurer had vexatiously failed to pay a claim, conflicted with the 14th amendment to the federal constitution. The constitutionality of the Oregon legislation authorizing the assessment of an attorney fee has never before been questioned in this court, but its validity has been many times recognized: Title  Trust Co. v. U.S.F.  G. *Page 591 Co., 138 Or. 467 (1 P.2d 1100, 7 P.2d 805); Lewis v.Continental Cas. Co., 135 Or. 170 (295 P. 450); School Dist.106 v. New Amsterdam Cas. Co., 132 Or. 673 (288 P. 196); Dolanv. Continental Cas. Co., 133 Or. 252 (289 P. 1057); Eaid v.National Cas. Co., 122 Or. 547 (259 P. 902); Ocean A.  G.Corp. v. Albina M.I. Works, 122 Or. 615 (260 P. 229); M. Murrayv. Firemen's Ins. Co., 121 Or. 165 (254 P. 817); Johnson v.Prudential Life Ins. Co., 120 Or. 353 (252 P. 556); Rosebraughv. Tigard, 120 Or. 411 (252 P. 75); Walker v. Fireman's FundIns. Co., 114 Or. 545 (234 P. 542).
Since the validity of legislation subjecting insurance companies to liability for attorney fees when their defense upon their policies has been unsuccessful has been many times recognized by this court, and since it can reasonably be said that the litigation arising out of such policies presents features peculiar to insurance companies, we conclude that the 1931 act does not conflict with article I, section 20, Oregon Constitution.
The defendant argues that the title to the 1931 amendment violates article IV, section 20, Oregon Constitution, which provides: "Every act shall embrace but one subject, and matters properly connected therewith, which subject shall be expressed in the title * * *". The title to the 1931 act is: "To amend section 46-134, Oregon Code 1930". Section 46-134, Oregon Code 1930, was 1929 Session Laws, chapter 377, the title to which was: "To amend section 6355, Oregon Laws, as amended by chapter 184, General Laws of Oregon, 1927, relating to attorney's fees in suit or actions brought upon any policy of insurance". The title of 1919 Session Laws, chapter 110, *Page 592 
is "To provide for the collection of a reasonable attorney's fee in all suits or actions brought upon any policy of insurance in any of the courts of the state of Oregon". The court has held that the title of an amendatory act which states that it amends a section of our code specified therein does not conflict with article IV, section 20, Oregon Constitution, if the subject-matter of the original act was sufficiently expressed in its title, and if the subject of the amendatory act could have been included in the original act under its title. For a collation of our holdings see State v. Eaton, 119 Or. 613
(250 P. 233). The courts in other states operating under similar constitutional provisions have held to the same effect. See Cooley's Constitutional Limitations (8th Ed.), p. 318; 59 C.J., Statutes, p. 818, § 400; and 25 R.C.L., Statutes, p. 870, § 115. The subject-matter of the 1931 amendment could have been included under the title of the 1929 act, but since the title of the 1919 act uses the word "fee" and not "fees" the defendant argues that the title is defective. Such technical and critical constructions of the title is foreign to the purpose of this section of our constitution: 55 C.J., Statutes, p. 809, § 390. We find no merit in this objection of the defendant.
The defendant next contends that the language of the 1931 amendment expresses a purpose to be prospective in operation and not retrospective. Having advanced this contention, it argues that the amendment has no application to the present policy of insurance which was written prior to the enactment of the 1931 law. It is true that the rules of statutory construction strongly favor a prospective interpretation of statutes which affect substantive rights, but when the new statute concerns itself merely with the laws of procedure *Page 593 
or remedies, the statute is generally applied to existing rights as well as to those which may accrue in the future: Denny v.Bean, 51 Or. 180 (93 P. 693, 94 P. 503). See, also, JosephFilipkowski v. Springfield F.  M. Ins. Co., 206 Wis. 39
(238 N.W. 828, 78 A.L.R. 613) (annotated concerning the retroactive effect of insurance legislation). However, the paramount purpose of all rules of statutory construction is not to achieve some preconceived arbitrary objective, but to give effect to the legislative purpose. In the present instance the 1931 amendment indicates that the legislature itself considered and determined the manner in which the new law should be applied. The act provides: "The terms of this act shall not apply to any suit or action started or begun prior to the passage of this act". Thus, it is evident that the legislature intended that the act should be applied to all existing rights except those only which had already become the subject-matter of suits or actions. It is our opinion that the act should be applied to policies which were in effect at the time the 1931 amendment became effective.
This brings us to the contention advanced by the defendant that the act violates article I, section 10 of the Federal Constitution and article I, section 21 of the Oregon Constitution, both of which prohibit the enactment of laws impairing the obligation of contracts, and also the 14th amendment to the federal constitution. It will be helpful at this point to take note of the chronological order of the events which are material to the contention now before us. The policy was written March 1, 1924. Spicer was injured May 26, 1931, and died June 21, 1931. The complaint in the instant case was filed in the circuit court October 29, 1931, *Page 594 
and 1931 Session Laws, chapter 355, became effective June 6, 1931. This contention requires the court to determine the purpose of legislation of this kind and to decide whether such laws alter substantive rights or merely concern themselves with the remedies which jurisprudence affords for the redress of rights. The defendant seems to believe that laws of this kind attempt to amend policies of insurance by including in them a stipulation for the payment of an attorney fee. A Louisiana statute which required insurance companies to provide the insured with blank forms for making proof of loss, pay an attorney fee and damages to the extent of 12 per cent of the face of the policy when it developed that the company had failed to pay the sum promised in the policy within a period of time specified in the statute, was construed as a law affecting the right and not merely the remedy. The court pointed out that the requirement that the insurer supply all policyholders with forms for making proof of loss clearly could not be construed as anything but an attempt to alter the substantive rights of the parties: Central Glass Co.v. Niagara Fire Ins. Co., 131 La. 513 (59 So. 972). But no person has a vested right in any particular mode of procedure or remedy, and accordingly a cause must be tried under the rules of procedure existing at the time of the trial, even though they may have been changed since the action was instituted. Thus, a new remedy of treating a refusal to pay alimony as a contempt of court may be applied to existing rights without invading constitutional limitations: Judd v. Judd, 125 Mich. 228
(84 N.W. 134). Likewise, the statutory right to have causes reviewed on appeal may be so altered, while the cause is on its way to the appellate tribunal, that the right is lost: Simpson v. Winegar,122 Or. 297 (258 P. 562). *Page 595 
It will be observed that in practical operation the act before us, unlike the aforementioned Louisiana statute, will not bring to every policyholder some advantage in addition to those specified in his policy. It concerns itself only with those beneficiaries who secure an affirmance of their judgment after the insurer has transferred the cause to this court. Likewise, the act does not undertake to bring into the pockets of beneficiaries a sum greater than the amount promised to them by their policies, but merely endeavors to prevent that amount from being diminished by expenditures for legal services in actions caused by the unjust attitude of insurers. Insurance policies are generally obtained for specific purposes such as the rebuilding of a home destroyed by fire or the payment of a sum to one's dependents, and both parties to the policy calculate carefully the amount which will be needed so that the policy will yield enough and yet not be unduly burdensome. Therefore, when the insurer subjects the insured to litigation for the establishment of his rights, evil consequences are visited upon the insured different from those generally attendant upon legal action. Expenditures for attorney's services are an inevitable attendant of litigation, and the legislature evidently believed that it was right to impose this expense upon the party whose unwarranted failure to pay had created the necessity for the legal services.
Let us now see whether any help may be gained from a consideration of the holdings of other courts. In Piedmont  A.Life Ins. Co. v. Ray, 50 Tex. 511, the court construed a Texas statute which subjected life insurance companies, incorporated outside of that state but involved in litigation within the state, to the payment of a reasonable sum for an attorney fee to the *Page 596 
beneficiary, together with 12 per cent damages. It pointed out first: "Certainly the language here used seems much more appropriately to apply to losses to occur after the passage of the law than to such as had previously occurred, though they were still unpaid". Next, it expressed the opinion that the act would violate constitutional provisions protecting obligations of the contract if the act was applied to losses which had occurred before the enactment of the law. Finally, it declared: "Whether like constitutional objections will prevent a judgment for attorney's fees where the loss occurs after the enactment of the law, on a policy issued prior thereto, we are not now called upon to determine". A Missouri statute provided that, in any action against an insurance company to recover the amount of a loss under a policy which the company had vexatiously refused to pay, the court could allow to the plaintiff, in addition to the amount thereof, damages not to exceed 10 per cent on the amount of the loss and a reasonable attorney fee. In Thompson v. Traders Ins.Co. of Chicago, 169 Mo. 12 (68 S.W. 889), the court held that the statute governed the performance of the contract and not the remedy. Since the policy was written in Kansas where the insured property was located, and since the cause of action arose in that state, the court held that the statute had no application to the cause of action. In Ayers v. Continental Ins. Co., 217 S.W. 550, the Missouri Court of Appeals, under facts similar to those in the case just mentioned, reached a similar result. A year later the Supreme Court of Missouri announced a like result inFirst National Bank v. Security Mutual Life Ins. Co.,283 Mo. 336 (222 S.W. 832), where, according to the decision, it appeared: "This contract was made in Texas. Respondent is a resident of Texas, paid the *Page 597 
premiums there, and demanded performance of the contract in that state". Since the Texas statute had neither been pleaded nor proved, the court awarded no relief under the Texas statute. It again expressed the opinion that the Missouri statute affects the right and not the remedy. In American N. Ins. Co. v. Donahue,54 Okla. 294 (153 P. 819), the Oklahoma court held that a Texas statute, which authorized a court to allow not only an attorney fee but also to assess as damages an amount equal to 12 per cent of the face of a policy, should not be construed retroactively, and refused to apply the statute to a situation which was as follows: The policy was issued in 1908, the law was enacted in 1909, and the death occurred in 1911. In Arkansas Mutual FireIns. Co. v. Woolverton, 82 Ark. 476 (102 S.W. 226), the court held that a statute which authorized the allowance of an attorney fee and 12 per cent damages could not be applied to policies of insurance written prior to the enactment of the statute. It held: "The statute, if it be valid, materially affects the contract of insurance". See, to the same effect, Arkansas Mutual Fire Ins.Co. v. Stuckey, 85 Ark. 33 (106 S.W. 203). In Central Glass Co.v. Hamburg-Bremen Fire Ins. Co., 133 La. 598 (63 So. 236), the court held that a Louisiana statute authorizing the award of 12 per cent damages and a reasonable amount for attorney fees did not apply to policies issued before the law became operative, and that if it were so applied it would be invalid, as one that impaired the obligation of contracts. See, to same effect,Central Glass Co. v. Niagara Fire Ins. Co., 131 La. 513
(59 So. 972), and Guardian Fire Ins. Co. v. Central Glass Co., 114 C.C.A. 639 (194 Fed. 851) (construing the Louisiana statute in harmony with the effect given it in the aforementioned Louisiana decisions). *Page 598 
It will be observed that the statutes before the courts in the foregoing cases required the insurer to do something more than pay an attorney fee. We now come to several cases where the statute required nothing more than the payment of an attorney fee. In Peterson v. Jahn Contracting Co., 96 Wash. 210
(164 P. 937), the court held that no attorney fee was recoverable in an action upon a surety bond written before a legislative enactment went into effect which provided that in actions upon such instrument the court could allow an attorney fee "in addition to all other costs". The court said: "But whatever this attorney fee be termed — costs or something else — it is an attempt to place a substantial liability on the bonding company which it did not contract to assume". In People of Sioux County, Nebraska, v.National Surety Co., 276 U.S. 238 (48 S. Ct. 239, 72 L. Ed. 547), the federal Supreme Court expressed an inclination to take a similar view of the nature of an attorney fee. In that case a county brought an action in the federal district court upon a bond given by a national bank to assure payment of a deposit made by the county in the bank. In holding that the county could recover an attorney fee under the Nebraska statute, the court was inclined to believe that the attorney fee was not merely an item of costs and, hence, limited in amount to the sum mentioned in the federal statutes governing costs assessed in federal courts. In Bullard v. Smith, 28 Mont. 387 (72 P. 761), the court held that a Montana statute which permitted negotiable instruments to contain a provision for the payment of attorney fees affected the remedy only and that, therefore, it did not conflict with the provision of the Montana constitution which prohibited *Page 599 
the enactment of legislation "impairing the obligation of contracts". In Kline Bros.  Co. v. Royal Ins. Co., 192 Fed. 378, the court held that a statute providing for the allowance of an attorney fee to a plaintiff in his action against an insurance company related solely to a matter of procedure, and hence did not affect an action in another state. In Manhattan WholesaleGrocery Co. v. Insurance Co., 92 Kan. 336 (140 P. 853), andAlliance Cooperative Ins. Co. v. Corbett, 69 Kan. 564
(77 P. 108), the courts held that the following provision of the Kansas statutes: "The court in rendering judgment against any insurance company on any such policy of insurance shall allow the plaintiff a reasonable sum as attorney's fee, to be recoverable as a part of the costs" affected only the remedy. The courts of Nebraska have consistently adhered to the view that a statute of that state which permits the insured to recover "a reasonable sum as attorney's fees to be taxed as a part of the costs" governs only the remedy and, hence, does not violate constitutional limitations when applied retrospectively: Reed v. AmericanBonding Co., 102 Neb. 113 (166 N.W. 196, L.R.A. 1918C, 63);Ward v. Bankers' Life Co., 99 Neb. 812 (157 N.W. 1017);Nye-Schneider-Fowler Co. v. Bridges, Hoye  Co., 98 Neb. 863
(155 N.W. 235); American Fire Ins. Co. v. Landfare, 56 Neb. 482
(76 N.W. 1068). Compare Sharpe v. Grand Lodge A.O.U.W.,108 Neb. 193 (188 N.W. 100, 189 N.W. 176). In Dowell v. The TalbotPaving Co., 138 Ind. 675 (38 N.E. 389), the court held that a statute allowing an attorney fee in proceedings for the foreclosure of contractors' liens did not violate constitutional limitations protecting vested rights when retrospectively applied because it merely affected the remedy for the enforcement of rights which had *Page 600 
already been conferred by previous legislation granting a lien to the contractor. In Germania Fire Ins. Co. v. Bally, 19 Ariz. 580
(173 P. 1052, 1 A.L.R. 488), the court held that a statute which authorized the award of an attorney fee to the insured, together with 15 per cent damages, where a fire insurance company had failed to pay a loss after the proper demand, did not violate constitutional limitations when retrospectively applied. It held that the statute was an exercise of the police power of the state for the promotion of the general welfare, and that the insurance business is subject to that power.
Thus, we see that, apart from the Washington decision which concerned a surety bond, the only decisions which hold that such statutes cannot be retrospectively applied without violating constitutional limitations concerned law authorizing not alone the exaction of an attorney fee but also substantial damages, and that in one instance the statute imposed upon the insurance company a further duty to supply all policyholders with printed forms for the preparation of proofs of loss.
The 1931 amendment authorizes the imposition of nothing more than an attorney fee and concerns itself solely with cases on appeal to the Supreme Court.
We have observed from the foregoing that the courts incline to the view that the award of an attorney fee becomes an item of costs. Section 7-601, Oregon Code 1930, which was a part of the enactments adopted in 1862, provides: "The measure and mode of compensation of attorneys shall be left to the agreement, express or implied, of the parties; but there may be allowed to the prevailing party in the judgment or decree certain sums by way of indemnity for his attorney fees in maintaining the action or suit, or *Page 601 
defense thereto, which allowances are termed costs". Section 7-605, Oregon Code 1930, which was in effect prior to the issuance of the aforementioned policy of insurance, specifies the amount of the attorney fee recoverable as costs. It allows $15 to the prevailing party on appeal. Costs are in the nature of incidental damages allowed to the successful party to indemnify him against the expense of asserting his rights in court, when the necessity for so doing was caused by the other's breach of a legal duty. Thus, before the enactment of the 1931 amendment our laws had already permitted the prevailing party to recover an attorney fee. The 1931 act, therefore, did not create a new liability but merely made the old liability flexible in the expectation of being just. It is possible that the amount allowed through the exercise of judicial discretion contemplated by the 1931 act might award in some instances less than the $15 previously awarded by section 7-605. This court has three times recognized the fact that the attorney fees recoverable under circumstances similar to those now before us are cost items:Johnson v. Prudential Life Ins. Co., 120 Or. 353 (252 P. 556);Title Guarantee  Trust Co. v. Wrenn, 35 Or. 62 (56 P. 271, 76 Am. St. Rep. 454); Bank of Ogden v. Davidson, 18 Or. 57
(22 P. 517). See, also, 33 C.J., Insurance, p. 146, § 894, and 7 R.C.L., Costs, p. 792, § 17.
We believe that the award of the attorney fee can properly be considered as nothing more than the imposition of a cost item for which there was already a liability prior to the enactment of the 1931 amendment, and that, hence, when the statute is retrospectively applied it does not conflict with the constitutional limitations to which the defendant has directed our attention. *Page 602 
There is still another reason why this act does not become invalid when retrospectively applied. The amendment authorizes the award of an attorney fee only in causes which have been appealed to this court and have been affirmed by it. It is a burden imposed upon the privilege of appeal to this court. At common law appeals were unknown and, as we have many times pointed out, our constitution contains no guarantee of review by the process of appeal. Appeal is, therefore, a statutory privilege and not a common law or constitutional right. Such being its nature, the legislature may in its discretion prescribe in what manner appeals may be taken and what limitations may be imposed upon the privilege: Cooley's Constitutional Limitations (8th Ed.), p. 840; 3 C.J., Appeal and Error, p. 318, § 30; 2 R.C.L., Appeal and Error, p. 28, § 5. The burden which the 1931 amendment imposes upon the privilege of seeking appellate review casts the expense of attorney fees upon the unsuccessful insurer-appellant. Apparently the legislature was persuaded that, since the one party or the other would be compelled to discharge this expense, it was just that the insurance company should bear it, since its unwarranted attitude had created the necessity for the legal services. Manifestly the expense will never be so great that any insurance company will abandon the privilege of an appeal rather than subject itself to the hazard of having the attorney fee imposed upon it. Hence, the statute cannot be construed as an effort to deprive insurance companies of due process of law if we should grant that due process of law includes a right to appellate review. Clay v. Clay, 56 Or. 538
(108 P. 119, 109 P. 129), is authority for the proposition that due process of law does not demand a right to *Page 603 
appellate review. We, therefore, conclude that the statute is valid when retrospectively applied.
The question now occurs what sum should be allowed the plaintiff as reasonable compensation for the services rendered by her attorney in this court. The jury awarded her $300 as compensation for her attorney's services in the circuit court. The statute does not contemplate the introduction of testimony in this court and evidently presumes that we will be governed by the facts which of necessity come to our attention in the examination of the case (Sherwood v. Wise, 132 Wash. 295 (232 P. 309, 42 A.L.R. 1219)), after having applied to them the commonplace rules which govern the measurement of attorney fees. They are reviewed in Schmalz v. Arnwine, 118 Or. 300 (246 P. 718). However, in an action of this kind the size of the fee is not to be determined as though it were a speculative or contingent one: Merchants'Fire Ins. Co. v. McAdams, 88 Ark. 550 (115 S.W. 175). The facts and circumstances which have come to our attention in the presentation of the cause in this court enable us to determine in a satisfactory manner the value of the services of the plaintiff's attorney rendered subsequent to the recovery of judgment in the circuit court; for instance, we heard his argument before this court; we have examined his brief, etc. Other courts have held that such services, within the presence and knowledge of the court, constitute evidence from which the court, unaided by opinion of others as to value, or even in defiance of such opinion-evidence, may reach a conclusion:Larscheid v. Kittell, 142 Wis. 172 (125 N.W. 442, 20 Ann. Cas. 576); Tullgren v. Karger, 173 Wis. 288 (181 N.W. 232);Crutcher v. Sims, 184 Mo. App. 488 (170 S.W. 430); Farley v.Geisheker, *Page 604 
supra. The transcript of evidence was short; the assignments of error were few in number; the questions of law were not difficult; the amount involved was $2,700; and the presentation of respondent's defense to this court displayed no unusual labors. It seems to us that in the presentation of any cause of ordinary importance before this court an attorney's fee of $150 is a reasonable amount. The plaintiff may, therefore, add that amount to the costs awarded to her on appeal.
In the respondent's cost bill we find this item: "Copy of transcript of evidence, $18.00". The appellant has moved to strike that item. The motion should be and is allowed. J.A.Campbell Co. v. Corley, 140 Or. 462 (3 P.2d 776,13 P.2d 610, 14 P.2d 455).
RAND, C.J., and BEAN, J., concur.