Court Opinion

ID: 9536502
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:00:52.805937+00
Date Added: 2024-06-11T14:54:35.297336
License: Public Domain

SUMMERS, Justice,
concurring.
I write separately to explain in greater detail why the wholesaler, Clayton Propane, Inc. should have it’s attorney’s fee paid, and why the retailer, Kiamichi Valley LP Gas Co., should not. The issue before us is the extent of a manufacturer’s obligation arising from a products liability suit to indemnify a distributor of his product. The requirement of such indemnification was recognized in Braden v. Hendricks, 695 P.2d 1343 (Okl.1985). Where the term “manufacturer” is used herein it is meant applicable to Kerr-McGee, the gas refiner, and where “distributor” is used it is meant applicable to Clayton Propane, Inc. and Kiamichi Valley LP Gas Co., wholesalers and retailers of the gas.
In Travelers Insurance Company v. L.V. French Truck Service, Inc., 770 P.2d 551 (Okl.1988), we described the manufacturer’s obligation as being noncontractual or equitable indemnity similar to common law contribution. Id. 770 P.2d at 555 n. 16. This duty to indemnify is in the nature of a quasi-contract1 which is also likened to *301common law contribution.2 In explaining different types of quasi-contracts Professor Corbin stated:
“Where one is compelled to pay money to a third person, which the defendant was legally bound to pay, the defendant must reimburse the one so paying. Illustrations of this are found in the rights of contribution and indemnity in favor of a surety or of a joint tort-feasor.... The same obligation has been held to exist where one pays under compulsion money that another ought to have paid, even though that other was not legally liable.” Corbin, Quasi-contractual Obligations, 21 Yale L.J. 533, 538-539 (1912). (Emphasis in original; footnotes omitted).
Thus, just as indemnity between joint tort-feasors may give rise to a cause of action based upon quasi-contract, the obligation of the manufacturer to his distributor is one of quasi-contract. Imposition of the quasi-contract as between tortfeasors is based upon their relative moral responsibility, and the one primarily responsible for the wrong bears the consequences. F. Woodward, The Law of Quasi Contracts, 406-409 (1913). We recognized a similar principle in Fakes et al. v. Price, 18 Okl. 413, 89 P. 1123 (1907), wherein we stated
“It is a well-established rule that among wrongdoers the law raises no implied promise or right of contribution; the legal maxim being, ‘In pari delicto potior est conditio defendentis/ This rule is subject to the exception that persons jointly liable for a wrong may have contribution where there was no wrongful intent, or where the wrong committed was not in itself illegal.” Id. 89 P. at 1124.
We recognized a similar exception in Braden v. Hendricks, supra, where we stated:
“While Oklahoma’s jurisprudence does not have a statutorily unrestricted right of contribution among joint tortfeasors, it does recognize a right of indemnity when one — who was only constructively liable to the injured party and was in no manner responsible for the harm — is compelled to pay damages because of the tortious act of another.” Braden v. Hendricks, 695 P.2d at 1349.
Thus, the manufacturer’s obligation arises because the distributor is constructively liable for the manufacturer’s wrongful act, and the obligation is one sounding in quasi-contract.
The wholesaler and retailer argue that their attorneys' fees must be paid by the manufacturer because of 15 O.S.1981 § 427(3). That provision states:
“An indemnity against claims or demands, or liability, expressly or in other equivalent terms, embraces the costs of defense against such claims, demands or liability incurred in good faith, and in the exercise of reasonable discretion.”
Their misinterpretation of § 427 becomes apparent once the manufacturer’s noncon-tractual indemnity obligation is understood to be quasi-contractual.
Contracts may be either express or implied. 15 O.S.1981 § 131. In an express *302contract the terms are stated in words. 15 O.S.1981 § 132. In an implied contract its existence and terms are manifested by conduct. 15 O.S.1981 § 133. An implied contract is a contract implied in fact. Ray F. Fischer Co. v. Loeffler-Green Supply Co., 289 P.2d 139 (Okl.1955). In express and implied contracts an agreement exists between the parties. Wattie Wolfe Co. v. Superior Contractors, Inc., 417 P.2d 302, 308 (Okl.1966).
A quasi-contract does not arise from the parties’ agreement or conduct but is an obligation implied in law. First National Bank of Okmulgee v. Matlock et al., 99 Okl. 150, 226 P. 328, 331 (1924). See also, R.M. Jackson, The History of Quasi-contract in English Law, 129 (1936), wherein he states: “the essence of contract has thus come to be agreement, whilst the essence of quasi-contract has remained a duty imposed by law irrespective of agreement”. Quasi-contracts are not, in a strict sense, contracts at all.3 The term quasi has been described as “a weasel word, that sucks all the meaning of the word that follows it”. Corbin on Contracts, § 19 (1963). The scope of the quasi-contract obligation is simply not determined by substantive principles of contract law. Cotnam v. Wisdom, 83 Ark. 601, 104 S.W. 164 (1907); Sceva v. True, 53 N.H. 627 (1873); E. Woodruff, Cases on the Law of Quasi-Contracts, 5-6 n. 1 (2d ed 1917).
The retailer and wholesaler claim that 15 O.S.1981, § 427(3),'provides for recovery of their attorneys’ fees. The reason it doesn’t is that section 427 begins with the language: “In the interpretation of a contract of indemnity the following rules are to be applied, unless a contrary intention appears.” (Emphasis added). Since “contracts” in Title 15 are express or implied in fact, and since indemnity sought in the present case must arise, if at all, in quasi-contract, section 427 does not apply. As we shall develop, a manufacturer’s obligation under the doctrine of quasi-contracts, apart from noncontractual indemnity, may, in certain cases, require payment of the legal fees incurred by a distributor in defending a cause of action based on products liability.
In Braden v. Hendricks, supra, we noted that other jurisdictions recognize a manufacturer’s noncontractual obligation to indemnify its distributor upon a claim for loss stemming from the manufacturer’s liability for harm caused by the manufacturer’s defective product. Id. at 1349-1350. One of the cases we cited was Heritage v. Pioneer Brokerage & Sales, Inc., 604 P.2d 1059 (Alaska 1979). In Heritage the court found that an indemnitee/retailer was entitled to recover full costs and attorney’s fees for expenses of its successful defense of a products liability action from the in-demnitor/manufacturer. Id. at 1067.
The indemnitor-indemnitee relationship as described in Braden v. Hendricks arises because of the relative moral responsibility between a distributor and manufacturer in placing a defective product in the stream of commerce. The absence of a defective product means the absence of that indemnitor-indemnitee relationship which arises from the existence of a defective product. However, this conclusion does not settle the issue. The manufacturer must, if the principles of quasi-contract are to be recognized, still pay his distributor’s attorney’s fees in certain situations.
*303Quasi-contracts have been defined as “legal obligations arising ... from the receipt of a benefit the retention of which is unjust, and requiring the obligor to make restitution.” F. Woodward, The Law of Quasi Contracts, § 2 at 4 (1913). Professor Corbin stated:
“In some instances where the plaintiff has voluntarily conferred a benefit upon the defendant without the latter’s request, the defendant is obliged to reimburse the plaintiff. Such was the case in Roman law known as negotiorum gestio, where one managed another’s affairs in the latter’s absence, and to the latter’s benefit.” Corbin, Quasi-contractual Obligations, 21 Yale L.J. 533, 539 (1912).
We recognized a similar principle in Berry v. Barbour, 279 P.2d 335 (Okl.1955). In that case a general contractor had a contract with an owner to repair his building. During this repair work the building was damaged by fire while the owner was out of the country and no one was authorized to act in his behalf. The contractor repaired the damage caused by the fire. The cause of the fire was disputed. We agreed with the contractor’s proposition that a quasi-contract arose from the facts. Id. at 337. The owner received a benefit in the form of a repair to his building without payment therefor and the retention of this benefit4 without compensation to the contractor was unjust.
Authority explaining “benefit” in quasi-contract law is plentiful. See, T. Sullivan, The Concept of Benefit in the Law of Quasi-contract, 64 Geo.L.J. 1, 4-13 (1975), and the cases cited therein. This author argues that the concept of a benefit has in recent times developed a broader definition to include when a party saves the other party from an expense. Id. 64 Geo.L.J. at
10. Professor Woodward has stated that: “[t]he benefit to the defendant is not less real because it consists of a saving of expenditure rather than an addition to his estate”. F. Woodward, The Law of Quasi Contracts, § 247 at 391 (1913). We have recognized the same principle in defining the term “unjust enrichment”.5
“ ‘Unjust enrichment arises not only where an expenditure by one person adds to the property of another, but also where the expenditure saves the other from expense or loss.’ ” McBride et al. v. Bridges, 202 Okl. 508, 215 P.2d 830, 832 (1950).
In Braden v. Hendricks, supra, we held that a successful defense of the manufacturing process by a manufacturer would bar a subsequent suit against his distributor based on an identical claim. Id. 695 P.2d at 1352. Similarly, a successful defense of the manufacturing process by the distributor would bar a subsequent suit against the manufacturer. Thus, a distributor’s successful defense protects his manufacturer from subsequent suit by the unsuccessful plaintiff, and the distributor suffers a detriment in the form of costs and attorney’s fees. A distributor’s successful defense of a claim for which the manufacturer would be ultimately liable but for said successful defense, saves the manufacturer an expense and confers a benefit upon him.
In a strict sense, a distributor is liable for placing a defective product into the stream of commerce apart from any liability of a manufacturer. Braden v. Hendricks, supra, at 1349-1350. However, a distributor’s liability is vicarious when “a defect is said to be attributable solely to *304the manufacturing process rather than to some conduct in the distribution system”. Id. at 1351. In such a case the distributor is defending allegations that he (the distributor) is constructively liable for the wrongful conduct of the manufacturer. Thus, the distributor is defending a suit in the interests of the manufacturer so that the manufacturer will not be ultimately liable and the distributor thereby confers a benefit to the manufacturer by saving the manufacturer the costs of litigation. It is reasonable that a manufacturer should pay for the legal fees which save him from liability. Acceptance of a benefit requires acceptance of the attendant liability. J.H. Munk-man, The Law of Quasi-contracts, 77 (1950).
In Heritage, supra, the Alaska court said:
“If the right to costs and attorney’s fees for defending the law suit is made contingent on losing on the merits of that action, in every case the indemnitee would be put in the difficult position of attempting to show lack of his own culpability at the same time that he is aiding the plaintiffs case by attempting to prove the liability of his indemnitor” Id. 604 P.2d at 1067.
Such a result would not inspire confidence in our adversarial judicial system. Another court in following the Heritage rationale has stated that a rule that allows recovery of attorney’s fees only if the indemnitee loses would “penalize a party for successfully defending the allegations against it”. Pullman Standard, Inc. v. Abex Corp., 693 S.W.2d 336, 338 (Tenn.1985). The baseball equivalent would reward a batter for striking out, but cost him dearly if he gets a hit. Just as such a rule would be inimical to the interests of baseball so it also runs counter to the Anglo-American adversary tradition of litigation. These concerns underscore the reasonableness of requiring a manufacturer to pay for those legal costs incurred in the defense of claims for which it would be ultimately liable. However, this duty to pay is not unqualified.
The distributor must notify the manufacturer and give him an opportunity to defend the claim, whether fees are sought under contract, 15 O.S.1981 § 427(4), or under noncontractual indemnity, Heritage v. Pioneer Brokerage & Sales, Inc., supra, or under the doctrine of quasi-contracts as in the case before us.6 The manufacturer should pay for defending only those claims against the distributor which are claims of vicarious liability based on the manufacturer’s wrongful conduct. Thus, the manufacturer is not liable for the expense of defending claims of negligence on the part of the distributor.
Allocating an attorney fee to a prevailing defendant/distributor and against a prevailing defendant/manufacturer does not violate the “American Rule”. In City National Bank & Trust Co. v. Owens, 565 P.2d 4 (Okl.1977) we discussed the American Rule and its exceptions. One of the several federal cases we relied on was Hall v. Cole, 412 U.S. 1, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973). Id. 565 P.2d at 7, n. 1 and n. 3. In both Owens and Hall the courts discuss several recognized exceptions to the American Rule. In Owens, we said:
“The American Rule does not however serve as an absolute bar to the awarding of attorney fees in the absence of statute or contract. Courts have from common law days recognized several exceptions to the general principle that each party should bear the costs of his or her own legal representation. Courts have long recognized that attorney fees may be awarded ... where a successful litigant has conferred a substantial benefit upon a class of person[s] and the court’s shifting of the fees operates to spread the costs proportionately among the members of the benefited class.” Id. 565 P.2d at 7.
The power to award attorneys’ fees in such a case is an equitable power of the court. *305Hall v. Cole, at 412 U.S. 1, 4-5, 93 S.Ct. 1943, 1945-1946. This equitable power may be used in spreading the costs of litigation apart from any bad faith of the parties.
“ ‘Fee shifting’ is justified in these cases, not because of any ‘bad faith’ of the defendant but, rather, because ‘[t]o allow the others to obtain full benefit from the plaintiff’s efforts without contributing equally to the litigation expenses would be to enrich others at the plaintiff’s expense.’ ” Hall v. Cole, 412 U.S. 1, 5-6, 93 S.Ct. 1943, 1946-1947, 36 L.Ed.2d 702 (1973).
This has been referred to as the common fund doctrine, although it does not require the actual creation of a fund. Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970). The Court stated that “[t]he fact that this suit has not yet produced, and may never produce, a monetary recovery from which the fees could be paid does not preclude an award based on this [common fund] rationale”. Id. 396 U.S. at 392, 90 S.Ct. at 625. (Explanation added). Although creation of a fund is not required a litigant must confer a substantial benefit to the class. Id. 396 U.S. at 393-394, 90 S.Ct. at 626-627. This substantial benefit need not be pecuniary in nature. Id. 396 U.S. at 395, 90 S.Ct. at 627. The benefit may be in the form of the stare decisis effect on subsequent litigation. Id. 396 U.S. at 393, 90 S.Ct. at 626.
In summary, the common fund doctrine allows a court to exercise a power in equity to allocate attorneys’ fees when a successful litigant confers a benefit to a class. In a sense, this principle is quasi-contractual. Those individuals receiving a benefit pay for the benefit received. One author has stated that application of the common fund exception “may be characterized as quasi-contractual, in that the property obtained or secured by the services of an attorney should reasonably bear the cost of the services”. 2 S. Speiser, Attorneys’ Fees, § 11.3 at 401 (1973). Requiring a manufacturer to pay for his distributor’s attorney’s fees which represent time spent defending a products liability claim is nothing more than making a party pay for the services that party received.
In the present case the attorneys for Clayton Propane, Inc. and Kiamichi Valley LP Gas Co. participated in the defense of the products liability claim. Independent acts of negligence were alleged against them but were dropped by plaintiff prior to trial. The only cause of action that went to trial was based on strict products liability.
The majority correctly points out that the position advocated at trial by counsel for Kiamichi Valley LP Gas Co. was contrary to Kerr-McGee’s interests. Kerr-McGee’s position at trial with respect to Kiamichi Valley was not one of closing ranks and uniting to defend against a common foe. Kerr-McGee rather raised as a defense at trial the actions of Tommy Ayers, the operator of Kiamichi Valley. Kerr-McGee understandably does not want to pay for the expenses of Kiamichi Valley’s defense of a products liability claim (even though it could have resulted in liability for Kerr-McGee) because counsel for Kiamichi Valley in effect sided with the plaintiff at trial.
When a defendant/distributor argues the plaintiff’s case against the manufacturer, as in the case of Kiamichi Valley, quasi-contract will not provide a remedy for the recovery of attorney’s fees. In advocating the plaintiff’s case such distributor is not attempting to confer a benefit on the manufacturer, but rather attempting to make sure that the manufacturer is liable. Our concern with a rule that rewards a party for losing the case is not present with Kiamichi Valley.
Clayton Propane, on the other hand, defended the suit in harmony with counsel for Kerr-McGee from opening statement through closing argument, calling for and participating in the defeat of plaintiff’s claims. Clayton Propane, if denied an attorney’s fee, would be clearly in the switch of being punished for victory and rewarded for defeat. Thus, I agree that Clayton propane should be reimbursed for its legal fees defending that portion of the plaintiff’s suit concerning products liability claims, but that Kiamichi Valley may not so *306recover. I therefore concur in the court’s opinion.
I am authorized to state that Justice DOOLIN joins in these views.

. The term "quasi-contract" has been defined as “all noncontractual obligations which are treat*301ed, for the purpose of affording a remedy, as if they were contracts". F. Woodward, The Law of Quasi Contracts, § 1 at 1 (1913).

. The development of contribution between joint tortfeasors is distinct from the genesis of quasi-contract. The common law did not provide for contribution between joint tortfeasors. Boyles v. Oklahoma Natural Gas Co., 619 P.2d 613, 617 (Okl.1980); J. Indermaur, Principles of the Common Law, 334 (12th ed. 1914). Five forms of quasi-contract were listed in Justinian’s Institutes. B. Nicholas, An Introduction to Roman Law, 158-159, 227-233 (1962); A. Stephenson, History of Roman Law, 468-469 (1912). It is generally agreed that the foundation of modern law of quasi-contracts springs from Lord Mansfield’s opinion in Moses v. Mcferlan, 2 Burr. 1005, 97 Eng.Rep. 676 (1760). J. Oldham, Reinterpretations of 18th Century Contract Theory: The View from Lord Mansfield’s Trial Notes, 76 Geo.LJ. 1949, 1963 (1988). Mansfield’s often quoted language was: ”[i]f the defendant be under an obligation, from the ties of natural justice, to refund; the law implies a debt, and gives this action, founded in equity of the plaintiffs case, as it were upon a contract (‘quasi ex contractu,’ as the Roman law expresses it).” Id. 76 Geo.L.J. at 1964. In the late eighteenth century a form of quasi-contractual obligation was created whereby a plaintiff could obtain contribution between co-sureties and joint contractors, ’’[b]ut the common law stopped short of giving the same remedy to joint tortfeasors”. J. Baker, An Introduction to English Legal History, 312 (2d ed. 1979).

. See 3 W.S. Holdsworth, A History of English Law, 424-425 (3d ed 1923), and the discussion in P.S. Atiyah, The Rise and Fall of Freedom of Contract, 480-490 (1979).
Professor Keener quoted the following with ap- • proval:
"‘Quasi,’ so used, is exclusively a term of classification. It has been usual with English critics to identify the quasi-contracts with implied contracts, but this is an error; for implied contracts are true contracts, which quasi-contracts are not_ Maine, Ancient Law, 4th ed., 343-4." W. Keener, A Selection of Cases on the Law of Quasi-contracts, 14-15 n. 2 (1893). This quote from Ancient Law is also cited with approval in G. Campbell, A Compendium of Roman Law, 136 (2d ed 1892).
Similarly, Professor Fraser has stated:
"A quasi contract is not a contract, and the substantive law of contracts is not applicable because liability is not based on an agreement between the parties. Instead, liability is based on a duty which is imposed by law.” G. Fraser, Contracts, Quasi Contracts, and Pleading, 27 Okl.L.Rev. 440, 441 (1974).

. Professor Fraser has commented with respect to Oklahoma quantum meruit cases “Unfortunately, in a few Oklahoma cases, it is not clear whether recovery is based on the value of plaintiffs services or the benefit to the defendant”. G. Fraser, Contracts, Quasi Contracts, and Pleading, 27 Okl.L.Rev. 440, 441 (1974). One author has stated that "the enrichment of the receiver of value informs the analysis only insofar as it goes to show that the detriment suffered by the giver was unjust". Corbin on Contracts, § 19A (Supp.1989).

. One author has stated that the terms "contract implied in law,” “quasi-contract,” "unjust enrichment,” and "quantum meruit” are closely related but analytically separate terms. Corbin on Contracts, § 19 (Supp.1989). This court has stated that a duty arising from quasi-contract “is not infrequently founded on the doctrine of unjust enrichment”. Conkling’s Estate v. Champlin, 193 Okl. 79, 141 P.2d 569, 570 (1943).

. A formal tender is not required if the manufacturer is given notice of the underlying action "particularly if the indemnitor is a party to the action and the indemnitee’s claim of indemnity is a part of that action”. Hanover Limited v. Cessna Aircraft Co., 758 P.2d 443, 450 (Utah App.1988). I would impose that principle on the present case.