In Wells v. Aetna Insurance Co. the Washington court indicated an increasing friendliness toward the allowance of attorney\u27s fees as damages. The plaintiff, Wells, had purchased a car from a used car dealer. The dealer had earlier made what the court called a  fictitious  sale to someone else, and had then assigned the conditional sales contract to a financing company, Hayden Mills & Associates, Inc. Apparently there was a record of this sale at the state license department, but no valid release was on file there. So when Wells applied for a new registration and a new title certificate, these were initially granted and later cancelled. Unable to get a license for the car he had purchased, and unable to sell it, Wells brought an action to quiet title, naming as defendants the dealer, the alleged purchaser, the alleged assignee of the conditional sales contract, and Aetna Insurance Co., which was the surety on the bond required of automobile dealers by RCW 46.70.070.

Beale, Robert L.

English

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Washington Law Review Volume 38 Number 2 Washington Case Law—1962 7-1-1963 Damages—Attorney's Fees Robert L. Beale Follow this and additional works at: https://digitalcommons.law.uw.edu/wlr  Part of the Civil Procedure Commons Recommended Citation Robert L. Beale, Washington Case Law, Damages—Attorney's Fees, 38 Wash. L. Rev. 328 (1963). Available at: https://digitalcommons.law.uw.edu/wlr/vol38/iss2/11 This Washington Case Law is brought to you for free and open access by the Law Reviews and Journals at UW Law Digital Commons. It has been accepted for inclusion in Washington Law Review by an authorized editor of UW Law Digital Commons. For more information, please contact cnyberg@uw.edu. WASHINGTON LAW REVIEWDAMAGESAttorney's Fees. In Wells v. Aetna Insurance Co.' the Washingtoncourt indicated an increasing friendliness toward the allowance ofattorney's fees as damages. The plaintiff, Wells, had purchased a carfrom a used car dealer. The dealer had earlier made what the courtcalled a "fictitious" sale to someone else, and had then assigned theconditional sales contract to a financing company, Hayden Mills &Associates, Inc. Apparently there was a record of this sale at thestate license department, but no valid release was on file there. Sowhen Wells applied for a new registration and a new title certificate,these were initially granted and later cancelled. Unable to get a licensefor the car he had purchased, and unable to sell it, Wells brought anaction to quiet title, naming as defendants the dealer, the alleged pur-chaser, the alleged assignee of the conditional sales contract, and AetnaInsurance Co., which was the surety on the bond required of automo-bile dealers by RCW 46.70.070.2At this point the procedure became somewhat involved. Accordingto the court, Hayden Mills and Associates, Inc., the assignee of theprior conditional sales contract, "cross-complained" against the otherdefendants, and Aetna "interpleaded" plaintiff Wells and HaydenMills.Sometime during trial plaintiff amended his complaint to ask for$800 attorney's fees. These were allowed, and Aetna appealed fromthat portion of the judgment only.The court held that Aetna, the surety, was liable to plaintiff for the$800:Plaintiffs were required to defend their right to the automobile againstthe claim asserted in the cross-complaint of Hayden Mills & Associates,Inc., as well as in the interpleader action of defendant. For this, theyare entitled to reasonable attorney's fees. The fees are a loss occasionedbe the action of the wrongdoer. 3The court did not stop there, however, but added:1 160 Wash. Dec. 884, 376 P.2d 644 (1962).2 "Before issuing a dealer license, the director shall require the applicant to filewith said director a surety bond in the amount of ten thousand dollars for automobiledealers and two thousand dollars for miscellaneous dealers running to the state. Suchbond shall be approved by the attorney general as to form and conditioned that thedealer shall conduct his business in conformity with the provisions of this chapter.Any retail purchaser who shall have suffered any loss or damage by reason ofbreach of warranty or by any act by a dealer which constitutes a violation of thischapter shall have the right to institute an action for recovery against such dealerand the surety upon such bond .. "3160 Wash. Dec. at 887, 376 P.2d at 645.[VOL. 38WASHINGTON CASE LAWWe believe it apparent from the history of RCW 46.70.070... that thesurety on the bond of a "double-dealing" motor vehicle dealer is liablefor the loss resulting from the perfidy of the principal....4There are, therefore, two independent grounds for the decision,either one of which would have been adequate. The first ground isthe well-recognized rule that one who wrongfully involves another inlitigation with a third party must pay the attorney's fees incurred inthat litigation. The second ground is that the language of the statuterequiring the surety to respond for "any loss or damage" authorizesthe assessment of attorney's fees incurred in the instant action againstthe surety.It is conceivable the the third-party litigation rule would justify theresult in this case, but not by the reasoning which the court uses. Thecourt states the rule in this fashion:[W] hen the natural and proximate consequences of a wrongful act by -the defendant involve the plaintiff in litigation with others, there may,as a general rule, be a recovery of damages for the resonable expenses.incurred in the litigation, including compensation for attorney's fees.5According to the cases and other authorities, the wrongful act ofthe defendant which forces the plaintiff into litigation with others canbe a tort,' or a breach of contract,7 or the breach of a fiduciary dutylike that which an agent owes to his prinicpal.8 One so involved inlitigation would normally be a defendant, but one who is forced toinitiate litigation may still recover from the wrongdoer the attorney'sfees incurred in that action.' The attorney's fees recoverable are notlimited to fees for trial only, but include the costs of investigation andpreparation, even where there is an eventual settlement."There are some limitations upon the application of the rule. Thelitigation with the third party must have been entered into or defendedin good faith.1 The act of the defendant which involved the plaintiff4 Id. at 887, 376 P2d at 646.Id. at 887, 376 P.2d at 645.8 Seaboard Surety Co. v. Permacrete Constr. Corp., 221 F.2d 366 (3rd Cir. 1955);Turner v. Zip Motors Inc., 245 Iowa 1091, 65 N.W2d 427 (1954) ; Prior Lake StateBank v. Groth, 259 Minn. 495, 108 N.W.2d 619 (1961); RESTATEmENT, TORTS § 914(1939).7 Freed v. The Travelers, 300 F2d 395 (7th Cir. 1962); Longview School DistNo. 112 v. Stubbs Electric Co., 160 Wash. 465, 295 Pac. 186 (1931); Murphy v.Fidelity Abstract & Title Co., 114 Wash. 77, 194 Pac. 591 (1921) ; Curtley v. SecuritySavings Society, 46 Wash. 50, 89 Pac. 180 (1907) ; RESTATEMENT, CoNTRACTs J 334(1932); 5 CORB IN, CoNTRAc-s § 1037 (1951).8 Tarnowski v. Resop, 236 Minn. 33, 51 N.W.2d 801 (1952).9 Bergquist v. Kreidler, 158 Minn. 127, 196 N.W. 964 (1924) ; Hiss v. Friedberg,201 Va. 572, 112 S.E2d 871 (1960).10 Seaboard Surety Co. v. Permacrete Constr. Corp., 221 F2d 366 (3rd Cir. 1955).11 Indiana Nat'l Life Insurance Co. v. Butler, 186 Ky. 81, 215 S.W. 949 (1919).1963]WASHINGTON LAW REVIEWin litigation must have been a legal wrong to the plaintiff; an innocentact is not sufficient." Finally, there must have been a causal connectionbetween the defendant's wrong to the plaintiff and the litigation inwhich the plaintiff became involved. In a Washington case the de-fendant had sold to the plaintiff logs which later turned out to besubject to liens. Both plaintiff and defendant were involved in the suitto foreclose the liens. Plaintiff was not allowed to recover fees fromdefendant because defendant was adequately defending the title to thelogs. Plaintiff's only reason for being a party was to cross-claimagainst defendant, so his attorney's fees were not caused by defendant'swrong."In explaining why it applied the third-party litigation rule in theWells case, the Washington court emphasized that the plaintiff wasforced to defend against a cross-claim made by one defendant againstanother defendant, and was required to interplead. Clearly, the ruleas described above would not apply to either of these situations, sincea plaintiff is not even involved in a cross-claim between one defendantand another defendant; and one required to interplead, if that isindeed what happened, is not forced into litigation by the wrongful actof the defendant.The third-party litigation rule might apply on the facts of thiscase: A wrongful act of the defendant, namely, breach of an impliedwarranty of title as to plaintiff, involved plaintiff in litigation withothers because he was forced to bring the action to quiet title againstthe purported vendee in the earlier "sale" and against the purportedassignee of the earlier conditional sales contract. For the plaintiff toprevail, however, it would be necessary to establish that there has beena breach of warranty of title where a purchaser of an automobile hashad difficulty in procuring certificates of registration and title fromthe department of licenses, even though a court finally decided thatthe purchaser did have title. Presumably, this proposition could beestablished, 4 but no such argument was attempted in the Wells case.Perhaps realizing that it was somewhat questionable whether thethird-party litigation rule would apply here, the court implied that thelanguage of the statute requiring a bond for motor vehicle dealers"12 Dwarsky v. Vermes Credit Jewelry, 244 Minn. 62, 69 N.W.2d 118 (1955).13 Atkinson v. McCarthy, 142 Wash. 1, 251 Pac. 861 (1927).14 In White v. Mid-City Motor Co., 39 Tenn. App. 429, 284 S.W.2d 689 (1955) acar buyer was allowed to rescind because the dealer had breached the warranty oftitle in not delivering a title certificate at the time of the sale.15 For text of statute see note 2 supra.[VOL. 38WASHINGTON CASE LAWauthorizes assessment of attorney's fees, at least against the surety.Should the court choose to follow this line of reasoning in the future, itwould bring about a significant change in the law.It is well settled in Washington, as in the rest of the United States,that the successful litigant cannot generally recover for the actualattorney's fees which he has incurred, except to the extent that they areallowed by the statute on costs.' From previous Washington cases italso appears that the court has been unwilling to read into a statuteallowing "damages" to the successful party the intent to allow actualattorney's fees, where that intent is not expressly stated. In Percy v.Miller' an administrator brought an action under what is now RCW11.48.060. This provides that a person who embezzles or alienatesproperty of a decedent before letters of administration are granted,"shall stand chargeable, and be liable to the executor or administratorof the estate, in the value of the property so embezzled or alienated,together with any damages occasioned thereby." The court held thatthis statute did not render the defendant liable to the administrator forattorney's fees incurred in the action to recover alienated funds. Thelanguage of the court specifically denies that the statute might auth-orize attorney's fees:The statute relating to costs and disbursements in itself provides what 'may be, recovered under these heads in the particular action. This.includes a limited attorney's fee, and is all that can be 'recovered asattorney's fees unless the statute expressly allows an additional re-covery.'8This view has been affirmed in actions under the mandamus statute,RCW 7.16.260, which provides: "If judgment be given for the appli-cant he may recover the damages which he has sustained .... " InState ex. rel. Macri v. Bremerton9 the court held that this statute didnot authorize assessment of attorney's fees, saying, "in absence ofcontract, statute, or recognized ground of equity, a court has no powerto award an attorney's fee as part of the costs of litigation.20Other courts are divided as to whether a right to "damages" orsimilar language when given by statute allows assessment of attorney's1 oChoukas v. Severyns, 3 Wn2d 71, 103 P2d 1106 (1940) ; Johnston v. Karkala,172 Wash. 122, 19 P2d 948 (1933) ; McCoamcx, DAMAGES §§ 60, 61 (1935). Thereare of course other exceptions such as contract between the parties, or allowance outof a common fund, but these are outside the scope of this note.1'115 Wash. 440, 197 Pac. 638 (1921).18 Id. at 447, 197 Pac. at 641.108 Wn.2d 93, 111 P.2d 612 (1941).20Id. at 113, 111 P2d at 621. Accord, State ex rel. Pacific Bridge Co. v. Wash-19631WASHINGTON LAW REVIEWfees. Kansas,2 Montana,22 and Utah" interpret their mandamusstatutes, which are quite similar to that in Washington, as allowingattorney's fees incurred in bringing the action. South Dakota24 on theother hand, agrees with Washington as to the mandamus statute, thecourt of that state saying:We feel that if it had been the desire of the legislature to provide forattorney fees in this statute, that in addition to using the word damages,it undoubtedly would have used the term attorney fees.23Some states have a mortgage satisfaction statute which provides thata mortgagee who refuses to enter satisfaction of a mortgage is liable tothe mortgagor for "damages." Both Idaho26 and Utah" have construedthis statute as allowing attorney's fees. However, Arizona, under astatute allowing a suit against state officers for wrongful applicationof state funds, and allowing a successful plaintiff "all damages," hasheld that the statute does not authorize attorney's fees.2If the Wells case indicates that the Washington court henceforth isgoing to read statutes allowing "damages" liberally, as allowing attor-ney's fees, the question arises how far the court will go. It might, ofcourse, allow attorney's fees as damages in every civil action, whetherbrought under statute or not. If a litigant is given attorney's fees wherethe statute allows him "damages," why should he not be allowedattorney's fees when the common law allows him damages? 9The most limited view would be to restrict the allowance of attor-ney's fees to actions arising under statutes which have languageidentical to that employed in RCW 46.70.070, which uses the words,"any loss or damage." There are two other such statutes in Washing-ton."o Such a limitation would be unfortunate, and would be unreason-able for two reasons. First, the variety of language used in otherington Toll Bridge Authority, 8 Wn.2d 337, 112 P.2d 135 (1941) ; State ex rel.Maltbie v. Will, 54 Wash. 453, 104 Pac. 797 (1909).21 Nolte v. Kansas City Long-Distance Tel. Co., 86 Kan. 770, 121 Pac. 1111 (1912).22 State ex rel. O'Sullivan v. District Court, 127 Mont. 32, 256 P.2d 1076 (1953).23 Colorado Development Co. v. Creer, 96 Utah 1, 80 P.2d 914 (1938).24 Calmenson Clothing Co. v. Kruger, 66 S.D. 224, 281 N.W. 203 (1938).25 Id. at 206.26 Cornelison v. United States Bldg. & Loan Ass'n, 50 Idaho 1, 292 Pac. 243 (1930).27 Swaner v. Union Mortgage Co., 99 Utah 298, 105 P.2d 342 (1940).28 U.S. Fidelity & Guaranty Co. v. Frohmiller, 71 Ariz. 377, 227 P.2d 1007 (1951).20 This is not an altogether frivolous suggestion, since respected writers have beensniping at the injustice and undesirable consequences of the present system for sometime. See, for example, McCoRMIcK, DAMAGES § 71 (1935); Ehrenzweig, ShallCounsel Fees be Allowed? 26 J. STATE BAR OF CAL. 107 (1951) ; Geller, UnreasonableRefusal to Settle and Calendar Congestion--Suggested Remedy 34 N.Y. ST. BAR J.477 (1962) ; Note, 15 U. CiNc. L. Rxv. 313 (1941) ; and sources therein cited.[VOL. 38WASHINGTON CASE LAWWashington statutes which give a right to recover against an individual,or a surety, indicates that the choice of words in the instant statutewas purely fortuitous."' Nothing should turn on the fact that thestatute here in question uses the words "any loss" as an alternative to"damage." Second, even if the legislature did intentionally use theword "loss" disjunctively with "damage," it was merely being redund-ant, as is the court when it uses the familiar words, "clear, cogent andconvincing." That damages and loss mean the same was early recogn-ized by the Washington court. Three opinions, all written by JusticeGose, state substantially the same thing: "'Damages,' in law, meansan adequate compensation for the loss suffered or the injury sus-tained."3 2 The Pennsylvania court has also recognized the identity ofmeaning in the two words, saying, "These words, 'damage,' 'loss,''injury' are used interchangeably, not simply in this particular statute,but generally." 3 The language of the statute ought not, therefore, to beused as the basis for limiting the operation of the rule that attorney'sfees are authorized where a statute gives a right to damages.What, then, will be the limitation? The obvious and most workabl6one would be to allow attorney's fees in any instance in which a statutegives a right to "damages," regardless of qualifying words. Since thereare a number of such statutes in Washington, 4 this would be a majorstep toward eliminating what many think are inequalities in the presentsystem. The Wells case provides the Washington court with a pre-cedent which it can use to expand greatly the range of cases in whichthe prevailing litigant may be allowed his actual attorney's fees.Whether it will be so used must depend ultimately upon a policy de-cision by the court that such a rule would be desirable.ROBERT L. BEALE30RCW 14.20.070 (aircraft dealers' licenses); RCW 46.80.070 (motor vehiclewreckers).3 1 RCW 5.56.060 (compelling attendance of witnesses) ("all damages occasioned");RCW Z16260 (mandamus) and 7.16.320 (prohibition) ("damages which he hassustained") ; RCW 11.48.060 (interfering with property of a decedent) ("any dam-age occasioned thereby"); RCW 16.65.250 (livestock market licensee) ("damagescaused by failure to comply"); RCW 17.21.160-.180 (pesticide applicators) ("legaldamages") ; RCW 18.12.110 (auctioneers of jewelry and appliances) ("all damages") ;RCW 1928.120 (electric installers) ("all damages that may be sustained") ; RCW19.86.090 (consumer protection) ("actual damages sustained") ; RCW 19.90.090 (un-fair practices) ("actual damages, if any, sustained") ; RCW 20.01.210-230 (commis-sion merchants) ("damages caused by such fraud") ; RCW 22.08.170-.180 (grain andterminal warehouses) ("all damages suffered thereby").32 North Coast Ry. Co. v. Kraft Co., 63 Wash. 250, 262, 115 Pac. 97, 102 (1911).Accord, Myhra v. Chicago, Milwaukee and Puget Sound Ry. Co., 62 Wash. 1, 112Pac. 939 (1911). Jones v. Nelson, 61 Wash. 167, 112 Pac. 88 (1910).33 In re City of Pittsburgh, 243 Pa. 392, 90 AtI. 329, 331 (1914).84 See notes 30 and 31 supra for a list of these statutes.19631

Damages—Attorney\u27s Fees

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Damages—Attorney\u27s Fees

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