Von Holt v. Izumo Taisha Kyo Mission of Hawaii

355 P.2d 40 (1960)

Herman V. VON HOLT v. IZUMO TAISHA KYO MISSION OF HAWAII, an Incorporated Association, John H. Wilson, Leon K. Sterling, The City and County of Honolulu, a Municipal Corporation.

No. 4144.

Supreme Court of Hawaii.

March 25, 1960.

On Petition for Rehearing May 16, 1960.

Argument on Rehearing August 1, 1960.

*41 Robert M. Rothwell, Honolulu, for petitioner-appellee.

Hiromu Suzawa, Deputy Corp. Counsel, Honolulu (Norman K. Chung, Corp. Counsel, Honolulu, with him on the brief), for respondent-appellant.

Before TSUKIYAMA, C. J., and MARUMOTO, CASSIDY, WIRTZ and LEWIS, JJ.

PER CURIAM.

On August 6, 1958, this court, after a hearing in the main case involving the same parties, rendered an opinion in favor of petitioner-appellee. 42 Haw. 671. Pursuant thereto, a decision on appeal was entered on October 7, 1958, reversing the previous decree of the circuit court and remanding *42 the cause "to the Circuit Court with directions by appropriate action:

"1. To nullify the effect of the purported conveyance made by said deed; "2. To cause record title to the property therein described to be re-registered in the City and County of Honolulu, by reconveyance thereto, for the same consideration mentioned therein, or otherwise; "3. To allow to petitioner-appellant herein his costs, and attorney's fees."

After the remand, the circuit court, upon motion of petitioner, entered the order from which respondent-appellant, the City and County of Honolulu, hereinafter sometimes referred to as the "city," now appeals. The city contested only that portion of the motion which requested the allowance of attorney's fees as to the city. Consequently, the city has appealed only from the following specific portions of that order:

1. "* * * subject to a charging attorney's lien in favor of Robert M. Rothwell in the sum of $16,800.00, as security for payment of his services rendered herein to the Petitioner and the taxpayers of the City and County of Honolulu which the Petitioner represents as a class, legal title to said land and improvements is hereby vested in the Respondent, City and County of Honolulu * * *." [Portion of paragraph 1 of the order.] 2. "That the Respondent, City and County of Honolulu is hereby ordered and directed to pay to Robert M. Rothwell, Esq., Attorney for the Petitioner herein, the sum of $16,800.00 as and for his services rendered to the Petitioner herein on behalf of said Petitioner and the taxpayers of the City and County of Honolulu as a class represented by the Petitioner, said sum to be paid forthwith." [Paragraph 3 of the order.] 3. "That this Decree shall constitute a charging attorney's lien against the real property and improvements thereon described in said Land Court Document No. 145182 in favor of the said Robert M. Rothwell as and for his attorney's fees above mentioned, until the same shall have been fully paid." [Paragraph 5 of the order.]

Under this appeal, the city specifies two errors:

1. That the circuit judge erred in assessing the attorney's fees against the City and County of Honolulu, because such an assessment is forbidden by R.L.H.1955, § 219-23. 2. That even if the circuit judge had power to assess attorney's fees as aforesaid, he had no jurisdiction to impose an attorney's charging lien on the land and improvements which were the subject of this suit.

Petitioner's confession of error on the question of whether an attorney's charging lien can be imposed on the property in question effectively disposes and obviates the necessity of consideration of the second specification of error. This leaves, for decision, only the first specification of error.

The main suit was a successfully prosecuted taxpayer's suit and the only question before us is whether the trial court erred in awarding an attorney's fee to petitioner's counsel and against the city. The city's contention is that it, as a political subdivision, is not liable for attorney's fees under the provisions of R.L.H.1955, § 219-23. Petitioner, on the other hand, argues that § 219-23 is not applicable to this case, or, in the alternative, that R.L.H. 1955, § 219-1, gives this court such broad powers as to permit an award of attorney's fees under Rule 9(d) of the Rules of the Supreme Court of the State of Hawaii.

Regardless of the applicability of § 219-23, and despite § 219-1, this is not a proper case for an award of attorney's fees. Criswell v. Board of Directors, 34 Wash. 420, 75 P. 984; Marion County v. Rives & McChord, 133 Ky. 477, 118 S.W. 309; Brundige v. Village of Ashley, 62 Ohio St. 526, 57 N.E. 226.

*43 The right to be awarded attorney's fees from one's opponent in litigation, as a part of the costs thereof, did not exist at common law. 14 Am.Jur., Costs, § 63, p. 38. This general rule is qualified, however, by the equity practice allowing reasonable attorney's fees out of a common fund or common property created or preserved for the benefit of all the common owners through the efforts of one of such owners. 14 Am.Jur., Costs, § 70, p. 45.

Some cases (cited by petitioner in his brief) have applied this fund theory to justify the allowance of attorney's fees in taxpayers' actions. Fox v. Lantrip, 169 Ky. 759, 185 S.W. 136; Council of Village of Bedford v. State, 123 Ohio St. 413, 175 N.E. 607; State ex rel. Faulkner v. Kreinbihl, 14 Ohio Supp. 49. However, others have rejected this application, either because the general equitable basis of implied contract is not present in taxpayers' actions, Park v. City of Laurens, 68 S.C. 212, 46 S.E. 1012; Milster v. City Council of Spartanburg, 68 S.C. 243, 47 S.E. 141; Williamson v. Los Angeles County Flood Control Dist., 42 Cal. App. 2d 622, 109 P.2d 992, or, that a "public fund" does not constitute a common fund under the equitable doctrine. Marion County v. Rives & McChord, supra.

Where no common fund has been created or preserved, a taxpayer, in the absence of statutory authority, is not entitled to the allowance of counsel fees. Gosso v. Hart, 123 Or. 67, 261 P. 80; People ex rel. Stephens v. Holten, 222 Ill.App. 427, affirmed 304 Ill. 394, 136 N.E. 738, 24 A.L.R. 929; Appeal from Auditors' Report of Borough of Exeter, 178 Pa.Super. 75, 113 A.2d 349; City of Ormond Beach v. Cook, Fla.1955, 81 So. 2d 481; Grandle v. Rhodes, 107 Ohio App. 558, 154 N.E.2d 172.

Moreover, the mere existence of a fund is insufficient to authorize a court to make an allowance of counsel fees from it, in favor of a taxpayer. The court must have at least constructive custody or control of the fund. Milster v. City Council of Spartanburg, supra.

Applying these principles of law to the situation at hand, it can readily be seen that it was inappropriate to allow attorney's fees to petitioner. Not only were counsel fees not allowable against the city, but also they were not taxable against the other respondents, or any of them. Cf., State ex rel. Stuart v. Holt, 163 Ind. 198, 71 N.E. 653. The judgment "[to] nullify the effect of the purported conveyance made by said deed" effectively held the conveyance to be invalid, not merely voidable, and no fund was created thereby. If it can be said that the property was preserved by the judgment, still it is clear that the court did not have control over it, even to the extent of constructive custody.

In view of the principles above enunciated, it is not necessary to place reliance upon § 219-23. Said section, however, does add further light upon the fact that the legislature itself did not contemplate the allowance of counsel fees, for it is there provided that the reimbursement by the government of actual disbursements shall not include "attorney's fees or commissions."

In considering this first specification of error, we are in effect reviewing the holding on the prior appeal on the question of attorney's fees. That holding established the law of the case which normally would be followed in further proceedings in the case.

However, as the court stated in Glover v. L. K. Fong, 42 Haw. 560, at page 578:

"The doctrine of the law of the case is akin to res judicata but is more limited in its application. It relates solely to questions of law and is confined in its operation to subsequent proceedings in the same case. (2 Freeman on Judgments, 5th ed., § 630) The doctrine is that a determination of a question of law made by an appellate court in the course of an action becomes *44 `the law of the case' and may not be disputed by a reopening of the question at a later stage of the litigation. It normally commands adherence but is not subject to the inflexibility of res judicata. Considerations justifying a deviation from adherence to the doctrine are stated in Mangold v. Bacon, 237 Mo. 496, 141 S.W. 650, as follows: `Whether from grace or right when cogent and convincing reasons appear, such as lack of harmony with other decisions and where no injustice or hardship would flow from a change, or where by inadvertence principles of law have been incorrectly declared the first time, or mistake of fact has been made, or injustice to the rights of parties would be done by adhering to the first opinion, then the exceptions to the rule have play, and it is our duty to re-examine and correct our own errors on the second appeal in the same case.'"

Attorney's fees were not sought under the pleadings, nor was the question advanced under the briefs in the prior appeal. A review of the lengthy presentation on oral argument in the prior appeal, which was recorded, discloses that no mention was made of counsel fees. It could have been included in the prior holding only through inadvertence either, in recognition of the feeling that the court should do all in its power to compensate reasonably those who seek to protect the public by compelling the return of public property, which power of compensation, however, rests with the legislative branch of the government, or, as a penalty for the "constructive fraud" found by the court. While in a proper case, counsel fees could be considered as an element of punitive damages for the perpetration of a fraud, this was not the situation here, as no such damages were sought.

It was the failure of the city to file a petition for rehearing after the prior holding in 42 Haw. 671 was handed down that has required this review of that holding and thus has caused undue prolongation of the litigation.

Having now considered the question for the first time under this appeal, we can only allow the appeal and remand the matter to the circuit court for entry of judgment without allowance of either attorney's fees or a charging attorney's lien. In other words, the circuit court is directed to enter up judgment in accordance with the prior decision in 42 Haw. 671 except as herein modified by deleting therefrom any reference to "attorney's fees" or a "charging attorney's lien."

Reversed.

On Petition for Rehearing.

The petition for rehearing is granted. Argument will be had on June 30, 1960, at 9:00 A.M.

Counsel are directed to file briefs on the following questions:

(1) Under the facts presented in this case, and without consideration of R.L.H.1955, Chapter 219, can appellee be allowed an attorney's fee? (2) If so, does such allowance constitute taxation of "costs" within the meaning of the first sentence of R.L.H. 1955, § 219-23?

The Opening Brief shall be filed within 20 days, the Answering Brief within 35 days and the Reply Brief within 40 days from the date hereof.

Argument on Rehearing.

By decision, dated March 25, 1960, in 44 Haw. 147, this court reversed that portion of the judgment allowing petitioner-appellee attorney's fees against the City and County of Honolulu, respondent-appellant.

A petition for rehearing was filed on April 13, 1960, and after consideration of the reply to the petition filed on April 27, 1960, this court, by decision and order dated May 16, 1960, granted the petition and directed counsel to confine themselves, in their briefs, to the following questions:

"(1) Under the facts presented in this case, and without consideration of *45 R.L.H.1955, Chapter 219, can appellee be allowed an attorney's fee? "(2) If so, does such allowance constitute taxation of `costs' within the meaning of the first sentence of R.L.H. 1955, § 219-23?"

Despite the protestations set forth in the petition for rehearing, we can find no inconsistency in legal principle between the aforesaid decision of March 25, 1960, and the briefs of petitioner filed in support of his petition.

That decision recognized the equity practice which allows reasonable attorney's fees out of a common fund or common property created or preserved for the benefit of all the common owners through the efforts of one of such owners, and under the direct or constructive custody or control of the court.

It also recognized the split of authority in the application of this fund theory to justify the allowance of attorneys' fees in taxpayers' actions.

However, this court held in that decision, that, in the instant case, there was no property of any kind, personal or real, which could form the basis of any sort of "common fund" under the custody or control of the court.

Having so found, it was unnecessary to, and this court did not decide, in that decision, whether this equitable fund theory should or should not be extended to taxpayers' actions in this jurisdiction, or if so extended, whether or not, its application should be limited or restricted to liquid funds comprising cash or negotiable instruments.

Thus, on this hearing, the crucial question before the court is again this one of control or custody, the same being essential to a recovery in the present suit as distinguished from a separate suit against the City.

The basis of this court's holding in the previous decision was that the judgment in 42 Haw. 671, "`[to] nullify the effect of the purported conveyance made by said deed' effectively held the conveyance to be invalid, not merely voidable, and no fund was created thereby. If it can be said that the property was preserved by the judgment, still it is clear that the court did not have control over it, even to the extent of constructive custody."

To counter this judgment of the court in 42 Haw. 671, petitioner contends "that at the time this action was brought, the Mission was the record owner of legal title to the premises in question. The Mission possessed a certificate of title to the property issued by the Territory of Hawaii * * * so that the moment the Registrar of the Land Court on December 24, 1952, accepted the City's deed for registration, the Mission became the legal owner of the property" by virtue of Section 342-42, R.L.H.1955, which provides that:

"Every applicant receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on the certificate in the order of priority of recordation and any of the the following encumbrances which may be subsisting, namely, * * *."

We are not impressed by the foregoing contention, based as it is on the assumption that the Mission, which received the void deed, took the certificate of title "for value and in good faith." Nor were we impressed with the distinction offered in oral argument that, because of the color of office of the signatories, the deed in question was not clearly void, as held in 42 Haw. 671, but somewhere between being void and voidable. No ground for further disturbing the decision and judgment in 42 Haw. 671 has been shown.

Having found no basis upon which we can rely to resolve this question of control or custody in favor of petitioner, we are constrained to affirm the prior decision of this court entered on March 25, 1960, in 44 Haw. 147.

*46 We say constrained advisedly, because we are mindful not only of the public service rendered by the taxpayer in this action but of the constitutional restraint on our powers. The legislative branch of government alone holds the purse strings to the public treasury. We can only quote with approval the general thought behind the holding in Grandle v. Rhodes, 107 Ohio App. 558, 154 N.E.2d 172, at page 173, as follows:

"* * * If it were in the power of the court to order the payment of reasonable attorneys' fees, it would seem eminently right and proper to do so. Many a soldier goes forth to war with no assurance that his family will be protected by the government he is helping to protect and preserve. He does his duty in the faith that a grateful government will do what is right by those whom he may leave behind. * * Courts ordinarily do not like to put counsel in the position of having to appeal, with hat in hand, to the sound discretion of some board for the allowance of attorneys' fees which they have justly earned. But the law in this case seems to us definite that there are no funds available out of which a proper order for payment can now be paid."

No question has been raised as to the reasonableness of the attorney's fee claimed and we have no reason to question it, but as enunciated above, we are without the power and authority to allow it.

Again, no occasion is presented that necessitates the determination of, and we do not decide, whether or not the equitable fund doctrine should be applied to taxpayers' suits and if so applied, whether or not the fund available for the purpose of awarding counsel fees should be limited to cash or liquid assets as contrasted with real property.

In view of the foregoing, it becomes unnecessary to consider further the second question above posed by this court.

Decision affirmed.