Kelly v. Narregang Investment Co. ( 1918 )

GATES, J.

The substance of the complaint in this action is set forth in the opinion rendered upon an appeal from an order overruling a demurrer thereto. 38 S. D. 632, 162 N. W. 386, arid need not be reiterated here. Trial to the court. Judgment for plaintiff for $500, consisting of the items of $350 attorney fees, $50 personal expenses, and $100 statutory penalty as disclosed by the complaint. Defendant appeals from1 the judgment and an order denying a new trial.

All of the points raised by appellant, save one, became res judicata by the judgment of the circuit court in a former action brought by the present respondent against the present appellant to compel a cancellation of the mortgage. The one question before us is whether the words, “all damages which he or they may sustain by reason of such refusal,” as found in section 2061, Civ. Code, include the fees paid by respondent to his attorneys in the former action and1 respondent’s personal expenses in connection with the preparation and trial of that action.

[1] While the statutes of a majority of the states contain provisions similar to our section 2061, Civ. Code, there is a surprising dearth of authorities- upon this question. Jones on Mtgs. (7th Ed.) §§ 990-1037. Under a Nebraska statute (Comp. St. 1887, c. 73, § 29) which provided “he shall foe liable- to the mortgagor, his heirs or assigns, in the sum of $100 damages, and also for all actual damages occasioned foy such neglect or refusal,” the Supreme Court of that state held, in Daniels v. Densmore, 32 Neb. 40, 48 N. W. 906:

“It was the duty of the plaintiff ini error, when receiving payment of the notes, to enter -satisfaction of the mortgage upon the record, and, failing to do so, he is liable for the costs of an action to remove the -cloud from- the title.”

By the sa-me token it would se-emi that if he were liable .for the -costs of that action he would also have been liable for the counsel fees paid foy the successful'party in that action if a claim had been made therefor.

In our opinion the situation is analogous to that arising in actions upon undertaking's given in injunction proceedings where it has been decided! that the injunction was im-providently granted. While in those -cases tine action- is ex contractu and the damage is measured -by section 2293, Civ. Code, and in this c^se the action is ex delicto and the damage is measured foy section 2312, -Civ. Code, yet if counsel fees are properly allowable in the one case they -certainly are in- the other. In each case the -question is, Was such -claimed element -of damage “proxim-ately caused thereby” ?

In McLennon v. Fenner, 19 S. D. 492, 104 N. W. 218, this court held that reasonable counsel fees in the former action constituted an element of damage in an action upon an injunction undertaking, as “being clearly within the proximate consequences of the injunction.”

In Edmison v. Sioux Falls Water Co., 10 S. D. 440, 73 N. W. 910; id., 14 S. D. 486, 85 N. W. 1016, attorney’s fees were allowed foy the trial court, and no suggestion that they were improperly allowed was raised on the appeals, but those decisions discuss the items of damage that come within the -definition of proximate cause.

In Spelling on Injunction, etc., § 953, and Joyce on Injunction, section 203, the rule is -laid down that generally attorney’s fees and expenses incurred upon a successful motion to -dissolve an injunction are properly allowable as elements of dam-ag'e in a suit on the injunction bond. See, also, note, 8 Ann. Cas. 712; 13 Ann. Cas. 262; Ann. Cas. 1912D, 715.

In our opinion the former successful action brought by this respondent bears the same relation to the liability arising under section 2061, C. C., as the successful motion of a party to -dissolve an- injunction bears to the liability arising under the injunction- undertaking.

[2] In our opinion the refusal of appellant to discharge the mortgage was the proximate cause of the incurring of the expense and counsel fees in the former action by this respondent. .

The judgment and order appealed from' are affirmed. The decisions in Jandt v. South, 2 Dak. 46, 47, N. W. 779, and Hegar v. De Groat, 3 N. D. 334, 36 N. W. 150, cited1 by appellant, would be pertinent if respondent had sought to charge appellant with his attorney’s fees in this action.