Kanaly v. State ex rel. Janklow

FOSHEIM, Retired Justice.

The Board of Regents and Board of Charities and Corrections appeal a circuit court order requiring them to pay $17,-919.87 in attorneys’ fees, costs, and expenses incurred by plaintiffs. Plaintiffs also request attorneys’ fees and costs incurred upon this and a prior related appeal. We reverse.

This is our second exposure to this case. It began as an action to halt the conversion of the University of South Dakota at Springfield (USD/S) into a minimum security prison by transferring its facilities to the Board of Charities and Corrections. In Kanaly v. State By and Through Janklow, 368 N.W.2d 819 (S.D.1985) (Kanaly I), this court held the gratuitous transfer violated the federal act dedicating the land for educational uses, and Article VIII, § 7 of the South Dakota Constitution. Both provisions prohibited transfer of the land except in exchange for its full market value. The case was then remanded for determination of the full market value of all property transferred. Shortly before Kanaly I was handed down however, the South Dakota Legislature by statute transferred the USD/S trust land and funds to the remaining state normal schools. Merkwan v. State by and through Janklow, 375 N.W.2d 624 (S.D.1985). Pursuant to our decision in Kanaly I, that enactment obviated any need for plaintiffs’ requested relief from the unconstitutional transfer. See Merkwan, supra.

No request for attorneys’ fees was made in the complaint. However, following the remand in Kanaly I, appellees made a motion in circuit court for a total of $43,491.88 in legal fees, sales tax, and other expenses. $36,305.00 of this amount represented attorneys’ fees. Plaintiffs’ counsel calculated fees at the rate of either $100.00 or $70.00 per hour depending upon which member of the firm performed the work billed. Following a hearing and a review of briefs, the trial court granted the motion and scheduled a further hearing to determine the amount to be awarded. The court thereafter determined that each of plaintiffs’ counsel should be compensated at the rate of $65.00 per hour. After making other adjustments regarding plaintiffs’ requests, the court awarded $17,919.87 in attorneys’ fees, costs, and expenses. The issue on this appeal is limited to the attorneys’ fees allowance.

The general rule in the United States is that absent statutory exception, or an enforceable contract so providing, a litigant must pay his own attorneys’ fees. Van Emmerik v. Montana Dakota Utilities Co., 332 N.W.2d 279 (S.D.) (Van Emmerik III), cert. denied, 464 U.S. 915, 104 S.Ct. 278, 78 L.Ed.2d 257 (1983) (citing Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975)). This so-called “American rule” has been consistently followed in South Dakota. See numerous cases cited in Van Emmerik III, 332 N.W.2d at 282. SDCL 15-17-6 and 7 codify this rule. SDCL 15-17-6 provides: “The compensation of attorneys and counselors at law for service in civil and criminal actions and proceedings must be left to the agreement, express or implied, of the parties.” However, SDCL 15-17-7 provides:

The court may allow attorneys’ fees as costs for or against any party to an action only in the cases if (sic) it is specifically provided by statute, but nothing herein abridges the power of the court to order payment of attorneys’ fees in all case of divorce, annulment of marriage, determination of paternity or for separate maintenance and alimony, if the allowance of the same before or after judgment is warranted. Nor does anything herein abridge the power of the court to allow attorneys’ fees from trusts administered through the court. (Emphasis added.)

Finding no statutory authorization to award the fees, the trial court reasoned that any award of attorneys’ fees and costs must fall under a common law exception to the no-fee rule. The court determined that any of three such exceptions allowed the award in this case, namely (1) the common fund doctrine, (2) the substantial benefit doctrine, and (3) the trust administration rule.

Van Emmerik III is apparently the sole South Dakota case discussing the common fund and substantial benefit doctrines. According to Van Emmerik III, the common fund exception “allows an award of attorneys’ fees from a common fund when a plaintiff, usually on behalf of a class, has successfully maintained an action that benefits a group of others in the manner that it benefits himself.” 332 N.W.2d at 282, (citing Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970)). The substantial benefit rule allows reimbursement to the plaintiff where the litigation he pursued conferred a substantial benefit upon an ascertainable class and where such an award will spread the costs of the litigation proportionately among these persons. Van Emmerik III (citing Mills, supra).

Because the common fund and substantial benefit doctrines were discussed in Van Emmerik III the trial court apparently assumed these common law exceptions to the American rule would allow the award of attorneys’ fees and costs in this case. In Van Emmerik III, however, we concluded neither doctrine applied because sovereign immunity precluded their application and because certain essential elements of the doctrines were absent. In the present case we need not belabor any of these exceptions to the American rule. Regardless of their merits, the simple and clear obstacle preventing their application is their failure to be specifically provided for by any statute. They are thus prohibited by SDCL 15-17-7. As we recently stated in American Rim & Brake, Inc. v. Zoellner, 382 N.W.2d 421, 424 (S.D.1986) (quoting Simpson v. Tobin, 367 N.W.2d 757, 763 (S.D.1985)), “[t]his court will not enlarge a statute beyond its face where the statutory terms are clear and unambiguous in meaning” and “[w]e assume that statutes mean what they say and that the legislators have said what they meant.” Zoellner, 382 N.W.2d at 424 (quoting Crescent Elec. Supply Co. v. Nerison, 89 S.D. 203, 210, 232 N.W.2d 76, 80 (1975)). It is settled South Dakota law that the common law is not in force when it conflicts with statutes enacted by the legislature. SDCL 1-1-23(5), -24. A statute in derrogation of the common law is to be “liberally construed with a view to effect its objects.” SDCL 2-14-12. Furthermore, as we stated in Van Emmerik III, our Carlson v. City of Faith, 75 S.D. 432, 67 N.W.2d 149 (1954), decision “impliedly rejected the concept of an extra-statutory award of attorneys’ fees for the redress of a public wrong.” 332 N.W.2d at 284. Despite the recognition given the common law doctrines in Van Emmerik III, neither exception was applied. This recognition was at most obiter dictum. It follows that application of the trust administration rule is similarly precluded.

Counsel for Kanaly argues in the alternative that the allowance of attorneys’ fees was authorized by SDCL 15-17-7 wherein it provides nothing shall “abridge the power of the Court to allow attorneys’ fees from trusts administered through the Court.” In Noll v. Brende, 318 N.W.2d 319 (S.D.1982), Chief Justice Wollman, writing for this court, considered a request for attorneys’ fees to be awarded from an implied trust. He stated: “We do not consider [SDCL 15-17-7] as authorizing the award of attorneys’ fees in the circumstances of this case. This was not a trust administered through the courts. In the absence of specific statutory authority the trial court should not have awarded the [attorneys'] fees in question.” 318 N.W.2d at 321 (citing Estate of Weickum, 317 N.W.2d 142 (S.D.1982); Boland v. City of Rapid City, 315 N.W.2d 496 (S.D.1982)). It follows that the phrase “trusts administered through the court” found in SDCL 15-17-7 refers to SDCL ch. 21-22, “Administration of Trust Estates” and not to the South Dakota educational trust fund.

In Kanaly I, Justice Henderson reaffirmed our historic position that the provisions of the Enabling Act and the South Dakota Constitution

create a special, permanent and perpetual trust of all land, money, property, and proceeds of the same, donated to the state for educational institutions by the United States and individuals alike and that the state is the trustee is beyond question. Such a conclusion is dictated by the strong and unequivocal language of the provisions themselves and this Court has long acknowledged the permanent trust relationship.

368 N.W.2d at 823. Kanaly I cites Heston v. Mayhew, 9 S.D. 501, 502, 70 N.W. 635, 636 (1897), which holds “[i]t is the duty of the legislature to direct and control the management of such trust.” The remand in Kanaly I for the trial court to conduct hearings concerning the nature and value of the transferred property did not make the educational fund a trust administered through the court and subject to the allowance of attorneys’ fees pursuant to SDCL 15-17-7. It remained a trust under the control and management of the legislature. See also Schelle v. Foss, 76 S.D. 620, 83 N.W.2d 847 (1957); In re State Bonds, 7 S.D. 42, 63 N.W. 223 (1895).

Plaintiffs also requested attorneys’ fees and costs incurred in the Kanaly I and present appeal. The trial court held it did not have jurisdiction to make this award. Plaintiffs argue that both this court and the trial court have jurisdiction to award such fees. Again, however, no statutory authority is cited and we find none.

The order of the trial court is reversed and remanded for a calculation and allowance of costs only. See First Nat. Bank of Minneapolis v. Kehn Ranch, 394 N.W.2d 709, 717 (S.D.1986).

WUEST, C.J., and MORGAN and SABERS, JJ., concur. HENDERSON, J., dissents. MILLER, J., not having been a member of the Court at the time this action was submitted to the Court, did not participate.