Ash v. Security Nat. Ins. Co.

• Decision Date: 17 November 1978
• Citation: 574 S.W.2d 346
• Parties: Robert ASH and Aliene Ash, Appellants, v. SECURITY NATIONAL INSURANCE COMPANY and William L. Wine, Appellees.
• Court: Kentucky Court of Appeals

Page 346

574 S.W.2d 346

Robert ASH and Aliene Ash, Appellants, v. SECURITY NATIONAL INSURANCE COMPANY and William L. Wine, Appellees.

Court of Appeals of Kentucky.

Nov. 17, 1978.

Edward A. Mayer, Terry E. Fox, Segal, Isenberg, Sales, Stewart & Nutt, Louisville, for appellants.

William A. Miller, Louisville, for appellees.

Before MARTIN, Chief Judge, and HOWERTON and LESTER, JJ.

MARTIN, Chief Judge.

This is an appeal from an order of the Jefferson Circuit Court denying appellants' motion for damages under KRS 26A.300. This case turns solely on the interpretation this Court will give to that statute. KRS 26A.300 defines in what instances damages (1) When collection of a judgment for the payment of money has been stayed as provided in the Rules of Civil Procedure, there shall be no damages assessed on the first appeal as a matter of right contemplated by section 115 of the Constitution of Kentucky.

will be awarded against an appellant upon the affirmance or dismissal of an appeal. It was enacted in 1976 replacing KRS 21.130 which provided for the award of damages in the amount of 10% On the sum superseded when an appeal was either affirmed or dismissed. The question before us is whether KRS 26A.300, which exempts a first appeal from damages, imposes damages where a petition for rehearing has been made and denied. KRS 26A.300 provides as follows:

(2) When collection of a judgment for the payment of money has been stayed as provided in the Rules of Civil Procedure pending any other appeal, damages of ten percent (10%) on the amount stayed shall be imposed against the appellant in the event the judgment is affirmed or the appeal is dismissed after having been docketed in an appellate court.

(3) Similar damages of ten percent (10%) shall be imposed when a petition for writ of certiorari, petition for rehearing, or other petition which stays collection of a judgment for the payment of money is denied by an appellate court under circumstances not constituting a first appeal under subsection (1) of this section.

(4) No additional penalty shall be imposed upon a party as a consequence of a review subsequent to a petition or a second appeal.

(5) Damages imposed under subsections (2) or (3) of this section shall not be payable and shall be void if the decision of the trial court awarding the payment of money is ultimately reversed.

The Ashes were successful litigants in a lawsuit against Security National Insurance Company and William L. Wine, securing a judgment in the amount of $5,000. The judgment was entered by the Jefferson Circuit Court on March 14, 1977. A notice of appeal was filed, and the defendants executed a supersedeas bond, and a supersedeas for the judgment was issued on March 29, 1977, staying the collection of the judgment pending defendants' appeal. The appeal was unsuccessful, and this Court affirmed the judgment below on December 2, 1977. The defendants filed a petition for rehearing on December 7, further suspending payment of the judgment. This Court denied the petition on February 10, 1978, and on March 3, 1978, the mandate issued. The defendants then paid the amount of the judgment, including costs, to the plaintiffs. A joint motion was made in Jefferson Circuit Court by all parties for a determination of whether defendants were liable for damages because of the delay caused by the filing and denial of the petition for rehearing. The Jefferson Circuit Court ruled that no damages were due as the petition for rehearing was denied under circumstances constituting a first appeal. KRS 26A.300(3). We agree. It is from this order that the Ashes, the original plaintiffs and former appellees, now appeal.

The parties' respective positions may be summarized briefly. The appellants, as winning plaintiffs below, contend that a petition for rehearing denied by this Court after affirmance of the original judgment is no longer a first appeal. Therefore, KRS 26A.300(3) applies and damages of 10% Must be assessed. Appellees, the losing defendants below, contend that the appeal as a matter of right referred to in KRS 26A.300(1) encompasses the petition for rehearing brought in the same court hearing the original appeal, and that the petition is, therefore, exempt from any assessment of damages. Neither party cites to us any authority, and we believe this is the first time the issue has arisen since the enactment of KRS 26A.300.

Prior to 1976, damages on affirmance were controlled by KRS 21.130, which awarded damages whenever an appeal was affirmed or dismissed. The award was mandatory; there was no discretion to be exercised by the court to determine, for example, the validity or frivolity of an appeal.

U. S. Fidelity & Guaranty Co. v. Citizens National Bank, 147 Ky. 810, 145 S.W. 750 (1912); Preece v. Burns Adm'r, 261 Ky. 202, 87 S.W.2d 375 (1935). With the implementation of the judicial article in 1976, came the addition of § 115 to the Kentucky Constitution. Section 115 provides, in part, "In all cases, civil and criminal, there shall be allowed as a matter of right at least one appeal to another court . . ." Until then the right to appeal was statutory. The legislature apparently repealed KRS 21.130 and enacted KRS 26A.300 to insure that there would be no penalty assessed for an appeal brought as a matter of right under § 115.

The assessment of damages against an appellant when an appeal is affirmed is allowed in most jurisdictions. The majority of jurisdictions provide that the reviewing court may assess a penalty or damages on a finding that an appeal was taken frivolously or for the purpose of hindering or delaying justice. 5 Am.Jur.2d, Appeal and Error § 1024. The federal rule states that "(i)f a court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee." Federal Rule of Appellate Procedure 38. This is typical of many jurisdictions in that the availability of damages is left to the discretion of the reviewing court. ¹ Whether the issues are meritorious and whether the appeal was brought solely for delay or vexation of the appellees are questions to be considered by the reviewing court. Krick v. Farmers and Merchants Bank of Boswell, 151 Ind.App. 7, 279 N.E.2d 254 (1972); Taliaferro v. Taliaferro, 203 Cal.App.2d 652, 21 Cal.Rptr. 870 (1962). At least two states, Mississippi and Virginia, automatically provide for damages upon affirmance of a money judgment. Miss.Code Ann. § 11-3-23; Va.Code § 16-1-113. The position of these two states is especially interesting in light of their single-tier appellate structure. Kentucky also imposed mandatory damages under former KRS 21.130. Even with the enactment of KRS 26A.300, damages are automatically conferred upon the affirmance or dismissal of appeals other than the first appeals.

The propriety of such damages, which are in fact a penalty imposed for appealing an unfavorable judgment, has been recognized by the United States Supreme Court. L & N Railroad Co. v. Stewart, 241 U.S. 261, 36 S.Ct. 586, 60 L.Ed. 989 (1916). Stewart sued the L & N Railroad under the Federal Employees Liability Act and won. The railroad appealed, and the Kentucky Court of Appeals affirmed, imposing additional damages of 10% Of the amount of judgment under the Kentucky law then in effect. The Supreme Court stated at 241 U.S. page 263, 36 S.Ct. page 588:

There was no obligation upon the state to provide for a suspension of the judgment, and nothing to prevent its making it costly in cases where ultimately the judgment is upheld. So, the state may allow interest upon a judgment from the time when it is rendered, if it provides appellate proceedings and the judgment is affirmed, as, but for such proceedings, interest would run as of course until the judgment was paid.

A resolution of the availability of damages where a petition for rehearing is denied by the Kentucky Court of Appeals requires an examination of the nature of the right to an appeal. The Kentucky Constitution, § 115, provides for a right to an appeal to another court. ² It does not provide for a petition for rehearing. The Constitution also gives the Supreme Court the power to define its own appellate jurisdiction as well as the jurisdiction of the Court of Appeals by the enactment of rules. Kentucky Constitution, §§ 110, 116. The Rules of Civil Procedure provide for the filing of a petition for rehearing in both the Court of Appeals and the Supreme Court. CR 76.32.

An appeal has been defined in various courts as the Removal of a cause from a On the other hand, a petition for rehearing is a request by a party for an appellate court to modify or set aside its own judgment in an appeal. 5 Am.Jur.2d Appeal and Error § 978. Under CR 76.32(2), a petition will be limited only to the issues argued on appeal and will be granted only when the court "has overlooked a material fact in the record, or a controlling statute or decision, or has misconceived the issues presented on the appeal, or the law applicable thereto." A petition for rehearing is arguably part of the appeal from which it arises because it is before the same appellate court, and by virtue of its being filed, suspends final action by that court. CR 76.30(2).

lower to a higher tribunal for retrial or review, Savelewitz v. Solid, 21 Conn.Sup. 159, 149 A.2d 314 (1958); the Removal of a suit from an inferior to a superior court, State v. Getty, 273 S.W.2d 170 (Mo.1954); the Removal of a case from an inferior court to a higher court for review, Griffitts v. Rockford Utility District, 41 Tenn.App. 653, 298 S.W.2d 33 (1956); the Removal of a suit, litigation, or action from an inferior to a superior court, Scott v. Newsom, 74 N.M. 399, 394 P.2d 253 (1964); any complaint to a superior court of an injustice done by an inferior one, Illinois Central Railroad Co. v. Moore, 215 So.2d 419 (Miss.1968); and, a review by a higher court of a lower court judgment, Bowen v. Doyal, 259 La. 839, 253 So.2d...