Brewer v. Home-Stake Production Co.

• Decision Date: 09 December 1967
• Docket Number: HOME-STAKE,No. 44860,44860
• Citation: 30 A.L.R.3d 1435,434 P.2d 828,200 Kan. 96
• Parties: , 30 A.L.R.3d 1435 Arthur B. BREWER and Margaret P. Brewer, Appellees, v.PRODUCTION COMPANY, Appellant.
• Court: Kansas Supreme Court

Page 828

434 P.2d 828

200 Kan. 96, 30 A.L.R.3d 1435

Arthur B. BREWER and Margaret P. Brewer, Appellees, v. HOME-STAKE PRODUCTION COMPANY, Appellant.

No. 44860.

Supreme Court of Kansas.

Dec. 9, 1967.

Syllabus by the Court

1. In this state exemplary damages are not regarded as compensatory in any degree.

2. In an action for damages where the facts are such that an award of exemplary damages may be made, probable expenses of litigation, including attorney's fees, may be considered by the jury in estimating an amount which will deter future wrongful conduct where such expenses are not stated to be matters which must be made a basis of compensation.

3. Before a new trial will be granted for a jury's misconduct it must appear that substantial rights have been prejudiced.

Franklin D. Gaines, Augusta, argued the cause and was on the briefs for the appellant.

Fred R. Vieux, Augusta, and James B. McKay, Jr., El Dorado, argued the cause, and J. B. McKay, El Dorado, was with them on the briefs for the appellees.

KAUL, Justice.

The appellees, plaintiffs below, brought this action against appellant for actual and punitive damages resulting from the alleged negligence of appellant in the operation and development of an oil and gas lease adjoining the land of appellees. The appellees will hereafter be referred to as plaintiffs or Brewers and the appellant as defendant or Home-Stake.

The petition alleges Home-Stake was engaged in a water flood project in the leases in question and had lead lines for moving oil from oil wells on the leases to the tank batteries used in connection therewith and pipe lines for moving salt water as a part of the project, and that all of such leasehold equipment was old, dilapidated and in bad condition. The petition further alleges that the general drainage and ravines from both Home-Stake oil and gas leases ran toward and over Brewers' land.

On or about December 2, 1964, and subsequent thereto, oil, salt water and other deleterious substances escaped from the leases into the ravines and ran onto Brewers' land. Brewers' cattle drank from the ravines containing such oil, salt water and other deleterious substances. As a result four cows and four calves died and the remainder of plaintiffs' herd suffered injuries. Plaintiffs were required to move their cattle to another pasture and to supplement the feed to their herd as a result of defendant's operations.

On or about December 3, 1964, Home-Stake burned off the crude oil which had escaped from its leases and accumulated in one of the ravines. Home-Stake's workmen allowed the fire to get out of control, thereby destroying 20 trees on plaintiffs' real estate. Plaintiffs prayed judgment for $7,000 actual and $10,000 punitive damages.

In its answer defendant admits ownership of the oil and gas leases but specifically denies any negligence in the operation thereof or that it was using old or dilapidated equipment and further denies that it destroyed trees on plaintiffs' property or that plaintiffs' cattle drank any polluted matter which had escaped from defendant's property.

Issues were joined and the case was tried to a jury. A verdict was returned in favor of plaintiffs for $2,542 actual damages and $5,000 punitive damages. Defendant's motion for a new trial was overruled and this appeal was duly perfected.

Issues raised on appeal concern that part of the trial court's instruction on punitive damages in which the items to be considered by the jury were set out. Home-Stake makes two contentions in this connection. It is first claimed the trial court erroneously specified factors to be considered in assessing punitive damages, if such were allowed, and, secondly, that a member of the jury was guilty of misconduct in connection with the consideration of the instruction on punitive damages.

We first pause to note that plaintiffs' challenge of defendant's right to be heard in this appeal is found to be without merit.

We shall proceed therefore to the issues raised. Defendant does not argue that exemplary damages were improperly awarded under the facts as determined by the jury; its complaint is directed solely at the instruction given. Defendant's objection to the trial court's instruction on punitive damages is directed at the following portion thereof:

'* * * If you allow punitive damages in this case then in assessing such damage you make take into consideration the following items:

'1. The probable and reasonable expense of the litigation including attorney's fees, expert witness fees and the inconvenience and time involved in preparing for trial.

'2. Such amount as will deter defendant from such future conduct; and

'3. An amount as shall be an example to others and deter them from such conduct.

'The amount should not be so small as to be trifling nor so large as to be unjust, but such as candid and dispassionate minds can approve as a punitive example and as a warning to others against a similar lapse of duty.'

It is defendant's contention that attorney's fees for services rendered in the same case should never be allowed unless stipulated for or expressly authorized by statute and that item (1) quoted above violates this principle.

We agree with defendant's statement of the law. We do not agree with the application thereof to the instruction given in this case. It is true this court adheres to the rule that attorney's fees for services in the case on trial are not to be allowed or taxed as costs in the absence of express statutory authorization.

In Swartzell et al. v. Rogers, 3 Kan. (2d Ed.) *380, a partition suit, this court first declared the word 'costs' includes charges necessarily incurred in the prosecution of an action, but does not include attorney's fees. Soon thereafter, by statute (now appearing as K.S.A. 60-1003(c)(5)), provision was made for the allowance of attorney's fees in partition actions. Since this early announcement, in the absence of express statutory authorization, attorney's fees have never been allowed as a part of compensatory damages nor in addition to a judgment for either actual or exemplary damages. Kansas cases on the subject were reviewed and discussed in State ex rel. Mitchell v. Sage Stores Co., 158 Kan. 146, 145 P.2d 830. See, also, Walker v. Davis Van & Storage Co., 198 Kan. 452, 424 P.2d 473; McGuire v. McGuire, 190 Kan. 524, 376 P.2d 908; Ablah v. Eyman, 188 Kan. 665, 365 P.2d 181, 90 A.L.R.2d 766; Vonachen v. Pratt Glass Co., 172 Kan. 545, 241 P.2d 775.

The instruction in question in the instant case, however, does not suggest the allowance of attorney's fees in addition to exemplary damages nor does it direct the fixing of a certain amount of attorney's fees as an item in the computation thereof. We believe a fair analysis of the instruction as a whole merely suggests that the jury may consider attorney fees as a necessary part of the probable and reasonable expenses of litigation in estimating exemplary damages in such sum as will deter defendant and others from such wrongful conduct in the future.

There is a difference of opinions among jurisdictions which have ruled on the question whether counsel fees and other expenses of litigation may be considered in estimating the amount in cases where exemplary or punitive damages may be given. (22 Am.Jur.2d, Damages, § 167, p. 237.) What appears to be the rule in many jurisdictions is stated in Oleck on Damages to Persons and Property § 289 as follows:

'In many (but not all) jurisdictions, when the case is one in which punitive damages may be awarded, the jury may include litigation expenses in the amount of damages. This, however, really grants such expenses as punishment of the loser, not as proximate expenses of the winner; which is part of the punitive amount, not in addition to it.' (pp. 600, 601.)

The rule is similarly stated in 25 C.J.S. Damages § 50:

'Where the facts are such that an award of exemplary damages may be made, the probable counsel fees may be considered by the jury in estimating the amount of the damages; but under this rule attorney fees are not allowed as compensation but rather as punishment for defendant's wrongful and malicious act. They are not allowed in addition to the sum assessed as exemplary damages, and their recovery is never permitted in a separate action. * * *' (P. 786.)

See, also, 1 Sedgwick on Damages (9th Ed.) § 234, pp. 468, 469.

The rule followed in Kansas is in substance as stated above. It was first considered and applied in Titus v. Corkins, 21 Kan. (2d Ed.) *722, where the trial court, in connection with punitive damages, instructed that the jury might take into consideration the probable and reasonable expenses of conducting the suit. In discussing the meaning of punitive damages the court...