A-49330, A-54200, APRIL 27, 1934, 13 COMP. GEN. 301

A-49330,A-54200: Apr 27, 1934

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" THERE IS NO AUTHORITY FOR INCLUDING AS A PART OF SUCH INDEMNIFICATION THE FEES PAID TO ATTORNEYS IN CONNECTION WITH SECURING DUPLICATES OF THE SECURITIES. YOU ARE AUTHORIZED TO CAUSE PAYMENT TO BE MADE TO THE MARINE INSURANCE CO. YOU HAVE STATED THAT THE QUESTION OF WHETHER ATTORNEY FEES ARE PROPERLY ALLOWABLE IN CONNECTION WITH INDEMNITY CLAIMS FREQUENTLY ARISES AND THAT INFORMATION IS DESIRED WHETHER MY DECISION OF JULY 20. WAS INTENDED TO PREVENT REIMBURSEMENT OF ATTORNEY FEES WHERE THE EMPLOYMENT OF AN ATTORNEY WAS DESIRABLE OR NECESSARY IN THE COURSE OF EFFECTING DUPLICATION OF THE CONTENTS OF THE REGISTERED ARTICLE OR ANY PORTION THEREOF. OR THE ACTUAL VALUE THEREOF WHEN THAT IS LESS THAN $100 AND FOR WHICH NO OTHER COMPENSATION OR REIMBURSEMENT TO THE LOSER HAS BEEN MADE.

A-49330, A-54200, APRIL 27, 1934, 13 COMP. GEN. 301

ATTORNEYS - FEES - REGISTRY INSURANCE UNDER TITLE 39, CHAPTER 10, SECTION 381, U.S.C. PROVIDING FOR THE REGISTRATION OF MAIL AND INDEMNIFICATION OF THE OWNER FOR LOSSES "IN THE MAIL," THERE IS NO AUTHORITY FOR INCLUDING AS A PART OF SUCH INDEMNIFICATION THE FEES PAID TO ATTORNEYS IN CONNECTION WITH SECURING DUPLICATES OF THE SECURITIES, ETC. 14 COMP. DEC. 831, MODIFIED.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, APRIL 27, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF MARCH 1, 1934, REQUESTING DECISION WHETHER UNDER TITLE 39, CHAPTER 10, SECTION 381, UNITED STATES CODE, AND DECISIONS OF THE FORMER COMPTROLLER OF THE TREASURY IN 14 COMP. DEC. 831, 836, AND APRIL 27, 1909, YOU ARE AUTHORIZED TO CAUSE PAYMENT TO BE MADE TO THE MARINE INSURANCE CO. OF NEW YORK AND TO THE COMMERCIAL UNION ASSURANCE CO., LTD., OF PRO RATA SHARES OF EXPENSES INCURRED BY THEIR PRINCIPALS OR BY THE INSURANCE COMPANIES FOR COUNSEL FEES IN CONNECTION WITH THE DUPLICATION OF SECURITIES LOST IN THE MAILS AND WHICH SECURITIES HAD BEEN SENT AS REGISTERED MAIL. YOU HAVE STATED THAT THE QUESTION OF WHETHER ATTORNEY FEES ARE PROPERLY ALLOWABLE IN CONNECTION WITH INDEMNITY CLAIMS FREQUENTLY ARISES AND THAT INFORMATION IS DESIRED WHETHER MY DECISION OF JULY 20, 1933 (A 49330), WAS INTENDED TO PREVENT REIMBURSEMENT OF ATTORNEY FEES WHERE THE EMPLOYMENT OF AN ATTORNEY WAS DESIRABLE OR NECESSARY IN THE COURSE OF EFFECTING DUPLICATION OF THE CONTENTS OF THE REGISTERED ARTICLE OR ANY PORTION THEREOF.

THE REFERRED TO TITLE 39, CHAPTER 10, SECTION 381, U.S.C. PROVIDES THAT:

* * * FOR THE GREATER SECURITY OF VALUABLE MAIL MATTER, THE POSTMASTER GENERAL MAY ESTABLISH A UNIFORM SYSTEM OF REGISTRATION, AND AS A PART OF SUCH SYSTEM HE MAY PROVIDE RULES UNDER WHICH THE SENDER OR OWNERS OF FIRST -CLASS REGISTERED MATTER SHALL BE INDEMNIFIED FOR LOSSES THEREOF IN THE MAIL, THE INDEMNITY TO BE PAID OUT OF THE POSTAL REVENUES, BUT IN NO CASE TO EXCEED $100 FOR ANY ONE REGISTERED PIECE, OR THE ACTUAL VALUE THEREOF WHEN THAT IS LESS THAN $100 AND FOR WHICH NO OTHER COMPENSATION OR REIMBURSEMENT TO THE LOSER HAS BEEN MADE. THE POST OFFICE DEPARTMENT OR ITS REVENUE SHALL NOT BE LIABLE FOR THE LOSS OF MAIL MATTER ON ACCOUNT OF ITS HAVING BEEN REGISTERED EXCEPT AS PROVIDED IN THIS CHAPTER. * * *

IT WILL BE NOTED THAT THE EXPRESS AUTHORITY OF LAW IS FOR THE INDEMNIFICATION OF THE OWNER FOR LOSSES "IN THE MAIL," BUT IT HAS BEEN HELD COMMERCIAL INSURANCE COMPANIES MAY BE SUBROGATED TO THE RIGHTS OF THE OWNER OF REGISTERED MAIL WHERE SUCH INSURANCE COMPANIES HAVE PAID INSURANCE TO THE OWNERS BY REASON OF THE LOSS OF THE SECURITIES, ETC., SENT UNDER REGISTERED MAIL. HOWEVER, THE COMMERCIAL INSURANCE COMPANIES ARE ENTITLED TO NO GREATER RIGHTS THAN THOSE WHICH ARE ENJOYED OR MAY BE EXERCISED BY THE OWNERS OF THE LOST REGISTERED MAIL.

AS INDICATED BY THE SUPREME COURT OF THE UNITED STATES IN ITS OPINION OF MARCH 5, 1934, IN LIFE AND CASUALTY CO. OF TENNESSEE V. MCCRAY, 291 U.S. 566, THE ALLOWANCE OF ATTORNEY FEES IN ADDITION TO INSURANCE IS IN THE NATURE OF PUNITIVE DAMAGES FOR REFUSAL TO PAY THE INSURANCE. THE ATTORNEY FEES ARE NOT A PART OF RECOVERABLE DAMAGES UNLESS EXPRESSLY MADE SO BY STATUTE, AS IN THE MCCRAY CASE, FOR REFUSAL TO PAY OTHERWISE. THE SAME COURT STATED IN AN EARLIER CASE, DAY V. WOODWORTH ET AL., 13 HOW. 363, 371, WITH RESPECT TO ATTORNEY FEES THAT:

THIS DOCTRINE ABOUT THE RIGHT OF THE JURY TO INCLUDE IN THEIR VERDICT, IN CERTAIN CASES, A SUM SUFFICIENT TO INDEMNIFY THE PLAINTIFF FOR COUNSEL- FEES AND OTHER REAL OR SUPPOSED EXPENSES OVER AND ABOVE TAXED COSTS, SEEMS TO HAVE BEEN BORROWED FROM THE CIVIL LAW AND THE PRACTICE OF THE COURTS OF ADMIRALTY. AT FIRST, BY THE COMMON LAW, NO COSTS WERE AWARDED TO EITHER PARTY, EO NOMINE. IF THE PLAINTIFF FAILED TO RECOVER HE WAS AMERCED PRO FALSO CLAMORE. IF HE RECOVERED JUDGMENT, THE DEFENDANT WAS IN MISERICORDIA FOR HIS UNJUST DETENTION OF THE PLAINTIFF'S DEBT,AND WAS NOT THEREFORE PUNISHED WITH THE EXPENSA LITIS UNDER THAT TITLE. BUT THIS BEING CONSIDERED A GREAT HARDSHIP, THE STATUTE OF GLOUCESTER (6 ED. 1, C. 1) WAS PASSED, WHICH GAVE COSTS IN ALL CASES WHEN THE PLAINTIFF RECOVERED DAMAGES. THIS WAS THE ORIGIN OF COSTS DE INCREMENT TO; FOR WHEN THE DAMAGES WERE FOUND BY THE JURY, THE JUDGES HELD THEMSELVES OBLIGED TO TAX THE MODERATE FEES OF COUNSEL AND ATTORNEYS THAT ATTENDED THE CAUSE. SEE BAC.ABR.TIT.COSTS.

UNDER THE PROVISIONS OF THIS STATUTE EVERY COURT OF COMMON LAW HAS AN ESTABLISHED SYSTEM OF COSTS, WHICH ARE ALLOWED TO THE SUCCESSFUL PARTY BY WAY OF AMENDS FOR HIS EXPENSE AND TROUBLE IN PROSECUTING HIS SUIT. IT IS TRUE, NO DOUBT, AND IS ESPECIALLY SO IN THIS COUNTRY (WHERE THE LEGISLATURES OF THE DIFFERENT STATES HAVE SO MUCH REDUCED ATTORNEYS' FEE- BILLS, AND REFUSED TO ALLOW THE HONORARIUM PAID TO COUNSEL TO BE EXACTED FROM THE LOSING PARTY) THAT THE LEGAL TAXED COSTS ARE FAR BELOW THE REAL EXPENSES INCURRED BY THE LITIGANT; YET IT IS ALL THE LAW ALLOWS AS EXPENSA LITIS. IF THE JURY MAY,"IF THEY SEE FIT," ALLOW COUNSEL-FEES AND EXPENSES AS A PART OF THE ACTUAL DAMAGES INCURRED BY THE PLAINTIFF, AND THEN THE COURT ADD LEGAL COSTS DE INCREMENT TO, THE DEFENDANTS MAY BE TRULY SAID TO BE IN MISERICORDIA, BEING AT THE MERCY BOTH OF COURT AND JURY. NEITHER THE COMMON LAW, NOR THE STATUTE LAW OF ANY STATE, SO FAR AS WE ARE INFORMED, HAS INVESTED THE JURY WITH THIS POWER OR PRIVILEGE. IT HAS SOMETIMES BEEN EXERCISED BY THE PERMISSION OF COURTS, BUT ITS RESULTS HAVE NOT BEEN SUCH AS TO RECOMMEND IT FOR GENERAL ADOPTION EITHER BY COURTS OR LEGISLATURES.

THERE IS THUS A CLEAR DISTINCTION BETWEEN DAMAGES AS SUCH PAYABLE UNDER AN INSURANCE POLICY OR AS THE RESULT OF JUDGMENTS OF THE COURTS FOR BREACH OF CONTRACT, ETC., AND THE FEES OF ATTORNEYS WHICH THE CLAIMING PARTY MAY BE REQUIRED TO PAY IN ORDER TO ESTABLISH THE INSURANCE CLAIMS OR TO SECURE THE JUDGMENTS. THE GENERAL RULE, AS INDICATED IN THE ABOVE-QUOTED EXTRACT FROM DAY V. WOODWORTH AND AS SHOWN IN 17 C.J. 808, ET SEQ., IS THAT IN THE ABSENCE OF A STATUTE TO THE CONTRARY COUNSEL FEES CONSTITUTE NO PART OF THE DAMAGE WHICH MAY BE RECOVERED UNDER AN INSURANCE POLICY OR AS THE RESULT OF A JUDGMENT IN VARIOUS CAUSES OF ACTION.

THE ABOVE-QUOTED TERMS OF TITLE 39, CHAPTER 10, SECTION 381, UNITED STATES CODE, DO NOT PROVIDE FOR THE PAYMENT OF ATTORNEY FEES, BUT DO PROVIDE THAT THE UNITED STATES MAY PAY INDEMNIFICATION FOR LOSSES IN THE MAIL WHERE THE MAIL HAS BEEN REGISTERED. THERE APPEARS NO JUSTIFICATION FOR THE UNITED STATES TO ADOPT A MORE LIBERAL RULE THAN THAT STATED BY THE SUPREME COURT OF THE UNITED STATES, AND GENERALLY APPLICABLE UNDER STATE LAWS WITH RESPECT TO THE RECOVERY OF ATTORNEY FEES IN COLLECTION OF INSURANCE OR OTHER CLAIMS. SOME OF THE STATES HAVE PROVIDED, AS INDICATED IN THE OPINION OF MARCH 5, 1934, IN THE MCCRAY CASE, FOR THE RECOVERY OF ATTORNEY FEES AS A PART OF PUNITIVE DAMAGES FOR REFUSAL TO PAY UNDER INSURANCE POLICIES, BUT NO SUCH PROVISION IS CONTAINED IN THE LAW WITH RESPECT TO THE PAYMENT OF INDEMNIFICATION FOR LOST REGISTERED MAIL, AND IN FACT IT IS NOT UNDERSTOOD THAT THE POST OFFICE DEPARTMENT HAS IN EITHER OF THESE CASES REFUSED TO MAKE PAYMENT OF ITS PRO RATA SHARE OF THE ACTUAL LOSS SUSTAINED IN THE REGISTERED MAIL.

ACCORDINGLY, YOU ARE ADVISED THAT THERE IS NO LEGAL AUTHORITY FOR MAKING PAYMENT OF ATTORNEY FEES TO INSURANCE COMPANIES UNDER THEIR RIGHTS TO SUBROGATION WHERE THE UNITED STATES IS LIABLE FOR A PRO RATA SHARE OF THE LOSS OF REGISTERED MAIL.