Lead Opinion
This is an action to recover treble damages, under section 7-106, R. R. S. 1943, for fraud and deceit on the part of the defendant while acting as city attorney of Bridgeport, Nebraska, as county attorney of Morrill County, Nebraska, and as an attorney at law. The trial court, sustained the motion of the defendant for a judgment on the pleadings, and plaintiff has appealed.
The petition alleges in substance that on or about February 17, 1955, defendant was engaged by plaintiff’s wife to represent her in a suit for a divorce against the plaintiff. On February 18, 1955, plaintiff was imprisoned in the city jail of the city of Bridgeport for a perod of 5 days, and on February 23, 1955, he was imprisoned in the county jail of Morrill County for 2 days. The plaintiff was not charged with any criminal offense prior to his dismissal from the county jail. The plaintiff alleged that the defendant, under the pretext that he was acting in his official capacity, fraudulently procured a deed and a bill of sale of his property to plaintiff’s wife, he not knowing that defendant was about to file a suit for divorce in her behalf. He also alleged that defendant induced him to sign voluntary commitment papers for commitment of plaintiff to the Hastings State Hospital. It was further alleged that defendant did on February
Defendant alleged in his answer, insofar as it is pertinent to this appeal, that section 7-106, R. R. S. 1943, is violative of Article VII, section 5, of the Constitution of Nebraska, and that the action is barred by section 25-208, R. R. S. 1943, a 1-year statute of limitations.
The trial court held that section 7-106, R. R. S. 1943, insofar as it provides that an attorney shall forfeit to the injured party treble damages to be recovered in a civil action, is violative of Article VII, section 5, Constitution of Nebraska, and thereupon sustained defendant’s motion for a judgment on the рleadings.
It is the contention of the defendant that section 7-106, R. R. S. 1943, is unconstitutional in that it violates Article VII, section 5, of the Nebraska Constitution. This statute provides: “An attorney and counselor who is guilty of deceit or collusion, or consents thereto, with intent to- deceive a court, or judge, or a party to an action or proceeding, is liable to be disbarred, and shall forfeit to the injured party treble damages to be recovered in a civil action.” It is argued that the provision that the guilty party shall forfeit to the injured party treble damages constitutes it a penalty and nоt a provision for liquidated damages, and consequently is void.
There is confusion in the cases as to the meaning of the words “fines, penalties, and license money” contained in Article VII, section 5, of the Constitution,
It has been a fundamental rule of law in this state that punitive, vindictive, or exemplary damages will not be allowed, and that the measure of recovery in all civil cases is compensation for the injury sustained. This rule is so well settled that we dispose of it merely by the citation of cases so hоlding. Boyer v. Barr,
In School District of the City of Omaha v. Adams,
The defendant contends that section 7-106, R. R. S. 1943, provides for the collection of a penalty by an individual and is unconstitutional for that reason. The plaintiff asserts that the statute is remedial and within the power of the Legislature to enact. This question has been before this court many times with varying results. The genesis of the problem is in Atchison & Nebraska R. R. Co. v. Baty,
The distinction between provisions providing for penalties and those providing for liquidated damages has been stated by this court to be as follows: “In construing a contract to determine whether or not a provision therein for the payment of a stipulated sum in case of default by one of the parties is to be considered as a penalty or liquidated damages, the court will consider the subject-matter, the language employed, and the intention of the parties. If the construction is doubtful, the agreement will be considered a penalty merely. If damages result from the performance or omission of acts, which damages are certain or can be ascertained by evidence, the stipulated sum is considered as a penalty; but where the acts or omissions occasioning
“The purpose of liquidated damages is to furnish compensation for an injury sustained, and, if the amount provided does not bear a reasonable relation to the damage which might be contemplated by the parties, or if it is apparent that it was intended to more than cover that damage, and is not compensatory merely, then it must be construed as a penalty.” Sunderland Bros. Co. v. Chicago, B. & Q. R. R. Co., supra.
It is clearly within the province of the Legislature to provide for liquidated damages in favor of a private person, although in form a penalty, if the amount provided bears a reasonable relation to the actual damages which might be sustained and which damages are not susceptible of measurement by ordinary pecuniary standards. But where it appears that the provision provides for the payment of an amount clearly in excess of compensatоry damages, it is a penalty and violates the due process clause of the Constitution when considered with Article VII, section 5, thereof. While there is respectable authority from other jurisdictions that providing liquidated damages in favor of a private person in excess of those which are termed compensatory does not violate the due process and equal protection clauses, such has not been the holding when the Constitution contains a provision similar to that in Article VII, section 5, of the Constitution. This question was determined in Cairo & St. Louis R. R. Co. v. Peoples,
Whether or not the granting of double or treble damages is in violation of the due process clause standing alone, it is a violation of such clause when considered with Article VII, section 5, of the Constitution. Since all penalties must go to the benefit of the common schools of the state, a penalty for the benefit of a private person is violative of the cited constitutional provisions.
A statute such as section 7-106, R. R. S. 1943, which provides that the party committing the wrongful act shall forfeit to the injured party treble dаmages to be recovered in a- civil action, authorizes the collection of a penalty. The effect of the statute is to authorize the actual compensatory damages to be determined, and then arbitrarily requires the defendant to pay to the plaintiff three times that sum. . It therefore exceeds compensatory, damages three times over and is a penalty prohibited by .the due process clause, Article I, section 3, and Article VII, section 5, of the Constitution of Nebraska......
Arguments have been advanced by text writers and case reviewers .that compensatory damages include not
We necessarily conclude that penalties in favor of private persons are prohibited by the two cited sections of the Constitution. This necessarily requires us to hold that the recovery of double or treble damages, that is, damages which double or treble the actual compensatory- damages established, are in contravention of the same sections of the Nebraska Constitution. We consequently hold that section 7-106, R. R. S. 1943, insofar as it provides for treble damages, likewise is violative of the cited sections of the Constitution.
The plaintiff contends that the constitutionality of section 7-106, R. R. S. 1943, is sustained by Arthur v. Trindel, supra; McNish v. General Credit Corp.,
In Arthur v. Trindel, supra, the action was brought by a taxpayer of the city of Beatrice against the defendant to recover money paid him for services and materials furnished the city while he was a salaried member of the city’s board of public works. The court held that the action was remedial and not one to recover a penalty. This conclusion is correct for this reason: The statute, which was declaratory of the common law, condemns transactions by a person with a city while he is serving as an officer of the latter because of his conflict of interest, and gives him no cause of action against the city for services rendered or materials furnished to the city while serving the city. Any payment made to him for services and materials is therefore an unlawful exрenditure of the city’s funds which may be recovered back by the city, or by a taxpayer in its behalf. ' It is in no sense for the recovery of a penalty and is an action to recover money unlawfully expended by the city which it had no authority to pay. It has no controlling effect on the case before us.
In McNish v. General Credit Corp., supra, plaintiff brought a suit to void an installment loan contract because of excessive interest charges therein as limited by section 45-138, R. S. Supp., 1953, and to recover back the payments made thereon by the plaintiff. This court held that the action was for the recovery of “a fine, forfeiture, or penalty, imposed by a statute” for purposes of jurisdiction. It further held that it was not a fine or penalty within the meaning of Article VII, section 5, of the Constitution. Applicable statutes are therein cited to the effect that such a loan is void and that the licensee shall have no right to collect or receive any principal, interest, or charges on such loan. This court concluded, from the language used in the statute, that the Legislature intended that a lender should have nothing in such a situation and that the borrower should
Our finding that the action to recover payments made on the void installment loan contract is not a suit to recover a penalty is inconsistent with the holding in the McNish case that it was a suit for the recovery of a penalty for the purpose of jurisdiction under section 25-404, R. R. S. 1943. Our holding in the present case leaves the holding in the McNish case in the inconsistent position of declaring the action one for a penalty for the purpose of jurisdiction and that it was not an action to recover a penalty in order to escape unconstitutionality. The assumption that the action was for the re
The case of School District of the City of Omaha v. Adams, supra, involved quite a different situation. It was a suit involving the 50 percent penalty for failure to list certain property for taxation. Taxation is the sole source of revenue to sustain the government. The listing of property for taxation is an essential step in the process of obtaining such revenue. It is a sovereign power by the exercise of which a government sustains itself. Measures enacted pursuant to this sovereign power of taxation, which аre coercive and punitive, and which tend to procure the listing of all property for taxation, are sustainable as a proper exercise of that sovereign authority. As we said in the Adams case, the penalty for failure to list property for taxation is punitive as to the wrongdoer, but it is also compensatory to the state and the subdivisions thereof entitled to share in the tax for the delay caused by the failure to list for assessment purposes and the consequent derangement of tax records and collection processes. It necessarily involves considerations that play no part in a case where a private individual seeks to recover damages in excess of actual, compensatory damages. The case lends no support to plaintiff’s contentions in the case now before us.
We conclude that section 7-106, R. R. S. 1943, insofar as it provides for treble damages, is violative of Article I, section 3, and Article VII, section 5, of the Nebraska Constitution.
The plaintiff next asserts that a statute which is declaratory of the common law does not divest the common law action. From this it is argued that evеn if
We are in accord with the view that a statute which merely recodifies a common law action, and does not purport to create a new statutory action, leaves the plaintiff in a position where an election of remedies is not required. State ex rel. Love v. Cosgrave,
We necessarily conclude that the plaintiff may not
The petition shows that there was no suit pending when the acts complained of were committed. The case is not brought within the scope of section 7-106, R. R. S. 1943, even if the treble damage provision were constitutional. The petition was demurrаble and the trial court did not err in sustaining the motion for a judgment on the pleadings.
Affirmed.
Concurrence Opinion
concurring.
I concur in the result reached by the court but, for reasons hereinafter set forth, do not agree with the court’s holdings in certain respects.
The court holds that the provisions of section 7-106, R. R. S. 1943, providing for treble damages, is violative of Article I, section 3, and Article VII, section 5, of the Constitution of Nebraska. I agree that such provision is unconstitutional for the reason that the Constitution of Nebraska does not permit the recovery of punitive, vindictive, or exemplary damages by individuals in civil cases. Sеe cases cited in the court’s opinion. However, I would not agree that all remedial statutes establishing the right of individuals to recover fixed amounts as liquidated damages in civil matters, although in the form of a penalty, necessarily come under the provisions of Article VII, section 5, of the Constitution of Nebraska. See, Graham v. Kibble,
The court concludes there is an inconsistency in our holding in McNish v. General Credit Corp.,
It will be noted that section 25-404, R. R. S. 1943, includes, as a basis for jurisdiction, “An action for the recovery of a * * * forfeiture, * * * imposed by a statute, * * a subject not dealt with by Article VII, section 5, of the Constitution of Nebraska. Webster’s New Twentieth Century Dictionary (2d Ed.), p. 719, defines forfeiture as “the act of forfeiting; the losing of some right, privilege, estate, honor, office, or property, by an offense, crime, breach of condition, or other act.” See, also, the definitions of forfeiture as given in Black’s Law Dictionary (4th Ed.), p. 1290; Arthur v. Trindel,
But let us consider the meaning of the word “penalty” as found in sectiоn 25-404, R. R. S. 1943. It is apparent the Legislature did not intend, by subdivision (1) of section 25-404, R. R. S. 1943, to cover the same subject matter as is dealt with by Article VII, section 5, Constitution of Nebraska, for the matter relates to “All fines, penalties and license money” while the former relates to “An action for the recovery of a fine, forfeiture, or penalty, imposed by statute * * (Emphasis mine.) Thus it becomes self evident to me that what the Legislature intended by using the word “penalty” in this statute was to give courts jurisdiction to enforce rights in civil matters which it had, by statute, given individuals