On Remand
This Court reversed a judgment for plaintiff Foremost Life Insurance Company in
Foremost Life Ins Co v Waters,
The facts, as presented in our previous opinion, are:
"Dorothy Vivian Blodgett was seriously injured in an automobile accident and received $26,714.77 from plaintiff Foremost Life Insurance Company pursuant to plaintiff’s group disability insurance policy with her employer. She also filed suit against the tortfeasor in the accident and entered into a consent judgment in that action in the amount of $120,000. Plaintiff filed a complaint for declaratory relief, seeking a determination that it was entitled to reimbursement from defendant in the amount of $26,714.77 under the subrogation provision of its group policy. The trial judge entered judgment for plaintiff and ordered defendant to reimburse plaintiff in the amount of $26,714.77.” Foremost Life Ins Co v Waters,88 Mich App 601 .
*802 Plaintiff was granted 6% annual interest on the judgment from August 25, 1976, the date on which plaintiff filed its complaint for declaratory relief. Defendant’s petition for attorney fees was denied. Three issues remain for our consideration.
I
Defendant argues that, since plaintiff sought only declaratory relief, the trial judge erred in also awarding monetary relief.
At the time the complaint for declaratory judgment was filed, defendant had not yet settled with the tortfeasor. When judgment for plaintiff was entered, however, defendant had entered into a settlement with the tortfeasor. It was, therefore, appropriate for the trial judge to grant a monetary award in addition to declaratory relief. Plaintiff was entitled to such relief even though it had not been demanded in plaintiff’s complaint. GCR 1963, 518.3.
II
Defendant also argues that, if a monetary award was properly entered, interest should have been computed from April 8, 1977, the date she entered into a consent judgment in the amount of $120,000 with the tortfeasor. As noted supra, the trial judge awarded interest from the date plaintiff’s complaint was filed. MCL 600.6013; MSA 27A.6013.
Interest is awarded to compensate for loss of the use of funds.
Vannoy v City of Warren,
*803 " 'Interest is the compensation allowed by law, or fixed by the parties, for the use or forbearance of money, or as damages for its detention.’ 33 CJ, p 178.” Marion v Detroit,284 Mich 476 , 484;280 NW 26 (1938).
The purpose of the prejudgment interest statute is to compensate the prevailing party for the
delay
in the payment of money damages.
Denham v Bedford,
We hold that, under the facts of this case, the trial judge erred in awarding interest from the date of filing the complaint. Defendant was not in possession of the funds to which plaintiff asserted a claim until April 8, 1977. Until that date there had been no detention of funds by defendant. Defendant’s delay in paying plaintiff pursuant to its request under the subrogation clause did not begin until April 8, 1977.
We find analogous the case of
McLouth Steel Corp v A E Anderson Construction Corp,
So too in the instant case we find that awarding interest from the date the complaint for declaratory judgment was filed was not proper. The amount of the fund from which plaintiff was to be subrogated was not determined until entry of judgment for defendant against the tortfeasor. Although the consent judgment in the case between defendant and the tortfeasor expressly provided that the $120,000 award was to be "without costs and interest”, the availability of 6% interest from the filing of the complaint was surely a factor taken into consideration by the parties in negotiation. The judgment is, therefore, modified to provide for interest from April 8, 1977. 1
Ill
Defendant’s final argument challenged the trial judge’s denial of her request to offset the sum awarded to plaintiff by a portion of the fees she paid to her attorneys in the suit filed against the tortfeasor._
*805
Generally, attorney fees may not be awarded unless authorized by statute or court rule.
State Farm Mutual Automobile Ins Co v Allen,
We find that the instant facts justify application of this exception to the general restrictive rule regarding award of attorney fees. By virtue of the subrogation clause in the group disability insurance policy, the judgment entered in favor of defendant in the suit against the tortfeasor also benefited plaintiff. We note that other courts have invoked the "common fund” principle in similar contexts to justify awards of attorney fees. See Anno:
Right of attorney for holder of property insurance to fee out of insurer’s share of recovery from tortfeasor,
2 ALR3d 1441, § 1(a), p 1441-1442;
State Farm Ins Co v Clinton,
Accordingly, defendant is entitled to deduct, *806 from the sum awarded plaintiff, plaintiff’s pro rata share of a reasonable fee due defendant’s attorneys in the suit against the tortfeasor.
Conclusion
The Supreme Court has affirmed the trial judge’s ruling that the subrogation clause is enforceable and applicable. The award of monetary relief to plaintiff is affirmed with the following modifications: interest on the judgment is to run from April 8, 1977; we remand for a hearing to determine a reasonable attorney fee due defendant’s attorneys in the suit against the tortfeasor and order that plaintiff’s recovery be reduced by its pro rata share of that amount.
Notes
Pursuant to MCL 600.6013; MSA 27A.6013, as amended in 1980, interest shall be calculated from April 8, 1977, to June 1, 1980, at the rate of 6% per year, and thereafter at the rate of 12% per year.
The record indicates that plaintiff was on notice of the litigation between defendant and the tortfeasor. Although defendant was of the opinion that the subrogation clause in the insurance policy did not apply, nothing suggests that plaintiff was precluded from seeking to intervene in defendant’s suit against the tortfeasor.