Defendant Pacific First Federal Savings and Loan Association (Pacific) appeals and plaintiffs cross-appeal from the trial court’s judgment awarding plaintiffs and the class which they represent unjust enrichment damages and other relief. The controversy arises out of Pacific’s failure to pay the class members, between May, 1969, and June, 1975, proceeds derived from Pacific’s use and investment of advance reserve payments which the members made to Pacific for taxes and insurance on dwellings for which they had received loans from Pacific. Many of the specific issues that the parties raise are variations of matters which were decided in
Derenco v. Benj. Franklin Fed. Sav. and Loan,
We quote from Pacific’s brief the facts which provide an overview of the case:
“During the relevant period, Pacific was chartered as a federal savings and loan association. It employed real property security instruments which required borrowers to deposit monthly one-twelfth of their estimated annual insurance premiums, taxes, assessments, and other public charges with Pacific. The purpose of thе requirement was to protect Pacific’s security interest in the property.
“Pacific commingled the tax and insurance reserves with other funds held for investment. Pacific retained the income derived from investing the reserves. The security instruments did not mention the investment of reserves or Pacific’s retention of income. Pacific’s personnel did not routinely inform borrowers of the practice.
“* * * The reserves were invested until the date of payment.” 1
The threshold question is whether Pacific’s notice of appeal gives us jurisdiction over the class members and issues pertaining to the class or perfects an appeal only against the representative plaintiffs as individuals. The notice is *273 addressed to the named plaintiffs Guinasso and their attorney. The caption on the notice refers to those plaintiffs as “husband аnd wife,” and only the two plaintiffs, referred to by name, are designated as adverse parties to the appeal. The copy of the judgment attached to the notice also refers, in its caption, to plaintiffs by name and as “husband and wife.” The judgment in the trial court file contains appended exhibits which name the 11,375 class members who filed claim statements, ORCP 32F(2), and the 13,647 who did not. The exhibits also show the share of the judgment to which each person in the first category is entitled. See ORCP 32M. However, copies of those exhibits are not attached to Pacific’s notice of appeal. The only thing in the notice or the part of the judgment attached to it which indicates that plaintiffs are representatives of a class is the recital to that effect in the judgment.
Plaintiffs contend that the notice succeeds in perfecting thе appeal only as to the named plaintiffs as individuals.
See Bourgeois v. Grenfell,
We conclude that the notice of appeal is sufficient to confer jurisdiction on us over the class action аs well as the representative plaintiffs. The principal basis for our conclusion is that the class members are not “parties,” within the meaning of ORS 19.029, and they accordingly do not have to be named in or served with the notice of appeal. Plaintiffs do not argue that any of the class members sought to intervene, see ORCP 32E(2), or to make an appearance either personally or through counsel, ORCP 32F(1)(b)(vi), or to participate in the proceedings directly, rather than through plaintiffs’ representation. We accordingly hold that the absence of any reference to the class members in the notice of appeal is not a jurisdictional defect as to the class.
Plaintiffs also argue that the failure of the notice to refer to the named plaintiffs as class representatives rather than as individuals is a defect of jurisdictional dimension as to the class. We do not agree. Plaintiffs sought individual relief
*274
as well as relief on behalf of the class. Obviously, their names were the same in both capacities, and the notice calls them by name in designating them as the adverse parties to the appeal. If it were necessary to construe the notice of appeal to determine whether Pacific intended to nаme plaintiffs as individuals, class representatives or both as respondents on appeal,
see Street v. Gibson,
Pacific argues in its first assignment that the Homeowners Loan Act of 1933, 12 USC § 1461
et seq,
and pursuant regulations of the Federal Home Loan Bank Board preempt state law and preclude the payment of earnings on reserve funds. Therefore, Pacific contends, the trial court erred by applying the Oregon common law principle articulated in
Derenco.
Before it announced that principle, the court held that federal law is not preemptive. Pacific’s argument for a different result here is twо-pronged: first, certain federal regulations which were in effect at relevant times and which were not considered in
Derenco
have a preemptive effect; and, second,
Derenco’s
holding on the preemption issue is not viable after the United States Supreme Court’s later decision in
Fidelity Federal Sav. & Loan Assn. v. de la Cuesta,
The regulations to which Pacific points are not expressly preemptive, and the substantive rule of Derenco is not inconsistent or in conflict with them. The strongest of Pacific’s arguments is based on the provisiоn of 12 CFR 544.1 to the effect that regulated savings and loan associations are “not required to distribute earnings on short-term savings accounts,” which include advance payment reserve funds of the kind in question. 2 See 12 CFR 541.5. Derenco says nothing to the contrary. It does not require payment of earnings on reserve funds when the contract between an association and a borrower or other communications between them make the borrоwer aware that earnings will not be paid, or when the *275 borrower has actual knowledge of that fact. The federal regulation simply provides that distributions of earnings on short-term accounts are not obligatory; there is no inconsistency between that provision and the Derenco principle that an association must either pay earnings on reserve deposits or inform the borrower that earnings will not be paid.
Pacific also contends that the regulations preempt state law, because they reflect a federal intent to “occupy the field.” That question was decided the opposite way in Derenco. Pacific argues, however, that Fidelity Federal S & L Assn v. de la Cuesta, supra, and cases decided by lower courts in its aftermath, are to the contrary. The issue in de la Cuesta was whether the federal board’s regulation relating to “due-on-sale” clauses preempted California law. On the basis of the languаge of the regulation and the history of its promulgation, the Court held that it did. It then noted:
“Because we find an actual conflict between federal and state law, we need not decide whether the [federal act] or the Board’s regulations occupy the field of due-on-sale law or the entire field of federal savings and loan regulation.”458 US at 159, n 14 .
Hence, de la Cuesta leaves open the question that Derenco purported to answer. To whatever extent state courts and lоwer federal courts have answered that question on the basis of their extrapolations from de la Cuesta, their decisions are not binding on us. Derenco is. The trial court correctly concluded that Oregon common law applies.
Pacific’s next assignment is that the court erred by certifying the class,
3
because there was abundant evidence that a substantial percentage of borrowers were aware when they obtained their loans that Pacific would retain the income from its investment of the reserve payments. Therefore, Pacific reasons, common questions did not predominate and separate adjudications were necessary. ORCP 32B(3);
see
*276
Derenco v. Benj. Franklin Fed. Sav. and Loan, supra,
The court said in Derenco:
“Considering that the borrowers who are affected by this opinion are in the many thousands, it would appear that the number of people who were knowledgeable enough to ask anything about the deposits at all is inconsequential. It could be argued that the balance did not inquire because they knew of the custom of loaning institutions making use of such deposits and they assented to it. However, because of the lack of evidence establishing such a custom and because of the other evidence, we believe the inference of the borrowers’ lack of awareness of the subject of the beneficial use of the deposits is a fair one.
“* * * * *
“The relationship between each borrower and defendant could vary according to what each borrower knew concerning defendant’s practice of using the deposits. Borrowers who, at the time of borrowing the money, knew of defendant’s use would be bound by their knowledge. It is plaintiffs burden to demonstrate that it is not ‘likely’ that separate adjudications will be required to resolve this issue in ‘numerous’ instances.
“* * * * *
“In our prior discussion in this opinion of the borrowers’ knowledge of custom, we referred to the testimony of defendant’s loan officer concerning the frequency of inquiries by borrowers about earnings frоm the deposits, which testimony indicated that the instances in which the question of the use of the money even occurred to borrowers were isolated and infrequent. Also, we draw the inference from the documents which borrowers were required to execute and from the testimony that borrowers were not told of defendant’s use of the money.
“In addition, we have a different situation here than we didin [Bernard v. First Nat’l. Bank,275 Or 145 ,550 P2d 1203 (1976)]. The class in the instant сase is made up of homeowners, whereas Bernard dealt with a class of ‘commercial’ loan borrowers. Although the loans in that case were not all strictly commercial (in fact, the majority of them were not), *277 nevertheless, the evidence indicated there were a substantial number of such borrowers who, it was reasonable to assume, likely would have had knowledge of the banks’ method of charging interest. We conclude from the evidence in this case that the contrary is true concerning the knowledge of members of the class about defendant’s use of the deposits for its own benefit. As is indicated from a previous quotation from [V Scott on Trusts § 530 at 3684-85 (3d ed 1967)], it is probable that few borrowers even thought of the matter at all, and it is reasonably certain that ‘numerous’ of their numbers were not told of it.
“It would be difficult to imagine a situation in whiсh the circumstances surrounding separate contracts were more likely to be the same as they are in the present case. We have a uniform class of borrowers who were submitted an identical (insofar as material here) adhesion contract under strictly regimented procedures. The only unknown factor is the knowledge of each borrower concerning the use of the deposits by defendаnt for its own purposes. It is our conclusion that the proof here indicates that it is ‘unlikely’ that ‘numerous’ members of the class possessed such knowledge or that the subject of the beneficial interest in the funds even occurred to them. It is therefore proper that this proceeding continue as a class action. In answer to the possible argument that no claims arising out of separate contractuаl situations are proper for class action treatment, we acknowledge that there is no doubt they present special problems. However, had it been the intention of the legislature to exclude contractual situations from class action relief, we believe it would have said so. We doubt that a situation otherwise suitable for a class action will ever be found where there is a greater рrobability of identity of separate contractual circumstances than that which exists in this case.”281 Or at 555, 570, 571-73 . (Footnote omitted.)
Pacific’s evidence of both borrower knowledge and industry custom was more elaborate than that of the defendant in Derenco. It consisted, in the first instance, of survey evidence and the testimony of particular borrowers and, in the second, of expert evidence and borrower testimony concerning savings and loаn association practices. We conclude, as did the trial court, 4 that the number of potential class members whom Pacific’s evidence showed may have had the requisite *278 knowledge, discounted by the unreliability of their memories of what they knew, does not overcome the inference that unawareness predominates or the Derenco standards for determining whether common questions predominate.
We arе also unpersuaded by Pacific’s evidence of industry custom, and we agree with the trial court’s finding that “the claimed custom lacked the degree of universality required to constitute an affirmative defense.” Moreover, the evidence was wholly unconvincing of any likelihood that significant numbers of borrowers were aware of the purported customary practice.
See Derenco v. Benj. Franklin Fed. Sav. and Loan, supra,
Pacific contends in its seventh assignment that the court erred by awarding attorney fees to plaintiffs. The court ordered the fees to be paid from “the total fund * * * which as of the date of final judgment has not been claimed by class members.” In the event that that fund was insufficient or was held on appeal to be an invalid source of attorney fees, the court ordered that the balance or the total amount of fees be paid by Pacific. Pacific argues that an unclaimed fund of the kind contemplated by the trial court cannot exist under ORCP 32F(2), because the amount of the final judgment cannot be determined until all claim statements have been filed. Although that may be correct,
see Benj. Franklin Fed. Sav. and Loan v. Dooley,
The more important contention that Pacific makes is that there was no basis for an award of attorney fees. It argues,
inter alia,
that the trial court erred by relying on
Gilbert v. Hoisting & Port. Engrs.,
In its eighth assignment, Pacific challenges the аmount of the award of attorney fees, arguing, inter alia, that, because “plaintiffs’ counsel recovered substantial attorneys’ fees * * * in [Derenco and a second ‘companion’ case][ 5 ] decided earlier, an award of $585,000 for the third bite at the apple is unwarranted.” Plaintiffs respond that, notwithstanding those earlier decisions, Pacific “vigorously contested certification, liability and damages.” Plaintiffs are correct. Plaintiffs did not take a third bite at one apple. They brоught this action to establish their and the class members’ right to a different apple of the same kind as the defendants in the earlier cases had wrongfully withheld from the plaintiffs in those cases. The attorney fees award was within the court’s discretion.
Pacific’s next assignment is that the court erred by awarding prejudgment interest. It contends that the amount of damages was not ascertained or ascertainable by simple cоmputation
until
the trial judge set the formula for damages. The equation the court established to measure damages was the “applicable passbook savings rate in effect, less one percent (1%), times the reserves.” That formula
rendered
the damages easily ascertainable by simple computation. Accordingly, prejudgment interest is allowable under our reasoning in
Banister Continental Corp. v. NW Pipeline Corp.,
Pacific next argues that it was error for the court to order that the prejudgment interest be compounded annually. In
Stephan v. Equitable S & L Assn.,
*280 “ ‘If the trustee uses trust funds in his own business and it does not appear how much he has earned thereon, he is ordinarily chargeable with compound interest on the ground that he probably received a return from the trust fund so used at least equal to compound interest.’ ”268 Or at 574-75 .
Pacific states, correctly, that it was not acting as a trustee. It then contends that Stephan lends no support for the compounding of interest when the defendant is not acting as a trustee and did not engage in fraud or comparably culpable misconduct. We disagree. Whether a holder of funds acts as a trustee or in some other capacity, compound interest is appropriate when (1) the holder uses another’s funds for its own benefit, (2) the exact amount of earnings on that beneficial use is unknown and (3) the holder “probably received a return * * * at least equal to compound interest.” We conclude that the rationale of Stephan and the Restatement comment on which it relies applies to defendants who improperly avail themselves of the beneficial use of another’s money, and does not depend on the capacity or relationship which gives them access to the money. Pacific comes within that rationale, and we reject its argument. 6
Pacific’s last assignment is that the court erred by allowing plaintiffs’ costs of $11,278.16 for an expert witness fee. We agree that that was error.
Hancock v. Suzanne Properties, Inc.,
Plaintiffs raise three assignments in their cross-appeal. The first two pertain to Pacific’s borrowers from the state of Washington, who were excluded from the class by the trial court. Both assignments fail unless we overrule
Powell v. Equitable Savings,
Plaintiffs’ third assignment challenges the trial court’s formula for computing damages. They argue that the court should have used the passboоk rate as the multiplier, as the court in
Derenco v. Benj. Franklin Fed. Sav. and Loan,
*281
supra,
did, rather than that rate less one percent. We agree with Pacific that
Derenco
does not compel the use of the passbook rate times the reserves as an exclusive formula, applicable in all cases. We understand
Derenco
to hold that, under the facts there, the straight passbook formula most accurately approximated the difference between the dеfendant’s gain from the reserves and its servicing costs.
See
On appeal, judgment modified to reduce costs and disbursements awarded plaintiffs by $11,278.16 and affirmed as modified; affirmed оn cross-appeal.
Notes
Other facts will be set forth in our discussion of the arguments to which they are relevant.
12 CFR 545.6-11(c), which relates to the payment of interest on such funds, was promulgated later and does not apply to the period in issue here.
The trial court defined the class as:
“All borrowers from branches of Pacific First located in Oregon on loans secured by single-family dwellings who made mandatory advance reserve payments of taxes and insurance which were held by Pacific First between May 28, 1969, and June 16, 1975, except for those borrowers whose lending instruments specifically disclosed that Pacific First would pay no interest while holding advance reserve payments.”
The parties appear to agree that this is an equitable proceeding and that our review is de novo.
Both cases involved defendants other than Pacific.
Pacific does not argue that, and we therefore do not decide whether, Stephan and the Restatement comment contemplate the compounding of interest only when the interest is awarded as compensatory damages. That was the case in Stephan; it is not the case here.