Farmers' Nat. Bank of Salem v. Rasmussen

• Decision Date: 31 January 1875
• Citation: 46 N.W. 574,1 Dak. 60
• Parties: Farmers' Nat. Bank of Salem v. Rasmussen.
• Court: South Dakota Supreme Court

46 N.W. 574

1 Dak. 60

Farmers' Nat. Bank of Salem

v.Rasmussen.¹

Supreme Court of the Territory of Dakota.

Jan. Term, 1875.

Appeal from district court, Clay county.

Shannon, C. J., dissenting.J. L. Jolly, for appellant. Bartlett Tripp, for appellee.

KIDDER, J.

This case comes here on an appeal from the district court in Clay county, where the same was instituted by the plaintiff upon a promissory note, made and executed by the defendant to one Ransom Bartle or bearer, and transferred by said Bartle through sundry parties to this plaintiff, the owner and holder thereof at the commencement of this action. The note is in the ordinary form, but contains, after the promise to pay the amount and interest therein named, these words: “And ten dollars attorney's fees, if action is commenced hereon.” The complaint sets out the note at length, and declares upon it in two causes of action,-one for the amount of the note and interest, and the other for the $10 attorney's fees. The defendant, in his answer, denies generally the first cause of action, and to the second cause he interposes a general demurrer that the complaint does not state facts sufficient to constitute a cause of action, in which demurrer the plaintiff joins; and, upon such issue joined, judgment was rendered in the court below overruling the demurrer, from which judgment the defendant appealed to this court. The defendant submitted no brief in the case, but orally contended that the contract was usurious, and was further in violation of the provisions of the Civil Code of this territory, and cited the statute of 1865-66, § 1842; the New York Code upon this subject, in Waite, Pr.; 2 Abb. N. Y. Dig. p. 50, § 367. Other objections were made, which we do not deem necessary to notice in this decision.

The practice has become a very common one in the western states, at the present time, to stipulate in notes and mortgages for reasonable attorney's fees in case an action shall be commenced thereon; and the question has been raised in many of the states, and, so far as we have been able to examine the decisions, the courts have held that such a clause is in no sense usurious and does not destroy the negotiability of the instrument. In Stoneman v. Pyle, 35 Ind. 103, the court says: “A stipulation in a note for the payment of attorney's fees, should a suit be instituted thereon, will not destroy the commercial character of the instrument.” In Nickerson v. Sheldon, 33 Ill. 372, wherein this question came up, the judge says: “The clause, ‘We further agree that if the above note is not paid without suit to pay ten dollars in addition to the above for attorney's fees,’ does not destroy the negotiability of the note.” The same doctrine has been held in Louisiana and Iowa in late cases cited in the last American edition. Byles, Bills, 32, note. Vide Gower v. Carter, 3 Iowa, 244;Gilmore v. Ferguson, 28 Iowa, 220;Conrad v. Gibbon, 29 Iowa, 120; Nelson v. Everett, Id. 184; Weatherby v. Smith, 30 Iowa, 131. Also McGill v. Griffin, 32 Iowa, 445. These cases are decisive of the questions involved in this, unless our statute has given a construction to such contracts that the court is not at liberty to depart...