Jensen v. Lichtenstein

• Decision Date: 09 January 1915
• Docket Number: 2690
• Citation: 45 Utah 320,145 P. 1036
• Court: Utah Supreme Court
• Parties: JENSEN v. LICHTENSTEIN et al

145 P. 1036

45 Utah 320

JENSEN v. LICHTENSTEIN et al

No. 2690

Supreme Court of Utah

January 9, 1915

Appeal from District Court, Third District, Hon. George G Armstrong, Judge.

Action by F. C. Jensen against M. B. Lichtenstein and another.

From the judgment defendants appeal and plaintiff cross-appeals.

REVERSED AND REMANDED WITH DIRECTIONS.

Lewis Larson for plaintiff.

Stephens Smith & Porter and Harold M. Stephens for defendants.

FRICK J. STRAUP, C. J., and McCARTY, J., concur.

OPINION

FRICK, J.

The plaintiff commenced this action against the defendants in the district court of Salt Lake County to foreclose a mortgage given to secure the payment of the following note:

"Salt Lake City, Utah, June 25, 1909. $ 10,000. Two (2) years after date, for value received, we jointly and severally promise to pay to Utah Savings & Trust Company, or order, ten thousand dollars, with interest thereon at the rate of seven per cent per annum from date until paid, both before and after judgment. Interest payable quarter-yearly to the Utah Savings & Trust Co., whose receipt for same shall be accepted without the presence of this note. If any interest remains due and unpaid for the period of thirty days then the principal sum and all accrued and unpaid interest shall at once be due and payable at the option of the holder of this note and the principal sum and all unpaid interest shall then draw interest at the rate of twelve per cent per annum until paid. The principal sum and interest payable in United States gold coin at the banking house of Utah Savings & Trust Company, in Salt Lake City, Utah. In case this note is collected by an attorney either with or without suit we agree to pay in addition thereto ten per cent of the principal amount of said note as attorney's fees."

The action was brought in April, 1913, and the only provision in the mortgage which is material upon this appeal is the following:

"If the indebtedness secured hereby should become due and payable and this mortgage is placed in the hands of an attorney for collection, the mortgagors agree to pay five per cent of such indebtedness in addition thereto as costs of collection; in case foreclosure proceedings herein be instituted, the mortgagors agree to pay as attorney's fees, a reasonable amount in addition to the indebtedness secured thereby."

The complaint is in the usual form in foreclosure actions. Plaintiff, however, alleged that the defendants had made default in the payment of interest, and had paid no interest after the 10th day of December, 1910, and that for that reason in thirty days from that date, to-wit, from January 6, 1911, according to the tenor of the note secured by the mortgage in question, he was entitled to twelve per cent interest upon the principal and upon the interest remaining unpaid. It was also alleged that by the terms of said note the defendant had agreed to pay ten per cent of the principal sum as attorney's fees in the event the note should be collected by an attorney; and also pleaded the clause contained in the mortgage concerning the payment of attorney's fees, and alleged that $ 1,000 was a reasonable attorney's fee. It was further averred that the plaintiff was compelled to pay $ 512.43 taxes on the mortgaged premises, upon which sum he was entitled to twelve per cent interest, which is the amount fixed by our statute.

The defendants appeared and filed an answer to the complaint. The only issues presented by the answer related to the rate of interest and the attorney's fee claimed by plaintiff; the defendants contending that plaintiff was entitled to only 7 per cent interest and to a sum not exceeding $ 500 as attorneys' fees.

On the hearing plaintiff produced the note and mortgage in evidence, proved the payment of taxes as alleged in the complaint, and also made the following proof respecting the payment of attorney's fees (plaintiff testify-1, 2, 3 ing):

"Q. Now, Mr. Jensen, relative to the attorney's fees in this case, have you any agreement as to what amount of attorney's fees you are to pay for the services? A. A thousand dollars. Q. And with whom is that agreement? A. My attorney, Lewis Larson. Q. Is that contingent upon the result of this case in any way? A. There is nothing said about the result of the case in our agreement. Q. Your understanding is that you are to pay $ 1,000 for my services in this case? A. Yes, sir. Q. And you have agreed to do so? A. Yes, sir. * * * After I purchased the note and mortgage, they were left with the Utah Savings & Trust Company for collection. I wrote a notice to the trust company authorizing Mr. Larson to receive all of the papers pertaining to this mortgage."

The foregoing is substantially all the evidence produced by the plaintiff, and the defendants offered none.

The court found the amount due upon the note and mortgage, including interest to January 14, 1914, to be $ 12,173.87, upon which sum it allowed plaintiff 7 per cent interest after judgment. The court also found that the plaintiff was entitled to the sum of $ 558.84 for taxes paid, which includes 12 per cent interest. The court further found "that a reasonable attorney's fee herein is $ 1,000," and that the plaintiff had agreed to pay said sum to his attorney as an attorney's fee in this case, and the attorney's fee, as well as the other sums found due, were declared to be secured by the mortgage aforesaid. A decree of foreclosure was accordingly entered on the 28th day of January, 1914, and the mortgaged premises were ordered sold to satisfy the several sums of money, with interest as aforesaid. Both parties appeal from the judgment.

The defendants, upon their appeal, in substance, insist that the court erred: (1) In allowing $ 1,000 attorney's fee, and in allowing any sum in excess of $ 500; (2) in declaring said attorney's fee a lien upon the mortgaged premises; (3) in adding the accrued and unpaid installments of interest to the principal up to January 14, 1914, the date the court announced its oral decision, and in allowing interest on the interest so added after judgment; and (4) in settling and allowing plaintiff's bill of exceptions.

It is insisted that the court erred in finding that $ 1,000 is a reasonable attorney's fee for the reason that there is no evidence sustaining such a finding. We have a statute (Comp. Laws, 1907, secs. 3504 and 3505) which reads as follows:

"Sec. 3504. In all cases of foreclosure, when an attorney or counsel fee is claimed by the plaintiff, no other or greater amount shall be allowed or decreed than the sum which shall appear by the evidence to be actually charged by and to be paid to the attorney for the plaintiff; and if it shall appear that there is an agreement or understanding to divide such fees between the plaintiff and his attorney, or between the attorney and any other person except an attorney associated with him in the cause, only the amount to be retained by the attorney or attorneys shall be decreed as against the defendant.

"Sec. 3505. In all cases of foreclosure by proceeding in court, the attorney's fee shall be fixed by the court in which the proceedings of foreclosure are had, any stipulation in said mortgage to the contrary notwithstanding."

From the evidence we have set forth it is apparent that the plaintiff attempted to comply, and, as we think, has substantially complied, with the provisions of section 3504, supra. Defendant's counsel, however, insist that the provisions of section 3505 were not complied with either by the court or counsel. As we have seen, the court found $ 1,000 to be a reasonable attorney's fee. The note provided for that amount, while the mortgage only provided, in case of foreclosure, for a reasonable attorney's fee. Under our statute (Comp. Laws 1907, section 3498) "there can be but one action for the recovery of any debt or the enforcement of any right secured by mortgage," and, under the decisions of this court ( Boucofski v. Jacobsen, 36 Utah 165; 104 P. 117; 26 L. R. A. (N. S.) 898, and cases there cited) no personal judgment is authorized in such an action until after the mortgaged property has been sold and the proceeds derived from such sale are applied to the payment of the debt, and then only for the deficiency. Such an action is therefore not personal, but is strictly one in rem, at least until after the mortgaged property is sold and the proceeds thereof have been applied in discharge of the debt. Sections 3504 and 3505, no doubt, were adopted for the purpose of protecting debtors against being required to pay excessive attorney's fees in foreclosure suits. It was, however, not intended that personal actions upon notes should be affected by these sections. Anything therefore that was said in McCornick v. Swem, 36 Utah 6; 102 P. 626; 20 Ann. Cas. 1368, or in Bank v. Nelson, 38 Utah 169 at 169-198; 111 P. 907, upon the subject of attorney's fees, has no application here. By the very terms of section 3505 it is limited to "foreclosure suits."

In such proceedings, however, the trial court cannot escape the responsibility of determining and declaring what amount shall be allowed as an attorney's fee, regardless of any stipulation of the parties upon that subject that may be contained in either the note or mortgage. By a "reasonable fee," no doubt, is meant one which is reasonable under all the facts and circumstances of each case. What is reasonable, therefore, in a large measure at least, must depend upon the amount in controversy, the labor and responsibility imposed upon the attorney in obtaining judgment, as these things may have arisen from the issues presented and tried. If an attorney is required to do no more than to prepare the formal pleadings and decree in a default case, a smaller sum,...