Miller v. Kyle

Decision Date12 December 1911
Docket Number12356
Citation97 N.E. 372,85 Ohio St. 186
PartiesMiller v. Kyle.
CourtOhio Supreme Court

Stipulations in promissory notes - For attorney's fees, void, when - Negotiability of note not destroyed - Sections 8106 and 8107 General Code.

1. It is the settled law of this state that stipulations incorporated in promissory notes for the payment of attorney fees, if the principal and interest he not paid at maturity are contrary to public policy and void.

2. Sections 8106 and 8107 of the General Code do not give validity to such stipulations but provide only that they shall not destroy the negotiable character of instruments in which they are incorporated.

The plaintiffs in error were plaintiffs in the court of common pleas. Their suit was upon a note and mortgage for $15,000 for which sum with interest judgment was awarded them. In both the note and the mortgage there was a stipulation for the payment of attorney fees if the maker should default in the payment of the principal sum. The court though finding the default, and further finding that $550 would be a reasonable fee for the services of counsel for the plaintiffs toward the collection of the debt, refused to render judgment in any amount on account of such services. On petition in error the circuit court affirmed the judgment of the court of common pleas.

Messrs Crum, Raymund & Hedges, for plaintiffs in error.

The determination of the questions before the court requires the consideration of the statute commonly known as the Negotiable Instruments Code, see Bates' Annotated Statutes; Chapter 2, and a construction of parts of Sections 3171, 3171a and possibly 3178e, Revised Statutes (Sections 8106 and 8300 General Code).

The legal principles to be applied to the construction of the negotiable instruments code seem to us to be elementary. Our only excuse for calling the attention of this court to a few of the authorities is the fact that the lower courts seem to have misconstrued, or ignored, some of the fundamental principles of construction. Probasco v. Raine, 50 Ohio St. 378; In re Will of Hathaway, 4 Ohio St. 385; Hough v. Mfg. Co., 66 Ohio St. 436; Johnson v. Life Assn. Co., 125 5. W. Rep., 1075; Senior v. Ratterman, 44 Ohio St. 674; Bridge Co. v. Bowman, 41 Ohio St. 52; Insurance Co. v. Talbot, 113 Ind. 373, 3 Am.St. 655; Redell v. Moores, 63 Neb. 219, 93 Am.St. 431; In re McCreight, 6 O. N. P., 480 23 Am. &.Eng. Ency. Law (1 ed.), 311: Pancoast v. Ruffin, 1 Ohio (pt. 2), 385; Harris v. State, 57 Ohio St. 94; Grocery Co. v. Armstrong, 8 O. C. C., 492; Sutherland on Statutory Construction (2 ed.), Secs. 254, 270, 271; Bartlett v. King, 12 Mass. 545.

If a revision of the law of itself and without express words, operates to repeal former inconsistent statutes, it follows that such revision must render ineffective judicial decisions based upon or construing such repealed statutes.

The authorities we have cited seem to us to establish the following propositions: first, the legislature has the right and power to declare what is public policy, and the courts have no right or power to nullify a statute on the ground that it is against natural justice or public policy; second, the language used iii a Statute must receive its usual and ordinary meaning, and courts have no power to restrict or enlarge its operation beyond the expressed meaning; third, where the words of a statute are clear and unequivocal the courts will not under pretense of construction vary from the meaning of the words of the statute; fourth, in construing a statute effect must be given to every part; fifth, in construing a statute the courts will look to contemporaneous history; sixth, the courts will look to the title of an act as an aid in determining the purpose and intent of the legislature; seventh, a statute intended by the legislature to be a complete revision or code of the law upon any subject-matter will change any prior law or laws even without direct reference to such prior laws.

Prior to the adoption of the negotiable instruments code each state had its own law of negotiable instruments made partly by statutory and partly by judicial determination. In no two states of the Union was the law of negotiable instruments exactly the Same on all points.

The law as enforced in the various jurisdictions probably varied more than in any other respect in the decisions in regard to provisions in promissory notes by which the maker obligated himself, upon default in payment at maturity, to pay ex- change, costs of collection, or attorneys' fees expended by the holder in enforcing payment.

The confusion in the authorities is discussed in an elaborate note to the case of Kittermaster v. Brossard, 55 Am.St. 438.

It cannot be doubted, in the light of the existing conditions, with which the law will presume the legislature was familiar, that the purpose and intent of the legislature was to enact a code which should be uniform with the laws of other states upon the same subject.

But we have additional and, it seems to us conclusive, proof of the legislative intent in the title of the act, "An act to establish a law uniform with the laws of other states on negotiable instruments." 95 O. L., 162.

The negotiable instruments code and its effect upon the prior decisions has been considered and discussed in the case of Savings Bank Co. v. Pottery Co., 5 O. N. P., N. S., 73.

The supreme court of Ohio, upon the same line of reasoning, arrived at the same conclusion in Rockfield v. Bank, 77 Ohio St. 311.

This court has again applied the same principle of construction to the negotiable instruments act in the case of Richards v. Bank, 81 Ohio St. 348.

Before the adoption of the code a stipulation in a note that the maker upon default will pay costs and attorney fees in collection was held by Ohio courts to be against public policy and therefore void. The plain words of the statute has changed the law and rendered such a stipulation valid. Bank v. Lumber Co., 102 Pac. Rep., 685; Mackintosh v. Gibbs, 74 A. 709; Bradley v. Hey- burn, 106 Pac. Rep., 171; Gibbs v. Guaraglia, 67 A. 81; Wirt v. Stubblefield, 17 App. Cas.D. C., 283; Richards v. Bank, 81 Ohio St. 348.

The great majority of the decisions in which the application of the negotiable instruments law,or code have been discussed have, it is true, arisen upon questions other than the attorneys' fee clause. But in all these cases the courts have followed the course we ask the court to follow here, that is, that the law must be taken to mean what the words of the act say; and that where the act, as so construed, differs from the law as formerly declared, the act must be construed as changing the law. Gibbs v. Guaraglia, 67 A. 81; Baumeister v. Hunt:, 53 Fla. 340; Toole v. Crafts, 193 Mass. 110; McLean v. Bryer, 24 R. I., 599; Klar v. Kostiuk, 119 N.Y.S. 684.

The question before the court here has been decided in at least two courts of last resort and in each the negotiable instruments act has been held to have changed the law and rendered the attorneys' fees clause in promissory notes valid although held invalid prior to the act. Bank v. Miller, 120 N.W. 820; McCornick v. Swem, 102 Pac. Rep., 626.

Messrs. Vorys, Sater, Seymour & Pease and Mr. Fred C. Rector, for defendants.

This action is based upon the provision which is contained in the note, and which is also contained in the mortgage, which recites that the signer of the note and mortgage will pay the costs of collection and an attorney's fee in case payment shall not be made at maturity.

The policy of the State of Ohio from the beginning has been that such a provision in a note or mortgage is against public policy, and void. This policy was first announced in 1841, in the case of State v. Taylor, 10 Ohio 378. Whatever was the reasoning which may be argued pro and con upon this question, the policy of the state of Ohio then and there became well settled. This doctrine is reaffirmed in the case of Shelton v. Gill, 11 Ohio 417; again in the case of Martin v. Bank, 13 Ohio 250. So well settled did this doctrine become that it remained uniformly unchallenged until 1893, when we find the case of Leavans v. Bank, 50 Ohio St. 591, where the parties specifically agreed in the mortgage that if the same was foreclosed, the court should fix the reasonable fee for the attorneys. So well settled was this doctrine deemed by the court that the case is disposed of by an opinion of one sentence, that such a provision is against public policy and void."

By Section 3171a the intention is to specifically state what is a sun, certain. It is provided that the sum 'payable is a sum certain, even though it, to-wit, the sum, is to be paid with costs of collection or an attorney's fee. We cannot conceive that the legislature intended to go further than this. That is to say, that it simply declared such a note to be negotiable, notwithstanding the...

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