Salisbury v. Stewart

• Decision Date: 02 July 1897
• Docket Number: 791
• Citation: 15 Utah 308,49 P. 777
• Court: Utah Supreme Court
• Parties: ORANGE J. SALISBURY, RESPONDENT, v. J. Z. STEWART, J. GOLDEN KIMBALL AND ELIAS S. KIMBALL, APPELLANTS

49 P. 777

15 Utah 308

ORANGE J. SALISBURY, RESPONDENT, v. J. Z. STEWART, J. GOLDEN KIMBALL AND ELIAS S. KIMBALL, APPELLANTS

No. 791

Supreme Court of Utah

July 2, 1897

Appeal from the Second district court, Weber county. Hon. H. H Rolapp, Judge.

Action by Orange J. Salisbury against J. Z. Stewart and others on a promissory note. From a judgment for plaintiff, defendants appeal.

Affirmed.

Young &amp Moyle and Rhodes & Tait, for appellants.

Cited Jones v. Radatz, 27 Minn. 240; First Natl. Bank v. Larsen, 18 Cent. L. J. 394; Md. F. Co. v. Newman, 60 Md. 584; Adams v. Seaman, 82 Cal. 636; Clark v. Barnes, 58 Mo.App. 667; First Natl. Bank v. Laughlin, 61 N.W. 473-4-5; Garretson v. Purdy, 14 N.W. 100, 102; First National Bank of Stillwater v. Larsen, 60 Wis. 206; 92 Pa. St. 227; 71 Mo. 618, also 627; 73 Mo. 35.

Evans & Rogers and W. C. Hall, for respondent.

Cited: Gaar v. Louisville Banking Company, (Ky.) 11 Bush. 180; Sperry v. Horr, 32 Iowa 184; Seaton v. Scovill, 18 Kan. 433; Nickerson v. Sheldon, 33 Ill. 372; Houghton v. Francis, 29 Ill. 244; Adams v. Addington, 16 F. 89; Hughitt v. Johnson, 28 F. 865; Trader v. Chidester, 41 Ark. 242; Heard v. Dubuque County Bank, 8 Neb. 10; Dietrich v. Bayhi, 23 La. Ann. 767; Howenstien v. Barnes, 5 Dillon 482; Bank of Commerce of Owensbore v. Fuqua, 11 Mont. 285; Towne v. Rice, 122 Mass. 67; Arnold v. The Rock River Valley Union R. R. Co., 5 Duer. 207; Bank of Commerce v. Fuqua, 11 Mont. 302; See Montgomery v. Crossthwait, (Ala.) 8 South Rep. 498; Benn v. Kutzchan, 24 Or. 28; Second Nat'l Bank v. Anglin, 6 Wash. 403.

The contrary decisions in Dakota, Minnesota, Wisconsin, Missouri, South Carolina, North Carolina, California, Pennsylvania, Maryland, and Michigan, it would be useless to consider or to attempt to distinguish.

ZANE, C. J. BARTCH and MINER, JJ., concur.

OPINION

ZANE, C. J.:

This is an action upon a promissory note for $ 3,500 with interest at 10 per cent per annum, executed by the defendants, and payable six months after its date to the order of John W. Taylor, the assignor of the plaintiff. It also contained the following stipulation: "And in the event of a suit to enforce the collection of this note, or any part thereof, we further agree to pay the additional sum of ten per cent upon the amount found due, as attorney's fees in said suit." Before its maturity the note was indorsed by the payee to the plaintiff. The defendants alleged in their answer, and offered to prove on the trial, that their signatures were obtained without consideration, by false statements of the payee, and promises which he did not perform, that would have been a defense to the collection of the note in his hands. The defendants assign as error the ruling of the court sustaining plaintiff's objection to their offer. The error alleged, presents for our consideration and decision the question, did the stipulation to pay 10 per cent on the amount recovered, as an attorney's fee, in the event of a suit to collect it, included in the note, destroy its negotiability? While text writers generally agree that such provisions do not affect the negotiability of notes, the question has given rise to much judicial controversy and difference of opinion, and it is impossible to reconcile the numerous decisions on the point. The question is new in this court, and we will endeavor to adopt the rule which our reason commends, and which we think is supported by the better line of authority. The makers of the note promised to pay the holders $ 3,500, and interest thereon at 10 per cent per annum. This payment was subject to no contingency. It was certain in every respect, and it remained so until a breach of the contract by the defendants. In case the makers should not keep their contract, and it should become necessary to institute suit upon the note, the makers stipulated they would pay the necessary attorney's fee, and the law required them to pay the other costs. In that case the holder of the note would receive the $ 3,500 and the interest--precisely the amount the makers promised to pay him. In that event the holder would receive no more for his own use than he would have received had the makers paid according to their promise. It appears right that the parties whose default caused the expense should pay it; that it should not be imposed upon the party who kept his contract. The party who keeps a contract should receive from the one who breaks it compensation for his loss. If the defendants had kept their contract, the holder would have received $ 3,500 and the interest. They not having done so, the stipulation and the law required the makers to pay him that amount, and no more, for his own use, and to pay the costs of the court and the attorney's fee. Only the costs of the court could have been charged against the defendants without the stipulation. The stipulation, in effect, also added the fee of the attorney, if one should be employed to bring the suit, to the costs imposed by the law upon the defendants. The fee is for the attorney. If the employment of an attorney does not become necessary, or if one is not employed, the court should not allow such a fee, and the allowance should not exceed the amount charged by the attorney. The allowance is not as a penalty, as interest, or as a bonus. It is simply to pay the costs of enforcing the collection of the note by suit. And, if none is charged, none should be allowed against the makers, and no more than is to be actually paid should be allowed against the makers. That is, in legal effect, the stipulation. The court should not allow the plaintiff, by deception, fraud, and false pretenses, to obtain money as an attorney's fee, and then appropriate it to his own use. Plaintiff should not be allowed (as it is suggested they do sometimes) to call a penalty, additional interest, or a bonus, as an attorney's fee, and by such deception and fraud to induce the court to impose burdens on the makers of contracts--to oppress them in that way or any other. This reasoning proceeds on the presumption that the stipulation to pay the attorney's fee is not negotiable. In other words, the maker interposes the same defense to the attorney's fee when the note is in the hands of an indorsee who received it before due, for a valuable consideration, that he could have interposed if it had been sued upon by the payee. If the makers of the note in question had...