United States v. Seaboard Citizens Nat. Bank
| Decision Date | 15 July 1953 |
| Docket Number | No. 6584.,6584. |
| Parties | UNITED STATES v. SEABOARD CITIZENS NAT. BANK OF NORFOLK. |
| Court | U.S. Court of Appeals — Fourth Circuit |
John M. Hollis, Asst. U. S. Atty., Norfolk, Va. (A. Carter Whitehead, U. S. Atty., Richmond, Va., Warren Olney, III, Asst. Atty. Gen., Harold P. Shapiro and Leonidas F. Summerall, Washington, D. C., on the brief), for appellant.
J. Hoge Tyler, III, Norfolk, Va., on the brief, for appellee.
Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.
This is an appeal in an action instituted for the forfeiture of an automobile engaged in the violation of the internal revenue laws. The Seaboard Citizens National Bank of Norfolk, Va., holder of a mortgage on the automobile, intervened in the action asking remission of the forfeiture to the extent of its mortgage interest under the provisions of 18 U.S.C. § 3617. No question was raised as to the good faith of the bank or as to its having complied with the conditions necessary to the remission of the forfeiture of its interest. The court granted the petition of the bank, entering an order that the automobile be condemned and sold but that from the proceeds of sale the marshal, after paying the costs of the proceeding including costs incident to seizure, storage and sale, pay the lien of the bank in the amount of $904.48 and then pay the remainder of the proceeds to the United States. Included in this sum of $904.48 was a 15% attorney's fee amounting to $117.98; and the only question raised by this appeal is the correctness of allowing this attorney's fee as a part of the lien for which remission was granted. We think that the fee was properly allowed.
The note given the bank contained a provision that if any installment should not be paid when due the entire amount should become due and payable forthwith at the option of the holder of the note "with cost of collection including fifteen per cent attorney's fees". The mortgage (deed of trust) securing the note contained the following provision:
"If default shall be made in the payment of any installment of said note or in any agreement or covenant herein made, the party of the first part will forthwith deliver the said automobile with its equipment and accessories to the said trustee, or to his nominee, and if he shall fail to make such delivery after default, the trustee, with or without legal process may take possession of the said automobile, with its improvements and accessories, wherever the same may be found; and the party of the first part agrees to pay all costs, charges, expenses and disbursements, including an attorney\'s fee of fifteen per cent of the amount then due on said note, incurred in taking possession of and holding said automobile, or in collecting any sums which may be due and owing to the holder of said note."
We think that the effect of these provisions was to give to the bank a lien on the mortgaged automobile, not only for the amount of the note, but also for expenses incurred in collecting it on default including a 15% attorney's fee. There can be no question but that such provision is lawful in Virginia and that the attorney's fees provided for therein are a part of the same obligation as the principal and interest of the note and are payable in the same way out of the proceeds of the mortgaged property. Merchants & Planters Bank v. Forney, 183 Va. 83, 31 S.E.2d 340. It is argued that the attorney's fees were incurred after the seizure of the automobile, and that, since the forfeiture became absolute at that time,1 remission under the statute should not cover attorney's fees subsequently earned. The answer is that prior to the seizure the mortgage secured the debt of the bank and expenses which might be incurred in collecting it, including attorney's fees, and that in remitting the interest of the...
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