Wilson Sewing Mach. Co. v. Moreno

• Decision Date: 18 August 1879
• Citation: 7 F. 806
• Parties: WILSON SEWING MACHINE CO. v. MORENO and others.
• Court: U.S. District Court — District of Oregon

7 F. 806

WILSON SEWING MACHINE CO. v. MORENO and others.

United States Circuit Court, D. Oregon.

August 18, 1879

Cyrus Dolph, for plaintiff.

Thomas N. Strong, for defendants.

DEADY D.J.

On September 1, 1877, the defendant Moreno, with four others as his sureties, executed and delivered a bond to the plaintiff in the penal sum of $1,000, conditioned for the payment of all indebtedness on the part of Moreno to the plaintiff; and on November 23, 1877, said Moreno, with two others as his sureties, executed and delivered another bond of the like amount and condition to the plaintiff. These actions are brought upon these two bonds to recover an amount alleged to be due from said Moreno for goods, wares and merchandise sold and delivered to him by the plaintiff and it is agreed that the amount due the plaintiff on such account is on promissory notes $741.74, and upon an open account $629.70; in all, the sum of $1,371.44. Each bond contains a stipulation to the effect that in case suit is brought upon the same the obligors therein will pay, in addition to the penalty thereof, the sum of $100 'for attorney's fees.' The plaintiff now moves for judgment upon the complaint for the amount admitted to be due, and for $100 in each action as an attorney's fee therein.

This latter part of the motion the defendant resists upon the ground that the provision in the bond for the payment of such fee, in addition to the penalty thereof, is void. It appears from the books that the question raised upon this motion is comparatively a new and vexed one. It has mostly arisen in actions upon promissory notes containing a stipulation for the payment of a fixed sum or percentage as an attorney fee to the plaintiff, in case an action is brought to collect the same. And the objection to the stipulation usually is that the amount which may be collected upon the note being thereby rendered uncertain, it is unnegotiable, and not valid as against an indorser, or that such stipulation makes it usurious, and therefore void in whole or in part. But in some few instances the courts have gone further, and held that such a stipulation is absolutely void as contrary to the policy of the law, and tending to the oppression of the debtor.

In Bullock v. Taylor, 7 Cent.L.J. 217, decided by the supreme court of Michigan in 1878, a stipulation in a note for the payment of a certain sum as an attorney fee over and above all taxable costs, in case the same was sued upon, was held void as opposed to the policy of the law upon the subject of attorney fees, and susceptible of being made the instrument of oppression.

In Woods v. North, 84 Pa.St. 409, it was held that a similar stipulation in a note rendered the instrument nonnegotiable, and thereby relieved the indorser from liability thereon.

In Witherspoon v. Musselman, 8 Cent.L.J. 24, decided by the Kentucky court of appeals in 1878, according to the brief abstract in the Cent. L.J., supra, it was held that such a stipulation in a note was void because it tended to the oppression of the debtor and the encouragement of litigation.

On the contrary, in Smith v. Silvers, 32 Ind. 321, it was held that a stipulation 'whereby the debtor agrees to be liable for reasonable attorneys' fees, in the event that his failure to pay the debt shall compel the creditor to resort to legal proceedings to collect his demand, is not only not usurious, but is so eminently just that there should be no hesitation in enforcing it.'

In Wyant v. Pottorf, 37 Ind. 512, a stipulation in a note for a reasonable attorney fee was impliedly sustained, though it was held that there must be proof of what is a reasonable fee.

In Nickerson v. Shelden, 33 Ill. 372, it was held that a stipulation for an attorney fee did not affect the negotiability of the note, but the fee was not claimed in the action.

In Clawson v. Munson, 55 Ill. 394, a stipulation in a mortgage to secure a note for an attorney fee to be paid as part of the costs of collection was held valid-- the court citing Dunn v. Rogers, 43 Ill. 260, in which a similar stipulation in a mortgage was enforced,-- and upon the question of hardship said that the defendants had expressly provided in the mortgage for the consequences in default of payment, which they might have avoided 'by paying the notes at maturity.'

In Gar v. Louisville Banking Co. 11 Bush. 189, it was held that a...