Young v. State Bank

• Citation: 117 S.W. 476
• Parties: YOUNG v. STATE BANK OF MARSHALL.
• Decision Date: 25 February 1909
• Court: Court of Appeals of Texas

117 S.W. 476

YOUNG v. STATE BANK OF MARSHALL.

Court of Civil Appeals of Texas.

February 25, 1909.

Appeal from District Court, Harrison County; W. C. Buford, Judge.

Action by the State Bank of Marshall against T. P. Young, executor of Mrs. E. S. Sloan, deceased. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

Cary Abney and Locke & Locke, for appellant. F. H. Prendergast, for appellee.

HODGES, J.

During her lifetime Mrs. E. S. Sloan, appellant's testator, executed and delivered her promissory note in writing payable to the order of H. C. Cates, for $593.46, due eight months after date, with interest and attorney's fees. Before maturity the note was, for a valuable consideration, transferred by Cates to the appellee bank. Cates was, at the time of taking the note, the agent of the Mutual Life Insurance Company of New York, and the note was given as part of a premium to be paid in consideration of the issuance of a certain policy of insurance by the insurance company upon the life of Mrs. Sloan. Mrs. Sloan was at the time a woman of advanced age, and the policy for which her application had been taken provided for annuities to be paid to each of her three children during their lives. The remainder of the premium, of which this note was a part, had been paid by Mrs. Sloan to Cates in cash, and amounted to something over $1,800. The policy was never delivered to Mrs. Sloan because of the rejection of her application by the insurance company. When the note was presented, payment was refused, and upon such refusal suit was instituted by the appellee against both Mrs. Sloan and the insurance company. The latter was made a party, upon the allegation that it had entered into a contract with Mrs. Sloan by which it agreed to indemnify her against any liability by reason of the execution of the note, or any judgment that might be rendered against her in any suit thereon. Before a final judgment was reached Mrs. Sloan died, and T. P. Young, the executor of her will, was made a party defendant. Thereafter, upon a trial before a jury, a verdict and judgment for the full amount of the note, together with interest and 10 per cent. attorney's fees, were rendered against appellant Young; a verdict in favor of the insurance company having been directed by the court. From that judgment the executor prosecutes this appeal.

One of the defenses urged in this suit was that the note was without consideration, and that the bank, through its officials, had notice of that defect. Inasmuch as this question involves an issue of fact which may again arise in another trial, and in view of the fact that the judgment must be reversed upon other grounds, we do not pass upon the assignment raising that question, preferring to rest our decision of the case upon other errors presented.

Special objection is urged by the appellant to so much of the judgment as warrants a recovery for 10 per cent. attorney's fees in favor of the appellee. It is contended that neither the pleadings nor the evidence justified such a recovery, and that the court committed error in instructing the jury that, in the event they found for the plaintiff on the note, to also find for 10 per cent. attorney's fees. That portion of the note providing for attorney's fees, or collection fees, as there stated, is as follows: "In the event default is made in the payment of this note at maturity, and it is placed in the hands of an attorney for collection, or suit is brought on the same, then ______ agree that an additional amount of ten per cent. on the principal and interest of this note shall be added to the same as collection fees." The allegation of the petition pertinent to this part of the note is as follows: "The full amount of said note of $593.46 with 6 per cent. interest from November 3, 1906, together with 10 per cent. attorney's fees on the amount so obtained, is now due and is unpaid. Plaintiffs have been compelled to place said note in the hands of F. H. Prendergast, an attorney, for collection, and he has been compelled to bring suit to collect the same. Therefore the said 10 per cent. as collection fees has accrued, and is now due. Wherefore plaintiffs bring this suit, and pray for judgment for $593.46, with 6 per cent. from November, 3, 1906, and 10 per cent. on the whole amount as collection fees, against the defendant Elizabeth S. Sloan." The record does not disclose any evidence tending to show that the appellee had paid, or had contracted to pay, any sum as fees or expenses for collecting the note, or any fee for the employment of an attorney to prosecute this suit. The court charged the jury: "If you find for the plaintiff, the amount of your verdict will be the principal and interest of said note to date, and 10 per cent. attorney's fees on same." The principles of law applicable to the issues here presented were fully discussed by this court in the case of Elmore v. Rugely, 107 S. W. 152, and in the cases there referred to. Under the rule there announced the assignments before us must be sustained. The appellee insists that our holding in that case is not in accord with the previous decisions of the Supreme Court on that question, and has called our attention to a number of cases upon which it relies. We have examined the authorities cited, but have failed to find any adjudications opposed to the conclusions reached in the case of Elmore v. Rugely. It is true there are some expressions in the earlier cases which would seem to be in harmony with the policy of treating the promise to pay attorney's fees, usually embodied in commercial paper, as liquidated damages inuring to the benefit of the holder of the note, upon default of payment and the happening of the contingency upon which it is made to depend—that is, the filing of a suit, or the placing of the note in the hands of an attorney for collection—but this is nowhere, so far as we have been able to find after a careful search, expressly held.

In Simmons v. Terrell, 75 Tex. 277, 12 S. W. 854, the question was as to whether or not attorney's fees could be collected upon a note against the estate of a decedent, when presented after maturity to his executor. It was contended by the appellant in that case that the proceeding required of a creditor by our probate laws in having his claim against an estate allowed by the administrator and approved by the probate court did not come within the most comprehensive definition of a suit, and that a civil suit in the district or county courts must be commenced by a petition, etc. In disposing of the issue the court said that the language used in the note, and which provided for the payment of 10 per cent. attorney's fees additional in case of suit after maturity to enforce collection, should not be restricted to a suit in equity or an action at law. In that case it appeared from the record that an attorney was employed for the purpose of presenting the claim for collection. The only question before the court was whether or not the record disclosed the institution of a suit within the meaning of the language used in the note providing for the payment of attorney's fees.

Morrill v. Hoyt, 83 Tex. 59, 18 S. W. 424, 29 Am. St. Rep. 630, presented a situation similar to the above. There the note had been executed by a person who afterwards became insane, and suit was brought against his guardian. In his answer the defendant admitted the facts stated, but denied any obligation for attorney's fees, on the ground that legal proceedings had not been instituted for the collection of the claim. In disposing of the case the court said: "The sole question for our consideration is, Did the steps taken by the plaintiff, viz., the putting of the claim past due against the estate of the lunatic into the hands of an attorney, who properly proved it up and presented it for allowance to the guardian of the estate, constitute the institution of legal proceedings for the collection of the amount due on the claim?" This question was decided in accordance with the case just previously cited.

Kendall v. Page, 83 Tex. 132, 18 S. W. 335, was a suit upon a promissory note containing the usual stipulation to pay attorney's fees. In that case the court states the error assigned as follows: "At the date of rendition of judgment herein the total sum due plaintiff —principal, interest, and attorney's fees—was $120.34, as shown by the plaintiff's petition and the record in said cause; whereas judgment is rendered in plaintiff's favor for $319.45, which is $199.11 more than was due. The petition sets out the note sued upon, and the credit and the balance, as above stated, are shown by calculation." It is evident that the sole question before the court in that case was whether or not the attorney's fees had been computed upon too large an amount; the appellant contending that it had, and the appellee to the contrary. That was the only question decided.

Brown Co. v. Perrill, 77 Tex. 206, 13 S. W. 975, was a contest between the wife and the creditors of the husband; she claiming her debt was entitled to priority over the indebtedness claimed by the appellant in the suit. The note by which the debt to the wife was evidenced provided for the payment of attorney's fees in the usual form. Upon appeal the appellant complained that the court erred in instructing the jury, in the event they found for plaintiff, to find for her attorney's fees, together with the principal and interest on the note. The court said: "The note stipulated that the makers should pay attorney's fees in the event suit should be brought for the recovery of the debt. Upon the institution of suit they became a part of the indebtedness. They were set up in the petition, and included in the amount for which the writ of attachment issued. Why the plaintiff was not entitled to recover them, if she recovered at all, we do not see." The record does not disclose upon what ground the collection of the...