Texas L. L. Co. v. Robertson Byars

PLEASANTS, Associate Justice. Appellant brought this suit to establish a claim against the estate of William Dunovant, deceased, for $70,000, evidenced by promissory notes executed by said Dunovant in *523 favor of appellant. The notes sued on contained a stipulation for the payment of ten percent attorney’s fees in case they were placed in the hands of an attorney for collection. Appellant sought to recover the ten percent attorney’s fees stipulated in the notes. The administrators of the estate resisted the claim for the full amount of attorney’s fees on the ground that the contract for the payment of said fees was a contract of indemnity, and appellant, not having agreed with its attorneys upon the amount to be paid them for their services in collecting the notes, would only be liable to them for the reasonable value of such services, and therefore could only recover of appellees that amount as attorney’s fees. The evidence shows that $1,500 was a reasonable compensation for the services rendered and to be rendered by appellant’s attorneys in the prosecution of the claim, and that there had been no agreement between appellant and its attorneys as to their compensation for collecting the notes. Judgment was rendered by the court below in fayor of appellant for the principal and interest due on the notes, and for the further sum of $1,500 attorney’s fees. The only question involved in the appeal is the correctness of the judgment for attorney’s fees. This court held, in the case of Dunovant’s Estate v. Stafford (81 S. W. Rep., 101), that the stipulation in a note for the payment of attorney’s fees in event it was placed in the hands of an attorney for collection was a contract of indemnity, or, rather, that the amount named as attorney’s fees should be regarded as a penalty, and not as agreed or liquidated damages. In that case a recovery for the whole amount of the attorney’s fees was upheld on the ground that the holder of the note had contracted with his attorneys to pay them the full amount of the attorney’s fees authorized to be paid by the note, and the maker having agreed that said amount could be paid as attorney’s fees, was estopped from setting up the unreasonableness of the contract in the absence of fraud or mistake. A writ of error was refused by the Supreme Court. While the refusal of the writ of error does not necessarily indicate that the Supreme. Court approved the grounds upon which our opinion in the case was based, as stated in that opinion, we think the rule that the stipulation in a note for the payment of attorney’s fees is a contract for indemnity, and not one for the payment of agreed damages, is settled by the decisions in this State. (Luzenberg v. Building & L. Assn., 29 S. W. Rep., 237; Hammond v. Atlee, 39 S. W. Rep., 600.) • In both the eases cited it was held that the "holder of a note was only entitled to recover as attorney’s fees the amount he had agreed to pay his attorneys for collecting the note. We think it logically and necessarily follows, from this rule, that, where no agreement has been made between the holder of the note and the attorneys employed by him to collect, the holder could only recover on the note such amount for attorney’s fees as his attorney could recover from him for his services. In such case the attorney could only recover the reasonable value of his services, and that should be the measure of the recovery which the holder of the note could obtain against' the maker. There is no issue raised by appellant on the sufficiency of the evidence to sustain the judgment of the court below that $1,500 was the *524 reasonable value of the services of his attorneys in the collection of the notes sued on. The judgment of the court below is affirmed. Affirmed.