L'Engle & Hartridge v. L'Engle

The Chiee-Justice delivered the opinion of the court: Respondents executed a mortgage to appellants to secure a note for a sum of money. The mortgage is in the usual form and contains these words: “ It is also agreed that the grantors, their heirs, &c., shall pay all expenses of collecting said debt, and every portion of it, including attorney’s fees and shall repay with twelve per cent, interest per annum all premiums for insurance, and all taxes and assessments that the grantees, their successors or assigns may by default of the grantors, their executors or administrators, necessarily pay, and that said moneys shall be secured by this mortgage. When the note became due the mortgagees brought suit in a court of- law against the maker of the note, which suit was contested by defendant and final judgment was had against him for the amount due, which he paid. The present suit is instituted to foreclose the mortgage, the complainant alleging that complainants necessarily expended a large sum, to wit: Seven hundred dollars for attorney’s fees in the prosecution and conduct of the suit at law, and collecting the money due on the note, which attorney’s fees or any part thereof defendant refused to pay. Complainants pray that an account be taken of their expenses, including attorney’s fees in conducting the suit at [134] law, and that they may have a decree therefor to be satisfied out- of the mortgaged property. To this bill defendants demurred for want of equity and the demurrer was sustained and bill.dismissed, wherefore complainants appeal. Respondents say that when a mortgage debt is paid the mortgage- is discharged. This is true if that is all the mortgage contemplates. In one of the cases cited by them, (Meyer vs. Hart, 40 Mich., 517,) it was a condition of the mortgage that in a case of foreclosure under the statute, (by advertisement of sale in a newspaper without decree,) the stipulated attorney’s fee could not be allowed unless there was a sale. That is not this case. , Here is a stipulation and covenant, not that attorney’s. fees should be secured and paid in case of foreclosure, but “ shall pay all expenses of collecting said debt and every portion of it, including attorney’s fees, * * and that said monkeys shall be secured by this mortgage.” . The stipulation is not confined to any specific method of collection, but covers any method in which the services of an attorney are usually employed. It is customary here and elsewhere, when not prohibited by statute, to provide in mortgages that the debtor shall pay the expenses of collection in case of default in making payment. “ Hor is it against publie policy that the expense of a litigation should be borne by the party whose breach of his contract necessitates such litigation. On the contrary, it accords fully with the soundest principles.”' Tholen vs. Duffy, 7 Kansas, 410. In that ease, as here, the covenant in the mortgage was to pay “ for attorney’s fees for collection and services.”' Clawson vs. Munson, 55 Ill., 394, was a like case. The court remarks: “ We can only say that the appellants pro [135] vided by their express agreement in the mortgage tor all the consequences that have followed, in case of default in prompt payment, and that they could have avoided all hardships by paying the notes at maturity. It is not in the power of the court to relieve a party from the force and consequences of his own agreement.” See also Williams vs. Meeker, 29 Iowa, 292 ; Mans. vs. McKellip et al., 38 Md., 231; Jones vs. Schulmeyer, 39 Ind.,119, 128. In the latter case it was also held that a married woman is bound by such a contract in her mortgage. There are numerous cases in the reports which might be cited to sustain the rule laid down in the foregoing citations and we have found nothing to the contrary. In these conclusions we only hold the party to the strict letter of his covenant, and that is that he will pay all the expenses incurred in collecting the debt, including attorney’s fees, in whatever forum the plaintiffs might lawfully proceed for that purpose. But in this we do not mean that the plaintiffs may pay an extravagant amount to his attorney and charge it against the debtor. The amount must be reasonable, not exceeding a fair remuneration for the services to be ascertained by the Chancellor upon proper proofs. The decree sustaining the demurrer is reversed.