Tholen v. Duffy

The opinion of the court was delivered by Brewer, J.: Only two questions are presented for our consideration in this case : First, Is the taking of twelve per cent, interest in advance, on a loan of one thousand dollars made for a year on note and mortgage, usurious ? Second, Is an agreement in a mortgage to pay ten per cent, attorney’s fees upon foreclosure valid and binding ? i. ikteotsst ; SsSSoSs!not I. Twelve per cent is the highest legal interest which by the terms of our law parties may contract to pay. Exacting this in advance, practically gives to the lender more than twelve per cent, on the amount the borrower actually has the use of during the time of the loan. It. seems difficult upon principle to sustain such a transaction. But in cases where note or [409] bill is given, it is supported by such an overwhelming current of decision, and is a matter of such universal practice, that it may well be considered as engrafted upon the law as a settled rule. 4 Scam., 21; 31 111., 490; 12 Pick., 589; 15 Johns., 162; 2 Cowen, 664; 3 Wend., 408; 8 Wheat., 354; 2 Pars, on Cont., (3d ed.,) 408. It was so settled before the passage of our interest law; and if the .legislature had intended to change this rule of construction, such intention would have been plainly expressed. It is satisfactory to know that in this way we give effect to a contract entered into by both parties in good faith, and with a full understanding of its terms. 2, stipulation to fees.attoiney 3 II. The stipulation in the mortgage in regard to attorney’s fees is in these words : “ And the said parties of first part hereby agree that ten per cent. “ n^on the amount due on said note at time “of any judgment thereon shall be added to the same, “and judgment rendered therefor for attorney’s fees for “ collection and services.” The learned judge who tried the case charged the jury that this stipulation was valid, and that they might add to the amount found due upon the note, ten per cent, thereof, and bring in a verdict for such sum. The verdict they returned really included only between six and seven per cent, for attorney’s fees. Stipulations like this have been sustained by the decisions , of many courts, and properly so : 7 Watts, 126; 51 Penn. St., 78; 3 Wis., 454; 10 Wis., 41; 12 Wis., 179, 452; 15 Wis., 522; 16 Wis., 672; 8 Blackf., 140; lNev.,161; 2 Nev., 199; 21 La. An., 607. It does not violate the usury law, because it is no stipulation to pay for the use of the money borrowed, but only an agreement to compensate the mortgagee for the expenses of compelling the mortgagor to perform his contract. If the mortgagor pay the money borrowed at the [410] time it becomes due, as he has promised to do, he incurs no loss by reason of this clause in the mortgage. He is wholly released by the payment of the money borrowed, and the stipulated interest. Where by the term of a contract, a party can discharge himself by paying the real amount due, the transaction is not usurious. Bac. Abr., Title, Usury, (6;) Billingsley v. Bean, 11 Ind., 331; Lawrence v. Cowlse, 13 Ill., 577; Gould v. The Bishop Hill Co., 35 Ill., 325. Nor is it against public 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. Our statutes, as well as those of nearly if not quite all of the States, provide that the costs — using the term in the limited sense as embracing the amounts due the sheriff, the clerk, and other officers of the court, for their services in the case — shall be paid by the losing party. The theory is, that the determination of the suit has shown ■that his wrong caused the litigation, and therefore he should bear the expense. And in many States the court is authorized to award to the successful party, in addition to the amount found due, and the court expenses, certain sums for liis attorney’s costs. Our statutes do not provide for this additional allowance. But this omission to provide for such compensation in all cases is no argument against-the right of the parties to contract for it in some. The decision of this court in Lender v. Caldwell, 4 Kas., 339, does not controvert these views. - This was the law then in force — Comp. Laws, 1862, p. 722: “ Sec. 3.* * * No court shall tax over two dollars as attorney’s fees in any case for foreclosure of any mortgage, or trust deed, or for collection of the same.” The court, quoting this section, add these words: “No language of ours can make this prohibition plainer than the statute itself. A [411] contract between the parties in derogation of this statute cannot be enforced.” Yet this statute impliedly recognized the validity of a contract of the nature of the one in question. The restriction was as to the amount, not the fact of the contract. It must not be for over two-dollars. But said provision was repealed in 1868. There is now in the statutes of this State no restriction upon such a contract. On the contrary, in the laws of 1870,. p. 175, §13, concerning the foreclosure of mortgages,, deeds of trust, etc., it is provided, that “ the court shall tax the costs, attorney’s fees, and expenses which may accrue in the action.” This evidently contemplates the making of such contracts as this. It is true, there may be cases where the amount stipulated to be paid is so-excessive that a court of equity will not enforce it. But this is not one of such cases. It does not appear in the-record, and is not a matter that this court can take judicial notice of, but it is a matter of general notoriety that' the amount stipulated in this mortgage is the minimum fixed by the fee bill of the attorneys of the First Judicial' District, the district in which this mortgage was executed and foreclosed. We see no error in this ruling of the-court. Judgment affirmed. All the Justices concurring.