Case ID: mich_241/html/0052-01.html
Source: Caselaw Access Project
Author: {"author": "Sharpe, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SECURITY TRUST CO. v. SOLOMON.
    1. Mortgages — Foreclosure —- Stipulated Attorney Fee Unenforceable.
    A stipulation in a mortgage that a specified sum is chargeable as attorney’s fees on foreclosure is unenforceable.
    2. Same — Court May Allow Reasonable Attorney Fee.
    On foreclosure of a mortgage the court has power to allow a reasonable sum as attorneys’ fees.
    Mortgages, 41 C. X § 264; 2Id., 42 C. X § 2062.
    
      3. Same — Reasonable Attorney Pee Allowed by Court Not Subject to Attack.
    ■Where the mortgagor agreed in the mortgage that in case of foreclosure the trustee should deduct reasonable compensation for its attorneys before any surplus should be payable to him, he may not attack the allowance for attorneys’ fees made by the court, in the absence of a showing that it is not reasonable compensation for the service rendered, nor is the second mortgagee in any better position to attack it than is the mortgagor.
    3Mortgages, 42 C. J. §§ 2063, 2064.
    Appeal from Wayne; Brown (William B.), J., presiding.
    Submitted October 14, 1927.
    (Docket No. 134.)
    Decided December 1, 1927.
    Rehearing denied January 19, 1928.
    Bill by the Security Trust Company against Benjamin Braver, Lena Solomon, and others for the foreclosure of a trust mortgage. From a decree for plaintiff allowing expenses for attorneys’ fees, defendant Solomon appeals.
    Affirmed.
    
      Beaumont, Smith & Harris (M. S. Harlan, of counsel), for plaintiff.
    
      Retan, Benjamin & Quay (Harry H. Platt, of counsel), for appellant.
   Sharpe, C. J.

In this suit, brought to foreclose a mortgage executed to plaintiff as trustee to secure a bond issue, and in which it was appointed a receiver of the property, the trial court allowed it for “expenses for attorneys’ fees” the sum of $1,500. The defendant Lena Solomon, a second mortgagee, appeals from such allowance.

This court has repeatedly held that a specified sum stipulated in a mortgage to be chargeable as attorneys’ fees on foreclosure is not enforceable. Curtis v. Mueller, 184 Mich. 148, and cases cited.

This mortgage provided:

“Upon sale being made by any of the methods in this indenture provided for, the trustee shall first take from the proceeds thereof all costs, disbursements, and expenses of such proceedings, as well as the expenses, disbursements, and reasonable compensations of the trustee and of its counsel, and shall apply the remainder as follows:
“(1) To the payment of all taxes, insurance, assessments, rates, charges, labor or mechanic’s liens due and unpaid.
“ (2) To the payment of all the principal and interest of the bonds then outstanding in full if such proceeds be sufficient, but if not, then pro rata, without preference or priority of one bond over another, or of interest over principal.
“(3) To the pro rata payment of any income tax due the holder or holders of any bond or bonds or interest coupons, in accordance with the provisions hereinbefore set forth.
“(4) The payment of the surplus, if any, to the mortgagor, his heirs, executors, administrators or assigns.”

The mortgagor thereby agreed that the plaintiff should deduct the reasonable compensation of its attorneys, if foreclosure be had, before the surplus, if any, should be payable to him. The appellant is in no better position to attack this allowance than the mortgagor would be. No claim is made that the amount allowed is not a reasonable compensation for the service rendered. This court has sustained such allowances when contested in Union Trust Co. v. Railway, 127 Mich. 252, 269, and in Union Trust Co. v. Amusement Co., 163 Mich. 687. There is no reason, apparent to us, why we should not do so in this case.

The decree is affirmed, with costs to appellee against appellant.

Bird, Flannigan, Fellows, Wiest, Clark, and McDonald, JJ., concurred.

The late Justice Snow took no part in this decision.