No. 81-348 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

THE FIRST NATIONAL BANK IN EUREKA, 

a National banking corporation, 

Plaintiff and Respondent, 

JOHN C. BECKSTROM and CAROL BECKSTROM, 

husband and wife, 

Defendants and Appellants. 

Appeal from: District Court of the Nineteenth Judicial District, 

In and for the County of Lincoln, The Honorable 

Robert Holter, Judge presiding. 

Counsel of Record: 

For Appellants: 

Oleson Law Firm, Ralispell, Montana 

For Respondent: 

David W. Ilarman, Libby, Montana 

Submitted on Briefs: November 12, 1981 

Decided: September 23, 1982 
Mr. Justice Fred J. Weber delivered the Opinion of the 

Court . 

The Beckstroms appeal from the Lincoln County District 

Court's award of costs and attorney fees to the First National 

Bank in the bank's action to recover a deficiency on a 

promissory note. 

The bank sued the Beckstroms to recover a deficiency 

owed on a promissory note. The Beckstroms made, and the 

bank accepted, an offer of judgment against the Beckstroms 

in the amount of $27,569.20. The offer of judgment also 

admitted the Beckstroms' liability for "costs of collection, 

including reasonable attorney fees" but reserved any admission 

as to the exact amount of costs and attorney fees. Agreement 

could not be reached between the parties as to the allowable 

costs and attorney fees, and on May 26, 1981, the District 

Court issued findings of fact, conclusions of law and judgment 

awarding the bank $5,000 in attorney fees, and collection 

costs which included a $200 attachment bond premium paid by 

the bank. From this judgment the Beckstroms appeal. We 

af firm. 

The Beckstroms first contend that the trial court erred 

in awarding $5,000 to the bank as reasonable attorney fees. 

Second, the Beckstroms contest the trial court's taxing the 

cost of an attachment bond. 

The Beckstroms defaulted on a promissory note dated 

December 3, 1976. The bank and John Beckstrom negotiated a 

new note and executed a security agreement on May 25, 1978. 

This note provided that the debtor would be liable for 

collection costs, including reasonable attorney fees, upon 

default. (Mrs. Beckstrom did not sign this note or security 

agreement.) Mr. Beckstrom defaulted on this second note, 

and the bank repossessed and sold the security to recover 
the $53,799.20 balance owing on the note. The sale left a 

deficiency of $28,779.20 with interest running as of August 

15, 1980. The bank retained the services of David Harman, a 

Libby attorney, to collect the deficiency. Suit was filed 

against the Beckstroms on September 26, 1980. Harman and 

the bank entered into a contingent fee contract which would 

allow Harman to keep 33 1/3 percent of the amount collected, 

if collection was made before trial. 

The Beckstroms' answer contained three defenses which 

necessitated some degree of research and investigation by 

Harman. The bank then filed a series of motions of judgment 

on the pleadings, partial summary judgment, and motion in 

limine. 

The bank, through attorney Harman, discovered that the 

Beckstroms owned unmortgaged land which could provide a 

corpus from which the deficiency could be satisfied. Upon 

learning of a possible attempt by the Beckstroms to transfer 

some property to third persons in order to hinder creditors, 

the attorney for the bank decided to attach the unmortgaged 

real property. Section 27-18-204, MCA, requires an attaching 

plaintiff to provide at least two court approved sureties 

before it allows attachment. The bank agreed to act as its 

own surety, and also purchased another surety bond for $200 

to satisfy section 27-18-204, MCA. The attachment was contested 

by the Beckstroms, which required additional work on the 

part of Harman to defend the writ of attachment. 

After obtaining a new attorney, the Beckstroms made 

their offer of judgment which was accepted by the bank, 

reserving only the issue of costs and attorney fees. The 

trial court, after an evidentiary hearing, allowed $5,000 in 

attorney fees to Harman, and also allowed the $200 attachment 

bond premium to be assessed as costs against the Beckstroms. 
COSTS - OF ATTACHMENT BOND 

The Beckstroms contend that because attachment was 

merely one possible legal option available to the bank, and 

not an absolute necessity, the cost of obtaining the attachment bond is not chargeable to them. We disagree. 

Under the terms of the promissory note, as well as the 

offer of judgment, the Beckstroms are liable for the "costs 

of collection." This phrase includes only those costs which 

were reasonably and necessarily incurred by the bank. The 

bank pursued the attachment only after learning of certain 

transfers of real property by the Beckstroms. The bank's 

attorney then felt that attachment was necessary to safeguard 

the interest of his client. This was not done as a mere 

convenience, rather, it was necessary to secure collection. 

There is no evidence of overreaching or harassment by the 

bank. In purchasing an attachment bond, the bank was merely 

complying with the express terms of section 27-18-204, MCA. 

We affirm the trial court's determination that the cost of 

the attachment bond was chargeable to the Beckstroms. 

AWARD - OF ATTORNEY FEES 

The Beckstroms contend that many of the fifty hours 

claimed by the bank's attorney were unnecessary, and were 

incurred only because of the bank's "sloppy" banking practices. 

We find no merit in this contention. The Beckstroms chose 

to raise certain defenses when sued by the bank. This 

required the attorney for the bank to spend many hours 

investigating and researching the validity of the defenses. 

Only when the case was ready for trial did the Beckstroms 

abandon the defenses by offering judgment against themselves. 

There is no basis therefore for the Beckstroms' assertion 

that many of the hours claimed by the bank's attorney were 

unnecessary. 
The Beckstroms also contend that the trial court abused 

its discretion in awarding $5,000 as reasonable attorney 

fees because there was no substantial evidence to indicate 

that such an amount was reasonable. We disagree. 

We have repeatedly stated what circumstances are to be 

considered in awarding reasonable attorney fees: 

"'The circumstances to be considered in determining the compensation to be recovered are 

the amount and character of the services rendered, the labor, time, and trouble involved, 

the character and importance of the litigation 

in which the services were rendered, the amount 

of money or the value of property to be affected, the professional skill and experience called for, the character and standing in the profession of the attorneys. * * * The result 

secured by the services of the attorneys may 

be considered as an important element in determining their value.'" Crncevich v. Georgetown 

Recreation Corp. (1975), 168 Mont. 113, 119-120, 

541 P.2d 56, 59. 

The findings of fact and conclusions of the District 

Court based upon trial without a jury contain the following 

findings of fact with regard to attorney fees: 

"6. Plaintiff has hired David W. Harman, of 

Libby, Montana, to represent them in this 

cause. The note in question provides that 

the Defendants will pay reasonable attorney's 

fees. In this regard, the Court finds: 

"a. That the Plaintiff and Mr. Harman made a 

contingent fee agreement which is not binding 

on the Court but is indication of the agreement between the Parties. 

"b. That to the time of hearing hereof, the 

Plaintiff's counsel had expended at least 

fifty (50) hours of time and it islikely 

that continued effort will be needed herein. 

"c. That the Defendants action have raised a 

number of rather unique questions of law into 

this proceeding, namely the status of a homestead exemption, the motion to dissolve attachment, the transfer of assets to third persons 

and the question of whether collection costs 

include the surety bond. An additional question was posed by the denial of liability of 

the Defendant, Carol Beckstrom, because of 

her failure to sign renewal notes. 
"d. That the results obtained were those which 

the Plaintiff expected; that the Defendant only 

submitted its offer of Judgment when the Plaintiff's attorney had advanced this case to trial. 

"e. That the Plaintiff's attorney had been admitted to the bar nine years, has represented 

this particular Plaintiff in other litigation 

and is competent to handle litigation generally * 

"f. -- That the $5,000.00 requested --- fee is commensurate with those usually charged in matters 

-- of this nature -- in this community." (Ederscoring added.) 

From the foregoing findings of fact, the District Court then 

concluded: 

"The note sued upon is due and owing. That 

suit was required to recover the same, and 

that Plaintiff is entitled to the principal 

amount sued upon, interest, costs as set 

forth in the memorandum and attorney's fees 

in the sum of $5,000.00." 

With regard to the findings of fact, the standard of review 

of this Court of the factual determinations by the District 

Court without a jury is set out in Rule 52(a), Montana Rules 

of Civil Procedure, as follows: 

"Findings of fact shall not be set aside unless clearly erroneous, and due regard shall 

be given to the opportunity of the trial court 

to judge of the credibility of the witnesses." 

Subparagraph (a) of the findings refers to the contingent 

fee agreement. Such agreement is an exhibit and shows the 

agreement by the bank to pay to the plaintiff upon a contingent fee basis as follows: 

"I agree to pay my attorneys upon a contingent 

basis on all sums of money which may be recovered by suit or settlement as follows: 25% of all 

amounts recovered if settlement is made without instituting suit; 33 1/3% of all amounts 

recovered if it becomes necessary to institute 

suit but the case is settled before pre-trial 

conference; 40% of all amounts recovered after 

the case is beyond the pre-trial conference 

stage, whether by settlement or by the recovery 

of a verdict or the collection of a judgment 

entered against the adverse party; a sum equal 

to 50% of all amounts recovered if any type of 

appellant proceedings are taken by either party." 
In subparagraph (b) the ~istrict Court found that 

plaintiff's counsel had expended "at least" fifty hours of 

time. Plaintiff's counsel submitted as an exhibit his 

affidavit regarding the matter of attorney fees. In that 

affidavit, counsel described the various factors which he 

thought to be relevant, and included an estimate of approximately fifty hours. He also testified orally, stating that 

he did not keep time records in this matter and that the 

estimate of fifty hours was an approximation based upon a 

review of the file and his notes. The record does sustain 

the finding that "at least" fifty hours were expended. 

However, plaintiff's counsel also pointed out that while he 

had a billable hour factor, generally he performed work on a 

different basis. He stated: 

"That your Affiant does have an hourly billable rate of $50.00 per hour but generally 

performs work on a 'per job' basis, or in 

accordance with a written retainer agreement." 

The District Court concluded that the contingent fee 

agreement "which is not binding on the Court" was nonetheless 

an indication of the agreement between the parties. Under 

the contingent fee agreement, the attorneys for the bank 

appear to be entitled to either 40 percent or 50 percent of 

the $27,569.20 which was recovered. Under those circumstances 

it would be unfair to hold counsel to an approximation of 

fifty hours of work at $50.00 an hour. 

Subparagraph (c) refers to the unique questions of law. 

There is uncontradicted testimony by two attorneys to substantiate those fact conclusions. 

Subparagraphs (d) and (e) are both also uncontradicted. 

Subparagraph (f) is a key finding. Based upon the 

uncontradicted testimony of plaintiff's counsel and another 

attorney who qualified as an expert witness familiar with 

fees in the area, the District Court concluded as a fact 
that the $5,000 fee is "commensurate with those usually 

charged. . .in this community." 

The record amply substantiates each finding of fact of 

the District Court. We are unable to find a basis to conclude 

that the findings of facts were clearly erroneous and therefore 

reversible under Rule 52(a). 

In addition, this Court has concluded that we will only 

consider whether there is substantial credible evidence to 

support both the findings and the conclusions of a District 

Court. In Cameron v. Cameron (1978), 179 Mont. 219, 228, 

587 P.2d 939, 945, we stated: 

"We will not substitute our judgment for that 

of the trier of fact, but rather will only 

consider whether substantial credible evidence 

supports the findings and conclusions. Those 

findings will not be overturned by this Court 

unless there is a clear preponderance of evidence against them." 

We hold that the record contains substantial credible 

evidence to support both the findings and the conclusions of 

the District Court and that the approach of the District 

Court in considering the factors set forth in Crncevich and 

reaching a conclusion that a $5,000 fee award is reasonable 

is the correct approach. 

Affirmed. 
Mr. Justice Daniel J. Shea dissenting: 

I join in the opinion on the attachment bond issue but I 

dissent from the decision approving the attorney fee award. 

Here we have a situation where plaintiff's counsel was 

virtually certain to obtain a judgment against the Beckstrams, 

(or at least against Mr. Beckstrom), in the amount of the promissory note. The real question was whether the bank would have 

available to it assets to satisfy any judgment obtained. 

The question is whether the attorney fee, under these circumstances, is excessive. It is. The attorney testified that he 

spent about fifty hours on the case, and many of the hours were 

spent on ancilliary matters directed at finding property that 

could satisfy any potential judgment. The attorney had represented the bank on other occasions, and so they were not 

strangers to each other. The attorney fee arrangement was that 

the attorney would receive on a contingency basis, 25 percent of 

any amount recovered before suit, 33 1/3 percent of any amount 

recovered after suit but before trial, 40 percent of any amount 

recovered after trial, and 50 percent for an amount recovered 

after an appeal. This contingency should not have been considered for any purpose in determining the reasonableness of a 

fee, for the Beckstroms were not a party to the contract and 

should therefore not be bound directly or indirectly by its terms 

or by its being considered as a factor in setting the fee. 

Unfortunately, the trial court and this Court both considered the 

contingency fee as a factor in setting the fee. 

The trial court found that the contingency fee contract was 

not binding on the court, but was simply an indication of the 

agreement between the parties -- that is, the agreement between 

the Bank and its attorney. The fact is, however, that absent 

this agreement, the only evidence present to justify an award 

would be the $50 per hour normal billable rate testified to by 

the attorney -- at this rate, the attorney's fee would be $2,500 

rather than $5,000 -- -- 

twice the normal hourly rate. There is no 
evidence in the record demonstrating that the normal hourly 

rates for attorney fees in the community is $100 per hour -- yet 

that is the only basis on which the award could be upheld under 

the majority rationale. 

While the trial court and this Court appear to want to avoid 

using the contingency fee arrangement as a basis for the amount 

of the attorney fee award, it is clear that both have at least 

let the contingency fee contract be used as evidence justifying 

an award beyond the normal $50 per hour testified by plaintiff's 

attorney as his normal hourly rate. Although I do not understand 

the majority rationale, this part of its opinion is revealing: 

The District Court concluded that contingent 

fee agreement which is not binding on the 

Court was nonetheless -- 

an indication of the 

agreement between the parties. Under the contingent fee agreement, the attorneys for the 

bank appear to be entitled to 40 percent or 50 

percent of the $27,569.20 which was recovered. 

Under those circumstances it would be unfair 

to hold counsel to an approximation of fifty 

hours of work at $50.00 an hour. (Emphasis 

added ) 

The Beckstroms should either be bound by the contingency fee 

agreement or they should not -- and I am sure neither the trial 

court nor this Court would venture to hold that the contingency 

fee arrangement, to which the Reckstroms were not a party, should 

be the basis on which they should pay an attorney fee. I also 

fail to see how the contingency arrangement can be "an - 

indication" in effect that the Beckstroms should pay more than 

the normal rate of $50 per hour. To hold otherwise is to hold 

that the contingency fee agreement is in fact - 

evidence that 

Beckstroms should be bound in some degree to some standard of 

assessment of attorney fees without the Beckstroms being a party 

to that agreement. 

Because the Beckstroms were not a party to this agreement, 

they cannot be held to the contingency fee arrangement as constituting in any way what a reasonable attorney fee would be. The 

question then becomes what standard should be applied in determining the reasonableness of the fee to be assessed against the 
Beckstroms. The only reliable evidence in the record is that of 

the attorney himself that his normal billable rate is $50 per 

hour. Any other evidence is based entirely on speculation and on 

the understandable yet regrettable proclivity of attorneys to 

justify fees on behalf of their brethren of the bar. 

This Court relies on the so-called uncontradicted testimony 

of plaintiff's counsel and "another attorney who qualified as an 

expert witness familiar with fees in the area, . . ." in 

upholding the trial court's finding that the $5,000 fee was 

"commensurate with those usually ------- charged . . . in this 

community." (Emphasis added) I fail to see, however, where ----- 

there is evidence in the record justifying this $5,000 fee. 

The Bank's attorney demanded that he be paid $5,000 as the 

fee, and he and another lawyer testified that $5,000 was a 

reasonable fee. However, the Bank's lawyer testified that when 

he charged an hourly rate it was at the rate of $50 per hour. The 

so-called expert also testified that his rate was $50 per hour. 

The essence of the testimony of the lawyer receiving the fee is 

that he should receive a fee higher than the rate of $50 per hour 

because he had a contingency fee agreement with the Bank which 

entitled him to a higher fee. 

The so-called expert on attorney fees, (and all attorneys 

seem to be experts - in -- support of attorney fees to be awarded to 

their brethren of the bar), was that the requested fee, $5,000, 

was reasonable. But, he really gave no basis for this testimony. 

In fact, he admitted that he had reviewed neither the District 

Court file nor the file of the lawyer before determining that the 

requested fee of $5,000 was reasonable. 

Contrary to the assertions of the Bank's counsel, this case 

was not a complex case. Indeed, judgment against the Beckstroms 

was virtually assured from the outset -- although whether there 

would be property to satisfy the judgment was another matter. It 

does not engender public confidence on the bench and bar for a 

court to rubberstamp a demand for attorney fees, especially when 
that demand is double the usual hourly billing rate of the attorney. 

To summarize, a fee twice as high as a fee calculated at the 

normal billable rate of $50 per hour, is, under the circumstances 

of this case, excessive. The fee should be $2,500, not $5,000. 

fido&AJustice