Source: https://supreme.justia.com/cases/federal/us/109/665/
Timestamp: 2019-04-26 04:29:58+00:00

Document:
The maker of a promissory note executed, to one who for his accommodation signed his name on the back of the note before its delivery to the payee, a mortgage of real estate to indemnify him against all costs and charges arising from his contract, with a power of sale in case of the mortgagor's default in paying the note. The mortgagor failing to pay the note at maturity, the mortgagee paid the amount thereof to the payee, and entered it upon his books in general account against the mortgagor, and the payee endorsed the amount as a full payment on the note, and delivered up the note to the mortgagee. The mortgagee afterwards assigned to a third person the mortgage and the obligation therein mentioned.
Held, that the assignee might maintain a bill in equity against the mortgagor for foreclosure and sale of the land under the mortgage, and for payment by the mortgagor personally of so much of the amount of the note as the proceeds of the sale under the foreclosure were insufficient to satisfy.
A stipulation in a mortgage of real estate that in case of foreclosure, the mortgagor shall pay an attorney's or solicitor's fee of one hundred dollars, is unlawful and void by the law of Michigan, as declared by the supreme court of the state, and therefore cannot be enforced in the circuit court of the United States upon a bill in equity to foreclose a mortgage, made and payable in that state, of land therein.
Bill in equity to foreclose a mortgage. The suit was commenced in a state court, and was removed to the circuit court of the United States, where a foreclosure and sale were decreed. The defendants below appealed.
"and also one hundred dollars as an attorney fee should any proceedings be taken to foreclose this indenture under the statute, and the same sum as a solicitor's fee, should any proceedings be taken to foreclose the same in chancery."
The other facts appearing by the record are as follows: Smith and Harris, who were partners, signed their partnership name upon the back of the notes before their delivery to Edwards. One of these notes, for $5,000, became payable on May 4, 1876, and, not being paid by Bendey, was protested for nonpayment, and an action was brought thereon by Edwards against Smith and Harris, who, before judgment in that action, paid the amount of the note, with interest. Edwards endorsed the amount as a full payment on the note, and delivered up the note to Smith and Harris, and they entered the amount paid by them upon their books in their general account against Bendey, and afterwards, on September 5, 1877, assigned the mortgage, and the land therein described, "together with the note or obligation therein also mentioned," to "William Brigham and Amos Townsend, trustees." The assignment was in fact made in part payment of debts due from Smith and Harris to firms of which Townsend and Brigham were respectively members.
due to the plaintiff of the principal and interest of the note and mortgage, and for general relief. After the filing of answers and replication, the case was removed, on petition of the defendants, into the Circuit Court of the United States for the Western District of Michigan, and a hearing there had, upon which the facts above stated were proved, and a decree entered that the defendants pay to the plaintiffs the sum of $7,996.59, with interest, together with a solicitor's fee of $100, and that in default of such payment the land be sold by public auction, and conveyed under the direction of a master in chancery, and the proceeds of the sale applied to the payment of these sums, and that if the proceeds of the sale should be insufficient for such payment, the amount of the deficiency, with interest, should be paid by Bendey to the plaintiff. From this decree the defendants appealed to this Court.
the note. The assignees were therefore rightly held to be entitled to a decree for the foreclosure of the mortgage, and also, under the ninety-second rule in equity, to a decree against Bendey himself for so much of the sum paid by Smith and Harris, with interest, as the money obtained by the sale of the land under the foreclosure should be insufficient to satisfy.
The decree below is therefore right in all respects except in allowing a solicitor's fee of $100. The land is in Michigan; the notes and mortgage were made and payable in Michigan, and by the law of Michigan, as settled by repeated and uniform decisions of the supreme court of that state, a stipulation in a mortgage to pay an attorney's or solicitor's fee of a fixed sum is unlawful and void, and cannot be enforced in a foreclosure either under the statutes of the state or by bill in equity. Bullock v. Taylor, 39 Mich. 137; Myer v. Hart, 40 Mich. 517; Vosburgh v. Lay, 45 Mich. 455; Van Marter v. McMillan, 39 Mich. 304; Botsford v. Botsford, 49 Mich. 29. Upon such a question, affecting the validity and effect of a contract made and to be performed in Michigan concerning land in Michigan, the law of the state must govern in proceedings to enforce the contract in a federal court within the state. Brine v. Insurance Co., 96 U. S. 627; Connecticut Ins. Co. v. Cushman, 108 U. S. 51; Equator Co. v. Hall, 106 U. S. 86.
The result is that the decree must be reversed without costs to either party in this Court, and the case remanded to the circuit court with directions to enter a decree for the plaintiffs, with costs, modified by striking out the allowance of the solicitor's fee.

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