Case Name: Moore, Admx., v. Staser et al.
Court: Appellate Court of Indiana
Jurisdiction: Indiana
Decision Date: 1892-11-16
Citations: 6 Ind. App. 364
Docket Number: No. 651
Parties: Moore, Admx., v. Staser et al.
Judges: 
Reporter: Indiana Court of Appeals Reports
Volume: 6
Pages: 364–371

Head Matter:
No. 651.
Moore, Admx., v. Staser et al.
Pbomissout Note. — Agreement to Pay Attorney’s Pees.- — Indemnity-.—Art agreement in a promissory note for the payment of attorney’s fees, is in the nature of indemnity to the payee or holder, and only such sums can-be recovered thereunder as the payee or holder has actually and necessarily expended or become liable for, on account of the default of the: payor. ' ' ’ '
Same. — Collection Without Suit. — Where, upon 'default of the payor, the payee or holder of a promissory note has placed the note in the hands of an attorney at law for collection, and has become liable, or paid for the services rendered by such attorney concerning the collection of the note, the payor is liable for the reasonable value of the attorney’s services, even though suit has not been brought.
Erom the Vanderburgh Superior Court.
H. A. Yeager, for appellant.
W. TF. Ireland, for appellees.

Opinion:
Crumpacker, J.
The issues in this ease were presented to the court below, upon an agreed statement of facts, under section 553, R. S. 1881. Erom the statement filed, it appears that appellant held a note against the appellees, which contained an unconditional stipulation for the payment of " attorney's fees." The note was past due, and appellant placed it in the hands of a regular practicing attorney for collection, Avith instructions to collect the same without delay. The attorney notified appellees, by mail, that he held the note for collection, and enclosed with the notice a statement of the amount of the note, including; five per centum for collection fee.
This was a reasonable fee for the collection of the note, and appellant became liable to her attorney for its payment, but before suit Avas brought, appellees tendered the attorney the amount of the note, less the collection fee, in full payment thereof, Avliiek was refused and the tender was kept alive.
The trial court held that appellees were not liable for the payment of the collection fee, and gave judgment accordingly, and this is the only question presented for decision by the appeal. Agreements to pay attorney's fees in promissory notes, not dependent upon any express condition* are valid and enforceable. Churchman v. Martin, 54 Ind. 380.
Such agreements, however, are in the nature of indemnity contracts, and the promisee can only recover thereunder such sums as he has actually and necessarily expended or become liable for, on account of the default of the promisor. Kennedy v. Richardson, 70 Ind. 524; Goss v. Bowen, 104 Ind. 207.
But in this case, while it is admitted that appellees defaulted in the payment of the note, and appellant, on that account, placed it in the hands of her attorney for collection, and thereby incurred a liability of five per centum of the amount of the note, it is claimed that she could not recover because the note was not actually sued before the tender. The solution of this question must depend upon the construction of the term " attorney's fees," as contained in the note. It is insisted in support of the action of the court, that the term "attorney" has reference, when employed in the connection it is in this case, to an " attorney at law," who is defined at common law to be, one who stands for or represents another in a suit at law or some other judicial proceeding. Under this definition, professional services of an attorney at law can only be rendered in connection with some proceedings of a court of which he, by virtue of his profession, is an officer. The distinctions maintained in the English practice between attorneys, solicitors, counselors, etc., have never obtained in the courts of this country, except in a few instances. By a universal and long-established custom, a large portion of the professional business of attorneys on this side of the Atlantic is in relation to matters entirely unconnected with court proceedings, hut which is of such a character as to require a knowledge of legal principles in its execution. An important factor in such business is the collection of claims without suit. It is as much the duty of an attorney to receive for collection, notes and claims to be collected without suit, if possible, as it is to bring and prosecute actions in the courts. He acts in a professional capacity as fully in tlie one instance as in the other, and is liable for his failure to employ care and skill in the interest of his client, equally in both eases.
In the case of Savings Bank v. Ward, 100 U. S. 195, it was held that an attorney employed to examine the title to property, while so engaged, was acting .professionally as an attorney at law. In the course of the opinion, the court said: "Persons acting professionally in legal formalities, negotiations, or proceedings by the warrant or authority of their clients may be regarded as attorneys at law within the meaning of that designation as used in this country." See, also, Meehem on Agency, section 802.
It is within the knowledge and experience of almost every lawyer that a considerable percentage of collections is made by attorneys without suit. Banks and ordinary collection agents do not assume to possess the skill-and knowledge of collection laws that may' be expected of an attorney, and consequently are not held to as strict an accountability for their failure to exercise skill and vigilance as the latter. Whether compensation for services performed by such agencies may be included in an agreement to pay " attorney's fees," we are not required to decide. It is conceded by counsel, that if suit had • been instituted on the note without notice having been given by the attorney, appellees would have been liable for the collection fee. Under the statutes of this State, a suit is not. deemed commenced until process has issued. An attorney to whom a note has been entrusted for collection by suit, often requires time for the preparation of papers, and for other steps necessary to a successful prosecution of an action, which involves labor and expense, and if the maker could escape the payment of attorney's fees, when the note provided for it, by tendering the amount of principal and interest at any time before process was actually issued, in many instances the agreement would furnish no indemnity. If the holder of such a note could not leave it with an at torney for collection, with, instructions to indulge the maker with a further opportunity to pay it, and thus avoid the annoyance of a suit and court expenses, without losing some of -his substantial rights under the contract, he could not afford to grant such indulgence, and the effect would be to multiply litigation. It is only when the holder of a note necessarily incurs a liability for attorney's fee in its collection, that the maker becomes liable therefor under the indemnity stipulation, and such necessity can never arise, except by the maker's failure to pay at maturity. If he performs his agreement, no liability will be incurred, and he should not complain at the enforcement of an agreement against him, which he could avoid by the performance of his contract. In view of these observations, it must be held that the agreement to pay " attorney's fees " covers the fee of an attorney for the collection of the note, made necessary by the default of the maker, whether suit is brought or not.
filed November 16, 1892.
The 'judgment is reversed, with instructions to enter judgment upon the facts in favor of appellant.
Reinhard, 0. J., dissents.