Case Name: FIRST NAT. BANK OF EAGLE LAKE v. ROBINSON
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1911-03-15
Citations: 135 S.W. 372
Docket Number: 
Parties: FIRST NAT. BANK OF EAGLE LAKE v. ROBINSON.
Judges: 
Reporter: South Western Reporter
Volume: 135
Pages: 372–373

Head Matter:
FIRST NAT. BANK OF EAGLE LAKE v. ROBINSON.
(Supreme Court of Texas.
March 15, 1911.)
Bills and Notes (§ 126 ) — Attorney’s Fee— Contract.
Where a note stipulates on default to pay “all costs necessary for collection, including 10 per cent, for attorney’s fees,” the provisions for such attorney’s fees are to be treated as a contract of indemnity, and not as a penalty or liquidated damages.
[Ed. Note. — For other cases, see Bills and Notes, Cent. Dig. §§ 272, 273; Dec. Dig. § 126. ]
Certified Question from Court of Civil Appeals of Fourth Supreme Judicial District.
Action by the First National Bank of Eagle Lake against S. S. Robinson. Judgment of 'the county court for defendant wras reversed by the Court of Civil Appeals, which certified a question to the Supreme Court.
Question answered.
See, also, 124 S. W. 177.
Strickland & Roos and Adkins & Green, for appellant. Carothers & Brown, for ap-pellee.
Kor other eases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key. No. Series & Kep’r Indexes

Opinion:
RAMSEY, J.
The question presented for decision in this case and the facts on which same depends are thus stated in the certificate sent up by the Court of Civil Appeals for the Fourth Supreme Judicial District:
"In the above styled and numbered cause pending in the Court of Civil .Appeals for the Fourth District-of Texas, on motion" for rehearing, a question of law arises presenting a conflict of ruling between the decision of this court in this cause and the decision of other Courts of Civil Appeals ad indicated below, which question this court believes it to be its duty, under the statute, to certify to your honorable court for adjudication, and which the court has directed to be certified for decision, as follows:
"Explanation. — The action is upon a note stipulating for an attorney's fee, as follows: 'And further hereby agree, if this note is not paid when due, to pay all costs necessary for collection, including 10 per cent, for attorney's fees.' This court, in reversing the judgment of the county court, rendered judgment for the principal and interest of the note, and for 10 per cent, for attorney's fee. The petition alleged that plaintiff plac ed the note in the hands of an attorney for collection, and agreed to give said attorney 10 per cent, for his services in the collection of same, and the proof was that it was placed in the hands of an attorney for collection, hut there was no proof made of an agreement to pay him 10 per cent, for his services. The ruling and judgment of this court in favor of plaintiff for 10 per cent, attorney's fee, in the state of the testimony, appears to be in conflict with what has recently been held by other Courts of Civil Appeals in cases reported as follows: Young v. Bank, 117 S. W. 476; Elmore v. Rugely [48 Tex. Civ. App. 456] 107 S. W. 151; De Steaguer v. Pittman, 117 S. W. 481; Nat. Bank v. Campbell, 114 S. W. 887; and Dunovant's Estate v. Stafford [36 Tex. Civ. App. 33] 81 S. W. 101. In this connection we may call the court's attention to the case of Adams v. Bartell [46 Tex. Civ. App. 349] 102 S. W. 779, in which your honorable court refused a writ of error, but prior to decisions above mentioned.
"Question.- — Was this court in error in rendering judgment for 10 per cent, attorney's fee as provided in said clause of the note, in the absence of testimony that plaintiff contracted to pay its attorney 10 per cent, for his services?"
We think the provisions for attorney's fees as contained in notes are -to be treated as partaking, in important respects, of the nature of contracts of indemnity, and that such undertakings to pay attorney's fees are not to be accepted or enforced, under all circumstances, as fixing a penalty, or to be regarded as constituting liquidated damages. It seems to us that the particular provision contained in the note sued on in this case, "and further hereby agree, if this note is not paid when due, to pay all costs necessary for collection, including 10 per cent, for attorney's fees." clearly stamps the contract as one possessing the qualities of indemnity only. Clearly it Seems to us by the terms of the note that the provision for attorney's fees is treated, and by the parties considered, as in the nature of costs, and such promise to pay attorney's fees is fixed as a contract of indemnity. So considered, it contains an obligation of the maker of the note to pay the cost of collection, and at the same time fixes the amount thereof at 10 per cent, of such obligation. In such case, in the absence of plea and proof that such a per cent, is unreasonable and unconscionable, the court is authorized to act upon the amount of such fees as agreed upon by the parties and enter judgment accordingly. Whether this rule should apply where the holder of the note had in fact, in the institution and prosecution of the suit, contracted with his counsel to pay less than the amount named in the note, or whether his contract should inure to the benefit of his debtor, and whether, if, on a proper showing, the amount of the attorney's fees stipulated to be paid was found to be unreasonable and unconscionable, such contract would be relieved against, we need not now determine. In the instant case no issue is made of the reasonableness of the amount agreed to be paid. The record shows that suit had been instituted on the note, and the same contains a clear statement of the amount agreed by the parties to be paid, and no other or further proof was required.
Tinder the statement made by the Court of Civil Appeals, it. did not, we think, err in rendering judgment for the attorney's fees claimed.