Court Opinion

ID: 9770225
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:55:13.489836+00
Date Added: 2024-06-11T07:31:15.862253
License: Public Domain

MURPHY, Justice,
dissenting.
I dissent from that portion of the court’s opinion and judgment which holds that ap-pellee’s recovery of attorney’s fees in this case must be limited to ten percent of the balance due and owing on the promissory note. I would hold that appellees were entitled to recover reasonable attorney’s fees actually incurred, and that the trial court erred in limiting appellees’ recovery to ten percent of the outstanding principal and interest.
In the promissory note at issue in this case, appellants agreed “to pay all expenses incurred, including Attorney’s fees of ten per cent on the amount of principal and interest” if the note was placed in the hands of an attorney for collection. However, as the majority correctly notes, Texas courts do not regard agreements to pay attorney’s fees based on a percentage of unpaid principal and interest under a note as absolute promises to pay the contractual amount. E.g., F.R. Hernandez Construction & Supply Co. v. National Bank of Commerce, 578 S.W.2d 675, 676 (Tex.1979). Rather, under Texas law, such agreements are regarded as “contracts to indemnify the holder of the note for attorney’s expenses actually incurred in collecting the principal and interest on the note.” Id.; see RepublicBank Dallas v. Shook, 653 S.W.2d 278, 282 (Tex.1983); Texas Airfinance Corp. v. Lesikar, 111 S.W.2d 559, 563 (Tex.App. — Houston [14th Dist.] 1989, no writ); Richardson v. Office Buildings of Houston, 704 S.W.2d 373, 376 (Tex.App. —Houston [14th Dist.] 1985, no writ).
Without citation to authority, the majority in this case implicity holds that the above rule is applicable only where the obligor on a note challenges the reasonableness of a fixed percentage attorney’s fee, and that it cannot be applied so as to allow the holder of a note to collect attorney’s fees in excess of those provided for by the terms of the note. I find no support for this argument either in logic or in law. The supreme court has held that agreements to pay attorney’s fees based on a percentage of unpaid principal and interest must be considered as “contracts to indemnify the holder of the note for attorney’s expenses actually incurred in collecting the principal and interest on the note.” F.R. Hernandez Construction, 578 S.W.2d at 676 (emphasis added); see Shook, 653 S.W.2d at 282. The express language of these holdings does not limit the application of this rule to cases where the obligor on a note seeks to pay less than the agreed upon fixed percentage fee, and I find no grounds to imply such a limitation.1
For the reasons stated above, I would sustain appellee’s cross-point and reverse and render that portion of the trial court’s judgment awarding attorney’s fees to ap-pellee. I agree with the majority opinion in all other respects.

. It appears that at least one opinion from this court indirectly supports this conclusion. See Richardson v. Office Buildings of Houston, 704 S.W.2d 373, 376 (Tex.App. — Houston [14th Dist.] 1985, no writ). Apparently, no other court of appeals has addressed the issue.