Court Opinion

ID: 7968571
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:52:59.156667+00
Date Added: 2024-06-11T16:34:42.813066
License: Public Domain

Mitchell, J.
Upon appeal from a judgment entered by the clerk of the court upon default of answer, the defendant makes the point that the complaint does not state a cause of action. We shall consider the appeal on the merits, for the reason that the plaintiffs do not raise the point that application should have been first made to the *564court in which, the judgment was entered; hut we do not wish the case to be considered a precedent for entertaining such appeals. See Bank of Commerce v. Smith, 57 Minn. 374 (59 N. W. 311.) The complaint is no credit to its author; but as against objections raised for the first time after judgment, when every reasonable intendment in favor of the pleading must be indulged in, we think it must be held that it states a cause of action for the amount of the principal and interest of the instrument sued on. •
The complaint must be construed as setting up an instrument payable presently, or at least on demand, no time of payment being specified. Libby v. Mikelborg, 28 Minn. 38, (8 N. W. 903;) Chamberlain v. Tiner, 31 Minn. 371, (18 N. W. 97.)
An agreement or promise to pay by the party who executed the instrument is also sufficiently alleged. And even assuming that the words “for value received” are to be construed as the allegation of the pleader, and not the language of the instrument, we think it should be held a sufficient allegation of a consideration for the promise, as against an objection made now for the first time.
The only remaining question is whether the complaint states a cause of action for the $310 attorneys’ fees included in the judgment. The allegations of the pleading are that by the terms of the instrument the defendant further agreed, if the note was not paid at maturity, to pay ten per cent additional, attorneys’ fees for collecting said note; that it was not paid at maturity; .that plaintiffs have been compelled to place it in the hands of attorneys for the purpose.of suit and collection, and have agreed to pay said attorneys, for their services, ten per cent, on the face of the note ($3,100). Stipulations in instruments for the payment of money for attorneys’ fees or costs of collection in excess of taxable costs are so liable to abuse that many courts hold themuto be absolutely void on grounds of public policy. This court holds that they are not in themselves void; that they are valid as agreements to indemnify the payees for such liabilities as they may be necessarily and reasonably compelled to incur for attorneys’ fees in case they are compelled, on default of the makers, to collect by suit. But we have held that the stipulated attorneys’ fees are no part of the original debt; that the right to them does not accrue until the payee incurs the liability, and then only to the extent of the reasonable value of the attorneys’ services actually performed *565or to be performed, which must be proved. Pinney v. Jorgenson, 27 Minn. 26, (6 N. W. 376;) Johnston Harvester Co. v. Clark, 30 Minn. 308, (15 N. W. 252.)
It is only upon this theory that such stipulations can be sustained at all, for, if they are not mere agreements to indemnify for expenses actually or reasonably made, they would be merely penal and hence void.
The full amount for which the maker is liable on such stipulations is not really due when suit is brought, for the services of the attorney are not then fully performed. Hence we hold that a recovery on such stipulations can only be had upon application to the court, and upon proof of the reasonableness and value of the attorneys’ fees; and thereupon the court may fix the amount to he allowed at such sum, not exceeding the amount stipulated, as it shall deem reasonable and just, and the amount so fixed may be included in the judgment, the same as any other disbursement in the action.
We think that this rule is not only correct on principle, but is also the only one that will prevent injustice and unconscionable extortion.
In the present case there is neither allegation nor proof of the value of the attorneys’ services. Neither was there any application to the court to fix the amount, but the stipulation was declared on as if it was an absolute agreement to pay $310 in case suit was brought, without regard to the extent or value of the attorneys’ services.
Judgment modified by deducting therefrom $310 as of the date of its rendition.
(Opinion published 60 N. W. 668.)