Court Opinion

ID: 9648583
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:28:16.185152+00
Date Added: 2024-06-11T18:12:03.380746
License: Public Domain

George Bose Smith, J. (dissenting). There seem to be only two real questions upon the bank’s appeal. First, was the obligation of the guarantors more extensive than that of the principal debtors? I think it was. The preamble to the guaranty agreement recites that “the undersigned [guarantors] are desirous of guaranteeing the Bank against loss as a result of such indebtedness.” Paragraph 4 compels the bank to give the guarantors ten days notice before filing a foreclosure suit. If the existing default is not made good within that time, and it becomes necessary for the Bank to foreclose, the guarantors make themselves liable for all reasonable costs and expenses of the suit. The principal debtors did not undertake either to guarantee the bank against loss or to become liable for the expenses (other than costs) of litigation. Hence the guarantor’s obligation was unquestionably greater than that of May and his wife. This reasoning also answers the suggestion that the duty of the guarantors was fully discharged when the Mays paid the judgment against them. In a foreclosure suit the greater part of the creditor’s expense is apt to be incurred not in the mere obtaining of a judgment but in the collection of that judgment. It was not until the bank had collected the principal debt from the mortgagors that it was in a position to determine the full amount of the expenses for which the guarantors were liable under their contract. Secondly, in Paragraph 4 of the guaranty agreement was the phrase “reasonable costs and expenses” intended to include attorney’s fees? I think so. The parties were talking about litigation and certainly knew that attorney’s fees are an unavoidable expense to be incurred by a bank in bringing a foreclosure suit. The guarantors had obtained the indulgence they sought by promising to guarantee the bank against loss. In the absence of special circumstances this phrase, costs and expenses, has been uniformly interpreted to include counsel fees. As the Utah court pointed out in Davidson v. Munsey, 29 Utah 181, 80 Pac. 743, the term “costs” has a well-understood meaning; so the use of the additional word “expenses” must mean something other than recoverable court costs. Attorney’s fees are an unavoidable incident to a lawsuit and therefore fall within the costs and expenses of the litigation that is being contemplated and provided for. Among many other cases holding that “costs and expenses” include attorney’s fees are In re Keystone Realty Holding Co., 3rd Cir., 117 F. 2d 1003; Fumiko Mitsuuchi v. Security-First Natl. Bank, 103 Cal. App. 2d 214, 229 P. 2d 376; State to the use of Mills v. Birkins, 32 Del. Ch. 39, 78 A. 2d 868; Burrage v. Bristol County, 210 Mass. 299, 96 N. E. 719; and In re Loudenslager’s Estate, 113 N. J. Eq. 418, 167 Atl. 194. I think the majority opinion to be contrary not only to the intention of the parties but also to the great weight of authority. Johnson, J., joins in this dissent.