W. S. McCORNICK, Doing Business as McCORNICK & CO., Respondent, v. J. M. SWEM and O. H. SONNE, Appellants.

No. 1974. Decided June 12, 1909 (102 Pac. 626).

1. BILLS AND NOTES-ACTION BY INDORSEE-DEFENSES. Where, in an action on a note by an indorsee, the presumptions created by Comp. Laws 1907, sec. 1578, 1608, 1609, 1611, that he was an indorsee before maturity for value and in good faith, were not overcome, the defense of partial failure of consideration was properly rejected. (Page 9.)

2. BILLS AND NOTES-NEGOTIABLE NOTE-STIPULATION FOR ATTORNEY'S FEES-EFFECT. Under Comp. Laws 1907, sec. 1554, providing that a provision in a note for an attorney's fee does not make the amount to be paid uncertain, a provision in a note by which the maker agrees to pay a reasonable sum as an attorney's fee does not render the note non-negotiable. (Page 11.)

3. BILLS AND NOTES-STIPULATION FOR PAYMENT OF ATTORNEY'S FEES. A provision in a note for an attorney's fee, but leaving blank the amount thereof, amounts to a promise to pay a reasonable sum as an attorney's fee. (Page 11.)

4. BILLS AND NOTES-RECOVERY OF ATTORNEY'S FEES. A plaintiff, in an action on a note stipulating for a reasonable attorney's fee, who employed an attorney, who conducted the case, need not to recover an attorney's fee prove an express agreement with his attorney as to fees, or that he paid the attorney a specified sum before suit was commenced. (Page 12.)

5. BILLS AND NOTES-ATTORNEY'S FEES-STIPULATIONS-EFFECT. The amount of the attorney's fee stipulated for in a note should be allowed, unless it is unjust, oppressive, or unreasonable in view of the circumstances. (Page 13.)

6. BILLS AND NOTES-ALLOWANCE OF ATTORNEY'S FEES. The court in an action on a note for $1167 on which $791.22 had been paid, stipulating for a reasonable attorney's fee, defended on the ground that plaintiff was not a bona fide holder, but held the note subject to defenses, may, on plaintiff proving that $75 is a reasonable attorney's fee, allow such sum as an attorney's fee. (Page 13.)

7. BILLS AND NOTES-ISSUES EVIDENCE. Where, in an action on a note, the issue was whether a stipulation in a note provided for the payment of an attorney's fee, the testimony of the maker

that, before or at the time of the signing of the note, it was understood that it should not provide for an attorney's fee, was properly disregarded. (Page 13.)

APPEAL from District Court, Third District; Hon. T. D. Lewis, Judge.

Action on promissory note. From a judgment for plaintiff, defendant appealed.

AFFIRMED.

H. J. Dinniny for appellants.

Henderson, Pierce, Critchlow & Barrette for respondent. FRICK, J.

Respondent, in his complaint, in substance, alleged: That on the 1st day of September, 1904, appellants, at Salt Lake City, Utah, executed and delivered their certain promissory note for the sum of $1167, payable in four months from said date, to the order of the Northern Light Mining & Milling Company, a corporation, at McCornick & Co.'s Bank, in Salt Lake City, with interest at 10 per cent. per annum. The note also contained the following provision: "In case this note is collected by an attorney, either with or without suit, we hereby agree to pay dollars attorney fee." It was further alleged: "That, immediately upon the execution and delivery of said note, the same was, before maturity, for a valuable consideration, and in good faith, purchased by this plaintiff (respondent) from the payee thereof, which payee duly indorsed and delivered the same, and plaintiff is now and ever since has been the owner and holder of the same;" that no part of the principal or interest of said note has been paid except the sum of $791.22; that $100 is a reasonable attorney's fee. Respondent prayed judgment for the balance due on said note, and for the attorney's fee aforesaid. Appellants, in their answer, admitted the execution, delivery, endorsement, and transfer of the note, as alleged in the complaint. They, however, denied that respondent

purchased the note in good faith, but alleged that said note was secured by plaintiff (respondent) under the circumstances, and with the knowledge of the consideration thereof hereinafter set forth. The appellants also denied that $100 was a reasonable attorney's fee, and alleged "that said note does not provide for any attorney's fee whatever." Appellants, further, in substance, alleged: That the note in question, with two other notes of equal amounts, were given as the purchase price of a certain mill building, and for certain machinery, tools, and appliances therein owned by the Northern Light Mining & Milling Company, the payee; that said company, at the time of the execution of said note, was indebted to respondent in a sum in excess of the purchase price evidenced by said three notes; that said notes, including the one in question, were endorsed and delivered by said company to respondent in payment of the indebtedness aforesaid; that respondent obtained and received said notes in that way and for that purpose; that the respondent at the time of the making and indorsement of said notes knew what the consideration, for which the same were given, was, and knew the terms and conditions of the sale which was evidenced in writing in the form of an ordinary bill of sale, and knew that the title to said property did not pass to appellants until said notes were fully paid; that whatever property appellants received under said bill of sale was received by them through the order of respondent; that they did not receive all of the property mentioned in said bill of sale; but that certain articles duly specified and of the value of $375, which were included in said bill of sale, were never received by appellants, although they at divers times demanded the same from both the respondent and said company. Appellants therefore ask to be given credit for $375 on the amount found due on said note. At the trial, after introducing the note in evidence and proving, over appellants' objections, that $75 was a reasonable attorney's fee, respondent rested. Appellants then attempted to show what the consideration for the note was, to which respondent objected upon the ground that appellants had admitted in their an

swer the indorsement and delivery of the note to respondent before maturity, for value, and had not alleged bad faith, or knowledge on the part of respondent of any failure of consideration, or infirmity in the note. The attorney for the appellants then offered to prove, in effect, that the respondent, at the time the note was indorsed to and received by him, had agreed to deliver the property mentioned in tho bill of sale, which was admitted had been delivered to him with the notes. The court permitted appellants to make their proof without formal amendment of the answer, with the understanding that, that, if the evidence was sufficient to establish the facts stated by counsel, the amendment to the answer would then be allowed. The appellants presented all the evidence they had upon the offers aforesaid; but the court was of the opinion that the evidence they had adduced was insufficient: (1) In that it did not overcome the presumption that the respondent was a holder as indorsee before maturity for value, in good faith, without notice of any infirmity; and (2) that the evidence failed to establish an agreement by respondent that he would deliver the property for which the note was given, or that he was connected with the contract of sale, further than that it was delivered to him with the notes, and he had thus permitted appellants to remove and sell the property for the purpose of obtaining the money to pay the notes. The court therefore refused the amendment, and further sustained respondent's objections to the offer of appellant to prove that the articles claimed not to have been received by them were of the value of $385. The parties in open court waived findings of fact and conclusions of law, and the court rendered judgment for respondent for $503.13 as the balance due as principal and interest on said note, and for $75 as attorney's fee, and for costs. Upon substantially the foregoing record the case is brought to this court on appeal.

The first assignment of error relates to the ruling of the court that the evidence adduced by appellants did not estabish the alleged agreement, namely, that respondent had agreed to deliver the property mentioned in the

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bill of sale. Without referring to the evidence in detail, we are clearly of the opinion that the conclusion of the court that the evidence adduced by appellants did not establish such an agreement nor connect the respondent with the original agreement of sale so as to admit the defense of a partial failure of consideration against him, was right. Nor is the assignment tenable that the court erred in not sustaining the defense of a partial failure of consideration, upon the ground that respondent was not an indorsee, before maturity, for value, and in good faith. In this regard the presumptions arising in favor of respondent, by virtue of sections 1578, 1608, 1609, and 1611, Comp. Laws 1907, were not overcome by any evidence adduced or offered by appellants, and hence the court was right in not considering this defense.

Appellants' counsel further insists that the note in question was non-negotiable upon its face because, if it provided for an attorney's fee at all, it was for an indefinite and uncertain sum, and hence destroyed the certainty required in negotiable instruments. Before the adoption of the so-called "negotiable instruments law," the authorities upon this question were in hopeless conflict with, perhaps, the greater number of cases in favor of holding promissory notes containing attorney's fee clauses as negotiable. Since the adoption of that law by a large number of states, including Utah, the holdings have become more uniform, and it is now generally held that a provision in a promissory note that the maker thereof will pay a specific amount named, or a certain per cent. of the amount due, or a reasonable amount, as an attorney's fee, does not affect either the certainty or the negotiability of the instrument. (Selover, Negotiable Instruments Law, section 68; Eaton & Gilbert on Commercial Paper, 204-207.) A large number of cases are collated by the authors in the footnotes to which we refer the reader. See, also, upon the subject generally, 1 Daniels on Negotiable Instruments, sections 62, 63a; 4 A. and E. Ency. of Law (2 Ed.), 98, 102; 7 Cyc.

584.

It is true that this court, in the case of Lippincott v. Rich, 22 Utah 196, 61 Pac. 526, under a statute different from the