Johnston v. Speer

Mr. Justice Gordon

delivered the opinion of the court, January 5th 1880.

If there is anything positively settled with reference to an agreement, in a bond, mortgage or note, for the payment of a fixed sum as attorney’s commissions, it is that the sum so fixed belongs to the payee or mortgagee as a compensation for the expenses and trouble he may incur in the collection of the claim. It does not belong to. the attorney who collects such claim, and it is not part of the costs of the case: Faulkner v. Wilson, 3 W. N. C. 339.

In Robinson v. Loomis, 1 P. F. Smith 78, it was held that such an agreement could not be regarded as a penalty, but as an agreed; compensation for expenses incurred by the mortgagee in consequence of the default of the mortgagor. According to this doctrine, the stipulation for attorney’s commissions would amount to air agreement for stipulated damages, over which the courts would have no control, as, in such case, the agreement of the parties would be the law of the case: Westerman v. Means, 2 P. F. Smith 97.

Following this rule, the agreement, in this case, for blank attorney’s commissions, amounts to nothing, for the blank could be filled only by the subsequent agreement of the parties, and until so filled it would have no force whatever.

But in Daly v. Maitland, 7 Norris 384, a somewhat different doctrine is held; for Mr. Justice Sharswood, in delivering the opinion in that case, says : “ This principle of liquidated damages is not applicable, however, to a contract for a loan of money; at least, such stipulation is subject to the control of courts of equity.” The effect of this decision is to give the agreement for commissions *229 the character of a penalty, or of a stipulation that damages shall not exceed a certain amount. If we adopt this rule, then a stipulation to pay attorneys’ commissions would be equivalent to a contract to pay damages, — reasonable damages, or such damages, as a court, at its discretion, might fix.

However this may be,' there is one thing about which we feel little doubt: that is, that uncertain stipulations of this kind ought to have no place in negotiable paper. As was said in Woods v. North, 3 Norris 407, “ It is a necessary quality of negotiable paper that it should be simple, certain, unconditional; not subject to any contingency.” It is certain that the note in suit does not meet the conditions above prescribed, for in any event, the question what the parties meant by the blank is an open one, and may have to be settled by oral testimony.

Judgment affirmed.