Guernsey v. Marks

Opinion by Mr. Chief Justice Moore.

It is maintained that the mortgage herein was executed to indemnify the plaintiff against any liability that he might incur by being compelled to pay the promissory note given by him and J. E. Marks to the Grant County Bank, but, as the plaintiff voluntarily discharged that note, his attempt to subject the defendants to the costs and disbursements incident to his suit is a violation of his agreement, and, such being the case, paragraphs 5 and 6 of the answer constituted a valid defense, and an error was committed in striking them out.

1. Considering the averments of paragraph 5 of the answer, no statute of this State requires the holder of a matured promissory note to bring proceedings thereon against the principal debtor, upon notice by or request of the surety, who in the absence of such statute may pay the debt, and thereupon maintain an action against the principal to recover the money so disbursed, with interest thereon. Dan. Neg. Ins. (5 ed.), § 1339; Tiedeman, Com. Paper, § 426; 27 Am. & Eng. Ency. Law (2 *327 ed.), 468. “The surety or guarantor who has paid the debt of the principal,” says an author, “may maintain an action of assumpsit against the principal for money paid at his request.” Brandt, Suretyship & Guar. (3 ed.), §229.

2. A well-recognized distinction exists as to the time when a surety may maintain an action against his principal, depending upon the terms of the contract. Thus, an agreement of indemnity given generally to save harmless from all loss or damage will affect a right of action only where the surety has been actually damnified by being compelled by legal process to pay the debt of his principal. Where, however, the contract is special, as that the principal shall pay a certain debt at a specified time, the surety can maintain an action when the principal makes default, even before he is called upon to pay as surety. 32 Cyc. 247; Brentnal v. Holmes, 1 Root (Conn.) 291 ( 1 Am. Dec. 44 ) ; Wright v. Whiting, 40 Barb. (N. Y.) 235.

In the case at bar, the contract of indemnity was special, in that it stipulated for the payment of $250 to the Grant County Bank in three months from March 2, 1907. The mortgage herein was given pursuant to such agreement, though not expressed, that J. E. Marks would pay such sum when the debt matured, June 2, 1907, and thereby relieve the plaintiff from the liability which he had incurred by becoming an accommodation maker of the note. Marks was in default more than a year when the plaintiff, on September 11, 1908, paid the sum, which, with interest, was awarded to him by the decree herein. The plaintiff therefore had the right voluntarily to pay the demand, and, having done so, was authorized to foreclose the lien of the mortgage. Jones, Mort. (6 ed.), § 1213.

3. It is not stated in paragraph 6 of the answer when the bank became indebted to Marks, or that he requested *328 any officer thereof to satisfy his note from such credit, and in the absence of a demand therefor the bank was not required to appropriate the indebtedness in that manner. Morse, Banking (3 ed.), § 559; London & San Francisco Bank v. Parrott, 125 Cal. 472 ( 58 Pac. 164 : 73 Am. St. Rep. 64 ) ; Camp v. First Nat. Bank, 44 Fla. 497 ( 33 South. 241 : 103 Am. St. Rep. 173 ). If, on June 2, 1907, the bank did not have sufficient of Marks’ funds with which to discharge his note, subsequent deposits made by him were not required to be credited thereto without his demand therefor. Bacon’s Administrator v. Bacon’s Trustees, 94 Va. 686 ( 27 S. E. 576 ).

The paragraphs of the answer to which attention has been called, not having stated facts necessary to make the indebtedness alleged therein applicable to the payment of the note held by the bank, no error was committed in striking out these parts of the defendants’ pleading.

4. The answer having denied the averments of the complaint, it is maintained that an error was committed in awarding to the plaintiff any attorney’s fees when no testimony was offered tending to show what sum, if any, would have been reasonable on account thereof. It is insisted by plaintiff’s counsel, however, that rule 17 of the trial court, respecting such matters, governed the procedure and rendered it unnecessary to offer any evidence on the subject. That rule is as follows:

“In all actions or suits based upon contracts in writing providing for attorney’s fees in which judgment or decree is obtained without litigation, and in which an attorney’s fee is allowed by the court, the amount of such fee shall be determined as follows, viz.: Ten per cent on sums not exceeding $500.00; seven per cent on excess of $500.00 up to $1,000.00,” etc.

In the absence of such rule, unless testimony was received, or a stipulation made, relating to the subject, the court would have been powerless to make a finding or to render a decree thereon. Bowles v. Doble, 11 Or. *329 474, 482 ( 5 Pac. 918 ) ; Bradtfeldt v. Cooke, 27 Or. 194, 204 ( 40 Pac. 1 : 50 Am. St. Rep. 701 ). “The law of evidence,” say v the editors of the Encyclopedia of Pleading and Practice (volume 18, p. 1249), “cannot be altered by rule, but it has been held that the courts may adopt rules dispensing with the proof of averments contained in the pleadings where such averments have not been specifially denied.”

The phrase, “without litigation,” in the rule quoted, evidently means that where no controversy exists respecting the reasonableness of an attorney’s fee, as stipulated for in a written contract, the sum awarded therefor shall be based on the ratio of the amount of money involved. When, however, an issue is tendered on thát subject, it is incumbent upon the plaintiff to offer evidence in support of the averments of the complaint. As the reasonableness of the sum demanded was denied in the answer and as no proof was offered by the plaintiff tending to show what sum would have been reasonable as an attorney’s fee, an error was committed in awarding any more than the statute prescribes for that purpose.

The decree will therefore be modified by striking out the sum so allowed as attorney’s fees, but in all other particulars it is affirmed. Modified.