24 Or. 28 | Or. | 1893
delivered the opinion of the court.
This is an action brought against the indorser of a promissory note, of which the following is a copy:
“ Ninety days after date, without grace, I promise to pay to the order of J. 0. McCaffrey three hundred and forty-seven no hundredths dollars in U. S. gold coin, at Portland, Or., with interest thereon in like gold coin at the rate of 10 per cent per annum from maturity until paid, for value received. Interest to be paid after maturity, and, if not so paid, the whole sum of both principal and interest to become immediately due and collectible, at the option of the holder of this note; and in case suit is instituted to collect this note or any portion thereof, I promise and agree to pay, in addition to the costs and disbursements provided by statute, such sum as the court may adjudge reasonable and just, in like gold coin, for attorney’s fees in said suit or action.
“M. P. Milburn, “489 Starr St., Albina.”
There are but two qtu flons presented on this appeal. First, does a stipulation m a promissory, note for the payment of a reasonable attorney’s fee in case of suit or action, destroy the negotiability of the instrument? and, second, if not, can such stipulation be enforced against an indorser ? Upon these questions the authorities are in hopeless and irreconcilable conflict. There is one line of cases which sustains the validity of the stipulation and negotiable character of the note; another, which denies the validity of the stipulation, thereby affirming the negotiability of the note; and still another, which seems to sustain the the stipulation, but denies the negotiability of the instrument.
In Peyser v. Cole, 11 Or. 39 (50 Am. Rep. 451; 4 Pac. Rep. 520), it was held by this court that such a stipulation is valid, and will be enforced, and this has become the settled law of this State, so that the only remaining question open for inquiry is whether we shall follow the authorities
From the position that a stipulation for a reasonable attorney’s fee in no way impairs the negotiability of a note, it would seem logically and necessarily to follow that the indorser of such a note is just as liable for the attorney’s fee as for the principal of the note. An indorser, by his contract of indorsement, promises, among other things that he will discharge the note according to its tenor, upon due presentment and notice. “It is a fresh, substantial contract,” says Mr. Daniels, “ embodying all the terms of the instrument indorsed, in itself”: 1 Daniel, Negotiable Instruments, § 669. And in Van Fleet v. Sledge, 45 Fed. Rep. 753, Mr. Justice Jackson, now of the supreme court of the United States, says: “The legal undertaking of the indorser is that he will pay the note if the maker fails to do so at maturity, upon proper demand made, and notice of such failure given, when not waived. When he passes the title to the paper to an endorsee for value with this undertaking, the sounder view seems to be that the indorser renders himself liable for the face of the note or bill.” Again, in Bank of British North America v. Ellis, 2 Fed. Rep. 44, in discussing the question now before us, Mr. Justice Deady uses the following language: “While there is a conflict in the authorities upon the question of whether an instrument, otherwise negotiable, that contains a stipulation for the payment of an attorney fee, is thus negotiable or not, no case has been cited which holds that such stipulation does not pass with the instrument, in case the same is deemed negotiable. * * * The maker of these notes having agreed to pay an attorney fee to the holder thereof, if the same were not paid without action, in my judgment, each subsequent party thereto assumed a like responsibility to such holders, and therefore the plaintiff is entitled to recover such fee from the defendants in this case.”
