114 S.W. 887 | Tex. App. | 1908
On February 14, 1905, at the suit of I. L. Campbell and S. M. Campbell, who represented themselves to be creditors and stockholders of each of the corporations named, S. F. Carter and W. H. Norris were appointed receivers of the J. I. Campbell Company, the Tyler County Land Lumber Company, and the Warren Corsicana Pacific Railway Company, upon allegations that each of said corporations was in imminent danger of insolvency. Carter having resigned, Norris was appointed sole receiver. The First National Bank of Houston filed its plea of intervention, claiming that the J. I. Campbell Company was indebted to it in a large amount, specifying the different items of indebtedness, and that said indebtedness was secured by certain promissory notes of the Tyler County Land Lumber Company aggregating $90,000, which said notes were secured by a vendor's lien upon all the lands, mills and other property of said company, and the Campbell Company indebtedness was further secured by 508 shares of the capital stock of the Yellow Pine Lumber Co., and 993 shares of the capital stock of the Warren Corsicana Pacific Railway Company, each of said shares of the face value of $100. *448
The receiver answered by general and special exceptions and general denial, and specially denied the liability for interest after the appointment of the receiver, and for attorney's fees. The claim of intervener included ten percent attorney's fees on the amount of the indebtedness of the Campbell Company, and also upon the collateral notes of the Lumber Company, and interest on the notes according to the contract rate.
The intervention was referred to the Master, who recommended the allowance of the claim of the bank against the Campbell Company, including interest and attorney's fees, and also of the claim on the collateral notes of the Lumber Company, including interest and attorney's fees. The receiver excepted to so much of the Master's report as allowed interest accruing after the appointment of the receiver, and to so much of the report as allowed any attorney's fees on either the principal notes of the Campbell Company or the collateral notes of the Lumber Company. Upon a hearing of the Master's report and the exceptions thereto, the court sustained exceptions to so much of the report as allowed interest on any of the notes after the appointment of the receiver, and attorney's fees on the collateral notes of the Lumber Company, rendering judgment for principal and interest only to the date of the appointment of the receiver, and attorney's fees only upon the original indebtedness of the Campbell Company. From this judgment the bank appeals and the rulings complained of are presented by proper assignments of error. The receiver also by cross-assignment complains of the ruling of the court in allowing attorney's fees upon the principal indebtedness of the Campbell Company.
The trial court filed its conclusions of fact and law, which are very full. None of the findings of fact are attacked by either party.
The facts, so far as is material to a decision of the questions presented by this appeal, are substantially as follows:
The Campbell Company executed to appellant its certain promissory notes at different times aggregating the sum of over $100,000 and bearing interest, some of them from date and others from maturity, until paid, at different rates, some at seven, some at eight, and some at ten percent per annum. Of these notes some matured before and the others shortly after February 14, 1905, which was the date of the appointment of the receiver. There was also a small amount of indebtedness other than that evidenced by the notes.
The notes provided for the payment of interest until paid, some from date and others from maturity, at different rates percent, and each of them also contained a provision for the payment of ten percent additional on the full amount due if the same was placed in the hands of an attorney for collection. The dates, amounts, etc., of the different items of indebtedness are fully set out in the findings, but a more specific finding is not necessary here.
The Campbell Company transferred and assigned to appellant, as collateral security for any and all indebtedness then existing or that might thereafter exist, 508 shares of the capital stock of the Texas Yellow Pine Lumber Company and 993 shares of the capital stock *449 of the Warren Corsicana Pacific Railway Company, each share of said assigned stock of the face value of $100.
The Campbell Company had, on September 30, 1904, sold and conveyed to the Tyler County Land Lumber Company certain land, mills and other property, fully described in the findings, the consideration being $115,811.50, of which $25,811.50 was paid in cash, and for the balance the Lumber Company executed its forty-five promissory notes for $2,000 each, dated September 30, 1904, payable to the order of the Campbell Company, with interest from date until paid at eight percent per annum, and also providing for the payment of ten percent additional on the full amount due if placed in the hands of an attorney for collection. There was reserved in the deed a lien on the property conveyed to secure the payment of said notes, "together with the principal, interest and attorney's fees." The first two of said notes matured respectively on the 1st and 15th of December, 1904, and the remainder matured respectively one each on the 1st and 15th of each succeeding month up to and including the 1st of October, 1906. These notes of the Lumber Company were pledged and delivered by the Campbell Company to appellant primarily for the security of a certain note for $32,500, given by it to appellant, being one of the promissory notes constituting the indebtedness of the Campbell Company to appellant heretofore referred to, and secondarily, for the security of all other indebtedness due by it to appellant.
On the day the receiver was appointed, all of the notes aforesaid, both the principal notes and the collateral notes of the Lumber Company, were by appellant placed in the hands of an attorney for collection, and appellant agreed with said attorney that he should have the ten percent attorney's fees provided in the notes. The court finds that it is necessary for the appellant to collect said notes by intervention in this cause. All of the notes are unpaid.
The first four assignments of error present the question of the refusal of the court to allow interest upon the promissory notes of the Campbell Company and the collateral notes of the Lumber Company after the date of the appointment of the receiver. Appellant's contention can be best expressed in the language of his two propositions under these assignments.
"When interest is expressly provided for in a note, it becomes part of the debt, and is recoverable as of right. It is an integral part of the debt, as much so as the principal debt itself, and in such cases the court has no authority to refuse to enter judgment for the interest stipulated for in the contract."
"In the distribution of the proceeds of a common security between liens of different priorities, interest can not be stopped on the amount of the superior lien until its satisfaction, even in a case where the estate is insolvent and there is no contract to pay interest."
The contrary view contended for by appellee and adopted by the court is thus expressed in two counter-propositions:
"The claims of creditors were presentable when the receivers were appointed; that date fixes their status and amount, regardless of *450 when they were in fact presented by intervention or otherwise, and no interest thereafter accruing can be allowed."
"The property of the defendant companies having been, by order of court, taken from their possession and placed in the hands of a receiver, whereby they were prevented from using same in payment of their indebtedness, they are not liable for interest accruing during the time the property has been, or may be, in the hands of the receiver."
We have been unable to deduce any fixed and settled rule applicable to the questions presented from the authorities. The question, so far as we have been able to find, is one of first impression in this State, with the exception of certain expressions in the opinion by Chief Justice Fisher in the case of Brazelton Johnson v. J. I. Campbell Co., 49 Texas Civ. App. 218[
In the case of Central Trust Company v. Condon, decided by the Circuit Court of Appeals of the United States, the facts are quite complicated and the opinion involves a discussion of many different questions. The point in question arose upon the allowance of interest upon the claim of a principal contractor, which was a preferred claim, secured by lien, and constituted the fund out of which certain subcontractors' claims were to be paid, being insufficient, however, to pay them in full. It was held that interest should be allowed on this claim to satisfaction and that the security and priority of the lien attached as well to the interest as the principal. The court says: "This is not a case where the distribution is to be madepro rata between the lienholders and bondholders, in which case, of course, interest is not to be calculated after the time of the sequestration of the property for sale and distribution so long as the claims can not be paid in full. In the distribution of the proceeds *451 of a common security between liens of different priorities, we know of no principle by which interest can be stopped on the amount of the superior lien until its satisfaction. As between the bondholders and the lienholders, the lienholders are entitled to interest to the day of payment."
The question also arose in Richmond I. Const. Co. v. Richmond N. I. B. Co., a case decided by the same court, the court adhering to the view expressed in the Condon case. In the opinion in this case, Thomas v. Western Car Co. (
"The language relied upon in support of the decree disallowing interest, from the opinion in Thomas v. Western Car Co., that 'as a general rule, after property of an insolvent passes into the hands of a receiver, or of an assignee in insolvency, interest is not allowable on the claims against the funds,' was not a point upon which that case turned, and was doubtless intended to apply only to a case where the fund is insufficient to pay all, and the creditors are all of the same rank, as in the distribution of the assets of an insolvent bank, as in White v. Knox,
In Jourolmon v. Ewing, supra, a case decided by the same court, it was again held that "when a fund in court is subject to lien claims of different priorities, the holders thereof are entitled to interest to the date of the decree."
We find the general principle stated in several cases as quoted from the opinion of the Supreme Court of the United States in Thomas v. Western Car Co. (Bowman v. Wilson, 12 Fed., 864; Grand Trunk Ry. Co. v. Central Vermont Ry. Co., 91 Fed., 569).
The distinction between creditors with and without liens, in favor of lien creditors to be paid principal and interest so far as it can be done out of the proceeds of the security, is recognized in Solomons v. American Building Loan Assn. (116 Fed., 676), cited by appellee. Interest, however, was refused after the appointment of the receiver on the ground that the creditor was not seeking to enforce his lien, but to be paid out of the general fund.
With the exception of People v. American Loan Trust Co. (
This case may possibly be distinguished from the one under consideration upon the terms of the statute granting the preference. As expressed in the opinion, "As the statute does not say that preferred claims shall be paid with interest to the date of payment, the courts should not, because the claims of substantially all the creditors, both preferred and unpreferred, were all alike in origin, for they were created by the deposit of money; and preference in derogation of the common law should not be extended by construction beyond the express commands of the statute." We are not inclined, however, to distinguish this case, but to construe it as directly supporting the contention of appellee in the present case. In such case we prefer to follow the decisions of the Federal Circuit Court of Appeals, heretofore considered, as more in accord with established general principles.
Appellant in the present case is in no way responsible for the delay in payment of its debt. It had prudently taken the precaution to take security for interest as well as principal. Under all of the authorities the interest contracted for is a part of the debt, as much so as the principal. (16 Am. Eng. Ency. of Law, 1096; Redfield v. Ystalyfera Iron Co.,
Our conclusion is that the court erred in sustaining the exceptions to the Master's report in the matter of the allowance of interest on the principal notes of the Campbell Company and the collateral notes of the Lumber Company, and that such interest should be allowed *453 and paid, so far as it can be done out of the proceeds of the securities, to date of payment. No interest, however, should be allowed to be paid out of the general fund after the date of the appointment of the receiver unless there should be, after all the debts and expenses of receivership are paid, a surplus to be returned to the stockholders of the respective corporations, in which case interest should be paid in full to date of payment out of such surplus, if not fully satisfied out of the proceeds of the securities. The rule, where applicable, that interest ceases to run when the court takes charge of the property by a receiver, only applies insofar as a distribution of the assets in his hands among the creditors is concerned, and can not be used to protect the corporation from full liability, if it proves to be in fact not insolvent. The assignments of error referred to must be sustained.
The fifth, sixth and seventh assignments of error present the question of the right of appellant to recover attorney's fees as part of his debt, on the collateral notes of the Tyler Land Lumber Company. The court found that each of these notes provided for the payment of ten percent additional on the full amount due "if placed in the hands of an attorney for collection; that they were placed in the hands of an attorney for collection on the day the receiver was appointed; that appellant agreed with the attorney to pay him the ten percent as attorney's fees, and that it was necessary to intervene in this suit in order to collect the same." It was also found that the lien given by the Lumber Company was to secure the payment of the notes, principal, interest and attorney's fees. The trial court refused to allow the attorney's fees on these notes. This, we think, was error. When under the stipulations of the contract, the notes were placed in the hands of an attorney for collection the attorney's fees became a part of the debt. (Martin Brown Co. v. Perrill,
It has been held by this court that a contract to pay attorney's fees is a contract of indemnity, and not for liquidated damages; that the creditor can only recover such portion of the attorney's fees provided for as he has obligated himself to pay, or in the absence of such contract, such as are reasonable. But if he has agreed with the attorney to pay the entire amount stipulated in the notes, in the absence of fraud or collusion, the debtor could not defeat the collection of this amount on the ground that it was unreasonable. (Dunovant's Estate v. Stafford,
By cross-assignment appellees question the correctness of the judgment in allowing attorney's fees upon the Campbell Company notes. What we have said is sufficient to indicate our views on the point. The cross-assignment is therefore overruled.
For the errors indicated the judgment is reversed and the cause remanded, with instructions to the trial court to allow interest and attorney's fees upon all the notes in accordance with their terms to be satisfied out of the proceeds of the securities respectively. In the event said proceeds are insufficient to pay said entire amount, then the same shall be prorated between the amount due as principal, interest up to the date of the appointment of a receiver, and attorney's fees, and the amount of interest accruing after said date, in the proportion which said respective amounts bear to their sum, and the balance remaining due of the first amount only to be a charge on the general fund. But if there should be, after payment in full of all claims and expenses, a surplus to be returned to the stockholders, then all interest to date of payment shall be paid before any surplus is returned to them.
Reversed and remanded.