Gaither v. Tolson

Bryan, J., delivered the opinion of the Court. The question in this case is of considerable interest. James S. Cockey and others mortgaged certain land to Thomas H. Gaither for seven thousand dollars. In course of time it became necessary to sell the land for the payment of the debt; and for the purpose of having a sale made, the mortgagee assigned the mortgage to George R. Gaither, Jr., attorney at law, by writing under his hand and seal.

This assignment is dated May the second, eighteen hundred and ninéty-five. The mortgagee had in the previous February placed the mortgage debt in the hands of Gaither & Clabaugh, a law firm, for collection by foreclosure. Mr. George R. Gaither, Jr., is a member of this firm. The land was sold and the sale duly ratified.

The auditor allowed among other claims the trustee’s commissions amounting to four hundred and two dollars to George R. Gaither, Jr., who made the sale, and attorney’s commissions for collecting the debt, amounting to three hundred and seventy-seven dollars and some cents, to Gaither and Clabaugh. Mrs. Tolson, the holder of a second mortgage, filed an exception to the allowance of the attorney’s commissions, and the exception was sustained by the Court. The mortgagors covenanted in the mortgage among other things to pay the debt and interest intended to be secured by it; all costs and attorney’s commissions incurred in the collection of it, or any part thereof, and all prior liens on the property. And it was provided that the proceeds of sale should be applied, first, to the payment of all prior liens, and secondly, to the payment “ of all expenses incident to the sale, including compensation to the person making the ⁶³⁹ sale as to trustees in equity” and afterwards all money "owing hereunder,” and then the balance to the mortgagors.

There has been no objection to the payment of the compensation for making the sale. As determined in Johnson v. Glenn, 80 Md. 369 , this compensation could not have been claimed in the absence of any agreement to that effect by by the parties. But the validity of agreements of this kind may be considered as firmly established by repeated decisions of this Conrt. In Bowie v. Hall, 69 Md. 434 , the Court upheld a stipulation made in a note for the payment of money, that the debtor should pay “ all cost or expense of collecting the same, including attorneys’ commissions.” It was there said, " Parties have the right to make their contracts in what form they please, provided they consist with the law of the land, and it is the duty of the Courts so to construe them, if possible, as to maintain them in their integrity and entirety.” And it was also said that the effect of the particular contract then in question "was not to put any money above the legal rate of interest into the pocket of the lender, but merely to enable him to get back his money with legal interest and no more.” The covenant in the mortgage to pay attorneys’ commissions must then be considered as sanctioned by the opinion of the Court.

The agreed statement of facts informs us that the mortgagee, in February, eighteen hundred and ninety-five, employed Gaither and Clabaugh to collect the debt by foreclosure. As soon as this employment was made and accepted, mutual duties, rights and obligations arose between the parties. The attorneys were bound to exert their skill, knowledge and diligence in the collection of the debt; and they became responsible pecuniarily for the performance of their contract. On the other hand, the mortgagee at the same time became responsible to them for the payment of their reasonable fees when the money should be collected.

He had provided himself by the covenant in the mortgage with an adequate resource for this payment; and they had agreed that their fees should be paid in this way. But this circumstance did ⁶⁴⁰ not affect the nature of the contract, or impair or vary in any way the duty which the attorneys were bound to perform. It is not unusual when an attorney receives a claim for collection for him to look for the payment of his fees exclusively to the sum collected. Fees for collection are understood to mean fees to be paid when the debt is collected.

Certainly an express contract to this effect can work no change in the relations of -the parties. Now, it was the duty of the attorneys to take care that the land should be sold under mortgage proceedings, and, if practicable, that it should bring such a price that the portion of the proceeds of sale applicable to the payment of the mortgage debt should