In re Harris

272 F. 351, 1921 U.S. Dist. LEXIS 1346

• Court: District Court, M.D. Pennsylvania
• Decided: May 2, 1921
• Docket: No. 3804
• Status: Published

Opinion

WITMER, District Judge.

The Miners’ Bank of Wilkes-Barre has brought here for review the order of the referee, disallowing portion of its claim proven, in so far as the same relates to attorney’s commission on a note held by the bank against the bankrupt and others.

A promissory note, dated April 27, 1916, for $16,500, with interest at 6 per cent., payable to the bank, was executed and delivered to it by Phillip Harris, Sr., William Plarris, and John Reese. The note contained a power of attorney to enter and confess judgment It also provided allowance for an attorney’s fee:

“An attorney’s foe of 5 per cent, if collected by legal process.”

May 6, 1916, judgment was entered on the note by confession in the court of common pleas of Luzerne county. February 5, 1918, $4,800 was paid on account pf principal. September 11, 1919, execution was issued and levy made on the real estate of Phillip Harris, Sr., which was afterwards stayed. November 3, 1919, execution was issued and levy made on real estate of John D. Reese, realizing by sale $3,000, which was applied, as follows': Sheriff’s costs, $143.40; taxes, $276.55; applied on judgment, $2,580.25. Phillip Harris, Sr., died, and his estate paid on distribution, April 9, 1920, $8,576.90, leaving a balance due on the judgment, exclusive of attorney’s fees, $l,521.5t). This balance was allowed and awarded to the bank. The contention is that a further sum of $585 is due and should have been allowed on the judgment and on account of the attorney’s fees.

[1] Where the holders of a note, providing allowance for attorney’9 fee, employ counsel to enforce collection, the commission stipulated in the instrument is usually allowed, unless such is highly exorbitant for such services rendered. The agreement of the parties, however, is of importance, and governs, as in all other business transactions.

[2] In the present case it was provided that an allowance of 5 per cent, should be added, if collected by legal proceedings. I take it that by this was meant that, in addition to the amount so collected, 5 per cent, should be added for counsel’s services. The amount of $3,000 was enforced by legal procéedings, and for such services the sum of $150 is due and may be added to the judgment.

- That the attorney’s fee was not incorporated and made part of the judgment on entry or revival is not important here. The fee attached to the judgment in the event of collection by legal proceedings in proportion to the amount collected, and became part of it as costs to which plaintiff is entitled.

[3] Referring to the money obtained from the estate of Phillip Harris, Sr., and credited on the judgment, it may be noted that, since it does not appear that the same was obtained through legal proceedings, in which services by attorney were required, there' can be no allowance on account.

[4] As to the balance allowed by the referee out of the bankrupt estate, no allowance is made, because the services of attorney, if any, were not required, nor had compensation for such services matured before bankruptcy proceedings were instituted. In re Gebhard (D. C.) 140 Fed. 571; In re Garlington (D. C.) 115 Fed. 999; In re Keeton, Stell & Co. (D. C.) 126 Fed. 429; In re Milling Co. (D. C.) 16 Am. Bankr. Rep. 456, 144 Fed. 314.

The report is referred bade to the referee, to make distribution agreeably, as herein indicated.