Conford, Kilkenny and Lewis. The opinion of the court was delivered by Conford, S.j.a.d.
The principal question here is whether a party to a written agreement may bind himself, by express stipulation therein, to liability to the other for the reasonable legal expense of maintaining an action for breach of the agreement as part of the recoverable damages in the event of such breach. We decide that question in the affirmative.
Early in 1954 plaintiffs and other homeowners in the Borough of Fair Lawn brought an action to enjoin the defendant corporations from erecting certain buildings and from conducting certain commercial operations on their premises as allegedly in violation of the local zoning ordinance and as constituting a nuisance. Defendants countered with an action against plaintiffs and the others for malicious prosecution and abuse of process. The litigation was "settled" by the parties'
entry on June 10, 1954 into the agreement which is the subject of the present action. Under that agreement plaintiffs would withdraw objections to a pending application by defendants for a variance from the zoning ordinance and defendants would refrain from violation of the ordinance, would make no other applications for variances, and would take certain specific steps in regard to the operation of their business and as to certain physical appurtenances on their property, all to the apparent end of reducing the harmful effect of defendants' business on plaintiffs' enjoyment of their homes as residences.
Paragraph 21 of the agreement was as follows:
"21. It is agreed between the parties that if the parties of the first part shall be successful in any suit for damages for breach of this agreement or to enforce this agreement or to enjoin the Fair Lawn Dairies and/or Farmland-Fair Lawn from violating this agreement, the parties of the first part shall be entitled to recover as part of their damages their reasonable counsel fees for bringing and maintaining any such action. In the event that the parties of the first part shall be unsuccessful in such a suit for the violation of this agreement, the Fair Lawn Dairies and/or Farmland-Fair Lawn Dairies shall be entitled to recover as part of their damages from the parties of the first part their reasonable counsel fees in defending any such action."
In May 1962 plaintiffs brought the present action alleging violation by defendants of the 1954 agreement in a considerable number of particulars. The complaint sought specific performance, injunctive relief and damages. In the course of the proceedings plaintiffs waived money damages (aside from the claim for "counsel fees") but pressed for an injunction. After trial, the court partly granted and partly denied the relief sought. Subsequently, on motion, supported only by an affidavit by counsel as to services rendered, the court awarded plaintiff a "counsel fee" of $6,000, determined in the judgment to be "reasonable," and stated to be granted pursuant to the agreement. On the hearing of the motion defendants interposed no objection, merely requesting that the allowance be "reasonable."
Represented on this appeal by different counsel, defendants now urge: (1) the agreement of the parties in respect of fee is invalid because in contravention of the rules of court governing counsel fees; alternatively, (2) the reasonableness of the fee was not established at a hearing and the amount allowed was excessive.
Plaintiffs urge, preliminarily, that the repudiation by defendants of the agreement respecting fees for invalidity should not be entertained on appeal because it was not urged below. We regard this problem, however, as within the exception to the rule invoked which concerns issues involving matters of public policy. The subject matter of defendants' contention does involve an important problem in that ...