Town of Middletown v. Rondout & Oswego Railroad

Learned, J. This action is brought in behalf of the plaintiff and all other stockholders, against the railroad company, its directors, and Messrs. Green and Satterlee. The complaint alleges that the plaintiff prosecuted “by the direction of certain persons who are commissioners of the plaintiff,” under what is called the bonding act. It alleges that the railroad company have entered into a certain contract for construction with defendants, Green and Satterlee, and it asks that the contract be annulled, and that both a temporary and a final injunction be granted against carrying it into execution. The grounds of this relief are four: First, that the contract is exorbitant; second, that it is in violation of an agreement between the railroad company and plaintiff; third, that it contains a lease of the road for ten years; and fourth, that Green and Satterlee are pecuniarily unable to perform their agreement. — 278 — The complaint is verified in the usual form by three persons, who state that they are commissioners of the plaintiff. It has attached to it also a verification, in' the usual form, by a person not a party to the- action, and also an affidavit by one of the attorneys as to the truth of the facts relative to the aforesaid agreement. The allegations in the complaint, as to all the terms and conditions of the contract, are on information and belief; those as to the pecuniary ability of Green and Satterlee are on information only. Upon these papers an injunction order was granted on February 5, 1872, by tire county judge of Ulster county, the place of trial, enjoining the defendants from executing or consummating a lease or sale of the railroad, its property or franchises, or any part thereof, or any interest therein, to Green and Satterlee, or any other person ; and concluding as follows : “Until the further order of the court in the premises, and you are hereby further required to show cause before me at my office in the village of Rondout, on February 14,. 1872, at ten o’clock A. m., why this order should not be continued.” On February 14, neither plaintiffs nor defendants appeared (i. e., in the legal sense) before the county judge, and no further order was then or has since been made by him in the matter. The. defendants, Green and Satterlee, by their attorneys appearing especially for this motion, and the other defendants by their attorneys appearing in like manner, now move to vacate the injunction, and for other relief, on the original papers, and also on affidavits served, and the plaintiffs read other affidavits in reply. The grounds of these motions are several, and it will be necessary to examine them in detail. Preliminarily, however, the plaintiffs object that such a motion cannot be made before answer. This was a general but not an inflexible rule, under the old — 279 — practice (Mallett v. Weybosset Bank, 1 Barb., 217). But the language of section 225, which authorizes the defendant to make the motion “with or without the answer,”' has, I think, established a different rule. The plaintiff urges that this section means only that, in making the motion, the defendant may or may not use the answer which he has served. But if he may make the motion without using his answer, what need is there of waiting until his answer has been put in ? Under the present practice, injunctions are to be granted and dissolved upon affidavits, and it is only as an affidavit that the answer is used on a motion to dissolve. This subject is so fully and clearly discussed by Judge Woodruff, in Fowler v. Burns (7 Bosw., 637), that I need only refer to that case. I do not think that the preliminary objection can prevail. The defendants urge that the injunction order is irregular, in that it requires the defendants to show cause before the county judge. It is to be observed, at the outset, that an order to show cause is only equivalent to a short notice of motion (Code, § 402; Parmenter Roth, 9 Abb. Pr. N. S., 385, 393). The party obtaining the order is the moving party on the hearing (New York & Harlem R. R. Co. v. Mayor, 1 Hilt., 562; Thompson v. Erie Railway Co., 9 Abb. Pr. N. S., 233, 238). The hearing, therefore, ordered to be had before the county judge on February 14, was the hearing of a motion on notice. What is called an injunction is expressly an order (§ 218). It is also within the general definition (§ 400). An application for an order is a motion (§ 401). A county judge has no jurisdiction to hear or decide a contested motion. His power extends only to such orders as are made out of court, and withou’t notice (Parmenter v. Roth, 9 Abb. Pr. N. S., 385; Rogers v. McElhone, 20 How. Pr., 441; S. C., 12 Abb. Pr., — 280 — 292). It is said on the part of the plaintiff that these decisions do not apply to the granting of injunction orders. The statement of the doctrine, however, by the court of appeals, is not restricted. The power of the county judge, they say, is limited to a class of orders which may be made without notice, and to which the applicant exhibits a right so plain that the judge is willing to grant the order without notice. But when the case is not so clear, the judge may require notice or grant an order to show cause. The application then becomes a special motion, and it can only be heard and decided by ■ a judge of the court in which the action is pending. See Parmenter v. Roth (9 Abb. Pr. N. S., 385, 393). In the case of injunction orders, a power to grant them is given by section 218 to the court, a judge thereof, or a county judge. This is substantially the same provision as to injunction orders which is made general as to all orders in section 401, subdivision 3. Section 223 provides that if a court or judge deem it proper that the defendant should be previously heard, an order may be made to show cause. This order to show cause is to be returnable at a specified time and place; not necessarily before the same judge. It must be at. a time and place when and where a contested motion can be heard, and, of course, before some -one competent to hear it. This section, therefore, does not settle the question who is competent to hear a contested motion. In section 225 it is said if the injunction be granted by a judge of the court, or a county judge, without notice, “the defendant, at any time before trial, may apply upon notice to a judge of the court,” &c. The plaintiff argues that this (substantially included in section 324), implies that a county judge may grant an injunction without notice. But I do not think that this is the true meaning. By section 218 the power to — 281 — ■grant injunction orders is given to three authorities: the court, a judge of the court, and a county judge. If the order should be granted by the court, even without notice, it would hardly seem right that a judge should be authorized to vacate it. An order made by the court should of course be vacated only by the court. Section 225, therefore, limits the cases where a motion to vacate may be made before a judge' of the court to those in which the order was granted by a judge of the court or a county judge. And as a judge of the court may grant the order with notice, it was necessary to limit the cases in which a motion'to vacate might be made to those in which the order was originally made without notice. But the remainder of the section, by clear implication, shows that the county judge cannot hear a contested motion as to an injunction, because it requires the motion on notice to vacate shall be made before the judge of the court. If then a county judge cannot hear a motion on notice to vacate an injunction order, why should he be allowed to hear a motion on notice to continue such an order ? Each motion brings up the merits similarly on a hearing of both sides. It appears to me, therefore, that the decision in Parmenter v. Roth applies to injunction orders. It follows from this that the county judge had no jurisdiction to hear the motion which he required the defendants to oppose before him on February 14. If they had appeared and opposed as they were required to do, and he had, on that day, upon such hearing, made an order continuing the injunction, such order would have been void for want of jurisdiction. And, in like manner, if the. defendants had failed to appear, and the plaintiffs, on proof of notice and on the defendant’s default, had taken an order continuing the injunction, that also would have been void. The question then arises, is the order granted by — 282 — the county judge restraining the defendants, still in force ? The language of this order restrained the defendants until the further order of the court, and at the same time required them to show cause why the order should not be continued. Supposing, for the present, that a county judge has authority to hear a contested motion, then if the plaintiffs had failed to appear on the return day, the defendants could not have brought on or opposed the motion for a continuance of the order. They might have have had costs for plaintiffs’ failure to bring on the motion, but they would have no power to bring on the motion themselves. The motion was to be made by the plaintiffs for a continuance of the injunction order, and they only could bring it on. If, therefore, the proper construction of an order, such as that of February 5, is that the injunction is to continue until it is vacated, then the plaintiffs, by neglecting to bring on the motion to continue the order, can make the injunction permanent. That part of the order requiring the defendants to show cause becomes meaningless. By such an order the plaintiff gives a short notice of motion to continue an injunction. Is it reasonable to construe the order to mean, that if the plaintiff fails to bring on and obtain a continuance of the injunction, still the injunction is continued by plaintiff’s neglect? If this be the construction, it would be best for the plaintiff never to appear on the return day. And again, if the injunction continues without any further action of the plaintiff, why should he give notice óf a motion to continue it ? This very notice of motion implies that unless then continued by order of the court, the injunction will cease to be in force. It seems to me, therefore, that the ‘ ‘ further order of the court,” mentioned in the order, has reference primarily to an order to be made on the return day, and that the order granted on February 5, was, in its — 283 — real effect, like an order under section 223, providing for an act interim restraint until the defendants could be heard. This is a case in which the judge might with great propriety deem it proper that the defendants should be heard before granting the injunction, and yet might restrain them meantime, as is provided in that section. The importance of the case, the magnitude of the interests involved, and the difficulty of the questions arising, would naturally make any judicial officer wish to hear both sides before granting an order which might be very injurious. An injunction order should not be strained beyond the necessity of the case. If the proper object could be accomplished by án ad interim restraint until the hearing of both sides, this is the safer and wiser construction. I am aware that in Kelly v. Joraleman (7 Robt, 158), the superior court at special term denied a motion by the plaintiff to continue an injunction, hold: ing that an order continued itself. The objection was not taken by the counsel on the hearing. And it is to be observed that in that case the judge practically, by his decision, refused to hear the defendant’s objections to the injunction. He held in effect that no such motion could be made; that the injunction was permanent; and that the defendant could be relieved only on a motion to vacate. I think that this decision cannot now be followed; for rule 94 has provided expressly for such a motion as that which was then before the court; and that rule does not mean that the judge shall do nothing on the return day. On the return of an order to show cause why an injunction should not be continued in force, if both parties appeared and the judicial officer had jurisdiction, he would not now refuse to hear the views of both, and to decide accordingly,—continuing the injunction or refusing to continue it, as he saw good cause. There is another consideration which tends to show — 284 — that the order granted on February 5, must be construed as an ad interim order only. The object of rule 94 was plainly to restrict the practice of granting permanent orders of injunction ex-parte. It intends, therefore, to provide that an ex-parte injunction order shall be at the most for ten days, and that within that time . the plaintiff shall make good his right to a continuance of the injunction, after giving the defendant an opportunity to oppose. If the construction claimed by the plaintiff is to stand, then rule 94 is utterly valueless. For the plaintiff has only to neglect to appear on the return day, and by that neglect his injunction remains permanent. Or he may appear and refuse to bring on the motion to continue, and then the same result is accomplished. Such was the course of the plaintiff in this case. They did not appear (legally) on the return day, and their non-appearance was (as they claim) as effective as the most powerful argument in their behalf could have been. I am aware of the difficulties which may arise in harmonizing section 218 and section 401, subdivision 4 of the Code; rule 46, paragraph 2, and rule 94, and the decision in Parmenter v. Roth. But it is not necessary to consider those difficulties here. For these reasons I am of the opinion that the order granted by the county judge, on February 5, was only an ad interim order, and that, as the injunction was not continued on the 14th, it has ceased, and that there is now no injunction to be vacated. With these views, it is unnecessary for me to examine the merits of the motion. But perhaps one further point should be considered. The defendants urge that the injunction order was void, under section 224 of the Code, and chapter 151 of the Laws of 18'70. By these provisions an injunction to suspend the general and ordinary business of a corporation can be granted only by the court, and bn eight — 285 — days’ notice. These provisions are not a limitation as to the grounds upon which a party may be entitled to an injunction, but only as to the tribunal which shall grant it, and the notice on which it shall be had. They assume.that sometimes an'injunction may properly be granted to suspend the general and ordinary business of a corporation, but require that it be granted by the court. In examining what is meant by an injunction to suspend the general and ordinary business of a corporation, some points are to be observed. The statute limitation as to the powers to grant injunctions may apply: 1. Although the injunction does not contain the words “general and ordinary business.” 2. Although it suspends only a part of such business. 3. Although the corporation is acting illegally in respect to the general and ordinary business which is sought to be restrained. 4. Although the corporation has the power to carry on such business in some manner other than that which is sought to be restrained. In the present case the complaint sets forth that a contract has been made by the company with two of the defendants, for the construction of the road, and that this contract includes a leasing of the road to these contractors, and the complaint asks an injunction against carrying this contract into effect. The injunction order, which was granted, does not in terms confine itself to restraining the carrying that contract into effect; but it forbids the leasing or selling any part of the property of the company to any person. It goes far beyond any matters alleged to have taken place, or even to be threatened. There are no allegations on which to base such a sweeping restriction. The company could not sell a worn out rail without violating the injunction, if the language is to be construed literally. And the injunction, in its literal construction, seems to me in effect to suspend the general — 286 — and ordinary business of the corporation. The injunction ought to have been confined in words to the contract set forth'in the complaint. But even giving it that construction it is then a restraint on the corporation from carrying out a certain contract for the construction of their road. Is not the building and equipping of a road a part of the general and ordinary business of the railroad company % Whether or not they can lawfully do this by the means which they propose to adopt I do not inquire. Perhaps they can build it in some other way better and more profitably. But the building of the road is their ordinary business, and to do that ordinary business they make the contract which is enjoined. I do not say that it is legal or not; nór do I say whether or not they should be enjoined from the means by which’, according to the complaint, they are undertaking to build their road.- Even assuming that the injunction is one which the proper authority ought to grant, still, as I think, it suspends part of the general and ordinary business of this company. The legislature, owing to events which are well known, has thought best.to protect corporations, as to their general and ordinary business, from injunctions granted ex-parte, and out of court. The same act in like manner limits the power of granting an injunction to restrain any director from the performance of his duties as such. And this present injunction comes within that limitation also. It cannot be said that because this injunction restrained the directors from an alleged violation of duty, therefore the act does not apply. For all injunctions in such-cases are to restrain supposed violations of duty. And no such absurdity was intended as that a county judge ex-parte might prohibit violations of duty in a director, but only a court on notice could prohibit a director from doing his duties properly. — 287 — For do I think that it can reasonably be said that this provision refers to a complete prohibition of a director from performing any of his duties. Otherwise by an ex-parie injunction out of court a director could be prohibited from performing all his important duties, leaving him free to discharge some that were unimportant. Thus the evil against which this legislative act was aimed might be revived. All who remember the history of railroad litigation within the few years past, will acknowledge the wisdom of the legislature in protecting corporations and their officers from ex-parte interferences by injunctions. And in using the language “general and ordinary businessit appeared to me that they intended to make this protection broad. Thus the business which corporations were created to carry on is not to be suspended, nor are their directors to be restrained, from the discharge of their official duties, except by the court and upon notice. It is therefore proper that the injunction order, although it has expired, should be set aside as contrary ^to these provisions, with costs to the defendants.