Manufacturers' & Traders' Bank v. Folk

FOLLETT, J. The appellant asks for a reversal of the order assessing the damages sustained by the respondent on two grounds: (1) That the court has not finally decided, within the meaning of section 620 of the Code of Civil Procedure, that the plaintiff was not entitled to. the injunction as against the defendant Abram Folk; (2) that several of the items allowed were too remote and contingent to be included within the term, “damages sustained by,reason of the injunction.” A few minor grounds of alleged error are argued on the brief submitted, some of which may be considered later. Section 620 of the Code of Civil Procedure provides that an undertaking must be given, when an injunction is applied for, “to the effect that the plaintiff will pay to the party enjoined such damages, not exceeding a sum specified in the undertaking, as he may sustain by reason of the injunction, if the court finally decides that the plaintiff was not entitled thereto.” The final clause of the foregoing paragraph is the one which it is important to consider,—“if the court finally decides that the plaintiff was not entitled thereto.” This provision, and in the same words, was contained in section 195 of the Code of 1848, and remained part of the Code of Procedure until it was superseded by the present Code. Before the Code of 1848, the thirty-first rule of chancery provided that an undertaking should be given, conditioned to pay to-the party enjoined, “such damages as he may sustain by reason of the injunction, if the court shall eventually decide that the complainant was not equitably entitled to such injunction.” The injunction in this action was not granted on affidavits, but on the verified complaint, and the plaintiff’s right to injunctive relief depended upon the .establishment judicially of the facts pleaded as the cause of action. The onus of proving the cause of action alleged was upon the plaintiff; and if, for any reason, it failed to sustain this burden, the action fell, and with it the injunction. Upon the trial of the issues joined between the plaintiff and the C. F. W. Dare Company and Charles'F. W. Dare,' two of the defendants,- the plaintiff failed to establish the allegations of the complaint, and it was decided that the transactions complained of were free from fraud, and a judgment was entered in favor of those two defendants, dismissing the complaint on the merits. After this decision on the merits, and before the entry, of the judgment thereon, Folk made a motion, on notice to the plaintiff, that the action be dismissed as against him for want of prosecution. The' plaintiff did not contest the motion, and it was granted' by default, and subsequently a judgment was entered on this order dismissing the complaint as against Folk, for want of prosecution. By these two final judgments it was determined by the court that the plaintiff was not entitled to a judgment in the action ■ against eithér of the defendants. The right to the injunction being dependent upon the same facts as those alleged as a cause of action, it was, in effect, decided that the plaintiff-was not entitled to the injunction. [809] In Palmer v. Foley, 71 N. Y. 106, the action was discontinued upon the agreement of the parties, the plaintiff paying to the defendant $100-as costs. It was held that this was not equivalent to a final decision of the court that the plaintiff was not entitled to the injunction order when it was granted. In discussing the case it was said: “ It is claimed that this is equivalent to the court finally deciding that the plaintiff was not entitled to the injunction order. Cases are cited which almost hold to that effect. I will not name them. In most of them there was some action of the court upon the validity or merit of the injunction order adverse to the plaintiff’s right to have it allowed. The plaintiff, after such action, discontinued of his own motion, and presumably in consequence thereof. In none of them was the discontinuance a matter of agreement between the parties to the action. In the case at bar the action was not discontinued by agreement, but by an order of the court, upon a motion made which was undefended, presumably upon the ground that it had already been decided that the action could not be sustained. Benedict v. Benedict, 76 N. Y. 600, was brought to compel the defendant to convey to the plaintiff land,, which the defendant was restrained from selling or incumbering during the pendency of the action. The final judgment rendered was that the plaintiff was not entitled to a conveyance of the land, but that he had an equitable lien thereon, and a sale was ordered to satisfy the lien and. costs. The defendant moved for a reference to ascertain his damages sustained by reason of the injunction, which was refused upon the ground that it had- not been finally decided that the plaintiff was not entitled to it. In that case the action had not been determined in favor of the defendant, and it may well have been that the plaintiff was entitled to the injunction to restrain the conveyance or incumbrance of land on which the plaintiff had an equitable lien. In Pacific M. S. Co. v. Toel, 9 Daly, 301, 85 N. Y. 646, a temporary injunction was granted, which the plaintiff’s attorney afterwards voluntarily vacated. After the cause was at issue, the plaintiff' entered an ex parte order without the consent of the defendant, discontinuing the action on payment of costs. The right to damages sustained by reason of the injunction was contested, on the ground that the court had not finally decided that the plaintiff was not entitled to the injunction. In considering this question it was said in the court of appeals: “The orders vacating the injunction and discontinuing the action entered by the plaintiff are, in effect, a determination, or, at least, equivalent to a determination, that the plaintiff was not entitled to the injunction granted.” In Amberg v. Kramer, 8 N. Y. Supp. 821, the general term of this department held that a voluntary vacation of an injunction, and the subsequent discontinuance of the action on the plaintiff’s motion, were equivalent to a determination that he was not entitled to the injunction. The rule contended for by the appellant would require defendants, in all cases where injunctions are granted on verified complaints, and the actions are dismissed for want of prosecution, or by voluntary discontinuance, to take upon themselves the burden of showing that the allegations in the complaint were unfounded, and of procuring an express adjudication that the plaintiff was not entitled to the injunction, as a [810] prerequisite to the right to have the damages assessed. Such was not the intended effect of the provisions of the Code under consideration. The referee reported that Abram Folk sustained damages, by reason of the injunction, to the amount of $3,740.66. The items found by him seem to overrun this sum, and it is not exactly apparent how his conclusion was reached. The following are the items reported: Rent paid for factory while use was enjoined (folios 84, 85)............ $416 66 Watchman for 7 weeks, at $13 per week (folio 85)....................... 84 00 Keeping horse, use restrained (folio 86)............................. 20 00 Salar3r of manager, 7 weeks, at $25 a week (folio 90).................. 175 00 Loss of wages paid (folio 90)......................................... 25 00 Defendant's counsel fees on the reference............................ 250 00 Orders on hand when injunction was served and received during its continuance, $4,826.77. Ten per cent, profit thereon lost...................................... 482 67 $1,453 33 The factory had capacity to produce toys during the 7 weeks the injunction was in operation of the value of $17,500. Loss of profit thereon, 10 per cent............._..........i...........$1,750 00 Injury to good will..........................."....................... 500 00 Referee’s fees on first reference..-.................................... 120 00 Counsel fees on first reference....................................... 150 00 $3,973 33 Upon an examination of the record we think the evidence was sufficient to sustain the first seven items, aggregating $1,453.33, but that it was insufficient to sustain the last four items. It cannot be fairly inferred from the evidence that the defendant, during the seven weeks he was under restraint, would have received orders for, and been able to manufacture, toys to the value of $17,500. Nor is there any evidence that he lost $500 by the injury to good will. The defendant is no more entitled to recover the $270 paid in the first reference, which was not sustained, than he would have been to recover counsel fees paid in an unsuccessful attempt to have procured the injunction to be vacated, We think, under the evidence, that the defendant’s damages recoverable on the bond are $1,453.33. It appears that after the conclusion of the first reference Folk assigned his interest in the sum reported to one Marshall, and it is urged that the respondent has no interest in the damages, and that the reference cannot be prosecuted in his name. The terms of the assignment do not appear. It may have been absolute, but it may have been conditional, or by way of security. We do not think that the record discloses such a want of interest in the damages as to preclude the defendant from the right to prosecute this proceeding. The referee’s report, and the order of the special term entered thereon, should be modified by fixing the amount of damages sustained by reason of the injunction at $1,453.33, and, as modified, affirmed, without costs to either party. All concur.