Troxell v. Haynes

Daly, Ch. J. There was no authority to enter up, a judgment upon the referee’s report of the damages which the defendants had sustained by reason of the injunction; nor, when the referee’s report is confirmed, is there anything in section 222 of the Code authorizing the entry of a judgment for the amount against the sureties. The liability of the sureties in this undertaking is to pay such damages, not exceeding five hundred dollars, as the defendants may sustain by reason of the injunction, such damages to be ascertained by a reference, or otherwise, as the court may direct. The sureties, by their undertaking, have stipulated for a mode in which it shall be ascertained whether they are liable or not to pay any amount, and until the court has, by reference or otherwise, ascertained this, then* liability is not established or fixed. The obligation is to pay such damages as the defendants may sustain by reason of the injunction. Money expended for the employment of counsel to obtain a dissolution of the injunction and to defend the suit brought to restrain the defendants by injunction, comes under this bead. It is a direct expense incurred by the defendants in consequence of the injunction, and if actually paid out by him, should be allowed (Corcoran v. Judson, 24 N. Y., 106 ; Coates v. Coates, 1 Duer, 664). An allowance was made to the defendants, under the Code, after the complaint was dismissed, of two hundred and fifty dollars. This, in the language of the Code, “is a certain sum allowed to the prevailing party by way of indemnity for his expenses in the action.” This amount has been paid to the defendants, and is a part of the ex — 4 — penses which they have incurred. I do not mean to say that this is all that can be allowed them upon the assessment of the damages, sustained by reason of the injunction, for the expense they may have been put to in the employment of counsel. It may be that they have had to expend much more, and when it appears that they have in good faith done so in consequence of the difficulty and large amount of labor that became necessary in the defense of the action, their additional expenditure for legal aid should, within reasonable limits, be allowed in the assessment of the damages (Bauler v. Roberts, 3 Robt., 226 ; Ricard v. Heriot, 5 La.,245; Wilcox v. Bundy, 13 Id., 381; Pargout v. Morgan, 2 Id., 101). What I mean to say is, that tile allowance given by the Code is a repayment of a part of the expenses incurred, and is to be taken into account in the assessment of the damages, which was not done in this case. If the defendants paid out four hundred dollars for legal services, then three hundred and twenty-five dollars of that amount has already been received by them, and the amount to be assessed would be seventy-five dollars, and not, as the referee has reported, four hundred dollars, in addition to the three hundred and twenty-five dollars. The confirmation of the report having been opened, the question is not now before me whether the defendants, upon the confirmation of the report, may enter up judgment against the sureties upon the report, but as the question has been discussed upon this motion, and as it will necessarily ensue upon the confirmation of the report, I may state that it is my impression that they can not. The Code makes no provision for it. It authorizes the assessment of damages which the defendants have sustained, the undertaking having provided that it shall be ascertained in that or such other mode as the court may direct. The sureties are not necessarily parties to that proceeding, and the assessment may be made without notice to them — 5 — (Methodist Church v. Barker, 18 N. Y., 465), and when the report is confirmed it is conclusive upon them as tc the extent of the damages, but there is, for all I know, no way in which, beyond this, the sureties can be charged, except by an action upon the undertaking. Independent of the question of the amount of damages which the defendants have sustained by the injunction, they may have a defense. Cases have occurred in which the names of parties have been fraudulently signed to analogous instruments, and in which individuals have personated them in acknowledging the instrument before notaries or commissioners, and there may be other defenses. In Merryfield v. Jones, 2 Curtis C. Ct., 306; Bein v. Heath, 12 How. U. S., 168, it was held that a court of equity can not order the sureties upon an injunction bond to pay the damages sustained by reason of the injunction, that the defendant must resort to his action upon the bond; and I suppose that the same course must be pursued here (Patterson v. Bloomer, 37 How. Pr., 450; Wilde v. Joel, 15 Id., 321. An order was subsequently entered deducting from the four hundred dollars reported as the damages sustained by defendants, Piske, Wenman, Tinkham, and Donaldson, three hundred and twenty-five dollars, being the amount of the taxed costs of the action, which had been paid by plaintiff as part of the three hundred and forty-seven dollars and ninety-four cents, awarded to all the defendants in the action, and confirming the report for seventy-five dollars damages together with the one hundred and one dollars paid for referee’s fees on reference, one hundred and seventy-six dollars altogether, and denying motion for allowance, trial fee, and costs of motion to confirm for want of power to grant same in this proceeding, also denying motion to order judgment in favor of defendants Piske, — 6 — Wen man, Tinkham, and Donaldson, against Troxell and Reiker for like want of power, bnt giving the defendants Eiske, Wenman, Tinkham, and Donaldson leave to sue on the undertaking for the sum of onehun dred and seventy-six dollars, the amount of damages as settled, allowed, and confirmed as the damages of these four defendants. Samuel E. Randall, for the appellants. Barrett, Redfleld, and Hill, for the respondents. From this order the defendants appealed. By the Court. Robihsoh, J. The object of this action was to enjoin the defendants in the use of an unpatented secret of trade, and this proceeding brings in review, on appeal, a decision made upon the right of the defendants to enforce an undertaking in the sum of five hundred dollars given on the granting of a preliminary injunction. There were five defendants, and, on the hearing upon the return of the order to show cause why the injunction should not be continued, that preliminary injunction was dissolved as to four of the defendants, and retained as to the defendant Haynes. An expense of five hundred dollars was incurred by all of the defendants for counsel fees on that occasion ; but, by reason of the retention of the injunction against Haynes, the damages of defendants on that motion have, upon a reference had under section 222 of the Code, been assessed at four hundred dollars. Upon a subsequent trial on the merits, the complaint was dismissed as to all the defendants, and they recovered for costs three hundred and forty-seven dollars and ninety-four cents, which included an extra allowance of two hun dred and fifty dollars. These costs have been paid, and the defendant and his sureties claim, and the judge from whose decision this appeal was taken has decided, — 7 — that such costs and allowance were to be deducted from, the four hundred dollars assessed as defendant’s damages under the undertaking. As to the defendant Haynes, the motion to dissolve the injunction was denied, and it was continued until final judgment. Under these circumstances the respondent claims that such trial was necessary to determine the right to the preliminary injunction as to him, and that the taxed •costs, including such extra allowance awarded the defendants “in a difficult or extraordinary case after defense interposed or trial had” (Code, § 309), were an indemnity to defendants (Code, 303); that was to be considered pro tanto as an allowance for “ damages sustained by reason of the injunction.” No proof .was offered or finding made by the referee that such extra allowance was in any way awarded in consideration of any services of counsel on the trial, or upon any employment or effort, having special reference to the removal of the injunction; nor do I find any warrant in any of the authorities cited for holding that the general taxable costs accruing in the action, including the extra .allowance, and awarded by way of “indemnity for the expenses of the action” (Code, § 303), should be applicable or considered with reference to such special damages as were occasioned by the issuing of the injunction. The language of the courts is uniformly to the contrary, and that none of the general costs of this action •constitute any part of such damages (Coates v. Coates, 1 Duer, 644 ; Childs r. Lyons, 3 Robt., 704 ; Strong v. De Forest, 15 Abb. Pr., 427; Town of Guilford v. Cornell, 4 Id., 220 ; Hovey v. Rubber Tip Co., 50 N. Y., 335 ; Disbrow v. Garcia, 52 N. Y, 654). The case of Andrews v. Glenville Woolen Co., 50 N. Y, 287, is an exceptional one where the original motion to dissolve the injunction “was not denied on the merits, nor for irregularity in making the motion, but because the — 8 — court, in its discretion, thought it more advisable to-defer the inquiry into the merits until the final hearing.” In the present case it in no way appears that, the continuance of the injunction, as against Haynes, was ordered upon any such exceptional grounds, nor that the hearing on the merits was at all deferred, or the motion decided otherwise than on the merits as they were then made to appear to the judge. The subsequent trial was then, as well to him as to the other defendants, an ordinary trial necessary for the disposal of the merits of the controversy. In such case, no counsel' fees or costs of the trial are allowable as damages sustained by reason of the injunction, as is held in Hovey v. Rubber Tip Pencil Co.; Disbrow v. Garcia, and other cases above cited. I am, therefore, of the opinion that the allowance-by the judge of the taxable costs and extra allowance-made on the final judgment, and already paid, as part-of the damages contemplated by the provisions of the-undertaking was error, and that the damages reported by the referee are not to be in any respect, for any of the causes stated, diminished or reduced. The order should in this respect be reversed, and au order made confirming the referee’s report; but I concur in the judge’s opinion that no final judgment should be entered upon the report, but leave should be given, to prosecute the undertaking. Labbemobe, J., concurred.