Buggeln v. Cameron

CAMPBELL, J. — Appellant Martin Buggeln was plaintiff in an action seeking to restrain appellees herein from collecting toll upon the Bright Angel toll road. An injunction was issued, and in pursuance of an order of the court a bond upon the injunction was given by the appellant Buggeln, as principal, with the appellants T. A. Riordan and M. J. Riordan, as sureties. Upon the final hearing of the case the injunction was dissolved and the petition dismissed. Thereafter the appellees herein brought this action upon the injunction bond to recover damages claimed to have been sustained by them by reason of the injunction. The complaint contains no allegation that Buggeln has failed to abide the decision in the injunction suit, or that any sum of money was adjudged against him in that or any other proceeding. Appellants entered a general demurrer to the complaint, which was overruled. A trial of the action resulted in a judgment for the appellees for $2,000, whereupon the case was brought here upon appeal. Appellants’ assignment of érror that the court erred in overruling their demurrer to the complaint presents the principal question in the case. The first contention of appellants is that such damages as result from the issuance of an injunction should, under the practice, principles, and procedure of equity, be assessed and awarded in the injunction suit, and that an independent action will not lie upon an injunction bond to recover such damages. This broad contention is not sustained by authority. In the ease of Bein v. Heath, 12 How. (U. S.) 168, 13 L. Ed. 939, it was held that, independent of the statute, the court cannot, when it dissolves an injunction, give judgment at the same time against the obligors in the injunction bond; that it merely orders a dissolution, leaving the obligee to proceed at law against the sureties in the bond, if he sustains damage from the delay occasioned by the injunction. The holding in this case was criticised and virtually disapproved in Russell v. Farley, 105 — 205 — U. S. 433, 26 L. Ed. 1060, in which it and other cases were reviewed, and the court said: “But upon a careful examination we are not satisfied that they furnish any good authority for disaffirming the power of the court having possession of the case, in the absence of any statute to the contrary, to have the damages assessed under its own direction. This is the ordinary course in the court of chancery in England, by whose practice the courts of the United States are governed, and seems to be in accordance with sound principle. The imposition of terms and conditions upon the parties before the court is an incident to its jurisdiction over the case; and, having possession of the principal case, it is fitting that it should have power to dispose of the incidents arising therein, and thus do complete justice, and put an end to further litigation. We are inclined to think that the court has this power, and that it is an inherent power, which does not depend on any provision in the bond that the parties shall abide by such order as the court may make as to damages (which is the usual formula in England), nor on the existence of an express law or rule of court (as adopted in some of the states) that the damages may be ascertained by reference or otherwise, as the court may direct; this being a mere appendage to the principal provision requiring a bond to be taken, and not conferring the power to take one, or to deal with it after it has been taken. But whilst the court may have (we do not now undertake to decide that it has) the power to assess the damages, yet if it has that power, it is in its discretion to exercise it, or to leave the parties to an action at law. No doubt in many cases the latter course would be the more suitable and convenient one.” Since the case of Russell v. Farley it has been quite customary in the courts of the United States to assess the damages upon proper pleadings and notice to the sureties in the equity suit, and we have no doubt of the power of the courts of this territory to so assess damages. Upon the other hand, the supreme court of the United States has since, in at least two cases, recognized the rights of defendants in injunction suits to maintain independent actions on the bonds. Meyers v. Block, 120 U. S. 206, 7 Sup. Ct. 525, 30 L. Ed. 642; Tullock v. Mulvane, 184 U. S. 497, 22 Sup. Ct. 372, 46 L. Ed. 657. And there is no difficulty in perceiving that, where the bond is so conditioned as to permit, such actions may be maintained in this territory. — 206 — This brings us to another contention of appellants, which is more difficult of determination. Paragraph 2751. Revised Statutes of 1901, provides: “Upon the filing of the complaint or affidavit and order of the judge hereinbefore provided for in the district court and before the issuance of the writ of injunction the complainant shall execute and file with the clerk a bond to the adverse party with two or more good and sufficient sureties, to be approved by such clerk in such sum as may be fixed in the order of the judge granting the writ, conditioned that the complainant will abide the decision that may be made therein, and that he will pay all sums of money and costs that may be adjudged against him, if the court finally decide that the plaintiff was not entitled thereto. The form of said bond shall be joint and several. If the territory be the plaintiff no bond shall be required. ’ ’ The recital and condition of the bond sued upon here is that: “Whereas, in the above-entitled action an order was issued granting a writ of injunction upon the filing of a' bond restraining said defendants, and each of them, from the commission of certain acts in accordance with the prayer of the complaint, now, therefore, in consideration of the premises and of the granting of said injunction, we, the undersigned, do jointly and severally undertake in said sum that the plaintiff will abide the decision which may be made in the above-entitled cause, and that he will pay all sums of money and costs that may be adjudged against him if the court finally decides that the plaintiff was not entitled to said injunction.” It is insisted by appellants that even .though, under the general principles governing recoveries on injunction bonds, independent actions may be maintained upon them, such an action will not lie upon a bond conditioned as is the one in this ease without an award of costs or damages being alleged. The usual conditions of such bonds are to pay all damages that defendants may sustain by reason of the injunction. Such was the condition prescribed by the statutes of this territory prior to 1887. Comp. Laws 1877, par. 2751. When so conditioned there is no difficulty in alleging a breach; but here, construing the terms of the bond strictly, there would seem to be no breach on the part of the sureties until the principal “fails to abide the decision,” or until he fails to pay some sum of money or costs “adjudged” against him. Paragraph 2751, quoted above, was adopted from Texas in 1887. It is claimed by appellees that the supreme court — 207 — of that state had, prior to our adoption of the statute, in the cases of Hammonds v. Belcher, 10 Tex. 271, Texas & New Orleans R. R. Co. v. White, 57 Tex. 130, and Avery v. Stewart, 60 Tex. 154, held that upon an injunction bond given under it the obligee might have the damages sustained assessed in the injunction suit, or might bring an original action upon the bond. Hammonds v. Belcher was decided in 1853. The statutes in force at that time were as follows r “No injunction writ shall be issued in any case until the complainant executes a bond to the adverse party with good and sufficient security in such sum as the judge granting the same shall deem sufficient to secure the amount or matter to be enjoined and all damages and costs that may be occasioned by such injunction, conditioned that the complainant will abide the decision which may be made therein, and that he will pay all sums of money and costs that may be adjudged against him, if the injunction be dissolved, either in whole or in part. The amount of such bond required shall be stated by the judge in his order granting the injunction and the bond shall be taken and the security approved by the clerk issuing the injunction, who shall file said bond with the petition.”. Paschal’s Digest, art. 3933. “Upon the dissolution of an injunction, either in whole or part, on final hearing, where the collection of money has been enjoined, if the court be satisfied that the injunction was obtained only for delay, damages thereon may be assessed by the court, at ten per cent on the amount released by the dissolution of the injunction, exclusive of costs; and in all other cases the damages shall be assessed by a jury sworn for that purpose; if neither party require a jury the damages may be assessed by the court.” Paschal’s Digest, art. 3935. It will be observed that our statute does not contain the words of the Texas statute, “in such sum as the judge granting the same shall deem sufficient to secure.the amount or matter to be enjoined, and all damages and costs that may be occasioned by such injunction,” and that we did not adopt any part of article 3935, Paschal’s Digest. The opinion does not disclose the terms of the order requiring the bond, or the recitals or condition of the bond. It cites the statutory provisions quoted above, and says: ‘ ‘ The statute evidently contemplates that the assessment of damages may be simultaneous with the dissolution of the injunction, and, when they are to be assessed by the court for the want of probable cause, there — 208 — is no doubt judgment for them should be immediately rendered. The amount is fixed by law, and the court has only to declare the sentence of the law in form. But when the injunction has operated on other matters than the collection of money, questions of difficulty as to the damages occasioned by the injunction may arise; and as the statute has not positively required them to be tried with the main action on penalty of being excluded from subsequent cognizance, we are of opinion that the defendant could rightfully prosecute a separate action to have the question of damages and their amount adjudicated. The issue as to the amount and legal grounds for damages is distinct from, though connected with, the main action, and it might be inconvenient to the defendant, and perplexing, perhaps, to both parties, to controvert the issue as to damages at the time of the trial of the principal matter in litigation. His right, independent of the statute to bring an action on the bond, is secured in general principles of law; and though a special provision is made for the assertion of his claim under the bond, yet that does not operate as a preclusion of his general right, the statute containing no terms of prohibition, either expressly or by implication.” The point urged here is not discussed. The court may well have construed the bond in connection with the provisions of the statute then in force in reaching its conclusion, as the supreme court of the United States in Meyers v. Block, supra, construed the condition of the bond before it in the light of the order requiring it. In our opinion, the statute construed is materially different from that adopted by this territory. Therefore we are not bound by the construction given by the Texas statute. Copper Queen Min. Co. v. Territorial Board of Equal., 9 Ariz. 383, 84 Pac. 511. In the revision of the statutes of Texas in 1879, article 3933, Paschal’s Digest, was made to read as does paragraph 2571 of our statutes, and, as so revised, was in force when the cases of Texas & New Orleans R. R. Co. v. White, supra, and Avery v. Stewart, supra, were decided. Therefore, we must examine those cases to determine whether the statute adopted by us was construed in accordance with the contention of appellees prior to the time we adopted it. Avery v. Stewart was a suit to enjoin the collection of a judgment. The defendant, upon the dissolution of the injunction, sought to have judgment against the sureties on the bond for the — 209 — amount of the judgment enjoined and for ten per cent damages allowable under the Texas statute heretofore quoted. The trial court refused the judgment, and the supreme court, after an examination and consideration of the evidence, held that no error was committed. In the course of the opinion the court referred to the ease of Texas & New Orleans R. R. Co. v. White, and pointed out that it was there held that the trial court could not, under the statutes as they then existed, enter judgment against the sureties for the amount of the judgment enjoined, and said: “In the same ease it was held that, under the statutory regulations now in force concerning injunctions, the party seeking to enforce payment of damages to the amount of the bond could bring an original action on the bond, or could in the pending suit attain the same object by pleading over in reconvention and setting forth in appropriate terms the facts on which his claim for such judgment was based. ’ ’ An examination of the ease of Texas & New Orleans R. R. Co. v. White, referred to in Avery v. Stewart, discloses that it too was brought to restrain the collection of a judgment. Judgment was given upon the dissolution of the injunction against the sureties for the full amount of the judgment enjoined and for ten per cent damages. The court say: “The second assignment of error is ‘the court erred in rendering judgment against the plaintiff and the sureties on the injunction bond for the amount enjoined.’ The judgment seems to have been rendered for the sum due upon the original judgment on the third day of June, 1879, and the propriety of rendering that judgment is the only question necessary to be considered.” The court reviewed the legislation bearing upon the question, and held that, under the statutes then in force, a judgment against the sureties for the amount of the judgment enjoined was unwarranted. In confirming the power of the equity court to give the damages sustained by reason of the injunction, section 1557 of Mr. High’s work on Injunctions is quoted. The substance of that section is that in the absence of legislative authority a court of equity will not, upon the dissolution of an injunction, enforce the payment of damages, but will remit the parties aggrieved to their action upon the bond, relying practically upon the case of Bein v. Heath, supra. If the language quoted from Avery v. Stewart is to be interpreted to mean that the White case held that an orig — 210 — inal suit might he maintained upon an injunction bond conditioned as required by the Texas statute, we are unable to perceive any foundation for such holding. There was nothing in either of these cases that required such holding. In both of them the judgments appealed from were rendered in injunction suits. In neither of the cases was the point urged here even remotely referred to. For the foregoing reasons we do not feel impelled to hold that this territory adopted the statute with the construction contended for by appellees. It is insisted by appellees that, regardless of the construction given the statute by the supreme court of Texas, we should construe the statute in accordance with their contention, and cite the case of Meyers v. Block, 120 U. S. 206, 7 Sup. Ct. 525, 30 L. Ed. 642. That case went to the supreme court of the United States from the state of Louisiana. The bond sued upon was given upon an injunction issued in a ■bankruptcy suit in a United States bankruptcy court. The order for the injunction directed a bond conditioned “to save the parties harmless from the effects of the injunction in this cause.” The bond given was conditioned to “well and truly pay to . . . the defendant in said injunction all such damage as he may recover against us in case it should be decided that said writ of injunction was wrongfully issued.” The court construed the condition of the bond in the light of the order requiring it, and say that “the parties signing the bond must be presumed to have been cognizant of the order under which it was given, ’ ’ and in effect held the plain meaning of the condition to be to pay all damages which the defendant might sustain by reason of the injunction. It is readily apparent that the facts of that case, and the principles which controlled it, are widely different from the case at bar. Here the bond is conditioned in the language of the statute and of the order requiring it, and we may look to it alone to determine the contract into which the sureties entered. Injunction bonds conditioned similarly to the one at bar have been before the courts of various states in numerous cases where recovery of damages was sought without an award previously made. We believe that practically all of them may be placed in two classes: (1) Where the statute or the order under which the bond is given requires a bond conditioned to pay damages sustained, the condition of the bond, — 211 — however worded, will he read in the light of the statute or order, and the sureties held to have contracted as the statute or order requires. The leading case of this class is Meyers v. Block, from which we have quoted. (2) Where the statute or order does not require a bond or order so conditioned, the sureties are entitled to stand upon the terms of the bond, and recovery may not be had upon it until award has been made. The reasoning of this class of cases is apparent, and is expressed in the early case of Ashby v. Chambers, 3 Dana (Ky.), 437: “The only question which we deem, essential to consider is, . . . does the declaration contain any averments of breaches sufficient to entitle the plaintiff to his action? We think it does not. The undertaking of the surety is in the alternative — if his principal ‘shall prosecute with effect, or on failure thereof shall well and truly pay such costs and damages as shall be awarded against them.’ According to any fair construction of the terms of the condition, an award of damages, where damages alone are sought to be recovered, seems necessarily to precede a breach of the condition on the part of the surety. He is not in default for failing to pay damages, when damages have not been awarded. For it is only the damages which may be awarded that he has undertaken to pay in default of his principal, and not any other damages. Until damages have been awarded, there is no obligation to pay, and without an averment that damages have been awarded, there is no breach of the condition of his bond. His liability is made to depend, by the express terms of his covenant, upon the happening of this precedent contingency — the award of damages against his principal — and cannot, without doing violence to its clear and unequivocal import, be made to precede it. We therefore cannot say that he was in default and liable to an action for failing to pay damages awarded when no damages have been awarded. We are aware that this court has gone great lengths in giving' efficacy to injunction and appeal bonds by constructions. But we know of no case where they have rendered the surety liable by construction, against the expressed terms of his covenant. When the language of the covenant is doubtful, the court may, by construction, give such interpretation to its terms as will carry into effect the intention of the parties in the undertaking. But they cannot make a contract for the parties, or substitute terms that are not used, or disregard the clear and unambiguous terms that are used.” Similar — 212 — reasoning is applied in Tarpey v. Shillenberger, 10 Cal. 391; Hathaway v. Davis, 33 Cal. 161; Davis v. Gully, 19 N. C. 360; McLuckie v. Williams, 68 Md. 262, 12 Atl. 1; Sledge v. Lee, 19 Ga. 411; Anderson v. Falconer, 34 Miss. 257; Sterling City etc. Co. v. Cock, 2 Colo. 24; Kennedy v. Hammond, 16 Mo. 341; Corder v. Martin, 17 Mo. 41; Russell v. Rogers, 56 Ill. 176; Brownfield v. Brownfield, 58 Ill. 152; Dunn v. Davis, 37 Ala. 95; Halsey v. Murray, 112 Ala. 185, 20 South. 575; Offterdinger v. Ford, 92 Va. 636, 24 S. E. 246. See, also, 2 High on Injunctions, 1640. We are of opinion that both upon principle and authority it must be held that the complaint fails to show any breach of the condition of the bond, and therefore fails to state a cause of action. United States v. Meade, 9 Ariz. 209, 80 Pac. 326; Bonebrake v. Hunt, ante, p. 98, 89 Pac. 544. It is urged upon us that the construction of the statute which we are compelled to adopt will cause much inconvenience in requiring obligees in injunction bonds to litigate the question of damages in the injunction suits, and at times when the parties are not prepared -to present evidence concerning the extent of the damages sustained. If such inconvenience results, we must leave it to the legislature to remedy the situation; but we see no reason why the district courts may not, under their general equity powers to impose conditions upon which injunctions may issue, require applicants for injunctions to give bonds so conditioned, in addition to the conditions required by the statute, that actions at law to recover damages sustained by reason of the injunction may be maintained upon them. Russell v. Farley, 105 U. S. 433, 26 L. Ed. 1060. The judgment is reversed, and the ease remanded to the district court for further proceedings in conformity with this opinion. KENT, C. J., and DOAN and NAVE, JJ., concur.