Woolfolk v. Jones

WADDIRL,, District Judge (after stating the facts as above). Three questions are presented for the consideration of the court: First, what is the true meaning of the bond in question, and the liability of the surety thereunder to the defendant, Jones; second, whether the petitioners Miller and Brown are entitled to recover thereunder the amount of the costs, respectively, allowed in their favor, and set up by them in their petition; and, third, whether any recovery under the circumstances could properly be had upon the bond. These will be disposed of in the order named. [1] 1. The defendant Jones insists that the fair interpretation and meaning of the words “to abide the order of the court” is in effect to perform, to execute, to conform to, and to pay such order, and he cites quite a number of authorities in support of his contention, among them, Molton v. Hooks, 10 N. C. 342; Fowler v. Thorn, 4 Ark. 208; Corson v. Tuttle, 19 Mc. 409; Hodge and Wife v. Hodgdon, 8 Cush. (Mass.) 294; Erickson v. Elder, 34 Minn. 370, 25 N. W. 804; Jackson v. State, 30 Kan. 88, 1 Pac. 317; 1 Amer. & Eng. Ency. p. 192. While some of these decisions — and others may be found — give color to the contention of the defendant, none of them were in cases in [810] volving injunction bonds, and it is not believed that any authority can be found sustaining the view that the use of the word “abide” in an injunction bond, unless to restrain the execution of a judgment or decree of a court, will be given the interpretation claimed for it, certainly to the extent of the payment of the debt in suit, in the absence of proof showing the loss of the debt as the result of the suit. This case, in the view of the court, must be determined in the light .of the meaning of such language in injunction bonds taken by federal courts in cases not enjoining decrees or judgments. In granting an injunction in the federal court, the question of talcing a bond or not, and the terms of such bond, is largely a matter of discretion with the court. Russell v. Farley, 105 U. S. 433, 437-439, 26 L. Ed. 1060; Meyers v. Block, 120 U. S. 206, 211, 7 Sup. Ct. 525, 30 L. Ed. 642; Foster’s Fed. Procedure (5th Ed.) § 297, High on Injunctions, § 1566. Indeed, in the absence of a requirement of the bond by the court granting an injunction, damages are not recoverable at all, unless the institution and prosecution of the injunction proceedings be shown to have been malicious. The proper condition of an ordinary injunction bond in the federal court is “to answer all damages which the defendant * * * might sustain in consequence of said injunction being granted, should the same be thereafter dissolved.” Bein and Others v. Heath, 53 U. S. (12 How.) 176, 13 L. Ed. 939; Meyers v. Block, supra, 120 U. S. 210, 212, 7 Sup. Ct. 525, 30 L. Ed. 642. A careful consideration of the two cases last cited, make it entirely clear that injunction bonds to pay “such damages as may be sustained” do not mean to pay such sum as the court may decree to be paid on the merits' of the case (certainly unless it can be shown that the collection of the debt was defeated in whole or in part by the delay caused by the injunction), but, on the contrary, cover only the damages and costs directly sustained as the result of suing-out the injunction if the same should be dissolved. The language “to abide the judgment of the court” in an injunction bond, while not generally used, is by no means new or unusual. Its insertion arises from the inherent power of the court in its discretion to grant or withhold injunctions, and to impose terms and conditions upon which the same may be either awarded or refused; that is to say, in granting to the complainant an injunction or withholding the same at the instance of the defendant, the court can impose such terms as will tend to secure the ends of justice. Russell v. Farley, 105 U. S. 438 et seq., 26 L. Ed. 1060, supra. The requirement, however, to abide the decision of the court ought not to be construed to afford any relief to which the party has not shown himself entitled, either under that or some other provision of the bond. The greatest latitude that should be given to the meaning of the particular words would be that which would enable the court to do justice between the parties litigant, and in the present case their use need be given but little added weight, so far as the merits of this case are concerned, the exact language of the bond being “to abide the decision of said court, and to pay all damages and costs in case the injunction be dissolved,” etc. The ordinary use of the language “to abide the order of the court” [811] alone might be construed to mean as well the payment of damages and costs as the carrying out of a specific direction of the court regarding some collateral or incidental matter in the case. Here, however, nothing is actually sought to be decreed, not covered by the use of the language “damages and costs,” unless the view be taken, which the court does not see its way clear to do, of interpreting the words to mean to pay the debt as on final determination on the merits. Such was certainly not the purpose of the court in taking the bond. The effort to have such a bond was urged at the time of granting the injunction, and refused because contrary to the ordinary condition of injunction bonds on suits of that character; and it is improbable that a bond for $10,-000 would have been taken had the purpose been to meet the final judgment in a suit enjoining two actions at law, involving $35,000. [2] Considering the damage which the defendant Jones is entitled to recover in this case, the conclusion reached is that, as no proof has been adduced of any actual loss in the collection of the principal of his debt by the delay from the injunction, the court can only award such damages as come within the term “damages and costs” in the bond, and that it cannot penalize the complainant Woolf oik in making allowances for aggravated interest in the premises, but for only such lawful interest as may have accrued by reason of the time consumed incident to the prosecution of the injunction suit, setting up a large indebtedness of $40,CC0, alleged to be due to the complainant, and the added costs imposed upon the defendant by the assertion of this claim, and in adopting that cumbersome and expensive method of ascertaining and enforcing the rights of the parties. This the court can do from an inspection of the record and its knowledge of the proceedings had in the cause, and accordingly allows the said Jones the sum of $1,835.33 on account of interest which accrued by reason of the delay in the entering of the decree in his favor, whereas a judgment at law would have been quickly had, such interest being at the rate of 6 per cent, per an-num from the 1st day of August, 1912, to the 22d day of October, 1913, and the-sum of $2,000 as costs incurred in connection with the expensive and serious litigation in which he was involved, by the complainant Woolf oik, in the injunction proceedings. The testimony before the special master covered 561 pages of typewritten matter, and the report of the special master 82 pages, and the taking of testimony and proceedings incident to the injunction before the master and before the court, and the reference, covered a period of over 18 months. These two amounts, aggregating $3,835.33, the court is satisfied is the least sum to which the defendant Jones is entitled, incident to damages and costs directly resulting from the issuing of the injunction against him, and for which he is entitled to a decree as well under the terms of the bond specifically providing for payment of damages and costs as under the provision to abide the decision of the court, as it would be inequitable, unfair, and unjust for him to be awarded a lesser sum. [3] 2. Coming to the claims presented by the petitioners, Miller and Brown, one for services rendered by the special master appointed at the instance of the plaintiff Woolf oik, the obligor in the bond sued on, and the other for stenographic work before the special master, they [812] would seem to come within the plain terms of the bond given to cover damages and costs incident to the suing out of the injunction suit. Complainant sought the intervention of a court of equity to the end that there might be a full and complete inquiry, investigation, and determination in and of the several transactions set up by him in his bill against the defendant Jones, his claim being that he owed Jones nothing, and that the latter was "indebted to him, and in this suit succeeded in having the prosecution of the suits at law enjoined. He executed the bond in suit conditioned to “abide the decision of the said court” and “to pay all damages and costs which shall be adjudged against him because of the granting of such injunction in case said injunction should be dissolved,” and a most elaborate investigation was then entered upon at his instance. Clearly these claims come within the terms of the bond, and while primarily as between Woolfolk and Jones the former may owe the costs, and a decree may have been entered against him and not Jones for the amount of the two bills in question, still it does not follow that the bond given for costs will not inure to the benefit of the parties to whom the costs are due, if the principal -in the bond, who is tbe complainant in the suit, fails to meet what is decreed against him as costs. There would seem to be no doubt about this proposition, unless it be the mere fact that the injunction bond is made payable to the defendant Jones, but that does not mean that only he can recover upon the bond, if the rights of others arising thereunder have not been satisfied. Its condition determines rights thereunder, and suit can be instituted in the name of the obligee therein for the benefit of persons whose rights arise under the same. The bond could as well have been taken in the name of the United States, or the clerk of the court, or in other names, or security taken in other ways, for instance, by stipulation, undertaking, or the mere deposit of cash or .collateral (Hutchins v. Munn, 209 U. S. 246, 247, 28 Sup. Ct. 504, 52 L. Ed. 776; Allen v. Jones [C. C.] 79 Fed. 698; Foster’s Fed. Prac., supra, § 297; Beach, Modern Equity Prac. §§ 768, 769; 1 Spilling on Injunctions, § 932), and in either event such bond or .other security would inure to the benefit of those whose rights were intended to be protected thereby. The bond here, it will be observed, while made payable to the defendant Jones, was not conditioned to pay only such costs and damages as he, the defendant and obligee alone, might sustain, but “to abide the decree of the said court” and pay all damages and costs which shall be adjudged against the complainant and obligor Woolfolk, because of the said injunction, should the same be dissolved. .Under this bond not only is Jones protected, but persons entitled to costs incurred as well, and therefore the petitioners Miller and Brown are entitled to recover under said bond for the costs claimed by them; all effort on their part to secure the amounts having proved unavailing against the principal therein. [4] 3. The surety in the injunction bond insists that no recovery can be had thereon, inasmuch as the injunction was not wholly dissolved, that is to say, as to the $10,000 suit, and, moreover, because in awarding $25,000 to the defendant Jones, and dissolving the injunction in the second suit, certain conditions were imposed upon him respect [813] ing the perfecting of the title to some of the property involved in the litigation, and counsel cite authorities in support of their view. Much thought has been given to this contention, and the conclusion reached by the court is that the same is not well taken, inasmuch as the suit in equity was a single suit in which Woolfolk, the obligor in the bond in which the surety joined, sought to enjoin the prosecution of two suits, one for $10,000 and the other for $25,000. He only succeeded in part, and the plaintiff in the common-law suit substantially prevailed in the litigation, and so far as the conditions imposed upon the right of the defendant Jones to recover the ,$25,000 are concerned, it was only because of formal and incidental matters regarding the titles, and he promptly complied with and conformed to the court’s requirement in the premises. It follows from what has been said that a decree may be entered against the defendant Joseph W. Woolfolk and the American Surety Company of New York under the injunction bond referred to, for the amounts heretofore ascertained, in favor of the defendant Jones for $3,835.33; to the petitioner Miller $2,500, and to the petitioner Brown ¿310.15. The decree in favor of said Jones should provide that any sums received by him on account of interest by way of damages under this decree should be credited on his judgment against Woolfolk in the equity suit.