Opinion
March 7, 1962 —
April 3, 1962.
APPEAL from a judgment and two orders of the circuit court for Milwaukee county: MYRON L. GORDON, Circuit Judge. Affirmed.
For the appellant there was a brief and oral argument by Morris Karon of Milwaukee.
For the respondent there was a brief by Grootemaat, Cook Franke of Milwaukee, and oral argument by Robert E. Cook.
Action by plaintiff Jordan-Jefferson, Inc., against defendant Harry Scheer to recover damages for wrongful issuance of an injunction.
The facts hereinafter set forth are taken from plaintiff's second amended complaint and from the opinion of this court and the printed briefs submitted in the prior appeal of Scheer v. Weis (1961), 13 Wis.2d 408, 108 N.W.2d 523.
One Bond owned a corner parcel of land in the village of Whitefish Bay having an 87-foot frontage on North Larkin street and a 173.05-foot frontage on East Fairmont avenue. A house facing North Larkin street occupied the east portion of the parcel. Bond entered into a contract to convey title of the entire parcel to Jordan-Jefferson, Inc. This contract provided that Jordan-Jefferson, Inc., would erect another dwelling on the west half of the parcel and that, upon sale of the new house, the profit would be split with Bond.
On June 21, 1960, Jordan-Jefferson, Inc., filed an application with Weis, the village building inspector, for a permit to erect a residence and garage on the west 78.05 feet of the former Bond parcel. Scheer owned and occupied a home across the street from the location of the proposed new dwelling. Having learned of the pending application, early in July, 1960, he instituted a circuit court action to enjoin Building Inspector Weis from issuing the building permit. This relief was sought on the ground that the village zoning ordinance prohibited the division of the Bond parcel and the erection of a second house thereon. Jordan-Jefferson, Inc., did not intervene in this action, but, coincident with its commencement, Scheer obtained an order requiring Weis, to show cause why a temporary injunction should not be entered. This order temporarily restrained the issuance of the building permit pending a hearing and determination. The hearing on the order was held on July 11, 1960, and testimony was taken over a period of several days. By order entered July 29, 1960, the court directed that the temporary restraining order be removed unless Scheer appealed to the supreme court by August 1, 1960. Thus, by implication, the application for a temporary injunction was denied.
Scheer immediately appealed from the order of July 29, 1960, and furnished an undertaking pursuant to sec. 274.25, Stats., to the effect that if the order was affirmed Scheer would pay all costs and all damages which Weis might sustain as a result of the continuance of the restraining order. Upon the appeal, the supreme court affirmed the order of the circuit court.
Thereafter, plaintiff Jordan-Jefferson, Inc., commenced the instant action for damages. In the second amended complaint plaintiff termed the temporary restraining order an injunction and alleged that it was "baseless" and "improvident" and that, in obtaining it, Scheer was actuated by malice. It was further alleged that the restraining order deprived plaintiff of the use of its property and caused it to lose a profitable sale. Plaintiff's compensatory damages were stated to be $10,000.
Defendant Scheer first moved to make the original complaint more definite and certain. Plaintiff amended the complaint, defendant demurred on the ground of failure to state sufficient facts to constitute a cause of action, and the court entered an order sustaining the demurrer. Plaintiff then served a second amended complaint and defendant again interposed a general demurrer. The court, by a further order, sustained the demurrer without leave to plead over, and directed that judgment be entered dismissing the second amended complaint.
Judgment was entered accordingly on October 13, 1961. Plaintiff has appealed therefrom, and also from both orders sustaining the demurrers.
In order to recover damages resulting from the wrongful procurement of an injunction, the elements of a cause of action for malicious prosecution must be present. 28 Am. Jur., Injunctions, p. 850, sec. 334; 43 C.J.S., Injunctions, p. 1054, sec. 281 a. Plaintiff contends that its complaint states facts constituting the required elements of a cause of action for malicious prosecution grounded on a prior civil action, except the element that the prior action was brought by defendant against plaintiff. However, plaintiff contends that an action for wrongful injunction will lie against one, who without probable cause maliciously secures an injunction which damages another's property, or restrains its use, even though the person so damaged was not a party to the prior suit for injunction. We shall, therefore, confine this opinion to the very narrow issue of whether one not a party to a prior suit for injunction may maintain an action for wrongful injunction.
There is a statement in 28 Am. Jur., Injunctions, p. 850, sec. 334, that supports plaintiff's contention. However, the only case cited to support this is Interstate Nat. Bank v. McCormick (1923), 67 Mont. 80, 214 P. 949, 34 A.L.R. 721, which is also the principal case relied upon by plaintiff. The facts in that case are: Defendant McCormick ordered some hay from a seller located at Kansas City, Missouri. Fifteen cars of hay were shipped to Billings, Montana, under order bills of lading attached to sight drafts drawn against McCormick. The plaintiff bank was a holder in due course of such bills of lading, and hereby became owner of the hay. McCormick paid the drafts covering nine of the cars of hay and took delivery. He then commenced an action against the nonresident seller for damages because the hay was not as represented and secured an injunctional order restraining the railroad companies, whose joint agent at Billings had possession of the remaining six cars of hay, from making any disposition thereof pending the further order of the court. The bank was not made a party to the suit. However, it filed an unsuccessful petition to have the hay released, which was resisted by McCormick. Thereafter, McCormick voluntarily moved to set aside the injunctional order because the hay had become worthless, and it was discharged.
The Montana court held that McCormick's act in securing the injunctional order wrongfully deprived plaintiff bank of its property and constituted a conversion thereof. Because of this, it was only necessary for the bank to allege facts constituting a cause of action for conversion without going further. A judgment for the value of the hay, as determined by the jury, was affirmed. A careful reading the court's opinion discloses that the holding of liability was not grounded on wrongful injunction. Injunction was merely the device whereby McCormick wrongfully exerted dominion over plaintiff bank's hay so as to cause a tortious conversion thereof. In the instant case, the restraining order issued against the building inspector did not result in any direct interference with plaintiff's possession of its real estate. Therefore, we do not deem that this Montana case is authority for the principle for which it has been cited by plaintiff.
Plaintiff's brief cites no case other than Interstate Nat. Bank v. McCormick, where one not a party to the original injunction suit has been permitted to recover damages arising from the issuance of the injunction. We have been unable by independent research to find any other case so holding. Therefore, we consider that the issue presented must be decided on the basis which provides the result most consonant with proper public policy. The learned trial court, discussing the public-policy issue in its memorandum opinion, stated:
"If the plaintiff's position is correct, all persons collaterally affected by an injunction could maintain suits. For example, let us assume that an annexation proceedings were improvidently enjoined; could every homeowner sue to recover for the interim loss of sewer service or school access?
"In my opinion, one who erroneously obtains an injunction may be liable for damages on the grounds of malicious prosecution which grounds are expressly disclaimed in the case at bar. Such a person may also be liable to one whose property has been taken. However, the scope of responsibility should not be broadened to collateral personages whose property has not been seized, whose acts are not restrained, or who are not parties to the litigation."
We feel this reasoning is eminently sound. Furthermore, this court has traditionally taken a restrictive rather than a liberal position with respect to actions for malicious prosecution, grounded on the institution of prior civil actions, which have terminated unfavorably to the parties who instituted them. Schier v. Denny (1960), 9 Wis.2d 340, 101 N.W.2d 35, and cases cited therein. In keeping with this policy, we are of the opinion that a suit for wrongful injunction should not be maintainable by one not a party to the prior injunction suit.
Another compelling reason exists in the instant case for denying relief to plaintiff on the theory of wrongful injunction. This is the fact that plaintiff had available an adequate remedy to protect itself which it did not see fit to employ. Such remedy was to promptly intervene in the action of Scheer v. Weis and demand that Scheer be required to furnish bond as a condition to entering a temporary injunction, or continuing the temporary restraining order in effect pending appeal by Scheer to this court. Plaintiff had such an interest in the subject matter of the controversy as to require it, upon request, to be made a party for its own protection. Sec. 260.19 (1), Stats.; Fish Creek Park Co. v. Bayside (1956), 273 Wis. 89, 92, 76 N.W.2d 557.
In White v. Strong (1929), 230 Ky. 119, 18 S.W.2d 960, two partners, doing business as Kentucky River Hardwood Company, commenced an action to quiet title to a certain tract of land against Strong and others. Defendants counterclaimed asserting that title was in themselves and obtained a restraining order which enjoined plaintiffs and their agents from entering upon, cutting, and removing timber therefrom. A copy of the order was served upon White who had a contract from Kentucky River Hardwood Company for the cutting of the timber on the disputed land. After the injunction was dissolved, White brought an action for damages on the injunction bond. The Kentucky court held that White was not entitled to maintain an action on the bond because he was not a party to the action in which the injunction had been issued. The court pointed out that White could have applied for an order in the first action discharging the restraining order unless a bond to protect him was given, but had not seen fit to do so.
Plaintiff cites Confidential Loan Mortgage Co. v. Hardgrove (1951), 259 Wis. 346, 48 N.W.2d 466, as authority to sustain the position that its sole remedy was not to intervene in the prior action of Scheer v. Weis. In the Confidential Loan Case the plaintiff was the assignee the conditional seller's title to a tractor and trailer unit sold under a conditional sales contract. Defendant Hardgrove, as sheriff of Fond du Lac county, attached the unit in an action brought against the conditional vendee. Thereafter, plaintiff instituted a replevin action against Hardgrove to recover possession of the unit. Hardgrove defended on the ground that the unit was in custodia legis by reason of the attachment, and, therefore, replevin was not maintainable. This court held that plaintiff was entitled to possession and could maintain the replevin action without the necessity intervening in the attachment proceeding. This was because the unit was not deemed to be in legal custody by reason of the prior attachment. We deem the crux of this determination was the holding with respect to custodia legis. It has no efficacy as a precedent on the issue of whether intervention is the sole remedy of one who is not a party to an injunction action but who would be entitled to intervene therein and demand discharge of a restraining order unless adequate bond were ordered for his protection.
Plaintiff also cites cases where recovery has been permitted for wrongful attachment or garnishment in favor of one not a party to the attachment or garnishment proceeding. These cases deal with situations where legal and equitable ownership of chattels is split between two or more parties as a result of chattel mortgages or conditional sales contracts, and the attachment or garnishment proceeding has been instituted only against the legal or equitable owner and not both. An example of this is where the attachment proceeding, in which the property was seized, named only the chattel mortgagor as a party defendant, and the chattel mortgagee brings the action for wrongful attachment. This type of situation is readily distinguishable from the restraining order issued in Scheer v. Weis where there was no seizure of plaintiff's property or any direct interference with its then present use or occupancy.
Plaintiff advances a possible alternative cause of action besides that of wrongful injunction. This suggested alternative cause of action is for unlawful interference with plaintiff's contract rights. Mendelson v. Blatz Brewing Co. (1960), 9 Wis.2d 487, 101 N.W.2d 805, is cited in support of this contention. However, this court is not prepared to hold that an unissued building permit constitutes a contract. Therefore, the restraining order issued in Scheer v. Weis did not constitute a wrongful interference with any contract rights of plaintiff.
While not material to the disposition of the instant appeal, we deem it advisable to correct a mistaken view of the law advanced by plaintiff's counsel in argument. Counsel argued that, in Scheer v. Weis, the trial court acted improperly in issuing the temporary restraining order without requiring bond. Apparently counsel deemed that sec. 268.06, Stats., required that a bond be furnished as a condition to issuing such temporary restraining order. However, in Laundry, etc., Local 3008 v. Laundry W. I. Union (1958), 4 Wis.2d 542, 555, 91 N.W.2d 320, 73 A.L.R.2d 843, we held this statute did not apply to temporary restraining orders.
By the Court. — Judgment and orders affirmed.
GORDON, J., took no part.