Opinion
November Term, 1896.
Delos McCurdy and John Yard, for the appellants.
H.B. Closson, for the respondents.
The nature of the action and the ground of the decision of the court upon the trial are stated in the opinion of the Court of Appeals affirming the judgment dismissing the complaint ( 142 N.Y. 427). It was there held that the action was brought in affirmance, and not in repudiation or disaffirmance of the agreement alleged, and that in such an action the court was right in refusing to the plaintiff any relief upon a contract which the complaint alleged to be void as contrary to public policy, and illegal as being a combination to enhance prices.
The judgment demanded by the complaint was that the action of the associates to that agreement in assessing an amount claimed to be due from the plaintiff to the associates be decreed to be unlawful, null and void, and that the defendants be enjoined and restrained from taking any action towards the expulsion of the plaintiff from said association, or enforcing against the plaintiff the penalty in said agreement or association contained, and from forfeiting the rights and interests of the plaintiff in and to the guaranty fund of said association. The complaint further prayed that a temporary injunction might issue restraining the association from expelling the plaintiff or enforcing against the plaintiff the penalties in the agreement or association contained, and from in any manner interfering with, removing, dividing or distributing the guaranty fund of said association, or any part thereof, until the hearing and determination of the action.
Upon the commencement of the action a temporary injunction was granted, substantially as prayed for in the complaint. Upon obtaining such injunction order the plaintiff furnished the usual undertaking on the injunction in the sum of $500. Upon the return of the order to show cause why such temporary injunction should not be continued, the defendants asked and obtained a modification of the injunction, and, as modified, it was continued without opposition on the part of the defendants. Later, in the progress of the suit and before the action was reached for trial, the defendants made a motion for a further modification of the injunction, which was granted without opposition, so that the amount of the guaranty fund required to be retained was reduced to the interest claimed in such fund by the plaintiff, to wit, the sum of $40,000. The action subsequently came on for trial at Special Term, when the complaint was dismissed upon the ground that, the contract being illegal as against public policy, the court was not bound to enforce it between the parties. An appeal was taken from that judgment, and on plaintiff's motion the injunction was continued pending such appeal. Upon the continuance of such injunction an undertaking was given by the plaintiff which provided that the sureties upon such undertaking would pay all costs and damages which might be awarded against the plaintiff upon such appeal, and also the sum directed to be paid by said judgment so appealed from, and also contained the following provision: "And do also undertake that if the said judgment, so far as it vacates such injunction, shall be affirmed, the appellant will pay all damages which the defendants have sustained by reason of the said injunction, or by reason of the continuance thereof, the amount thereof to be determined as provided by the statute in such case made and provided." The judgment so appealed from was affirmed by the General Term, and subsequently by the Court of Appeals. Upon such affirmance a motion was made in the court below for the appointment of a referee to ascertain the amount of damages sustained by the defendants, or either of them, by reason of such injunction, and this appeal is taken from the order confirming the report of such referee.
No question is raised as to the power of the court to continue an injunction after a final judgment in the action is entered dismissing the complaint, and the defendants consented to the entry of the order continuing such injunction upon the giving of the undertaking before referred to. The question that we have to determine is as to the liability of these sureties upon the undertaking given by them, and the amount of such liability. By the original undertaking for $500, the sureties agreed that the plaintiff would pay to the defendants the amount of such damages, not exceeding the sum of $500, as they might sustain by reason of the injunction if the court finally decided that the plaintiff was not entitled thereto. By the undertaking given to secure the continuance of the injunction after judgment, the sureties undertook that if the said judgment, so far as it vacates such injunction, should be affirmed, the appellant would pay all the damages which the defendants had sustained by reason of said injunction, or by reason of the continuance thereof.
By the decision of the court on the trial it was determined that the plaintiff was not entitled to the injunction, and, upon the appeal, the judgment, so far as it vacates such injunction, was affirmed, and the sureties upon the undertaking given to obtain the injunction became liable to pay the damages which the defendants sustained by reason of the injunction while it continued; and the sureties on the undertaking given to secure the continuance of the injunction became liable to pay the damages which the defendants sustained by reason of the continuance thereof. The condition of the first undertaking was not that the plaintiff would pay the damages if it should not have a good cause of action other than that alleged in the complaint, but that the plaintiff would pay such damages if the court should finally decide that the plaintiff was not entitled to the injunction in that action; and of the second undertaking that such damages should be paid if the judgment which vacated said injunction should be affirmed. The final judgment of the Court of Appeals affirming such judgment imposed upon the sureties the liability to pay the damages sustained by the defendants.
The referee allowed as the damages sustained by the defendants the counsel fees exclusive of taxable costs and allowances on and before the trial of $1,250, and the counsel fee on the appeal to the General Term of $500. We think that these sums were improperly allowed as damages sustained by reason of the injunction. As before stated, no application was made by the defendants, on the return of the order to show cause why the injunction should not be continued, to vacate the injunction; nor was objection made to its continuance except that the modification before referred to was applied for.
The objection, that the court would not aid either of the parties to this illegal agreement to enforce the agreement or to prevent a violation thereof, plainly appeared on the face of the complaint and was the objection that was finally sustained by the court upon the dismissal of the complaint, and by the Court of Appeals on the affirmance of the dismissal. We must assume that if that question had been presented to the Special Term on the return of the motion to continue the injunction the correct principle would have been applied and the injunction would have been vacated and a trial would not have been necessary to get rid of the injunction. The defendants were not obliged to submit to the restraint until the trial, because they could have disposed of the injunction by opposing the motion to continue it pending the litigation. The contingency, therefore, which would justify an allowance of the expenses of the trial was not presented in this case, and upon the principle established in Andrews v. The Glenville Woolen Co. ( 50 N.Y. 282) such counsel fee was not allowable. There (at page 287) the court says: "The other item objected to was the counsel fee upon the trial. Ordinarily this would not be allowable; but, under the circumstances of this case, I think it was. The defendant made the proper effort to dissolve the injunction before the trial (he had moved to dissolve the injunction). The court required that the question should be deferred, to be disposed of on the trial. A trial was, therefore, necessary, not merely to dispose of the issues, but to get rid of the injunction. Until the cause should be tried the defendant was obliged to submit to the restraint. It was placed in that position by the order of the court, and not by its own laches."
Here the defendants made no effort to dissolve the injunction before the trial. The trial was not, therefore, necessary to get rid of the injunction, and the defendants were placed in this position, not by order of the court, but by their acquiescence in the continuance of this injunction. This question was presented to the General Term of the Supreme Court in this department in Whiteside v. Noyac Cottage Assn. (84 Hun, 557), and it was held that the counsel fee in such case was necessitated, not by the injunction, but by the suit which the association was compelled to defend, and that the counsel fee paid under such circumstances could not be recovered of the sureties. The cases cited in that opinion fully sustain that conclusion. We think, therefore, that the allowance of these counsel fees cannot be sustained.
It appeared, however, that the two modifications of the injunction obtained by the defendants involved an expense of seventy-five dollars, and we think that sum can be fairly said to be damages sustained by the defendants in consequence of the injunction, and that that amount should be allowed instead of the amount of $1,750 damages allowed for counsel fee for the trial of the action, and that the sureties upon the undertaking given to obtain the injunction in the first instance are responsible for the payment of this amount.
The counsel fee upon the reference and the expenses of the referee were properly allowed. The remaining item is the difference between legal interest and the amount of interest received by the defendants upon the funds held under said injunction. The defendants have shown no such loss of interest by reason of this injunction. Section 15 of the contract between the members of the Bridge Manufacturers' Association provided that all the funds of the association should be deposited with such banks or trust companies as the executive committee should direct. When the injunction was obtained on January 28, 1890, one-half of the guaranty fund was on deposit with the United States Trust Company and the remaining one-half with the Union Trust Company. On September 30, 1890, the whole of the fund was deposited with the former company. On February 7, 1891, $170,000 was withdrawn from the United States Trust Company, still leaving $40,000 with that company. What was done with the remainder is not shown. Thus it appears that the defendants did with the guaranty fund, including the plaintiff's $40,000, precisely what they had been doing prior to the injunction. It was not shown that the $170,000, removed from the United States Trust Company on February 7, 1891, was placed more advantageously. On the other hand, it was shown that the removal of one-half of the fund from the Union Trust Company on September 30, 1890, was due to more advantageous rates received from the United States Trust Company. For all that appears, the $40,000 claimed by the plaintiff might have been removed with the rest of the fund on February 7, 1891. The defendants were at liberty to deposit it wherever they saw fit. All that was required of them by the injunction was, that they should not distribute it among the individual members as the property of such members. It is, in fact, the distinct claim of the defendants that they earned with this money all that could be earned in the manner provided for by the contract, viz., by deposit with banks or trust companies; and that very contention, supported by the proof, is fatal to their position. It is true that where one withholds money to which another is entitled, the latter may recover legal interest. That is presumed to be the damages caused by the detention. ( Sanders v. L.S. M.S. Ry. Co., 94 N.Y. 641.) But there was here no withholding. The defendants have had possession of the fund throughout. They have been, to a certain extent, restrained in their use of it. The question is: Did this restraint, as matter of fact, damage them? Did it prevent their securing legal interest or any greater interest than they did? Plainly not, since they used it just as they would otherwise have done. But, if it did, that fact should have been shown. The presumption of damage up to the legal rate of interest has never been applied except where the money has been withheld. In other words, that is the measure of damages for a total deprivation of possession. Here there is simply a qualification of the right attaching to possession and ownership. The same rule ought not to apply in both cases. The legal presumption which governs, when the successful party has not the possession, must yield to the actual fact when that possession has been his throughout.
The order appealed from should be modified by fixing the amount of the damages sustained by the defendants in consequence of the granting and continuance of the injunction at $325, and the order, as so modified, should be affirmed, without costs.
VAN BRUNT, P.J., BARRETT, PATTERSON and O'BRIEN, JJ., concurred.
Order modified as directed in opinion, and, as so modified, affirmed, without costs.