Case ID: ny-st-rep_55/html/0051-01.html
Source: Caselaw Access Project
Author: {"author": "Parker, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William A. Sweet, Pl’ff, v. Henry J. Mowry et al., Def’ts.
    
      (Supreme Court, General Term, Fourth Department,
    
    
      Filed September 23, 1893.)
    
    1. Injunction—Damages—Counsel pees.
    In an action for an injunction the court granted an order to show cause why an injunction pendente lite should not be granted and restrained defendants from acting until the further order of the court. On the hearing of the order to show cause the application was denied and the temporar3r injunction vacated, and the defendants subsequently recovered, judgment in the action. Held, that counsel fees incurred by defendants upon the hearing of the order to show cause were not expenses caused by reason of such temporaiy injunction, as it would only continue, in any event, until the determination of the application f< rthe injunction pendente lite, and hence counsel were not employed to dissolve such injunction, but to prevent the granting of another, and such counsel fees cannot be assessed as damages in a proceeding to determine the damages sustained by reason of such temporary injunction.
    3. Same—Expenses of reference.
    Where no damages are found to have been sustained by reason of the injunction, the expenses of the reference cannot be charged as damages against the plaintiff.
    Appeals by both parties from an order of special term, confirming in part and disallowing in part the report of a referee on • .a reference to determine the damages sustained by reason of a temporary injunction.
    The defendants, or some of them, being officers of the city of Syracuse, were about to issue $500,000 of city bonds, under the provisions of certain acts of tire legislature known as the “ Syracuse Water Acts,” and had advertised for sealed propo■sals for the purchase of them; such proposals to be received and opened on the 9th day of June, 1890, at three oclock in the afternoon. The plaintiff claimed that such acts were unconstitutional, and on the 9th day of June, 1890, commenced an action against all the defendants herein to perpetually enjoin them from proceeding under such acts, and on June 7th applied to a justice of this court for an injunction pendiente life, On such application the justice made an order to show cause, returnable on the 11th day of June, 1890, why such injunction should not be granted, and in the same order restrained the defendants, until the further order of the court, from taking any further proceedings under the statutes in controversy. Such order was served upon 'the defendants June 9th, and was, before three o’clock of that day, so modified that the defendants were permitted to receive and open any bids which might be tendered for bonds in response to said advertisement. Upon obtaining such order, a bond was executed by the plaintiff and a surety in the sum of $250. Prior to the commencement of such action and the issuing of such order, the Onondaga County Savings Bank resolved to bid for $300,000 of such bonds at a premium of two and one-half per cent, above their par value. Daring the forenoon of June 9th the commencement of such action and the issuance of such order became known to the officers of said bank, and they thereupon reconsidered their former resolution, and determined to make no bid whatever. The highest bid received on June 9th was an average of three-sixteenths of one per cent, premium for the bonds, and all of them were subsequently sold in the fall of 1890 to such bidder. On June 11th, upon the return of such order to show cause, the defendants appeared by counsel in response thereto, and argued before the court at special term the questions raised thereby. The court, reserving its decisioú for gome days after argument, then and there made an order requiring the plaintiff to furnish an increase of security, to the extent of $10,000, as a condition for the further continuance of the injunction order, and an undertaking in that amount was thereupon given by the plaintiff and his sureties. On the 16th day of June, 1890, the court rendered its decision, denying the application for an injunction pendente lite and vacating'the temporary injunction then existing. The action proceeded to judgment, which resulted in the defendants’ favor, and such judgment was subsequently affirmed in the court of appeals. Afterwards, on September 19, 1891, an order was obtained by the defendants, referring it to a referee to ascertain the damages sustained by them by reason of such injunction. Upon the hearing before the referee the defendants claimed damages as follows: Por loss sustained in the difference between the selling price of $300,000 of bonds and what would have been received had the Onondaga County Savings Bank bid for the same, $6,937.50; for counsel fees and expenses incurred in the removal of such injunction order, $3,000 ; also, for legal services and expenses on such reference. The referee reported that the defendants had suffered no damages by reason of the injunction, either in the sale of bonds, or expenses of removing it. He found, however, that $1,000 was a reasonable compensation to counsel for services rendered in the hearing upon the return of the order to show cause. He also found that $200 was a reasonable compensation for the defendants’ counsel fees on the hearing before him. On a motion at special term to confirm such report, the court confirmed the report as to the damages claimed to have been suffered on the sale of the bonds, but disallowed it as to the other items, and fixed as the defendants’ damages the $1,000 counsel fee, and the counsel fees and expenses on the hearing before such referee. From such order, both defendants and the plaintiff appeal to this court.
    
      Charles H. Peck, for pl’ff; C. L. Stone, for def’ts.
   Parker, J.

Upon the question whether the market value of the bonds was depreciated below the price which the savings bank contemplated offering by the injunction itself, rather than by the litigation then inaugurated, we are not disposed to disturb the conclusion which the referee reached. We think, with him, that on the whole evidence the depreciation which evidently followed the commencement of the action, and the conclusion of the bank not to bid at all, should be ascribed to the uncertainty which the litigation suggested as to the validity of the bonds, rather than to the fact that the defendants were temporarily enjoined from accepting bids upon the day they had advertised to receive them. The burden is upon the defendants, who claim to have sustained the damages, to show by satisfactory proof that the loss would; not have been incurred except for the issuing of the injunction.. Dwight v. Northern Indiana R. R. Co., 54 Barb., 271.

As to the other question—whether the counsel fees incurred upon the hearing on the return of the order to show cause can be properly charged as damages—we also think that the referee’s-conclusion was the correct one. When the application for an injunction was first made, the judge had the right to deny it until notice of the application was given the defendants, or he might then grant an order requiring them to show cause why such injunction should not be granted. Whichever course he took, he had the right to then “enjoin the defendants until the hearing and decision of the application.” Code Civ. Pro., § 609. In this case he made an order to show cause, and enjoined the defendants until the further order of the court. The defendants were then confronted with the following stituation; they were threatened with an injunction pendente lite, to be granted on the 11th of June, unless they could show cause why it should not be. To make such a showing they must employ counsel, and evidently the order which required them to make that showing, and not the order restraining them from acting in the mean time. was the one which imposed upon them the burden of employing counsel.

The injunction order would continue until June 11th, whether the defendants employed counsel to appear on that day or not, but in no event would it continue any longer, for it was then to be superseded by a new order of court. Although the order made June 7th, in terms, is to continue “ until the further order of court,” we give it no other meaning or greater force than is allowed it by § 609, that is, “ until the hearing and decision of the application,” and therefore we say that when such decision was made, whichever way it might be, an order would be made that would supersede the restraining order already granted. Hence, counsel were, not employed to dissolve that injunction. The defendants would have been relieved from that order whether they appeared on the 11th or not, but they might have been troubled with another order then made, granting an injunction against thera.pendente lite, and hence they took measures to prevent such an order from being granted. They went to the expense of hiring counsel, not because the temporary injuntion had been granted, but to prevent another and more extensive one from being made. If the judge had made the order to show cause, and not granted the temporary injunction, the defendants would have had the same condition before them, and the same expense to incur. Hence, it cannot be said that such expense was caused by reason of such injunction. Hot having been rendered necessary by the temporary injunction, they cannot be assessed as damages in this proceeding. Randall v. Carpenter, 88 N. Y., 293.

As to the expense of the proceeding before the referee, inasmuch as no damages were found to have been sustained by reason of the injunction, they should not be charged as damages against the plaintiff. He did not render the inquiry necessary, and therefore he should not be required to pay the expense of it. Randall v. Carpenter, above cited. The order of the special term should be reversed, and an order entered confirming the report of the referee.

Hardin, P. J., and Merwin, J., concur.