Case ID: ny-super-ct_47/html/0477-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ERASTUS D. BENEDICT, Appellant, v. COURTLANDT P. DIXON and EDWARD LARNED, impleaded with HENRY E. KNOX, Respondents.
    
      Removal to federal court. — Undertaking on injunction—action having been removed as to certain defendants, order of reference to determine damages of remaining defendants, under injunction, when not granted.—Adjudication as to right to injunction—what constitutes.
    
    Where an action is begun in a State court, and an undertaking, the obligation of which is to the defendants jointly, is given therein upon obtaining an injunction against defendants, and thereafter such action is discontinued as to certain defendants, and removed to a federal court as to the remaining defendants, which said order of discontinuance is subsequently modified, so as to preserve the rights and remedies of the defendants therein referred to, upon the undertaking, the action in the federal court being pending, and no adjudication as to the right of the plaintiff to an injunction against the defendants therein having been had, an order of reference to determine the amount of damage sustained by the defendants, as to whom the discontinuance was had, should not be granted by the State court.
    But, it seems, that such an order of discontinuance, as modified, if obtained or acted on by plaintiff, is equivalent to an adjudication, as to the defendants therein referred to, that plaintiff is not entitled to the injunction.
    Before Sedgwick, Ch. J., and Van Voest, J.
    
      Decided December 5, 1881.
    Appeal by plaintiff from an order appointing a referee to take proof of and determine the amount of damages, if any, sustained by the defendants, who are here respondents by reason of an injunction order issued in the action.
    When the action was begun, and when the injunction order was made, there were, beside the present defendants, Dixon, Learned and Knox, two other defendants, Williams and Kernochan.
    The undertaking or undertakings on the injunction order, provided that the obligors “undertake in the sum of $500 that the plaintiff will pay to the defendants so enjoined, such damages, not exceeding the before mentioned sum as he may sustain by reason of the injunction, if the court finally decides that the plaintiff was not entitled thereto ; such damages to be ascertained and determined by the court or a referee appointed by the court,” &c.
    Afterwards, on the ex parte application of plaintiff, an order was entered discontinuing the action as to the present defendants, Dixon, Learned and Knox.
    It appears by an affidavit read below, that after-wards “ the plaintiff, proceeding under act of Congress of March '3, 1875, on the ground of diverse citizenship of parties, procured the removal of the said suit to the United States circuit court, for the southern district of New York ; said removal has never been disputed, but has always been recognized by the defendant’s attorneys as perfectly valid and binding.”
    After the proceeding for the removal taken as referred to, the present defendants, who are here respondents, upon notice to plaintiff, obtained an order modifying the order of discontinuance in, among others, the following respect: “Provided, however, that this order is made without prejudice to the rights and remedies of the said defendants, Learned and Dixon, for damages or an award thereof, under the order of injunction herein granted, &c., and the undertakings given by the plaintiff thereunder or either of them, to be nunepro tune.'1''
    
    The respondents then obtained, upon notice, the order- of reference, to assess the damages sustained by them, the defendants, Dixon and Learned.
    
      
      Lawrence & Waehner, attorneys, and George Bliss, of counsel, for appellant, Benedict, among other things, urged:
    I. By reason of the removal to the United States court, February 7,1881, this court was, June 18, 1881, when the order of reference was made, and still is, without jurisdiction or authority in the premises (Act of March 3, 1875; Dillon on Removal of Causes, 3 ed. 91, and cases there cited). The United States circuit court for this district possesses all the jurisdiction which appertains to the subject of appeal (Act of March 3, 1875; Kerr v. Huidekoper, U. S. Supr. Ct., Apl. 11, 1881, Alb. L. J. July 30, 1881; also Blake v. McKim, U. S. Supr. Ct., May 2, 1881, 23 Alb. L. J. 505-6 ; Barney v. Latham, U. S. Supr. Ct., April 18, 1881, Id. 446-7).
    II. The subject of motion was clearly in the federal court, and it is most extraordinary to claim either that the federal court cannot pass upon the questions involved in the motion, or that an action which has been removed according to law can be straddled partly in one court and partly in the other (Dillon on Removal, 3 ed. 93, and cases there cited).
    III. It nowhere appears that final judgment has been entered, and there has been no final determination of action. The motion for reference must for such reason be denied (Lawton v. Green, 64 N. Y. 326).
    IY. This application should be joined in by all of the original defendants, and is therefore premature until the action has been decided as to the defendants, Williams and Kernochan. Otherwise it might prove that Dixon and Learned would secure the full amount of undertaking, and leave the other defendants remediless (Cunningham v. White, 45 How. Pr. 486 ; Dry Dock, &c. v. Cunningham, Id. 458).
    Y. The opinion of this court, at May term, did not assume further than a right to incidentally correct its own orders. The order of reference now appealed from is a radical violation of the provisions of act of March, 1875.
    
      EdwardM. Shepard, for respondents.
   By the Court.—Sedgwick, Ch. J.

As I understand Palmer v. Foley (71 N. Y. 106), that case will require a reversal of the order appealed from. The court said, as appears on page 112: “Coming to the conclusion that there has been no breach of the condition of the undertaking, and that the defendant has no right of action thereon, it would be a useless proceeding to direct a conditional ascertainment of the damages sustained'by the defendant by reason of the order, arid encourage him to bring his action upon the undertaking, only to decide then, what we may as well decide now,” &c.

It is clear, from the terms of the undertaking, that the defendants or respondents, Dixon and Learned, have no several cause of action upon it. The obligation is to the defendants jointly, including the defendants Williams and Kernochan, who remain defendants in the United States circuit court, if the action has been removed, with the issue undetermined, as to whether the plaintiff was entitled to an injunction against them. There is no intention of saying that if the defendants all joined in an action on the undertaking, proof of several damage could not be taken. All that is now meant is, that the conclusive obligation of the contract is that the parties liable shall be subjected to but one suit. It is not even intended to hold that, if the event of the action in the circuit court was that the plaintiff was entitled to hold the injunction against the defendants there, that a several action could not be maintained by the present respondents. But there has not been such an event. It may be that the issue will be determined in favor of the defendants. Then the latter will have a cause of action on the undertaking. Then it would be manifest not only that the obligors were to be held in but one suit, but that it was a beneficial right under" the contract, that the damages should be assessed in a manner that would prevent their sum being greater than $500.

It might be conceived as possible under some circumstances, that part of the order might stand, but proceedings under it to be stayed, until the action in the circuit court be determined. It is hardly worth while to attempt this, when we consider that if there has been a valid removal, the injunction bond has been removed under the statute into the national court, and that court has a power to direct how the damages shall be assessed.

Such a conclusion is not satisfactory, but it seems to be necessary, provided the action has been removed. This has not been denied on the argument here, nor, as I understand, was it below.

If, from the fact that the undertaking on injunction must be split up in the way in which it is now supposed to be, to justify a removal, it could be held that the statute of removal was not intended to apply tp a case where the undertaking could not be wholly removed, and if the respondents had an interest in the removal sufficient to justify their interference in that matter, then, ultimately, the respondents might have benefit from the undertaking. The matter of the removal is not before us.

Whether or not there has been, as to the respondents, within the meaning of the undertaking and the Code, a final adjudication that the plaintiff was not entitled to the injunction, is not clear on the authority. The late authorities of Palmer v. Foley, already cited, and Pacific Mail Steamship Co. v. Toel (Court of Appeals, June, 1881), seem to require that there be some adjudication beside an order of discontinuance. It is certain that a final adjudication in a specific sense is not necessary. In the case last cited, all there was in the nature of a final adjudication, beside the ex parte order of discontinuance, appeared in an order setting aside the injunction made on the plaintiff’s application, ex parte. Much cannot be needed, when the effect of a discontinuance upon the preliminary injunction is considered. I am inclined to think that it is enough if the plaintiff takes an order of discontinuance that saves, as in the present case, the rights and remedies of the defendant under the undertaking. Such a provision shows, as much as an ex parte order setting aside the injunction, an assent of a specific kind to the injunction order being deemed finally disposed of. It is said that the order, as modified, is not an act of the plaintiff; but the order, with the provision, appears of record as made on his motion. The facts show that he has acted on it, by continuing the action only against the other defendants.

There were other questions in the case, but they do not call for discussion after the case has been disposed of on the positions already considered. As the costs are within the discretion of the court, in this case they should not be imposed on the respondents.

Order reversed, and the motion made below denied here, without costs.

Van'Vorst, J., concurred.