Case Name: The American Exchange National Bank, Appellant, v. Auguste A. Goubert and National Surety Company, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-12-30
Citations: 135 A.D. 371
Docket Number: 
Parties: The American Exchange National Bank, Appellant, v. Auguste A. Goubert and National Surety Company, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 135
Pages: 371–375

Head Matter:
The American Exchange National Bank, Appellant, v. Auguste A. Goubert and National Surety Company, Respondents.
First Department,
December 30, 1909.
Injunction — guaranty and suretyship—undertaking — construction — when court may impose conditions—enforcement of undertaking — pleading — conclusions of law — insufficient allegations.
Where an undertaking recites that it was given pursuant to an order, but differs therefrom in the omission of a word, it will he considered in- the light of the order the same as though the word had been inserted.
Where a plaintiff,'siting to recover certain stock, asked for an injunction restraining the defendant from disposing of it in any manner, the court, as a condition of granting the order, may direct the plaintiff to give an undertaking not only to indemnify the defendant for any damages growing out of the issuance of the injunction, but also to secure the indebtedness claimed .to be due-defendant from plaintiff for which it is claimed the stock was originally given as collateral.
When the principal accepted the terms and had the benefit of the injunction, both he and the surety are bound thereby.
Where it has been determined by a dismissal of the complaint that the moving party was not entitled to the injunction, liability on the undertaking accrues. As the undertaking was more" than a statutory one, it is enforcible according to the principles of the common law and no assessment of damages, pursuant to section 623 of the Code of Civil Procedure, heed be shown before an action can be maintained on the undertaking under section 625 of the Code.
Where the first causé of action in a complaint to recover on said undertaking . merely alleges that the indebtedness for which the stock was pledged was a certain sum, but fails to-state any facts upon which to base such conclusion, ai demurrer thereto will be sustained. The allegation is in effect a conclusion of law, and is, therefore, not admitted by a demurrer.
A second cause of action purporting to be for damages sustained in interest, costs and other expenses in consequence of the injunction which fail's to allege the amount of any of the items except by an allegation that defendants are indebted to plaintiff in a given sum, is also demurrable, upon the ground that it fails to state facts constituting a cause of action.
Houghton, J., dissented, in part. '
Appeal by the plaintiff, The American Exchange National Bank, from an interlocutory judgment of the Supreme Court in favor of the defendants, entered in the .office of the clerk of the county of New York on the 17th day of July, 1909, upon the decision of the court, rendered after a trial at the New York Special Term, sustain-. ing the defendants’ demurrer to the complaint on the ground that it fails to state facts sufficient to-- constitute a cause of action.
Joseph M. Hartfield, for the appellant.
George E. Morgan, for the respondents.

Opinion:
Laug-hlin, J.:
The plaintiff, attempted in the complaint to allege two separate causes of action. The first count is on an undertaking given by the defendant Goubert, as principal, and the defendant surety company, as surety, in an action in the Supreme Court by Goubert against the plaintiff to recover 100.— stated hi the order pursuant to which the undertaking was given to be 400 — shares of the capital stock and the certificate therefor of the Goubert Manufacturing Company which the defendant in that action, -the plaintiff in this, claimed to hold as collateral security for the. payment of certain indebtedness from Goubert to it. During the pendency of that action the plaintiff therein applied, on notice, for an injunction order restraining the defendant therein from selling, transferring or in any manner disposing of the stock. Affidavits were read in ' opposition tó the motion and the court made an order granting the application "only upon .condition that the plaintiff, within ten days from the date hereof, file an undertaking, with sureties to be approved by this court, in the sum of one thousand five hundred ($1,500) dollars, agreeing to indemnify and hold the defendant, The American Exchange National Bank, harmless from any and all damage, interest, cost or other expenses by reason of, or growing out of, the issuance or continuance of the injunction, and as security for the amount of indebtedness claimed to be due to the defendant, and for which it claims to hold said certificate of stock as collateral." The order further provided that unless the plaintiff gave such undertaking within ten days, with sureties approved by the court, and served the sanie with notice of allowance thereof upon the attorney for the defendant " that this motion be in all respects denied." The undertaking in question was thereupon given pursuant to that order, but in reciting the conditions of the undertaking, the word "and" contained in the order before the words "as security for the amount of indebtedness" was .omitted. The undertaking, how ever, recites,-in effect, that it was given pursuant to said order. We are of opinion, therefore, that the undertaking is to be construed in the light of the order, the same as if the word " and " were inserted' therein. (Sonneborn v. Libbey, 102 N. Y. 539, 550; Elmendorf v. Lansing, 5 Cow. 468; Ryan v. Webb, 39 Hun, 435; Waldron v. Willard, 17 N. Y. 466; Sanger v. Miner, 54 App. Div. 54.) The learned counsel for the respondents contends that even though the undertaking should be construed with the order, still it should be regarded as a statutory undertaking, given pursuant to the provisions of section 620 of the Code of Civil Procedure, and that the provision of the undertaking to the effect that it is given as security for the indebtedness should tie regarded as surplusage. This claim is made upon the theory that on an application for an injunction the court is powerless to require any undertaking other than that required by the statute, and the case of Palmer v. Foley (71 N. Y. 106) is cited as authority therefor. That decision merely states the general rule that statutory undértakings must conform to the statute, and the case of Bein v. Heath (12 How. [U. S.] 168), which relates to the authority of the Federal courts in requiring undertakings, is therein cited, but it is not controlling here. Of course, where the court merely grants an injunction and fixes the amount of the undertaking, the statute prescribes the form of the undertaking; but a party is not entitled to a temporary injunction as matter of right, at least not in all cases, and it is competent for the- court to grant or withhold the injunction in its discretion. The facts presented to the court upon which the order was granted are not contained in the record, and it must be assumed that they were sufficient to authorize the court to require the undertaking in this form, if it was competent for the court in any case to require such an undertaking. We are of opinion that in a proper case the court may" require, as a condition of granting an injunction, that the party who asks for it shall give an undertaking to pay the claim made against him by the adverse party, and which may be affected by the injunction. Such, evidently, was the intention of the court in the case at bar. The principal has had the benefit of the injunction order, and having accepted the terms imposed- by the court,' both principal and surety are bound. (Goodwin v. Bunzl, 6 Civ. Proc. Rep. 226.) It has been finally determined by a dismissal of the complaint in the other action that the plaintiff therein was not entitled to the injunction, and, therefore, a liability on the undertaking has accrued.
It is also contended that it was incumbent on the plaintiff to show an assessment of his damages pursuant to the provisions of section 623 of the Code of Civil' Procedure, before an action can be maintained therefor by virtue of the provisions of section 625 of the same Code. In this case, however, the court had. no' authority, pursuant to the provisions of those sections of the Code, to determine the amount of the indebtedness as security for which-the plaintiff held the stock. The undertaking, is something- more than a statutory undertaking and created a liability enforcible pursuant to the principles of the common law. (Toles v. Adee, 84 N. Y. 222; Ryan v. Webb, supra; Goodwin v. Bunzl, supra.)
The amount of the indebtedness, to secure- which the undertaking was given, has not been judicially determined. It is, therefore^ necessary for the plaintiff to establish it in this action. The allegation of the first count of the complaint with.respect thereto is "that ' the amount of indebtedness for which said, stock' was originally deposited was- the sum of $2,800, with interest from September 16, 1906, subject to-a credit of $251.16, paid October 3, 1906." We are of opinion that this allegation is, in effect, a legal-conclusion with respect to the indebtedness, and does not - state the facts upon which the conclusion is based. Manifestly, a complaint that the defendant is indebted to the plaintiff in a certain sum ' of money unless the action is based on an instrument in-Writing for the payment of money, iñ which case this form of pleading, if the instrument be set forth, is perhaps authorized (Code Civ. Proc. § 534), would be insufficient, and such a complaint is not aided by the fact that it is alleged that this indebtedness is oyer and above a certain credit or that security was- held therefor, or' that such security has been applied on the indebtedness and leaves- a specified balance. (Abb. Tr. Brief PI. § 273, 915; Bailey v. Richmond, 49 N. Y. Super. Ct. 519; Tate v. American Woolen Co., 114 App. Div.. 106 ; Sampson v. Grand Rapids School Co., 55 id. 163.) If it had been alleged that the indebtedness was for goods sold and delivered a contract obligation .would' have been sufficiently stated. - (Allen v. Patterson, 7 N. Y. 476), but here no fact is stated, and the plaintiff may he proceeding on an entirely erroneous view of the law in stating that defendant Goubert is 'indebted to it.
Inasmuch as conclusions of law are not admitted by demurrer, we are of opinion that the first cause of action, for the reasons stated, is insufficient.
The second cause of action is equally defective. It purports to be for the damages sustained in interest, costs and other expenses to which the plaintiff has been put in consequence of the injunction Order. The plaintiff fails to allege the amount of any of these items other than by stating that the defendants " are indebted to plaintiff in the sum of $1,500" therefor. The second cause of action, therefore, is likewise insufficient. Whether the plaintiff could, in any event, maintain an action on the undertaking, if it were a simple statutory undertaking on granting an injunction without having its damages assessed pursuant to the provisions of the Code of Civil Procedure, need not be decided, for we are of opinion that the total liability on the undertaking may be determined in this action, and that the plaintiff was not obliged to apply to the court to have part of the damages, assessed pursuant to the provisions of the Code of Civil Procedure and then bring separate actions.
It follows, therefore, that the interlocutory judgment should be affirmed, with costs, but with leave to appellant to amend its connplaint on payment of the costs of this appeal and of the demurrer.
Ingraham, McLaughlin and Soott, JJ,, concurred.