Title: Lightsey v. Kensington Mortgage and Finance Corp.
Citation: 315 So. 2d 431
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: June 19, 1975

315 So. 2d 431 (1975)
In re Wayne LIGHTSEY and Debbie Lightsey
v.
KENSINGTON MORTGAGE AND FINANCE CORP., a corp., etc., et al.
Ex parte KENSINGTON MORTGAGE AND FINANCE CORPORATION, a corp., etc.
SC 1101.

Supreme Court of Alabama.
June 19, 1975.
Rehearing Denied July 31, 1975.
Lee Bains, Bessemer, for petitioner.
Norman K. Brown, Bessemer, for appellees.
MERRILL, Justice.
This is a petition for writ of certiorari to the Tenth Judicial Circuit Court to review *432 a decree which held petitioner, Kensington Mortgage and Finance Corporation, in contempt for violating the terms of a preliminary injunction.
This contempt proceeding is collateral to the main case in which the Lightseys, plaintiffs, had purchased a mobile home on the installment plan and they sued the manufacturer, the retailer, Kensington Mortgage and Finance Corporation (hereinafter referred to as Kensington) and others for damages for defects in the mobile home.
On September 18, 1974, plaintiffs moved for a preliminary injunction to enjoin Kensington from foreclosing or collecting further payments on the mobile home until the suit was settled. At the hearing on October 3, the trial court granted plaintiffs' motion, and required the plaintiffs to pay the monthly payments to the clerk of the circuit court and ordered the clerk to deposit the payments in a bank at interest. The preliminary injunction was actually issued on October 9, but Kensington's counsel was present and participated in the hearing on October 3.
The injunction, issued October 9, 1974, provided in part as follows:
The trial judge did not require the plaintiffs to post bond as security for the issuance of the preliminary injunction.
On October 17, 21 and 23, plaintiffs received threatening collection letters from Kensington, even though the regular installment payment had been paid to the clerk on October 10 and the account was not delinquent when any of the Kensington letters were written. On October 23 and October 25, counsel for plaintiffs wrote counsel for Kensington (both practice in Bessemer) requesting that Kensington be notified that the account was not delinquent and to comply with the court's order. (We note that the record shows that Kensington's counsel in Bessemer advised Kensington promptly as to all events that had transpired.) Kensington wrote another letter on November 6 or 7 to the plaintiffs "to discuss repossession of your mobile home."
Plaintiffs filed a motion to punish Kensington for contempt on November 13, and asked for damages in the amount of $50,000.00, and the matter was set for hearing on November 22.
Counsel for Kensington explained to the court that the continued attempts to collect, in violation of the injunction, were due to computer malfunctions, assured the court there would be no more violations, stated that some people in Kensington's organization had been discharged as a result of the error, and that a telegram of apology was being sent to plaintiffs and their counsel. These telegrams were dated November 21 and received November 22.
On November 25, plaintiffs received a series of demand cards from Kensington. *433 Since the court had not ruled on the motion for contempt, plaintiffs moved that they be allowed to present additional evidence in support of their motion for contempt. This hearing was set for December 2.
Both sides presented evidence and argument and the cause was taken under advisement. On December 4, the court entered a "Judgment of Civil Contempt" against Kensington, assessing a fine against it for $20,000.00, directed to be paid to plaintiffs, and no opportunity was provided for Kensington to purge itself of the contempt.
On December 16, the trial court granted a stay of the fine pending a review in this court.
Kensington's first contention is that the trial court erred in issuing the preliminary injunction without requiring a bond. ARCP 65(c) requires a bond. We agree that the trial court erred in not requiring the appellee (applicant for the injunction) to file the required security.
In Board of Water &amp; Sewer Com'rs v. Merriwether Const. Co., 276 Ala. 650, 165 So. 2d 739, this court said:
In Ex parte Miller, supra, the court said:
Rule 65(c), ARCP, provides in pertinent part:
We adopted our ARCP in 1973 and they became effective July 3, 1973. This is our first opportunity to write on Rule 65(c). As stated in Chats v. Freeman (C.A. 7th, 1953), 204 F.2d 764, "* * * a temporary restraining order should not issue without compliance with rule 65(c). To us, the rule seems plain, definite and unmistakable. There is nothing ambiguous about it. We conclude that the trial court committed error in issuing the temporary restraining order without providing for security as required by rule 65(c) of the Federal Rules of Civil Procedure. The judgment appealed from is reversed, and the cause is remanded." See also, Telex Corp. v. International Business Machines Corp. (C.A. 8th, 1972), 464 F.2d 1025.
We are aware that there are necessary exceptions to such an absolute holding in all cases under Rule 65(c), such as requiring only a nominal security, or where the litigant is impecunious or the issue is one of overriding public concern. Wright &amp; Miller, Federal Practice and Procedure, Civil, § 2954, p. 529.
Still, the rule requires "the giving of security by the applicant" for a "restraining order or a temporary injunction" and our courts ought to either follow the rule or show why it should be changed.
We hold that before an injunction or restraining order is issued under ARCP 65, the giving of security by the applicant for the payment of costs, damages and reasonable attorneys fees as provided in Rule 65(c) is mandatory, unless the trial court makes a specific finding based upon competent evidence that one or more of the exceptions, stating them, do exist. See Hutchins v. Thrombley, 95 Idaho 360, 509 P.2d 579. There was no such finding in the instant case and no suggestion by the trial court in its orders that an exception did exist. It follows that the judgment of contempt must be reversed, because "there can be no injunction, and consequently no contempt for its violation, until the bond has been given." Ex parte Miller, 129 Ala. 130, 30 So. 611. See also, Annotation 12 A.L.R.2d 1093, §21.
This disposes of this case in this court, but in view of the fact that more proceedings may be had, we address ourselves to two other questions which arose in this case and which could arise in future proceedings, if any.
The first question is whether the contempt in this case was criminal or civil. The trial court treated it as a civil contempt and we think correctly so, although it partakes of the characteristics of both.
One of the most quoted cases on this subject is Gompers v. Bucks Stove &amp; Range Co., 221 U.S. 418, 31 S. Ct. 492, 55 L. Ed. 797, where it was said:
The subject was treated by this court in Ex parte Griffith, 278 Ala. 344, 178 So. 2d 169, where it was said:
"In Ex parte Dickens, 162 Ala. 272, 50 So. 220, it is stated:
"In Ex parte Hill, 229 Ala. 501, 158 So. 531, this court wrote:
"As stated in 17 Am.Jur.2d Contempt, Section 4:
We affirm these statements.
The second question is whether Alabama permits compensatory fines in favor of the adverse party in contempt proceedings. The trial court did award the fine of $20,000.00 to the plaintiffs in the instant case.
The federal courts allow indemnity or compensatory fines in both criminal and civil contempt cases. The states fall into three general categories: (1) those which have statutes that specifically authorize compensatory fines for civil contempt; (2) those whose statutes are silent as to compensatory fines and that silence is interpreted as a prohibition of such power; and (3) those whose statutes are silent, but hold that in the absence of a statutory prohibition, the power to assess compensatory fines is inherent in the court whose decree has been violated. See 17 C.J.S. Contempt §94, for discussion and citations.
This court has consistently applied a rather strict construction to contempt cases.
We are inclined to adopt the reasoning and result reached by the Supreme Court of California in H. J. Heinz Co. v. Superior Court, 42 Cal. 2d 164, 266 P.2d 5 (1954), when the question of compensatory fines was presented. The court noted the two different positions where the statutes were silent, and noted and cited cases from Idaho and Montana which held that "their statutory provisions precluded the courts from imposing compensatory damages for contempt" and the court concluded:
In Beverly v. Roberts, 215 S.W. 975, the Court of Civil Appeals of Texas, after noting what other courts had done, cited a prior Texas case and said: "It was held in such case that the prosecution for contempt did not warrant a civil judgment in redress of injuries resulting from the acts which constituted the alleged contempt, and that such remedy could only be obtained in a civil suit."
In Ex parte Textile Workers Union of America, 264 Ala. 656, 89 So. 2d 92, the fine was ordered "to be paid to the Register for the use and benefit of Madison County" when the violation was of a temporary restraining order issued by the then chief justice of this court. We know of *437 no statute or decision of this court that has ever authorized a circuit court to impose a fine as indemnity or as compensatory damages to the adverse party in a civil action. We think the question of the amount of unliquidated damages should be regularly tried so that a dissatisfied party could have an initial review by an appeal rather than by a writ of certiorari. An indemnity or a compensatory award of damages must be determined in an ancillary proceeding and is not permissible as an integral part of the court's adjudication of contempt in the circuit courts of this state.
Having held that Rule 65(c) requires "the giving of security by the applicant" and that this is mandatory unless specifically excepted by the court in its order granting a restraining order or a preliminary injunction, we hold that the injunction was not proper and, therefore, there was no contempt.
We are not to be understood as impinging, in this opinion, on the holding in Fields v. City of Fairfield, 273 Ala. 588, 143 So. 2d 177, and that of United States v. United Mine Workers of America, 330 U.S. 258, 67 S. Ct. 677, 91 L. Ed. 884, that violations of an order of a court are punishable as criminal contempt even though the order is set aside on appeal. In both of those cases, it was not contended that any procedural requirements were omitted, while here, the proceeding shows on its face that there was no compliance with Rule 65(c).
Nor are we to be understood as holding that where there is a violation of a valid restraining order and such violation proximately results in damages to the aggrieved party, such injured party is without a remedy.
Unlike the court in Texas, we do not see the necessity of requiring the aggrieved party in such an instance to pursue his remedy in another suit; but, like the California court, we believe either party on demand would be entitled to a jury trial on the issue of damages. We perceive of no reason why this cannot be afforded in the same proceeding on petition of the aggrieved party seeking damages after a finding by the trial court that the opposite party is in contempt. A jury would be impaneled to hear the evidence on such petition and determine whether damages, compensatory or punitive, should, under the usual rules, be imposed.
Reversed and remanded.
All the Justices concur.