Opinion ID: 1668628
Heading Depth: 1
Heading Rank: 9

Heading: release of bonds

Text: The Board also appealed in this case from an order of the trial court releasing two bonds posted by Durbin pursuant to A.R. Civ.P. 65(c). That rule provides: Security. No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs, damages, and reasonable attorneys fees as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained; provided, however, no such security shall be required of the State of Alabama or of an officer or agency thereof, and provided further, in the discretion of the court, no such security may be required in domestic relations cases. Durbin posted three bonds under this provision. The first was for $50,000.00 and was posted in June 1977 and cancelled in April 1981. The release of this bond is not at issue here. The second bond was for $250,000.00 and was posted in August 1979. The third bond was for $215,000.00 and was posted in April 1981. The trial court in August 1981 entered an order on the merits and vacated the injunctions. In December 1981, Durbin filed a motion to release the security which, following a hearing, was granted on March 1, 1982. The Board appeals from this release of security by the trial court. The Board contends that the purpose of the bond is to secure indemnification for costs incurred in opposing the injunction, including attorney fees, court costs, costs of depositions, damages for being wrongfully enjoined, and loss of the use of the money that would have been collected if the new rate structure had not been enjoined. Durbin maintains that Rule 65 only requires security for payment of costs and damages which a party incurs by virtue of having been  wrongfully enjoined or restrained. In the case before us, the trial court specifically found that the Board had not been wrongfully enjoined and therefore released the security, implicitly disallowing any recovery by the Board for any damages flowing from the issuance of the injunctions. Thus, there are, in fact, two issues presented: first, whether the Board was wrongfully enjoined; and second, if so, the damages which have been occasioned by the injunctions. Since we hold that the Board was not wrongfully enjoined, we pretermit consideration of the second issue. In order for a party to be liable on the bond posted pursuant to Rule 65(c), the court must find that the party had been wrongfully enjoined. The mere fact that an injunction has been vacated is not conclusive as to whether or not an injunction was wrongfully issued. In Union Springs Telephone Co. v. Green, 47 Ala.App. 427, 430, 255 So.2d 896, 899 (1971), the Court of Civil Appeals discussed this rule: If it has been judicially determined that a temporary injunction was rightfully issued, though subsequently dissolved, dismissed or discharged, there is no right of recovery in a suit on the bond. Jones v. Ewing, et al., 56 Ala. 360; Satellite Broadcasting Co. v. Tingley, 286 Ala. 571, 243 So.2d 677; U.S.F. & G. Co. v. Int. Bro. of Teamsters, [41 Ala.App. 114, 125 So.2d 526 (1960)]. We agree with this analysis. Thus, the vacation of the injunction did not, in and of itself, establish that the injunction was wrongfully issued. An award of damages pursuant to a security bond is discretionary. The award of damages pursuant to an injunction bond rests in the sound discretion of the court's equity jurisdiction. H. & R. Block, Inc. v. McCaslin, 541 F.2d 1098, 1099 (5th Cir.1976). We cannot say that the trial court abused that discretion in the case before us. The Alabama rule is virtually identical to the Federal rule, F.R.Civ.P. 65(c). This rule was discussed in Page Communications Engineers, Inc. v. Froehlke, 475 F.2d 994 (D.C.Cir.1973). In that case Page brought an action against the Department of the Army to enjoin performance under a contract awarded to a third party. Page posted a bond pursuant to F.R.Civ.P. 65(c). Page lost on the merits of the lawsuit; however, the district court refused to award damages under the injunction bond to the Department of the Army. The Department of the Army appealed the district court's decision not to award damages pursuant to F.R.Civ.P. 65(c). In upholding the trial court's action, the D.C. Circuit Court stated that even where an injunction is wrongfully issued, damages are not necessarily mandated: Although Rule 65(c) required a bond here, it does not follow that the District court was bound to award damages on the bond, without considering the equities of the case. The Rule did not make judgment on the bond automatic, upon a showing of damage. On the contrary, the court in considering the matter of damages was exercising its equity powers, and was bound to effect justice between the parties, avoiding any result that would be inequitable or oppressive for either party. The Rule was not intended to negate the court's duty in this regard. Thus, we hold that the court had discretion to refuse to award damages, in the interest of equity and justice. 475 F.2d at 997. In reaching its conclusion the federal court had considered whether the lawsuit was frivolous, whether the questions involved were already clearly defined and free of ambiguity, and whether the lawsuit had been fairly and honestly pursued. See also, Russell v. Farley, 105 U.S. 433, 26 L.Ed. 1060 (1881). After reviewing the case before us, we are convinced that the trial court was correct in holding that the Board was not wrongfully enjoined, since the case involved issues of crucial importance to both of the parties and questions of constitutional rights not previously adjudicated. Thus, the order of the trial court releasing the security was correct under the circumstances of this case. AFFIRMED IN PART; REVERSED IN PART; AND REMANDED. MADDOX, FAULKNER, ALMON, SHORES, EMBRY and BEATTY, JJ., concur. ADAMS, J., concurs in the result. JONES, J., dissents.