224 F. 673 | 4th Cir. | 1915
The question for decision on this appeal is the liability -of the surety on an injunction bond, and the material facts appear to be these:
The appellee, John-T. Jones, brought two actions at law in a state court of Virginia against Joseph W. Woolfolk, one for $10,000 and the other for $25,000, basing his right to recover upon certain contracts previously entered into between the parties. These actions were removed into the District Court of the United S'tates for the Eastern District of Virginia. Before trial, Woolfolk filed a bill on the chancery side of the court, reciting at length the actions against him and the contracts upon which they were founded, alleging defenses that could not be set up in a suit at law, and asking that the prosecution of the actions be enjoined and the entire controversy adjudicated by a court
“Tlie condition oí this obligation is such that, whereas, Joseph W. Wool-folk having' ihed on the chancery side of the United States District Court for the Dasteni District of Virginia a bill against the said John T. Jones, and having obtained an allowance of an injunction as prayed for in said bill from said court: Now, therefore, if the said Joseph W. Woolfoik shall abide the decision of the said court, and pay all damages and costs which shall be adjudged against him because of the granting of said injunction in case the said injunction shall ho dissolved, then this obligation shall be void; otherwise, to remain in full force and virtue.”
There was a demurrer to the bill, which was overruled, answer was filed, and the cause referred to a special master, with instructions to inquire and report. After an extended hearing the special master found and reported, as stated in the stipulation o f counsel:
“That Jones was not entitled to recover anythin;-? on the $10,000 claim asserted in the first suit at law, and that, as to the $25,000 claim asserted in the second suit at law Jones was entitled to $8,051.10, subject to offsets allowed Woolfoik which reduced Jones’ net recovery to $6,220.22, with interest from March 14, 1910; and the special master recommended that Jones and Woolfoik each be required to do certain things before receiving the benefit of the master’s findings.”
By decree of October 23, 1913, the District Court overruled defendant’s exceptions to this report so far as the §10,000 suit was concerned and perpetually enjoined its prosecution. As to the $25,000 suit the court held, disagreeing with the special master, that Jones was entitled to recover the sum for which he had sued, subject to certain conditions with which Jones afterwards complied. It is sufficient to say of these conditions that they related to and established rights of Woolfoik which he could not assert in the law action and which could be secured to him only in a court of equity. In January, 1914, after Jones had met the requirements of the November decision, the court made the further decree;
“That the Injunction heretofore awarded to salt! Joseph W. Woolfoik, enjoining the prosecution of the suit at law brought against him by the defendant John T. Jones to recover the sum of 825,000, be and the same is hereby dissolved, and that the said suit at law be dismissed at the costs of the said Joseph W. Woolfoik.”
There was a further provision that if Woolfoik failed to pay the sums awarded against him by these decrees within 60 days the surety on his bond be required to show cause why it should not be held liable. The final decree of August 6, 1914, adjudged the surety liable for the special master’s fees of $2,500, and the stenographer’s charges of $310.15, and also liable to Jones for the—
“sum of $3,835.33 on account of ini crust which accrued by reason of the delay in the enferirig of a decree in his favor, whereas a judgment at law would have been quickly had, ’5 * * and 1ho sum of $2,000 as costs incurred in connection with the expensive and serious litigation in which ho was involved by the complainant Woolfoik in the injunction proceedings.”
The foregoing suggests the views we entertain as to the liability of the surety. This depends, in our judgment, upon whether the injunction was properly awarded, and the result of the litigation removes that question from the field of doubt. The injunction was merely ancillary to the equity suit, and the object of granting it was
The asserted liability of the surety company rests altogether upon the decree of November, 1913, which in form of words dissolved the injunction. But this dissolution, to treat it as such, was not ordered because the injunction had been improvidently awarded, but because it had fully performed its office. The controversy between Jones and Woolfolk was completely determined in the equitable proceeding, to which the injunction was an aid, and it was then of no consequence whether the injunction was dissolved or made perpetual. The whole litigation was ended in that proceeding, so far as the trial court was concerned, and this accomplished the purpose for which the injunction
“And, in general, wherever an injunction is rightfully obtained upon sufficient grounds, and is afterwards dissolved upon the removal of those grounds, •complainant should not be required to pay damages upon the dissolution, ■having had good cause for the injunction in the first instance. Thus, where judgments for the purchase money of real estate are enjoined on the ground •of the defective title, and the dissolution is granted upon the title being made good, no damages should be allowed against complainant.” High on Injunctions, § 1678.
“It is held that no right of action accrues upon an injunction bond until the court has finally decided that plaintiff was not entitled to the injunction, or until something occurs equivalent to such decision. But no damages'can be recovered by the party enjoined, although the Court of Appeals decided the suit against plaintiff, unless the judgment amounts to a determination that plaintiff was not entitled to the injunction at the time it was issued.” 22 •Cyc. 1027. See note 39.
The conclusions above stated make it unnecessary to refer to the •other questions discussed in brief and argument. The decree against the surety company must be reversed, and the cause remanded for further proceedings in conformity with this opinion.
Reversed.