New York & Long Branch Railroad v. Dennis

40 N.J.L. 340 | N.J. | 1878

Lead Opinion

The opinion of the court was delivered by

Beasley, Chief Justice.

This case comes before this-court under the following circumstances: The New York and Long Branch Railroad Company, the plaintiff in error, was defendant in a suit in chancery, brought in the name of the attorney general, on the relation of Easton and McMahon-calling in question the right of such company to erect a bridge-over the Raritan river, at Perth Amboy. That case is reported in 9 C. E. Green 49. Upon the filing of that bill the Chancellor granted a restraining order, and required a bond,, which was executed by the defendants in this suit, the condition of which was in the words following, to wit: “ Now,, therefore, the condition of the above obligation is such, that if the above bounden James T. Easton and James McMahon shall well and truly pay, or cause to be paid, unto the said, the New York and Long Branch Railroad Company, Edward G. Brown, H. R. Campbell and J. B. Campbell, such, damages as they, or any of them, may sustain by reason of the restraining part of said order, if the court shall eventually decide that the complainants were not equitably entitled to such restraining order, then the above obligation to be void,, otherwise to remain in force."

Subsequently such proceedings were taken in this chancery suit that, upon argument, this restraining order was dissolved,. an injunction refused, and the hill dismissed. Thereupon tin's present suit was brought in the Supreme Court on the bond above described, and at the trial the plaintiff proved the instrument and the decree of the Chancellor dissolving the restraining order, refusing the injunction and dismissing the bill. Upon the case thus made the plaintiff was ordered to be called.

We are not possessed of the advantage of having the views of the judge before whom this case was tried, and therefore cannot be certain with respect to the ground on which this non-suit was ordered; but, from intimations in the briefs of counsel, I am led to conclude that it proceeded from the opinion that a forfeiture of the bond sued on could not be shown by simply proving that the Chancellor had decided that the complainants in the suit in equity were not, by the law and the fact, entitled to the restraining order at the time it was made, but that, in addition to this, it must appear that the application for such order was made in bad faith. This opinion seems to have been induced by the remarks of the court in the case of Smith v. Kuhl, 11 C. E. Green 98, in which it was said that these bonds are intended to secure bona fid.es in the application for the injunction, and to provide indemnity to the party enjoined against the effects of an injunction unfairly obtained. The question is, can this view be sustained ?

The first and fundamental difficulty with which it is encountered, is that it cannot be made to harmonize with the language of the instrument in question. That language is plain and perfectly reasonable and intelligible, and is entirely unaffected by the context; and such language, existing in either a contract or in a rule of court, cannot be controlled or made to mean something that it does not import. The rule is universal that a court is not warranted in adding to or taking away anything from such language. The bond in question declares its own liability to forfeiture “ if the court shall eventually decide that the complainants were not equitably entitled to such restraining order.” This the court has decided, for it will hardly be pretended that the restraining order would have been dissolved and the bill dismissed if the complainants were “equitably entitled” to it. It is consequently an obvious, and, as it seems to me, an indisputable addition of an extraneous matter to require that, to make this bond forfeited, mala fides in the application for the restraining order must be exhibited.

The instrumental condition calls for the existence of a single state of facts, viz., the absence of an equitable right to the restraining order; the proposed construction calls for the existence of two states of fact, viz., the absence of such equitable right, and mala fides. This latter term seems to me like the introduction of a pure interpolation into this condition, for it is certain that a man may not be equitably entitled to an injunction, no matter how honest his intentions and proceedings may be in applying for it. For example: a merchant is enjoined when about to ship his goods to a foreign part; the bill has been filed by a creditor for discovery, and the injunction obtained on the ground that the contemplated removal of the goods is in fraud of creditors; the discovery turns to the discomfiture of the complainant; he made his application in good faith, supposing that he was entitled to an injunction, but in point of fact he was not so entitled, as is manifested by the supposed defendant’s answer. If, in such á case as this, a bond similar to the one in suit had been given, would its forfeiture be saved by the fact that the suit was instituted and carried on with an honest intention? It is impossible to say that justice would be served by such an interpretation, for there is surely no reason why the creditor, in the casé put, should obtain his discovery at the expense of the unoffending defendant, but it is the better and, as I think, the conclusive objection to such an interpretation, to say that it will not square with the clear terms of the instrument to be construed.

Nor have I found that elsewhere in the practice of courts of equity, this limited effect has been given to these injunction bonds. It seems to have been the prevailing opinion that it is but common justice that the loss incident to preliminary injunctions, which are founded to some extent on decisions adverse to defendants before they are heard, should fall on the party seeking them, if, in the end, it appears he was in the wrong. Both parties being innocent of wrongful intention, he who occasions the loss should bear it. This is the rule at law and in equity, and is the dictate of natural justice.

The practice in the English courts has long been settled. The complainant is held on his bond, without any reference to his intention being good or bad. If he fails to sustain the equity of his bill he must pay the damages incurred. Daniell’s Chan. Prac.

In Novello v. Jones, 31 L. & Eq. Rep. 280, a bond had been given on the continuance of an injunction, and the question arising as to its enforcement, Knight Bruce, L. J., said he would consider it unjust to the defendant “ to disregard or not give effect to the undertaking, which was the price of the continuation of the injunction.” And in the same case, Turner, L. J., expressed his views in these terms: “The plaintiff came upon a title at the time doubtful, there being conflicting decisions upon it by the superior courts of law, and therefore it was that in granting the injunction the court put the plaintiff on this undertaking;' and the result having ultimately turned out unfavorable to the plaintiff, it seems to follow that it is the duty of the court to carry the undertaking into effect.”

Thus the complainant was held on his bond, although there was no pretence of mala fides, his defeat being occasioned by the settlement against him of a doubtful question of law. Bonds having a similar scope are in frequent use on the equity side of several of the courts of this country, and I have failed to find any instance of an instrument of this kind being employed merely for the end of indemnifying the defendant against the evil consequences of the fraud or bad faith of the complainant.

There is also another consideration of much weight tending in the same direction. These bonds are taken in our practice by force of the forty sixth rule of the Court of Chancery. This rule is of long standing, and is substantially a copy of one of the rules of practice of the old court of equity of the State of New York, and the obligations given by force of this original rule have been repeatedly construed by the courts within whose jurisdiction it prevailed.

In such adjudications it does not appear to have occurred to the mind of any judge that a decision eventually made to the effect that the complainant was destitute of a title to the equitable relief to which the injunction was ancillary, did not work a forfeiture of the bond without any regard to the question whether the complainant in applying for the writ had acted with candor and fairness. There is quite a crowd of cases of this character which I will cite without other comment than the remark that they hold that, in the language of one of them, “ the object of the rule was to afford to the party enjoined full and ample security for all damages he might sustain by reason of the allowance of an injunction against him, without giving him an opportunity to be heard in opposition to such allowance.” Leavitt v. Dabney, 2 Sween. 617; Cayuga Bridge Co. v. Magee, 2 Paige 116; Sullivan v. Judah, 4 Paige 444; Carroll v. Sand, 10 Paige 298; Edwards v. Bodine, 11 Paige 223; Loveland v. Burnham, 1 Barb. Ch. 66; Lawton v. Green, 64 N. Y. 326.

This construction is, as I have already said, the only one that comports with the explicit terms of this class of instruments. Nor does it appear that any practical objection can be made against such exposition of them, for they are entirely under the control of the Chancellor until he issues his order to put them in suit. If the equity of any possible case should require such order to be withheld, it is within the discretion of the Chancellor to take such course. But when the suit is permitted, and it is brought, a court of law can look only to the language of the instrument, in order to ascertain its legal effect, and must put it in force according to its terms.

In the present case, the decision of the Chancellor, finding that the complainant had no title to the equitable relief prayed for, and dismissing the application for injunction, the bill operated as a forfeiture of the bond, in the absence of all evidence showing that such decree was founded on some fact which did not exist when the restraining order was granted ; and the consequence is, that at the trial there should have been an assessment of damages founded on such forfeiture.

The judgment of the Supreme Court, I think, should be reversed.

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Dissenting Opinion

The Chancellor,

(dissenting.) Easton and McMahon, relators and complainants in the case of Attorney General and others v. New York and Long Branch R. R. Co., 9 C. E. Green 49, were, on the granting of the order to show cause why an injunction should not be issued in that case, required to give bond to the defendants, with sufficient surety or sureties, in the penalty of $10,000, according to the forty sixth rule of the Court of Chancery; the bond to be approved, as to form and sufficiency of sureties, by one of two special masters of that court therein named.

That rule provides that in cases where an injunction is granted ex parte, the Chancellor or master may, at his discretion, take from the complainant a bond to the party enjoined, in such sum as may be deemed sufficient, either with or without sureties, conditioned to pay to the party enjoined such damages as he may sustain by reason of the injunction, if the court shall eventually decide that the complainant was not equitably entitled to such injunction.

The bond was given. It recited that the Court of Chancery had granted the order to show cause with an interim, restraining order, and it was conditioned that the complainants, Easton and McMahon, should well and truly pay, or cause to be paid to the defendants, such damages as they or any of them might sustain by reason of the restraining part of the order, if the court should eventually decide that the complainants were not equitably entitled to such restraining order.

The order to show cause was, after argument, discharged, the injunction denied and the bill dismissed. The provision for the ascertainment of the damages by the Court of Chancery was omitted from the condition of the bond. How this omission occurred does not appear. It was not by direction or with the consent or acquiescence of the court, but probably through mistake of the person who drew the bond. After the discharge of the order, application was made, on the part of Brown and Campbell, two of the defendants, for the delivery of the bond to them, in order that they might prosecute upon it at law for the recovery of their damages by reason of the restraining part of the order. In view of the omission above referred to, the application was granted. Easton and McMahon v. New York and Long Branch Railroad Co., 11 C. E. Green 359.

Suit was brought on the bond in the Supreme Court. At the trial, the plaintiffs proved that the injunction was denied, but made no further proof on that point. The justice who presided at the trial non-suited them, on the ground that they had not proved sufficient on that head to entitle them to judgment. In this he was clearly right, unless the mere fact of the refusal of the injunction of itself worked’ a forfeiture of the bond, and the obligors could not avail themselves of any excusatory facts or circumstances to protect them against the forfeiture.

The Vice Chancellor, in his opinion upon the application for delivery of the bond, said that the question whether the condition of the bond had been broken or not must be left to the judgment of the court in which the action on the bond was to be instituted, and that if the Court of Chancery had not, under that bond, power over the surety, it should not attempt, as against him, to adjudge whether a cause of action existed or not; that that should be left to the determination of the court of law. It appears that that court adopted the view of the Court of Chancery in Smith v. Kuhl, 11 C. E. Green 97, on the subject of the forfeiture of such bonds. The view there expressed was, that the object of the bond taken under the rule is to secure bona fides in the application for the injunction. The language of the court was: “ The bond given under this rule is security only for damages, in case the complainant shall prove not to have been equitably entitied to the injunction when he applied for it. That the injunction was dissolved is not of itself evidence that he was not equitably entitled to it. And though it may have been improvideutly granted, and for that cause be dissolved before-answer, that will not, if the case be fairly presented by the bill and verification, entitle the defendant to whom it is given to look to it for damages. But if the action be actually or presumably mala fide, as for example, if the bill present grounds for relief by injunction which have no existence, or distort or falsely color facts, or omit facts in the knowledge of the complainant, or 'of which he might, and in fairness ought to have informed himself, and which would have had an important bearing against granting the injunction if stated in the bill; in short, if the application be disingenuous, mala fide, or made without due regard to the rights of the court or the defendant in the application, the complainant is not to-be regarded as having been equitably entitled to the injunction. A complainant may come into court for a discovery, and on that ground pray an injunction. If the discovery be made, and the result be "ad verse to him, and the injunction therefore be dissolved, he may, nevertheless, have been equitably entitled to the injunction. The object of the rule is to secure bonafides in the application, and to provide indemnity to the party enjoined against the effects of an injunction unfairly obtained.”

This view of the subject is opposed by the construction which was given to the rule in 'the State of New York, from which it was derived. There it was held that the obligor in the bond was liable if the injunction was dissolved, without regard to the question of bona fides in the application; that the bond was in fact an absolute undertaking that the injunction should be sustained—an absolute undertaking that not only the court granting it, but the appellate tribunal should sustain it; that is, not only that the Chancellor who granted it should continue to the end to hold the same views in regard to the complainant’s right to it which he held when he granted it, but that the Chancellors who succeeded him, and who might pass upon the cause, should take the same view of it, both as to law and fact, which was taken by him, and that a majority of the members of the appellate tribunal should entertain such a view of the case as to sustain the injunction. It was urged, in the brief of the counsel of the plaintiffs in error, that the construction given to the rule in New York attaches to it authoritatively and controls its construction here.

I am unwilling to concede this doctrine when applied to a rule of court. The construction of our own courts upon any rule of their own must, with us, outweigh that of the court from which the rule was taken, and I think that the construction which has, in practice, been given to this rule in this state for the many years (more than twenty five) during which it has existed, is a far more important element in the adjudication than the construction which has been given to it by the courts of New York. During all the time that the rule has been one of the regulations of the Court of Chancery of this state, up to the year 1875, there was no instance of even an application to the court for leave to prosecute, or for an ascertainment of damages under such a bond. And yet there were many bonds taken under the rule on granting injunctions, and some of those injunctions were dissolved on bill alone, and very many after answer. The fact that recourse was not had to the bonds for damages in any case, is conclusive evidence of the construction which was put upon the rule by the bar. In 1875 the application in Smith v. Martin, ubi supra, the application in this case, and an application in Green v. The Philadelphia Freestone and Granite Company, 11 C. E. Green 443, were made. In the last mentioned case, it may be remarked it was held that the bond was forfeited on the ground that the complainant, with full knowledge of the facts, misrepresented them in the bill, and there was a reference to a master to ascertain and report the defendant’s damages.

It is hazarding nothing, I think, to say that a construction of these bonds which shall make the obligors absolute guarantors of the complainants’ success in maintaining the injunction, will be a surprise to the bar. It surely will be so to the persons who have become sureties in these bonds. If it was intended by the framer of the rule to make the bond the means of indemnity to the person enjoined, in case of the dissolution of the injunction from any cause whatever, qucerente invito, the language used was very inapt, to say the least of it. The condition of the bond is for the payment of such damages as the person enjoined may sustain by reason of the injunction, if the court shall eventually decide that the. complainant was not equitably entitled to it. It will be perceived that the forfeiture is to arise, not if the court shall eventually decide that the complainant is not entitled to an injunction in the case, but that he was not equitably entitled to the preliminary injunction granted. The reference is to the preliminary injunction alone. Nor is it obvious why the court should have used the term “ equitably ” in that connection if it was not intended to have reference to the bona jides of the complainant in the application. The term was adopted by those who were acquainted with the exact meaning of words. In a court of equity he who obtains an injunction always obtains it because he is supposed to be equitably entitled to it. What, then, is the signification of the word “ equitably,” in the connection in which it is used in the rule, if it be not “fairly,” unless, indeed, it is merely redundant?

In my opinion, a fair construction of the rule refers- the obligation of the bond to the fairness of the application for an injunction at the time when it was made. If more is intended, a bond witii a different condition should be required —one clearly and explicitly stating the liability which the complainant 'and his sureties are to incur. So long as relief by preliminary injunction is part of the remedies of our law, the complainant who shows himself by his bill to be entitled to it, is entitled to it at the hands of the judge, who is authorized to grant it merely on presenting a case which, in the judgment of the judge, warrants it; just as he is to the extraordinary remedy of the writ of ne exeat.

Said Chancellor Green, in Flavell v. Dodd, 2 C. E. Green 255, the application being for security against loss to the defendant by reason of the injunction, “ Upon the case made by the bill, the right of the complainant is clear, and the infraction of that right established. Under such circumstances the fact that the injunction occasions a serious loss to the defendants affords no. just ground of complaint.” He did not, in that case, consider himself bound to require the complainant to guaranty by bond, either with or without surety, that the injunction should be maintained, or that it should eventually appear, even to the Chancellor himself, that the complainant was equitably entitled to it. The Chancellor may, indeed, if he sees fit to do so, require security, but his demand must be reasonable. He is not at liberty to impose conditions which amount to a denial of the relief. He cannot justly put upon the shoulders of the complainant the burden of the responsibility for the error in judgment of the court. No pecuniary responsibility arises to any one for those errors. Even the judge himself cannot be held to pecuniary responsibility for them. It is the right of the complainant to. present his case, and it is the duty of the Chancellor dfecide upon it. The complainant is entitled to the judgment of the court upon the case presented, and to the relief to which the court may adjudge him to be entitled thereon. And though injury ensue to the party enjoined in such case, it is to be put down to the same account as that which ofttimes attends appeals and the delay in deciding causes; it is to be put down to the necessities of the administration of justice, against which no suitor is bound to indemnify his adversary.. To require a complainant to furnish an indemnity to the defendant, amounting to a guaranty of eventual success of the former, at all events, before granting a preliminary injunction to restrain the latter, would, in very many cases, be equivar lent to an absolute denial of justice. The destruction of the poor would indeed, in such case, be their poverty. The helpless would also be hopeless, and the friendless at the mercy of their oppressors. Nor is it any answer to say that the Chancellor may exercise his discretion in such cases, and require no bond where the complainant is unable to find one. He can exercise no discretion in such case but a judicial discretion, and the indemnity, if required, is taken for the protection of the party enjoined, who is as much entitled to it on the application of a poor person as on that of a person of wealth. To the rich even the requirement would often be equivalent to a denial of justice, for the best cause may be eventually lost by the death or absence of one of the complainant’s witnesses, or other like accident. Indeed, it may be lost by the death, or even absence, of the complainant himself, or of his agent. There are many casualties which may deprive a worthy complainant of relief in a most meritorious cause, and insure to the defendant a- most unrighteous triumph. The uncertainty of the law is not confined to the results of the deliberations of petit juries, but it not unfrequently arises from radical differences of opinion and views between courts equally learned, wise, painstaking and conscientious ; the final settlement of the question involved, the one way or the other, depending in such cases merely on the order in which the differing tribunals pass upon it.

These considerations incline me against any construction of the rule in question which will make the bond given under it a guaranty of more than the bonafides of the complainant in the presentation of his application for injunction. ' As has been already said, if the court shall, for any reason, deem the case a proper one for security for the final result, it is easy for it to say so, and to require a bond which shall expressly and explicitly state the obligation; and in my judgment, that would be a better practice than to hold that the complainant and his sureties in the bond under the rule under, consideration may, if the court deem it proper to do so, be held liable to the person enjoined for all damages up to the amount of the penalty of the bond occasioned by the injunction, without regard to the bonafides of the complainant.

It may be added, that to so construe the rule as to subject the bonds taken under it to a construction different from that which by common understanding has been put upon them (to say nothing of the construction put upon them by the court by which, in the course of its practice, they were taken,) to hold that they impose a liability which it has not been hitherto supposed that they embraced, will cause no embarrassment in future practice, for not only would the construction put upon them in Smith v. Kuhl be conclusive as to all bonds taken under the rule since that decision, but the rule itself is, of course, subject to modification, alteration and repeal by the court which made it. The question is only interesting in connection with bonds taken before that decision.

In the case in hand, how did it appear by the evidence that the complainants were not equitably entitled to the restraining order which they had obtained ? The fact that the order to show cause was discharged did not establish it, and no further or other proof on that point was offered. It had been decided, indeed, that they were not entitled to an injunction; but did that fact of itself establish the fact that they were not entitled to the ad interim restraining order, the stay of proceedings, until the matter of the propriety of granting an injunction could be heard? Surely, it did not. It is to be borne in mind that the restraining order was merely ad interim, granted merely for the purpose of inquiry as to whether there should be a preliminary injunction or not.

There are cases in which it is but simple justice, no less to the defendant than to the complainant, that the defendant should be required to refrain from action until the court can determine whether the complainant will probably be entitled to relief against him. In such case the ad interim, stay is prudential merely.

In this case the question submitted to the court was the construction of an act of the legislature conferring a franchise, and it involved the construction of the grant itself. The bill was filed by the attorney general at the relation of Easton and McMahon, and by the relators as complainants with him. Its object was to restrain the defendants from further proceeding in the erection of a bridge over the Raritan, between South Amboy and Perth Amboy, and for the removal of so much of the structure as had been built. The application was for a preliminary injunction, which, as before remarked, was not granted. Had the defendants been permitted to proceed with their work pending the consideration' of the application, and had the conclusion at which the court arrived been adverse to them, the action of the court in declining to stay the work in the meantime would have been the subject of complaint as well as of criticism. Whether, in such cases, the complainant should be required to indemnify the party enjoined against the loss caused by the ad interim stay, must depend on the circumstances, and it must depend on the bona fides of the application and on nothing else.

In this case there was nothing shown to the justice who tried the suit upon the bond from which he could adjudge that the application for an ad interim stay was not in all respects bona fide; nothing from which he could adjudge that the Court of Chancery had eventually decided that the complainants were not entitled to the restraining order. That the order was discharged, and the injunction refused and the bill afterwards dismissed, did not establish it. Neither the pleadings nor the affidavits in the cause were offered. Nothing but the order to show cause, the order denying the injunction, the decree of dismissal and the bond. Not even the order for the delivery of the bond for prosecution was offered. There was in fact nothing before the justice from which he could decide that the complainants were not equitably entitled to the restraining order when they obtained it, unless the bond was to be held to be an absolute undertaking that the Chancellor would grant the injunction. He did not so hold, and ought not to have held so. The non-suit, therefore, was proper.

It will not be out of place to ádd that the embarrassment in this case has arisen from the fact that the bond was sent to a court of law for prosecution. When the order that the bond be delivered for prosecution at law. was made, the subject was res nova; the decision in Wauters v. Van Vorst, 1 Stew. 103, had not been made. In that case it was held substantially that the Court of Chancery has power over bonds given* in the course of practice therein ; and on the principle of that decision the order for delivery in this case would not have-been made, but the subject of liability and consequent damages would have been disposed of in the Court of Chancery,, notwithstanding the omission from the condition of the bond, of the provision that the damages should be ascertained by that court. I am of opinion that the judgment should be-affirmed.

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Dissenting Opinion

Reed, J.,

(dissenting.) I think that the plaintiff should' have proven a distinct decree, made by the Chancellor in the-equity suit in which this bond was given, to the effect that, when the injunction was ordered in that suit the complainant, was not equitably entitled to the same. As there was a failure to do this, I think the non-suit was right, and the judgment should be affirmed.

For affirmance—The Chancellor, Reed. 2.

For reversal—The Chief Justice, Dixon, Scudder, Van Syckel, Woodhull, Clement, Dodd, Green, Lilly, Wales. 10.