Brown v. ComPany

118 A.D. 190, 103 N.Y.S. 53, 1907 N.Y. App. Div. LEXIS 641

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: March 8, 1907
• Docket: No. 1.
• Status: Published

Opinion

Ingraham, J.:

This action was commenced to require the individual defendants to account for their conduct as officers of the defendant Utopia Laud Company, and to annul an annual meeting of the corporation. At the commencement of the action the plaintiff obtained- an injunction restraining the defendants and each of them from al'L acts, including the'annual election of officers or the removal of the present officers and directors from office, with an order to show cause why an injunction should not be continued during the pendency of tíie action. Upon the return of this order to show cause on February IS, 1906, the motion for an injunction was denied, without prejudice to the right to renew upon further papers; and the order to show cause was vacated and set aside. On May 29, 1906, the defendant corporation interposed a demurrer to the complaint, and the issue raised by this demurrer was heard by the Special Term on the 2d of October, 1906 ; and on October 16, 1906, the demurrer was sustained and judgment was entered thereon dismissing the complaint as to such corporation on the merits. The plaintiff was not given leave to amend the complaint, the interlocutory judgment reciting that it was entered on plaintiff’s default. Whereupon the defendant corporation moved for an order of reference to ascertain the damages sustained by the defendant corporation by reason of the injunction which had been vacated. The plaintiff opposed the motion, claiming that it could not be granted until the final determination 'of the action. The motion was granted and a referee appointed. Subsequently the plaintiff made a motion for a reargument of that motion and to vacate the order appointing the referee upon additional papers submitted, the fact then appearing that the judgment of the Special Term sustaining the demurrer had been resettled so as to recite that both parties had been heard upon the issues of law raised by the demurrer and the demurrer had been sustained and that an appeal had been taken from the interlocutory judgment. This application for a reargument seems to have been granted, although no order was entered granting it, and the motion was thereupon reargued before the justice-who had granted the original motion upon the new papers presented; whereupon he denied the motion for a reargument and denied the motion to vacate the order of reference ; and the plaintiff appealed both from the original order of reference and from the order denying the motion to vacate the order of reference.

It seems to be settled that the undertaking 'cannot be enforced until the action is finally determined. In Williams v. Montgomery (148 N. Y. 519) the Court of Appeals reviewed the judgment appealed from in order to determine whether or not the plaintiff was entitled to the preliminary injunction at the time it was granted, so that the question as to the liability of the sureties upon the undertaking should not be foreclosed by the final judgment, which simply

dismissed the complaint upon the ground that the time within which, equitable relief could be granted- had expired, and that in consequence of such lapse of time the plaintiff’s remedy,was solely at law to recover damages. It is stated ¿n the statement of facts-that the preliminary injunction was vacated and the General Term had affirmed the order'vacating it (68 Hun, 416); but it was held that the right to enforce the undertaking depended on the right of the .plaintiff to equitable relief at the commencement of the action. In Johnson v. Elwood (82 N. Y. 362) it appeared that before the injunction was, vacated or dissolved the defendant died. The injunction was subset. quehtly dissolved by a stipulation upon the termination of another ; suit, and the action never was revived;. that subsequent to the death of the defendant, on motion of his administratrix, the plaintiff vras : required to elect whether he would continue the action against her by a supplemental complaint.. As the plaintiff did not elect to continue the action, it was on motion discontinued, without costs to either party, and a judgment of discontinuance was entered accordingly. It was held that there was no final decision- that the plaintiff. was. not entitled to the injunction,, and the order of reference could not be granted. In Musgrave v. Sherwood (76 N. Y. 194) the injunction was continued until the trial, when the complaint was- dismissed; but from that judgment ‘.dismissing the complaint the plaintiff appealed. It was held that until the determination Of the appeal there was no final decision that .the plaintiff was not entitled to the injunction. In deciding that case the court said.:

“ The decision of the Special Term, if allowed to stand, was a determination of the case. .But when an appeal was perfected by the execution of the bond required by the Code, the final decision was postponed until ,that appeal was decided. In the. meantime,, the defendant has no- claim .to an- Order of reference to assess- the dam- .' ages.” In New York Security & Trust Co. v. Lipman (83 Hun, 569) , - a -temporary injunction had been previously granted, from which an appeal was taken by the defendants. The' order granting the .injunction was reversed

* and the reversal was sustained by the : Court of Appeals. (New York Security & Trust Co. v. Lipman, 139 N. Y. 657). Subsequently a judgment' in favor of' the plaintiff, ; permanently enjoining the defendants' from proceeding further against the plaintiff, was entered. The effect of the order of the Special Term, vacating the temporary injunction affirmed by the Court of. Appeals, was 'discussed, and it was held that as the judgment stood, finally determining that the plaintiff was entitled to an in junction, no liability on the undertaking could arise with such judgment standing in force and effect, because the condition of such undertaking was that the damages were not to be payable unless the court finally decided that the plaintiff was not entitled to the injunction.

From these cases it would appear that a referee to assess the defendant’s damages should not be appointed until by the final judgment in the action it is determined that the plaintiff was not entitled to the injunction. The interlocutory judgment sustaining the demurrer to the complaint is not such a final determination as would justify the court in granting an order of reference. The motion as originally made being based, as it was, upon a final determination of the court sustaining the demurrer entered on default, the court was justified in granting the order, but when that judgment was resettled by stating that it was made after hearing counsel for the plaintiff as well as for the defendant, and the defendant had appealed from that judgment, the right of the court to proceed to assess the damages was suspended until the determination of the appeal, and the court should then have vacated the order of reference-This, of course, would be without prejudice to a renewal of the motion for a reference after the action had been finally determined.

If this is the correct view, then the original order which was appealed from should be affirmed, with ten dollars costs .and disbursements to the respondent, but the order denying the motion to vacate the order of reference should be reversed", with ten dollars costs and disbursements to the appellant, and the order of reference vacated, with ten dollars costs.-

Patterson, P. J., McLaughlin, Clarke and Scott, JJ., concurred.

Original order affirmed, with ten dollars costs and disbursements; order deflying motion to vacate order of reference reversed, with ten dollars costs and disbursements, and order vacated, with ten dollars costs. Order filed.

See New York Security & Trust 0o. v, Mydenstéin (7Ó Hun, 216). — [Rep.