Mulvane v. Tullock

50 P. 897, 58 Kan. 622, 1897 Kan. LEXIS 156

• Court: Supreme Court of Kansas
• Decided: November 6, 1897
• Docket: No. 10214
• Status: Published

Opinion

Johnston, J.

The measure of damages recoverable upon the injunction bond is the principal subject of dispute between the parties. According to the provisions of the bond in question, the obligors bind themselves to the defendants in the injunction proceeding for the payment of “ all damages which they or either of them have already sustained, or may at any time sustain, by reason of the granting or issuing of said restraining order or the granting and issuing of said temporary injunction,” etc. Does this provision of the bond entitle the obligee to counsel fees necessarily expended in resisting and defeating the injunction? We think the question must be answered in the affirmative.

i. Attorneys’lees iecoveiawe. That counsel fees are recoverable as damages upon an injunction bond, has been the uniform holding of this court from the beginning; and this appears to be the view taken by most of the courts of the country. Underhill v. Spencer, 25 Kan. 71; Loofborow v. Shaffer, 28 id. 71; Loofborow v. Shaffer, 29 id. 415; Nimocks v. Wolles, 42 id. 39; 10 Am. & Eng. Encyc. of Law, 999, and cases cited. It appeal’s, however, that there are some decisions of the Federal courts to the contrary, holding that the obligation of an injunction bond imposes no duty upon the obligor to pay the attorney’s fees if the injunction is wrongfully obtained. Arcambel v. Wiseman, 3 Dallas, 306 ; Oelrichs v. Spain, 15 Wall. 211. It is contended that, as the bond was given in a case in one of the Federal courts, the obligation must be interpreted in accordance with the decisions of those courts. The claim is that the rules and decisions of the Supreme Court of the United States have the force of legislative declarations ; that they enter into, and become a part of, the contract of the sureties, who can only be held liable for such consequences as are the direct result of the breach and were within their contemplation at the time the bond was executed. No statute, however, prescribed the conditions of the bond nor limited the extent of liability thereon. It is true that it was within the general equitable power of the Federal court to prescribe the conditions upon which the injunction should issue. It could have granted an injunction without requiring a bond, or it might in its discretion have imposed such terms as it saw fit as a condition of granting the injunction. It did require the giving of a bond, and the bond was executed in accordance with the order of the court. The bond executed is in the ordinary form ; is in the nature of a contract; and the liability of the obligors depends, not on the Federal. Constitution or a congressional act, but on the proper’ interpretation of the bond itself. In the absence of a statute fixing the measure of damages or limiting the recovery, we think the bond should be viewed in the light of an independent contract, and is to be interpreted by the general principles of the common law. It is not a mere incident of the injunction proceeding, nor can this, which is an ordinary action at law, be regarded as auxiliary to the proceeding in the Federal court. Being an independent contract, actionable in any state court where service upon the sureties can be obtained, the interpretation of the forum applies. As the action on the bond could be brought in the state court — and, indeed, the present action could not have been brought in any other — it cannot be said that the sureties contracted with reference to the view of the law taken by the Federal courts. They knew that the obligation was enforceable in the courts of the state of which the plaintiff and defendants were all residents, and that the highest court of that state had consistently held that counsel fees were recoverable upon an injunction bond. That the bond was given in a Federal court, where a different rule of interpretation obtains, has not been deemed to affect the state court in determining the liability upon such bond when suit was brought thereon. Mitchell v. Hawley, 79 Cal. 301; H. & St. J. Rld. Co. v. Shepley, 1 Mo. App. 254; Wash v. Lackland, 8 id. 122; Aiken v. Leathers, 40 La. Ann. 23 ; Corcoran v. Judson, 24 N. Y. 106. In Mitchell v. Hawley, supra, the Supreme Court of California expressly held that the fact that counsel fees are not allowed in United States courts in actions on injunction bonds, does not preclude a recovery of such damages in an action in a state court on an injunction bond given in a United States court. It was said that ‘ ‘ bondsmen in such cases cannot be held to have contracted with the understanding that a suit would be brought upon the bond, if at all, in a Federal court and that their liabilities would be fixed according to the view which that court might be supposed to take of the law. If, for instance, the defendants here and the defendants in the injunction suit were all residents of California, which was probably the fact, an action on the bond could probably not be maintained in a Federal court.” In Wash v. Lackland, supra, it is said :

“There was no stipulation in the bond that it should be sued on in a Federal court. While it is but natural and proper to suppose that the Federal tribunals would adhere to their former rulings, there is yet no guaranty to that effect in the contract. We, therefore, fail to perceive that the makers ‘ intended to create only such obligations as attached under the Federal jurisprudence.’ The interpretation of a contract belongs to the court before which it is pending. That being once settled by a superior and judicial authority, it is of no consequence what might be the interpretation in a different jurisdiction. It is settled in Missouri that attorney’s fees paid in the defense of an injunction suit may be recovered as damages in an action on the injunction bond ; and this, although the bond was given and the injunction obtained in a Federal court.”

Attention lias been called to Moyer v. Block (120 U. S. 207), cited as an authority in behalf of defendant, -which was a case from Louisiana. The Supreme Court of Louisiana allows attorney’s fees as damages upon an injunction bond given in a Federal court, and in Moyer v. Block the judgment of that court was affirmed by the Supreme Court of the United States. The report of the case does not clearly show the damages sought to be recovered in the case, or that attorney’s fees were involved. In the late case of Aiken v. Leathers, supra, in referring to the cases taken from that State to the Supreme^ Court of the United States, the court says :

“ Now a reference to the records of those cases shows that counsel fees were an element of damages in the demand as well as in the proof. Hence we feel authorized to conclude that the decisions which we have considered and consulted are not to be construed as excluding counsel fees as an element of damages in an action at law in a Federal court, and a fortiori in a Louisiana court, for the recovery of damages on a bond of injunction given in and by the order of a Federal court in an equity proceeding.”

In view of the authorities, we would not feel justified in departing from the rule established by the decisions of this court, and applying another to the case before us simply because the bond was given in a proceeding in one of the Federal courts.

^ l 2. Defendants may [unetfonboíá, wien' It is contended that the plaintiff cannot recover attorney’s fees, because the final ruling and entry dissolving the injunction was made upon the motion of Coffin & Stanton. It appears, however, that Mulvane resisted the issuance of an injunction and moved for its dissolution. His motion and that of Coffin & Stanton were set down for hearing before Judge Caldwell at the same time. Only one hearing was necessary; and, as the grounds for dissolution were the same in each motion, it was immaterial which one was formally called up, or in which one the final entry was written. The injunction was dissolved as to all parties, and upon the ground that Woodbury & Moulton were indispensable parties in the injunction case, and, as they were residents of the same state with the plaintiffs, the court was ousted of its jurisdiction. It appears that Mulvane was the party principally interested in the proceeding. He had sold, and was attempting to transfer, property valued at more than a half million dollars. Being a moving party, he assumed the burden of the.defense, and employed and paid attorneys for the other defendants as well as for himself. The record shows that he and Ms attorneys were chiefly instrumental in securing the dissolution of the injunction ; and therefore we think the plaintiff is entitled to recover reasonable attorney's fees for defending against, and procuring the dissolution of, the injunction. The amount of the recovery, however, cannot be determined from the record. The plaintiff cannot be awarded damages for counsel fees incurred generally in the case and not connected with the injunction feature ; and in view of the release of the defendants in the injunction proceeding, other than Mulvane, we think there can be no recovery for the services of attorneys provided in behalf of those defendants.

liable for attorney’s fees, when. As the statement of facts shows, the complainants in the injunction proceeding dismissed their appeal as to Coffin & Stanton, the Topeka Water Supply Company, and the Topeka Water Company, and withdrew so much of their appeal as sought a specific performance oí the contract between the complainants and Mulyane. In consideration of the withdrawal and dismissal, Coffin & Stanton and the Water Companies each agreed to waive, release, and relinquish any and all rights of action that any of them might have against the plaintiffs on the injunction bond. In the same stipulation it was provided that the release should not affect the rights or remedies of the complainants against Mulvane, nor enlarge or lessen the rights or remedies of Mulvane against the complainants. The stipulation was signed by counsel who had represented Mulvane, and it was filed among the papers in the cause. The defendants released by the complainants, Wescott & Hanson, appeared as distinct parties to the injunction proceeding. They were represented by counsel who filed separate papers in the case as if they had separate interests and distinct rights to protect. If, as some of the testimony tends to show, Mulvane agreed to pay the fees of the attorneys who appeared for his codefendants, there is nothing to show that notice of that fact was brought to the attention of Wescott & Hanson before the release was executed. As will be seen, the releases between the parties were mutual. In consideration of dismissing Coffin & Stanton and the other defendants from the case and discharging them from liability, they agreed to release and relinquish any and all rights of action that they had against Wescott & Hanson on the injunction bond by reason of the issuance of the temporary injunction. In the absence of any notice or knowledge that there had been an assumption of the expenses of counsel fees by Mulvane, or an equitable assignment to him of a claim for damages by reason thereof, Wescott & Hanson had a right to assume that they were relieved from liability for any and every expense incurred, or apparently incurred, by the other parties, in and about the dissolution of the injunction. Apparently, they had an interest in the contract which was the subject of controversy ; apparently, they were real parties to the suit, as their pleadings and papers indicated ; and, apparently, they had employed their own counsel and had paid or assumed to pay them for their services. Nothing in the case, that we have been able to discover, indicated that Mulvane had paid the counsel fees for these parties, or that he was bound or obliged to pay them. The fact that Mulvane. had the greater interest, or that he might be liable in damages to Coffin & Stanton in case the contract with them had not been carried out, can hardly be regarded as notice that Mulvane had assumed the liability for the expenses of counsel employed by them. In view of the fact that the stipulation protected the rights of Mulvane, and in view of the counsel who signed the' same, as well as the additional fact that it was filed with the papers in the cause, it cannot be said that Mulvane is not affected by the stipulation. He is entitled to recover the fees of the counsel employed by him and whose services were performed in his behalf. Some of the counsel appeared for Mulvane and also for his codefendants. How much of the service was performed in his own behalf and how much for his co-defendants, the record does not disclose. There is no basis therefore to determine to what extent the release operates, nor the amount of damages recoverable by Mulvane for attorneys’ services performed in his own behalf. For that reason no judgment can be entered upon the findings of the court, and hence for the settlement of these questions of fact another trial must be had. It is also claimed that the court should have allowed the expenses of D. W. Mulvane, amounting to $448, on trips to New York'to procure assistance to get rid of the injunction. If the expense was reasonably necessary, it is recoverable. The testimony on that question is in the nature of-conclusions and is not entirely satisfactory. The court, in its findings, appears to have disallowed the bill, and hence upon the testimony before us we cannot say that it should be allowed. The matter will be open for consideration in another trial of the cause, when there may be a fuller development of the facts concerning the necessity of the expenditure. The trial court held that there had been, before the commencement of the case, a final determination as to whether the injunction had been unlawfully issued, and, as there is no cross-petition in error, that question must be treated as settled, so far as the present case is concerned. The error of the court, however, in holding that the plaintiff was not entitled to recover attorney's fees, requires a reversal of the judgment and a new trial of the cause.