City of Younkers v. Fed. Sugar Ref. Co.

• Decision Date: 11 July 1917
• Parties: CITY OF YOUNKERS v. FEDERAL SUGAR REFINING CO.
• Court: New York Court of Appeals Court of Appeals

221 N.Y. 206

116 N.E. 998

CITY OF YOUNKERS

v.FEDERAL SUGAR REFINING CO.

Court of Appeals of New York.

July 11, 1917.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by the City of Yonkers against the Federal Sugar Refining Company. From an order of the Appellate Division of the Supreme Court (177 App. Div. 728,164 N. Y. Supp. 516), modifying and confirming an order of the Special Term, both parties appeal. Order reversed, and petition dismissed, with costs in all courts.

Collin, J., dissenting.

Thomas F. Curran, of Yonkers, for plaintiff.

Charles Philip Easton, of New York City, for defendant.

CARDOZO, J.

In August, 1907, the city of Yonkers began an action against the Federal Sugar Refining Company to enjoin a public nuisance. It sued in behalf of the people of the city, whose comfort and property were affected by the use of soft coal in the furnaces of the defendant's factory. On August 27, 1907, there was served an order to show cause why an injunction should not be granted during the pendency of the action. On the return day, August 29th, the defendant made default, and the injunction issued. The injunction order was served on September 4th, but the plaintiff consented that its effect should be suspended until September 7th. On September 13th the defendant obtained an order to show cause why the injunction should not be vacated. The motion was granted on September 17th, the defendant stipulating for a reference of the issues and a speedy trial. The referee gave judgment in favor of the plaintiff. The Appellate Division reversed the judgment and granted a new trial on the ground that the city was without authority to redress the wrongs of its inhabitants (136 App. Div. 701,121 N. Y. Supp. 494). On appeal to this court the order was affirmed, and judgment absolute was entered in favor of the defendant (207 N. Y. 724, 101 N. E. 1098).

A petition to assess the damages resulting from the temporary injunction followed. The injunction had been in force from September 7th to September 17th. The referee found that during that interval the defendant's output was diminished and its profits decreased by the use of hard coal, and he fixed the damage at $34,578.21. He also allowed counsel fees of $3,200. The total award with disbursements was $38,753.21. The Appellate Division reduced the item of damage to the business to $20,000. The other items it approved. Both parties have appealed to this court, the plaintiff from the award as reduced, and the defendant from the reduction.

There was no liability at common law for damages resulting from an injunction erroneously granted unless the case was one of malicious prosecution. Lawton v. Green, 64 N. Y. 326, 330;Palmer v. Foley, 71 N. Y. 106, 108;Mark v. Hyatt, 135 N. Y. 306, 310,31 N. E. 1099,18 L. R. A. 275;Russell v. Farley, 105 U. S. 433, 26 L. Ed. 1060;Meyers v. Block, 120 U. S. 206, 7 Sup. Ct. 525, 30 L. Ed. 642;Krzyszke v. Kamin, 163 Mich. 290, 128 N. W. 190. Sometimes the chancellor made his order conditional upon the plaintiff's undertaking to assume the damages. Russell v. Farley, supra; Smith v. Day, 21 Ch. Div. 421; Chancery Rule [N. Y.] 31. But without such a condition the defendant had no remedy against the honest and cautious suitor. Public policy was thought to demand that the free pursuit of remedies in the courts should not be obstructed by the menace of liability for innocent mistake.

The Code requirements for security upon applications for provisional remedies must be read in the light of the rule at common law. Invariably the undertaking is limited to a sum specified by the court or judge. That is true in cases of arrest (Code Civ. Proc. § 559); attachment (section 640); and injunction (sections 611, 613, 616, 620). The general rule for injunctions is prescribed by section 620:

‘Where special provision is not otherwise made by law for the security to be given upon an injunction order, the party applying therefor must give an undertaking, executed by him, or by one or more sureties, as the court or judge directs, to the effect that the plaintiff will pay to the party enjoined, such damages, not exceeding a sum, specified in the undertaking, as he may sustain by reason of the injunction, if the court finally decides that the plaintiff was not entitled thereto.’ Code Civ. Proc. § 620.

The rule is not changed where the plaintiff signs without sureties. The undertaking is still the source and measure of liability. Lawton v. Green, supra; Palmer v. Foley, supra. It is true that the court may increase the amount of an undertaking which is found to be inadequate. Code Civ. Proc. § 567, arrest; section 629, injunction; section 682, attachment. A plaintiff then has the opportunity, if he thinks the security excessive, to abandon his injunction. In any case, he counts the cost, and assumes a liability whose maximum is a determinate amount.

Special rules apply, however, to provisional remedies granted at the instance of municipal corporations. In such cases no security is required. Until an amendment in 1894, the statute was as follows (Code Civ. Proc. § 1990):

‘Each provision of this act, requiring a party to give security, for the purpose of procuring an order of arrest, an injunction order, or a warrant of attachment, or as a condition of obtaining any other relief, or taking any proceeding; or allowing the court, or a judge, to require such security to be given, is to be construed as excluding an action brought by the people of the state, or by a domestic municipal corporation; or by a public officer, in behalf of the people, or of such a corporation; except where the security, to be given in such an action, is specially regulated by the provision in question.’

Under those provisions, a municipal corporation was exempt from liability altogether. Doyle v. City of Sandpoint, 18 Idaho, 654, 112 Pac. 204,32 L. R. A. (N. S.) 34, Ann. Cas. 1912A, 210. An amendment in 1894 modified the exemption. By chapter 90 of the laws of that year, there was added to section 1990 the following provision:

‘But in any action in which a domestic municipal corporation, or a public officer in behalf of such corporation, shall be, by the foregoing provisions of this section, excused from giving security on procuring an order of arrest, an order of injunction or a warrant of attachment, such corporation shall be liable for all damages that may be so sustained by the opposite party by reason of such order of arrest, attachment or injunction in the same case and to the same extent as sureties to an undertaking would have been, if such an undertaking had been given.’

The effect of that amendment is now to be determined.

The statute does not say that a municipal corporation shall be liable without qualification for all damages sustained by reason of the injunction. It says that the corporation shall be liable for all such damages ‘in the same case to the same extent as sureties to an undertakingwould have been if such an undertaking had been given.’ The defendant construes the statute as if...