Hoon v. Wai, 1378.

• Decision Date: 12 September 1922
• Docket Number: No. 1378.,1378.
• Citation: 26 Haw. 546
• Parties: HONG HOON, ET AL., v. LUM WAI, ET AL.
• Court: Hawaii Supreme Court

26 Haw. 546

HONG HOON, ET AL.,

v.LUM WAI, ET AL.

No. 1378.

Supreme Court of the Territory of Hawai‘i.

Submitted May 25, 1922.

Decided September 12, 1922.

EXCEPTIONS FROM CIRCUIT COURT FIRST CIRCUIT. HON. J. T. DEBOLT, JUDGE.

(Perry, J., dissenting.)

Syllabus by the Court

Where a vendor in an executory contract of sale of chattels refuses to further deliver to the vendee and the vendee brings a suit in equity against the vendor for the specific performance by the vendor of the contract and ancillary thereto causes a temporary restraining order to issue therein restraining the vendor from delivering the chattels, subject to the contract, to others than the vendee and the vendor under the coercive measures of the temporary injunction delivers the same to the vendee at the contract price, upon the dissolution of the temporary restraining order and action by the vendor against the obligors upon the temporary injunction bond the vendor is entitled to recover as damages the difference between the contract price received by him from the vendee and what he could have obtained but for the injunction.

A claim by the vendee against the vendor for the vendor's breech under the circumstances does not arise out of the same transaction or subject-matter of plaintiff's action but is disconnected therewith and is not the subject of recoupment by the vendee.

W. B. Lymer and Marguerite K. Ashford for plaintiffs.

Smith, Warren, Stanley & Vitousek and W. T. Rawlins for defendants.

PETERS, C. J., EDINGS AND PERRY, JJ.

OPINION OF THE COURT BY PETERS, C. J.

The plaintiffs and the assignors of the defendant partners, constituting the See Wo Poi Shop Company, on November 8, 1917, entered into a contract of sale by which the plaintiffs as vendors agreed to sell to the said defendants' assignors as vendees for the period of two years from and after the day of the date thereof all marketable taro that might be grown by the vendors upon certain lands at Kahana, Oahu. There were reciprocal covenants on the part of the vendees to buy. In March, 1918, the vendees assigned their interests in the contract to the See Wo Poi Shop Company and deliveries were made to the company until May of the same year when the vendors discontinued and refused to make further delivery. Thereupon the assignees instituted a suit in equity against the plaintiffs for the specific performance by the latter of the sales agreement of November, 1917, and by way of ancillary relief secured a temporary restraining order to be issued restraining the plaintiffs, their agents, etc., from delivering to any person or persons other than the assignees, until the final disposition of the suit or until further order of the court, any marketable taro that might be grown and harvested by them on the land at Kahana, referred to in the sales agreement. As a condition precedent to the issuance of the temporary injunction the assignees were required to furnish, and they did as principals with the other defendants as sureties, furnish to the plaintiffs as obligors a bond in the sum of $2000 conditional upon and idemnifying the obligees “for and concerning all the damage which they (the obligees) or either of them shall suffer by reason of the issuance of said temporary injunction in the event that it shall be finally determined that the same was improvidently or wrongfully issued.” A demurrer going to the merits of the bill after an interlocutory appeal to this court (see 24 Haw. 696) was sustained with leave to amend and the temporary injunction dissolved. Thereafter the complainants discontinued.

The within action is in debt upon the temporary injunction bond for damages suffered by plaintiffs by reason of the improvident and wrongful issuance of said temporary injunction. The defendants plead the general issue. The court directed a verdict for the defendants. No reasons were assigned by the trial court for withdrawing the case from the jury, but assuming appellees' contentions to have been the same below as here the court's action was evidently predicated upon the claim that plaintiffs had shown no damages, the deliveries of taro made by them pursuant to the terms of the temporary restraining order having imposed no greater burden than their legal obligations to make deliveries under the contract. In this we think the trial court was in error.

Upon the breach by the vendors of their covenants in the sales agreement by refusing to deliver the only remedy accruing to the vendees was an action at law for damages. Equity was powerless to afford relief. The status of the respective parties was fixed by the breach. No legal impediment existed to prevent the vendors from contracting for the sale of their taro to persons other than the vendees. The vendees, not content with the remedy which the law afforded them, improvidently and wrongfully caused the vendors to be restrained from the exercise of their contractual rights and for this restraint they were liable to the vendors in damages for the difference between what the vendors received from the vendees and what they could have obtained but for the coercive measures of the temporary restraining order. The delivery of the taro by the vendors to the vendees during the pendency of the temporary restraining order was due to the restraining order and was not pursuant to the contract. The terms of the contract were immaterial and constituted no defense.

The contract would not constitute a justification for a conversion of the taro by the vendees upon notice to them of the vendors' refusal to make further delivery. It was no less a trespass. The possession of the taro was secured by the vendees under the guise of a temporary restraining order. Its effect was to take from the vendors taro to the possession of which they were entitled by every legal right and to deliver it to the complainants in the equity suit. The court by a dissolution of the temporary restraining order held that this was wrongful. That holding is conclusive. To permit the vendees in this action to justify under the contract is in effect to review the order of dissolution and to approve in this action as legal and within the rights of the vendees what the equity court held was wrongful and illegal. The oft invoked maxim that “the end justifies the means” has no place in the body of the law and is not a measure of the rights of persons and things.

The case of New England Box Co. v. Prentiss, 82 Atl. (N. H.) 531, 532, is similar in all respects to the instant case. There the plaintiffs through the coercive measures of a temporary injunction forced the defendants to deliver to them pine planks which were the subject of an executory contract of sale between the parties. The court said: “In the present proceeding the contract alleged by the plaintiffs as the foundation of the proceedings which have been decided against them is immaterial. The measure of the damages is not the difference between what the defendants did receive and what thy would have received of the plaintiffs under the contract, but the difference between what they did obtain and what they could have received but for the injunction. It has been decided in this case that the defendants could not be compelled to sell the plank to the plaintiffs. * * * As the defendants could not be compelled to sell the plank to the plaintiffs, the sum they would have been obliged to accept for it, if compelled to sell it, can have no bearing on the question of damages occasioned by the wrongful prevention of such sale to others. As the defendants had the right to sell to others, they had the right to such price as they could obtain from them. The foundation of this proceeding is the wrong in granting the injunction. That wrong could not be cured by the trial and conclusion in favor of the plaintiffs of the question already conclusively determined against them.”

Every presumption must be indulged, however, in favor of the judgment and the question arises whether the court's action may be justified by allowing a recoupment by the defendants to the extent of the damages occasioned by plaintiffs' breach.

The plaintiffs in support of their claim introduced evidence tending to prove that during the period of the pendency of the temporary restraining order the market price of taro was in excess of the contract price. This evidence could be rendered equally available to defendants in a proper case. Defendants' damages under that state of the evidence would equal plaintiffs' and, if available as a defense, neutralize plaintiffs' claim, entitling defendants to a directed verdict.

In order to render the defense of recoupment available, however, it must appear that the claim sought to be recouped arose out of the same transaction or subject-matter as the demand sued for. 34 Cyc. 623; Sutherland on Damages, Secs. 172, 178. Plaintiffs' demand is predicated upon a temporary injunction bond; the defendants' upon an executory contract of sale. The obligations of the injunction bond are as foreign to the contract of sale as if the damages which the bond indemnifies were occasioned by a stranger or as if they had resulted from a conversion of the taro by the defendants. There is no connection between the two claims. In an independent action by the assignees for the breach of the contract by the plaintiffs the plaintiffs' claim under the injunction bond would be equally foreign to the...