I. H. P. Corp. v. 210 Central Park South Corp.

• Citation: 228 N.Y.S.2d 883,16 A.D.2d 461
• Parties: I. H. P. CORP., Plaintiff-Respondent, v. 210 CENTRAL PARK SOUTH CORP., Carol Management Corp. and Alfred Kaskel, Defendants-Appellants.
• Decision Date: 12 June 1962
• Court: New York Supreme Court Appellate Division

Page 883

228 N.Y.S.2d 883

16 A.D.2d 461

I. H. P. CORP., Plaintiff-Respondent, v. 210 CENTRAL PARK SOUTH CORP., Carol Management Corp. and Alfred Kaskel, Defendants-Appellants.

Supreme Court, Appellate Division, First Department.

June 12, 1962.

Sylvan D. Freeman, Brooklyn, of counsel (Robert D. Cole, New York City, with him on the brief, Dreyer and Traub, Brooklyn), for defendants-appellants.

Copal Mintz, New York City, for plaintiff-respondent. Before BREITEL, J. P., and VALENTE, McNALLY, STEVENS and STEUER, JJ.

BREITEL, Justice Presiding.

The principal issue is whether punitive damages may be awarded in an action for an injunction and ancillary compensatory damages. Lesser issues are also raised concerning the amount of damages awarded, both compensatory and punitive.

Plaintiff, a tenant restaurant operator in a building owned by one of the corporate defendants and managed by the other, sued to restrain all three defendants from interfering with its occupation and to recover damages sustained when defendants, on two occasions, attempted to bar plaintiff from the leased premises. The individual defendant was alleged to have instigated and directed the interference.

Extended discussion of the facts is not necessary, for defendants do not seriously challenge the sufficiency of the proof except as to the amount of actual damages. It sufficies to say that after sending a notice purporting to cancel plaintiff's lease on the ground that the premises had become vacant, defendants twice broke into the premises during the nighttime and attempted to bar plaintiff's re-entry. The first time, the windows and entrances were boarded up and the electric fuses removed. The second time, steel bars and plates were welded to the door and window frames. The purported lease cancellation was without justification and the two intrusions, as the trial court properly concluded, amounted to defendants' taking the law into their own hands.

The complaint, alleging the lack of adequate remedy at law, prayed for a permanent injunction against further interference with plaintiff's occupancy and treble the actual damages occasioned by defendants' unlawful entries. The action was tried without a jury, and at the close of plaintiff's case an amendment to the complaint was allowed, which alleged that the acts of interference were 'wilful, malicious and wanton.' The prayer was amended to include a claim for exemplary damages.

The trial court granted a permanent injunction and awarded damages of $21,074. The sum of $5,268.50 was awarded as compensatory damages, and treble that amount, thus quadrupling the assessment, was added as exemplary damages.

As will be seen, the compensatory damages must be reduced, but the award of exemplary, or punitive, damages, adjusted to bear a proper relation to the reduced actual damages, may be sustained.

It should be noted, at the outset, that the weight of authority in this State and elsewhere has, in the past, forbidden punitive damage awards in actions in which equitable relief is sought. The reasons are rooted in the historic procedural separation between law and equity--a separation which, in large measure, is no longer sustainable under modern code practice. Although the abolition of the ancient forms of action has not eliminated the several legal and equitable principles separately governing judicial remedies, it has removed outmoded procedural barriers against awarding complete relief in a single action.

The rule which would forbid the combination of equitable relief with an award of punitive damages, was followed by this Court in Dunkel v. McDonald, 272 App.Div. 267, 70 N.Y.S.2d 653, aff'd on other issues as limited by stipulation of the parties, 298 N.Y. 586, 81 N.E.2d 323. This issue, notably, has not been passed upon by the Court of Appeals. In the Dunkel case reliance was placed upon two nisi prius and two federal court decisions (Witkop & Holmes Co. v. Great Atlantic & Pacific Tea Co., 69 Misc. 90, 124 N.Y.S. 956; Winthrop Chemical Co., Inc. v. Blackman, 159 Misc. 451, 288 N.Y.S. 389; United States v. Bernard, 9 Cir., 202 F. 728, 732; Taylor v. Ford Motor Co., 7 Cir., 2 F.2d 473, 474). In none of these was the rationale for the rule explored. More particularly, no effort was made in the New York cases to reconcile the rule with section 8 of the Civil Practice Act (cf. CPLR, § 103, eff. Sept. 1, 1963), which provides that the distinction between actions at law and suits in equity, and the forms of those actions and suits, have been abolished.

In order jurisdictions, some of which have similar statutory provisions, the rule has been similarly applied, although the authorities are far from unanimous (see cases collected in 48 A.L.R.2d 947, Anno: Punitive Damages--Award by Equity; 25 C.J.S. Damages § 117 at p. 709).

Several reasons have been assigned for the rule. First, in Dunkel v. McDonald, supra, and the cases cited there, it was said that a court of equity has no power to award punitive damages (see also, Coca-Cola Co. v. Dixi-Cola Laboratories, 4 Cir., 155 F.2d 59, 63, 64, cert. denied 329 U.S. 773, 67 S.Ct. 192, 91 L.Ed. 665, and other authorities cited in 48 A.L.R.2d at 951-953, supra). This presupposes that courts still sit exclusively either as equity or law courts and cannot act in both roles at the same time in the same case. By statute, however, legal and equitable causes of action may be joined in the same complaint (Civ.Prac.Act, § 258). Moreover, it has long been true that where the proof under a complaint alleging only a claim for equitable relief establishes the right to a legal remedy, that remedy may be granted even though the equitable relief is not warranted (Sternberger v. McGovern, 56 N.Y. 12, 20-21; April Productions v. G. Schirmer, Inc., 284 App.Div. 639, 642-644, 131 N.Y.S.2d 341, 343-345, rev'd on other grounds 308 N.Y. 366, 126 N.E.2d 283, 69 A.L.R.2d 1305; see also City of Syracuse v. Hogan, 234 N.Y. 457, 138 N.E. 406). Of course, there is still preserved the right to a jury trial of legal causes, if demanded, but that will ordinarily pose no practical difficulty, and the two causes may readily be tried at the same time.* In sum, the plea that an equity court lacks power to award punitive damages does not answer the question whether a modern-day court, empowered and directed to dispense both equitable and legal relief in the same action, may award punitive damages and also grant a permanent injunction.

Another argument, or rather, conclusion, is that punitive damages are incompatible with equitable principles, although this appears, largely, as an outgrowth of the procedural separation rather than as an independent substantive rule (see, e. g. Livingston v. Woodworth, 15 How. 546, 559, 56 U.S. 546, 559, 14 L.E.d. 809; Superior Constr. Co. v. Elmo, 204 Md. 1, 102 A.2d 739, 104 A.2d 581, 48 A.L.R.2d 932, supra, and cases cited in annotation at pp. 953-954). The equitable principle with which an award of punitive damages would purportedly conflict is that equity will not enforce a penalty or forfeiture but will only award that which is, ex aequo et bono, or justly, due. The full force of such a principle, as applied to punitive damages, would not only preclude their recovery in an action for equitable relief but would also bar recovery in any other action, for such would amount to splitting a single cause of action (Maflo Holding Corp. v. S. J. Blume, Inc., 308 N.Y. 570, 574-575, 127 N.E.2d 558, 560-561; Hahl v. Sugo, 169 N.Y. 109, 62 N.E. 135, 61 L.R.A. 226).

But, to repeat, the consequence last discussed is governed by procedural forms rather than reason or principle. It is one thing to deny legal relief in a court of equity. It is quite another for the equity side of the court to reach across the invisible line and forbid the law side to grant a legal remedy to which a party is otherwise unquestionably entitled. To do so would presuppose that the traditional equitable remedies--in this case, an injunction and ancillary compensatory damages--will invariably afford complete relief. Such approach, however, would run counter to another equitable principle, of equal standing, that equity will mold its decrees to suit the needs of the particular case. Thus, while tradition and precedent might forbid the Chancellor, as such, from awarding punitive...