Lightsey v. Kensington Mortg. & Finance Corp.

• Decision Date: 19 June 1975
• Citation: 315 So.2d 431,294 Ala. 281
• Parties: In re Wayne LIGHTSEY and Debbie Lightsey v. KENSINGTON MORTGAGE AND FINANCE CORP., a corp., etc., et al. Ex parte KENSINGTON MORTGAGE AND FINANCE CORPORATION, a corp., etc. SC 1101.
• Court: Alabama Supreme Court

Page 431

315 So.2d 431

294 Ala. 281

In re Wayne LIGHTSEY and Debbie Lightsey v. KENSINGTON MORTGAGE AND FINANCE CORP., a corp., etc., et al.

Ex parte KENSINGTON MORTGAGE AND FINANCE CORPORATION, a corp., etc.

SC 1101.

Supreme Court of Alabama.

June 19, 1975.

Rehearing Denied July 31, 1975.

Lee Bains, Bessemer, for petitioner.

Norman K. Brown, Bessemer, for appellees.

MERRILL, Justice.

This is a petition for writ of certiorari to the Tenth Judicial Circuit Court to review a decree which held petitioner, Kensington Mortgage and Finance Corporation, in contempt for violating the terms of a preliminary injunction.

This contempt proceeding is collateral to the main case in which the Lightseys, plaintiffs, had purchased a mobile home on the installment plan and they sued the manufacturer, the retailer, Kensington Mortgage and Finance Corporation (hereinafter referred to as Kensington) and others for damages for defects in the mobile home.

On September 18, 1974, plaintiffs moved for a preliminary injunction to enjoin Kensington from foreclosing or collecting further payments on the mobile home until the suit was settled. At the hearing on October 3, the trial court granted plaintiffs' motion, and required the plaintiffs to pay the monthly payments to the clerk of the circuit court and ordered the clerk to deposit the payments in a bank at interest. The preliminary injunction was actually issued on October 9, but Kensington's counsel was present and participated in the hearing on October 3.

The injunction, issued October 9, 1974, provided in part as follows:

'* * * Defendant, Kensington Mortgage and Finance Corporation, be and the said Defendant is hereby enjoined from collecting further payments from Plaintiffs, and is restrained and enjoined from initiating foreclosure proceedings against Plaintiffs or the mobile home units as described in the complaint, or the real estate described in deed attached to said Defendant's recorded financing statement (UCC--1) as recorded in the office of the Judge of Probate of Bibb County, Alabama.

'It is further ordered, that commencing with the payment due in the month of October, 1974, Plaintiffs shall make said payments to J. B. Vines, as Deputy Clerk and Register of this Court, and shall continue to make said payments to said Register on or before the 1st day of each month, and not later than the 10th day of each month thereafter, pending final judgment in this cause. The said J. B. Vines is hereby authorized and directed to deposit said payments in a local financial institution at the highest prevailing daily interest rate.'

The trial judge did not require the plaintiffs to post bond as security for the issuance of the preliminary injunction.

On October 17, 21 and 23, plaintiffs received threatening collection letters from Kensington, even though the regular installment payment had been paid to the clerk on October 10 and the account was not delinquent when any of the Kensington letters were written. On October 23 and October 25, counsel for plaintiffs wrote counsel for Kensington (both practice in Bessemer) requesting that Kensington be notified that the account was not delinquent and to comply with the court's order. (We note that the record shows that Kensington's counsel in Bessemer advised Kensington promptly as to all events that had transpired.) Kensington wrote another letter on November 6 or 7 to the plaintiffs 'to discuss repossession of your mobile home.'

Plaintiffs filed a motion to punish Kensington for contempt on November 13, and asked for damages in the amount of $50,000.00, and the matter was set for hearing on November 22.

Counsel for Kensington explained to the court that the continued attempts to collect, in violation of the injunction, were due to computer malfunctions, assured the court there would be no more violations, stated that some people in Kensington's organization had been discharged as a result of the error, and that a telegram of apology was being sent to plaintiffs and their counsel. These telegrams were dated November 21 and received November 22.

On November 25, plaintiffs received a series of demand cards from Kensington. Since the court had not ruled on the motion for contempt, plaintiffs moved that they be allowed to present additional evidence in support of their motion for contempt. This hearing was set for December 2.

Both sides presented evidence and argument and the cause was taken under advisement. On December 4, the court entered a 'Judgment of Civil Contempt' against Kensington, assessing a fine against it for $20,000.00, directed to be paid to plaintiffs, and no opportunity was provided for Kensington to purge itself of the contempt.

On December 16, the trial court granted a stay of the fine pending a review in this court.

Kensington's first contention is that the trial court erred in issuing the preliminary injunction without requiring a bond. ARCP 65(c) requires a bond. We agree that the trial court erred in not requiring the appellee (applicant for the injunction) to file the required security.

In Board of Water & Sewer Com'rs v. Merriwether Const. Co., 276 Ala. 650, 165 So.2d 739, this court said:

'Assignment of error 7 charges that the court erred in granting an injunction against appellants without requiring appellee to give bond. Title 7, §§ 1041 and 1042, Code 1940, require bonds to be given before the issuance of injunctions in specific situations, and Tit. 7, § 1043, applicable here, provides that 'in other cases' the party seeking the injunction must give bond. Our cases hold that it is reversible error to issue a temporary restraining order or a temporary injunction without requiring complainant to give a bond as required by the statutes. Persons v. Summers, 274 Ala. 673, 151 So.2d 210; Loop National Bank of Mobile v. Cox, 255 Ala. 388, 51 So.2d 534; Morris v. Sartain, 224 Ala. 318, 140 So. 373; Ex parte Miller, 129 Ala. 130, 30 So. 611.'

In Ex parte Miller, supra, the court said:

'In this state it is provided that injunctions can be issued alone, upon the execution of bonds, such as are prescribed by the statute. Section 786 of the Code provides, that no injunction must issue to stay proceedings after judgment in a personal action until the party applying for it gives bond and security, as prescribed. Section 787 directs, that no injunction must issue to stay proceedings at law for the recovery of land, unless the party give bond and security as provided; and section 788 requires, that in other cases,--than those specified above,--the party must give bond with surety in such sum as the officer granting the injunction directs, payable and conditioned as prescribed. These sections cover any and every case that may arise for an injunction. To issue one without the bond prescribed, would be irregular. Thorington v. Gould, 59 Ala. 461. Whatever might be the rule, in the absence of statutory regulations on the subject, as to the time the writ becomes operative, we apprehend, under our statute, it can never be operative, until the injunction bond has been executed. Such an order is conditional in its nature, and there can be no injunction, and consequently no contempt for its violation, until the bond has been given. 2 High, Inj., § 1429; 1 Beach on Inj., § 269; Winslow v. Nayson, 113 Mass. 411.' (Emphasis Supplied.)

Rule 65(c), ARCP, provides in pertinent part:

'No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs, damages, and reasonable attorneys fees as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained; * * *.'

We note that §§ 1043, 1053, 1056 and 1059 of Tit. 7, are among the sections of the Code superseded by ARCP 65.

We adopted our ARCP in 1973 and they became effective July 3, 1973. This is our first opportunity to write on Rule 65(c). As stated in Chatz v. Freeman (C.A.7th, 1953), 204 F.2d 764, '* * * a temporary restraining order should not issue without compliance with rule 65(c). To us, the rule seems plain, definite and unmistakable. There is nothing ambiguous about it. We conclude that the trial court committed error in issuing the temporary restraining order without providing for security as required by rule 65(c) of the Federal Rules of Civil Procedure. The judgment appealed from is reversed, and the cause is remanded.' See also, Telex Corp. v. International Business Machines Corp. (C.A.8th, 1972), 464 F.2d 1025.

We are aware that there are necessary exceptions to such an absolute holding in all cases under Rule 65(c), such as requiring only a nominal security, or where the litigant is impecunious or the issue is one of overriding public concern. Wright & Miller, Federal Practice and Procedure, Civil, § 2954, p. 529.

Still, the rule requires 'the giving of security by the applicant' for a 'restraining order or a temporary injunction' and our courts ought to either follow the rule or show why it should be changed.

We hold that before an injunction or restraining order is issued under ARCP 65, the giving of security by the applicant for the payment of costs, damages and reasonable attorneys fees as provided in Rule 65(c) is mandatory, unless the trial court makes a specific finding based upon competent evidence that one or more of the exceptions, stating them, do exist. See Hutchins v. Thrombley, 95 Idaho 360, 509 P.2d 579. There was no such finding in the instant case and no suggestion by the trial court in its orders that an exception did exist. It follows that the judgment of contempt must be reversed, because 'there can be no injunction, and consequently no contempt for its violation, until the bond has been given.' Ex parte Miller, 129 Ala. 130, 30 So. 611. See also, Annotation 12 A.L.R.2d 1093, § 21.

This disposes of this case in this court, but in view of the fact that more proceedings may be...