Powers v. Fidelity And Deposit Co.

• Decision Date: 06 March 1945
• Docket Number: 18
• Court: Delaware Superior Court
• Parties: EUGENE D. POWERS v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, a Corporation of the State of Maryland

41 A.2d 830

42 Del. 577

EUGENE D. POWERS v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, a Corporation of the State of Maryland

No. 18

Superior Court of Delaware, New Castle

March 6, 1945

Clarence A. Southerland and William Poole (of Southerland Berl and Potter) for plaintiff.

Isaac D. Short, 2d, for defendant.

LAYTON C. J., RODNEY and TERRY, J. J., sitting.

OPINION

RODNEY, J.

This case solely involves the propriety of a suit in a court of law on an injunction bond given in a proceeding in equity where a preliminary injunction has been dissolved and bill dismissed, and where such suit at law was instituted during appellate proceedings attacking the validity of such dissolution and denial of the injunction.

Because, however, the matter here involved and the argument of counsel, in some degree, have relation to the general principles controlling the question as to the operation of appellate proceedings as a supersedeas, with or without the entry of security, such question may be briefly considered.

The very term "supersedeas" itself has undergone great change. Originally it was a distinctive writ directed to a ministerial officer commanding him to suspend action pending appellate proceedings. The term is now largely used to designate the effect of the appellate proceedings themselves.

It seems to be entirely clear that at common law a writ of error in an action at law operated as a supersedeas or stay of proceedings in the Court below. This resulted in great abuse and in the denial of the plaintiff's ultimate recovery. By several early English statutes it was enacted that in certain stipulated actions unless security or bail was given the writ of error did not operate as a supersedeas or stay of the proceedings on the judgment in the Court below. Those statutes known as 31 Elizabeth c 3 Sec. 3, 3 JacIc 8 and 18 Car IIc2 are set out in 2 Sellons Pr 365 and 2 Tidd's Pr 1149 and the procedure under them is made clear. The Acts generally had application only to judgments of certain characteristics and they culminated in 19 Geo III c 70 (1779) 4 Halsbury Stat. of England p 10, wherein it was provided that no execution should be stayed by a writ or error on any judgement of over ten pounds unless ball in error or a recognizance was entered with two sureties.

In most jurisdictions the matter is regulated by statute, but in Delaware, Art. IV, Sec. 27 of the Constitution of 1897, it is provided:

"Whenever a person, not being an executor or administrator, appeals from a decree of the Chancellor, or applies for a writ of error, such appeal or writ shall be no stay of proceedings in chancery, or the court to which the writ issues, unless the appellant or plaintiff in error shall give sufficient security, to be approved respectively by the Chancellor, or by a judge of the court from which the writ issues, that the appellant or plaintiff in error shall prosecute respectively his appeal or writ to effect, and pay the condemnation money and all costs, or otherwise abide the decree in appeal or the judgment in error if he fails to make his plea good."

The foregoing provision had its origin in the Constitution of 1792 where, with very slight variation, it appeared as Art. 6, Sec. 12. In Pettyjohn v. Bloxom, 6 Del. (1 Houst.) 594, the Court, after reciting the effect of a writ of error as a supersedeas at common law and the effect of the English statutes, stated that the effect of our constitutional provision was to change the common law as it had been changed in England by statute. The Court then said:

"The meaning and effect, therefore, of this provision of our State constitution is, that when sufficient security is given for the prosecution of it, a writ of error shall be a supersedeas of all proceedings on the judgment in the Court below."

See also State v. McCoy, 16 Del. (2 Marv.) 465, at page 540, 36 A. 355.

It will thus be seen that, in Delaware, appellate proceedings do not, ordinarily, operate as a stay or supersedeas unless security is given.

At common law the effect of appellate proceedings as a supersedeas seems to have differed, depending whether such proceedings were by Writ of Error to a court of law or appeal in Equity proceedings. It is unnecessary to consider whether this distinction may have been due, in part, to the difference in the nature of the appellate proceedings. In 2 Daniels Chancery Pr. (1st Ed.) 575, it is pointed out that jurisdiction in Writs of Error originally resulted from the record, itself, of the court below being brought by the Writ of Error to the House of Lords for correction, and thus no record remained in the lower court, while in an appeal in Chancery such appeal was commenced by a mere petition reciting the proceedings below, and that it was on this petition and subsequent pleadings, and not on the record below, that the appeal was heard. At a somewhat early period the English House of Lords considered that by an appeal further proceedings were stayed in the court below, but this seems never to have been adopted in practice, and the matter was set at rest in 1807 by resolution of the House of Lords, in 15 Ves. Jr. 184, 33 Eng. Reprint 723. There it was determined that appeals in Equity do not stay proceedings in the court below unless such court or the Appellate Court should expressly order that the appeal should have such effect. Chancellor Wolcott considered the matter in McDaniel v. Franklin Ry. Supply Co., 20 Del. Ch. 354, 177 A. 544, 547, where he said:

"The forms of relief in equity are so diversified and their effectiveness as a means of justice so dependent on the exigencies of peculiar situations, that the question of their temporary suspension pending appeal should be assigned for determination to judicial discretion and not left to be determined by the election of a defeated litigant to docket an appeal. Section 27, art. 4 of our Constitution is to be read in the light of this principle of procedure. All that it means with respect to appeals in equity causes is, that notwithstanding an order should be entered granting a stay pending appeal, the same should not be operative unless a bond with sufficient surety be given."

It will thus be seen that, under our decisions, appellate proceedings, whether by appeal or Writ of Error, do not operate as a supersedeas or stay of proceeding in the court below unless security be given to prosecute the appeal with effect and pay the condemnation money if he fail to make his plea good. It will also be seen that in proceedings at law the Writ of Error does act as a supersedeas where proper security has been given; that in appeals in Equity, owing to the peculiar nature of equitable relief, the taking of the appeal does not operate as a supersedeas or stay without an independent order of the Chancellor or Supreme Court to that effect, nor does such order of the Chancellor or Supreme Court operate as a stay without the giving of the bond, pursuant to the Constitutional provision.

The present case, as hereinabove stated, was brought upon an injunction bond to recover the damages allegedly sustained by the present plaintiff by reason of the original granting of a preliminary injunction. The preliminary injunction was not made permanent, but was dissolved by the Chancellor. From this decision to dissolve the injunction an appeal was taken, and is now pending. No order of the Chancellor was obtained, providing for a stay of proceedings pending the appeal, and no bond in the nature of a supersedeas was given by the appellant.

It is clearly and concededly the law of Delaware that an appeal from a decree dissolving an injunction does not operate to reinstate or continue the injunction unless a special order to that effect is made by the Chancellor or by the Supreme Court. Cutrona v. Mayor and Council of Wilmington, 14 Del. Ch. 262, 125 A. 417. This principle is likewise preserved in Rule 60 of the Delaware Supreme Court, which provides, in part,

"No appeal taken from an order or decree refusing or dissolving an injunction shall have the effect of granting or continuing in force an injunction unless the Chancellor, pursuant to the application of the appellant, shall have so ordered. In case the Chancellor shall have refused such an application the Supreme Court or any three judges thereof may, for good cause shown, direct the grant or continuance of such injunction in whole or in part and prescribe the terms and conditions thereof."

It will be seen from the foregoing facts that no injunction now limits, nor has limited, since the dissolution of the injunction in March, 1942, any action of the present plaintiff in regard to the stock covered by the original injunction. No order continuing the injunction having been obtained and no bond given, no injunction was continued, and the present plaintiff was at liberty, after 1942, to do with the stock as he pleased. The validity of the original injunction and the correctness of the conclusion that the injunction should have been dissolved, is directly attacked, and is now pending in the Supreme Court. This present proceeding seeks to ascertain the amount of damages sustained by the issuance of the original injunction, and the collection of such damages from the present defendant.

Looking through the facts of the present case, it is difficult to see that any question of supersedeas is at all involved, or that there is any particular pertinency as to the effect of an appeal upon the dissolution of the injunction. No present supersedeas is here claimed and no existing injunction is contended for. The sole question is the right to assess and collect damages for the allegedly improper issuance of an injunction,...