The City of Clay Center v. Williamson

• Decision Date: 06 February 1909
• Docket Number: 15,837
• Citation: 79 Kan. 485,100 P. 59
• Parties: THE CITY OF CLAY CENTER v. A. L. WILLIAMSON et al
• Court: Kansas Supreme Court

100 P. 59

79 Kan. 485

THE CITY OF CLAY CENTER v. A. L. WILLIAMSON et al

No. 15,837

Supreme Court of Kansas

February 6, 1909

Decided January, 1909.

Error from Clay district court; SAM KIMBLE, judge.

Judgment reversed.

SYLLABUS

SYLLABUS BY THE COURT.

1. DAMAGES--Action on Injunction Bond. In an action on an injunction bond only those damages which are the direct and proximate result of the injunction are recoverable.

2. DAMAGES--Remote--Injunction--Sale of Municipal Bonds. Where a temporary injunction restrains a city from issuing or disposing of certain bonds for the purpose of erecting and equipping an electric lighting plant, damages alleged to have been caused by the increased cost of machinery and building material during the time the injunction remained in force are too remote and can not be recovered.

3. DAMAGES--Enjoining Sale of Bonds--Depreciation in Value. In such an action, where it is alleged that during the pendency of the injunction the market value of the specific bonds depreciated, the difference between the market value of the bonds at the time the injunction was granted and their market value at the time the injunction was dissolved is a proper element of damages, for the reason that the loss occasioned by the depreciation is the direct and proximate result of the injunction.

4. INJUNCTION--Indemnity Bond--Action by the State. Section 242 of the code of civil procedure, which provides that no injunction shall operate until the party obtaining the same shall give an undertaking, has no application to suits brought by or on behalf of the state in the exercise of its sovereignty.

5 INJUNCTION--Same. Injunction being an equitable remedy, it is within the power of the court to provide that it shall not issue until the party applying for the same shall give an undertaking to indemnify the defendant from loss or damage occasioned thereby, and this power extends to cases brought by or on behalf of the state.

6. INJUNCTION--Same. Where a temporary injunction is granted by the district court in a suit brought by the state on the relation of the attorney-general, which is afterward dissolved, and on the application of the state the supreme court grants an order continuing the injunction in force pending proceedings in error, on the condition that the plaintiff shall furnish a bond to secure to the party injured all damages sustained if it be finally decided that the injunction ought not to have been granted, held, that a bond executed under such circumstances is a valid and binding obligation, and an action can be maintained thereon.

F. B. Dawes, C. P. Rutherford, and R. C. Miller, for plaintiff in error.

Chiles C. Coleman, and Frank L. Williams, for defendants in error.

OPINION

PORTER, J.:

This action was brought to recover damages on an injunction bond. On the 27th day of August, 1906, the state, on the relation of C. C. Coleman, attorney-general, brought an action in the district court against the city of Clay Center to restrain the city from issuing and disposing of certain bonds which were about to be issued and sold for the purpose of building and equipping an electric lighting plant. A temporary injunction was granted by the judge of the district court. A trial was had and judgment rendered in favor of the city dissolving the temporary injunction. On the application of the state the order dissolving the temporary injunction was stayed and the cause was brought to this court on proceedings in error, where the judgment of the district court was affirmed. (The State v. Clay Center , 76 Kan. 366, 91 P. 91.)

The bond sued on was given in pursuance of an order of this court for the purpose of keeping in force the temporary injunction pending the decision here. The district court allowed a motion of the defendants to strike from the plaintiff's petition certain paragraphs with respect to damages claimed, and it is to review the rulings of the district court in this respect that these proceedings are brought.

The first paragraph stricken from the petition alleged that during the pendency of the injunction the price of machinery and building material necessary for the erection of the lighting plant advanced in the market as much as twenty per cent. in value, and that the difference in the price at which the city could have purchased such machinery and building material at the time the bond was given and the market price when the injunction was finally dissolved amounted to the sum of $ 2500.

The second paragraph alleged that on the date the injunction was granted the bonds of the city were worth par in the market, and could readily have been sold at their face value; that because of a depression in the money market the value of the bonds had depreciated at the time of the dissolution of the injunction at least ten per cent., and could not then and can not now be sold for more than ninety cents on the dollar, to the damage of the plaintiff in the sum of $ 2500.

The first claim of damages is based upon an increase in the cost of machinery and building material during the pendency of the injunction. The bond only indemnified the city against loss or damage occasioned by the injunction. Unless the injunction was the direct and proximate cause of the damage there is no liability on the bond. The rule is stated in volume 2 of the third edition of High on Injunctions, section 1663, as follows:

"That nothing will be allowed which is not the actual, natural and proximate result of the wrong committed. . . . Speculative and remote damages are not properly allowable, nor are those which are merely consequential, the limit being such damages as flow directly from the injunction as its immediate consequence."

The city was enjoined from issuing and selling certain bonds. It was not enjoined from doing anything else. There was nothing in the injunction to restrain the city from erecting a lighting plant or from purchasing machinery and material. Unless it was prevented from making these purchases by reason of the injunction it can not set up a claim that the increased price it might afterward pay would be the direct result of the injunction. It is obvious, therefore, that this claim is too remote, and was properly stricken from the petition.

It is equally obvious that for the reasons just stated the trial court erred in striking from the petition the claim of damages based upon the depreciation in the market value of the specific bonds which the injunction prevented the city from selling. In the same section of High on Injunctions from which we have just quoted (§ 1663) it is said:

"But where an injunction operates to delay the sale of property, real and personal, and pending such delay great depreciation occurs in the value of the property, such loss, being regarded as occasioned by the injunction, may be properly included in estimating the damages incurred."

The city was enjoined from issuing and selling these bonds. During the pendency of the injunction their market value depreciated $ 2500. When a city places its bonds on the market it must dispose of them at the market price. But for the injunction it would have received a certain sum for these particular bonds. The difference, therefore, between the market value of the bonds when the injunction stopped the sale and their market value when the injunction no longer prevented a sale is the measure of one of its claims for damages, because it measures a loss which is the direct and proximate result of the injunction.

The defendants have directly raised another question, which has never been passed upon by this court and which it is...