Summary
In Corcoran v. Judson (24 N.Y. 106), cited by the respondent, the injunction and the object of the action was to stay payment of an award, and the undertaking was to pay the cost and damages arising from the adverse claim, and from the obligors contesting its payment.
Summary of this case from Newton et al. v. RussellOpinion
December Term, 1861
John H. Reynolds, for the appellant.
Henry Nicoll, for the respondent.
The only point made on the argument is whether counsel fees paid by the plaintiff are covered by the words in the condition of the bond, "costs and damages," I cannot doubt that they are. The bond was to indemnify the plaintiff for the expenses and damages to which he might be subjected by the proposed contestation. It was in contemplation of the defendant to institute legal proceedings, thereby subjecting the plaintiff to costs, and the employment of counsel. He would be necessarily damnified in consequence thereof, to the amount he should be compelled to pay such counsel. It was a damage clearly within the contemplation of the act, and of the parties. Sedgwick on Damages (p. 177), lays down the rule that in an action of covenant for breach of warranty, where a former suit has taken place which the covenantee has been obliged to defend, not only his costs but his counsel fees may be recovered in the proceeding on the covenant itself.
Edwards v. Bodine (11 Paige, 224), is not unlike the present case. There an injunction master, on issuing an injunction, took from the party applying for it, a bond to the defendant, conditioned to pay the parties enjoined such damages as they might sustain by reason of the injunction. The court dissolved the injunction and decided that the party suing it out was not entitled to the writ. An order was then obtained referring it to a master to ascertain what damages the party enjoined had sustained by reason of the injunction. This proceeding was a substitute for an action on the bond. The master allowed the counsel fees paid by the party procuring the injunction to be dissolved, and this allowance was affirmed by the Chancellor. He says "as the counsel fees are clearly covered by the condition of the bond, I cannot disallow them without depriving the party of a legal right. By the Code (§ 222), when an injunction order is made, it is the duty of the court, or judge making the order, to take a written undertaking, with or without sureties, to the effect that the plaintiff will pay to the party enjoined, such damages not exceeding the amount specified, as he may sustain by reason of the injunction. Under this section of the Code, the practice is universal, to allow the party enjoined as part of his damages, the counsel fees he has been subjected to, in consequence of the issuing of the injunction. In accordance with this rule is the case of Coates v. Coates (1 Duer, 664).
The judgment of the Superior Court should be affirmed, with costs.
This is a very broad bond. In it the defendants agree to pay the plaintiff all damages arising from his claiming this fund, or from his notifying the Secretary of the Treasury thereof, or from his contesting the payment thereof to the plaintiff by the government. It is broad enough to protect the plaintiff from any injury he may have sustained by reason of the defendants' claiming this fund and contesting the payment thereof to the plaintiff. It is broader in its language than the common injunction bond issued under the requirement of the 21st Rule of the late Court of Chancery in this State. The condition of the bond under that rule was "to pay the party enjoined such damages as he may sustain by reason of the injunction." Such a bond was held by the Chancellor in the case of Edwards v. Bodine (11 Paige, 224), broad enough to embrace the necessary counsel fees incurred by the defendant in getting rid of the injunction. The language of this bond is broader than the undertaking required by the 22d section of the Code on procuring an injunction, which is to the effect that the plaintiff will pay to the party enjoined such damages as he may sustain by reason of the injunction, and it has been frequently held that counsel fees incurred in the defence of the suit to get rid of the injunction were covered by such undertaking. ( Coates v. Coates, 1 Duer, 664.) In the case at bar the defendant is clearly liable on his bond for all damages which have arisen to the plaintiff by reason of the defendant claiming this fund and contesting the payment thereof to the plaintiff. It is clearly broad enough to embrace those counsel fees which the plaintiff has been obliged to pay out in defending the suit, which the defendant brought against him to establish his claim to this fund. The necessity of paying such counsel fees is an actual damage which the plaintiff has sustained by reason of the defendants' bringing a suit against him and contesting this claim with him, and they are damages which legitimately arose from the defendants' bringing that suit and contesting his claim to this fund. In the case of the Trustees of the Village of Newburgh v. Gallatian et al. (4 Cow. R., 340), which was an action upon a bond to indemnify and save harmless against all actions, suits and damages in consequence of certain acts, the court held that the bond extended to the costs of defending a groundless suit for an act in which the obligee succeeded. The 35th section of 2 Revised Statutes, 618, provided that upon certain appeals to the Court for the Correction of Errors, the appellate court might in its discretion award damages to the respondent upon affirming the decree, for the delay and vexation caused by such appeal. Under this statutory provision the Court for the Correction of Errors has allowed to the respondent on appeal a sum in damages to cover his extra counsel fees. ( Boyd v. Brisban, 11 Wend., 529; Murray v. Mumford, 2 Cow., 400.) In Staats v. The Ex'rs of Ten Eyck (3 Caines R., 118), it was held under a covenant of warranty in a conveyance, that the grantee who had been evicted was entitled to recover against his grantor his costs and reasonable fees of counsel which he had been compelled to pay in defending his title, as a part of the damages which he had sustained by the breach of the covenant of warranty. These cases seem to me fully to justify the construction put upon this bond by the court below, and the judgment should be affirmed.
DENIO, LOTT and JAMES, Js., concurred; COMSTOCK, Ch. J., SELDEN and HOYT, Js., dissented.
Judgment affirmed.