National Surety Co. v. O'Connell
National Surety Co. v. O'Connell
Opinion of the Court
The action is on a bond given by one Willis as principal and the appellant here as surety, in an equity proceeding in the District Court of the United States for the Southern District of Alabama, and payable to the plaintiff, as a prerequisite to obtaining a temporary restraining order restraining the appellee, who was the defendant in the equity proceeding in the federal court, from making certain alleged libelous and defamatory publications in a newspaper which he owned and was then publishing. The bond is conditioned “to pay all costs and expenses and damages which the said plaintiff might incur in the dissolving of the said restraining order, should the same be held to be improvidently issued.”
In Oelrichs v. Spain, 15 Wall. 211, 21 L. Ed. 43, the Supreme Court of the United States held that such expenses as fees paid to counsel incurred by a litigant in defending against and seeking the dissolution of an injunction granted by a federal court were not recoverable “damages” in a suit on injunction bonds conditioned to “prosecute the writ of injunction with effect and pay all damages and costs which the obligees or any of them shall sustain by the granting of this injunction,” or to prosecute the writ of injunction “with effect and satisfy and pay as well the costs, damages, and charges which shall accrue in said circuit court * * * as all costs, damages, and charges which shall be occasioned by said writ of injunction, unless the * * * court shall decree to the contrary.” This ruling has been reaffirmed in Tullock v. Mulvane, 184 U. S. 497, 22 Sup. Ct. 372, 46 L. Ed. 657, and followed by our Supreme Court in National Surety Co. v. Fletcher, 186 Ala. 605, 65 South. 150, Ann. Cas. 1916D, 872.
Nonliability for attorney’s fees on a bond so conditioned is rested on two grounds: (1) *656 That, inasmuch as such fées are not recoverable as a part of the damages in ordinary-actions, it is illogical to allow such fees as a part of tire “damages” on a bond so conditioned; and (2) there being no fixed standard “by which the honorarium can be measured,” and inasmuch as some counsel demand much more than others and some clients are willing to pay much more than others, the litigation ,to recover the fees on the bond might become more animated than the original litigation, resulting in an embarrassment to the court that might perchance be called upon to reduce the fees allowed by a jury or the master on reference. The court says:
“In actions of trespass where there are no circumstances of aggravation, only compensatory damages can be recovered, and they do not include the fees of counsel. The plaintiff is no more entitled to them, if he succeed, than is the defendant if the plaintiff be defeated. Why should a distinction be made between them? In certain actions ex delicto vindictive damages may be given by the jury. In regard to that class of cases, this court has said: ‘It is true that damages assessed by way of example may indirectly compensate the plaintiff for money expended in counsel fees, but the amount of these fees cannot be taken as the measure of punishment or a necessary element in its infliction.’ Day v. Woodworth, 13 How. 370, 371 [14 L. Ed. 181].
“The point here in question has never been expressly decided by this court, but it is clearly within the reasoning of the ease last referred to, and we think is substantially determined by that adjudication. In debt, covenant, and assumpsit, damages are recovered; but counsel fees are never included. So in equity cases, where there is no injunction bond, only the taxable costs are allowed to the complainants. The same rule is applied to the defendant, however unjust the litigation on the other side, and however large the expensa litis to which he may have' been subjected. The parties' in this respect are upon a footing of equality. There is no fixed standard by which the honorarium can be measured. Some counsel demand much more than others. Some clients are willing to pay more than others. More counsel may be employed than are necessary. When both client and counsel know that the fees are to be paid by the other party, there is danger of abuse. A reference to a master, or an issue to a jury, might be necessary to ascertain the proper amount, and this grafted litigation might possibly be more animated and protracted than that in the original cause. It would be an office of some delicacy on the part of the court to scale down the charges, as might sometimes be necessary.”' Oelrichs v. Spain, supra.
This reasoning seems to lay out of view the fact that the action is on a bond given for the specific purpose of indemnifying the party against the result of unfounded and vexatious litigation, and that the measure of liability is to be determined, not by the fees charged, but by what would be reasonable for the necessary services rendered in rid-1 ding the party of the ban laid upon him by the extraordinary process of the court.
“The court, in the exercise of its discretion, frequently resorts to the expedient of imposing terms and conditions upon the party at whoso instance it proposes to act. The power to impose such conditions is founded upon and arises from the discretion which the court has in such cases to grant or not to grant the injunction applied for. It is a power inherent in the court, as a court of equity, and has been exercised from time immemorial.” Russell v. Farley, supra.
“As the issue of a special injunction is in its discretion, the court may impose terms upon the plaintiff or defendant when granting or refusing the issue, dissolution, or continuance *657 of the same, the usual terms, or the giving of a bond, or undertaking with good security to indemnify the other party against all loss that may result from the issue or withholding of the injunction.” Foster’s Fed. Practice, § 297.
And in section 298 this same authority-states:
“The court might direct the insertion of a clause in the hond providing that counsel fees should be included in the damages.”
The only expense of any consequence that could be incurred in the dissolution of the restraining order is attorney’s fees, and, to deny the plaintiff the right to recover for such expenses in this action, we would have to ignore the plain import of the language used in expressing the condition of the bond, and hold that the proceeding of the federal court in requiring the bond was a mere farce, affording the party sought to be protected no indemnity whatever.
“While liability of the obligors cannot be extended beyond the precise terms of an injunction bond, it is coextensive with the terms of the bond reasonably interpreted.” Ala. Power Co. v. Hamilton et al., 201 Ala. 62, 77 South. 356; Houghton v. Cortelyou, 208 U. S. 157, 28 Sup. Ct. 234, 52 L. Ed. 432.
Affirmed.
Reference
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- National Surety Co. v. O'connell. [Fn]
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