National Society of United States Daughters of 1812 v. American Surety Co. , 107 N.Y.S. 820 ( 1907 )

Gildersleeve, J.

In an action in the United States Circuit Court, wherein one Titus and others were complainants and the plaintiff herein was defendant, a temporary injunction was given, upon the application of the complainants. Upon the undertaking given on said injunctioti, the defendant herein was the surety. The injunction was subsequently dissolved, and the bill, or complaint, in the case was dismissed. Thereupon this action was brought in the Mimic, ipal Court, on the undertaking, against defendant as surety. The only damages shown were for counsel fees in procuring a dissolution of the injunction; and the court below gave judgment for the plaintiff for the sum of $200, interest and costs. Defendant appeals. Counsel fees are not recoverable, as an element of damage, in an action upon an injunction bond given in a United States court and sued upon in a United States court. Oelrichs v. Spain, 15 Wall. 211-231. It has also been held by the United States Supreme Court that, in an action brought in a State court upon an injunction bond given in a United States court, the rule of the Federal court prevails, and that the counsel fees are not admissible as an element of damage. Tullock v. Mulvane, 184 U. S. 497; Missouri, K. & T. R. Co. v. Elliott, id. 530. Plaintiff claims that defendant did not raise this point at the trial, and that the action was tried on the theory that the principle prevailing in the courts of this State, allowing counsel fees for setting aside the injunction as an element of damage in an action on the undertaking, applied to the case at bar. There is no substantial contention as to the law applicable to the conditions created by the transaction under consideration. The respondent rests his claim for affirmance upon the ground that the trial proceeded upon an erroneous theory with the acquiescence of both parties, and that a new, although correct, theory cannot be urged upon appeal. The general rule is that a party who has acquiesced in the trial of an action upon a certain theory will not be heard to assert for the first time on appeal that there was' error in adopting the theory he assisted in establishing as the law of the case, and that a question which was not raised on the trial will not be considered for the first time on appeal. 151 N. Y. 129; 94 id. 401; 90 id. 656; 165 id. 263. This general principle has been held to apply to appeals from the Municipal Court to the Supreme Court, and its soundness will not be challenged. Steinhart v. Enteen, 43 Misc. Rep. 388-390, The learned counsel for the appellant, however, urges that it is not necessary in an action in a State court, on a bond given in a United States court, that a right of a Federal nature should be specifically raised; but that it is sufficient if the State court, by the pleadings, evidence or otherwise, is informed of such fact. In support of this theory he cites the ease of M., K. & T. R. Co. v. Elliott, supra, which is an appeal to the United States Supreme Court from the State court, of Missouri. It was there held by Mr. Justice White that, “ if the State court in deciding the case has actually considered and determined a Federal question, although arising on ambiguous averments, then a Federal controversy having been actually decided the right of this court to review obtains; and all that is essential is that the Federal questions must be presented to the State court in such a manner as to bring them to the attention of that tribunal.” Can it be said that the erroneous admission of evidence by the Municipal Court on the question of damages is sufficiently presented to the Appellate Term of this court by the objections and exceptions taken at the trial? The pleadings state the facts which show the successive steps taken in the United States court. Plaintiff’s counsel took the stand to show what damages plaintiff had sustained by reason of the injunction, and he-is the only witness on that branch of the case. lie sought to show what services he had rendered in the injunction matter, their value, what he had been paid, and what his client had agreed to pay him. All of this testimony was taken under the objection and exception of defendant’s counsel. The grounds of the objection were immateriality and irrelevancy, without referring specifically to the Federal rule on the inadmissibility of counsel fees as an element of damage in a suit on an injunction bond. While it is true that the evidence, to which objection was made, was, -in point of fact, immaterial and irrelevant to the issues, since the services proven and the fees paid, or agreed to he paid, were not an element of damage in the case at bar, still it cannot be said that the Federal question was presented to the Municipal Court by the objections in such a manner as to bring it specifically to the attention of that tribunal. While it must be said that the - question which the court below wras called upon to determine was not, upon the trial, in terms and language designated as a Federal question, still under the pleadings and proof it was the inherent and vital question upon which the decision necessarily turned; and the judgment, as rendered, could not have been given without deciding it. The only issue presented was the claim for damage under a Federal bond; the limit of liability under the bond was $250, which was the amount demanded in the complaint, and also the amount claimed by counsel to be his agreed fee for getting the injunction vacated; and, as we have seen, the only evidence of damage by reason of the injunction was this counsel fee. If plaintiff could have shown any other element of damage, it is not indicated in any way either in the pleadings or proof. In Maxwell v. Newbold, 59 U. S. 511—516, cited with approval in Oxley Stave Co. v. County of Butler, 166 id. 649, 655, 656, no reference was made to the Federal question at the trial in the State court; but the 'Supreme Court of the United States held that this did not preclude the plaintiffs in error from raising the point in the appellate State court, “ if it was involved in the case as presented to that court.” In the case at bar the Federal question, as we have seen, is clearly involved in the case as presented to the Appellate Term. As the case now stands, the plaintiff has a judgment for damages to which he is not entitled by law. Such judgment, in the interests of justice, cannot stand. Inasmuch, however, as there may be at least a possibility of plaintiff’s proving some' other element of damage, a new trial should be granted. So far as defendant’s claim that plaintiff is not legally incorporated is concerned, assuming- such to be the fact, it may be observed that the general rule is that persons sued by a corporation in an action ex contractu, as well as persons sued by a corporation in an action ex delicto, are equally debarred from setting up the defense that the corporation was not legally organized, which is a question for the State. Cook on Corp.'l422. However, it is not necessary- to discuss this branch of the case, as the judgment must be reversed for the reasons above stated.

As the questions presented are somewhat novel and of an important character, the respondent may have leave to appeal to the Appellate Division.

Guy and Bruce, JJ., concur.

Judgment reversed and new trial ordered, with costs to appellant to abide event.