M. Blatt Company v. Southwell

130 S.E.2d 859 (1963) 259 N.C. 468

The M. BLATT COMPANY
v.
Charles L. SOUTHWELL.

No. 610.

Supreme Court of North Carolina.

May 22, 1963.

Blair L. Daily and Jordan J. Frassineti, Greensboro, for plaintiff-appellant.

E. D. Kuykendall, Jr., and Weinstein & Weinstein, Greensboro, for defendant-appellee.

BOBBITT, Justice.

Although defendant's motion is made under G.S. § 1-497 for judgment against plaintiff and the surety on its undertaking or bond, the undertaking or bond is not in the record. Whether for $2,500.00 or $500.00, it is assumed the bond was drafted in accordance with G.S. § 1-496. Defendant's motion for judgment thereon alleges the bond was "conditioned that said plaintiff would pay to the party enjoined such damages as he might sustain by reason of said injunction if the Court should finally decide that the plaintiff was not entitled thereto."

Section 341 of the Code of 1883 as amended by Chapter 251 of the Public Laws of 1893 included all of the statutory provisions subsequently codified as Sections 817 and 818 of the Revisal of 1905 and Sections 854 and 855 of the Consolidated Statutes of 1919 and now codified as Sections 1-496 and 1-497 of the General Statutes. G.S. §§ 1-496 and G.S. § 1-497 are in pari materia and must be construed together. There can be no recovery of damages under G.S. § 1-497 on a bond given in accordance with G.S. § 1-496 unless and until "the court finally decides that the plaintiff was not entitled" to the restraining order or injunction.

"It is held that no right of action accrues upon an injunction bond until the court has finally decided that plaintiff was not entitled to the injunction, or until something occurs equivalent to such a decision." 22 Cyc. 1027-1028; 43 C.J.S. Injunctions §§ 285, 292b; 28 Am.Jur., Injunctions § 338.

The question before Judge Johnston on February 20, 1962, was whether the temporary restraining order should be continued in effect until the final hearing or dissolved. The only reason stated in his order of February 20, 1962, for then dissolving the temporary restraining order is that it appeared to the court that "the Restraining Order should not be continued." The order contains no recital, finding or adjudication that plaintiff was not entitled to the temporary restraining order during the period it was in effect. As stated in Scott v. Frank, 121 Iowa 218, 96 N.W. 764: "To sustain an action for damages it must be made to appear that such injunction was wrongful in its inception, or at least was continued owing to some wrong on the part of plaintiff. If rightfully awarded, but afterwards properly dissolved because of matters done or arising subsequent to its issuance, there can be no recovery of damages."

Absent an express decision that plaintiff was not entitled to the temporary restraining order, the question is whether the order of February 20, 1962, was the equivalent of such a decision. This question must be answered in the light of the legal principles set forth below.

In an action in which the plaintiff has obtained a temporary restraining order or injunction by giving bond such as that required by G.S. § 1-496, "(t)he voluntary and unconditional dismissal of the proceedings by the plaintiff is equivalent to a judicial determination that the proceeding for an injunction was wrongful, since thereby the plaintiff is held to have confessed that he was not entitled to the equitable relief sought." Gubbins v. Delaney, 64 Ind.App. 65, 115 N.E. 340; St. Joseph & Elkhart Power Co. v. Graham, 165 Ind. 16, 74 N.E. 498, and cases cited; Columbus, H. V. & T. Ry. Co. v. Burke, 54 Ohio St. 98, 43 N.E. 282, 32 L.R.A. 329; 43 C.J.S. Injunctions § 292b(2); 28 Am.Jur., Injunctions § 340; 54 A.L.R. 2d 505. It is so held in this jurisdiction. R. R. v. Glendon & G. Mining & Mfg. Co., 117 N.C. 191, 23 S.E. 181; Timber Co. v. Rountree, 122 N.C. 45, 29 S.E. 61.

"When, however, the dismissal of the action is by an amicable and voluntary agreement of the parties, the same is not a confession by the plaintiff that he had no right to the injunction granted, and does not operate as a judgment to that effect." St. Joseph, etc. v. Graham, supra, and cases cited; Columbus, etc. v. Burke, supra; Gubbins v. Delaney, supra; American Gas Mach. Co. v. Voorhees, 204 Minn. 209, 283 N.W. 114, and cases cited; Janssen v. Shown (C.C.A.9th), 53 F.2d 608; 43 C.J.S. Injunctions § 292b(2); 28 Am.Jur., Injunctions § 340. As stated in American Gas Mach. Co. v. Voorhees, supra: "A judgment of voluntary dismissal by agreement of the parties of an action in which a restraining order has been issued is not an adjudication that the restraining order was improvidently or erroneously issued."

While the order of February 20, 1962, did not expressly provide the action was dismissed, these facts are noted: The sole object of plaintiff's action was to restrain defendant as provided in the temporary restraining order. No pleadings were ever filed by plaintiff or by defendant. The action was quiescent from February 20, 1962, until December 28, 1962. In these circumstances, the rule stated in the preceding paragraph would seem as pertinent as if there had been a formal dismissal of the action.

The facts set forth in the affidavit of Blair L. Daily were not controverted. They tend to show the temporary restraining order was dissolved by and with the consent of defendant on account of defendant's assurance to plaintiff that defendant thereafter would voluntarily refrain from the conduct the temporary order had restrained. If this be true, the order of February 20, 1962, dissolving the temporary restraining order, may not be considered the equivalent of a final decision that plaintiff was not entitled to the temporary restraining order.

Judge Crissman's order contains no findings of fact with reference to the matters referred to in the Daily affidavit. The order is based solely on a finding that the temporary restraining order of February 15, 1962, was dissolved by the order of February 20, 1962, an undisputed fact. The burden of proof was on defendant to show, as a prerequisite to his right to recover damages from plaintiff and its surety, either that the court had finally decided plaintiff was not entitled to the temporary restraining order or that something had occurred equivalent to such a decision. Since it would seem the order was entered under misapprehension of the applicable law, the order of Judge Crissman is vacated and the cause is remanded for further hearing at which evidence may be offered and the facts found relevant to the matters referred to in the Daily affidavit.

It is noteworthy that nothing in the present record indicates defendant asserted at the hearing on February 20, 1962, that the restraining order had been improvidently issued or that he was entitled to judgment against plaintiff and its surety. In this connection, see R. R. v. Glendon & G. Mining & Mfg. Co., supra.

Since the order is vacated for the reasons stated, we do not reach plaintiff's contention that the evidence was insufficient to show defendant suffered damages on account of the issuance and service of the temporary restraining order. However, it is noted that the order contained no findings of fact with reference to the nature and extent of defendant's damages.

Questions with reference to procedures for the ascertainment of the amount of damages upon motion under G.S. § 1-497 are not presented.

Error and remanded.