New York Law Review

Tag: Undertaking

  • Encounter, Inc. v. Borker, 49 N.Y.2d 417 (1980): Recovery on Injunction Undertaking

    Encounter, Inc. v. Borker, 49 N.Y.2d 417 (1980)

    A defendant may recover damages on an undertaking posted for a preliminary injunction if it is finally determined that the plaintiff was not entitled to the preliminary injunction, regardless of the ultimate outcome of the main action.

    Summary

    This case clarifies the conditions under which a defendant can recover damages based on an undertaking filed by a plaintiff who obtained a preliminary injunction. Encounter, Inc. was subject to a preliminary injunction that was later vacated on appeal. Although the main action was discontinued, Encounter sought to recover damages under the undertaking. The Court of Appeals held that the relevant determination for recovery is whether the plaintiff was entitled to the preliminary injunction when it was granted, not whether the plaintiff ultimately prevails in the main action. The court emphasized the importance of protecting defendants from improperly issued preliminary injunctions.

    Facts

    Encounter, Inc., a drug rehabilitation organization, leased premises in Manhattan. Tenants and a neighborhood association sued to permanently enjoin Encounter from occupying the premises. The Supreme Court granted a preliminary injunction conditioned on the plaintiffs posting a $10,000 undertaking. Encounter vacated the premises. The Appellate Division vacated the preliminary injunction but affirmed the denial of the motion to dismiss the complaint. Encounter moved back in, but later vacated the premises due to external factors. The plaintiffs then sought to discontinue the action and discharge the undertaking.

    Procedural History

    The Supreme Court initially granted the preliminary injunction. The Appellate Division vacated the preliminary injunction. The Supreme Court then denied the discharge of the undertaking but discontinued the action. A special referee found that Encounter sustained damages exceeding the undertaking but was not entitled to recover them because there was no final determination that the plaintiffs were not entitled to an injunction. The Supreme Court confirmed the referee’s report and discharged the undertaking. The Appellate Division affirmed. The New York Court of Appeals reversed.

    Issue(s)

    Whether the phrase “if it is finally determined that [plaintiff] was not entitled to an injunction” in CPLR 6312(b) refers to a determination on the merits of the underlying action or to a determination regarding the propriety of granting the preliminary injunction itself.

    Holding

    No, because the statute refers to a final determination that the plaintiffs were not entitled to the preliminary injunction, rather than a determination with respect to their right to a permanent injunction or other favorable outcome on the merits of the main action.

    Court’s Reasoning

    The Court of Appeals reasoned that a preliminary injunction is an extraordinary remedy that should only be granted upon a special showing. “If it is later finally determined that the preliminary injunction was improperly granted there will then be a ready source from which the defendant may recover for damages which he may have sustained.” The court emphasized that the defendant’s right to damages hinges on whether the plaintiff was entitled to the preliminary injunction, not on the ultimate outcome of the case. The court distinguished the present case from Williams v. Montgomery, 148 N.Y. 519 (1896), where the plaintiff was entitled to the preliminary injunction when issued, even though the plaintiff eventually lost on the merits. The Court also noted that CPLR 6312(b) lacks an alternative provision regarding the final outcome of the underlying action, unlike statutes governing undertakings for arrest and attachment. The Appellate Division’s vacating of the preliminary injunction, based on a finding that the plaintiffs had not demonstrated irreparable harm, constituted a “final determination that plaintiffs were not entitled to the preliminary injunction.” The court stated, “The interest of the minors not having been shown to be adversely affected, the injunction rests on no foundation at all and must be vacated.” (45 AD2d, at p 834). Further, the discontinuance of the underlying action was made “without prejudice to defendants’ rights, if any, that may exist under CPLR 6314 [presumably should be CPLR 6315]”, preserving Encounter’s rights to recover damages on the undertaking.

  • Robert v. Good, 36 N.Y. 103 (1867): Admissibility of Evidence and Curing Defects on Appeal

    Robert v. Good, 36 N.Y. 103 (1867)

    An allegation in a complaint that a document was executed is sufficient proof of the document’s delivery, and defects in evidence presented at trial can be cured by the submission of proper evidence during the appeal process, particularly in courts with statutorily defined procedures.

    Summary

    Robert sued Good on an undertaking related to an appeal in the Marine Court. The complaint alleged the execution of the undertaking, affirmance of the judgment, and failure to pay. Good’s answer primarily disputed the affirmance and non-payment. At trial, Robert offered a copy of the undertaking and the justice’s docket, which had a slight name discrepancy. An improperly certified order of affirmance was also admitted. Good moved to dismiss, arguing a lack of proof of delivery, a non-existent judgment, and insufficient evidence of affirmance. The motion was denied, and the jury found for Robert. On appeal, Robert introduced a duly certified copy of the order of affirmance. The Court of Appeals held that the initial evidentiary errors were either non-prejudicial or cured by the evidence presented on appeal.

    Facts

    1. Thomas Robert sued Ezekiel Donnell in the Marine Court.
    2. Donnell appealed the judgment to the General Term of the Marine Court.
    3. Good and Donnell executed an undertaking promising Donnell would pay costs and damages if the judgment was affirmed.
    4. The judgment was affirmed by the General Term.
    5. Donnell failed to pay the judgment.
    6. Robert then sued Good on the undertaking in the New York Common Pleas.

    Procedural History

    1. Robert sued Good in the New York Common Pleas.
    2. The trial court found in favor of Robert.
    3. Good appealed to the General Term of the Common Pleas, which affirmed the judgment.
    4. Good then appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the allegation of execution in the complaint sufficiently proves delivery of the undertaking.
    2. Whether the admission of a copy of the undertaking and notice was prejudicial error.
    3. Whether the defect in the evidence regarding the affirmance of the judgment at trial could be cured by submitting a duly certified copy on appeal.

    Holding

    1. Yes, because the allegation of execution in the complaint, not being denied in the answer, sufficiently proves complete execution, including delivery.
    2. No, because the proof of the undertaking was not required, as it stood admitted upon the pleadings, so the admission of the copy was not prejudicial.
    3. Yes, because defects in documentary evidence can be cured by supplying the correct evidence during the appellate process.

    Court’s Reasoning

    The Court reasoned that the allegation in the complaint that the undertaking was executed by the defendants, and the absence of denial in the answer, was sufficient proof of the complete execution, including delivery. The Court found the admission of the copy of the undertaking and notice was erroneous, but not prejudicial because proof of the undertaking was unnecessary due to its admission in the pleadings. Regarding the order of affirmance, the court acknowledged that the initial copy admitted at trial was not duly certified and should have been excluded. However, this defect was cured by the duly certified copy supplied during the appeal. The Court emphasized that Marine Court proceedings are statutorily regulated and its judgments are not formally enrolled. The order of the General Term, entered in its minutes, affirming the judgment was proper evidence of the fact, and an exemplified copy or a copy certified by the clerk under the seal of the Court was equally competent and conclusive. The Court cited previous cases such as Ritchie v. Putnam, 13 Wend. 524 and Williams v. Wood, 14 Wend. 126 supporting their reasoning.