This case presents the question of the proper damages to be allowed a party who is restrained by an injunction, proven by the event of the suit to have been improperly awarded. The plaintiff, claiming an equitable right to certain timber on lands in possession of the defendants, commenced this action to compel the defendants to release to him said timber with the right of removal, and to obtain an injunction to restrain the defendants: 1st. From cutting, drawing, taking or interfering with such timber; 2d. From prosecuting Smith Barton, an employee of the plaintiff, on account of such timber or on account of cutting, drawing, taking or using the same; 3d. From doing any act to prevent or hinder the plaintiff or his agents from removing said timber and using the same. He procured an ex parte injunction in accordance with this prayer in the complaint, on furnishing an undertaking, executed by Stephen McCoy, that the plaintiff would pay all damages, not exceeding five hundred dollars, which might be sustained by the defendants by reason of said *Page 170 order, if the court should finally decide that the plaintiff was not entitled thereto. The court did so finally decide — the ultimate judgment in the action being in favor of the defendants — dismissing the plaintiff's complaint with costs. Meanwhile, the defendants obeyed the injunction, and the plaintiff, not being interfered with, cut and removed from the defendants' land timber to the value of four hundred and fifty dollars. After the judgment was perfected, a reference was ordered, on the application of the defendants, to ascertain the damages sustained by the defendants by reason of the injunction. The referee reported the same at $450 — that being the value of the logs taken and used by the plaintiff. The plaintiff, on notice, moved at special term to set aside the report: 1st. On the ground that the damages were excessive; 2d. On the ground that the referee had adopted an erroneous principle in assessing the damages; 3d. On the ground that there was no proof to sustain the report. The special term overruled the exceptions to the report and confirmed the referee's report. On appeal, the general term affirmed this decision. From the latter order, the plaintiff appealed to this court. The plaintiff is insolvent. The point now made is, that the damages are merely nominal, and that the damages sustained arose, not by reason of the injunction, but by reason of the tortious act of the plaintiff and his agent, in taking the defendants' timber, for which an action of tort lies against them.
I think the order should be affirmed. 1st. The defendants have actually lost, and the plaintiff has actually and improperly obtained the property in question. It turns out to have belonged to the defendants and not to the plaintiff. 2d. By the injunction the defendants were restrained from taking or using their own property, and the plaintiff was impliedly authorized to take the possession of the property, if not to appropriate it to his use. Availing himself of this authority, he has thus taken and *Page 171 appropriated it, and it is forever lost to the defendants. 3d. No other mode of compensation is open to the defendants, except in the form of damages on account of an injunction inequitably issued. The judgment in the action does not include an award of damages for this property improperly converted by the plaintiff. If it did, I do not see that it would be a bar to this proceeding. No other suit will avail the defendants, for the plaintiff is irresponsible, and the defendants ought not to be subjected to the contingency of possible success in recovering its value from the plaintiff's agent. 4th. The damages in question are occasioned by the injunction. But for the injunction the defendants would not have lost their property. By the injunction the plaintiff was impliedly authorized to take it, subject to the liability for damages in case of failure in the action. The loss which the defendants have sustained, was incurred by compliance with the order of the court. If the defendants had commenced an action, and obtained an injunction restraining the plaintiff from interfering with the property, they would have preserved it, and by reason of success in the suit, relieved themselves from liability under the injunction order. If they had failed in such an action, having in the meanwhile appropriated the property, it is difficult to see why the adverse party could not have assessed his damages under the injunction order and undertaking to the value of the property illegally converted. The liberal rule of damages declared in adjudicated cases in principle sustains the claim of the defendants in this case. (Coates v. Coates, 1 Duer, 664;Edwards v. Bodine, 11 Paige, 223; Corcoran v. Judson,24 N.Y. 106; Aldrich v. Reynolds, 1 Barb. Ch. R. 613.)
It is said the damages were not sustained by reason of the injunction, because the plaintiff and his agents would be liable to an action for an unauthorized conversion of the property. The reasoning is inconsequential. The remedies are in fact cumulative. The injunction was *Page 172 decided to be a complete protection to the enjoined party from all loss which could by possibility ensue in consequence thereof, so far as the same was occasioned by the act of the partyapplying for the injunction, or his agents. The reference is a summary mode of relief, given by way of substitute for an action, and intended to accomplish all the results of an action on the undertaking. If the action were upon the undertaking, and the complaint should aver the termination of the suit unfavorably to the plaintiff, the appropriation and conversion of the property by the plaintiff, the acquisition of the possession by the plaintiff of the property through and by means of the injunction, it is difficult to see why the loss of the property to the defendants could not be said to be the direct, proximate and necessary result of the injunction order. It matters not whether the injunction conferred upon the plaintiff the right toappropriate the property to his use. Assume that it did not. It nevertheless impliedly authorized him to take possession of it, or countenanced him in doing so, inasmuch as it forbade all others to interfere with him in acquiring such possession. In this respect it is somewhat analogous to the bond in an action of replevin, and impliedly imposed upon the defendant the obligation to return the property in the event of an unfavorable termination of the suit. Having taken possession, it is lost to the defendants through his wrong or his negligence. This is the very result against which the injunction was designed to protect the party. It may possibly be as is said to have been decided in the unreported case of Lent v. McNaughton (which we have not seen), that the illegal conversion of the property by astranger to the suit does not constitute a proper item of damages on the injunction bond. Perhaps it would be so unless proof was offered reasonably connecting the loss of the property with the granting of the injunction order, or the party obtaining the injunction with the tortfeasor. But this is a case where the *Page 173 party who obtains the injunction and procures the undertaking is himself guilty of the conversion, accomplished only by the facilities which the injunction put in his way, and the operation of which the defendants were forbidden by the injunction to prevent.
I think there is no sound reason for disturbing the report of the referee, and that the order of the court below should be affirmed.
All the judges concurring, order affirmed. *Page 174