Gardner v. Masters, 56 N.C. 462, 3 Jones Eq. 462 (1857)

Dec. 1857 · Supreme Court of North Carolina

56 N.C. 462, 3 Jones Eq. 462

BRYAN GARDNER and another against SAMUEL MASTERS.

Where matters in controversy are submitted to arbitration by agreement of the parties, being a tribunal of their own choosing, it is independent in its action, and no appeal will lie from its decision; neither can it be rescinded by a court of law or equity. The only ground upon which an award upon a submission in pais can be set aside in a court of equity is, that it is against conscience to take benefit under the award.

An award upon a submission, in a suit pending in court, requires more certain- iy than is required in an arbitration by agreement out of court, because the court is to pronounce its judgment upon it.

Mistakes in charging' interest and the like do not furnish a ground for a court of equity to interfere and set aside an award.

A want of certainty and finality are not such errors as make it against conscience to seek the enforcement of an award.

An award is deemed sufficiently certain and final when it is as much so as the nature of the case will admit.

In a suit brought upon a bond conditioned for the performance of an award, as the question whether the authority of the arbitrators was revoked before the award was made, can be legitimately put in issue therein, a court of equity will not take cognizance ofit. Nor is there anything in that question affecting the conscience of him in favor of whom is the award.

A court of equity will not set aside an award because the arbitrators have awarded costs in such a case without authority, as the party can have the benefits of it, on the trial at law, in the mitigation of damages.

Appeal from tbe Court of Equity of Craven county, Judge Ellis presiding.

The bill was filed for an injunction to restrain the defendants from proceeding to enforce the collection of a bond given by the plaintiffs, for the performance of an award made by certain arbitrators, or otherwise, for the recovery of the award made by fhem.

The plaintiff Bryan Gardner, and the defendant, Samuel Masters, entered into a copartnership in the business of making, distilling and selling turpentine in the State of Georgia, and for this purpose they purchased a body of land in the county of Charlton in that State, from one C. ITall, and hired from him a number of slaves with which they commenced that business on 1st of July, 1853. The name of the firm was agreed to be “ Gardner and Masters.” Each partner was to advance an equal share of the funds to establish and carry on the business ; each was to be equally liable for the charges, losses and expenses of the same; and each to draw an equal share of the profits. The business was carried on under this copartnership until the lltli of December, 1854, when it was dissolved by mutual consent. In the prosecution of the business, they purchased a number of slaves, wagons, mules, and 'implements for carrying on the work, which were entered on the books of the firm as a charge against it, and the active operations, during the partnership, were conducted at a place called “ Camp Pinckney,” situated upon their possessions aforesaid. On the dissolution of the copartnership, a division of the slaves and effects took place between them, the share of the plaintiff being put into the possession of Joseph Sirhp-kins as his agent.

Differences having arisen between the partners as to the settlement of their copartnership dealings, it was agreed that all the matters pertaining to their copartnership business should be referred to two arbitrators, Messrs. Jerkins and Guión, with power in them to choose an umpire, and each was to execute a bond with security, conditioned for the performance of such award as might be made, and as a basis upon which the arbitration was to be conducted, it was agreed in writing, in substance as follows:

1st. That Masters should make over to Gardner, a full and perfect title to the Camp Pinckney lands.

2d. That Masters was to be looked, upon as one who had loaned his money to Gardner.

3d. That Gardner was to refund the same to Masters, with six per cent interest from date and one per cent for damages. That Gardner was to pay Masters, for the use of his negroes and their expenses in travelling to and from Camp Pinckney, and his own travelling expenses.

4th. That Masters should retain (he slaves which he had received, on the dissolution of the copartnership, as a part payment, also such sums as lie had received, and such as might be due from him to the firm, in part payment; that it should be left to the arbitrators whether or not he should retain the other property received by him on that occasion.

5th. On all calculations of interest one per cent should be added to cover damages.

6th. That Gardner should give a note and security due twelve months after date, with six per cent interest from date, for such sums as the arbitrators might award against him.

The bond provided for was given on tbe part of Gardner with the plaintiff Hughes as his surety, in $10,000, conditioned to stand to, abide T)y and perform, the award; but the plaintiffs allege that the corresponding bond of the defendant never was given, and they insist that this failure to give such bond on his part, renders the award nugatory, and discharges the plaintiff Gardner from all liability to perform it.

The bill charges that, while in session on the matter of reference, the arbitrators permitted the defendant to come before them, and to make ex parte statements concerning their dealings, without being on oath, but refused to let plaintiff Gardner come before them at the á'ame time, or let him know what was going on, though requested to permit him to come before them and to be heard in explanation of his accounts.

The arbitrators, after bestowing much labor upon the subject referred to them, came to a conclusion and made in writing a rough exhibit of the state of the dealings between the parties, on the 19th of July, 1856, and submitted it to their inspection, with a request that they should state any objections they might have, and offering to correct any errors that might be pointed out. By this statement, it appeared that Gardner was indebted to Masters in the sum of $7,873,58 with interest from 1st of January, 1856. It was also stated in this paper, as the opinion of the arbitrators, that the defendant should return to the plaintiff. Gardner certain"articles of property which he had received upon the dissolution of the co-partnership at Camp Pinckney, a list of which was furnished to Gardner. According to the invitation, Gardner first appeared before the arbitrators and pointed out divers errors in charging certain amounts to him which had been included in notes given by Gardner to Masters and been paid ; likewise divers errors in the calculations of interest. The defendant afterwards came before the arbitrators and pointed out several other errors in his favor, all of which were allowed by the arbitrators, and the account being corrected, the award was corrected also, and the balance against the plaintiff Masters was reduced to $6,741,91. A notice of this correction was given to Gardner with a request that he would produce before them, the statement made in July, 1856, that it might also be made to correspond with the final award which they were about to make. This he refused to do, but gave notice to the arbitrators that he revoked the submission and desired them to proceed no further in the business. Notwithstanding this intimation, the arbitrators, on the 26th of September, 1856, did make a final award according to the statement as corrected, which was delivered to the several parties.

The plaintiff, in his bill, insists that the award made on the 19th of July, 1856, exhausted die power of the arbitrators, and that they had no right to take further action in the case, and that the award then made was erroneous in many particulars, going on to specify the errors already spoken of as being corrected in the further award, with some few others of minor importance. He contended that these errors were of so grave a character as to show misconduct in the arbitrators. He contended also that the arbitrators exhibited partiality in permitting the defendant to come before them and make ex parte statements, but denying the same privilege to plaintiff Gardner. That the award is uncertain, and not final, and embraced matters not embraced in the submission. They excepted to it also, on the ground, that it adjudged them to pay the costs, whereas there was no power given them to determine upon that subject; and because no conveyance of the Camp Pinckney land had been ordered by them.

The defendant answered, denying that he had failed to give bond and security as required by the terms of the submission. He averred that he made and delivered a bond to the arbitrators according to the terms of submission, and that the defendant had notice of it before the arbitration was entered upon.

lie further says in his answer, that the books of the copart-nership had been kept entirely by Gardner; that they were very unskillfully kept, and that most of the errors into which the arbitrators fell were occasioned by the loose and incorrect manner in which these books were kept; that one of the arbitrators bad been employed by him (Gardner) to post the books and arrange the accounts before the submission was made, and that both of the arbitrators were selected by him. He denies the charge of partiality in permitting him to come before them privately and to make ex parte statements. lie says that the chief business of the arbitrators was to collect a result from the books as furnished by Gardner, and that for months, while this engaged their attention, neither party was permitted to come before them; but that on arriving at á conclusion based on these premises, they were both then called on, and first Gardner and then Masters did come before them and were fully heard; that the explanations of both were duly considered, and all fair corrections made, except some few unimportant ones in the matter of interest, which were overlooked. lie denies that there was any fraud, corruption, partiality or misconduct in the arbitrators, but so far' as he could discover, there was an earnest purpose to do justice between him and his adversary. He says that after the first draft of the award was made, the plaintiff still recognised the pendency of the business before the arbitrators, by coming before them and making corrections, and that lie did not signify his dissent to their going on with the arbitration until he found out what the arbitrators had finally agreed upon, and were just about to deliver their final award.

The cause was heard on the bill and answer, and upon a motion to dissolve the injunction.

His honor ordered the injunction to be dissolved, and the plaintiff appealed.

J. W. Bryan, for the plaintiffs.

Hubbard and Donnell, for the defendant.

PeaesoN, J.

"Where matters of controversy &re submitted to arbitration by agreement of the parties, they substitute a tribunal of their own choosing in place of the ordinary courts of the country. "Whether the motive be to save expense or to avoid giving notoriety to the “ actings and doings” of the parties, or because they suppose the matters are so complicated, that a court aud jury cannot investigate them so as to arrive at justice, or because they desire the controversy to be adjusted upon principles different from those adopted in a court of law or of equity, and more consonant (as they imagine) to substantial justice, or whatever else the motive may be, is immaterial. The tribunal so constituted hy them is independent in its action. Its decision cannot be appealed from, nor can it be rescinded either hy a court of law or equity.

"Where a suit is pending, and the matter in controversy is referred to arbitration as a rule of court, the action of the arbitrators is not entirely independent, for it is resorted to as ancillary, or in aid of the court by whose judgment it is to be carried into effect, and on that account is, in some degree, subject to the supervision of the Court. • This mode of arbitration differs essentially from the former, and some conflict has been allowed to creep into the eases by not keeping the distinction steadily in view. Devereux v. Burgwin, 11 Ire. 490, and Eaton v. Eaton, 8 Ire. Eq. 102, are instances of the former. The manner in which an award, made by tribunals of this kind, is treated by the courts, both of law and equity, is therein fully discussed.

The submission in this case was by agreement of the parties in fans. The defendant has instituted an action, at law, upon the bond executed by the plaintiffs to perform the award, and they seek the interference of this Court to enjoin him from proceeding at law.

The only ground upon which they can ask this relief is, that it is against conscience for the defendant to avail himself of the advantage that the award gives him in a court of law. So the question is reduced to this: Is there any thing to affect the conscience of the defendant, growing out of unfairness or fraud on his part, or of misconduct or corruption on the part of the arbitrators? “Corruption or partiality are admitted grounds for setting aside an award; so is a mistake into which the arbitrators have been led by undue means, or into which they have been permitted to fall by the fraudulent concealment of the party or his agent. A court of equity does not in such cases correct the award, or revise the decision of the arbitrators, but holds it to be against conscience to take advantage of the award in seeking to enforce it by an action at law, or by using it as a plea in bar of a bill for an account Eaton v. Eaton, supra.

The matters charged in the bill, at least in this stage of the cause, where the answer is to be taken as true, do not make a case for the interference of this Court. The plaintiffs allege that the defendant did not execute a bond for the performance of the award, and so was guilty of fraud. This is denied, and the defendant sw'ears he did execute a bond, which was duly filed with the arbitrators, and of which the plaintiffs had notice.

They allege that the arbitrators refused to allow the plaintiff Gardner to appear before them and make the necessary explanations, but came to their conclusions from the expcvrte statements of the defendant. This is denied, and a satisfactory explanation is set outin the answer; for the defendant says, that the matters connected with the copartnership, a settlement of which was the object of the reference, appeared, or ought to have appeared, upon the books, which had been kept by Gardner; that the task imposed upon the arbitrators was mainly that of finding out from the books how the balance stood, which was not easily done because of the very loose and unskilful manner in which they had been kept; that while thus engaged, they did not allow either of the parties to appear before them; that on the 19th July, 1856, having made out a rough estimate, they made the result known to the parties, and notified them to attend and suggest any mistakes or corrections, or alterations, that ought to be made. This was assented to. Gardner accordingly went before them, and at his instance, several alterations were made. Afterwards, the defendant went before them and pointed out several mistakes into which they had fallen, owing to the confused manner in which the entries had been made, but the correction of these mistakes was in favor of Gardner.

They allege several mistakes, and insist that the errors are so gross as to raise a presumption of corruption or misconduet. The answer admits these mistakes ; for instance, charging interest in favor of the defendant some five months before he was entitled to it and the like.

Mistakes, such as these, do not furnish an inference of misconduct; they are all fairly attributable to the condition of the books, and we are satisfied that the arbitrators acted fairly, and devoted much labor to the investigation, with a single eye to the truth, and a conscientious desire to do justice.

They allege that the arbitrators exceeded their authority, and took into the account matters not submitted. This is denied. They allege that the award is uncertain and not final. Such objections apply more properly to awards made under a rule of court, where a degree of certainty is necessary to enable the court to enter up judgment. In awards under a submission by agreement in pais, so much certainty is not required. In respect to its not being final, the particular mainly relied on is that the award does not provide for a conveyance or release of the defendant’s interest in the whole tract of land. This had been sufficiently provided for in the articles which the parties adopted as the basis of the agreement to refer the matters to arbitration. The same remarks are applicable to the other particulars relied on as showing that the award is not final. A further answer to this objection is this: the supposed want of certainty and finality is not a matter that affects the conscience of the party, and may be made the subject of consideration as well in a court of law as in equity. It would seem that in either court, an award would be deemed sufficiently certain and final, if it be as much so as the nature of the several matters involved in the controversy are susceptible of, and the condition of things makes practicable.

They allege that tho submission was revoked before the award was made and published. We. will not enter upon this subject, because if it be true in fact, the plaintiffs may avail themselves of it at law. It certainly does not affect the conscience ; and indeed, if it be true that the attempt to revoke was not until after the plaintiff Gardner was informed how the award would be, if he was not too late in the consideration of a court of law, he surely cannot expect such an objection to be received with favor by a court of conscience.

And lastly, they allege that the arbitrators were not empowered to tax him with the costs of the arbitration. The same remarks apply to this objection. It may be that the arbitrators had no right to make any disposition of the costs in the absence of an express clause to that effect; but it is a strict legal objection, and we must refer it to the court of law where the action is pending, and the defendants may have the benefit of it by way of reducing the damages.

Pee CukiAM, There is no error, and the decretal order is affirmed.