Cothran v. Knox

13 S.C. 496, 1880 S.C. LEXIS 84

Opinion

The opinion of the court was delivered by

McIver, A. J.

Upon all the questions raised by this appeal, except that raised by the fourth ground, we agree with the Circuit judge.

As to the alleged arbitration, we think it lacks one essential featui’e, which deprives it of the character claimed for it. It seems to us to be essential to the very idea of an arbitration that there should have been an antecedent dispute or controversy between the parties. As is said by Morse, in his work on Arbitrations and Awards, at page 40, quoting from Russell’s work on the same subject, “a decision which precludes differences from arising instead of settling them after they have arisen, is, for many purposes, not an award.” Or, as is said in Smith v. B. C. & M. R. R. Co., 36 N. H. 458, if the parties have a difference or dispute, however trivial, or upon a matter however simple, and in whatever mode the truth is to be ascertained, and they select an indifferent third person to be the judge between them, and bind themselves to abide his decision, that seems to us a submission to arbitration, and the decision to be an award.” In the case now under consideration, there is no evidence whatever tending to show that the parties had had any previous dispute or difference, but, on the contrary, they seem to have been the best of friends, the one reposing so much confidence in the other as to leave in his possession a note for a large amount against that other. The most natural'inference to be drawn from the testimony is, that so far from there having been any previous controversy between the parties, the only difficulty that seemed to be in their minds was the preparation of an account of their complicated transactions, from books which did not appear to have been kept with much accuracy or system, for the purpose of enabling them to ascertain how they stood towards each other. This would call for the services of a skilled accountant rather than for those of arbitrators, strictly speaking. If this was what was in the minds of the parties, then clearly the account prepared by the so-called arbitrators could at most only furnish the basis-for a subsequent settlement between the parties, and, until accepted, would not be binding. So far as Cunningham is concerned, there is not only no evidence of his having ever accepted the statement, so prepared, as correct, but, on the contrary, the evidence tends to show that he never saw it, and never knew anything about it.

But even assuming that the foregoing objection is not well founded, there is another, fatal to the alleged award. While it is very true that a submission to arbitration may be by parol ás well as by deed or rule of court, yet it is essential that it should appear clearly from the evidence what matters are to be submitted, and to whom. Here the testimony is defective in both respects. The testimony of Millford is that he was asked by Knox “to make a settlement between Mr. Cunningham and himself. * * * Mr. Cunningham afterwards came to me and asked me to make the settlement;” but what matters were to be embraced in such - settlement this witness did not state. The natural inference from the language used would be-that it was to embrace all matters between them, as well partnership as individual accounts, and yet it is not pretended that the partnership accounts were to be embraced, and the arbitrators ■expressly say that their award embraced only the individual and not the- partnership accounts. The testimony of Cason is: Heard Mr. Cunningham say to Mr. Knox that he was willing to give over all books and papers to Mr. Millford to make settlement. * * * Cunningham said to Knox, ‘ Knox, Millford is an honest man, and I am willing to turn books and papers over to him to make a settlement between us.’ ” Here again is the same uncertainty as to what matters were to be embraced in the settlement, and the same inference may be drawn from the language used, that all matters, as well partnership as individual, were intended to be embraced. If, therefore, the intention of the parties was to submit all matters, as well partnership as individual, to arbitration, and the arbitrators have confined their award, as they manifestly have done, to the individual transactions, this certainly would be a fatal objection to the award, because while Cunningham might have been willing to submit •all matters, partnership as well as individual, to arbitration, it does not by any means follow that he would have been willing to submit only the individual transactions between himself and Knox to arbitration. For it was possible that an adjustment of the individual transactions might have brought Cunningham in •debt to' Knox, while if the partnership transactions had been brought into the arbitration, the balance might have been the •other way. Be this, however, as it may, the basis of every arbitration is the consent of the parties, and where arbitrators make an award in which certain transactions embraced in the submission have been entirely ignored, such an arbitration cannot be said to have the essential element of the consent of the parties.

There is also the same uncertainty as to the persons to whom the matters were submitted for arbitration. The only evidence tending to show that Wosmansky was one of the persons selected is the vague impression of Millford that both parties ■agreed that Wosmansky should assist him in making the settlement, for certainly the mere fact that Wosmansky signed the paper purporting to be the award cannot be regarded as evidence that he was one of the persons selected as arbitrators; while the testimony of Cason, the only other witness relied upon to show the submission, not only fails to show that ’W’osmansky was agreed upon as one of the arbitrators, but, on the contrary, shows that his name was not even mentioned. This testimony is manifestly insufficient to show who were “ the judges of the parties’ choice,” and this, therefore, constitutes another objection fatal to the award.

But, in addition to all this, the alleged award is clearly amenable to the objection that it is partial. As is said by Nott, J., in Shinnie v. Coil, 1 McC. Ch. 485: “When it is said that partiality on the part of the arbitrators is good ground for setting aside an award, it is not to be understood that it must necessarily be a corrupt partiality. Any ex parte proceeding, the effect of which is to give an advantage to one party over the other, is such' a partiality as will avoid an award.” In this case, while Cunningham was not only not called upon for any statement, so far as the testimony shows, but was not even notified of any meeting of the arbitrators, fhe other party, Knox, was either present or in some way communicated with the arbitrators, as it distinctly appears that upon his ex parte statement, certainly incompetent as to one of the notes, whether under oath or not does not appear, the arbitrators undertook to change very materially two written instruments — notes of hand — in both instances in favor of Knox. It is difficult to understand how such conduct could be regarded by a fair-minded person as impartial. For when arbitrators not only permitted a bare statement of an interested party to contradict the terms of a written instrument, but actually undertook to alter the terms of another note, upon the bare statement of the party interested, that a third person, who was not examined as a witness, •could testify that there was an error in drawing the note in the form in which it was written, without giving the other party an opportunity to be heard as to such an extraordinary proceeding, it looks very much as if the arbitration was the result of the mere dictation of one of the parties, without any regard to the interests of the other.

As to the second ground of appeal, it is very clear that there is no evidence whatever which would have justified the referee-in charging plaintiff’s testator, with the amount of the two accounts against S. W. Cunningham. The fact that Knox and J. J. Cunningham were partners, and that S. W. Cunningham was living on land belonging to J. J. Cunningham, would certainly furnish no evidence that the latter was to be liable for any account which the latter might see fit to contract.

As to the claim for commissions, we are unable to discover any ground upon which it can be sustained. As is abundantly shown in the authorities cited, commissions can only be claimed by virtue of some statutory provision or some contract between the parties. Where, as in this case, there is no statute allowing commissions and no evidence of any agreement between the parties to that effect, they cannot be allowed. But it is sufficient for us to say that in the case of Cooper v. Reid, 2 Mill’s Ch. 549, the point has been distinctly decided adversely to the claim of the appellant.

We think, however, that the Circuit judge erred in refusing to give the appellant credit for the note of Cunningham to Eakin, & Knox. He seems to base his judgment upon the assumption that this note was embraced in the settlement made by Du Pre in 1870. But we are unable to discover any evidence that such was the case,.and, on the contrary, think that the evidence tends to show the reverse. There is no pretence that there is any direct evidence showing that the note in question went into that settlement, but the argument is that it must be presumed to have entered into that settlement, because the giving of the note for $5091.85 raises a presumption that all antecedent indebtedness had been settled. It is very true that the giving of a note furnishes a presumption of the liquidation of all antecedent accounts, yet this is a mere presumption, liable to be rebutted, as is said in Chewning v. Proctor, 2 McC. Ch. 15, “by’very slight circumstances,” or, as is perhaps more correctly said in Morse v. Ellerbe, 4 Rich. 606, “ until explained or rebutted, the legal presumption ■ from giving a note is that all precedent indebtedness of the maker is covered by it.” Where, however, the note is given in a different right, it may well be questioned whether there is any room for such a presumption. A note given by Knox to Cunningham would not necessarily raise the presumption that a note previously given by Cunningham to Eakin & Knox had been liquidated, for in law they are totally distinct persons, and unless there was evidence showing that at the time the last note was given the first was in the possession and under the control of Knox, the presumption would not arise, for it might be that the first note had become the absolute, individual property of Eakin, and that Knox had thereby lost all control •over it. But, in addition to this, the uncontradicted testimony of Knox' is that the note in question did not go into the settlement, and all the circumstances tend, in our opinion, to corroborate his testimony. Hence, even if the presumption contended for could arise it is certainly rebutted by the evidence. We think, therefore, that the Circuit judge erred in sustaining plaintiff’s second exception to the report of the referee, and that in this respect also the report should be confirmed.

The judgment of the Circuit Court, as modified herein, is affirmed, and the case is remanded to that court for such further proceedings as may be necessary.

Willard, C. J., concurred.