de Pusey v. du Pont

1 Del. Ch. 82

• Court: Court of Chancery of Delaware
• Decided: August 15, 1819
• Status: Published

Opinion

Ridgely, Chancellor.

After stating the 15th, 16th and 17th Articles of Association, and the substance of the bill, and answer, the Chancellor proceeded to say:

It is evident that, in the events provided for, the arbitrators had no authority to do any other act than to make an inventory. Mr. du Pont had the authority to make a final settlement of the accounts on the non-renewal of the articles of association ; but on his settlement there is no appeal or reference to arbitrators. The action of the arbitrators was to precede the settlement of' the accounts and lay'the foundation for it: but they could not inquire into any matter beyond the valuation or estimate of the joint property. Hone of the matters in controversy under the bill and answer are comprehended within the scope of the reference. They are not provided for, unless it is by the settlement of accounts to be made by Mr. du Pont, himself; and it has not been contended that he has made any settlement to bar an inquiry in this court; nor that the case has happened upon which he was to make a final settlement.

The authorities read by the counsel of both parties do not support the defendant’s counsel in the position which he has taken, that the agreement of the parties ousts this court of jurisdiction, and that the case in the first instance must be submitted to arbitrators. In Wellington vs. McIntosh, 2 Atk. 569, which was a bill brought by one partner against another, to discover and be relieved of fraud, Lord Hardwicke would not allow the plea of an agreement, that in case any difference should arise it was to be referred, because there was no clause in the agreement giving the arbitrators power to examine the parties, as well as witnesses, upon oath. But this opinion of Lord Hardwicke is said, in Halfhide vs. Fenning, 2 Brown Ch. R. 336, to be misreported. In the latter case, Lord Kenyon then Master of the Rolls, allowed a plea to a bill for an account of the partnership, that all matters in controversy were to be determined by arbitrators, and that there should not be any suit at law or in equity, because the controversy which had arisen between the parties must have been the very matter provided for by the agreement, and more especially because it was agreed that there should not be any suit at law or in equity. Vide 2 Vesey Jr. 132. But he expressly declared that if the matters in controversy were not within the range of such a reference, the objection would be fatal. 2 Dickens 702, S. C. In Mitchell vs. Harris 2 Vesey Jr. 129 : 4 Brown 312, on a bill of discovery in aid of an action of covenant, a plea of a clause in the articles that any dispute should be referred, was overruled. And there, the Lord Chancellor said, that where there was an express agreement that there should be no suit at law or in equity, the parties should not proceed contrary to their agreement, but he said that there was no case in which an agreement to refer had been set up as a bar to an action; that such an agreement would not stop a court of law; an d that there never had been an idea of a bill to enjoin a party from proceeding at law, under a notion of giving specific effect to such a covenant when the parties were proceeding at' law. And this opinion of Lord Loughborough certainly conforms to the decision in Kill vs. Hollister, 1 Wilson 129. It may also be remarked that he observed that Halfhide vs. Fenning was a singular case, and stood in opposition to the case in Atkyns, wbmh, he said, was a clear authority, though the reporter had mistaken Lord Hardwicke’s reasons ; and that such a clause could not by possibility stop the discovery. In 1 V. & B. 154, decided in 1812, Lord Eldon refused to interpose, till the parties had tried the redress provided by the articles; but he declared that if the means of redress were not sufficient, the Court might interfere. Now, what are the means of redress provided for here ? That on the expiration of the partnership an inventory shall be made by persons named by the parties. That is the whole amount of their duty. There is not a single point in controversy which falls within the range of this reference. Hot one of them is provided for. The agreement is totally silent in these particulars ; and it would be a strange perversion of the spirit and words of the articles to force the parties to an arbitration of the matters brought into controversy by this bill and answer, because the parties had agreed that in certain events arbitrators should make an inventory. Hot one of the cases goes the length to support this objection of the defendants; and it is very clear that the jurisdiction of this Court cannot be ousted, or rather suspended, unless the parties had unequivocally so intended, and had substituted a mode of decision by arbitrators of the several matters in controversy.

The defence set up by way of plea was over-ruled. Upon the merits of the cause the Chancellor decreed with the complainant for an account. The decree was afterwards affirmed by the High Court of Errors and Appeals at the June T. 1820.