Geiger v. . Caldwell

114 S.E. 497, 184 N.C. 387, 1922 N.C. LEXIS 94

• Court: Supreme Court of North Carolina
• Decided: November 15, 1922
• Status: Published

Opinion

"WalKER, J.

Tbe referee (Mr. Lawrence) acted wisely in presenting a report in tbe alternative views based on tbe construction of tbe arbitration and award and tbe evidence. He held himself bound by tbe award, and in this be was also correct, but we are of tbe opinion that tbe arbitrators adopted a mistaken view of tbe arbitration. It is clear from tbe terms of tbe submission to them that tbe plaintiff was not to be allowed a credit of more than $750 for work done by him on the balance of the debt due by him to Caldwell. This, it seems to us, is the plain and only allowable construction of the submission. The confusion as to its meaning arose from the fact that they had separated a part ($750) of an entire debt due by Geiger to Caldwell from the whole thereof ($1,750), and referred to the $750 as if it was a separate and distinct debt evidenced by a note or some other instrument for its amount ($750), whereas the balance of the debt, originally $4,750, was $1,750, but the meaning and intention of the parties is so plainly manifest that this peculiar and confusing way of expressing it is altogether immaterial. We search for the contract and construe it according to the real intention of the parties, and when this is discovered, and especially when, as in this case, it is so easily found, we do nothing more than execute it.

In paying or reducing the amount of Caldwell’s indebtedness to him for his work on the house, the plaintiff could offset it by his debt to Caldwell for the balance of the purchase money due for the lot and secured by the Harrill deed of trust, but only to the amount of $750. This was, therefore, the limit of the power conferred upon the arbitrators in determining the balance due by Geiger to Caldwell. The learned referee considered this matter, and would have given Geiger a credit for only $750 had he not been of the opinion that he was bound and concluded by their award allowing him more than that amount. In thus holding, he overlooked the fact that the arbitrators had exceeded their power and jurisdiction, if it may be so called, and to the extent that they did so, he was not bound by their decision, but could decide for himself.

Turning to the authorities, we find it settled that the submission furnishes the source and prescribes the limits of the arbitrators’ authority, without regard to the form of the submission. The award, both in substance and in form, must conform to the submission, and the arbitrators are inflexibly limited to a decision of the particular matters referred-to them. 5 Corpus Juris, 124. A submission is in itself a contract, or agreement, or so far partakes of its nature as to be substantially within the principle applicable to contracts as “the basis of the arbitration and award is the submission.” Sprinkle v. Sprinkle, 159 N. C., 81; Millsaps v. Estes, 137 N. C., 536; Dist. of Columbia v. Bailey, 171 U. S., 176. As a legal proposition, defendant is correct in contending that an award may not extend beyond the meaning and scope of the submission, unless waived by the conduct of the parties, or by some other recognized method of enlarging the range of inquiry, which is not shown here. Such improper action on the part of the arbitrators is void, certainly as to the excess, and if not on matter independent and severable, its effect may be to render the entire award invalid. Robert son v. Marshall, 155 N. C., 167. An award must be made strictly in pursuance of and in agreement with the submission, which must not, in its terms, be exceeded, and the arbitrators should regularly award as to all things referred to them, though an award may be good as to p>art, and void as to the remainder (if the parts are separable), where the arbitrators have acted in excess of authority. Millinery Co. v. Ins. Co., 160 N. C., 130; Watson on Arbitration, marg. p. 176; Stevens v. Brown, 82 N. C., 460. In Cutler v. Cutler, 169 N. C., 482, it was held that an agreement to arbitrate is a contract, and from it the arbitrators derive their authority to bind the parties by their decision, and it is well settled that the arbitrators cannot exceed the authority conferred upon them by the agreement.

The award exceeded the limit set by the terms of the submission, and, as argued by the defendant, it was, at least to that extent, not authorized and void, and did not bind the defendant or the arbitrators. But this is, as to the latter, on matter substantially separable from the rest of the award and indejiendent of it. The arbitrators did what they were authorized to do, although they did more, but as this does not vitiate what was within their express power to do, we may hold it valid as to it, and void as to the excess.

The parties, as rexjorted by the referee, treated the submission as, in the first instance, to two of the arbitrators, and in the event of disagreement between them, the third then to act in conjunction with the others. But the last was not required to be done, as the two agreed, and rendered his participation unnecessary. This was the correct view as taken by the referee. The very nature of the transaction, as disclosed by the entire record, clearly sustains his conclusion irpon this part of the case.

The objection to the form of the single exception and assignment of error is not well taken. It substantially presents the real point intended to be raised, namely, that the award in its present form is not legal and binding up>on the defendant, because the arbitrators exceeded their p)owers. It would be placing a very technical and strained construction upon the exception of defendant should we decide otherwise.

The judgment will be modified and the case remanded, so that the rexJort of the referee may be modified by the court, or recommitted to the referee for that |>urpose, by allowing the plaintiff $750, as a credit on the account, instead of the amount now apxoearing in the referee’s account as stated by him, this being his alternative ruling, if the award is not valid and binding upon defendant, except as modified, which it is now held by us to be. The other grounds of objection to it are untenable.

As thus modified, the judgment of the court is affirmed, and will be enforced.

Modified and affirmed.