Witz v. Tregallas

33 A. 718, 82 Md. 351, 1896 Md. LEXIS 13

• Court: Court of Appeals of Maryland
• Decided: January 9, 1896
• Status: Published

Opinion

Boyd, J.,

delivered the opinion of the Court.

On the first day of January, 1881, Isaac Witz, Levi Witz, Wm. T. Biedler and Samuel R. Tregallas entered into articles of copartnership, by which it was agreed what each partner was to contribute to the capital, what interest thereon was to be paid, what share of merchandise on hand each was to receive in the event of dissolution of the firm, and that the copartnership should continue for the term of three years. It was further agreed that after paying all expenses and losses the appellee was to receive one-tenth of the profits, and that the remainder should be divided equally between the other three, but if the appellee furnished additional capital from two to fifteen thousand dollars, within six months from the expiration of each year, his profits should be increased at the rate of one per cent, per thousand. A supplemental agreement was entered into by which the copartnership was continued until December 3 ist, 1886, on the terms mentioned in the original agreement,, excepting with reference to the division of profits, which was changed so that Levi Witz and W. T. Biedler were each to receive thirty-one and a-quarterper cent., S. R. Tregallas twenty-five per cent., and Isaac Witz twelve and one-half per cent. On December 31st, 1887, another change was made, by which it was agreed that for two years from January ist, 1888, Isaac Witz was to receive ten per cent, of the net profits, up to forty thousand dollars, as his special and full interest, and then the profits were to be divided as follows: To Levi Witz and W. T. Biedler each thirty-six and one-fourth per cent., and to S. R. Tregallas twenty-seven and one-half per cent.

The partnership continued until December 31st, 1889, when it was finally dissolved, and the assets were turned over to the appellants and W. T. Biedler, as liquidating partners, who proceeded to realize on them. After a large part of them had been collected and distributed, differences arose between the members of the firm, and on February 18th, 1893, an agreement was entered into "to submit said differences to arbitration.” It was therein stated that Christian Devries was satisfactory as an arbitrator to three of the partners, and if Mr. Tregallas desired two, he was authorized to name one, and in case he did, and the two could not agree upon a conclusion, they could select an associate, and “ the majority decision shall be the unanimous decision.” The arbitrators were required to write their names on the agreement as evidence of their acceptance. It was further provided that either party could present his views in writing or orally and offer such evidence as he deemed advisable.

Mr. Tregallas exercised the right to name an arbitrator and selected J. Frank Supplee. Messrs. Devries and Supplee accepted the appointment and entered upon their duties. Being unable to agree, they selected Daniel E. Conklin as their associate. Messrs. Supplee and Conklin signed an award which Mr. Devries declined to concur in, by which it was determined that the assets of the late firm of Witz, Biedler and Company should be divided between the respective partners in the proportions of 32.41 per cent, to Levi Witz ; 27.34 per cent, to Isaac Witz ; 24.06 per cent, to W. T. Biedler, and 22.19 Per cent. to S. R. Tregallas, and the following provisions were also made in said award :

“ Each of the partners who has received more than his share, as above determined, of the assets thus far distributed, shall return the same, and in the future all assets received shall be distributed in the proportion above set forth.

“ The Bridener defalcation made before the dissolution of the firm, and any and all other items charged off or to be charged off shall be charged to the respective partners on their accounts in the same proportion as above declared.

“All expenses of liquidation shall also be divided or charged to each partner in the proportion above set forth.

“ The three liquidating partners, Levi Witz, Isaac Witz and William T. Biedler, shall repay to the firm the sum of $4,636.61, the amount of the defalcation of the bookkeeper, Bridener, made after the dissolution of the firm.”

The award was acceptable to Messrs. Biedler and Tregallas, but not to the Messrs. Witz, who declined to abide by it. Mr. Tregallas filed the bill in this case against the other three members of the firm, praying (1), that the defendants should be. required to account with him for all the assets which they had received, as liquidating partners of the late copartnership, including the sum of $4,636.61, specially mentioned in the award ; (2), that there might be an accounting and a distribution of the assets in the manner prescribed by said award, and (3), for general relief. William T. Biedler admitted the allegations of the bill, but the Messrs. Witz filed an answer in which they set up a number of objections to the enforcement of the award.

The Court below passed a decree referring the case to one of its auditors and masters to state an account in accordance with the terms of the award. From that decree this appeal was taken by the Messrs. Witz.

Before considering the main reasons relied on by the appellants for setting aside the award, it may be well for us to pass upon what might be termed the preliminary and technical questions that have been urged in this Court. It is said that there is no jurisdiction in a Court of Equity in this State to enforce an award. The learned counsel for the appellants did not rely for this contention upon any decision in Maryland sustaining that position, but rather upon the absence of all precedents in this State to justify a Court of Equity intervening to enforce the specific performance of such an award. If that be conceded, it is not conclusive against the right to do so when a proper case is presented. If we assume that this award is valid, we can see no reason why a Court of Equity cannot require an accounting and a distribution of the assets of the firm between the partners on the terms established by it. The defendants were bound to account to the plaintiff, and the arbitrators having determined the proportion of assets that each partner was to receive, such accounting should be in accordance with the award. It is conceded in the answer of the appellants that “ an accounting under the the supervision of this Court is necessary, in order to ascertain the respective rights of copartners.” Whether the distribution be made in the proportions fixed by the award, or otherwise, it is evident that a Court of Equity must take charge of the settlement to do full and substantial justice between all partners, as they cannot agree among themselves. It might well be questioned whether this is, strictly speaking, a bill for the enforcement of a specific performance of the award— whether it is not simply a bill to settle the affairs of the copartnership, using the award for the purpose of determining the proportions the partners are to receive, and such other matters as it disposes of. But there is no longer any doubt about the right of a Court of Equity to exercise this power, when the thing ordered by the award to be done is such as a Court of Equity would specifically enforce, if it had been agreed upon by the parties themselves. Morse on Arbitration, 603; Russell on Arbitration, 563, and cases cited by them.

It is also contended that the award is void, because Mr. Conklin failed to sign his name on the agreement. It is true that there is a provision that “ The said arbitrators shall write their name or names on this article of agreement, as evidence of accepting the same,” but there is no doubt that Mr. Conklin was duly selected by the other two, and that in point of fact he did accept, with the knowledge and consent of the partners. He ought to have signed his name, but his omission to do so did not and could not possibly prejudice or injure the appellants. His signature was not the only evidence of his acceptance of the appointment, and to set aside an award for such an omission would be far more technical than is required or justified either by authority or reason. The testimony of Mr. Conklin shows that his failure to sign his name was entirely an oversight, and not because there was any question of his acceptance.

It is further alleged that the three arbitrators did not act together, and that it was in effect simply an award of the two who signed it, without their making a proper effort to have all three pass upon and agree to the matters submitted to them. The evidence shows that Messrs. Devries and Supplee had a number of meetings, during a period of time covering about two months, and heard considerable evidence and argument. Being unable to agree, they finally selected Mr. Conklin. After his appointment all three met at different times and the partners were requested to come before them. All except Mr. Isaac Witz appeared and were interrogated by, or at least in the presence of the three arbitrators. Mr. Levi Witz informed them it would not be necessary to have his brother present, as he could answer all questions for him. They were represented by the same counsel in the written argument that was submitted on their behalf. The record discloses the fact that Messrs. Supplee and Conklin differed materially with Mr. Devries as to the settlement and this finally resulted in the announcement by Mr. Devries of his withdrawal. He thought the settlement should be made on a different theory from that adopted by the other two. He, having been called on behalf of the defendants, testified that Messrs. Supplee and Conklin told him they were ready to make the award, but he requested a postponement until the following Monday or Tuesday, to which they assented, and they again met at the time agreed upon. They still differed and he then told them he would withdraw from the arbitration and “ did so.” He further said that on that occasion “ The gentlemen stated that they were prepared to make an award and I presume from the papers they had, that the award might have been made'up, but I declined to look at them to see what they contained.” Between the two meetings above spoken of, Mr. Devries had seen Mi-. Witz and his counsel, and told them he had determined to withdraw, unless his associates would either continue to recognize the articles of partnership in the distribution of the assets, or submit to a rewriting of the books. The counsel for the Messrs. Witz told him he had a perfect right to withdraw. When the three met on the Monday or Tuesday previously spoken of, finding that his associates did not agree to either of the two propositions made by hiiq, he carried out his determination, announced his intention to withdraw and did so.' Mr. Supplee testified that “ a meeting was held at the bank, of which Mr. Devries was president,” and a full discussion entered into of all the points submitted to us. This was a prolonged meeting and the questions were viewed from every possible standpoint. Mr. Devries remarked at this meeting that “ I have heard all I wish to hear of argument or further discussion or expert testimony, and a date was then fixed for a final meeting, and it was agreed at that meeting a conclusion should be reached.” The final meeting was held as above stated and after some discussion Mr. Devries said, “ Well, gentlemen, if this is your decision I withdraw from the arbitration.” To this Mr. Supplee replied, “ Mr. Devries, you cannot now withdraw from the arbitration after having staid in all this time, and we, by agreement, are now ready to vote.” To this he answered, “ But I do withdraw nevertheless ; but you gentlemen are perfectly competent to bring in your report without me in accordance with the articles submitted to us, as you are a majority of the board.”

After that, as Mr. Conklin was going away, he and Mr. Supplee prepared and signed the award that is filed in the case, buf at the request of the former the latter took it to Mr. Devries, who declined to sign it. The two arbitrators who constituted the majority were under no legal obligation to present the award to Mr. Devries, he having already withdrawn because he could not agree with the majority, and that act of courtesy of submitting it to him certainly cannot invalidate it. It was agreed in the submission “ that the majority decision shall be the unanimous decision,” and hence, two had the power to make the award if the three could not agree, and no one of them could defeat it by his withdrawal. All the testimony that the majority deemed relevant and proper was fairly and fully considered by the three and the award cannot be set aside because it was signed by the two, in the absence of the third, who had declined to act.

So far as the objection that the counsel for Messrs. Tregallas and Biedler was on one occasion called before Messrs. Devries and. Supplee, a sufficient answer might be that it occurred before Mr. Conklin had been appointed. But it would be carrying technicalities to an extreme to say that this would have invalidated the award if he had appeared before the three in the absence of the other counsel without at least showing that some injury was or might have been done. Mr. Arnold was present as an accountant to sustain the claim of the Messrs. Witz, and Mr. Supplee suggested that it might be well to have Mr. Rose, counsel for Messrs. Tregallas and Biedler, present, so he could explain some matters that Mr. Arnold did not seem to be able to explain to the satisfaction of the arbitrators. To this Mr. Devries consented and we see nothing in that act of the arbitrators that would justify us in setting aside the award.

This brings us to the consideration of the questions whether the arbitrators exceeded their powers by passing on matters not submitted to them, or failed to consider all matters that were so submitted. The articles of submission begin, “ desiring to reach a speedy, equitable and just settlement of our partnership differences, We * * * * members of the late firm of Witz, Biedler and Company, agree to submit said differences to arbitration; further agree to submit all books, papers, documents pertaining to the business of said Witz, Biedler and Company, to the use of the said arbitration.” What these differences were are not disclosed on the face of the agreement, and we must therefore resort to extrinsic evidence to ascertain them. The large preponderance of testimony shows that the differences existing were those passed on by the arbitrators in the award, but if there could be any question about that it would seem to be conclusively settled by the written arguments submitted by the ’ counsel for the respective parties. That of the counsel for the appellants was largely taken up in his effort to sustain the contention of his clients as to the proportions in which the assets should be distributed; whilst Messrs. Biedler and Tregallas contended for another principle which was adopted by the arbitrators. He then discussed the Bridener defalcation before the dissolution, and under a separate head the defalcation during the liquidation, and concluded by giving his views in brief as to the expenses of the liquidation. Thus we see that the questions passed on by the arbitrators were those argued before them. There is nothing on the face of the award to suggest that any matters were passed upon which had not been submitted, unless, possibly, that as to the Bridener defalcation after the dissolution of the firm. But when we understand what that was, and find that it was argued before the arbitrators by the representatives of all the parties, we can see no reason why the arbitrators could not properly pass upon it in the settlement of the partnership differences. It was contended by the appellee that the liquidating partners had been negligent as to this fund, and that inasmuch as they mingled it with the money of the new firm (of which Mr. Tregallas was not a member) to which Bridener had access, they were responsible. It was a question which properly arose in connection with the distribution of the assets of the late firm, having been received by the defendants as part thereof. We, therefore, cannot say it was not included in the submission.

We have not been able to discover from the evidence wherein the arbitrators failed to pass upon any question which had been submitted to them. It is true that there were some matters of detail as to the distribution, etc., argued before them, which are not mentioned in the award, but they are necessarily embraced in what was determined. In reaching a conclusion as to what proportions of the assets the former partners were respectively entitled to, the arbitrators presumably took into consideration all the evidence submitted to them and the theories .presented by respective parties, including the questions as to how far the course of dealing between the partners changed the terms of the articles of partnership in reference to interest on the capital invested, the accounts of the partners with the firm, and other relevant matters. The burden of proof is on the appellants to show that the award is not coextensive with the submission (Morse on Arbitration, 363), and they have utterly failed to satisfy us of this or that the arbitrators exceeded their powers.

Then again it is contended that the award is not certain and final and that an account should have been taken and the sum due by each partner ascertained. The differences between the partners that were to be arbitrated were not as to the amounts received by them or what the assets of the firm were, but as to the proportions they were respectively entitled to receive, A considerable part of the assets of the firm had not been collected. It was not possible to determine definitely how much could be realized or when the collections could be made. The liquidating partners were still collecting when the arbitration was going on and even after the award was made. It was therefore impossible to name in dollars and cents the amount each partner was entitled to and the only method that could be adopted was to determine the proportion of assets that each partner was to receive, as was done by the award. This being done the rest is simply an arithmetical calculation which did not require arbitrators to make and which they were not asked to do. “If the' arbitrator give the rule for calculating the amount of money to be paid, without stating the results of such calculations, the award is sufficiently certain according to the general rule “id certum est quod cerium reddipotest." Russell on Arbitration, 297; Morse on Arbitration, 422; Stroitgsr. Strong, 9 Cush. 566. And what we have said in reference to the receipts is applicable to the losses charged off or to be charged off and to the expenses of liquidation. The proportions being established, the rest is simply and wholly ministerial, not calling for the exercise of any judgment on the part of the arbitrators. If under the circumstances they had attempted to name the sum due to or by each partner, the award might possibly have been liable to impeachment as being beyond the submission.

It was also contended that the arbitrators were mistaken both as to the law and the facts. There is nothing on the face of the award to indicate that any mistake of law was made, as there should be to avoid an award on that ground. Goldsmith v. Tilly, 1 H. & J. 361; Hewit v. State, 6 H. & J. 95; State v. Williams, 9 Gill, 172. But it was conceded before the arbitrators that the business of the firm had not been conducted according to the articles of copartnership, and the counsel for all the parties contended that the departure from the terms of those articles, with the knowledge and acquiescence of all the parties, had been such as to alter them as effectually as if such alteration had been agreed to in writing. As was said by the counsel for the appellants in his argument before the arbitrators, “such a practice of conducting business will not only be effectual to change or annul an express provision of the partnership agreement inconsistent with the custom, but will also be effectual to add new provisions to the agreement.” The general principle contended for in that argument is undoubtedly correct, and if it were not, it is difficult to see how the appellants can question it in this proceeding, as they and all the other parties undoubtedly submitted that question of law to the arbitrators, and hence their decision was final, there being no error of law apparent on the face of the award, 1 Am. and Eng. Ency. of Law, 675, 676; Morse on Arbitration, 293, 304. It is evident that there had been modifications of the articles of partnership and the arbitrators were called on to determine what they were.

It is well settled in this State, as well as elsewhere, that the decisions of arbitrators on questions of fact are generally final and conclusive when there is no imputation on their conduct. Cromwell v. Owens, 6 H. & J. 10; State v. Stewart, 12 G. & J. 456; Ebert v. Ebert, 5 Md. 353; Morse on Arbitration, 316. Courts of Equity may sometimes grant relief for palpable errors in awards, such as an apparent mistake in calculation or something of that kind, but where the facts that have been submitted are such as may be determined differently by fair-minded and honest people, the conclusions of those selected for the purpose are final, and not subject to review by some other tribunal. The fact that the accountants produced by the appellants may think the arbitrators erred, does not authorize us to interfere with the award. The parties selected the arbitrators, not the accountants, to pass on these questions, about which the partners themselves, as well as accountants, differed. It was said in 5th Md. 359, “a more liberal and reasonable interpretation is now adopted by the Courts than formerly existed as to awards. Every reasonable intendment will be made in their favor, and a construction given to them that will support them, if possible, without violating the rules adopted for the construction of instruments. It will be intended that the arbitrators have not exceeded their powers ; that all matters have been decided by the arbitrators, unless the contrary shall appear on the face of the award; that it is certain, final and legal.” Applying those principles to this case, we have no hesitancy in sustaining this award, and must confirm the decree of the Court below.

(Decided January 9th, 1896.)

Decree affirmed and cause remandéd, with costs to the appellee.