WM. C. Hamilton & Son v. Hart

Opinion, Mr. Justice Mitchell :

The assignments of error are very numerous, but it is not necessary to notice them in detail, as there is a fatal defect in the cause of action.

The parties entered into sealed articles of agreement for making extensions and repairs to plaintiffs in error’s paper mills. The agreement contained, inter alia, the following stipulations:

“ Third. The architect shall have power to reject and remove (in ease the said Hart refuse so to do) any materials and workmanship which, in his judgment, are unsuitable for the work, and to substitute suitable materials and workmanship therefor, and to charge the cost thereof to the said Hart, or deduct the same from the amount otherwise due under this agreement.”

“ Fifth.....Any change or alteration made by said Wm. C. Hamilton & Son, or said architect, shall not invalidate this agreement, and the cost thereof shall be agreed upon and indorsed on this agreement before said alterations are made. If the said Hart and the said Hamilton & Son are unable to agree as to such cost, whether as an addition or deduction, said cost shall be determined by said architect, whose decision on all points affecting this agreement and the alterations thereof, or under said alterations, shall be final and conclusive on both parties,” .... “and the said Hart .... will furnish a release of liens for all work done and materials furnished.”

The parties disagreed upon several matters, and the architect being called upon, made an award, upon which the present suit was brought by the contractor Hart. At the trial the plaintiff put in evidence the agreement and the award, testified that there were differences between himself and defendants, which were submitted to the architect Benner, and that the latter signed the award. He then gave some further testimony as to the filing of a mechanics’ claim by himself (not material now to consider) and rested.

The defendants then offered evidence to impeach the award for want of finality and for failure to include all the matters submitted. This was excluded by the court, for the purpose *149 offered, but, treating the award as conclusive as far as it went, the matters not included in it were allowed to be proved in reduction of the amount.

This was clear error. It is well settled that an award which is not final, or is not complete as to all the matters included in the submission, is void altogether, and is not admissible even as an account stated.

In Samuel v. Cooper, 2 Ad. & E. 752, on a submission, plaintiff claimed that certain matters were within it, which defendant denied. The arbitrator, a barrister, decided that they were not, and so reported in his award. The King’s Bench held that his decision on this point was not 'conclusive, and that as on the true construction of the submission the omitted matters were included, the whole award was bad. “We have reluctantly come to the conclusion,” said Lord Denman, “that the rule must bo made absolute.....There were matters in difference so referred, upon which the arbitrator has not decided. We do not see any means of avoiding the consequence, which is that the award must be set aside.”

And the same rule prevails in equity. In Bowes v. Fernie, 4 M. & Cr. 150, the arbitrators declared in the award that they had abstained from taking a certain account into consideration, for the reason that a suit in chancery was pending in regard to that account, in which the master had found a balance due. Lord Chancellor Cottenham held that as the true construction of the submission included the account, the award was void. The whole argument turned on the construction of the submission. No question was made by counsel or court as to the effect of the omission, or the reasons of the arbitrators, it being conceded that the fact of omission made the whole award absolutely void.

The law is thus summed up by Morse: “ A failure to determine any controversy submitted will render the whole award void,” and “the motive from which the arbitrators resolve to omit the determination of a matter submitted, seems to be immaterial: ” Morse on Arbitration, 345-6. See also to the same effect, Russel on Arbitration, pt. 2, ch. 5, § 4, 4 ed., 249.

In the present case the award was called a statement of account and was very informal, but, passing by smaller matters, it clearly appears to lack the essential of finality. The agree *150 ment called for a release of liens, and the arbitrator at the close of his award said, “ I will not accept the release of liens in its present condition.” It thus appearing that something still remained to be done by one of the parties, the award was not final, and was therefore entirely worthless on its face.

But in addition to this patent defect, the uncontradicted evidence showed that the award was not co-extensive with the submission. The agreement contemplated the settlement by the arbitrator of all differences of every kind that should arise between the parties in the course of the work. Complaints were made, and deductions claimed by the defendants for delay, for bad workmanship in the foundation and wall of one of the buildings, and for negligent injury to machinery. All of these matters were within the submission, and the second, as to bad workmanship, was within the very letter of the third section of the agreement already quoted.

The award, therefore, being void for both these reasons, the plaintiff should have been nonsuited or a verdict directed for the defendants.

This disposition of the case which is inevitable on the law, would also follow from the facts. When the award was made the plaintiff repudiated it altogether, not for its defects in law, but because he was not satisfied with its amount. He thereupon brought an action of assumpsit on the agreement and his claims for extra work, and prosecuted it for more than two years until this court decided it against him: See Hamilton v. Hart, 109 Pa. 629 . It was only after this failed that he resorted to the award he had repudiated. On this point it was said in the court below, “ That the plaintiff repudiated the award is immaterial. He was bound by it, and could not repudiate it.” This would have been clearly so, had the other party elected to hold him to the award, but the evidence is that both parties were dissatisfied a.nd united in disregarding it. Under these circumstances the plaintiff could not now be permitted to fall back upon it, even if it had been a valid award in the outset.

The judgment is reversed.

Subsequently, a motion for re-argument was filed by the defendant in error; refused, April 15, 1889.

*151 Opinion, Mr. Justice Mitchell:

In the opinion already filed, the cases of Samuel v. Cooper, 2 Ad. & E. 752, and Bowes v. Fernie, 4 M. & Cr. 150, from the courts of common law and equity respectively, were cited simply as illustrations, among many others at hand, of the principle involved. Discussion of the special facts of those cases is therefore unimportant, as the principle itself is too well settled to require discussion, and is fully treated in the text books referred to. There is nothing in the principle, nor in its application in the present case, in conflict with Hostetter v. City of Pittsburgh, 107 Pa. 419 . On the contrary, that ease shows clearly that the submission and the award are always open to examination. “ It was contended,” says Chief Justice Mebour, “ that this submission is not authorized by the language of the agreement,” p. 431; and what was decided was, that the submission was within the agreement, and the award being- on its face certain, final, and mutual, and no mistake, irregularity, or misconduct being shown in the arbitrator, the award was conclusive; see page 434. Under such circumstances there never has been any question as to the conclusiveness of an award.

But it is urged that the award in the present case was final, inasmuch as the release of liens was “ a mere matter of form” and “ only became important before the money was paid.” But the argument overlooks the facts of the case. A release was presented by the plaintiff, which he contended was sufficient, and this very question was part of what the arbitrator was to pass upon. He did so, and rejected the release in the form presented. One of the conditions precedent to plaintiff’s recovery was thus decided against him, and one of the very matters in dispute between the parties which the arbitrator was to decide, was left open. When a new release of liens should be presented, whether when payment was claimed or at any other time, who was to settle its sufficiency ? Manifestly the arbitrator. It is not intended to say that an award is necessarily bad because it involves future action by the parties. Every award involves payment or some other future act by one or both parties. But an award which leaves something still to be done by the arbitrator himself, before the existing controversy is terminated, cannot be said to be final.

*152 We should not, however, have thought it necessary thus to reiterate what was already said in the opinion heretofore filed, had there not appeared to be a serious misapprehension on the part of counsel as to the scope of our decision. It was not said, nor was it intended to be inferred, that plaintiff was without remedy. When the case was first here, 109 Pa. 629 , the action was assumpsit, on the ground that the sealed instrument had been so far altered as to make a new contract, which was in parol. It was decided that as it was specifically provided that alterations should not invalidate the agreement, but should be considered as made under it, there was no new contract, and the remedy must be in debt or covenant on the agreement. The present action was rightly brought in debt on an award under the agreement, but it fails because the award was not valid. But the agreement is still in force, and if the arbitrator should now make a valid award, or should have already done so, as is intimated in the argument, the plaintiff’s remedy upon that is still open to him.

Re-argument refused.