Waisner v. Waisner

Scott, Justice.

This action was originally commenced in the District Court of Sheridan County by the plaintiffs in error against the defendant in error for a dissolution of a partnership then and theretofore existing between them and for the appointment of a receiver to take charge of the firm property, for an accounting, and for a division of the personal partnership property. The property consisted of sheep, some real estate, state land leases and necessary personal property to care for the sheep. It was alleged in the petition and admitted by the answer that the real estate belonging to the firm could not be equitably divided and should be sold and the proceeds divided. The parties were equal partners. The court appointed a receiver, who duly qualified and took into his possession all of the partnership *428 property.. While the suit was pending and after the issues were made up. the parties entered into and signed the following agreement, viz.

“ARBITRATORS — SUBMISSION AGREEMENT.

“Know All Men, by These PresentsThat we, the undersigned, do hereby mutually agree to submit the matters in difference between us hereinafter set forth, to the- determination and award of J. J. Blackbourn of Sheridan, 'Wyoming, C. F. .Halbert of Sheridan, Wyoming, with, such other party as the two may select, as arbitrators, J. I. Kirby. Said .arbitrators to meet at Coffeen-Redly hall, in the Town of Sheridan, Wyoming, on Saturday, February 18th, 1905.

“Said arbitrators shall take up all questions of the ownership of all real estate, leased land, live stock, assets, and liabilities, either of the parties composing the firm of Waisner & Sons, or of outside parties to said firm, but in the latter case the account is to be accepted by the firm,before being passed on by the arbitrators, except the claim of R. R. Selway, also regarding the sale of 120 ewes to G. C. Waisner, which are to be decided by the arbitrators; said property is to be divided without public sale, but it is in the discretion of the arbitrators to allow the parties composing the firm of Waisner & Sons to bid either on the homestead, or the leased land. Should it happen in the division of the property that one partner shall have what exceeds his share, payment shall be made to the other parties, of the amount so due, within 30 days from the time the decision of the arbitrators is given.

“It is mutually agreed by the parties to this agreement, that no attorneys shall be present at any meeting of the arbitrators, either to examine witnesses, or to argue any matter in the case, but the arbitrators may present any question, touching the legality of any action of theirs, or the legal status of any matter coming up before them in this case to any lawyer, but his opinion shall not be binding on said arbitrators.

*429 “The said arbitrators shall hear and determine said above questions, make division of said property, and award the payment of the costs and expenses incurred in said arbitration, and shall make their award in writing on or before' February 25th, 1905, at 4 o’clock p. m.

“Witness: G. W. Waisner,

“J. G. Hunter. . J. A. Waisner,

“W. E. Waisner.”

The following agreement is endorsed on the reverse side of the agreement to submit to arbitration:

“We,, the undersigned parties to the arbitration submission, on reverse side of this sheet, hereby mutually agree to abide by the decision of said arbitrators, and mutually agree that any court may render judgment and issue execution thereon:

“Witness: G. W. Waisner,

“J. G. Hunter. J. A: Waisner,

“W. E. Waisner.”

The arbitrators met pursuant to the terms of this agreement and proceeded to divide the personal property between the parties and to apportion the indebtedness of the firm among them; they also attempted to divide and apportion the real estate among the parties. In so far as the award of the personal property is concerned, each of the parties accepted from and receipted to the receiver for his part and the action of the receiver in so turning the personal property over to the parties entitled thereto under the award was affirmed by the court, and the receiver was on September 21, 1905, by consent of the parties, they being- personally present, discharged by order of the court and his bondsmen released. The following recital appears in the award made and filed by the arbitrators, viz.: “The said arbitrators do further award that all actions and suits commenced, brought or pending between the said G. W. Waisner, W. E. Waisner and J. A. Waisner for any matter, cause of thing whatsoever, arising or happening at the time of, or before, entering *430 into the said agreement of arbitration, shall from henceforth cease and determine, and be no further prosecuted or proceeded in by them, or either of them, or'by their, or either of their means, consent or procurement.” The agreement to submit to arbitration, the oath and award of the arbitrators were filed in the case on February 24, 1905. The receiver made his final report on March 25, 1905, in which he recites that “the said parties to this action, the plaintiffs and defendants composing the members of said copartnership of Waisner & Sons, have by agreement submitted all their difficulties existing between them and involved between them in this action to arbitration; said parties mutually agreeing in writing to abide by. the decision of said arbitrators, and therein agreeing in writing that this court may render judgment and issue execution thereon, both of which instruments are on file in this court.” In the order approving this report and discharging the receiver the court found “by the consent of said parties that there has been no necessity for said receiver since March 24, 1905, and that all his duties terminated at that time.” The defendant filed exceptions to the award as to the real estate on March 9, 1905. Upon hearing, the exceptions were sustained, the court found that the real estate belonging to the partnership could not be equitably divided and ordered the same to be sold and the proceeds of the sale to be equally divided among the partners.

1. The jurisdiction of the court to consider defendant’s exceptions to the award was challenged. The exceptions filed were not entitled in the cause, and over plaintiffs’ objections the court permitted the exceptions to be amended by the insertion of the title.

A great part of plaintiff’s brief is devoted to the .question of jurisdiction. The arbitration was not in pursuance of any rule of the court. It was with reference to property in custodia le gis and in so far as the division of the personal property and apportioning the debts is concerned seems to have been satisfactory, and the custodian divided the per *431 sonal property of the firm in accordance with the award, took receipts therefor and his action was approved by the court; and he was discharged and his bondsmen released by and with the consent of the parties. If plaintiff’s contention is correct, that it was a common law arbitration and that the exceptions had no place in the record of this case they could, upon the overruling of their objection to the jurisdiction of the court to consider the exceptions, have declined to proceed further and rested their rights upon the award. They did not do so, but after the ruling complained of they filed their petition and motion for judgment upon the award, and in which they alleged, among other things, that the defendant was estopped from questioning the award, he having voluntarily agreed to the arbitration and to abide by the award to be made by the arbitrators, and having received his share of the personal property as .fixed in the award. The petition and motion partook of the nature of a supplemental petition. It was entitled in and was in effect a pleading in the original case. It says: “Comes now the plaintiffs in the above entitled cause, being an action brought for the dissolution of a copartnership theretofore existing between the plaintiffs and the defendant under the firm name of Waisner & Sons, the plaintiffs and defendant constituting said firm, and for an accounting, adjustment, determination, settlement and winding up the partnership affairs of said concern.” The estoppel so plead was directed to the exceptions on file and the arbitration award and exceptions thereto were thus brought into the original case by the plaintiffs, and by thus petitioning the court to try issues so raised they submitted the matter to the jurisdiction of the court. Such being the case, it is unnecessary to determine when a submission to arbitration of matters in controversy in a suit pending operates as a discontinuance of the suit. The petition and motion, together with the exceptions, raised an issue of fact as well as of law, and the motion could not be granted except upon a hearing in the face of the defendant’s objections and *432 exceptions and upon which he was entitled to be heard. The endorsement on the back of the agreement to submit the matters to arbitration is in effect to abide by the decision of the arbitrators, and its purport is to authorize any court to render judgment and issue execution thereon. This endorsement is not dated and it does not appear whether made. and signed prior or subsequent to the decision of the arbitrators. It was made out of court and if the arbitration be deemed one under the rules of the common law the court had no authority upon a motion as against objection to enter judgment thereon. In Ex parte Dudley, 79 Ala., 187 , a case in chancery, the parties pending the action without any order of court submitted their differences to arbitration. It was stipulated that the award should be the decision and decree of the chancery court. The award was filed and a motion was made to have it entered up as the judgment and decree of the court. This motion was contested by the defendants, who filed objections in writing to the award. Upon hearing the objections were sustained and the motion denied, and it was sought, notwithstanding such rulings, by proceedings in mandamus to compel the chancellor to enter up the award as the decree of the court. The court said: “A court has no authority to enter up as its judgment a common law award; unless by the consent of parties litigant solemnly given in judicio. A consent given out of court and afterward revoked will not do.” In Childs’ Executor v. Updyke, 9 O. St., 333, it is said: “The award rendered in such common law arbitrations has no judicial force. It operates neither as a judgment nor as the verdict of a jury.” The filing of the objections and exceptions to the award was a revocation by the defendant of his agreement to abide the decision of the arbitrators and his consent that judgment should be entered upon the award. The revocation was on file and he was also present in court objecting to and opposing' the motion. Such being the case, the court was without authority to grant the motion. The award having *433 been plead and brought into the original case the judgment, in the absence of the consent of the parties, would have to be based on a finding from the evidence upon the issues raised. The plaintiffs did not, however, treat it as an arbitration independent of the supervisory powers of the court. Their motion was for a confirmation of the award in addition to judgment thereon. If it was a common law award it needed no confirmation to give it validity. The jurisdiction to confirm implies also jurisdiction to inquire into and hear any valid objections to such confirmation. By their motion they invoked the power of the court in aid of the arbitration proceeding and sought to make it a rule of court and bring it within the provision of the statute, but even if all the provisions of the statute had been followed the court would still have had jurisdiction to consider the exceptions. Section 4078, Revised Statutes, provides that “If it be made to appear, on oath, at the term of the court at which the award and arbitration bond are filed that the award was obtained by fraud * * * the court may set aside the award, and the matters submitted shall be retained by the court for trial as upon appeal * * It is clear from' the statute that in a statutory proceeding of this nature the award may be impeached upon a showing of fraud. It is not necessary that the fraud which will warrant the court to set aside the award should be shown to be intentional or perpetrated by the parties. A mistake though honestly made which would work a fraud on either party would be sufficient to vitiate the award. In Corrigan v. Rockefeller, 67 O. St., 354, the court said in construing statutes identical in terms: “The very purpose is to reach in a speedy and inexpensive way, a final disposition of the controversy between them, and to avoid future litigation concerning the same matters. It is in the furtherance of this purpose that, by the general rule, the award cannot be overturned by the dissatisfied party. And as the rule is that it cannot be impeached for error, nothing but fraud, in the parties or the arbitrators, or such manifest mistake *434 as naturally works a fraud, can be alleged to avoid it.” The same rule is announced in an earlier case by that court in Ormsby v. Bakewell, 7 Ohio, 98. We are of the opinion that the trial court had the jurisdiction to hear and pass upon the exceptions and objections to the award regardless of whether the award was brought into the case either as a common-law or as a statutory one.

The court proceeded to try the issues and upon the trial the plaintiffs as well as the defendant submitted evidence. At the close of the evidence the bill of exceptions recites: “It is hereby agreed between the parties to this suit that the partnership heretofore existing between the parties is dissolved by decree of this court, and that the affairs of this estate with reference to the real estate be wound up.” This was a stipulation or agreement made during the trial, in open court, when the very question was the disposition of the real estate owned by the partnership, a question which was within the issues of the pleadings independent of any arbitration, attempted arbitration, or award. Having so stipulated, they will be deemed, if for any reason the court should find that the terms of the award were inequitable and unjust, to have waived their right to stand upon the terms of the award and to have re-submitted the question to the court. The court having by its decree dissolved the partnership and settled all matters except as to the real estate, the parties as shown by this stipulation placed themselves in the attitude of invoking the power of the court as to the disposition of such real estate. Having done so the plaintiffs are not in a position after having petitioned the court in the original case to render judgment on the award, appeared and introduced evidence at the hearing, and so stipulated, to question the jurisdiction of the court to act in the matter.

2. It is urged that the defendant was estopped both by record and by conduct to deny the legality of the award. It is true that he accepted his share of the personal property and assumed his share of the indebtedness of the firm as *435 fixed by the arbitrators in the award, and in that respect the division appears to have been just and equitable upon the evidence, and the court so found, and all the parties complied with the terms of the award with reference to those matters. At the time the receiver was discharged, the parties were all present in court consenting thereto, and immediately thereafter and on the same day plaintiffs made their motion to strike the exceptions to the award from the files. These exceptions had been on file in the case for several months, having been filed March 9, 1905, and before the duties of the receiver had terminated as found by the order discharging him, and the plaintiffs must have had knowledge of them and their purport at the time they consented to the discharge of the receiver. They were then advised of the mistake complained of in the award, and which the court afterward, upon hearing, found to exist. The division of the real estate as fixed by the award was inequitable, unjust and would, if permitted to stand, work a fraud upon the defendant. It is uniformly held that one who accepts the fruits of an award cannot thereafter question its validity. This holding, however, by no means applies to awards as a whole which are divisible, for when so divisible each part is independent of the others and distinct in itself. The award in such cases is not void in to to, but void protanto. So it is held that if the void part of an award is divisible from the other part it will be upheld as to that part which is good. (3 Cyc., 713.) This rule applies in cases not alone when the bad part of an award is void ub initio, but also in cases where such portion is voidable. (3 Cyc., 715.) The consent to the discharge of the receiver and the approval of his report as to the division of the personal property and the assumption of the indebtedness pro rata by the individuals comprising the firm, the allegations of their petition that the real estate could not be equitably divided and that it was necessary to sell the same and divide the proceeds, the agreement and stipulation made in court “that the affairs of the estate with refer *436 ence to the real estate be wound up/’ taken together, show that the plaintiffs elected to treat everything pertaining to the partnership affairs as closed except as to the real estate. Such being- the theory upon which they presented the case, and the court having acted upon that theory, they are not now in a position to urge that the award was an entirety and not divisible. It may also be further said that the award being so divisible, and all the parties having acceded to and accepted the benefits and burdens of that part of the award with reference to all matters except as to the real estate, they are estopped from questioning its validity to that extent.' The defendant was bound by the award to that extent, but was not estopped from questioning on the grounds alleged that part which was divisible and separate therefrom.

3. By the terms of the award “160 acres of deeded land known as the home ranch, with 280 acres adjoining home ranch and lying on the east and south of same. Also 160 acres of land-to the north and adjoining home ranch, with all improvements on and under construction on desert claim, and homestead owned by J. A. Waisner,” is the part of the real estate awarded to the plaintiffs. The arbitrators awarded “all improvements on his homestead and desert claim which may have been placed there by the firm of Waisner & Sons, also lease or school land of 320 acres lying on Powder River, near Arvada, and held at this time by Waisner & Sons. Also 40 acres of scrip land near home ranch which is in the name of J. A. Waisner.” Neither the value nor kind of improvements placed on defendant’s homestead are shown. The value of the improvements in.such settlement would be a proper charge against his interest in favor of the firm. Such improvements constituted a part of the realty the title to which is not claimed to be in the firm and the indebtedness for such improvements was a part of the personal assets, and it must be assumed to have been taken into consideration by the arbitrators in the division of the personal property and the ap *437 portionment of the indebtedness. This was evidently the view of the trial court, for it found and recited in the decree “That all the personalty of said firm has been equitably distributed among the said copartners.”

4. The court found from the evidence “that the'said award is void as to the awarding or disposition of the real estate and leases referred to therein; that all other matters determined in said award being separable from the portion of said award as to said real estate and leases is hereby affirmed; that the division of the property by the award except as to the said real estate and leases appears to have been equitable, but the arbitrators without authority considered real estate belonging to third persons not members of the firm of Waisner & Sons, and real estate not belonging to said firm which materially affected said award.” It was shown by the evidence that the 40-acre tract was purchased by the defendant’s wife, she having paid for it with her own money. She held the legal title and no evidence was introduced which would constitute her a trustee of the title either expressly or impliedly for the partnership or any member thereof. The evidence showed that it had been used by the partnership, but fails to show that it was so used in pursuance of any contract, nor was it in the name of defendant at the time of the award or at any time. It was selected and entered as scrip land on August 8, 1904, and her deed thereto bears date February 27, 1905. At the'time the arbitrators had the matter before them for consideration the defendant was asked as to the value of this land in connection with the business of the firm, but he made no statement that it belonged to the firm. Upon the evidence a mistake through no fault of the defendant was committed by the arbitrators which if permitted to stand would work a fraud upon him. He was entitled to his share of the partnership real estate and the arbitrators had no authority to consider or subject any not so owned by the partnership to the arbitration. The evidence supports the finding and the award being divisible the court properly set aside so much *438 thereof as attempted to divide the real estate between the parties. (Ormsby v. Birkwell and Corrigan v. Rockefeller, supra.)

5. The decree finds that certain real estate described therein belonged to the partnership, directs that it be sold and the proceeds, after deducting expenses of sale, be divided equally between the parties; and the court commissioner is directed to have the same appraised, make sale thereof as upon execution and make return of such sale within 90 days from the date of the order. As there was no controversy in the pleadings as to the necessity of a sale of the real estate, the plaintiffs in error cannot be heard to complain of this part of the decree.

6. It is urged that the court erroneously omitted from the decree certain real estate aside from the 40 acres already referred to that should be considered as partnership property. No mention is made in the decree of the land embraced in defendant’s desert and homestead entries.

These entries were by virtue of filings made by the defendant under the land laws of the United States, and it does not appear that at the time of the trial any final proof had been made upon the tracts of land embraced in the entries or either of them. Defendant’s title was inchoate and in so far as the homestead is concerned he had no title which he could convey. His original homestead entry amounted to nothing more than a declaration of intention, and while he thereby obtained an inchoate title he did not acquire any vested right against the government or any ownership in the land. (26 A. & E. Ency. of Law, 254, and cases there cited.) It is urged that impliedly the entries were for and inured to the benefit of the firm and should, therefore, be deemed and considered assets of the firm. An express agreement; and, of course, an implied one, to that effect with reference to the homestead would be void'as against public policy. (26 A. & E. Ency. Law, 410 and 416, and cases there cited.) There is no showing that the law is different with reference to obtaining title to the. land embraced in the *439 desert entry. Aside from this legal phase of the question the defendant testified that these lands were not partnership lands, and that they were not included in the agreement of submission to arbitration and the plaintiffs offered no evidence in opposition thereto, nor did they allege in their petition that the lands embraced in these filings were owned by the firm, but rested that question so far as they were concerned upon the fact that the land had been used by the partnership during its existence. This we think was not sufficient. The defendant could not legally convey title to the land. It could not, therefore, be considered as partnership assets, though it may have been used in connection with the firm business. The right to its use was permissive and terminated with the partnership.

The judgment will be affirmed and the case remanded with directions to the District Court of Sheridan County to make any further order necessary to carry the decree into effect. • Affirmed.

Potter, C. J., and Beard, J., concur.