Case ID: mass_6/html/0038-01.html
Source: Caselaw Access Project
Author: {"author": "Sewall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

* Asa Towne versus Samuel Jaquith.
    Where there is an agreement by parole to submit a dispute to the arbitrament of three, who all hear the parties, and two of them only make an award, the third dissenting from them, the award is not valid.
    Action of the case on a promissory note dated September 20th, 1805, subscribed by the defendant, payable to Moses Lewis or order, and by him endorsed to the plaintiff.
    The general issue was pleaded and joined ; and upon the trial before Parker, J., at the sittings after the last October term in the county, the signatures being admitted, the defence was founded on the following facts proved in the case, viz., — that Lewis and the defendant, having a dispute respecting the quantity and value of certain timber furnished by the former to the latter, agreed by parole to submit to the decision of three referees, who met and persuaded each party to subscribe a note payable to the other for 2000 dollars, intending, when they had determined the amount due from either, to deliver both notes to the prevailing party, after having endorsed on the one payable to him such sum as would leave due thereon the sum which they should find actually due upon the adjustment. Two of the arbitrators agreed upon the balance, and having reduced by endorsement the note signed by the defendant, which is the subject of this action, to 1300 dollars, (the sum which they determined to be due,) they delivered both notes to Lewis.
    
    The other arbitrator was present, and all three of the arbitrators proceeded to hear and examine the cause; but, the third differing from the other two, he protested against their doings, and also against the authority of any two to act, considering the submission to have been made to the three, and not to a major part.
    The defendant always refused to pay the note, on the ground that all the referees had not agreed in the decision; and there was evidence that the plaintiff had full knowledge, when the note came into his hands by endorsement, of the manner in which, and the consideration for which, it was given, and also of the ground [ * 47 ] on which payment * had been refused ; nor did it appear that he was any other than nominal plaintiff in the action. The jury were directed, if they were fully satisfied that the submission, as originally intended by the parties, was to three, without any authority to a major part of them to decide, and that it was, in fact, the expectation of both parties to the submission, that, unless all three agreed, the decision should not be binding, then the note was void, as between promisor and promisee; and also against the present plaintiff, if they believed that he knew all the circumstances when he took the note, or was merely the agent of the original promisee in bringing the action.
    The judge also instructed the jury, that where a submission by parole, or in writing, was to three, without any express authority, to be inferred from the manner or circumstances of the submission, to a smaller number to decide, an award or decision would be void, un less made by all.
    The jury returned a verdict for the defendant, with which the judge declares himself satisfied.
    The question reserved was, whether the doings of the two arbitrators, upon the dispute submitted to them and another, without any authority given to them to act by a majority, are valid, so as to make a good consideration for the note sued, between the parties in this action.
    If the Court should be of that opinion, a new trial was to be granted, otherwise judgment to be entered on the verdict.
    The action stood over to this term ; and now Ward, for the plain tiff, read from Justice Butter’s opinion in the case of Grindley vs. Barker, [1 Bos. Pull. 239: ] “A deed which speaks in general terms, giving a power to a certain number of persons, does not necessarily import that all these persons shall concur.” That a majority shall govern, and have the authority of the whole body, is a principle universally adhered to in all our private as well as public institutions; and little doubt can be entertained, that in this case it was the intention of the parties to the submission to be * bound by a rule so useful and so generally adopted [ * 48 ] and approved.
    
      Bigelow, for the defendant,
    cited Cro. Jac. 277. 400. — Willes’s Rep. 215. — 2 Barnes’s Notes, 53.
    
    The action being continued nisi for advisement, at the following March term in Suffolk, the opinion of the Court was delivered by
   Sewall, J.

This is an action by the endorsee of a promissory note against the promisor. The defence is, that the note was improperly obtained, and exists without any valuable consideration ; and that the plaintiff had notice of the objections to it. And from the finding of the jury, under the directions given at the trial, it is understood that this note, payable to Moses Lewis or order, with another noté for the same amount by him payable to the defendant, were deposited, as mutual pledges, to secure the performance of an award by three arbitrators, to whom the parties to the notes had agreed to submit certain disputes between them; that the arbitrators were not, by the agreement of the parties, authorized to decide by a majority; and that the promisee obtained the note in question in consequence of an award, consented to by two of the arbitrators, against the opinion and without the consent of the other; — all which facts and objections were known to the plaintiff, when .he received the endorsement of the note, or undertook the collection of it for the use of the original promisee.

Arbitrators derive their authority altogether from the agreement of the parties, according to the terms of their submission; and although the words of the submission, as well as of any award that may be made pursuant to it, are to be liberally construed, yet the authority of the arbitrators to decide must not be extended beyond the agreement of the parties.

Some decisions, in cases of umpirage, are reported, where the award has been disputed upon the ground that the [ * 49 ] * terms of the submission, in designating the persons authorized to decide, had not been pursued.

It has been decided, that a submission to A and B, and to C, being an umpire, gives to C that exclusive authority; and that it is competent to the persons named as arbitrators, with a time limited for their agreement, and a power to appoint an umpire if they disagreed, to appoint an umpire, as well before as after the limited time expires, and to proceed in nominating an umpire until one accepts, when the first or any succeeding nomination is ineffectual; and that the consent of the arbitrators with the umpire, after one is appointed, will not vitiate the award.

The questions decided, and the decisions themselves, show that the agreement of the parties in the submission is to be closely observed, respecting the person or persons authorized to decide ; and the cases are sufficiently analogous to be cited, where no direct authority has been found upon the point to be decided.

With the precedents cited at the bar, as well as upon obvious principles of reason and justice, and of public expediency, the Court would go far in construing and giving effect to an agreement of this sort. But they would go too far, were they to infer an authority not intimated by any expression of the parties in their submission to the three arbitrators, or arising constructively by any necessary implication from the terms of the submission.

The jury have determined the fact to be, in the case at bar, that the parties, in their agreement to submit their disputes to three arbitrators, used no expression which authorized two to decide; and that an authority to this effect is not to be inferred from the manner, or from any circumstances of the submission.

To proceed, therefore, in enforcing an award by two, under these circumstances, would be wholly without the agreement of the parties. When a submission is to three, a power to two to decide renders an adjustment of the disputes * submitted [ * 50 ] much more certain; and even the public is interested in the conclusion of controversies. But there is no adjustment where there is no consent of the parties concerned, unless in the course of judicial proceedings.

In the case cited from Bosanquet and Puller, it seems the court gave effect to an authority conferred for public purposes, and to prevent the failure of a remedy provided against a public mischief, by construing a decision by a majority to be a decision by the whole number of a body of men, intrusted with powers of that nature. The chief justice, Eyre, in stating his opinion, carefully distinguishes that case from every case of mere private confidence, and the other judges recognize the distinction. It is observed in that case, that a different construction prevails with respect to private authorities, and authorities for the advancement of public justice. The authority conferred in a case of arbitration, although it may be considered as a means of doing justice, and employed with some advantage to the community, yet it is a private confidence, and altogether the act of the parties concerned.

Upon the whole, the directions given at the trial are confirmed by the opinion of the Court; and judgment is to be entered upon the verdict. 
      
      
        Rol. Air. 261, 262, Osborne vs. Rogton.
      
     
      
       2 Vent. 113.
     
      
      
        Soulsby vs. Hodgson, 3 Burr. 1474
     
      
      
        [Green vs. Miller, 6 Johns, 39. — Franklin vs. Osgood, 14 Johns. 590. — Patterson vs. Leavitt, 4 Conn. 50. — Commissioners of the Alleghany Corporation vs. Lecking, 6 S. R. 166. — McReady vs. The Guardians of the Poor, 9 S. & R. 94. — King vs Reeston, 3 T. R. 592. — Co. Lit. 181, b. — Story, Agency, 45, in note. — Sutton vs. Cole, 3 Pick. 232. — Damon vs. Granby, 2 Pick. 345. — Kupfer vs. Augusta, 12 Mass. 185. — Ed.]