JULY, 1811.

#### Alwyn vs. Perkins and Kelly.

case e.

An award kf “■* bitrators act-mg under an ^inclusive on the party, questions them^imkss liable to ob-partiality, 01 corruption, gross nus-conduct . or take'1'of TMhe law. An A-aen covering-ahagpi^ menean, tho’ operation of * assisted by Uobtainhi^co-vering corn-

¡Tried before Chancellor Besausjsjire, February term, 1811, and continue ed by adjoúrñmentj to

June, 1811.]

THE complainant, who is ^ British subject;, filed a bill in this Court for an account' and settlement of the proceeds of a vessel and cargo entrusted to the care of the defendant Perkins, who is an American citizen. The bill charged that the complainant had directed the defendant, Perkins, to purchase a vessel on his account* but to take the bill of sale in the name of the defendant, Perkins, “ for reasons of trade not forbidden by the laws of the United States.”' And that he instructed the defendant to proceed with the vessel and careno, A ° after accomplishing a prescribed voyage, to the Port of Charleston, and there to be subject to the control and orders of jolm S. Adams, the agent of complainant, That the defendant, Perkins, wds to receive for all his services a certain fixed remuneration, as appears by written agreement signed by him, a copy of which was filed with the bill. That Perkins accordingly purclias-ed a vessel, which he paid for by a draught on complainant, which he has taken up *;*and he proceeded on the voyage directed, and arrived safe in America, with largo cargo, the property of the complainant; but disregarding his instructions, he refused to subject himself or the cargo to the orders of the said J. S. Adams, and *298substituted an agent of Ms own choosing, Kelly, the o-^ier defendant. That they have sold the cargo, and have never accounted for the proceeds to complainant dr aSen^ Adams, and have never paid any part *gl*the proceeds of the sales, except a small sum. The bill prays for an account, and an injunction, and a ne exeat. The defendant, Perkins, put in an answer admitting that he was employed by complainant, as stated in the bill, and that he purchased the vessel and took the bill of sale in his ora name, and prosecuted the voyage directed by complainant. The defendant admitted that he subscribed the contract as exhibited with the bill *;*but he avers that the said agreement does not contain all *the*subjects for which defendant was entitled to remuneration. The defendant denied that he was to proceed to Charleston, or that he was follow the orders of J. S. Adams, as in bill *stated;*but that he was to proceed to the best port he thought proper, for the purposes stated in complainant’s letter's to defendant. That the defendant arrived at Savannah with the vessel and cargo of complainant, and knowing J. S. Adams to be the correspondent of complainant, he consulted with him as to the best plan to adopt for the benefit of complainant-; but he advising an impracticable plan, the defendant refused to •follow it, and he placed part of the cargo in the hands •of Michael Kelly for sale, and he himself sold part of ■the remainder of the cargo. That defendant having •afterwards received letters from complainant, desiring him to account and settle with J. S. Adams, he has settled with him for part of the cargo, and is ready and willing to account for the whole, and to pay what may be justly due him, after deducting what is due defendant, under the agreement and understanding between the parties. On the coming in of the answer, a reference had been made to the master, who made a report (on 5 March, f 810,) stating that there has been frequent discussions before him, and lie had examined a number of witnesses and documents *;*that the defendant had declared his inability to proceed on certain important *299points, until he could obtain the examination of certain witnesses abroad- But the defendant in the accounts which he had exhibited, admitted an undisputed balance of *$*1S000 and upwards, due by him to the complainant; and the master submitted to the court whether fie ought hot to be directed to pay over the same to tile complainant. Upon this report, an argument was had in March, 1810, before the judge, who then presided, and he ordered that the report should be confirmed, and that the defendant should pay over to the complainant the sum therein mentioned, unless lie should by his. consent in writing, on or before the 10th day of May, then next ensuing, agree to submit all the matters in. controversy between the parties in the suit, to the final award arid determination of three persons therein, named, or a majority of them, who should return their award,, or before the 1st day of the next term.

In November 1810, the order of reference was extended to the first day of the then next term- At the ensuing term, February 1811, an award was returned, and upon argument, it was ordered by the Court, that the award should stand ; but that the defendant should nevertheless have leave to exhibit proof to the referees to diminish the amount proved to be due to the complainant, provided he furnished the referees, his prooís in time to enable them to make this final award on or before the 19 th June then next ensuing; and that the award of the arbitrators should be final and conclusive on the parties.

The arbitrators accordingly reported in June 1811, that they had examined the matters in dispute between the parties, and awarded the sum of g 22397, 77, to he due by the defendant, Perkins, to the complainant Aylwyn, as would appear by reference to an account current between the parties made out by the arbitrators and annexed to the report.

The complainants counsel moved to confirm the award, which was opposed by the defendants counsel.

*300■ Mr. Simon’s, for defendant,

read the agreement between Aylwin and Perkins, dated 28th June, 1806, by which it appears that certain duties were to he pcrform-Mr. Perkins, for certain stipulated rewards. The object of all arbitrations is to put an end to litiga-tions. The award should settle all matters in dispute, that no future suit might be brought on any parts of the matter which had been in *dispute;*but this award is not definitive, Perkins, as an agent, was not liable for debts out standing and not recovered. The sum of g 1353, 2, ought to be allowed him, as most of it is for money to attornies in Georgia for collecting debts. The charge of g 177, 77, for passage to Europe ought to be allowed ; for Perkins was not merely a captain, but a confidential agent of complainant. As to the note of hand left for collection, g 888, 88, the arbitrators have left it undecided. Their award ought to be final, and to be so should cover all the points in dispute.

The next sum relates to what are called Perkins’s overcharges in port, g 999, 20. This relates to the subsistence of Perkins. His demand is cut down not because the charges are extravagant or improper *;*but because the charges are not usual for a captain. But he charges them as agent. The arbitrators allowed only a dollar a day, and deduct g 999, 20, which was erroneous.

The next sums struck out by the arbitrators improperly, were for covering commissions, amounting to g 3753, 67. The arbitrators made these deductions upon the supposition that Perkins had bound himself by the agreement, which did not provide for such charges. But these charges in fact were neither the subject of the agreement, nor could they be ; for the agreement provides only for ordinary charges, as master : not for extra services as agent, some of them secret and confidential. The agreement binds as far as it goes — no further. This claim steers clear of the objection, that pa-rol evidence shall not be introduced to contradict a dee$, *301The agreement is admitted as far as it goes. Peake 11", King v. inhabitants of London.

The objection to the covering commissions cannot be made by Aylwin, on the principle that the trade is nn-lawful. It is customary, and will be protected by the Court. The charge for covering commissions is collateral to the agreement and independent of it. The agreement specifies the precise grounds of the charge. The extra charges are of a different kind.

As to the power of the Court to disturb the award. Mr. Perkins did not choose the arbitrators as his domestic judges. He preferred to submit Jus cause to the Court ,* but it was imposed upon him to submit his case to arbitrators, or submit to a decree when he was unprepared, Surely the Court did not mean to deprive the party of the benefit of the law of the Court, contrary to bis wish. Kyd 350, Sd East. 18. Plain mistakes of arbitrators will be corrected by the Court, where they attempt to decide on a point of law. This is the case in regular ordinary voluntary arbitrations. Still more so in a reference made by order of the Court against the wishes of the party. 6th Yes. jun. 282. As to arbitrators deciding a point of law. If it is referred, to them and they decide wrong, still it binds. But in 3 East. 18, this is questioned by tlie Judges.

The law of the country gives an appeal. If the reference m.ade by order of the Court, and the award made, were conclusive, it would preclude the party from the benefit of Iris appeal. This will lead the Court to consider this reference as the usual one of leaving accounts to accountants, to assist the master, which arc always examinable by the Court.

The Court can always get at the grounds of proceedings of the arbitrators. (See 3 East. p. 18.)

The award must be taken in reference to all the papers. The arbitrators had the bill, and answer, and papers. Perkins charged the covering commissions. It js disallowed by the award. Why ? They are not prohibited by any statute. It is not fraudulent. Seryices *302were required *by*the complainant Aylwin, and pcrform-e(* ^y Perkins, totally different from the services stipu-la-^ed for in the agreement. The usage is clear. Tim ar^i>a^ors had110 doubt j but supposed the agreement precluded them from allowing it. This was an error in the law, and the Court according to the case in 3d East, can correct the error.

Mr. Dkattost, for complainant.

The award is peculiarly binding on the defendant. The alternative was. to obey a decree for paying a sum of money reported to> be due, *$*13,000, or to go before arbitrators. He agreed voluntarily to the *latter.*It was for his benefit.

Referees made an award, which was sent back, because not sufficiently specific. They have now made a final award, as explicit as possible. This refers to ah account attached to the award. The award, after all, inakes defendant debtor for a sum infinitely below the first cost of the adventure.

To open this case again, would be terrible, after such a painful and laborious examination. *No*new matter j no new points ; no new evidence could now be submitted to the arbitrators. Every thing has been submitted to them. Nothing but some substantial ground of objection should prevail afterwards. 2 Atk. 501, Lingood v. Eade. No presumption shall be allowed to overturn an "award. 3 Atk. 529, Titterson v. Peake. Ah award is final, unless collusion or gross misconduct in the arbitrators. 1 Vcrn. 15/ *;*2d Ray’d. 10/6, 12 mod. 585, Strange 903 *;*1 Atk. //, 64. An award may be set aside if any circumstance had been concealed from the arbitrators, and if one of them had said it would, if known, have made a difference. 2 Yes. jr. 16, Morgan v. Maddar. An award cannot be impeaohed for error. as to *facts;*but may as to law, or gross misconduct. 3d East. 18 j 1 Yes. jr. 369. On general reference arbitrators may'go further than the Court and relieve against a harsh right. 2 Yes. jr. 22, judgment of arbitrators on allowance of compound interest, is conclusive.

Allow that usually these commissions arc admissible. *303yet the arbitrators may judge under all the circumstances of this case that the party is not entitled. 2 Yes. jr. 23, Dick v.-. The exception to the award must have reference to the transactions in the case, and to the papers in the cause. 6th Ves. jr. 282.

The agreement really does not allow the charge of this commission *•,*hut it was for the arbitrators to decide whether these commissions, under the circumstances, •should he allowed or not. They have said not.

The commissions for covering is against conscience.,. It is a charge for swearing that property is American, when it is British. But take it as stated by the counsel for defendant. *He at*all events, seduces a customhouse officer to neglect his duty against his oath. Perhaps this conduct of covering enemy’s property is the source of all these edicts and decrees which afflict our commerce and endanger our peace. 3 Cranch’s rep. 248,-v. Ede.

As to the charge about the passage. It was a mere fact$ and for the arbitrators *;*the Court has no ground to go on. It does not even know that the voyage was performed.

So as to the del. credere commissions not allowed *;*this was for the arbitrators. They allowed some commissions.

As to S. Guilly’s hill *%*4580, the arbitrators have decided on it. It is a fact within their province, and the award is conclusive.

It is said the award is not conclusive, because a sum due on a note is not decided upon. But they have decided. If the Court should be of opinion that some of the items are wrong, let them be struck out *•,*and complainant will take the balance rather than bo delayed.

Mr. W. S. Smith, for defendant.

Aylwin has no right to exclaim against the charges in this case. He engaged in the African slave trade, in violation of the law’of his country. He tempted defendant to be his agent in this business. All his demands are founded on these transactions. Yet he pretends to raise an out-*304C1'^ a§’a‘us^ defendant Perkins, for his charges, or for covering the property as American, when, in l-cality it was British to which ho tempted him.

Perkins’s submission to the award was compulsory. He would have been glad to have paid the *$*13000, and been totally discharged, but this offer was not made. The order of the last Court left open the whole subject by allowing the defendeant to go into proof. It is said the award is final. It does profess to be so. But when executed it is found not to be so. It refers to an account, which shews it is not final.

The disallowance of scVerál charges is *contrary to law;*and clear mistakes in law made by arbitrators can he corrected by the court.

As to the mistakes of the arbitrators, the bill admits the covering. And the commission follows of course. It is allowed in insurance offices *;*and by the court below. But our law forbids tile covering, Br. Pro-.as *American;*and the exception being taken potior est con-ditio defendentis.

It was impossible to put this covered / trade and commissions into the agreement, as it would have been a violation both of English and American law. The charges agreed to be allowed by the instrument, are different from the covered commission, and the arbitrators should have allowed the covered commission. They did not, which was error. The case from 3 East has1 overruled the qases of L. Hardwicke.

The rejection of the claims is clear. This rejection was wrong; It was contrary to law. If it ho asked what law? The answer is commercial law; usage, which makes law.

The error in law is examinable by the Court, ana will he rectified by the Court.

The arbitrators looked, only to the agreement, (where no provision could be made for covering commission,) whereas they should have looked to the usage.

Defendant is entitled to his passage money to return.

*305DECREE.

The question of the note is not disposed of by the award.

The Chancellor delivered his decrees and after stat- ,, . , . , mg the case as above, he said,

I have considered the circumstances of the case, (as v far as the imperfect lights and proofs furnished, enabled me) the points made, and the agreements of counsel, very maturely. The complainant’s counsel insisted that the award made by arbitrators, upon whose conduct there was no imputation, was final and conclusive. The defendant’s counsel insisted, that this was not a voluntary submission to arbitration, but imposed on him by the *court;*and that, therefore, the award ought not to be considered binding $ unless upon a full examination of all the facts of the case, and a plenary hearing, the Court should be entirely satisfied therewith.

. I confess I do not see the force of this argument.. A report was made by the master, stating that in all events, the defendant was indebted to complainant, to the amount of $ 13,000, as.his own accounts admitted that sum. And the Coux*t ordered the payment of that sum. But upon the argument of defendant’s counsel, the Court was induced to give the defendant an alternative, to pay the money according to that order, or to refer the whole case to arbitration. This was for the defendant’s benefit, and he made his option *;*and I consider him as much bound by the award, as if he had himself originally solicited the reference. Of what utility was the appointment of arbitrators, if the Court is to go into the whole case and into the examination of all the accounts ? It would have been a mere waste of time, and a source of delay to the complainant. I am of opinion therefore, that the award is binding on the defendant, unless he can shew corruption, partiality or gross misconduct on the part of the arbitrators ; or unless the arbitrators were mistaken in a plain point of law, which affected the interests of the or unless *306*kere were such gross and palpable mistakes in calcula-tion as produced manifest injustice.

With respect to the first of these grounds of objection, ho'pretence has been set up, nor any allegation made of corruption, partiality or misconduct on the part of the arbitrators.

With respect'to .the second ground, it was argued, that there were plain mistakes in point of law '$ which it was insisted,1 furnished good ground to set ¿side the : award: viz, (that the-arbitrators had refused'to allow the defendant his .charges of commissions, for covering the property óf the complainant who is a British subject, and passing it as American, upon theground that the agreement between the complainant and defendant, had stipulated all the charges which were to be made for all the services to'be performed ; and that they, the arbitrators were bound by the. agreement, and could not travel out of it, or allow any other or greater charges or commissions than were comprised in the agreement $ which the defendant’s counsel insisted was an error in law of the arbitrators.

Secondly. That the arbitrators bad refused to allow the defendant the said covering commissions, on a mistaken ground that they were not legal charges.

It might perhaps be sufficient to say, that I have no data upon which to form an opinion on what principles the arbitrators proceeded in rejecting these charges for covering commissions. It does not appear that the arbitrators refused to allow them upon either of the grounds alleged. For any thing that appears to the contrary, they may have rejected these charges upon a full consideration of all the circumstances apart from the agreement, and from a conviction that the defendant was not entitled under these circumstances to those commissions. And upon that ground I should be of opinion that the award ought tobe conclusive Upon the parties $ but admit that it did appear that the arbitrators had decided on one or other of the alleged grounds. I cannot set aside the award : .for I am not prepared to say *307that their construction of the agreement may not be the right one; or to presume with the defendant that there was an omission in the agreement, of any charges intended to be allowed for any services to be performed.

If, however, every other difficulty was overcome* there remains one which with me is invincible. I can^ not sanction the covering British property as American*. It was contended for the defendant that however irregular such transactions might be, however done in frau-dem legis, (and the very terms of the claim imply this) yet that usage had sanctioned the claim *;*and that the usage made it obligatory on* the arbitrators to allow the covering commission. That their refusal to do so, was a violation of the mercantile usage now grown into law* which ought to induce the' Court to set aside the award. I will not trust my feelings in the expression of invectives against this, usage ; I will only remark that so far fronl bad usages ripening into law, it is a maxim of justice as well as of law, that mains usus abolendus est. That the usage in question is* mains- in a high degree, is obvious- frora-its! necessarily involving the parties concerned in it, in deception, fraud;, corruption and sometimes perjury ; and all this to compass a violaron of as law of the country. How an usage productive of such, effects, and directly in contravention of the laws of the country, can. ever acquire a legitimate character and be entitled- to claim the support of courts of justice' is incomprehensible. The parties engaged in such transactions may give effect to- such a principle; they may make such a law for themselves-, and Be obedient to it; and instances may pass sub silentio in courts of justice^, hut if the objection be taken, and brought to the vitew of the court, it must prevail. The law will not he made-instrumental to destroy the law* In.íhe case of Hannay vs. Eve, 3d Cranch, 247, (quoted by Mr. Drayton);. Chief J ustice Marshal declares the opinion of the Gourt to be that though the agreement was riot in-itself an immoral-act, yet as it was a fraud on tile act of congress, no principle can be more clear than this, that the courts of the. *308United States can furnish no aid in giving efficacy to it.

It was further argued on the part of the defendant, that an award ought to be final and settle all the points *n contPoversy between the parties, and referred to the arbitrators ;■ or it should be set aside ; and it was alleged that the award in this case did not decide finally on a sum of g 888 88, which was the amount of a note of hand due to defendant, and left with complainant for collection. This objection, I apprehend, is founded in mistake. The award does decide that the defendant is not entitled to make the complainant accountable for this money. If they had stopped there, no controversy could have arisen 5 but from tenderness for the defendant and for his benefit, they go on to say, in a memorandum at the foot of the account, that they do not mean to confound this claim with the items totally and finally rejected; but that the . note of hand left by defendant with complainant for collection, should he returned, or the money accounted for. This was speaking the language of the law itself; and was meant to furnish evidence to defendant, that though'the claim was rejected in this settlement, he was entitled to the note its *elf. I hare*no doubt, that the award is sufficiently complete ahd final to he sustained. But if a regard to the interests of the defendant on this point had betrayed the arbitrators into any little irregularity, not affecting the justice of the case, I should not, on that account set aside their award.

It is therefore ordered and decreed, That the award made and returned in this cause, be confirmed, and declared absolute and final; and that the defendant do pay to the complainant the sum of g 22,397 77, which was awarded by the arbitrators.

From this decree there was an appeal.

An appeal is made from this decree on the following grounds:

1. That the written agreement between the complainant and defendant, did not, and was not intended to effect the claim for covering commissions, which was a *309subject collateral to and independent of the agreement 5 depending on the known usage of the particular trade $ and as the rejection of the claim by the referrees proceeded from a misapprehension of the legal effect of . , , . ,. ,, ,, . . that instrument, this error was subject to the revision and correction of the Court.

2. That if the contract for covering the property was a fraud on our laws, that circumstance would not bar the claim of the defendant, but rather would be an objection to the complainant recovering any thing from the defendant, as the complainant was a party to and a chief actor in the fraud *;*and the rule of law on this subject, is, Potior est conditio defendentis, the effect whereof would be to prevent the Court from making any decree against the defendant.

3. That the award is defective and wrong in not exempting the defendant from the consequences of any of the debts, which are the proceeds of the vessel and cargo, proving insolvent.

4. That the decree is in other respects contrary to equity. Signed, K. L, Simons, sol. for apppell’t.

The case was argued before the Court of Appeals i Present Chancellors Desaussure, GaiUard and Waties.

The decree was unanimously affirmed for the reasons stated therein.

The ground on which the complainant Aylwin was understood to have employed Captain Perkins as his agent, to cover the vessel and, cargo, as American, was that the British Parliament had passed an act pro. hibiting British subjects from supplying foreign ports or places with slaves. Whereas the act of Congress totally prohibiting the slave trade was not to takeeffect till the 1st. of January, 1808. The vessel and cai-go arrived in America in October 1807. The use therefore of the Ame. rican name, on the voyage, was not to cover the property from the operation of the American laws, but of the British act of Parliament. The importation of slaves into this country was not then therefore such an unlawful act, by the American laws, as could be made a ground to resist the demand of the complainant for an account, on the maxim, that where both parties are in default, potior est conditio defendentis. Nor was it seriously insisted upon by the defendant, that he ought not to account to complainant. But the covering British property with the American name did appear to the Court, tobe such an offence, as to deprive the American citizen of any right to claim the aid of the Court in recovering commissions for such an unlawful act.