Case Name: Shinnie and Loomas v. Jonathan Coil
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1826
Citations: 1 McCord Eq. 478
Docket Number: 
Parties: Shinnie and Loomas v. Jonathan Coil.
Judges: 
Reporter: South Carolina Equity Reports
Volume: 6
Pages: 478–486

Head Matter:
Shinnie and Loomas v. Jonathan Coil.
An award set aside where the arbitrators heard evidence without giving the opposite side an opportunity of being heard or of cross examination.
Equity, after setting aside an award, will not entertain jurisdiction where adequate remedy maybe obtained at law.
This bill was brought for the purpose of setting aside an award between the parties. It was in evidence, that the arbitrators met, and proceeded in the examination of sundry witnesses, but defendant wishing further time to examine certain witnesses at Cheraw, for the purpose of invalidating the testimony of complainants’ witnesses, it was granted him, and no time was set for the second meeting. Defendant procured sundry affidavits of persons residing at Cheraw, and placed them in the hands of the Secretary of the Board of Commerce, who placed them in the hands of the arbitrators the day before the second meeting. The complainants had no notice of the time or place of the examination of the witnesses, nor of their names, nor the subject matter of which they were to be examined; nor had they any notice of the second meeting. The arbitrators met, read the affidavits, and rendered in an award against the complainants.
The counsel for the complainants contended that the award should be set aside, on the ground of error and mistake of the arbitrators in proceeding to investigate the rights of the complainants without their being present or notified thereof, and upon ex parte evidence taken upon affidavits without giving them an opportunity of a cross examination of the witnesses.
1826.
Charleston
It was contended by the counsel for the defendant, that as the arbitrators were persons of the parties’ own choosing, they ought to be bound by their award, and that they were not bound by any legal technical rules.
Thompson, Chancellor.
It will be observed in this case, that the arbitrators are not judges of the parties’ own choosing, but that they were appointed monthly by the Chamber of Commerce; and admitting that they were, every day’s practice proves, that the Court will set aside an award made contrary to law, or founded in error or palpable mistake. As to their not being bound by the rules of evidence, if such an idea has heretofore existed, it is time that it should be corrected and abolished. Every tribunal to decide upon the rights of parties, whether delegated ¡by law or the parties themselves, are bound to decide by the rules of evidence. There is no rule in law which allows an eai parte affidavit to be read in evidence. There is no rule of law which allows a person to be examined out of Court, without giving the adverse party an opportunity of cross examination, nor is there any rule of law which will justify the rendering a a judgment against a party without giving him an opportunity of being heard. The testimony should be heard, the documentary evidence read, in the presence of both parties. None of these requisites have been complied with in the present case. The Court is of opinion, that the arbitrators acted erroneously in receiving and acting upon ex parte affidavits, without giving complainants an opportunity of cross examination or rebuttal, and that in their absence, without notifying them either of the contents of the affidavits or of the time when they took the same into consideration.
It is therefore ordered and decreed, that the award be set aside, and the case be set down in this Court for trial upon its merits.
This was an appeal from that decree on the following grounds.
First. Because his honour erred in setting aside the award, inasmuch as there was not sufficient grounds for so doing.
Second. That if the award be exceptionable, and be therefore rightly annulled by the decree, yet it was insisted that the bill should be dismissed, the complainants having full and adequate remedy at law for the recovery of any balance due them.
Hunt, for the appellant.
An award will not be set aside except for fraud or partiality, 1 Desaus. Rep. 345, 1 Vern. 157; or for collusion or gross misconduct, Lord Raym. 1076, Str. 908, I Atk. 77, 3,Desaus. Rep. 305; or for corruption, partiality or gross misconduct, Amb. 245. If the parties chose those men they were their own agents, and must be governed by their acts. If they chose to refer their matter to a Committee of Commerce they must be governed by their rules. An award of arbitrators was good though against law. 1 Wils. 4. lSwanst.Rep. 56. 2Madd.Cha. Rep. 6. 1 Price’s Rep. 81. The testimony need not be on oath, unless so stipulated. Wellington v. M’Intosh, 2 Atk. 569. 1 Dali. 161. A party interested may be examined. 1 Bos. & Pul. 175. 18 Ves. 447. The arbitrators ought to be made parties. 1 Wash. Rep. 11.14. And they are notbound to give notice of their meeting. 3 Atk. 530. Equity will not be anx ious to give relief when a party may obtain relief at law. 6 Ves. 10. 9 Ves. 67. He also cited 2 Bay, 374. 450.
JDunkin, contra.
The award was invalid. Walker v. Frobisher, 6 Ves. 70. Chaplin v. Kirwan, 1 Dali. 187. Passmore v. Pettit, 4 Dali. 271. Herrick v. Blair, l Johns. Cha. Rep. 101. The Court, in this last case, say, in Walker v. Frobisher the arbitrators, after the parties were dismissed, examined three more persons on the part of the defendant when no person was present on the part of the plaintiff. This was unfair, partial, and gross misconduct, contrary to all the principles of a just proceeding. Complainants were not informed what witnesses were to be examined, when or where, nor did they know the questions, &c. They were not present at the meeting, nor did they hear of it until after the award. It was an extraordinary award.
On the second ground he cited 2 Chit. Plead. 478. 8 East, 344. 1 Saund. 327. An issue at law might be ordered.
Grimke, in reply.
The complainants knew of the application for further time. Why did they not then object? Why did they not apply to the arbitrators after-wards ? The arbitrators are the private agents of the parties, and they must be bound by their acts.

Opinion:
Cueia, per
Nott, J.
It is contended in this case, that as the arbitrators were judges of the parties' own choosing, the Court ought not to set aside their award except for fraud, corruption, partiality, or gross misconduct.
The cases on this subject are certainly very strong; and it cannot be expected, that when the parties have thus withdrawn their cause from the ordinary tribunals of justice, that the same .regularity should be observed as would be required in a Court whose proceedings are governed by fixed and determinate rules.
The parties themselves, by selecting their own judges, are understood to dispense with that degree of formality; and the very object of referring cases to arbitration is, in most cases, to be absolved from those fetters which the technical rules of Court impose upon their proceedings. But there are nevertheless certain limits, beyond which even arbitrators are not permitted to dispense with the rules of law. There are certain fundamental rules for the trial of causes, the disregard of which by any tribunal, however organized, will render their proceedings null and void. Among these are, the right of the party to have notice of the time and place of trial; to have an opportunity to produce his testimony; to know and to have an opportunity to rebut the testimony offered against him. However, the law is so well settled upon this subject, that I will barely refer to the decided cases, and shall be satisfied to be governed by the conclusion which is to be drawn from them. In the case of Fitzpatrick v. Smith, 1 Desaus. Rep. 345, the Chancellor, who delivered the decree of the Court, observed that as there was no charge of fraud or partiality on the part of the arbitrators, the award was conclusive. In the case of Brown v. Brown, 1 Vern. 157, the Lord Keeper dismissed a bill to set aside an award, because he did not see any fraud or collusion in the matter. Other cases are relied on where similar expressions are used, from whence it is inferred that these are the only grounds on which an award will be set aside. But upon examining those authorities it will be found that there is usually some alternation annexed. Thus in the case of Aylwin v. Perkins, 3 Desaus. Rep. 305, it is said, 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 aplaip point of law; or unless there were such gross and palpable mistakes in calculation as produced manifest injustice. So in the case of Brown v. Brown, above quoted, the Lord Keeper added, if their accounts prove a manifest error in the body of an award, relief may be had. In 3 Atk. Rep. 644, an anonymous case, though Lord Haedwicke said, unless there is corruption or partiality in an arbitrator, the party cannot set aside his award; yet he added, if there was any palpable mistake made by the arbitrator, or miscalculation in an account laid before him, the party aggrieved might bring his bill to have it rectified. In the case of Ridout v. Pain, 3 Atk. Rep. 494, the same learned Judge refers to the case of Comforth v. Green, where Lord Cowpee lays it down, that if arbitrators go upon a plain mistake, either in law or fact, Equity will relieve against the award; and remarks, " in the case of Medcalf v. Ives I was of the same opinion." It appears then that there are cases falling very short of fraud or corruption, in which an award may be set aside. But the cases go even further.
In the case of Morris v. Reynolds, 2 Lord Raym. 857, a motion was made to set aside an award on the ground, that the arbitrators had refused to hear what the defendant could say after they bad heard the plaintiff. Holt, Chief Justice, opposed this totis viribus, as contrary to all his experience. He said, the integrity of the arbitrators, in such cases, whom .the parties by consent had chosen for their judges, should never be arraigned any more than the integrity of any other Judges; but Powell, Powys and Gould, Justices, said "it was abominable to give countenance to any such proceedings and they suffered the award to be examined into. The same doctrine is laid down in Metcalf v. Ives, 1 Atk. 64. The Lord Chancellor says, when the arbitrators make their award clandestinely, without hear-; ing each party, the Court ought to interfere to avoid such an award. In the case of Morgan v. Mather, 2 Ves. Jun. 16, 17, not hearing a witness, even though there be no corrUptjon, js expressly stated as a ground for setting aside an award. In the case of Walker v. Frobisher, 6 Ves. 70, where the arbitrator examined witnesses on one side without the knowledge of the other party, after he had informed the parties that he would hear no other testimony, the Chancellor set aside the award; although the arbitrator swore he had previously made up his mind, and that this testimony had no influence on his judgment in making up his award. The Lord Chancellor said he believed him, because he knew him to be a most excellent man. But he could not, from respect for any man, do that which he could not reconcile to general principles. A Judge must not, said his Lordship, take upon himself to say whether evidence, improperly admitted, had or had not an effect upon his mind. And that although the award might do perfect justice, upon general principles it could not be supported. Now, what are the facts in this easel In the course of the investigation the defendant discovered that he should want more testimony than he had adduced. He requested further time for that purpose, which was granted. He must have expected that the testimony, which he was about to obtain, would have an important influence on the result of the case, otherwise he would have been indifferent about it. And it was equally important to the complainant as to the defendant; for their interests were equally involved in the issue. They ought therefore to have had an opportunity of cross-examining the witnesses whose testimony was to be taken, and notice of the time and place of hearing the case, that they might have had an opportunity of rebutting the testimony. The case comes precisely within the principles of the case of Walker v. Frobisher, and se veral of the other cases which have been relied on. For, whether ex parte testimony be received after the arbitrators had agreed to close the examination, or during its progress, the principle is precisély the same. When it is said, that partiality on the part of the arbitrators is a good ground for setting aside an award, it is not to be understood that it must necessarily be a corrupt partía-lity. Any ex parte proceeding, the effect of which is to give an advantage to one party over the other, is such a partiality as will avoid an award. Suppose the witnesses had been examined viva voce, ought not the complainants to have had notice of the time and place of meeting, that they might have heard the evidence. And in principle, there is no difference whether the evidence be ore terns, or in writing. There is no allegation of corruption or fraud against either the defendant or arbitrators. It is admitted that they are all gentlemen of high respectability, whose characters raise them above any suspicion of that sort. But they have mistaken their duty in hearing evidence on one side without giving the other party an opportunity of being heard. Their award therefore cannot be supported. It is the opinion of the Court, that that part of the decree which goes to set aside the award must be affirmed, and that the defendant must pay the costs. But that is as far as the decree ought to have gone. The only relief which the coipplainants have asked and to which they are entitled is, that the award should be set aside. They then have a plain and adequate remedy at law. At least there is nothing brought to the view of the Court, by which it can be seen that they have not. By their original agreement it was stipulated, that if any difference should arise between them it should be settled by arbitration, and there can be no reason why the Court of Equity should take the case from the tribunal selected by the parties themselves. That part of the decree, therefore, which directs that the bill should be retained for further hearing is reversed.
Partiality up-°"t award need yupt parüaii-
It is therefore ordered and decreed, that so much of ¿ecree 0f the Chancellor as goes to set aside the award in this case be affirmed ; but that so much of the decree as directs that the case be set down for trial in that Court on its merits be reversed, and that the cause be struck from the docket, the Court seeing no cause for further relief.
Decree modified.