Title: Harrell v. Dove Mfg. Co.
Citation: 234 Or. 321, 381 P.2d 710
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: May 22, 1963

Affirmed May 22, 1963.
Frederick A. Jahnke, Portland, argued the cause and submitted the brief for appellant.
Harvey J. Osborn, Portland, argued the cause for respondent. With him on the brief was Roscoe E. Watts, Portland.
*322 Before McALLISTER, Chief Justice, and ROSSMAN, SLOAN, GOODWIN and LUSK, Justices.
AFFIRMED.
ROSSMAN, J.
This is an appeal by a corporation entitled Dove Manufacturing Company from a judgment of the circuit court entered upon an arbitration award in favor of one Harry E. Harrell. During the proceedings the appellant Dove Manufacturing Company was referred to as "the respondent" and Harrell as "the petitioner." For purposes of our consideration of the issues before us, we adopt those designations of the parties.
By a contract dated January 28, 1961, petitioner (Harrell) agreed to sell and respondent (Dove) agreed to buy more than fifty per cent of the common stock of the Imperial Manufacturing Company which was engaged in the production and sale of electrical heating equipment. The contract incorporated an agreement by the petitioner "not to compete in lines of endeavor related to the activities of Imperial Manufacturing Company in the States of Oregon, or Washington * * *." Also included in the contract was the following:
Under the contract a payment became due the petitioner from the respondent on January 1, 1962. Petitioner's demand for the payment was ignored, whereupon he filed in the circuit court a petition for an *323 order appointing an arbitrator and directing arbitration in accordance with the provision of the contract set forth above. An arbitrator was appointed and the issues were framed, petitioner praying that the contract be declared void and that he be permitted to retain as liquidated damages payments which had been made by the respondent. The respondent denied that it had breached the contract and in support of a prayer for rescission alleged as affirmative defenses fraud in the inducement and a breach of the covenant not to compete.
The arbitrator found that respondent had breached the contract in failing to make the disputed payment and that its affirmative defenses were without merit. As to the allegation of fraud, he ruled that the respondent had by its conduct ratified the contract after it had obtained actual or constructive knowledge of the alleged fraud and that it was therefore unnecessary to determine whether such fraud in the inducement actually existed. The arbitrator also found that the respondent had failed to produce evidence supporting its allegation of breach of the covenant not to compete. He thus made an award in the petitioner's favor.
Pursuant to the provisions of ORS 33.310 and 33.320, the respondent filed with the circuit court the following exceptions to the award:
In denying those exceptions the circuit court entered judgment upon the arbitrator's award. It is from that judgment that respondent (Dove) appeals.
ORS 33.320, which enumerates the permissible exceptions, reads as follows:
Upon this appeal the respondent has apparently abandoned the exceptions with which it confronted the circuit court. In their stead it has submitted the following assignments of error which, it will be noted, seek a decision by this court on the merits of the case:
1. We quote the following from Jacob v. Pacific Export Lumber Company, 136 Or 622, 297 P 848 (1931):
See also, Rueda v. Union Pacific Railroad, 180 Or 133, 175 P2d 778 (1946) at page 168. The quoted statement *326 is in accord with the provisions of ORS 33.210 through ORS 33.340 which regulate arbitration proceedings in Oregon. The latter section provides for appeals from judgments based upon awards of arbitrators. The scope of such appeals, however, is necessarily limited by the provisions of ORS 33.320 which set forth the grounds upon which exceptions to awards may be filed with the circuit court. That section does not provide for judicial review on the merits of arbitrators' awards. This court is limited in its consideration of awards to exceptions which have been submitted to the circuit court in accordance with the provisions of ORS 33.320.
These provisions of our statute are rooted in reasons of policy. One of the primary purposes for which parties agree to arbitrate their disputes is to avoid what they fear may be costly and time-consuming litigation. See generally, Note, 63 Harv L Rev 681 (1950). It would be patently unfair to allow a party to an arbitration proceeding for which both parties have voluntarily contracted to turn the proceedings into a lawsuit in the event the arbitrator's decision is unfavorable to him. Through the provisions of ORS 33.320 our legislature has undertaken to guarantee that the proceedings will be conducted in a fair and honorable manner. It has not undertaken to authorize the courts to substitute their judgment for that of an arbitrator whose actions do not fall within the purview of that section. Were the courts to assume this privilege they would defeat the very purposes for which disputes are submitted to arbitrators. In the absence of an arbitration clause in the contract the parties are free to settle their disputes in court. But where they have contracted not to do so the courts *327 are authorized to interfere only where statutory grounds for such interference appear.
2. We have noted that the exceptions submitted by the respondent to the circuit court raised grounds approved by ORS 33.320. But we have also seen that it abandoned those exceptions upon this appeal in favor of two assignments of error which would necessitate a decision on the merits. Such a decision would be beyond the authority conferred upon this court by the legislature.
The judgment of the circuit court is affirmed.