Court Opinion

ID: 3631108
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:10:37.832909+00
Date Added: 2024-06-11T14:07:40.775454
License: Public Domain

The judgment in this case appropriates over $50,000 of the defendant's property to satisfy a claim for damages by the plaintiff for the breach of an agreement by one Dimick to arbitrate certain claims and to pay the award. It is admitted that the breach was the act of Dimick, and of him alone, in revoking the submission after the arbitration had been pending over two years. The plaintiff's claim is for the damages sustained by the payment of its expenses of the arbitration while pending, and nothing else. It is not claimed, or even suggested, that the defendant had any power or right to prevent Dimick from revoking the agreement, or that it had any control over his action in that regard. The decision contains another curious but perfectly correct admission, and that is, that the defendant committed no breach of the agreement itself, and was not the surety of the one who did.
With these facts conceded at the outset, the mind is at once directed to the inquiry whether the judgment has any support in law, reason or authority, since, if it has not, the decree which transfers such a large portion of the defendant's property to the plaintiff is but an arbitrary edict and little better than downright confiscation. The discussion of the case up to this time has produced at least five judicial opinions by as many different judges, including the opinion of this court now before us. After reading them all, it is not too much to say that no two of them are at entire agreement upon any clear or definite theory of liability. This discord in opinion and theory is, perhaps, not at all surprising. While the case would *Page 648 
be a very simple one, involving no difficulties whatever, if we would only aim to give effect to the plain and clear language of the agreement which the parties made, it becomes very difficult when we attempt to make a new one, based not upon the language which the parties employed, but upon reasoning processes so subtle and artificial that it is difficult for an ordinary mind to grasp them, and quite impossible for any two persons to state them in the same way. Courts are often astute to defeat fraud and prevent injustice, and sometimes go to the extreme limits of construction in order to compel a party to pay a claim which is just, and which, in the forum of conscience, he ought to pay. With all that, there need be no complaint, but it would require a very acute mind to discover in the plaintiff's claim any such element of equity as would warrant any court in putting a strain upon law, or upon the language in which the parties have carefully expressed their mutual rights and obligations.
It appears upon the face of the agreement that when it was executed various suits at law, in behalf of the plaintiff, were pending in the courts, and by the terms of the submission these suits were to be discontinued and the claims involved therein submitted to the arbitrators. When the arbitration was revoked by the sole act of Dimick, the right to prosecute these actions was revived, and it was admitted at the argument that they had been prosecuted and the claims recovered, as we may assume, with the costs of prosecution. So that while the plaintiff lost the right to have an award of arbitrators, it gained the right to have the judgment of the courts upon the claims. In legal theory it could have lost nothing but the expenses of the arbitration, and in fact it may have gained more than that in the recovery. But nothing can more clearly reveal the want of any strong equity in the plaintiff's claim than the agreement itself. There the plaintiff expressly stipulates that it will pay all of its own expenses and that the defendant shall not, under any circumstances, be liable for them, since they could not be made any part of the award or included in it. The only purpose of this action is to collect *Page 649 
from the defendant's property the very expenses which, by the agreement, the plaintiff was to bear itself, and which it is conceded the defendant never agreed to pay. The parties virtually stipulated with each other that in the event of revocation by one none of the others not participating in that act should claim damages as against each other, but should pay their own costs. They bound each other, so far as words could do it, not to revoke, and in any event to pay their own costs. The railroad stock, which is the subject of this action, was pledged for one purpose and one only, and that was to pay an award when made, and the expenses which the plaintiff now seeks to have declared a lien upon it could never by any possibility become a part of that award. It is conceded that had the plaintiff recovered an award of $10,000, it could not collect a dollar of the expenses of the arbitration from this property, although as large then as now, for the plain reason that it was not pledged for any such purpose. The plaintiff has no more right to appropriate this property for its expenses now than it would then, unless we are to hold that the agreement under which the pledge was made means one thing in case an award was made and another thing in case it was not made, or one thing before revocation and something else after. We must hold that, although the purpose of the pledge was clearly expressed in writing, yet that purpose was subject to be enlarged and changed without the consent of the owner, by future events and contingencies not within the contemplation of the parties when the writing was made and in which the owner was in no manner concerned. The plaintiff is seeking to do now, that there is no award, what it could not do if one had been made, thus profiting by the act of Dimick, since by that act it must have acquired some right against the defendant's property that it did not possess before; or, to state it in another way, the plaintiff's claim is and must be that by the act of Dimick it gained the right to demand costs against this property, and the defendant lost the right to object to that demand. When the judgment in this case is carefully analyzed it virtually declares that during the two years that *Page 650 
the arbitration was pending the defendant's property was pledged to pay an award, since that is the only purpose expressed in the writing, but at the end of that period, by Dimick's act of revocation, it became pledged for something else, that is to say, for the plaintiff's costs and expenses, although the plaintiff agreed to bear them itself, and the defendant who owned the pledge never gave its consent in any form that it should be devoted to any such purpose. When the terms of the instrument under which the defendant's property was deposited are placed in contrast with the provisions of the judgment, it will be difficult to resist the conclusion that the court must have made for the parties a new and different contract.
(1) By the terms of the instrument there was no obligation upon the defendant to deposit its property in pledge for any purpose, but it volunteered to make the deposit for a particular purpose only and that was to pay any award made against Dimick. There was no award made, and it is said that at the end of two years Dimick rendered it impossible by revoking the arbitration. The decision, therefore, is that the defendant's property pledged to pay an award which was never made is forfeited to the plaintiff for another purpose, namely, to pay the costs of the arbitration. But it is said that the plaintiff lost the right to procure an award and should be compensated for that loss. The answer to that is, that the loss of a prospective award is not, since the statute, a legitimate element in the estimation of damages for the breach of an agreement to arbitrate.
(2) Not only were these costs by the terms of the agreement to be excluded from the award, but the plaintiff stipulated to bear and pay them itself. The courts have discharged the plaintiff from the obligation of the agreement to pay its own costs by ordering them to be paid out of the defendant's property.
(3) The most favorable award that the plaintiff could possibly obtain against Dimick was secured by the pledge of the five hundred shares of stock and nothing more. The claims *Page 651 
that it had against Dimick, when reduced to the form of an award, were to be paid out of that as far as it would go, but under the judgment the plaintiff, without any award whatever, gets the stock or its proceeds, not to pay the claims, but to pay the costs of an arbitration, frustrated by the act of Dimick, and it has the judgments upon the claims and costs besides, or the money collected under them.
No review of this case would be fair or just that does not take careful note of the grounds upon which these conclusions rest and the reasoning process from which they have been deduced. It has been often said, upon high authority, that law was the perfection of human reason, and that whatever is contrary to reason is generally contrary to law. If, therefore, it can be shown by any fair reasoning process that the defendant's property has been forfeited to the plaintiff by the act or default of Dimick, then any hasty views or impressions concerning the propositions above stated must at once disappear. It is claimed that these conclusions all rest upon sound reason and well-established legal principles.
1. In the first place, it is said that the judgment rests well upon a statute, that is, upon section 2384 of the Code. The section provides that where a party revokes an arbitration any other party to the submission may maintain an action against him and his sureties upon the agreement, or any instrument collateral thereto, to recover the costs and damages incurred in preparing for the arbitration. Inasmuch as the defendant owning the stock in question, did not revoke the arbitration, and was not surety for Dimick who did, and since there is not any instrument collateral to the agreement of submission, it is very difficult to perceive how this statute can have any application to the case. Dimick was the only one who revoked, but he gave no sureties or collateral instrument. The plaintiff can doubtless proceed against him for breach of his agreement, and then the statute measures the damages. It is admitted on all sides that Dimick or his estate is liable. But the fact that one who broke his agreement is liable in damages for the breach, does not prove that another, who kept the agreement *Page 652 
to the letter, is also liable, or that his property can be taken to pay the costs preceding the revocation. It is quite impossible to say from the various opinions in the case how much or how little of a part this statute is supposed to play in the case. None of the learned judges who have discussed the questions have been willing to rest the case upon it, while it is equally apparent that none of them have felt entirely safe without it. But it is quite obvious that it can give the plaintiff no aid. If the stock was not pledged for the damages arising from Dimick's revocation, then the statute cannot and does not enlarge or change the purpose of the pledge. On the other hand, if it was pledged for that purpose by the agreement, then the plaintiff needs no statute, but may stand upon the instrument itself. The theory of the action is that the plaintiff has a lien upon the stock. Of course it never got any lien except such as arises from the terms of the agreement. That agreement might confer a lien for an award, without costs, when made, but what the plaintiff now claims is a lien for costs alone without any award whatever. Whatever lien the plaintiff had attached immediately on the execution and delivery of the agreement, and the purpose of the pledge was specific and definite. The lien now claimed is one arising from the act of Dimick, committed two years afterwards, and which clearly was not within the contemplation of any of the parties. When and how a lien to pay an award without any costs was transmuted into a lien to pay costs alone, as damages for the act of Dimick, is a problem in the case that no one has yet attempted to solve. This is the critical point in the discussion, and when we reach it, mere assertion and generalization will not answer. We must stop to inquire just how the plaintiff has acquired a lien on this property for the damages arising from Dimick's act in defeating an arbitration that might or might not result in an award against him. No man can get a lien upon or an interest in his neighbor's property except through some contract. Did the defendant ever agree to charge this property with the costs incurred by the plaintiff in the arbitration? If so, how and in what language? When the defendant bound the plaintiff *Page 653 
to bear these very costs and excluded them entirely as an element in the controversy, did it intend or contemplate any such thing as making them a charge on its own property? When the plaintiff covenanted to bear these costs itself, did it then intend or contemplate any such thing as their collection out of the defendant's property? These questions admit of but one answer, and that must prove that the judgment in this case has sought to impress a lien upon the property that the parties never created or intended to create. Obviously the plaintiff got no lien from any agreement of the defendant, express or implied. It got no lien through Dimick, since he never owned it or had it in his possession, or under his control, or even made the deposit. There is no legal privity or connection of any kind between Dimick's act of revocation and the defendant, or the property in question, and so it seems to me that the plaintiff has no lien at all.
The only object of a bond in a submission to arbitration is to secure some one against damages arising from the exercise of the right of revocation, and there can now be no damages but the costs and expenses incurred. In all such cases there is, of course, a privity of contract between the sureties and the injured party. But here we have a wholly different situation, since the parties intended to make, and supposed they had made, an irrevocable agreement of submission, in which damages would be impossible, and then they proceeded to covenant with each other that the costs, now the only element that can constitute damages, should be eliminated from the submission entirely, and each party should bear and pay its own costs, and consequently that neither party should claim damages of the other in case they were mistaken as to the irrevocable character of the contract. It is plain, therefore, that the lien for costs and expenses as damages which the plaintiff claims upon the property in question does not and cannot arise from any contract between the parties. It is a purely artificial development by reasoning processes upon principles derived from what are supposed to be analogous cases, but which really have no application to the special and *Page 654 
peculiar agreement under which the defendant pledged its property. When it made the pledge for a single specified purpose the appropriation of it to another and different purpose is a plain violation of its legal rights.
2. In the opinion of my learned associate now before us it is stated that the plaintiff's stipulation to pay its own costs did not contemplate a revocation of the arbitration, and since that unexpected event happened the stipulation is no longer in the plaintiff's way. That is a very candid admission that the stock in question is to be devoted by the judgment to a purpose not within the intention or contemplation of the parties when they made the agreement. It reveals the fundamental error that has pervaded the case from the beginning. It is perfectly true that the contingency of revocation was not contemplated. The parties were pledged and became bound hand and foot against the happening of any such event, and not until this court held that the binding was of no avail did any one attempt to give to the agreement a construction which the parties never intended that it should have. The construction now is that the defendant pledged its property to secure a claim by the plaintiff for damages arising from the act of Dimick in revoking the arbitration, something that was not within their intention at all. Of course, if that act was not within the contemplation of the plaintiff when it agreed to pay its own costs, neither was it within the contemplation of the defendant when it pledged its property to pay the award. While the intention of the parties was, of course, the same, yet the decision in the case discharges the plaintiff from its stipulation as to costs, which now mean damages, and at the same time changes and enlarges that of the defendant in regard to the purpose for which it made the pledge by imposing upon its property a lien for a purpose never contemplated.
3. But it is said that the defendant's stock is surety for Dimick and can be proceeded against in rem upon breach by him of his agreement. There is nothing whatever in the agreement or the transaction that creates any relations of suretyship for Dimick. There is no legal privity between *Page 655 
them such as must always exist between principal and surety. The defendant voluntarily deposited the stock for a specific purpose, and that was to pay an award when made. When that event happened the plaintiff could appropriate the stock for that purpose without any regard to Dimick and as upon an original promise and pledge by the defendant. But even if the property stood as surety to pay the award when made, then surely the owner may protect it by invoking all the rules of law applicable to the liability of sureties. The surety cannot be held beyond the very terms of his agreement, since it is strictissima juris. His undertaking cannot be enlarged by construction or implication, and when it is sought to make him answer for the act or default of another, it is sufficient for him to show that he has not expressly agreed to be answerable for such act or default. (Page v. Krekey,137 N.Y. 307; Smith v. Molleson, 148 N.Y. 241.) The plaintiff can point to no agreement by which this property was to be devoted to the payment of damages arising from Dimick's act, but, on the contrary, it is conceded that no such purpose was in contemplation when the agreement was executed.
4. It is asserted that very ancient and some modern authorities sustain this judgment. The oldest case relied on is VyniorsCase (4 Coke, 302). That contains all that any of the others contain, and is quite as favorable to the plaintiff as any of them. All that case or any of the others hold, that has any application to this case, is that an agreement to perform an award is broken by a revocation of the arbitration. No one, I think, will question that. The cases are good authority against Dimick, the only one who committed the breach. They were all actions against the party who violated his covenant, and not, as in this case, against an innocent party that has kept it. None of them support or give any color of support to the proposition upon which this judgment rests. The right to maintain an action against the party guilty of a breach of his agreement to arbitrate, and who has rendered an award impossible by revocation, or against his sureties in legal privity with him, upon written instruments, *Page 656 
should not be confounded with the right which the plaintiff asserts in this case. That is nothing less than the right to maintain an action against one who has never revoked, and who is not a surety, or in legal privity with another who did revoke, to appropriate property voluntarily pledged only to pay an award, under an agreement which excludes the right to damages in the form of costs and casts that burden on the party who complains. Moreover, the decisions in these cases are supported by an element of right and justice conspicuously absent in this case, since it is plain that in all of them the plaintiff lost by the revocation the right to collect his costs by including them in the award, whereas, in this case, the plaintiff lost no such right, it having been excluded by its own agreement. It is perfectly plain that, in the special and peculiar agreement now under consideration, the parties undertook to protect the property in question from all consequences of a revocation by Dimick. It was for that purpose and to that end that the pledge was restricted to the payment of an award when made; that all parties renounced the right to revoke; that the right to costs, and consequently to damages, was expressly excluded, and the burden of paying its own costs imposed upon the plaintiff. There is but one ground, as it seems to me, upon which this judgment can rest, and that is that it was legally impossible for the defendant, by any stipulation, or by the use of any form of words, to confine the pledge to the payment of an award, or to protect the property from a claim of damages arising out of the conduct of Dimick. If that proposition is not refuted by the bare statement of it, then it is quite evident that no argument, however conclusive, and no reasoning, however persuasive, would avail.
I think that the plaintiff has not shown that it has any claim or lien upon the property which is the subject of this action, and that the judgment should be reversed.
All concur, with VANN, J., for affirmance, except O'BRIEN, J., who reads for reversal, and PARKER, Ch. J., not sitting.
Judgment affirmed, with costs. *Page 657