Court Opinion

ID: 6960952
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:45:29.426407+00
Date Added: 2024-06-11T16:08:26.333444
License: Public Domain

Mr. Justice Dickey, dissenting : I can not concur in this judgment or the reasoning on which it rests. For many purposes, this proceeding was not an arbitration, and the award of the appraisers is not such an award as spoken of in our statutes concerning “Arbitrations and Awards.” It was, however, a matter to be determined between the parties by the judgment of the appraisers; a determination by which the parties were to be bound, as by the judgment or decree of a court. In other-words, the conclusion reached was to become and be res .judicata, as to the then value of this property. In all such” cases, whether the proceeding be before a court, or before arbitrators or referees or appraisers, or before any other forum, I think the party to be affected thereby is entitled to be heard, if he demand it, and to that end is entitled to notice of the time and place of deliberation or investigation. A party may, no doubt, by contract or otherwise waive this right to notice, and that is the ground on which the cases, as I understand them, of McAuley v. Carter, 22 Ill. 53, Korf v. Lull, 70 id. 420, and like cases, rest, in which it is held notice need not be given in cases of building and construction contracts, where the matter to be determined was left to the engineers, superintendent or architect. In that class of cases, in view of the nature of the business, and of the fact that the question was left to the, decision of an expert, whose ordinary duties, in the nature of things, gave him the full means of understanding the matter to be by him determined, it was held that, by a fair construction of the contract, the parties had waived this right to notice. In these decisions I fully concur. They do not invade the fundamental principle of common fairness and justice which pervades the law in all civilized communities, and which demands that, in all proceedings— judicial or quasi judicial—the party to be. bound thereby must have an opportunity to be heard, unless he has expressly or by reasonable or necessary implication waived that right. In this case there is no express agreement on the part of Norton to waive this right, and I find nothing in the contract from which, by necessary implication, or even reasonable implication, such a waiver ought to be inferred. The men selected were to be disinterested and were to be holders of real property of the city of Chicago. This does not designate them as experts, in any sense. Had it been provided by statute that, in all eases where property is leased by one man to another for a long term of years, at an annual rent equal to six per cent upon the cash value thereof, it shall be the duty of the tenant, in the month of January in each year, to choose one disinterested holder of real property, within five' miles of the premises, and of the landlord to choose a like holder of real property, which said persons so chosen shall at once proceed to appraise the cash value of said premises, and in case they can not agree upon the same, they shall choose a third like holder of real property, and the award of the majority of the appraisers shall be final and binding as to the value of the property, for the purpose of fixing the amount of rent to be paid under such lease for that year,—it seems to me, it could not be said the legislature intended, in such case, to deprive the parties to such a lease of their right to be heard before their interests should be affected by the finding of the appraisers, or that parties making leases of that kind, after the passage of such a statute, had thereby waived their right to a hearing. Nor can I see that the creation of such a forum by contract can have any effect different in this regard from the creation of the forum by statute. The contract is silent on this question and no inference of a waiver is to rest upon a presumption not founded upon anything said in the contract. • The waiver of a right so vital, ought not to be slightly ■presumed; nor is such to be inferred, unless the words of the contract clearly import that such was the intention of the contracting parties. This view of the law has for its support decisions where this very question came in judgment. In Peters v. Newkirk, 6 Cowen, 103, it appeared that New-kirk had leased to Peters certain premises for a period of three years, but before the time expired the parties agreed to cancel the lease and make a settlement of their accounts. The balance of rent due to Newkirk was agreed to be $87.75, for which Peters gave his due bill, and it was also agreed that Newkirk should take a shearing machine, to be appraised by C. Sturges, in part pay of the due bill. Sturges' made the appraisement at $85 in the absence of Newkirk, who was not notified. Subsequently Newkirk made a distress for the $87.75 rent due, whereupon Peters tendered the balance of rent due, after deducting the $85, and demanded a return of the goods, which was refused, and he then brought an action on the case, for distraining his goods when no rent was in arrear, and upon the trial of this action the question arose whether the appraisement was valid, and upon this point the court say: “The appraisal was irregular and not conclusive on the defendant. Both parties should have had notice, so that an opportunity might be afforded to submit their remarks to the appraiser, and adduce proof if deemed necessary. The plainest dictates of natural justice require that no man shall be condemned unheard. The right to notice was implied in the agreement to submit.” In Underhill v. Van Cortlandt, 2 Johns. Ch. 339, the defendants leased to Underhill a mill place and land for twenty-one years, and in the lease it was provided, “ that at the expiration of the term the mill or mills then standing, and whatever might appertain thereto, should be appraised or valued, by two persons indifferently chosen by the parties, and in case of their disagreement, by a third person, to be chosen by the two, and the said appraisement should be binding on the parties.” Chancellor Kent, in his opinion, treats this agreement precisely as a submission to arbitration, and he applied to their conduct the same rules which are applied to the conduct of arbitrators. In Kelly v. Crawford, 5 Wall. 785, there was an agreement between two firms that an accountant "should examine their books of account, and ascertain from them the exact amount due from one firm to the other, “the amount so found to be due and owing to be final.” It was held the agreement was not a submission to arbitration, nor was the amount found due by the accountant an award, in any such sense as would make them subject to the strict rules governing arbitrations and awards. The court made a distinction between a case where there is something submitted to the judgment or discretion of the person chosen, and one where he is to have no discretion. In Thomas v. West Jersey Railroad Co. 24 N. J. Eq. 568, provision was made in a lease that it might be terminated by notice; and provision was made for determining, by arbitration, the damages to which the lessees might become entitled by the determination of the lease. The notice was given, and two arbitrators chosen, who, after hearing evidence and arguments, were unable to agree, and thereupon chose an umpire to act as third arbitrator. The three then met without notice to the parties, or giving them any opportunity to be heard. This action was held by the court to be misconduct, in the sense of the law, and fatal to the validity of the award. In Bushey v. Culler, 26 Md. 534, it appeared there had been a suit pending between the parties which was compromised by a contract, which provided Culler, who had a dam which caused the water to flow back upon Bushey’s mill and land, should lower his dam to such an extent as should be judged necessary by Samuel Margate and George Thomas, they to select a third person, in case of disagreement, who should determine how much the said dam should be lowered, and whose determination should be final and conclusive; and it was further provided, that at any time, within one year from such determination, Bushey should think the dam had not been sufficiently lowered, he might again apply to the arbitrators, who should examine the matter and make another determination. Under this contract the arbitrators made a decision requiring the dam to be lowered six inches, which decision was made without giving notice to either party, and without either party being present. The court held the decision was not valid, and, following the case of Bullit v. Musgrave, 3 Gill, 32, said: “ Where, from the nature of a submission, the judgment of arbitrators may be influenced or enlightened by the adductions of evidence, the parties are entitled to notice of the time and place of their proceeding to investigate the matters submitted to them.” In Dickenson v. Railroad Co. 7 W. Va. 390, a contract for the sale of land in Nicholas county, Virginia, provided that the vendor should convey it to the vendee “at so much per acre, as maybe determined by Messrs. George Brown, Samuel J. Grose and Joseph Copenliaver, being disinterested and responsible land owners in the said county, the price per acre to be certified by them on the back of this agreement.” The persons named in the contract made their valuation without notice to, and without the presence of, the vendee. The court held the valuation not binding, and the learned judge who wrote the opinion said: “ The certificate of valuation can not be considered as more solemn, more conclusive or binding upon the parties than an ordinary award. It is but an award, and the referees can not, upon principle, be considered otherwise than as arbitrators.” After citing and quoting from a large number of authorities, the opinion continues : “ From the weight of authority upon the subject, and from such reflection as I have been able to exercise, my mind has been brought to the conclusion that sound principles, justice and a due regard for the proper administration thereof among men by arbitration, require, ordinarily, though not universally, in equity, that an award made by arbitrators in the absence of the parties to the submission * * * * may be set aside in equity.” In Billings v. Billings, 110 Mass. 225, a question arose between two parties as to the construction of a will, and they agreed to refer the point for decision to Henry Chapin, Esq. The referee made his decision without notice and without giving the parties an opportunity to be heard, and the court held his decision Avas void. In Brown v. Leyddy, 11 Hun. (N. Y.) 451, a lease provided that in case of the renewal of a lease, the rent, if not agreed upon by the parties, Avas to be ascertained as follows: Each party “shall choose a disinterested person to ascertain the same, Avhich persons so chosen shall themselves, respectively, be owners in fee simple of one or more lots of land in the neighborhood of the one hereby demised, and shall, in making their award or determination in the said premises, under oath, appraise and value the said lot or lots of land hereby demised, at its or their full and fair worth or price at private sale,” etc., and it Avas also provided that in case the two could not agree, an umpire was to be chosen by them, Avhose decision, under oath, should fix and determine the value. The two arbitrators chosen failed to agree, and chose an umpire, Avho made his award without having given the parties notice of the time and place of hearing, and without taking any proofs. Upon this point the court say: “ The appraisers were to ascertain the value, but in what manner is not stated, whether by the exercise of their own knowledge and judgment or by a hearing, at which the parties could produce witnesses. The word “ ascertain,” however, has its meaning, and therefore its force: “ To make sure or certain; to fix, to establish, to determine; to settle,” are definitions of that word according to Worcester; and this would seem to demand the observance of the usual mode of investigation in order to determine—to settle the valúe. “ The right of the parties to a hearing * * * is one of the established privileges, although it may be waived by them. The courts would not declare that such right did not exist, unless the terms of the submission so provided or a waiver was clearly demonstrated.” There are other cases carrying this doctrine farther, holding that even where, by the agreement of the parties, the amount or value of work done under a contract is to be determined by an engineer or other expert, a determination made by him without notice to the parties will not be binding. Among these are the following: McMahon v. New York and Erie Railroad Co. 20. N. Y. 463; Collins v. Vanderbilt, 8 Bosw. (N. Y.) 313. On this latter question the authorities are not in harmony, and this court has taken a different view, and in which I fully concur. But my attention has not been called to any case where matter requiring the exercise of judgment and discretion (on the part of the persons by whose judgment the parties have agreed to be bound), and such persons are not selected as experts, in which the decision of such persons has been held binding upon a a party who has not had an opportunity to be heard. On that question I find no want of harmony in the authorities. Cases are found in Avhich a distinction in some respects is recognized between arbitrations and appraisals; but not in respect of the right of a party to be heard if he is to be bound by the award or appraisal. None of these cases involve the question of the right to notice. It has been held, where the revenue laws require one kind of stamp upon an appraisal and another kind of stamp upon an award, that an appraisal by parties to fix the value of certain property was not an award, within the meaning of the revenue laws. Leeds v. Burrows, 12 East, 1. And where a statute authorized the enforcement, by attachment, of an award by arbitrators, it was held the appraisal of the value of land, which one party had agreed to buy at a price to be fixed by chosen appraisers, was not such an award as could be enforced by attachment. Lee v. Hemmingway, 3 Nev. and M. 860. A like distinction is taken in Collins v. Collins, 28 L. J. Ch. 184, and in Garred v. Macey, 10 Mo. 160, and in Curry v. Lackey, 35 id. 389, wherein it is held that in many cases an appraisement is not in all respects an arbitration; and that in such respects certain of the rules as to arbitrations do not apply to appraisements. But in none of them is it held that they differ in respect to the necessity of notice; and it is not perceived that there is any reason found in these cases in support of the idea that a party has the right to an opportunity to be heard in an arbitration, and yet in an appraisal he has no such right, though he is to be bound thereby as matter res judicata, and it may be to the extent of his fortune. The position I regard as unreasonable, and liable to lead to great injustice, which can not be undone by the review of the courts. Again, were it conceded that the mere want of notice to the parties in such case be not sufficient, per se, to invalidate such an award, it seems to me the misconduct of the appraisers, which appellant offered by his pleas and otherwise to prove, if true, was sufficient to render the appraisal inoperative upon the ground of fraud. In one of the pleas it is alleged that the appraisers did corruptly and fraudulently refuse to allow the parties to be heard before them, but secretly did proceed to decide said case without allowing the parties to be heard. On the trial appellant offered to prove that he demanded a hearing before them, which they refused. This is not a case of mere omission to give notice of the time and place of hearing or consideration of the matter submitted ¡ it is the case of a wilful refusal to hear when requested, and (as is charged in the plea) this was done corruptly and fraudulently. In my judgment such conduct is evidence of fraud. Even in the case of an appraisement to be made by an expert chosen for such purpose, should he refuse so hear suggestions touching the matter to be determined by him, offered to be made by one of the parties (with the privilege to his adversary to be present), such fact would be competent to be proven, as a circumstance tending to show that the award was in fact fraudulent, and this, too, in an action at law brought upon the award. I do not understand the court, in this case, as holding such proof would not be competent and cogent in a proceeding in chancery, instituted to set aside the award, but only that it is incompetent in an action at law. I think otherwise. An award, if fraudulently made, is void, and if so, no action can be supported by it.