Court Opinion

ID: 9662049
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:57:54.421873+00
Date Added: 2024-06-11T18:14:36.132130
License: Public Domain

NORTON, Judge
(dissenting).
I respectfully dissent. When the Minnesota legislature adopted an act “to validate arbitration agreements,” it did not intend to nullify arbitration agreements which were valid and enforceable under prior Minnesota law. Unif.Arbitration Act, 7 U.L.A. 1 (1986).
The Minnesota Uniform Arbitration Act does not expressly affect the availability of common law arbitration. See Minn.Stat. § 572.08-.30 (1988). “Ordinarily statutes are presumed not to alter or modify the common law unless they expressly so provide.” Agassiz & Odessa Mut. Fire Ins. Co. v. Magnusson, 272 Minn. 156, 166, 136 N.W.2d 861, 868 (1965) (citations omitted).
Legislation supersedes common law “[i]n cases of conflict between legislation and the common law,” but here there is no conflict. 2A Statutes and Statutory Construction § 50.01, at 421 (C. Sands 4th ed. 1984). Under Minnesota common law, oral agreements to arbitrate are valid, and an award made following arbitration based on an oral agreement is enforceable. See Larson v. Nygaard, 148 Minn. 104, 108,. 180 N.W. 1002, 1003 (1921). The Minnesota Uniform Arbitration Act provides that “[a] written agreement to submit any existing controversy to arbitration * * * is valid, enforceable, and irrevocable.” Minn.Stat. § 572.08. There is no conflict between these principles, just as there is no conflict between the holdings of Larson and Park Constr. v. Independent School Dist. No. 32, 209 Minn. 182, 186-87, 296 N.W. 475, 477 (1941) (holding a written agreement to arbitrate valid and enforceable under the common law).
The courts of other states have found no conflict between statutes that declare written arbitration agreements valid and the common law principle that oral agreements to arbitrate are valid. See, e.g., Shaw v. State, 125 Ala. 80, 84, 28 So. 390, 391 (1899); Lilley v. Tuttle, 52 Colo. 121, 127, 117 P. 896, 898 (1911) (citations omitted); Halvorson-Mason Corp. v. Emerick Constr. Co., 304 Or. 407, 412, 745 P.2d 1221, 1224 (1987); Wetzel v. Sullivan, King & Sabom, P.C., 745 S.W.2d 78, 81 (Tex.App.1988) (citations omitted). But see, e.g., Bennett v. Meader, 208 Conn. 352, 359, 545 A.2d 553, 557 (1988). See generally 5 Am.Jur.2d Arbitration and Award § 13, at 530 (1962) (statutes making written agreements prerequisite to statutory arbitration do not invalidate oral arbitration agreements under common law).
Minnesota’s former Arbitration Act included a provision for the preservation of common law arbitration. Minn.Stat. § 572.01 (1953). The majority argues that, because the legislature repealed this act when it adopted the Uniform Arbitration Act, it intended to eliminate common law arbitration. It is likely that the Minnesota legislature would have had no reason to believe that Minnesota courts would construe the Uniform Arbitration Act as an exclusive remedy eliminating common law arbitration.
Before 1957, when Minnesota adopted the Uniform Arbitration Act, several states adopted arbitration statutes which, like the uniform act and unlike Minnesota’s earlier Arbitration Act, made no provision for preservation of common law arbitration. Those statutes were generally construed to allow continued use of common law arbitration. E.g., First Baptist Church (Colored) v. Hall, 246 S.W.2d 464, 465 (Ky.1952); Harwell v. Home Mut. Fire Ins. Co., 228 S.C. 594, 600, 91 S.E.2d 273, 276 (1956); see Sturges & Reckson, Common-Law and Statutory Arbitration: Problems Arising From Their Coexistence, 46 Minn.L.Rev. 819, 827-28 n. 24 (1962). New York courts, in particular, found that the New York Arbitration Act had no effect on the availability of common law arbitration. Jones v. John A. Johnson & Sons, Inc., 129 N.Y.S.2d 479, 481 (N.Y.Sup.Ct.1954) (parties’ agreement did not provide that arbitration *74proceedings be conducted solely under arbitration statutes), affd 283 A.D. 1085, 131 N.Y.S.2d 362 (1954). As the Minnesota Supreme Court has noted, the New York act was the model for the Uniform Arbitration Act. Layne-Minnesota Co. v. Regents of the Univ. of Minn., 266 Minn. 284, 289 n. 12, 123 N.W.2d 371, 375 n. 12 (1963).
Additionally, prior to 1965, when Texas adopted the Uniform Arbitration Act, the Texas arbitration statutes included a provision which preserved the right to common law arbitration. Tex.Rev.Civ.Stat.Ann., Title 10 historical note to art. 238, at 12 (Vernon 1973). That provision was repealed, and the Texas legislature, like the Minnesota legislature, chose not to include a similar provision in its version of the uniform act. In Carpenter v. North River Ins. Co., 436 S.W.2d 549 (Tex.Civ.App.1968), the court stated:
While the present general arbitration statutes do not have language' specifically reserving to the disputants the right to resort to common law arbitration, neither do they have any language purporting to render common law arbitration invalid. * * *
[T]he Legislature in repealing Art. 238 and in not including similar language in the amended arbitration statutes, did not intend to deprive the parties of the common law procedure for arbitrating their existing disputes or accrued causes of action.
Id. at 553. The Minnesota legislature, like the Texas legislature, did not intend to discard common law arbitration when it adopted the Uniform Arbitration Act.
In Layne-Minnesota the court found that “the records of the National Conference of Commissioners on Uniform Laws, and particularly the writings of the chairman of the [special committee] that undertook the drafting of the act” are especially useful for discerning legislative intent for uniform laws. Id. 266 Minn. at 290, 123 N.W.2d at 376. Maynard Pirsig, chair of the committee which drafted the Uniform Arbitration Act, stated:
The act does not extend to oral arbitration agreements as to which the common law principles will continue to apply.
Pirsig, Some Comments on Arbitration Legislation and the Uniform Act, 10 Vanderbilt L.Rev. 685, 691-92 (1957). The records of the National Conference suggest that none of the participants proposed that the uniform act should eliminate common law arbitration, with only one participant mentioning the possibility of any effect on common law arbitration. See Memorandum to Dean E.B. Stason, Professor R.A. Smith, and Professor W.J. Pierce (Aug. 5, 1954), in 1954 Annual Meeting Nat’l Conf. of Commissioners on Uniform State Laws, Unif.Arbitration Act, pt. 13 (Aug. 9-14, 1954).
Moreover, the act itself relies upon the continued availability of common law arbitration. The act expressly states that it applies “to arbitration agreements between employers and employees * * * unless otherwise provided in the agreement.” Minn. Stat. § 572.08. Under the majority’s decision, if employers and employees agree to arbitration, and provide that arbitration shall not be governed by the act, as the act expressly allows, the agreement invalidates itself.- Thus, if an agreement provides that it shall not be enforceable under the uniform act, then there is no common law of arbitration under which the agreement could be enforced, even after arbitrators have completed proceedings and rendered an award. Since the legislature expressly provided for these agreements, it must have intended that they would remain valid and enforceable under common law.
The majority adopts the reasoning used by the Supreme Court of Connecticut in Bennett. In that case the plaintiffs and the defendants’ insurer entered into an oral agreement to arbitrate a claim under the rules of the American Arbitration Association (AAA). The parties agreed on an arbitrator selected by the AAA, and at the conclusion of the hearing the arbitrator, in writing, awarded plaintiffs an amount substantially less than the insurer’s final settlement offer. Bennett, 208 Conn. at 354, 545 A.2d at 554. The supreme court affirmed the trial court vacating the award *75solely on the grounds that the agreement to arbitrate was unwritten, and therefore, did not qualify as a statutory proceeding under the Uniform Arbitration Act. Id. at 364, 545 A.2d at 559.
Pirsig and other commentators have argued that the uniform act should not be construed as eliminating common law arbitration primarily to avoid the result reached in Bennett. As Pirsig has stated:
Of course, if, under an oral agreement, a dispute has in fact been submitted to an arbitrator and he has rendered an award in writing, the award should be sustained even though the original agreement was oral.
Pirsig, The Minnesota Uniform Arbitration Act and the Lincoln Mills Case, 42 Minn.L.Rev. 333, 337 (1958). See Carb, The Need for Uniform Laws of Arbitration, 15 Arb.J. 65, 66 (1960). Adoption of the Bennett decision will cause both courts and arbitrators to waste substantial time and effort.
The majority recognizes that one purpose of the uniform act is “to make uniform the law of those states which enact it.” Minn. Stat. § 572.28 (1988). However, the majority does not follow decisions of other state courts which have found that the Uniform Arbitration Act does not eliminate common law arbitration. See, e.g., Board of Educ. v. Prince George’s County Educators’ Ass’n, 309 Md. 85, 96-98, 522 A.2d 931, 936-37 (1987); Pittsfield Gen. Hosp. v. Markus, 355 Mass. 519, 522-23, 246 N.E.2d 444, 446 (1969); Township of Gaines v. Carlson, Hohloch, Mitchell and Piotrowski, Inc., 79 Mich.App. 523, 528-29, 261 N.W.2d 71, 73-74 (1977) (citation omitted); Daniels Ins. Agency v. Jordan, 99 N.M. 297, 299, 657 P.2d 624, 626 (1982) (where Act conflicts with common law, provisions of Act govern) (citation omitted); Wetzel, 745 S.W.2d at 81. A uniform act will not operate uniformly if state courts ignore consistent precedent from other states. As long as parties to commercial contracts are capable of invoking the protections of the uniform act by so providing in their contracts, the problems for commercial arbitration which the majority foresees will be adequately addressed without eliminating common law arbitration. See Carb, supra p. 75, at 66.
Based on its view of policies regarding commercial arbitration and resolution of disputes, the majority has decided to eliminate common law arbitration. The Minnesota Supreme Court has consistently expressed a policy favoring arbitration. Layne-Minnesota, 266 Minn. at 288 n. 5, 123 N.W.2d at 374-75 n. 5; Zelle v. Chicago & N.W. Ry., 242 Minn. 439, 446, 65 N.W.2d 583, 589 (1954); Larson, 148 Minn. at 108, 180 N.W. at 1003. This court is an “error correcting rather than a legislative or doctrinal court.” Minn.Ct.App.Internal R. 1. .In consideration of the longstanding policy favoring arbitration, a decision eliminating common law arbitration on the basis of the Uniform Arbitration Act should be left to the supreme court.