Court Opinion

ID: 6973052
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:06:04.392669+00
Date Added: 2024-06-11T16:08:52.368249
License: Public Domain

Mr. Chief Justice Scott delivered the opinion of the court: Stone and Baldwin entered into a co-partnership in 1869 and engaged in the commission business on the Chicago Board of Trade. They were to contribute an equal amount to the capital and were to share equally in the gains and losses. Stone’s contribution on account of the capital of the firm was $9289.15; Baldwin’s was $3163.36. This difference was never adjusted. In 1875 the firm failed. The country creditors were paid in full, but a settlement with the city creditors was made at 33 x/z cents on the dollar. Business was resumed without any further contributions to the capital of the firm and continued until the dissolution, on May 1, 1904. At that time Stone claimed that he should be reimbursed by Baldwin in the amount which he had paid to the capital in excess of one-half of the aggregate capital, and that he should have an allowance from Baldwin for interest on such excess from the time of the organization of the firm. Baldwin contended that the failure in 1875 wiped out the assets of the firm and that the capital was entirely lost, and that when, they resumed business Stone no longer had a valid claim against either Baldwin or the firm on account of his payment to capital or on account of interest thereon. There was also a question about two other items. A loss of $257 had been charged to Baldwin personally, and he claimed that it should be regarded as a firm loss and one-half thereof charged to Stone; and that there was an item of $1185 that should be charged to Stone’s account that had not been so charged or that had not been properly brought forward on the ledger. The partners selected Messrs. Reeme and Gray as arbitrators, and in case the two could not agree, they, the arbitrators, were to select an umpire. The finding of the arbitrators or the umpire -was to be final, conclusive and binding upon the partners in reference to the matters submitted for decision. The contract of arbitration was oral. Stone says that the only question submitted was the question as to whether or not Baldwin should pay interest on that portion of the capital which Stone had contributed in excess of one-half of the capital, while Baldwin testifies that all matters in dispute were submitted. We think the preponderance of the evidence is with Baldwin on this subject. The arbitrators, to whom the contract was stated, swear that all things in- controversy between the partners were submitted. All questions which we have mentioned in the foregoing portion of the opinion were considered, Stone taking part in the hearing. The arbitrators made a written award, finding that neither Baldwin nor the firm owed Stone anything on account of capital or interest thereon, and that the $1185 and one-half of the $257 Should be charged to Stone. The arbitrators, Stone and Baldwin were together when the decision was made known to the partners. Stone then said, “That settles it;” and on the next day said to Baldwin that as the matter was settled they would have no further use for the books and papers of the firm and might as well destroy them. Baldwin assented, and the suggestion was acted upon. It is urged that the arbitrators were guilty of such misconduct that their award should be disregarded. At the first meeting of the arbitrators, which was held at the office of the firm, after the parties had made their statements, there being none present except the arbitrators and the partners, Baldwin produced a letter addressed to himself, written by John Milton Oliver, then and now one of his solicitors, which reads as follows: “Chicago, April ip, ipoq. “Brastus B. Baldwin, Esq., 501, ióp Jackson blvd., Chicago: “Dear Sir—From an examination of the authorities we advise you as follows: In case of a partnership where there is no specific agreement to allow interest on the capital contributed by the various partners, no interest can be charged by one partner as against another. And where a partnership exists for a long series of years and no interest has been credited to the capital account of the partners or insisted upon by any partner, although at the inception of the partnership there may have been an agreement to allow interest on contributed capital. “We likewise advise you that in case of a partnership where originally one partner contributed more than another partner to the capital and thereafter the firm makes a compromise settlement with its creditors, alleging its inability to pay a hundred cents on the dollar, and the creditors accept a compromise for less than a hundred cents, and the firm continues in business without contribution of capital by either partner, the partners thereafter are equal partners in all the assets of the partnership. “Yours respectfully, John Milton Oliver.” The propositions contained in this document are abstract, ambiguous and misleading. That portion of the first paragraph beginning 'with the word “and” is meaningless, and the. last paragraph of the letter, when applied to the facts of the case before us, would undoubtedly be understood by a layman as an opinion holding that after the failure Baldwin was not liable to Stone in any amount on account of capital. It was, however, submitted to the arbitrators as a communication from Baldwin’s attorney. Stone knew of it and made no attempt to meet it. Either, party had a right to be represented before the arbitrators by counsel. If Mr. Oliver had been present he would have had the right, had he seen fit to do so, to make the statement verbally that was contained in the letter, and we are not able to perceive that such statement, whether oral or written, when received and considered by the arbitrators in the presence of both the parties, would constitute misconduct on their part. When Reeme, one of the arbitrators, was testifying, he said that the arbitrators wanted a legal opinion as to what the condition of the partners would be if the original capital was lost at the time of the failure, and that they found such an opinion in the letter above set out, and then the witness continued, “I got the same opinion from someone else, too.” It is said that it is thus shown that the arbitrator obtained an opinion from some person whom he consulted in the absence of Stone, and that the award is thereby vitiated. There is no evidence that any such opinion was obtained .from any person other than Mr. Oliver, except the statement above quoted from Reeme’s testimony. This testimony does not' furnish legal basis for an attack upon the finding, as the testimony of an arbitrator showing that he alone has been guilty of misconduct will not be received to impeach an award. (Claycomb v. Butler, 36 Ill. 100; Seaton v. Kendall, 171 id. 410.) There is no other proof tending to show improper acts of Gray or Reeme. The view of the arbitrators was, that inasmuch as the assets of the firm were entirely consumed at the time of the failure, in 1875, in paying the debts, both partners had lost all the capital they had invested, and there was no liability from Baldwin to Stone by reason of the fact that the former had contributed a smaller amount to the capital than the latter. While this view of the law was plainly wrong, still the parties selected their own tribunal, and that tribunal having acted, the courts will afford no relief, even though the arbitrators have mistaken the law, where it does not appear that they have been guilty of fraud, partiality or misconduct. Pulliam v. Pensoneau, 33 Ill. 375; Sherfy v. Graham, 72 id. 158; White Star Mining Co. v. Hultberg, 220 id. 578. The judgment of the Appellate Court will be affirmed. Judgment affirmed.