Court Opinion

ID: 8801751
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:34:36.755135+00
Date Added: 2024-06-11T17:03:55.811513
License: Public Domain

Mr. Justice Brown delivered the opinion of the court. The view that we take of the issues involved in this appeal renders unnecessary any adjudication by us on what under the state of facts shown by the evidence in the cause were the legal rights of E. B. Baldwin and Edward Stone as against each other on the dissolution of their copartnership, and before they entered into an agreement for an arbitration. As to Mrs. Peters and Mrs. Barnes, there are reasons, independent both of the personal claims and counter-claims of Baldwin and Stone, and of the arbitration in which those claims were adjudicated, quite sufficient to justify the decree of the court below. Whatever the evidence may be claimed to show concerning the legal pecuniary relations of Baldwin to Stone and to the partnership, it is clear to us that it shows no such surreptitious, illegal or unauthorized use by Baldwin of the partnership funds of Baldwin & Stone as would in any event give to Stone any lien on the property belonging to Mrs. Peters and Mrs. Barnes on the ground that such funds had been invested therein. The only withdrawals from the funds of the firm which were connected with this property seem to have been made from its income, and to have been made in a manner entirely open and above board. They have been counterbalanced by equal drafts by, or by payments to, the other partner, and seem to us to be no more illegal, irregular or lien producing, because" devoted by Baldwin to the improvement of Mrs. Baldwin’s property for a dwelling-house for himself and wife and children, than if they were made for any other living expense of his family. As is said in Bates on Partnership, section 545: “ If one partner, in fraud of- his copartner’s rights, abstracts funds and invests them in property in his own name or in that of his wife or of a third person, or uses them to- pay off incumbrances upon his own property or that of his wife, the defrauded partners can follow the funds. But it seems that there must be some element of fraud in the appropriation— thus mere overdrafts give no' right to proceed against the separate estate. Thus, where a partner drew out money and expended it on his wife’s land, there was held to be no lien for it unless the taking was surreptitious or in bad faith. Sharp v. Hibbins, 42 N. J. Eq. 543.” The case thus cited by Bates will be found on examination to be entirely in point. Moreover, we think that the Statute of Limitations and laches are valid defenses to this bill so far as these defendants, Peters and Barnes, are concerned, according to any' theory of the cause by which any funds going into the house in question could be said to be assets of the firm. Whether or not any limitation would begin to run in favor of Baldwin before the dissolution, we can see no reason why it should not begin to run immediately upon the diversion in favor of a defendant not a party to the partnership, into whose property the partnership funds improperly go, with the knowledge, although without the consent, of injured partners. We wdll not take the time to discuss the question argued at length in the briefs as to the competencjq as against the defendants Peters and Barnes, of the testimony offered concerning the diversion of partnership funds into Mrs. Baldwin’s house. For if there be any valid claim as against the property of these defendants which can be enforced in this suit, it depends on the existence of the claim in favor of the complainant sought to be enforced in this same suit against the defendant Baldwin. We agree with the chancellor below that there is no such claim, and this position renders superfluous further discussion of other reasons justifying the dismissal of this bill against Mrs. Peters and Mrs. Barnes. The award of the arbitrators was made, as it appears to us, in good faith, without fraud or misconduct. So made, it was binding and effective, even though based on a mistaken view of the facts or of the law or both. In Merritt v. Merritt, 11 Ill. 567, the Supreme Court said: “If they” (i. e. arbitrators) “have acted in good faith, the award is conclusive upon the parties, and neither party is permitted to avoid it by showing that the arbitrators erred in their judgment either respecting the law or the facts of the case. Whether their decision was correct or erroneous is not the proper subject of inquiry.” To the same effect are: Root v. Renwick, 15 Ill. 461; Sherfy v. Graham, 72 Ill. 158; Schmidt v. Glade, 126 Ill. 485, and other cases in Illinois. Adams v. Ringo, 70 Ky. 211, Brush v. Fisher, 70 Mich. 469, and Burchell v. Marsh, 17 Howard, 344, may be cited among cases in other jurisdictions to the same purport. In the American and English Encyclopaedia of Law (2nd ed.), vol. 2, page 778, the weight of authority in the United States is said to be as it has been stated in Illinois, and on that and subsequent pages are grouped many authorities which sustain the rule and define and limit its exceptions. Among these exceptions it may be conceded would be a case where the mistake of law- or fact was the result of-fraud on the part of either party to the arbitration, or gross misconduct on the part of the arbitrators. It is insisted by appellant that these conditions exist in this case. We see no reason for so holding. One ground relied on by appellant for this charge is that a letter written by the counsel for one of the parties to that party, and expressing an opinion of the law, was shown to the arbitrators openly and in the presence of the parties. There is nothing to indicate that this letter was intended to deceive, or stated anything but the actual opinion of t-he writer. The argument that it contained a double meaning or was evasive, or was intended to be so, is not sustained to our minds. Conceding that it was mistaken as to the rule of law, its presentation would not be fraudulent or improper. It was at best but an argument, and it does not appear from the evidence that the decision would have been different without it. The testimony of Hr. Reeme, on the contrary, was that the arbitrators did not act on the letter altogether; that on the contrary they regarded their decision “ as an honest decision between man and man,” because Mr. Baldwin “ had due him as much or more for the business than Mr. Stone had.” Mor does Mr. Gray’s testimony bear out any different view. The matter cannot be said to have been the taking of legal counsel by the arbitrators, but it would have been competent and not misconduct for them to have taken such counsel. Russell on Awards, pages 208, 211 et seq.; Goodman v. Sayers, 2 J. & W. 249; American and Eng. Ency. of Law, 2nd ed., vol. 2, p. 688; Burchell v. Marsh, 17 How. 344, and cases there cited; Bangor Savings Bank v. Ins. Co., 85 Me. 68. We do not think that Moshier v. Shear, 102 Ill. 169, or the other cases cited in appellant’s argument, properly considered, decide anything contrary to this proposition. Certainly, in view of the law as thus stated, the testimony of Mr. Beeme, in connection with the Oliver letter, “I got the same opinion from some one else, too,” cannot be deemed sufficient to overthrow the effect of the award. It is argued also by the appellees that the acquiescence of appellant in the award after it was made, is by itself sufficient to prevent a successful attack on it in this cause. Acquiescence by Stone is certainly shown by the evidence, and we are disposed to think from an examination of the authorities that the point of appellees in this regard is well made. Moreover, if the testimony of Mr. Baldwin is given credence, that the next day after the award, and because the award was considered a final settlement, the account books of the firm were destroyed, we think the matter passes from a mere acquiescence into an estoppel. It was the allegation of the bill in this case that the arbitrators went beyond the scope of their duties and decided matters not submitted to them. If this is to be considered as still urged by appellant, it is sufficient to say that the evidence amply sustains the statement of Mr. Baldwin that the question submitted to the arbitrators was the final settlement of the affairs of Baldwin & Stone. The decree of the Superior Court is affirmed. Affirmed.