Court Opinion

ID: 9852792
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:36:49.972225+00
Date Added: 2024-06-11T09:22:34.520489
License: Public Domain

Neely, Justice,

concurring:

I must concur because the majority has not clearly abolished archaic rules regarding arbitration which are passé and ineffective. The majority opinion traces the history of arbitration and reaches the correct result, but in doing so obfuscates rather than overrules a century’s collected confusion. The majority opinion does not clearly further a policy of conflict resolution, although I believe that that is the intent of the decision.
*129Arbitration as a means of conflict resolution appeared in West Virginia case law as early as 1867. Boring v. Boring, 2 W. Va. 297 (1867). The common law favored arbitration as an effective procedure for the resolution of controversies because arbitration was simpler, faster, and cheaper than courts. Mathews v. Miller, 25 W. Va. 817 (1885). At common law,1 however, under a principle first enunciated by Lord Coke in 1609,2 either party could revoke his agreement to arbitrate at any time before the award. The oft-stated justification for this principle, namely that parties cannot by agreement oust the courts of their jurisdiction, was not established until 1746.3 Anyone sensitive to the judicial decision making process must infer that this doctrine arose through hard cases making bad law.
The 1870 Code of West Virginia contained a statutory provision for arbitration which is substantially the same statute which we find in our present Code. The 1870 Code read at Chapter 108 as follows:
“1. Persons desiring to end any controversy, whether there be a suit pending therefore or not, may submit the same to arbitration, and agree that such submission may be entered of record in any court. Upon proof of such agreement out of court, or by consent of the parties given in court, in person or by counsel, it shall be entered in the proceedings of such court; and thereupon a rule shall be made in pursuance of such agreement.
“2. No such submission, entered, or agreed to be entered, of record in any court, shall be revo*130cable by any party to such submission, without the leave of such court; and such court may, from time to time, enlarge the term within which an award is required to be made.”
This statute was construed by the courts to be supplementary to and not exclusive of common law arbitration. The language “persons desiring to end any controversy” was construed to mean that only existing controversies could be submitted to arbitration under the statute and that parties could not make provision for the arbitration of future conflicts.4
Under common law arbitration which permitted parties to withdraw from arbitration any time before an award, the majority cites the exception found in Condon v. South Side Railroad Co., 55 Va. (14 Gratt.) 302 (1858) which allowed that an agreement to arbitrate future controversies may not be revoked if it has been made a condition precedent to a right of action in the courts. The Condon opinion, which in 1858 properly conceived the role of courts in reviewing arbitration questions, tacitly recognizes that a court cannot adjudicate a controversy on its own motion; before it can act there must be proper application invoking the judicial power of the court to litigate the matter at issue. The condition precedent exception, then stems from the idea that until a cause of action becomes complete — that is to say, until an issue becomes ripe for review — there is no case or controversy to be resolved. The parties agree in their contract that they will not invoke the jurisdiction of the courts until such time as the arbitrators have ruled on the controversy. The parties are not ousting the courts of their jurisdiction, but are merely postponing the time *131when they may take the matter to the courts. Therefore, a court should withhold its jurisdiction until such time as the parties have agreed to invoke that jurisdiction.Under this exception the question remains, however, whether such arbitration is but a ceremony, or whether the court will summarily enter an order enforcing the arbitrator’s award. This is by far the most important issue in the entire field of arbitration, and the majority opinion has squarely avoided it.
As the majority opinion points out, the exception involving arbitration as a condition precedent was applied with increasing frequency as the 20th Century progressed. Court dockets were becoming overburdened and the courts began to enforce arbitration agreements as binding. As recently as 1952, this Court expressed its approval of contractual arbitration provisions by upholding an agreement to arbitrate future disputes in Pettus v. Olga Coal Co., 137 W. Va. 492, 72 S.E.2d 881 (1952):
“A contract providing a procedure for arbitration of disputes, and providing that ‘all claims, demands or actions growing therefrom or involved therein shall be by the contracting parties settled and determined exclusively by the machinery provided in the’ contract, creates a condition precedent to any right of action or suit arising under the contract.” Id. at Syllabus point 3.
While Pettus is less than a clarion call to binding and final arbitration, it does demonstrate the Court’s interest in enforcing arbitration agreements made before a controversy arises, as the court permitted the creation of a condition precedent by implication. Similarly in the instant case, the present Court re-emphasizes the interest in enforcing arbitration agreements by interpreting the language of the contract sub judice as creating a condition precedent to a right of action. However, what exactly is the nature of this so-called right of action?
*132The clear direction of this Court as well as the federal courts5 over this whole century has been toward favoring binding arbitration. If we recognize the advantages of binding arbitration, why do we not overrule all the outdated prior cases6 and say clearly that parties who undertake to arbitrate must do so, and further that the judgment of the arbitrator cannot be challenged in the courts except for fraud. California has held that parties who voluntarily agree in writing to arbitrate should be bound by the statute and should not be permitted to escape from their contract through the portals of the common law. Crofoot v. Blair Holding Corp., 119 Cal. App.2d 156, 260 P.2d 156 (1953).
Every lawyer understands perfectly that a law suit is a very poor way to resolve conflicts. Regardless of who emerges victorious from the courtroom, everyone loses. The time, effort, and expense of a law suit drains both parties. The trauma can be lessened considerably, however, if arbitration is used to settle the same dispute. As early as 1925, statistics showed that arbitration was inexpensive, convenient for the parties, expeditious, simple to administer, tended to preserve the good will between the disputants, and assured such privacy as the parties desired.7 Existing common law doctrines circumscribing arbitration have outlived any imagined usefulness in the last century. Unfortunately, because the common law principles have existed for so long, courts *133are reticent to extinguish them in favor of a more sensible and precisely outlined system.
Consequently, in West Virginia, I would overrule the following cases insofar as they promote and protect the common law arbitration doctrine: Pendleton v. Barton, 4 W. Va. 496 (1871); Bean v. Bean, 25 W. Va. 604 (1885); Kinney v. Baltimore & Ohio Employees’ Relief Ass’n., 35 W. Va. 385, 14 S.E. 8 (1891); Riley v. Jarvis, 43 W. Va. 43, 26 S.E. 366 (1896); Turner v. Stewart, 51 W. Va. 483, 41 S.E. 924 (1902); Lawson v. Williamson Coal & Coke Co., 61 W. Va. 669, 57 S.E. 258 (1907); Flavelle v. Red Jacket Consol. Coal & Coke Co., 82 W. Va. 295, 96 S.E. 600 (1918); Kohlsaat v. Main Island Creek Coal Co., 90 W. Va. 656, 112 S.E. 213 (1922); and Morrison Dept. Store Co. v. Lewis, 96 W. Va. 277, 122 S.E. 747 (1924).
Parties should be free to contract for any method of resolving existing or potential conflicts they see fit — and such agreements should be firmly binding and strictly enforced. The only exception which I could foresee would involve contracts of adhesion where there has been a gross disparity of bargaining power between the parties, exclusively as a result of the monopolistic or oligopolistic position of one of the parties. Furthermore, unless there be a clear showing of manifest fraud, corruption, or clerical error, resort to the courts after submission to arbitration should meet with summary judgment in favor of the award. I hasten to add that fraud and corruption are far different animals from procedural irregularity.
The federal courts have instituted such a system of enforcing arbitration and recognize its advantages. In Textile Workers Union v. Lincoln Mills, 353 U.S. 448 1 L.Ed.2d 972, 77S.Ct. 912 (1957), the United States Supreme Court held that federal courts must grant specific performance of collective bargaining agreements to arbitrate. Three years later in the landmark Steelworkers trilogy of 1960, the Supreme Court indicated that courts would be closed to the challenge of arbitration awards in most cases. The Court limited the courts’ role “to ascer*134taining whether the party seeking arbitration is making a claim which on its face is governed by the contract,”8 created a strong presumption favoring arbitration in contract disputes,9 and, finally, held that if the arbitrator’s award is based on the relevant agreement, the courts must enforce the agreement and not consider the case de novo, regardless of whether the court agrees with the award or even if it finds the award is ambiguous.10
Procedures for arbitration can be spelled out in the contract. When such procedures are not spelled out fully the arbitrators should be free to use any procedure they see fit. The scope of agreements to arbitrate should be liberally construed. The parties contract for an arbitrator, not a procedure. Due process does not necessarily mean Anglo-American legal rules of evidence, nor winner-take-all substantive rules. Furthermore, once the parties have agreed to arbitrate, they ought not to be allowed to re-litigate the same issues in the courts. The system of review of arbitration awards should be set up to avoid delay caused by the losing party in arbitration challenging the award of the arbitrators, especially on mere procedural grounds The strict rules governing an action at law have never been applicable to an arbitration proceeding, Boomer Coal & Coke Co. v. Osenton, 101 W. Va. 683, 133 S.E. 381 (1926). The parties should know this when they agree to arbitrate, and they should not be heard later to complain on an issue of procedure. Arbitration can, and almost inevitably does, decide the substance of the controversy with substantial justice regardless of procedure.
*135The argument is often heard that parties frequently are “forced” into arbitration agreements because of unequal bargaining power. Almost all contracts involve unequal bargaining power. The law of contracts of adhesion is rapidly developing and is based on economic realities concerning monopolies and oligopolies. Aside from the exceptions carved out in the contract of adhesion exception, in the United States men are still free to contract and must be bound by their own agreements rather than the conscience of courts. In business affairs it is predictability above all else which is required. It is not the function of the courts to compensate for all the natural and acquired differences among men. Laborers have unions to protect them, corporations have high-priced counsel, professionals should know enough to retain counsel, and laymen in their capacity as mere consumers rarely are engaged in situations calling for arbitration.
The cost of arbitration is considerably less than actions at law, primarily because of the arbitrator’s ability to use what in the courts would be called “judicial notice.” Judges simply cannot be familiar with the intricacies of every business that comes before them in law suits. Consequently, in order to inform the judge, and the jury, regarding the dispute between parties, a great deal more time is required to put on expert witnesses and general witnesses to testify to mundane facts that must be established before the trier of fact can make a reasoned decision. In an arbitration proceeding, each of the parties selects his own arbitrator, and those selected usually are people familiar with the type of dispute to be presented. That is to say, contractors select contractors, engineers select engineers, laborers select union people, and professionals select other people in their profession. Arbitrators can take “judicial notice” of so many more facts than a court can, such as reasonable standards in the trade or profession, local custom, and trade usage. Consequently, this information need not be presented at the arbitration hearing ad nauseum by deposition after deposition, witness after witness, testimony after testi*136mony, and cross-examination after cross-examination, all of which unnecessarily increases the time and expense required in court to come to a reasoned resolution and effect substantial justice.
Implicitly one of the things for which contracting parties covenant in providing for arbitration is finality; that is to say the elimination of the expense and annoyance of appeals. Nothing brings business to a halt or precipitates bankruptcy upon the under-capitalized like litigation. Litigation is always a curse; it is never a blessing except to the iniquitous and the law’s delay will always exert pressure upon parties who are both needy and righteous to accept far less than their just entitlement.
It should be self-evident to anyone who has even practiced the least bit of law that common law rules with regard to damages, legal defenses, and evidence do not necessarily promote justice in any individual case — they are merely more just in more cases than any other rules yet devised which must be broadly applied. Most American households are reasonably well run and decision making within the family is reasonably just without anyone ever having heard of the common law. Compromise, consideration for one’s fellow man, gentlemanly conduct, and a firm desire to minimize loss for both parties in a dispute are the real qualities which make a reasonable business community. Reluctantly I confess that these values are better served through a wise arbitration than in a court of law.

For a very interesting article on the historical origins of arbitration, see, E. Wolaver, “The Historical Background of Commercial Arbitration,” 83 U. of Pa. L. Rev. 132 (1934).

Vynoir’s Case, 4 Coke 299 (1609); the English have all but erased this precedent, but its influence lingers strongly in this Country. See “The Paradox in Arbitration Law: Compulsion as Applied to a Voluntary Proceeding,” 46 Harv. L. Rev. 1258 (1933).

Kill v. Hollister, 1 Wilson 129 (K.B. 1746).

“A submission to arbitration of an existing controversy entered in court, or by agreement out of court providing that the award shall be entered as the judgment or decree of the court, is not revocable, except by the court, and will bar a suit upon the demand submitted. But a provision in a contract that any future controversy under it shall be arbitrated will not prevent an action.” Turner v. Stewart, 51 W. Va. 493, 41 S.E. 924 (1902).

The United States Supreme Court recently held that injunctive relief is available under §301 of the Labor-Management Relations Act, 29 U.S.C. §185(a) [1970] against strikes in violation of a no-strike clause where the grievance which gave rise to the strike is arbitrable under the agreement. Boys Market, Inc. v. Retail Clerks, Local 770, 398 U.S. 235 (1970).

“The common law of England is in force in this State only so far as it is in harmony with its institutions, and its principles applicable to the state of the country and the condition of society.” Powell v. Sims, 5 W. Va. 1 (1871), at Syl. Pt. 1.

See “Commercial Arbitration or Court Application of Common Law Rules of Marketing,” 34 Yale L. J. 480 (1925).

United Steelworkers of America v. American Manufacturing Co., 363 U.S. 564 (1960).

United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960).

United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960).