Court Opinion

ID: 3876087
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:09:03.484167+00
Date Added: 2024-06-11T13:51:43.092467
License: Public Domain

September 14, 1916. The leading opinion, after reciting the foregoing, was delivered by
There are seven exceptions, but appellant reduces his questions to three.
1. "Are the defendants entitled to have the cause transferred to calendar 2 for trial of the equitable issues on said calendar?" This question, I think, should be answered in the affirmative. The rule is well stated in Corpus Juris, vol. V, p. 192, et seq.:
"In an action on an award defendant may, of course, avail himself of any defense apparent on the face of the award at common law. Matters extrinsic of the award, such as fraud, mistake, or partiality in the arbitration, cannot be set up in defense to an action on the award. Defendant's redress in such cases is a resort to a Court of equity."
Of course, under the present practice, the result would be to transfer to calendar 2 for trial.
If the reply had pleaded fraud, then, of course, under the well settled rule in this State, the plaintiff could have relied upon the petition that the award was a nullity, and proved fraud without pleading it. But the reply did not set up fraud. It set up partiality on the part of the arbitrator and misconduct on the part of an agent of the defendant and the arbitrators. The difference between fraud and partiality is very apparent. When an award by arbitration is pleaded in the answer, the defendant knows that he has pleaded a complete defense, but that the award may be attacked for fraud. The defendant is held to know what he has done, and is held to be prepared to meet that attack. Here the attack is in part upon the conduct of the appraisers. A man may be held to be prepared to defend his own conduct, but not the conduct of another. In this particular case it is alleged that the agent knew of and participated in the conduct complained of, but we are stating general rules, and we have stated it correctly. The plaintiff set up a purely legal cause of action. The defendant set up a bar at law. To that point there was only a question of law; when the plaintiff replied, the issue was changed. The reply practically *Page 369 
changed the action into an action to set aside an award of arbitrators for partiality and misconduct. The only issue was an equitable issue to be tried in chancery. There may be both legal and equitable issues in a case. Sometimes an issue is common to both. A purely legal issue, however, must be tried on the law side of the Court and a purely equitable issue in equity. Sometimes the settlement of one issue eliminates the other. For instance, a plaintiff brings an action for partition. That is an equitable action. The defendant sets up title in himself to the whole land. That raises a legal issue. It is manifest that the first issue to be determined is the legal issue of defendant's title to the whole land. If the plaintiff prevails, the case then goes to the equity side of the Court for partition. If the defendant prevails, that ends the case; for there is nothing to partition. In the case at bar, the question is, shall this award be set aside for partiality and misconduct? and that issue is in equity. In Adams' Equity, secs. 192, 193, we find:
"In order to resist the enforcement of the award, it is necessary that its validity be impeached. * * * If these objections (fraud, partiality, uncertainty, failure to decide completely, etc.) appear on the face of the award, they invalidate it and preclude its enforcement at law; and, if there be actual fraud, it may be pleaded (in this State proven without pleading) in avoidance at law. If there be a mere miscarriage, not apparent on the face of the award, it cannot be pleaded in avoidance at law, but must be made available by an independent application to set aside the award. And where the submission rests on mere agreement, and not a rule of any Court, the jurisdiction for this purpose is exclusively in equity. If the submission is by rule at nisi prius, the jurisdiction is concurrent in law and equity."
The submission was under the policy of insurance, i. e., "mere agreement." The jurisdiction was, therefore, according to Adams, exclusively in equity. Adams is high authority, and doubtless states the old rule. The old rule is modified *Page 370 
in this State as to fraud, but this is not fraud, but partiality and misconduct.
It is true that this is not an arbitration under the statute, and the statute is not binding, but certainly no great harm can be done by conforming the practice as near as may be to the statute. In statutory arbitration, there is an appeal to the Circuit Judge, who tries the appeal "without the intervention of a jury." The appeal in statutory arbitration is, in effect, a proceeding to set aside the award, and the mode of trial in the Circuit Court is the mode of trial in the Court of equity, i. e., without the intervention of a jury.
2. Does plaintiff's reply to defendant's plea in abatement state facts sufficient to constitute a defense to said plea; that is, do the facts alleged constitute a waiver of the provisions of the policy involved? In discussion of this question, appellant explains that it refers to the agreement not to commence suit within 60 days of the award. With this explanation, this question must also be answered in the affirmative. Appellant admits that a denial of any liability is a waiver of the 60 days, and no good reason has been shown (we know none) why a denial of partial liability should not have the same effect.
3. Does the reply of plaintiff to defendant's defense, setting up the award, allege facts which, if proven, would invalidate the award? Again the answer is in the affirmative:
"That two appraisers were appointed, who were selected one by the plaintiffs and the other by defendant, for the purpose of making an appraisal as provided in said contract, and which two appraisers so appointed subsequently selected an umpire, but plaintiffs deny that their finding was binding upon them, for the reason that the representative of the defendant was not a disinterested party, as provided in said contract, and acted entirely under the control and domination of the adjuster sent by the defendant to settle the loss, and even while the said arbitrators, to wit, the representative *Page 371 
of plaintiffs and the representative of defendant, were attempting to adjust the loss, they were approached by the adjuster of the said defendant and informed that if they agreed to more than a specified amount, the same would not be paid."
It needs no citation of authority to show that the partiality of the appraiser is a good defense against the appraisement.
It is the opinion of the majority of the Court that the judgment should be affirmed; and it is so ordered.