Court Opinion

ID: 8742796
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:55:09.767245+00
Date Added: 2024-06-11T17:00:29.982560
License: Public Domain

After the foregoing statement of the case, GROSSCUP, Circuit Judge, delivered the opinion of the court, as follows:
As we construe the contract, it imposed upon the United States Company the duty of paying the Allis Company the stipulated sum when, by the completion of the work provided for in the agreement, the dryers were made steam-tight and mechanically operative. Acceptance of the dryers by the United States Company, or. submission to arbitration, though provided for in the contract, are stipulated methods only of-ascertaining the basic fact, namely^ whether-the *885dryers are steam-tight and mechanically operative. The right of the Allis Company to receive, and the obligation of the United States Company to pay, the stipulated price, arises, not from acceptance or arbitration, but from the Allis Company’s having performed its contract obligation in respect to the dryers. Nor can this right to receive payment be defeated, or this obligation to pay be evaded, by an unjust refusal of the United States Company to accept the work done, or its fraudulent prevention of an award under arbitration. To so construe the contract would be to put the method above the end, and to make available to the United States Company the power to nullify the contract, by taking advantage of its own wrong. Doubtless the methods provided for in the contract — determinative of whether the contract has been fulfilled — must be primarily followed; but if these methods are prevented or made unavailable by the fraud of the party to be charged, it does not follow that the hands of the courts are tied, so that they may not, as in other cases, proceed to enforce the contract, and do justice between the parties. The case under review is, in this element of prevention of arbitration by fraud, different from Milnes v. Gery, 14 Ves. 400; Scott v. Avery, 5 H. L. Cas. 811; Babbage v. Coulburn, 9 Q. B. Div. 235; President, etc., of Delaware & H. Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 250. In none of these cases is it ruled that a recovery could be permanently prevented, according to the usual method of ascertaining facts and making up a judgment in courts, should the methods devised in the contract be nullified by the fraud of the party to be charged. We are clear in our opinion that, in the absence of acceptance, and the failure of an award, brought about by the fraud of the United States Company, the court below properly proceeded to ascertain, by verdict of the jury, whether the contract had been actually performed, and to give judgment accordingly. This is simply to hold that while parties to a contract, such as the one under review, may rightfully insist upon arbitration, they can not, having obtained it, throw it away, and then insist upon the ensuing vacuum as an unchangeable legal right.
There was sufficient evidence to go to the jury, tending to show acceptance, and also sufficient evidence to show fraudulent prevention of arbitration by the United States Company. All things considered, the weight of the evidence, in our opinon, justifies the verdict returned. We are not satisfied that the court was correct in charging that acceptance alone — without any finding that arbitration was fraudulently prevented — entitled the Allis Company to a verdict. Probably if the question were raised we would hold that the resort to arbitration suspended the rights growing out of acceptance, and, had an award been fairly reached, superseded them; but when the arbitration was brought to naught by the fraud of the United States Company, it is clear that there was an immediate restoration of the parties to the previous status, so that acceptance again becomes determinative, as if no arbitration proceedings had been entered upon. Any other conclusion would'give to-the United States Company the advantage of its own fraud. On the whole, the possible error of the court referred to is unimportant; and as no exception *886was taken at the time to this feature of the charge, and no requests were offered which would have obviated it, we are of the opinion that it is not a ground for reversal.
In view of the construction we have placed upon the contract, there is no ground for the contention that there can be no recovery under the common counts. The gist of the action is the contract price of the dryers. This, of course, is triable under the common counts. Acceptance or award are incidental features only of the contract, and though potent in given cases to defeat a recovery, do not furnish the basis of the action.
The judgment will be affirmed.