Court Opinion

ID: 7037534
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:47:02.047087+00
Date Added: 2024-06-11T16:11:12.902727
License: Public Domain

Elliott, J.,
dissenting. — Rice sued Loomis on an account for work and labor, &c. Loomis, in his answer, set up the agreement of submission and award, set out in the opinion of Frazer, C. J., in bar of the action, and alleged that the account now sued on was presented by Rice before said arbitrators and settled in said award; to which Rice replied, in substance, that he was induced to enter into the agreement of submission and the arbitration referred to by the false and fraudulent representation of C. C. Loomis that Francis B. Loomis, who, it is alleged, was solvent and possessed of large means, was a member of the firm of Loomis ft Go., the name in which the note deposited with the arbitrators to secure any sum that might be awarded in favor of said Rice was executed, when, in truth, said alleged firm consisted of G. C. Loomis alone, who was wholly insolvent, and that had he known that Francis B. Loomis was not a member of said firm, he would not have entered into said agreement or arbitration. It further denies that Rice was indebted in any sum whatever to either G. G. Loomis or Francis B. Loomis. A demurrer was sustained to the replication. The correctness of that ruling is the question here.
It is well settled that a valid award extinguishes the original demand or cause of action, and is a bar to any subsequent suit on such demand. This is not controverted. An award, like a judgment or decree in a court of record, is conclusive upon the parties in any subsequent contest in*410volving the same matter; and it has been repeatedly held by this court that a judgment of a court having jurisdiction of the parties and of the subject of the action is conclusive upon the parties thereto and their privies, and cannot be. impeached, even for fraud, in a collateral suit where it may come in question. The same rule is apjfiicable to an award, which is a final adj udication and settlement of the matters in controversy between the parties, by a tribunal chosen by themselves, and to which they have, by agreement, voluntarily submitted.
Hough v. Beard, 8 Blackf. 158, was a suit upon an award, and on the trial the defendant, to impeach the award, offered to prove certain misconduct of the arbitrators in making it. It was held that in such a suit the misconduct of the arbitrators in making the award was no defense, for the reason that the award could only be impeached for the misconduct of the arbitrators by a suit in chancery.
In the case of The Whitewater Valley Canal Co. v. Henderson, 3 Ind. 3, Henderson sued on an award made in his favor for the damages resulting to him by the construction of the canal over his land. A plea was filed alleging that one Jenks, the former owner of the land, and from whom Henderson derived title, had executed a release to the'State for the right of way for said canal over said land, and of all damages thereto, which release had been filed in the office of the Secretary of State, as required by law; that said Henderson had fraudulently concealed from the canal company the execution and existence of said release until long after the date of said award, said company having no knowledge that the same had ever been executed. In the decision of the question as to the sufficiency of the plea to bar the action, it was said by Smith, J., in reference to the averment that Henderson had fraudulently concealed from the defendant the fact of the execution and existence of the release, that “ it is unnecessary now to decide whether .this averment adds anything to the sufficiency ,of the plea, though we are of opinion that it does not. It has been *411heretofore decided by this court, that, in an action on a judgment, a plea that the judgment was obtained by fraud is insufficient ; Hutton v. Denton, 2 Ind. 644; and, also, that in an action on an award, the award cannot be impeached for misconduct of the arbitrators. The proper remedy, in either case, is by bill in chancery to have the judgment or award set aside. Hough v. Beard, 8 Blackf. 158; Elliott v. Adams, id. 103.”
The doctrine on this subject is fully, and, in my judgment, correctly stated in note 408, in 2 Phil. Ev. 400, where, among other things, it is said that “an award of arbitrators decides the rights of the parties as effectually as a judgment at law or a decree in chancery, and is as binding, until regularly set aside, or its validity questioned in a proper manner. "When not made under a rule of court, it may be annulled by a decree in chancery, on a bill showing corrupt practices of the arbitrators or parties, or the mistake of the former, or any accident or proper ground for a new trial attending the case of the losing party. But he can never overleap it, treating it as void, and litigate his right anew, by commencing, an action as if it had not been made, and in a collateral manner attack its validity. Bulkley v Stewart, 1 Day’s R. 130, 132, 133.”
“ That at common law, the award of arbitrators regularly made, and in relation to a matter which might be submitted, is conclusive between the same parties in a contest involving the same matter, is a proposition too well settled to need illustration by the citation of authorities.” Shackleford v Purket, 2 Marsh. 435.
Judgments may be impeached for fraud, by a direct proceeding for that purpose, in the nature of a bill in chancery, under our present practice, but they are conclusive upon the parties when brought in issue collaterally. This position is fully sustained by authority and reason as well as sound public policy. Courts are organized to adjudicate, try, and settle questions of controversy between parties. Policy requires that a cause once litigated and re*412dueed to a judgment in a court of competent jurisdiction, should there terminate and the judgment should be conclusive, unless reversed by an appellate court or set aside for some adequate reason, in a proper proceeding instituted for that purpose; but if the validity of a judgment may bo attacked by evidence aliunde every time it may be brought in question collaterally in some other suit, there would be no end to litigation. The sanctity and conclusive character of judgments would be destroyed, and they would cease to be respected as the final settlement of controversies.
Arbitration is but another mode of settling disputes. The parties, instead of appealing to an organized court, by mutual agreement create a forum for themselves, and select their own judges, who are called arbitrators, for the trial of the mattei’s in dispute between them, and the awax’d made by them, upon the matters so submitted, is, as we have seen, as conclusive upon the parties as a judgment rendered by a, court of competent jurisdiction. . The award xxxay be impeached in the same manner as a judgment; but the same reasons of justice and of public policy which fox-bid that a judgment should be attacked collaterally, apply with equal force to an award, and that such is the law, both ixx England axid in this country, is clearly shown by the authorities. Elmendorf v. Harris, 5 Wend. 516; same case, 23 Wend. 628; Preston v. Whitcomb, 11 Verm. 47.
I am not unmindful of the fact that it was said in Carson v. Earlywine, 14 Ind. 256, that, “beyond doubt, under our present practice, all objections that could be successfully xxx-ged, either at law or in chancei-y, against an award, may now be made in a suit upon it.” There the suit was oxx the awax-d, and the answer alleged misconduct and fraud on the part of the arbitratox-s. It is admitted in the opinion in the case that, at common law, such a defense was unavailable, axxd the party would have beeix compelled to seek his relief in chancery. The opinion is based on the change of practice under the code. The question is xxot discussed. The proposition is simply announced, in the language above *413quoted, and then it is said: “ But this topic need not be pursued, as no evidence in support of the allegations in the answer was offered on the trial, and the submission and award, which were not denied, but which were nevertheless ¡moved, made out a prima facie case for the plaintiff.” It may be conceded that the proposition as stated is substantially correct. The code abolishes the distinction between actions at law and suits in equity, and provides that the defendant may set forth in his answer as many grounds of defense, whether legal or equitable, as he shall have. And where the action is brought upon the award it becomes the direct subject of litigation, and, if impeachable for fraud, I do not doubt the right of the defendant, under the code, to set up the fraud in an answer in the nature of a bill iu equity, or a cross-complaint, and ask to have it set aside. Such an answer, under the code, would be in the nature of an original bill in chancery, and would perform the same office under the present practice as would have been per’formed by a bill in equity under the old, and, if successful, the court in its final judgment should set aside the award as fraudulent. The same defense, with the same result, might, under the code, be made in an action on a judgment impeachable in equity for fraud. But here the action is not brought on the award, but on an account, which— and not the award — is the subject of litigation.
The complaint is silent as to the award, and seeks to recover a judgment on the account only. The award is not set up as a set-off, nor is any affirmative relief demanded on it. It is set up, in connection with other averments, as a bar to the action on the account, by showing that the same demand was passed upon and settled by the arbitrators and concluded by the award. The plaintiff might, under our present practice, have filed his complaint to set aside the award, and at the same time have asked a judgment on the account. The award is valid on its face, it is not void, even though fraudulent, but only voidable, and he cannot over-leap it, “treating it as void, and litigate his rights anew, by *414commencing an action as if it had not been made, and in a collateral manner attack its validity.” Such a practice would tend to confusion, and lead to the most pernicious consequences. Where the answer contains new matter, the plaintiff may reply any new matter thereto not inconsistent with the complaint. But the original cause of action is merged iff the judgment or award, until it is set aside for the fraud. The judgment or award is, therefore, a good bar to the action for the same cause, so long as it remains in force. And the plaintiff by suing on the original cause of action, without attacking the award in his complaint, and then attacking it in the replication, makes the latter inconsistent with the complaint. It must be borne in mind, that the award is not pleaded as a set-off, nor is any affirmative relief asked upon it. It had been performed by Rice, and is set up as a bar to the action, simply because the account sued on had been litigated and settled in the ai'bitration.
It seems to me equally clear that Rice was not, in any manner, injured by the alleged fraud, and has nothing, therefore, to complain of. If a fraud was practiced as alleged, it was a “ fraud without damage,” and it is well settled that fraud to be available, as a ground of relief, must have worked an injury to the party setting it up. Here the alleged fraud had no relation to the controverted matters submitted to the arbitrators, nor to the conduct of O. C. Loomis on the trial, nor to the conduct of the arbitrators in making the award. It is not claimed by Rice that he did not have a fair and impartial trial. It is true, that he alleges he did not owe either of the Loomis’ anything, but that averment, of itself, amounts to nothing. The question of his indebtedness was submitted to the arbitrators, who found against him, and that finding is in nowise impeached, and must be presumed correct. It is not pretended that the decision of the arbitrators was, or could be, in any manner influenced by the alleged fraud. The representations complained of related alone to the secmrity of the note *415executed by “ Loomis § Co.,” to be delivered to Rice in the event the arbitrators found in his favor, but as that finding was against him, how can it be said that he was injured ?
D. D. Pratt and D. P. Baldwin, for appellant.
E. Walker, for appellees.
The proper rule, in cases like this, to test the question of injury, I conceive to be this: Is the party placed in a worse condition by the false representation than he would have been had the representation been true? Tested by this rule, it is evident that no injury resulted to Rice by the alleged fraud, and hence he has nothing to complain of.
But it is said that the alleged fraud rendered the submission void, and that the award is therefore void for want of jurisdiction in the arbitrators. This is simply begging the question. It must be conceded that a void submission confers no jurisdiction on the arbitrators named therein; hut the question whether the submission in this case was rendered void by the false representations complained of, is the very question in controversy, and which, in my opinion, should be answered in the negative.
The false representation as to who constituted the firm of “Loomis & Co.” at most only rendered the agreement of submission voidable, not absolutely void; and as the parties went to trial and suffered the award to be made under it, it could not afterwards be avoided by Rice, unless it appeared that he was injured by the alleged fraud, and as ho was not so injured, he cannot avoid the award.
T cannot, therefore, concur in the opinion of the majority of my brother judges.