If an award is within the submission and contains the honest
decision of the arbitrators after a full and fair hearing of the
parties, a court of equity will not set it aside for error either
in law or fact.
In this case, one of the parties sued the other for debt, who,
in his turn, claimed damages for the manner in which he was sued.
The submission was broad enough to cover all these demands on
either side.
One of the claims made by the party who was sued was for damages
for the violence of the agent of the creditors, and the referees
heard evidence upon this subject. Even if this had been beyond the
submission, there was nothing in the record to show that the
arbitrators made any allowance for this violence and slanderous
language.
The charges of fraud and corruption made in the bill are denied
in the answer, and the award is not so outrageous as of itself to
constitute conclusive evidence of fraud or corruption. Error of
judgment in the arbitrators is not a sufficient ground for setting
aside an award.
Page 58 U. S. 345
The bill was filed by Marsh, Frear, and Arbuckle, to set aside
an award made by arbitrators chosen by them upon the one part, and
Burchell upon the other, to hear all matters of claim of either
party, upon or against the other, in the law or in equity.
The facts in the case were these:
There were two commercial firms in New York, carrying on
business under the names of Marsh and Frear, and Alexander Frear
and Co. The first was composed of Stewart C. Marsh and Alexander
Frear, and the second of Alexander Frear and William M. Arbuckle.
Burchell was a retail country merchant, having a store at St.
Charles, in Kane County, Illinois, and another store at Cherry
Valley, in Winnebago County, Illinois. Burchell had been in the
habit for several years of purchasing goods from the firms in New
York and of making payments on account.
In March, 1852, the two firms brought suits in the Circuit Court
of the United States for Illinois, against Burchell, by summons. At
April term, 1852, at Chicago, Burchell filed an affidavit for a
continuance, stating that he could prove by absent witnesses that
the debt was not due when the suit was brought in March, nor until
the April following. Whereupon the plaintiffs submitted to a
nonsuit.
In May, 1852, the two firms renewed their suits, but filed the
affidavits required by law and commenced the suits by writs of
capias ad respondendum under which Burchell was arrested
and held to bail. The amount claimed by Marsh & Freer was
$12,000, and by Freer & Arbuckle, $2,014. These suits were
brought by R. V. M. Cross as agent and attorney for the
plaintiffs.
In July, 1852, the court being held at Springfield, the causes
were continued upon affidavit of the defendant.
In October, 1852, there was an agreement for a reference to
arbitrators, which, however, was afterwards revoked by Freer.
In December, 1852, the parties agreed upon another award. The
agreement recited the claims of the firms upon Burchell, and the
suits
"by which the said Burchell claims to have sustained damages by
reason of having been sued by said firms as aforesaid, and by
reason of the doings of the said firms towards him."
The agreement then proceeded thus:
"Now therefore, in consideration of the premises and to put an
end to all further controversies and for a full and final
adjustment of all differences between them, this article of
submission, made and entered into this 15th day of December, A.D.
1852, between Alexander Freer, William M. Arbuckle, and Stewart C.
Marsh, of the one part, and Peter J. Burchell, of the other
Page 58 U. S. 346
part, witnesseth that the said parties have agreed to and do
hereby submit all demands, suits, claims, causes of action,
controversies and disputes between them to the arbitrament,
determination, and award of F. B. Mosley, Oliver M. Butler, and
such other person as the said Mosley and Butler may select, who are
within sixty days from the day of the date hereof, and on such day
as they or a majority of them shall select, to meet at St. Charles,
Kane County, of the time of which meeting notice shall be given to
the said parties or their attorneys, and the said arbitrators shall
hear all matters of claim of either party upon or against the other
founded in law or equity. And the said award shall direct and
determine what, if anything, is due or owing from said Burchell to
said firms or what, if anything, shall be due from either or both
of said firms to the said Burchell &c."
Evidence was given before the arbitrators of the accounts, of
the credits, the institution of the suits, of the time when the
goods were to be paid for, of Burchell's pecuniary condition, of
the arrest under the capias and bail, of the violent declarations
of Cross, the agent of the plaintiffs, the opinions of witnesses,
how much injury Burchell's credit had sustained by reason of the
suits &c.
In February, 1853, the arbitrators awarded as follows,
namely:
"First that all claims, demands, controversies, and disputes
between the respective parties or between the said Burchell and the
firm of Marsh & Freer, and also between the firm of Alexander
Freer and Co. and the said Burchell, should cease and be determined
by the said award. Second, that as between Stewart C. Marsh and
Alexander Freer, the firm of Marsh & Freer, and the said
Burchell, that there was due from said firm of Marsh & Freer to
the said Peter J. Burchell the sum of one hundred dollars, which
said sum they did direct that the said Marsh & Freer should pay
in money to the said Peter J. Burchell in one month from the date
of said award. Third, as between Alexander Freer and William M.
Arbuckle, the firm of Alexander Freer and Co., that there was due
from said firm of Alexander Freer and Co. to said Burchell the sum
of twenty-five dollars, which said sum they did direct that your
orators, Alexander Freer and William M. Arbuckle, should pay in
money to said Burchell in one month from the date of the said
award. Fourth, that the costs of said arbitration should be paid as
follows: that the firms should pay all the costs which they had
made or occasioned, and should also pay the said Burchell his costs
expended in and about said arbitration."
In February, 1853, the firms filed a bill on the equity side of
the court to set aside this award. The bill was answered, and
Page 58 U. S. 347
the cause came up upon bill and answer in May, 1853, when the
court decreed that the award should in all things be vacated,
annulled, and set aside, and that Burchell should absolutely
refrain and desist from counting upon or in any manner pleading
said award in any suit or proceeding in law or equity.
Burchell appealed to this Court.
Page 58 U. S. 349
MR. JUSTICE GRIER delivered the opinion of the Court.
This case was submitted on bill and answer. The appellees, who
were complainants below, pray the court to set aside an award made
between the parties as "fraudulent and void." The bill charges
that
"The award was made either from improper and corrupt motives,
with the design of favoring said Burchell or in ignorance of the
rights of the parties to said submission and of the duties and
powers of the arbitrators who signed the said award."
The answer denies
"that the arbitrators acted unjustly or with partiality or
ignorance in making their award, but avers that they acted justly,
fairly, and with a due consideration of the rights of the
parties."
This allegation of the answer must be taken to be true unless it
appears from other facts admitted by it that this conclusion or
averment founded on them is incorrect.
In the consideration of this case it will not be necessary to
encumber it with a history of the facts charged and admitted or
denied by the pleadings except as they shall be incidentally
noticed. The general principles upon which courts of equity
interfere to set aside awards are too well settled by numerous
decisions to admit of doubt. There are, it is true, some anomalous
cases which, depending on their peculiar circumstances, cannot be
exactly reconciled with any general rule, but such cases can seldom
be used as precedents.
Arbitrators are judges chosen by the parties to decide the
matters submitted to them, finally and without appeal. As a mode of
settling disputes, it should receive every encouragement from
courts of equity. If the award is within the submission, and
contains the honest decision of the arbitrators after a full and
fair hearing of the parties, a court of equity will not set it
aside for error either in law or fact. A contrary course would be a
substitution of the judgment of the chancellor in place of the
judges chosen by the parties, and would make an award the
commencement, not the end, of litigation. In order, says Lord
Thurlow,
Knox v. Symmonds, 1 Ves.Jr. 369,
"to induce the court to interfere, there must be
Page 58 U. S. 350
something more than an error of judgment, such as corruption in
the arbitrator or gross mistake, either apparent on the face of the
award or to be made out by evidence, but in case of mistake, it
must be made out to the satisfaction of the arbitrator, and that if
it had not happened, he should have made a different award."
courts should be careful to avoid a wrong use of the word
"mistake," and, by making it synonymous with mere error of judgment
assume to themselves an arbitrary power over awards. The same
result would follow if the court should treat the arbitrators as
guilty of corrupt partiality merely because their award is not such
an one as the chancellor would have given. We are all too prone,
perhaps, to impute either weakness of intellect or corrupt motives
to those who differ with us in opinion.
1. The first objection to the award in this case is that it is
not within the submission. But we are of opinion this objection is
without foundation.
The submission recites that controversies and disputes had
arisen between the firm of March and Freer and of Freer &
Arbuckle with Burchell. It states the controversies to have arisen
from suits brought by said firms against Burchell to recover
certain debts claimed to be due by him to the firms, respectively,
"and the said Burchell claims to have sustained damages by reason
of having been sued by said firms and by reason of the doings of
the said firms towards him." The parties therefore agreed to submit
"all demands, suits, claims, causes of action, controversies, and
disputes between them to the arbitration and award of F. B.
Mosley," &c., "who are to hear all matters of claim of either
party, upon or against the other, in law or equity."
On the hearing, the arbitrators received evidence of the debts
alleged to be due from Burchell to the two firms, and of the
alleged oppressive and ruinous suits brought against him by one
Cross, who acted as agent of the firms. The witnesses, in proving
these transactions, were permitted to state certain slanderous
language used by Cross in speaking to and of Burchell, charging him
with dishonesty and perjury. When this testimony was offered, the
complainants' counsel agreed that it might be received, subject to
exceptions.
It has been argued that because the arbitrators received
evidence of the slanderous language used by Cross, that therefore
they included in their award damages for his slanders for which his
principals would not be liable, and that therefore they had taken
into consideration matters not contained in the submission. But the
answer to this allegation is that the record shows no admission or
proof that the arbitrators allowed any damages
Page 58 U. S. 351
for the slanders of Cross. Whether the complainants were liable
and how far they were justly answerable for the conduct of their
agent were questions of law, and fact submitted to the arbitrators.
All these questions were fully argued before them by counsel.
Whether their decision on them was erroneous does not appear. The
transactions which were testified to with regard to the suits
brought against Burchell, and whether they were oppressive,
wrongful, and ruinous to him, was one of the very matters submitted
to the arbitrators. The words as well as the acts of Cross made
part of the
res gestae, and could not well be severed in
giving a history of them. Every presumption is in favor of the
validity of the award. If it had stated an account by which it
appeared that the arbitrators had made a specific allowance of
damages for the slanders of Cross, it would have been annulled, to
that extent at least, as beyond the submission. But it cannot be
inferred that the arbitrators went beyond the submission merely
because they may have admitted illegal evidence about the subject
matter of it.
We are of opinion, therefore, that there is nothing on the
record to show that the arbitrators, in making this award, exceeded
their authority or went beyond the limits of the submission.
2. The charges of fraud, corruption, or improper conduct in the
arbitrators, as we have seen, are wholly denied by the answer,
which must be assumed to be true unless facts are admitted from
which they are a necessary or legal inference. We can see nothing
in the admitted facts of the case from which any such inference can
be justly made. The damages allowed for the alleged oppression of
Burchell and the ruin of his business as a merchant may seem large
to some, while others may think the sum of four or even five
thousand dollars as no extravagant compensation for such injuries.
It may be admitted that, on the facts appearing on the face of the
record, this Court would not have assessed damages to so large an
amount nor have divided them so arbitrarily between the parties,
but we cannot say that the estimate of the arbitrators is so
outrageous as of itself to constitute conclusive evidence of fraud
or corruption. Damages for injuries of this sort cannot be measured
by any rules, nor can the court properly impute corruption to
others because they differ with them in their estimation of a
matter which depends on discretion, rather than calculation. It is
enough that the parties have agreed to trust the discretion and
judgment of neighbors acquainted with them and their relative
standing and credit. The admission of witnesses to prove their
estimate of the damages, even if it had been in the face of the
objection of counsel, and not by consent, may have
Page 58 U. S. 352
been an error in judgment, but it is no cause for setting aside
the award; nor can the admission of illegal evidence or taking the
opinion of third persons be alleged as a misbehavior in the
arbitrators which will affect their award. If they have given their
honest, incorrupt judgment on the subject matters submitted to them
after a full and fair hearing of the parties, they are bound by it,
and a court of chancery have no right to annul their award because
it thinks it could have made a better.
In fine, we are of opinion that this record furnishes no
evidence of corruption or misbehavior in the arbitrators, nor of
"ignorance," as charged in the bill, or of any such mistake as
would justify a court of chancery in annulling it.
The decree of the court below is therefore
Reversed and the record remitted with directions to dismiss
the bill of complaint, with costs but without prejudice to any
legal defense.
MR. JUSTICE McLEAN and MR. JUSTICE NELSON dissented.
MR. JUSTICE NELSON.
I do not agree to the judgment of the Court in this case. I
think the damages allowed against the complainants by the
arbitrators are so extravagant, disproportioned and gross as to
afford evidence of passion and prejudice, and justified the
judgment of the court below in setting aside the award. It is
difficult, if not impossible, to see upon any other ground how
between four and five thousand dollars should have been allowed
against one of the firms in the submission, and but some one
thousand dollars against the other under the circumstances of the
case.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Illinois, and was argued by counsel. On consideration whereof it is
now here ordered, adjudged, and decreed by this Court that the
decree of the said circuit court in this cause be, and the same is
hereby, reversed with costs, and that this cause be and the same is
hereby remanded to the circuit court with directions to dismiss the
bill of complaint with costs but without prejudice to any legal
defense which the parties may have.
* MR. CHIEF JUSTICE TANEY and MR. JUSTICE WAYNE, did not sit in
this cause.
