U.S. Supreme Court Karthaus v. Yllas y Ferrer, 26 U.S. 222 (1828)
Karthaus v. Yllas y Ferrer
26 U.S. 222
ERROR TO THE CIRCUIT COURT
OF THE DISTRICT OF MARYLAND
There is a class of cases upon awards to be found in the books in which arbitrators have been held to more than ordinary strictness in pursuing the terms of the submission and in awarding upon the several distinct matters submitted upon the ground of this submission's being conditional, ita quod. But the rule is to be understood with this qualification -- that in order to impeach an award made in pursuance of a conditional submission on the ground of part only of the matters in controversy having been decided, the party must distinctly show that there were other points in difference of which express notice was given to the arbitrators and that they neglected to determine them.
One partner, during the continuance of the partnership, cannot bind the other partner to a submission of the interests of both, to arbitration, but he might bind himself so as to submit his own interests to such decision.
It is a settled rule in the construction of awards that no intendment shall be indulged to overturn an award, but every intendment shall be allowed to uphold it.
If a submission be of all actions, real and personal, and the award be only of actions personal, the award is good, for it shall be presumed no actions real were depending between the parties.
When, upon a submission by one partner of all matters in controversy between the partnership and the person entering into the agreement of reference, an award was made directing the payment of money in an action on the bond to abide by the award, the breach assigned was that the partner who agreed to the reference did not pay, &c.;, this is a sufficient assignment of a breach, as he only who agreed to the reference was bound to pay.
On 16 January, 1823, the plaintiff in error gave an arbitration bond in the usual form, with sureties, to the defendants in error, in which it was set forth that
"Whereas certain disputes, differences, and controversies, have arisen and are still depending between the above bounden Charles W. Karthaus, acting for the late house of Charles W. Karthaus & Co. and himself, and the above named Francisco Yllas y Ferrer and Josef Antonio Yllas, for the ending and determining the disputes, differences, and controversies aforesaid and all actions, suits, claims, and demands whatsoever concerning the same, the said parties have agreed to refer the same to the award, judgment, and determination of Lewis Brantz and Henry Child, both of Baltimore, merchants, arbitrators indifferently chosen, and named by and on behalf of the said parties, to award, order, arbitrate, judge, and determine concerning the same. And if the said arbitrators cannot determine the same, that then the same shall be fully ended and determined by a third person to be by them chosen as an umpire in such
manner as hereinafter is in that behalf mentioned and expressed."
"Now the condition of this obligation is such that if the above bound Charles W. Karthaus, his heirs, executors, administrators, and every of them shall and do for and on his and their parts in and by all things stand to, obey, abide, perform, fulfill, and keep the award arbitrament, order, determination, final end, and judgment which shall be by them, the aforesaid arbitrators, made, of and concerning the premises, and of all disputes, differences, actions, suits, claims, and demands whatsoever touching and concerning the same, so as such award, arbitrament, determination, final end, and judgment of the said arbitrators, of and in the premises, be by them made and given up in writing under both their hands and seals, ready to be delivered to each of the said parties in controversy in fifty days from the day of the date hereof."
"And if they the said arbitrators of and in the said premises cannot agree, end, and determine the same in fifty days from the day of the date hereof, that then if the said Charles W. Karthaus, his heirs, executors, administrators, and every of them shall and do, for and on his and their parts, in and by all things, stand to, obey, abide, perform, fulfill, and keep the award, arbitrament, and umpirage, of the above named arbitrators, and such third person and umpire, as they the said arbitrators, shall indifferently name, elect, and choose for the ending and determining the same premises or a majority of them, so as such award, umpirage, and judgment of the said arbitrators and umpire or a majority of them of and concerning the same be by them so made and given up in writing under their hands and seals, ready to be delivered to each of the said parties in controversy, in sixty days from the day of the date hereof, this obligation to be void and of no effect, otherwise the same shall remain in full force and virtue."
Upon this reference, the following award was made under the hands and seals of the arbitrators and the umpire:
"We, the undersigned, Henry Child, and Lewis Brantz, as arbitrators, and Michael McBlair, as umpire, acting in virtue of the annexed bond or instrument of writing, do hereby award and adjudge that the late firm of Charles W. Karthaus & Co. pay or cause to be paid unto Francisco Yllas y Ferrer and Josef Antonio Yllas, or their representatives, the sum of $1,475 for a balance of the general account current between the parties, and also the sum of $1,398 for a balance arising out of the moneys recovered for the brig Arogante Barcelonese and cargo, in which award a parcel of cutlasses or their
proceeds are considered as becoming the property of said Yllas y Ferrer."
"Given under our hands and seals, in Baltimore, this 8 March, 1828."
To an action on the bond against the plaintiff in error he pleaded the condition and that no award had been made. The defendants in error replied and answered and set it out as stated, and there was a demurrer to the replication, which the court overruled, and a judgment was entered for the plaintiff below. In this judgment error was alleged, and before this Court the plaintiff in error sought to maintain:
1. That the award is not agreeable to the submission.
2. It is not certain, final, and mutual.
3. It directs an act to be done by strangers.
4. It is defective in other respects.
MR. JUSTICE TRIMBLE delivered the opinion of the Court.
This was an action of debt brought by Francisco Yllas and Josef Antonio Yllas against Charles W. Karthaus on an arbitration bond in the Circuit Court of the District of Maryland.
The defendant, after oyer of the condition of the bond, pleaded, no award made, &c.; The plaintiff replied, setting
forth the award in haec verba and assigning a breach; the defendants demurred generally and the plaintiff joined in demurrer. The circuit court having given judgment upon the demurrer in favor of the plaintiffs, the defendant has brought the case up by writ of error for the consideration of this Court.
The first and principal ground relied on by the plaintiff in error for the reversal of the judgment is that the award is not agreeable to the submission in this, that two several distinct controversies, the first between the plaintiffs and the late house of Charles W. Karthaus & Co., and the second between the plaintiffs and Charles W. Karthaus individually, were submitted to the referees, and that they left the latter undetermined. The condition of the bond, after reciting, that certain disputes, differences, and controversies have arisen, and are still depending between the above bound Charles W. Karthaus, acting for his late house of Charles W. Karthaus & Co., and for himself and the above named Francisco Yllas y Ferrer and Josef Antonio Yllas, &c.;, "refers the same to the referees named, and their umpire, and binds the said Charles W. Karthaus, &c.;, to abide by and perform their award," so as such award, &c.;,
"of the arbitrators of and in the premises be by them made and given up in writing under their hands and seals, ready to be delivered to each of the said parties in controversy in fifty days."
The arbitrators, and their umpire, within the time limited by the submission, made and delivered their award in writing, under their hands and seals, in the following words, to-wit:
"We, the undersigned, Henry Child and Lewis Brantz, as arbitrators, and Michael McBlair, as umpire, acting in virtue of the annexed bond, or instrument of writing, do hereby award and adjudge, that the late firm of C. W. Karthaus & Co. pay to Francisco Yllas y Ferrer, and Josef Antonio Yllas, or their representatives, the sum of $1,475, for the balance of the general account current between the parties, and also the sum of $1,398, for a balance arising out of moneys received for the brig Arogante Barcelonese, and cargo, in which award, a parcel of cutlasses or their proceeds are considered as becoming the property of the said Yllas y Ferrer."
It is plainly seen from the face of the award that the arbitrators have not contradistinguished between Charles W. Karthaus as a member of the late house of Charles W. Karthaus & Co., and Charles W. Karthaus as an individual, unconnected with his late house. The argument is that this omission of the referees vitiates the award. It is said that this, being a conditional submission, ita quod, the arbitrators were bound to pursue the submission strictly, and to award, of and
concerning every matter referred to them. In support of this argument, the counsel referred to Randall v. Randall, 7 East 80, and several other cases less apposite.
That there is a class of cases in the books in which arbitrators have been held to a more than ordinary strictness in pursuing the terms of the submission, and in awarding upon the several distinct matters submitted, upon the ground of the submission being conditional, ita quod, is conceded. The case of Randall v. Randall is a leading case of that class. Lord Ellenborough, C.J. in delivering the opinion of the court, says:
"The arbitrators had three things submitted to them; one was to determine all actions, &c.;, between the parties; another was to settle what was to be paid by the defendant for hops, poles, and potatoes, in certain lands; the third was to ascertain what rent was paid by the plaintiff, to the defendant, for certain other lands. The authority given to the arbitrators, was conditional, ita quod, they should arbitrate upon these matters, by a certain day. The arbitrators have stopped short, and have omitted to settle one of the subjects of difference stipulated for."
This case was adjudged according to the rule laid down in the books; that if the submission be conditional, so as the arbitrator decide of and concerning the premises, he must adjudicate upon each distinct matter in dispute, which he has noticed. Kyd, 177.
But the rule is to be understood with this qualification, that in order to impeach an award, made in pursuance of a conditional submission, on the ground only of part of the matters in controversy having been decided, the party must distinctly show that there were other points in difference, of which express notice was given to the arbitrator, and that he neglected to determine them. Caldwell 105' Kyd, 177; Cro.Car. 216; Baspole's Case, 8 Co. 98; Ingraham v. Milnes, 8 East 445.
That Lord Ellenborough understood and intended to apply the rule, as thus qualified, in Randall v. Randall, is manifest. For Mr. Espinasse, in commenting upon Baspole's Case, having observed that it is said in that case, that though there be many matters in controversy, yet if only one be signified to the arbitrators, he may make an award for that, for he is to determine according to the allegata et probata -- and it is in every day's practice that an award may be good in part, and bad in part. Lord Ellenborough, in answer to that argument, replies
"That is, where it does not appear there is any notice to the arbitrator, on the face of the submission, that there is any other matter referred to him, than those which are mentioned to him at the time of the reference. But here it does expressly appear, that there was another matter referred, on which there is no arbitrament. "
In this case, it is not pretended that any notice was given to the arbitrators of any other matter unless that notice was given on the face of the submission.
The question then is does it distinctly appear from the face of the submission that any other point of difference between parties was submitted, and of which the submission itself gave the arbitrators notice, but which they have neglected to determine.
If, as the argument supposes, there was any point in difference, which concerned Charles W. Karthaus individually, as contradistinguished from the points in difference which concerned him as Charles W. Karthaus, of the late firm of Charles W. Karthaus & Co., what was that point of difference?
No satisfactory answer has been given, and it is believed none can be given, to this inquiry. How then can it be maintained that a distinct point in difference between the parties was referred, and by the reference itself notified to the referees, which they have neglected to determine? The case of Ingraham v. Milnes is a strong authority to show that although the submission be conditional, ita quod, there must be a distinct specification, as in Randall v. Randall, to sustain the objection that part has been omitted by the arbitrators. Here the submission is in very general and we think in very vague and ambiguous terms. It speaks of disputes, differences, and controversies between Charles W. Karthaus, acting for the late house of Charles W. Karthaus & Co. and for himself, and the plaintiffs. But how or in what he acted for the one or the other is not specified. The terms "late house" imply the former existence but present nonexistence of the late house of Charles W. Karthaus & Co. He may be the only surviving partner, the firm having ceased by the death of the other members. But if the firm was continuing, Charles W. Karthaus, while he must be admitted to be perfectly competent to submit to reference his own interests in the firm, could not, by his submission, bind his partners. He might bind himself to perform whatever the award directed the firm of which he was a member to do, so that either way it was a submission of his own interest only. In order to overturn the award, it is not enough that he may have had different and distinct interests in his individual and in his partnership character. It is a settled rule in the construction of awards that no intendment shall be indulged to overturn an award, but every reasonable intendment shall be allowed to uphold it. Thus, if a submission be of all actions, real and personal, and the award be only of actions personal, the award is good -- for it shall be presumed no actions real were depending between the parties. Kyd, 72, and Baspole's Case, before cited.
So in this case, although the submission speaks in general terms of disputes, differences, and controversies with Charles W. Karthaus, acting for his late house of C. W. Karthaus & Co. and for himself, it shall not be intended there were any controversies with C. W. Karthaus individually other than those decided by the arbitrators. If any such did exist, inasmuch as they are not specifically and distinctly set forth in the submission, so as to give notice to the arbitrators, it was the duty of the party to show by averment and proof aliunde they were brought before the referees.
There is no analogy between this case and Lyle v. Rogers, 5 Wheat. 394, cited at the argument. In that case, it was decided that where claims against a party, both in her own right and in her character of administratrix, were submitted to arbitrators, it was a valid objection to the award that it awarded a gross sum to be paid by her, without distinguishing between what was to be paid by her in her own right and what in her representative character. THE CHIEF JUSTICE, in delivering the opinion of the Court, explains the reason and ground of the decision by observing
"if this award was made against Mrs. Dennison as administratrix, she would not only be deprived by its form of the right to plead a full administration (a defense which might have been made before the arbitrators, and on which their award does not show, certainly, that they have decided), but also of the right to use it in the settlement of her accounts as conclusive evidence that the money was paid in her representative character. If this objection to the award is to be overruled, it must be on the supposition that it is made against her personally; yet the statement of facts shows the claim against her to be in her representative character."
This reasoning cannot apply to the case before the Court. It is of no sort of consequence to C. W. Karthaus whether he is directed to pay as Charles W. Karthaus individually or as Charles W. Karthaus of his late house of C. W. Karthaus & Co. In each case, he is bound personally to pay, having bound himself so to do by the submission, and the award, if in any case it would be evidence for him against the firm, would not be conclusive, as he had no power to bind his partners, if any existed, by his submission. It is objected that the award is not certain, final, and mutual. It was said in argument that as the first sum awarded is expressed to be for a
"balance of the general account current between the parties; the general account current must be understood to include all accounts between them, and hence that the second sum awarded for a balance arising out of moneys received for the brig Arogante Barcelonese is included in the first, and the party thus twice charged, or at least that it does not certainly appear otherwise. "
We think there is no foundation for this argument. To indulge such a supposition would impute either manifest injustice or gross negligence to the referees. Great stress was laid in the argument on the uncertainty of the closing clause of the award, in these words, "in which award a parcel of cutlasses are considered as becoming the property of said Yllas y Ferrer." There is considerable doubt and uncertainty as to the meaning of the arbitrators in the use of these terms. And had this uncertainty appeared in any part of the award, intended for the benefit of the defendant, it would perhaps be fatal to the whole award. Had that been the case, it would be hard and unjust to compel him to perform that part of the award which is onerous to him when he could not have, on account of its uncertainty, that which would be beneficial to him. But however doubtful the precise intent and meaning of this part of the award may be, it is certain it was intended as a benefit in some way to Yllas y Ferrer over and above the two sums of money directed to be paid to the plaintiffs. The defendant can have no reason to complain that the plaintiffs or either of them may not, on account of this uncertainty, be able to obtain all the benefits intended by the award, nor can it furnish any reason for withholding from them that to which they are certainly entitled.
It is deemed a sufficient answer to the objection of want of mutuality in the award to remark that great stress was laid in the early cases upon the mutuality of an award, but at present it is by no means considered necessary that each party should be directed to do or not to do any particular thing, Cald. 113. Two had submitted to an award; nothing was awarded as to one party but that all actions should cease. The court held it a good award, Harris v. Knight, 1 Levz. 58.
In Palmer's Case, 12 Mod. 234, one party was directed to pay money to the other without any directions' being given to the latter in any way, and again it was awarded that A should pay B 40 shillings for a trespass; Freeman 204. The respective awards were considered unimpeachable. These cases fully establish the principle above laid down. An award is regarded as final when it is an absolute conclusive adjudication of the matters in dispute, and there is no reason to doubt the conclusiveness of the adjudication in this case as to the two sums of money directed to be paid, and that the award will operate as a bar to any future litigation upon the accounts for which they are given. Again, it is objected that the award directs an act to be done by strangers. This objection grows out of the direction in the award that "the late firm of C. W. Karthaus & Co. pay, &c.;" Whatever might be the force of this objection if it were true in point of fact, we cannot so regard it. So far as
appears upon the record, the late firm or house of C. W. Karthaus & Co. and C. W. Karthaus are one and the same person -- or, more properly speaking, it does not appear that there is any other person in esse belonging to that firm than C. W. Karthaus himself. If there be any other person in esse of the late house of C. W. Karthaus & Co., it cannot be truly affirmed that he and the house of which he was a partner are strangers to each other. But we cannot, consistently with the rules of law, presume or intend there is any other; indeed, in support of the award, it may reasonably be intended there is not, as the party objecting was cognizant of the fact, and might have shown it if true, but has not. The direction that the late firm of C. W. Karthaus & Co. shall pay unquestionably includes C. W. Karthaus, and no other person appearing to exist, it is equivalent to a direction that he shall pay. This reason is applicable to the last ground assumed by the counsel for the plaintiff in error, for a reversal of judgment -- namely that the replication is insufficient because, in assigning a breach, it only alleges C. W. Karthaus had not paid. As no other was or could be bound by the submission and award to pay, and he was bound, it was a sufficient assignment of a breach of the condition of his bond to allege that he had not paid the money awarded in favor of the plaintiffs.
Upon the whole, it is the opinion of this Court that there is no error in the judgment of the circuit court, and the same is
Affirmed with costs and damages.