Bray v. . Staples

CoNNOR, J., after stating the case: The right of the plaintiff to the relief demanded and the ruling of his Llonor depend upon the answer to questions in regard to which there is no conflicting evidence. Does the failure of the arbitra *92 tors to notify the parties of the appointment of Mr. Reid as “third arbitrator,” and of the time and place of their meeting with him to finally hear and determine the matters submitted to them, and the failure of Mr. Reid to hear the evidence from the witnesses, invalidate the award? The question does not appear to have been decided by this Court. In Russell on Arbitration, 3rd Ed., 320, cited with approval in Gaffy v. Bridge Co., 42 Conn., 143, it is said that it is the duty of the umpire to re-examine' such witnesses as the parties choose to produce, and as to such points as they choose to raise, although the same witnesses have been examined as to the same points before the arbitrators. Pie may not take the evidence, or any part of it, from the notes of the arbitrators, unless there be a special provision in the submission, or a clear agreement between the parties permitting such a course. In Thomas v. R. R., 21 N. J., Eq., 567, it is said: “When the new arbitrator was chosen the complainant had the right to adduce additional testimony and additional arguments and that, unless the right was clearly waived by their agreement or conduct, notice of the appointment of a third arbitrator, and opportunity to be heard, were essential preliminaries to a valid award. This doctrine is founded in natural justice and is not denied to be law.” Elemdorf v. Harriss, 23 Wend., 628, 35 Am. Dec., 587; Alexander v. Cunningham, 111 Ill., 511; Day v. Hammond, 57 N. Y., 479, 15 Am. Rep., 522, in which it is said: “Parties are always entitled to a hearing before arbitrators, unless that hearing is waived, and if an umpire or other arbitrator is called in, in case of a disagreement, the same rule, as to a right of hearing, applies. The waiver of the right must be distinct and unequivocal.” In a well considered opinion reviewing the authorities, Keith, P., says: “We deduce from the authorities the general rule that when two arbitrators who differ, ha.ve the power to appoint a third, who shall have authority to decide between them, it is necessary to inform *93 the parties in interest of his appointment, give them a reasonable opportunity to produce evidence before them, touching the matters in controversy.” Coons v. Coons, 69 Va., 434, 64 Am. St. Rep., 804. In 3 Cyc., 660, the editor says that, after a disagreement between the original arbitrators, the special arbitrator, acting with them or upon his sole responsibility, may proceed to a consideration of the case as presented by the original arbitrators and make an award thereon without hearing the evidence anew or additional evidence, unless such rehearing be specially requested by one of the parties or required by the terms of the submission, but he further says this rule does not apply unless the parties have been notified of the appointment of the special arbitrator or umpire, and of the proceedings by him, and have been accorded reasonable opportunity to make such demand. In the note he says: “In the absence of such notice and opportunity to be heard or to demand a re-hearing, no authority to proceed exists,” citing numerous cases. Some distinction has been made between the duty and power of an umpire and a “third arbitrator.” It is unnecessary to consider this question because Mr. Reid was, by the terms of the submission, made “third arbitrator” and comes clearly within the decisions cited. Whether the award may be attacked for failure to give the notice and hear the evidence by the third arbitrator, collaterally, or only by a direct proceeding to set it aside, is not presented upon this appeal. This is a direct proceeding for that purpose. It is insisted that, however the question may have been decided in other jurisdictions, this Court in Zell v. Johnston, 16 N. C., 302, held the award valid. In that case Judge Rodman puts the decision on the ground that, conceding the rule as to notice, when the parties have presented their claims and evidence, they are not entitled to notice of the time when the arbitrators will meet to consider and dispose of the case. He also says that the defendant clearly waived any other notice than he had. The *94 decision is not in conflict with the uniform current of decisions on the question in other jurisdictions. His Honor’s instruction on the first issue was clearly correct. We find no evidence of a ratification by the receiver, if it be conceded that lie had the power to ratify, which is very doubtful. We concur with his Honor’s instruction in that respect. It is conceded by all parties that the arbitrators, and each of them, acted in good faith and no suggestion is made to the contrary. They inadvertently overlooked the necessity of notifying the parties of Mr. Reid’s appointment and the time and place of their meeting to determine the matter submitted to them. We think that their course in that respect was in accordance with the custom with us, but the uniform current of authority is that notice must be given of the selection of the third arbitrator or umpire, and that the rule is founded in wisdom. Its observance secures to the parties an opportunity to present their evidence and arguments to the final arbiter of their rights and tends to secure acquiescence in this mode of trial favored by the law, because it is inexpensive, expeditious and usually works substantial justice. The gentlemen who consented to act as “third arbitrators” were doubtless discharging “a friendly office,” without compensation. The judgment of his Honor, for the reasons assigned, was correct. The other exceptions in the record are immaterial in the view which we take of the case. Of course, the par: ties and their rights, in respect to the subject matter of the arbitration, are not affected by the award or the judgment setting it aside. They are relegated to their original status. It may be well enough to say that the form of his Honor’s •instruction to the jury does not conform to many decisions of this Court, but as there was no contradictory testimony and no inference to be drawn from.it, contrary to the legal conclusion stated by his Honor, no harm could come to defendant. The judgment must be Affirmed.