John D. Milnor & Co. v. Georgia Rail Road & Banking Co.

By the Court. Warner, J. delivering the opinion. [1.] It appears from the record in this case that the plaintiffs in error entered into a written contract with the defendant, on the 21st day of December, 1840, to construct the superstructure on certain divisions of the Athens Branch of the Georgia Rail Road, as specified in said written contract, which work was to be finished and completed on or before the 25th day of December, 1841. The defendant covenanted to deliver the crossties and mudsills, at convenient points along the line, and the wood and iron rails at the end of the finished part of the road. The contracting parties also covenanted and stipulated that the Engineer of the Georgia Rail Road and Banking Company, for the time being, or some one to be appointed by him, should be the inspector of the work, and should determine when the contract had been complied with, according to its just and fair interpretation, and the amount of tho same, and all disputes and differences arising under the same; and that his decision should he obligatory and conclusive between the parties to said contract, iviihout further recourse or appeal. Tho complainants allege in their bill a breach of the contract [389] on the part of the defendant, in not furnishing the materials as stipulated, according to a reasonable interpretation thereof, whereby they were subjected to ruinous delays^and losses, a bill of particulars' of which is attached to their bill as an exhibit; and pray that the defendant may be decreed to account with them concerning the same, and for further relief, &c. The defendant demurred to the bill of the complainants on two grounds: First, Because there was no equity in it, which would entitle the complainants to relief; and Second, Because, by the complainants’ own showing, all matters of dispute or .difference between the parties to the contract set forth, were to be determined by the engineer of said company, and from which there was to be no appeal, &c. On hearing the demurrer, the Court below sustained it, and dismissed the bill; whereupon the complainants excepted, and now assign the same for error here. It is undoubtedly true, as insisted on the argument, that a Court of Lawis as competent to assess and award damages for the breach of an agreement, either express or implied, as a Court of Equity, and is the proper tribunal for the adjudication of such questions, where the remedy is adequate, and there is no impediment, or barrier, to hinder or obstruct such Common Law remedy. Such, however, is not the case made by the complainants’ bill, in our judgment. The complainants do set forth a special agreement, in which there are dependant covenants, and allege abreach thereof on the part of the defendant; but that is not the whole case made by the complainants’ bill. They charge that by the terms of the agreement, all disputes and differences arising under the contract, should be referred to the Engineer of the Company, and his decision should be obligatory and conclusive between the parties; that this Engineer was an interested stockholder in the Company to the amount of ten thousand dollars, which fact was unknown to the complainants at the time of entering into the agreement; and that they have submitted their account for losses, &c., to him, which he has declined to allow for the reasons stated. It was contended there had been no breach of the agreement, as the bill showed the materials were all furnished by the defendant within the year, and ¡the work completed. What is to be considered a “just and fair interpretation” of this contract, according to its terms and stipulations ? The just and fair interpretation of the [390] contract, is, in our judgment, that the complainants were to employ a reasonable number of hands, so as to complete the work within the year, and the defendant was to furnish the crossties, and mudsills at convenient points along the road, and the wood and iron rails at thtí end of the finished part of the road, as the same should be built by the complainants, when needed, without any unreasonable delay. The complainants could not have employed a thousand hands, •and have required the defendant to furnish all the materials within the first three months of the year within which the contract was to have been completed ; nor could the defendant have required the complainants, with a reasonable number of hands, to perform the contract within the stipulated time, to remain idle until the last three months of the year, without furnishing the materials for the superstructure of the road, and then have required them to perform their contract within the year. Each ■party to the contract had a duty to perform, and to act in good faith towards the other. The complainants were bound to prepare themselves with the necessary reasonable means and laborers to do the work within the time limited; and the defendant was bound to furnish the necessary materials, as stipulated by the contract, within a reasonable time, when wanted by the complainants, so as not to occasion any unnecessary or unreasonable loss or delay on their part. The complainants charge, that in consequence of the failure of the defendant to furnish materials, and procure the right of way, they were, throughout the whole work, subjected to the most ruinous delays and losses, the extent of which appears from the bill of particulars annexed to their bill of complaint. After the complainants had completed the work, they allege they sought satisfaction of the Engineer, for the loss sustained by them. At first he promised to settle their account— then he doubted, and concluded to submit it to the Directors, and promised to be governed by their opinion; but finally, he declined making any allowance whatever of their account, upon the ground that he had discovered that he had allowed the complainants one cent per lineal yard for the superstructure, more than their proposal. The complainants claimed from the defendant nearly two thousand dollars for damages, as per account rendered, for non-compliance with the contract, and presented the same to the Engineer for payment, which, after some doubt and hesitation, [391] he has decided not to allow or pay. Ry the agreement of the complainants and the defendant, all disputes and differences arising under the contract between them, were to he determined by the Engineer, and his decision was to he obligatory and conclusive between the parties, without further recourse, or appeal. But it is said, in this case, there has been no Jormal submission of the matters in dispute, to the arbitrator selected by the parties, and no formal award made. If there has not been a strictly technical submission and award between the parties, there has been, in our opinion, just such a submission of the matters in dispute, and just such an award as was contemplated by the parties to the agreement; and if there were no other objections to it, would be' binding and conclusive upon them ; and such, we infer, was the view taken of it by the defendant, when the demurrer was filed ;■ inasmuch as that is one of the grounds insisted on by it. “ That act by which parties refer any matter in dispute between them, to the decision of a third person, is called a submission ; the person to whom the reference is made, an arbitrator; the judgment pronounced by an arbitrator or arbitrators, an award. The submission may be purely by the act of the parties themselves, or it may be by their act, with the interposition of a Court.” Kyd on Awards, 4, 5. Here is a matter of “ dispute or difference,”' arising under the contract made between the complainants and the defendant. The agreement of the parties submits it to the decision of the Engineer, the arbitrator selected by them — the' complainants’ account, which is the subject matter of dispute, has* been submitted to the arbitrator for his consideration and decision, and he has decided not to pay it; not because, as seems to-be supposed, it was not supported by sufficient evidence, but for" the reason that the arbitrator had discovered that he had allowed thee omplainants, one cent per lineal yard forthe superstructure more than their proposal. It is true, during the progress of the work, the complainants rendered the Engineer an account for loss, on1 Division No. 3, and he then required the certificate of the Assistant Engineer; but when the final decision was made, no such reasont appears to have been assigned by the arbitrator, but a very different one. The complainants’ bill makes a case in which there1 is a dispute or difference between them and the defendant, aris--ing under the contract for constructing the superstructure on certain divisions of the Athens Branch of the Georgia Rail Road.. [392] By the contract of the parties, such dispute or difference was to be submitted to the Engineer for his decision, which, it is stipulated, shall be conclusive between the parties; that after the work was completed, the complainants submitted their account to the Engineer for loss and damage, in consequence of the alleged non-compliance of the defendant’s part of the contract, who-decided against allowing them payment for their claim, and gave his reason therefor, that at the time of entering into the. agreement constituting the Engineer of the Company the arbitrator of all disputes and differences between themselves and the defendant, they were ignorant that he was a stockholder to the amount of ten thousand dollars, in the Company of the defendant, which they allege to be the fact. The main object of the complainants’ bill is to have the award of this interested arbitrator set aside, and that the defendant may come to a fell ana fair account with them, for lost time and damage sustained by them in consequence of the alleged breach of the contract on the part of the defendant, in not furnishing the materials, &c., as stipulated therein. The object of the bill is not solely to recover damages for breach of the agreement, but it is to have the award of the arbitrator, which disallowed the account of the complainants, submitted to his decision under the agreement, set aside, on the ground that he was an interested, party, which was unknown to the complainants at the time they agreed to submit the matter in dispute to his decision. If the arbitrators appear to have an interest in the subject matter of the reference, a Court of Equity will consider this as a sufficient ground for setting aside the award. Kyd on Awards, 239. 2 Comyn’s Dig. 514. [2.] That a party cannot be a judge in his own cause, is a principle too well established to require the citation of authorities to support it. According to the case as presented by the complainants in their bill, we are of the opinion that a Court of Equity has jurisdiction to grant the relief sought j and that the Court below erred in its judgment, in sustaining the demurrer and dismissing the bill. Let the judgment of the Court below be reversed, and the cause reinstated.