Emery v. Owings

Spence, J., delivered the opinion of this court. The object of the bill in this case is to obtain a decree for the sale of the mortgaged premises, for the payment of a sum of — 495 — money, charged to be due under an award made in pursuance of the provisions of a mortgage deed, bearing date the 25th July 1836. The questions to be decided, arise under the contract recited in the deed, which is as follows: “Whereas, it is contemplated to continue the said private road from its nothern termination through the grounds of Nicholas Owings, to the ground hereinafter described, known by the name of Fox Rock, so as to form one entire road or way, from said last mentioned premises to the Patapsco Falls, and thence by means of a bridge to be constructed over said Falls, to intersect the line of the Baltimore and Ohio Rail Road. And whereas the said parties hereto, of the second and third parts, have agree d to advance to the parties of the first part hereto, a sum of money, not exceeding the sum of five thousand and five hundred dollars, which sum, or so much thereof as may be necessary to be applied by them to the payment of the amount awarded by the county court aforesaid, to the said Noah and Comfort Worthington, and to the costs of the court and other expense in obtaining the aforesaid decree, and to be advanced and applied in the construction of the aforesaid entire road from Fox Rock to the Baltimore and Ohio Rail Road, including the bridge to be constructed over the Patapsco Falls. And whereas the parties of the second and third parts hereto, have- agreed to give to the said parties of the first part a credit of five years from the date hereof, upon the amount which has or shall hereafter be advanced by them for the purposes aforesaid, to be ascertained and determined as hereinafter provided for with interest on one-third part thereof only, semi-annually, to commence as the advances are made, and to terminate at the expiration of the said five years, and interest on the whole amount of said advances, or so much thereof as may remain unpaid from and after the expiration of said five years. And whereas the said parties hereto of the first part, have agreed to purchase the said road at the termination of the said five years from the date hereof, and to pay to the parties hereto of the second and third parts the full value thereof, to be fixed and ascertained as the data thereof, by reference to the amount adjudged by the — 496 — county court aforesaid, (of Baltimore,) to the said Noah and Comfort Worthington, for the costs of court, and all necessary expenses in obtaining the decree for said read, and all costs of constructing said road, and the bridge’ to be constructed over the Batapsco Falls, as aforesaid,- taking also into consideration, and making allowance for the wear and tear of the said road, and the injury and the deterioration thereof, by reason of the use and occupation of the same,-during the said term of five years. And it is hereby agreed betweén- the parties hereto, respectively, that the value of the said road, upon the principles above laid down, shall be ascertained and determined at the expiration of the period of said five years, by two competent and disinterested persons, one to be chosen by the parties hereto of the first part, and the other by the parties hereto of the secoud and third parts, with power to said persons, in case they disagree as to the said value, to choose'a third person, and the said referees, or a majority of them, taking the data hereinbefore stated as their rule or guide, shall make out their award or valuation of said road, in writing,-and return the same to the parties hereto, or their representatives, within thirty days after their said appointment.” We have made this large extract from the mortgage deed of the 25th of July 1S36, because, according to our view, all the questions arise out of it which are to be decided in this case. The complainants’ bill charges, that the rail road and bridge were constructed by the appellants, within the time prescribed by the contract, recited in the mortgage deed. The answers of the respondents, admit, that a road and bridge were constructed by the appellants or their assignees, but deny that the road and bridge were constructed according to the meaning and intention of the parlies as set forth in said contract. The bill also charges, that persons were appointed by the parties, as arbitrators, at the termination of the five years, as provided for by said contract, to ascertain the value of the road and bridge, and the cost of the work; that the arbitrators made their award in pursuance of their authority, and made a return thereof to the parties. The answers of the respondents admit the appointment of — 497 — tke arbitrators, and that they made an award, but charge that the course and conduct of the arbitrators was so irregular and illegal, as vitiated and rendered null and void their award. The answers charge, that the arbitrators gave no notice to the appellee's of the time and place of their meetings, when acting upon the subject matters submitted to their arbitrament and decision. That without the knowledge or consent of the anpellees, they examined the books of the appellants to obtain information touching the advances' made by the appellants, when the appellees were not present. The first question presented for decision, is the validity of ihe award. And first, as to the failure on the part of the arbitrators to give notice to the parties. The evidence, so far from proving that notice was given by the arbitrators to the respondents, of the times and* places, and objects of their meeting, that our conclusion from the evidence of the arbitrators themselves, is, that no such notice was given. And the conclusion is quite as clear, that the arbitrators, Bwton and Moke, at their meeting in the city of Baltimore, in the absence of the respondent, examined the books of Emery cmd Gault, and an account kept there, of the cost of the road, without requiring or obtaining any further proof by oath of witnesses, or otherwise, as to the correctness of the charges^ or the fact of furnishing the materials therein charged, to the road. In the case of Rigden vs. Martin, 6 Har. and Johns., 406, the court say, “That, the parties ought to have notice of the time of meeting, is a position so strongly supported by common justice, that it would seem not to require the aid of authorities.” — .“Where the person to whom the parties have agreed to refer the matters in dispute has consented to undertake the office, he ought to appoint a time and place for examining the matters, and give notice of such appointment to the parties, or their attorney.” Kyd on Awards, p. 95. We hold, therefore, this award invalid and void, both upon reason and authority, for this cause. Again, the conduct of the arbitrators in examining the books of Emery and Gault, without notice to, and in the absence of, the respondents, and without proof of the correctness of the statements and entries in those. — 498 — books, was conduct so inconsistent with all the principles of law recognized in the impartial administration of justice, as would vitiate and render null and void their award. To hear the cause of a party in his absence, and without notice, would be bad enough in all conscience, but in his absence, in such a case, to decide his cause upon the declarations of his antagonists, made when he was absent, surely is without precedent. An award made under such circumstances, we cannot sanction. But the argument of the appellants’ counsel insists, that the appellees by their acquiescence and acts have waived all objections to the irregularities and illegalities of this award. We find nothing in the record to warrant this conclusion. There is no evidence in the record of the delivery of a copy of the award to these parties, and especially within the time prescribed by the contract. It is true, that at the expiration of the time limited, to wit, five years, they took possession of the railroad. This they did, independently of any authority derived from the appellants. But it is insisted, that as the appellants have performed their part of the contract, they have advanced their money, constructed the road and bridge, and that any irregularity or improper conduct on the part of the referees ought not to prevent the recovery by them of the money advanced, and for the labor bestowed in the construction of this road and bridge. This brings us to the interpretation of the contract. By the mortgage deed, a lien is given upon certain real estate, described in said deed, to secure the payment of the cost of the erection of the railroad and bridge, described in the mortgage. The amount or sum which the mortgage deed was given to secure, and which was a lien upon the land, was to be ascertained by the award of two persons, one to be chosen by the parties thereto of the first part, and the other by the parties thereto of the second and third parts, with power to said persons, if they disagreed, to choose a third person, and the said referees, ora majority of them, taking the data as stated in the deed as their rule or guide, were to make out their award or valuation of said road in writing, and return the same to the parties, or their representatives, within thirty days after their appointment. — 499 — It is clear from a fair interpretation of this contract, that this mortgage is a security and lien for the amount of an award thus made, and for nothing more. We have before said, that the aw'ard relied on in this case, and for the payment of which the bill claims a decree for the sale of the mortgaged premises, is for the reasons before stated, a nullity. What relief, then, can a court of equity afford in this case, and preserve the lien? A court of equity cannot order or decree the appointment of other and different arbitrators. This would be to make a new contract for the parties, when the prayer of the bill is for a decree, for the specific performance of the contract set forth in the bill. If a court of equity were to ascertain the amount of advances made in the construction of the ¡oad and bridge, it would not he in accordance with the contiact; for by the contract the parties have agreed, that the ascertainment of the amount for which the mortgage is to be a lien, is to be made by persons of their own choice. The parties having stipulated the mode by which the amount to be a lien on the land shall be ascertained; a court of equity has no jurisdiction to compel the parties to adopt any other mode. Vide 2 Simons and Stewart, 418, Agar vs. Marklew. 6 Ves., 815. 12 Ves., 400. Against this doctrine, much reliance, in the argument, was placed on the case of Cheslyn vs. Dolby, 2 Younge and Collyer’s Reports, 170. We have examined this case with care and interest, to learn if it warranted the conclusion deduced from it, but in vain. This was an application for the reconveyance of premises mortgaged for the security and payments of certain accounts, to be ascertained by arbitration, which failed, by reason of the death of the arbitrator. “What is now to be done?” says Alderson, B., “ Here the arbitration originally agreed on, has, by the death of the arbitrator and umpire, been w'holly frustrated.” “'Here,” (says the court.,) “the plaintiff, Cheslyn, comes into equity to ask relief, and before he can obtain that relief he must of course perform what the court shall deem to be equitable, that is to say, the substance of his agreement.” In the case of Cheslyn and Dolby, there was an agreement for a specific mode of ascertaining the balance due; that mode failed by events over which the parties had no control. But, says — 500 — the court,if Mr. Cheslyn has admitted that there is a balance due, and has, by a deed executed under such circumstances, as that it ought to be enforced, agreed that his estate shall be subject to a lien for tha.t balance, why am I to decree a reconveyance of the estate, without compelling him to fulfill that part of his agreement?-” The case was for this reason referred to the master, that he should take the account and ascertain the balance. The case we are called upon to decide, differs in this controlling particular, from the case of Cheslyn vs. Dolby; the latter case was an application to a court of equity for a re-conveyance of mortgaged premises, the reference to ascertain the balance due having failed, by reason of the death of the arbitrator. This case is an application by the mortgagees to a court of equity, to enforce the specific performance of a contract, by the payment of a sqm of money, to be ascertained and determined by the award of arbitrators, to be chosen by the parties, in the mode and upon the data prescribed in the mortgage deed; but we have seen, that there is no award in this case which the court can enforce. If this were an application by the mortgagors for a reconveyance of tfye mortgaged premises, upon the ground that there was no legal and valid award by reason of the improper course and acts of the arbitrators, the answer would be, true, but you shall do equity before you receive equity; and we will have an ascertainment of the value of the railroad and bridge, as stipulated in your contract, and you shall pay the amount thus ascertained, before we grant you the relief asked. In this case, although we are of the opinion, that the court did not err in not granting to the complainants the relief sought by the bill, yet inasmuch as there is nothing in the record to show, that the vices in the award were, at the instance, or by the procurement of the appellants, we think the court below did err in not dismissing the bill without prejudice, and for this reason we reverse the decree of the county court, with costs, to the appellants, and will sign a decree dismissing the bill without prejudice and without costs. DECREE REVERSED, AND BILL DISMISSED WITHOUT PREJUDICE.