Norton v. Hayden

Grant, J. (after stating the facts). Two questions are involved: (1) Had the court of law jurisdiction ? (2) Was the making and delivery of an award a condition precedent to the right of action ? The two questions are so intimately connected that they will be discussed together. [685] In his opening statement to the court and jury, after stating the facts, the attorney for the plaintiff thus stated his claim: “This action is brought in assumpsit, based upon the agreement of October 18, 1898, and the actual transfer by bill of sale at that time of the property to Mr. Hayden, and to carry out the terms of that agreement, and recover the purchase price mentioned in the bill of sale and the previous articles providing for the arbitration.” In their brief counsel for plaintiff thus state their claim: “We contend that a fair construction of the contract warrants the interpretation that defendant purchased from plaintiff his interest in the business on the terms of the recital, and submitted the ascertaining of the value of the assets and liabilities to arbitrators, and that this submission, being at the common law, was revocable thereafter by either party, and enforceable only by action.” We are unable to agree with this contention. We must construe the contract as the parties have made it. The arbitration agreed upon was just as much a part of the contract as was the agreement on the part of one to sell and of the other to buy. Mr. Hayden did not agree to buy Mr. Norton’s interest, and to pay what a jury or court might find that he ought to pay, or what his interest might be worth. He agreed to take the property, and assume all the liabilities of the firm, upon condition that certain arbitrators, agreed upon, should determine what, if anything, he should pay Mr. Norton. It is too obvious to require further comment that Mr. Norton could not, at his will, revoke the arbitration, and hold Mr. Hayden liable upon the remainder of the contract. No case cited sustains any such doctrine. A revocation of the arbitration portion of the contract by either party would have been a revocation on his part of the entire contract. No action at law could be maintained by either of these partners against the other until an award had been made, or until one of them had repudiated the contract, or the [686] provision to arbitrate had been waived. Delaware & H. Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 250; Campbell v. Insurance Co., 1 MacArthur, 246 (29 Am. Rep. 591); Ball v. Doud, 26 Or. 14; Scott v. Avery, 36 Eng. Law & Eq. 1, 18; Chippewa Lumber Co. v. Phenix Ins. Co., 80 Mich. 116; Boots v. Seinberg, 100 Mich. 134; Guthat v. Gow, 95 Mich. 527. In Scott v. Avery, the court say: “If I covenant with A. not to do a particular act, and it is agreed between us that any question which might arise should be decided by an arbitrator without bringing an action, then a plea to that effect would be no bar to an action; but if we agreed that J. S. was to award the amount of damages to be recoverable at law, then, if sjich arbitration did not take place, no action could be brought.” No revocation is, however, involved in the case. Neither party is responsible for the failure of the arbitration. Both parties acted in good faith in their attempt to secure an award. The failure of the arbitrators to agree was probably not contemplated, and the parties in their contract made no provision for such a contingency. The effect, therefore, was to place them in statu quo, and to leave them in the same position as they were before the contract was made. Both parties appear to have treated their action as a dissolution of the partnership. It is elementary that in such cases the sole and appropriate remedy is by a bill in equity for an accounting. The judgment is affirmed. Montgomery, Hooker, and Moore JJ., concurred. Long, C. J., did not sit.